Sysgroup Regulatory News (SYS)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

Embargoed until 0700hrs

3 March 2011

McKesson UK Holdings Limited ("McKesson UK")a wholly-owned subsidiary of McKesson Corporation

RECOMMENDED CASH OFFER

for

System C Healthcare plc ("System C")

(to be implemented by way of a Scheme of Arrangement

Under Part 26 of the Companies Act)

Summary

·; The boards of McKesson Corporation and System C are pleased to announce that they have reached agreement on the terms of a recommended cash offer under which McKesson UK will acquire the entire issued and to be issued ordinary share capital of System C (the "Acquisition"). It is intended that the Acquisition be implemented by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act.

·; Under the terms of the Acquisition, Scheme Shareholders will be entitled to receive 70 pence in cash for each System C Share held at the Scheme Record Time, valuing the entire issued and to be issued share capital of System C at approximately £87.0 million. This is based on total shares in issue as at the date of this announcement of 116,394,316 ordinary shares and fully diluted share capital of approximately 124,296,652 million ordinary shares.

·; McKesson UK is a wholly-owned subsidiary of McKesson Corporation, incorporated in England and Wales and formed for the purpose of making the Acquisition.

·; The consideration of 70 pence for each System C Share represents a premium of approximately:

- 71.2 per cent., if the value of the net cash position of System C of approximately £15.7 million on a per share basis as at 2 March 2011 is excluded, over the closing price (also adjusted for such exclusion) of 46.5 pence per System C Share on 28 February 2011, being the day before System C's announcement that it was in talks regarding a potential offer;

- 50.5 per cent. over the closing price of 46.5 pence per System C Share on 28 February 2011, being the day before System C's announcement that it was in talks regarding a potential offer;

- 64.3 per cent. to the average closing price of 42.6 pence per System C Share for the three month period before System C's announcement that it was in talks regarding a potential offer; and

- 74.1 per cent. to the average closing price of 40.2 pence per System C Share for the six month period before System C's announcement that it was in talks regarding a potential offer.

·; System C Shareholders on the share register at close of business on 25 February 2011 will receive the interim dividend of 0.25 pence per System C Share on 21 March 2011, as set out in System C's interim results statement dated 26 January 2011.

·; The System C Directors, who have been so advised by Charles Stanley Securities, consider the terms of the Acquisition to be fair, reasonable and in the best interests of System C and System C Shareholders as a whole. In providing their advice, Charles Stanley Securities has taken into account the commercial assessments of the System C Directors. Accordingly, the System C Directors intend unanimously to recommend System C Shareholders to vote in favour of the Scheme, as the System C Directors have irrevocably undertaken to do (or procure to be done) in respect of their and their connected persons' entire beneficial holdings in System C, amounting to, in aggregate, 4,998,796 System C Shares, representing approximately 4.29 per cent. of the entire issued ordinary share capital of System C.

·; McKesson Corporation and McKesson UK have also received irrevocable undertakings to vote in favour of the Scheme from Liontrust Asset Management plc ("Liontrust"), Gartmore Investment Management Limited ("Gartmore") and Guy Hands in respect of 23,082,604 System C Shares, representing 19.83 per cent. of the existing issued ordinary share capital of System C, and a letter of intent to vote in favour of the Scheme from Blackrock Investment Management (UK) Limited ("Blackrock") in respect of the number of System C Shares held by Blackrock at the Voting Record Time. As at the close of business on 1 March 2011, Blackrock had the ability to control voting rights in 10,656,454 System C Shares representing approximately 9.16 per cent. of the existing issued share capital of System C.

·; In aggregate, McKesson Corporation and McKesson UK have, therefore, received irrevocable undertakings and a letter of intent to vote in favour of the Scheme in respect of 38,737,854 System C Shares as at close of business on 1 March 2011, representing 33.28 per cent. of the existing issued ordinary share capital of System C.

·; The Acquisition is conditional on, inter alia, certain approvals by System C Shareholders and the sanction of the Scheme by the Court. In order to become effective, the Scheme must be approved by a majority in number of the Scheme Shareholders voting at the Court Meeting representing not less than 75 per cent. in value of the Scheme Shares held by the Scheme Shareholders present and voting in person or by proxy. It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and General Meeting together with the Forms of Proxy, will be posted by 21 March 2011 and that the Acquisition and the resolutions required to implement the Scheme will be put to System C Shareholders at the Court Meeting and the General Meeting which are expected to be held by 11 April 2011. Subject to the satisfaction, or where relevant, waiver of all relevant Conditions, the Scheme is expected to become effective by 6 May 2011.

Commenting on the Acquisition, Dr Ian Denley, Chief Executive of System C, said:

"System C believes that the Acquisition will create a leading force in the UK health and social care IT industry. We believe the Acquisition will be to the benefit of our customers, their patients, our staff and our shareholders, and are delighted to be part of such an exciting opportunity."

Commenting on the Acquisition, Patrick Carter, Chairman of McKesson Information Solutions UK Limited, said:

"McKesson believes that this is a very attractive offer to System C Shareholders in light of the current challenging market conditions. We believe that the combination will, in time, provide both of our organisations with the prospects for further growth and real opportunities for our staff. Further, the complementary sets of products and services will enhance our ability to deliver value and further compelling propositions to an evolving healthcare technology market."

The Acquisition will be made on the terms and subject to the conditions and further terms set out herein and in Appendix I to this announcement and the further terms and conditions set out in the Scheme Document and Forms of Proxy when issued. The bases and sources of certain financial information contained in this announcement are set out in Appendix II to this announcement. A summary of the irrevocable undertakings given by the System C Directors and the irrevocable undertakings and letter of intent given by certain other System C Shareholders is contained in Appendix III to this announcement. Certain terms used in this announcement are defined in Appendix IV to this announcement.

HSBC, which is authorised and regulated in the UK by the Financial Services Authority, is acting for McKesson Corporation and McKesson UK and no one else in connection with the Acquisition and this announcement and will not be responsible to anyone other than McKesson Corporation and McKesson UK for providing the protections afforded to clients of HSBC nor for providing advice in connection with the Acquisition or any matter referred to herein.

Charles Stanley Securities, a division of Charles Stanley & Co. Ltd, which is authorised and regulated in the UK by the Financial Services Authority, is acting exclusively for System C and no one else in connection with the Acquisition and this announcement and will not be responsible to anyone other than System C for providing the protections afforded to clients of Charles Stanley Securities nor for providing advice in connection with the Acquisition or any matter referred to herein.

This announcement is for information purposes only and does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to buy securities, pursuant to the Acquisition or otherwise. The Acquisition will be made solely by means of the Scheme Document, which will contain the full terms and conditions of the Acquisition, including details of how to vote in favour of the Scheme. System C will prepare the Scheme Document to be distributed to System C Shareholders. System C and McKesson Corporation urge System C Shareholders to read the Scheme Document when it becomes available because it will contain important information relating to the Acquisition.

This announcement does not constitute a prospectus or prospectus equivalent document.

This announcement has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements.

Unless otherwise determined by McKesson Corporation or McKesson UK or required by the City Code and permitted by applicable law and regulation, the Acquisition will not be made, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and the Acquisition will not be capable of acceptance from or within a Restricted Jurisdiction. Accordingly, copies of this announcement and all documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions as doing so may invalidate any purported acceptance of the Acquisition.

The availability of the Acquisition to System C Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

Further details in relation to overseas System C Shareholders will be contained in the Scheme Document.

McKesson Corporation and McKesson UK reserve the right to elect, with the consent of the Panel (where necessary), to implement the Acquisition by way of a Takeover Offer. In such event, the Takeover Offer will be implemented on substantially the same terms, subject to appropriate amendments, as those which would apply to the Acquisition.

Forward looking statements

This announcement, any oral statements made by McKesson Corporation or System C in relation to the Acquisition, and other information published by McKesson Corporation or System C may contain statements about McKesson Corporation, McKesson UK and System C that are or may be forward looking statements. All statements other than statements of historical facts included in this announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of McKesson Corporation's, McKesson UK's or System C's operations and potential synergies resulting from the Acquisition; and (iii) the effects of government regulation on McKesson Corporation's, McKesson UK's or System C's business.

Such forward looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements. McKesson Corporation, McKesson UK and System C disclaim any obligation to update any forward looking or other statements contained herein, except as required by applicable law.

Not a profit forecast

No statement in this announcement is intended as a profit forecast or profit estimate and no statement in this announcement should be interpreted to mean that the future earnings per share of the McKesson Group as enlarged by the Acquisition, McKesson Corporation and/or System C for current or future financial years will necessarily match or exceed the historical or published earnings per share of McKesson Corporation or System C.

Disclosure requirements of the Takeover Code (the "Code")

Under Rule 8.3(a) of the Code, any person who is interested in one per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30pm (London time) on the 10th Business Day following the commencement of the offer period and, if appropriate, by no later than 3.30pm (London time) on the 10th Business Day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30pm (London time) on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

This summary should be read in conjunction with the full text of this announcement. Appendix I to this announcement contains the conditions to, and certain further terms of, the Acquisition. Appendix II to this announcement contains further details of the sources of information and bases of calculations set out in this announcement. Appendix III contains a summary of the irrevocable undertakings given by the System C Directors and by Liontrust, Gartmore and Guy Hands and a letter of intent given by Blackrock. Appendix IV contains definitions of certain expressions used in this summary and in this announcement.

Publication on website

In accordance with Rule 19.11 of the Code, a copy of this announcement will be made available, free of charge, at www.systemc.com by no later than 12 noon (London time) on 4 March 2011.

Neither the content of the website referred to in this announcement nor the content of any website accessible from hyperlinks on System C's website (or any other website) is incorporated into, or forms part of, this announcement.

You may request a hard copy of this announcement, free of charge, by contacting Jane Conner on 01622 691616. You may also request that all future documents, announcements and information to be sent to you in relation to the Acquisition should be in hard copy form.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

Embargoed until 0700hrs

3 March 2011

McKesson UK Holdings Limited ("McKesson UK")a wholly-owned subsidiary of McKesson Corporation

RECOMMENDED CASH OFFER

for

System C Healthcare plc ("System C")

(to be implemented by way of a Scheme of Arrangement

Under Part 26 of the Companies Act)

1 Introduction

The boards of McKesson Corporation and System C are pleased to announce that they have reached agreement on the terms of a recommended cash offer under which McKesson UK will acquire the entire issued and to be issued ordinary share capital of System C (the "Acquisition"). 

2 The Acquisition

It is intended that the Acquisition be implemented by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act.

Pursuant to the Acquisition, which will be subject to the conditions and further terms set out below and in Appendix I and to the full terms and conditions which will be set out in the Scheme Document, Scheme Shareholders will receive:

for each System C Share 70 pence in cash

The Acquisition values the entire existing issued share capital of System C at approximately £81.5 million and the entire issued and to be issued share capital of System C at approximately £87.0 million. 

The consideration of 70 pence for each System C Share represents a premium of approximately:

- 71.2 per cent., if the value of the net cash position of System C of approximately £15.7 million on a per share basis as at 2 March 2011 is excluded, over the closing price (also adjusted for such exclusion) of 46.5 pence per System C Share on 28 February 2011, being the day before System C's announcement that it was in talks regarding a potential offer;

- 50.5 per cent. over the closing price of 46.5 pence per System C Share on 28 February 2011, being the day before System C's announcement that it was in talks regarding a potential offer;

- 64.3 per cent. to the average closing price of 42.6 pence per System C Share for the three month period before System C's announcement that it was in talks regarding a potential offer; and

- 74.1 per cent. to the average closing price of 40.2 pence per System C Share for the six month period before System C's announcement that it was in talks regarding a potential offer.

System C Shareholders on the share register at close of business on 25 February 2011 will receive the interim dividend of 0.25 pence per System C Share on 21 March 2011, as set out in System C's interim results statement dated 26 January 2011.

3 Background to and reasons for the Acquisition

The UK is, and will continue to be, an important international market for McKesson Corporation. Since establishing its UK presence in 1999, McKesson Corporation has developed and successfully delivered a broad portfolio of IT and software solutions and services to the NHS and private healthcare sector.

Under the National Programme for IT, a programme initiated in 2002 to move the NHS in England towards a single, centrally-mandated electronic care record for patients, iSoft and Cerner were chosen to provide Patient Administration Systems ("PAS") and clinical systems to the 166 NHS Acute Trusts. Recently, the Department of Health released the NHS Trusts from central IT procurement obligations and opened up the market for other vendors to provide new PAS and clinical systems. This has provided an opportunity for McKesson Corporation to re-enter this market.

The directors of McKesson Corporation believe that the combination of System C's brand, its technically advanced PAS and clinical systems and its capability in delivering high-quality deployments, together with McKesson Corporation's financial strength and strong reputation for delivering a broad portfolio of IT and software solutions for the NHS and the private healthcare sector, will create a compelling product and service offering to address the healthcare IT market.

4 Recommendation

The System C Directors, who have been so advised by Charles Stanley Securities, consider the terms of the Acquisition to be fair, reasonable and in the best interests of System C and System C Shareholders as a whole. In providing their advice, Charles Stanley Securities has taken into account the commercial assessments of the System C Directors. Accordingly, the System C Directors intend unanimously to recommend System C Shareholders to vote in favour of the Scheme, as the System C Directors have irrevocably undertaken to do (or procure to be done) in respect of their and their connected persons' entire beneficial holdings in System C, amounting to, in aggregate, 4,998,796 System C Shares, representing approximately 4.29 per cent. of the entire issued ordinary share capital of System C.

5 Background to and reasons for the recommendation

The UK healthcare market has provided a challenging environment in which to operate and it will continue to do so as government policy and spending in the public sector, including within the NHS and local government, is reviewed. This has been reflected in System C's financial performance and share price over the past 12 months.

Recent changes, in particular the release of the NHS Trusts from central IT procurement obligations under the National Programme for IT, have created market opportunities for System C as NHS Trusts have now started to procure new PAS/Electronic Patient Record ("EPR") and clinical systems to replace legacy systems that are up to 30 years old. In response, System C is transitioning from being a services-led company to a products-led company in order to take advantage of, and compete for, large scale contracts for delivery of its proprietary software. These changes are, however, not without risks as highlighted in System C's financial performance for the six months ended 30 November 2010, which saw a 27 per cent. decline in revenues when compared with the same period in 2009. This was due largely to a reduction in service revenues from the implementation of third party software under the National Programme for IT. During this time, System C continued with the development of its own systems, but volume product sales were not yet coming through. This resulted in a loss from operations, before the amortisation of acquired intangibles and share based payments, of £0.1 million over the period compared with a profit of £3.2 million in the same period in 2009. Further, there are associated implementation risks as the timing of revenues during this transition period is uncertain. The lengthy customer procurement cycles involve competitive bidding (often against a number of well-resourced competitors), which can take up to 12 months to complete. Furthermore, system deployments can take the same length of time again. 

Against this background, the System C Directors have considered the strategic options available to System C and concluded that System C's long term prospects will be best served by the Acquisition. As part of McKesson Corporation, System C will benefit from McKesson Corporation's financial strength, large installed user base and complementary products, including child health and picture archiving software. This will provide System C with a strategic advantage in the market, together with enhanced prospects for System C's management and employees.

The System C Directors, having consulted Charles Stanley Securities, believe that the terms of the Acquisition, pursuant to which System C Shareholders will receive 70 pence in cash for each System C Share, provide certainty for System C Shareholders and the opportunity for System C Shareholders to realise their investment in cash at a premium of approximately 71.2 per cent., if the value of the net cash position of System C of approximately £15.7 million on a per share basis as at 2 March 2011 is excluded, over the closing price (also adjusted for such exclusion) of 46.5 pence per System C Share on 28 February 2011, being the day before System C's announcement that it was in talks regarding a potential offer and a 74.1 per cent. premium to the average closing price of 40.2 pence per System C Share for the six month period before System C's announcement that it was in talks regarding a potential offer.

Additionally, System C Shareholders on the System C register at the close of business on 25 February 2011 will be entitled to receive the interim dividend of 0.25 pence per share on 21 March 2011, as set out in System C's interim results statement dated 26 January 2011 in respect of the six month period ended 30 November 2010.

Accordingly, and recognising also the significant strategic benefits of the Acquisition to System C, the System C Directors have concluded that the Acquisition is in the best interests of System C and its shareholders.

6 Irrevocable undertakings and letter of intent

McKesson Corporation and McKesson UK have received irrevocable undertakings from each of the System C Directors, and persons connected to them, to vote or procure the vote in favour of the resolutions to be proposed at the Court Meeting and the General Meeting, in respect of a total of 4,998,796 System C Shares, representing approximately 4.29 per cent. of the entire issued ordinary share capital of System C.

In connection with the Acquisition, McKesson Corporation and McKesson UK have also received irrevocable undertakings to vote in favour of the resolutions to be proposed at the Court Meeting and the General Meeting from Liontrust, Gartmore and Guy Hands in respect of 23,082,604 System C Shares, representing 19.83 per cent. of the existing issued ordinary share capital of System C and a letter of intent to vote in favour of the Scheme and the General Meeting Resolutions from Blackrock in respect of the number of System C Shares held by Blackrock at the Voting Record Time. As at the close of business on 1 March 2011, Blackrock had the ability to control voting rights in 10,656,454 System C Shares representing approximately 9.16 per cent. of the existing issued share capital of System C.

In aggregate, McKesson Corporation and McKesson UK have, therefore, received irrevocable undertakings and a letter of intent to vote in favour of the Scheme and the General Meeting Resolution in respect of 38,737,854 System C Shares as at the close of business on 1 March 2011, representing 33.28 per cent. of the existing issued ordinary share capital of System C.

Further details of these irrevocable undertakings and the letter of intent (including the circumstances in which they will fall away) are set out in Appendix III to this announcement.

7 Information on McKesson UK and McKesson Corporation

McKesson UK is a wholly-owned subsidiary of McKesson Corporation, incorporated in England and Wales and formed for the purpose of making the Acquisition.

McKesson Corporation is a company listed on the New York Stock Exchange, with a market capitalisation of approximately $20.2 billion as at 1 March 2011, that delivers medicines, pharmaceutical supplies, information and care management products and services designed to reduce costs and improve quality across the healthcare industry. In the year ended 31 March 2010, McKesson Corporation generated revenues of $108.7 billion.

McKesson Corporation operates in two categories:

(i) Distribution Solutions - this segment distributes ethical and proprietary drugs, medical-surgical supplies and equipment and health and beauty care products throughout North America. It also provides specialty pharmaceutical solutions for biotech and pharmaceutical manufacturers, sells financial, operational and clinical solutions for pharmacies (retail, hospital, long-term care) and provides consulting, outsourcing and other activities; and

(ii) Technology Solutions - this segment delivers enterprise-wide clinical, patient care, financial, supply chain, strategic management software solutions, pharmacy automation for hospitals, as well as delivery and management of connectivity, outsourcing and other services, including remote hosting and managed services, to healthcare organisations. It also includes the McKesson Corporation's Payor group of businesses, which includes InterQual®, claims payment solutions, medical management software business and care management programs. The segment's customers include hospitals, physicians, homecare providers, retail pharmacies and payors from North America, the UK, Ireland and other European countries, Asia Pacific and Israel.

Further information about McKesson Corporation is provided in section 1 (Business) of Part 1 of its Annual Report on Form 10-K for the fiscal year ended 31 March 2010.

Since establishing its UK presence in 1999, McKesson Corporation has developed and successfully delivered a broad portfolio of IT and software solutions and services to the NHS and private healthcare sector. McKesson Corporation's services in the UK include:

·; Workforce Solutions - back office HR and Payroll administration, including Electronic Staff Record (the national, integrated HR and payroll system used by nearly all NHS organisations throughout England and Wales), rostering, time and attendance and consultancy and education.

·; PAS and Clinical Solutions - PAS, child health and supporting managed IT services.

·; Care Management - clinical decision support tools for determining appropriate level of care, resource utilisation, patient flow and bed management.

·; Medical Imaging - picture archiving and communication systems, radiology information systems and cardiovascular image and information solutions.

8 Information on System C

System C is a leading health and social care software and services company, specialising in providing IT solutions and systems implementation and consultancy services to the health and social care sectors in the UK. System C was founded in 1983 and has been quoted on AIM since June 2005.

System C's core product, its Medway suite of clinical and care management systems, is used across 40 hospitals in the NHS and by the private sector and includes:

·; EPR systems and PAS;

·; departmental clinical systems;

·; business intelligence and clinical dashboard applications; and

·; healthcare web portals.

Through its subsidiary company, Liquidlogic Limited, System C provides multi-agency health and social care solutions to enable collaborative working across the public sector. Liquidlogic Limited's capabilities include children's services, adult services, domestic violence and mental health.

For the financial year ended 31 May 2010, System C recorded group revenues of £38.3 million, profit from operations of £5.1 million and net cash generated from operating activities of £6.3 million.

Revenue for the six months to 30 November 2010 was £13.3 million, which reflected a shift from falling short term revenues (due largely to a reduction in service revenues from the implementation of third party software under the National Programme for IT) towards increasing licensing revenues from system sales, which are expected to start being realised before the end of the current financial year. During the six months to 30 November 2010, there was a loss from operations, before the amortisation of acquired intangibles and share based payments, of £0.1 million and a loss from operations of £0.8 million.

As at 30 November 2010, System C had a net cash balance of approximately £17.0 million.

9 Management, employees and locations

McKesson Corporation attaches great importance to the skills and experience of System C's existing management team and employees. McKesson Corporation believes that the combination of its existing UK operations and System C will offer enhanced opportunities for the existing management team, who will continue to lead the System C business as part of McKesson Corporation's enlarged UK operations, and for the employees of System C.

McKesson Corporation does not currently intend to make any material changes to staffing levels, locations of business or the conditions of employment of System C employees. Further, the board of McKesson Corporation confirms that, following the Scheme becoming effective, the existing employment rights, including pension rights, of all employees of System C will be fully safeguarded.

Upon the Scheme becoming effective, a joint team from McKesson UK and System C will be established to consider how best to realise the advantages of the combined businesses' strategic position and growth opportunities.

The System C Non-Executive Directors intend to resign from the board of System C upon the Scheme becoming effective.

10 System C Employee Share Schemes

Participants in the System C Employee Share Schemes and holders of System C Non-Employee Options will be contacted separately regarding the effect of the Acquisition on their rights under the System C Employee Share Schemes and the System C Non-Employee Options and appropriate proposals will be made to such persons in due course. The Acquisition will extend to any System C Shares which are unconditionally allotted or issued before the Scheme Record Time as a result of the exercise of existing options under the System C Employee Share Schemes and System C Non-Employee Options.

11 Financing the Acquisition

The cash consideration payable under the terms of the Acquisition will be funded using McKesson Corporation's existing cash resources.

HSBC, financial adviser to McKesson Corporation and McKesson UK, is satisfied that sufficient resources are available to satisfy in full the cash consideration payable to System C Shareholders under the terms of the Acquisition.

12 Implementation Agreement

McKesson UK, McKesson Corporation and System C have entered into the Implementation Agreement which provides, among other things, for the implementation of the Scheme and contains assurances and confirmations between the parties, including provisions to implement the Scheme on a timely basis and relating to the conduct of business of System C prior to the Scheme becoming effective or the Implementation Agreement being terminated. In particular, the Implementation Agreement contains the following principal provisions:

12.1 Inducement Fee

As an inducement to McKesson Corporation to commit time and personnel to the Acquisition, System C has undertaken to McKesson Corporation that it shall (to the extent permitted by law) pay to McKesson Corporation a fee of one per cent. of the aggregate offer value of the Acquisition if, following this announcement:

12.1.1 the System C Directors withdraw or adversely modify or qualify their recommendation (or intention to recommend) to System C Shareholders to vote in favour of the Scheme and/or the General Meeting Resolutions (or if applicable to accept the Takeover Offer) or they at any time decide not to proceed with the Scheme (except where the necessary resolutions to approve the Acquisition have not been passed at the Court Meeting or the General Meeting); or

12.1.2 a Third Party Transaction is announced prior to the Acquisition lapsing or being withdrawn and the Third Party Transaction referred to in such announcement or any other Third Party Transaction is either: (i) recommended by the System C Directors; or (ii) becomes or is declared unconditional in all respects or is completed.

Nothing in the Implementation Agreement shall oblige System C to pay any amount to McKesson UK or McKesson Corporation which the Panel determines would not be permitted by Rule 21.2 of the City Code.

12.2 Non-solicitation

System C has agreed that no member of the System C Group, nor any of its directors, employees, advisers or agents, shall directly or indirectly solicit, initiate, encourage, negotiate, discuss or otherwise seek to procure a Third Party Transaction. The non-solicit obligation is subject to the System C Directors either concluding, having taken appropriate legal and financial advice, that their fiduciary duties so require them to act in response to an unsolicited approach, or reasonably believing that a written proposal submitted by a bona fide potential offeror could lead to a Superior Transaction with a value of 10 per cent. or more above the offer price then being made by McKesson Corporation. In such circumstances, System C shall be permitted to enter into negotiations with any such third party and to provide information to such person.

System C has also undertaken to notify McKesson UK as soon as reasonably practicable (and in any event by the next day) of any approach that is made to it or to any member of the System C Group or any of their respective directors, employees, advisers or agents regarding a Third Party Transaction and shall inform McKesson UK of the material terms of such approach. To the extent that a third party requests information not already provided to McKesson UK, System C has undertaken to promptly provide such information to McKesson UK.

12.3 Right to switch to a Takeover Offer

Under the terms of the Implementation Agreement, McKesson UK has retained the right to implement the Acquisition by way of a Takeover Offer.

13 Opening Position Disclosures and interests

McKesson UK confirms that it is making on the date of this announcement an Opening Position Disclosure, setting out the details required to be disclosed by it under Rule 8.1(a) of the Code. The Opening Position Disclosure does not include all relevant details in respect of McKesson UK's concert parties and McKesson UK confirms that a further disclosure in accordance with Rule 8.1(a) and Note 2(a)(i) on Rule 8 of the Code will be made as soon as possible, if required.

14 Structure of the Acquisition

It is intended that the Acquisition will be effected by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act. The Scheme is an arrangement between System C and the Scheme Shareholders and is subject to the approval of the Court.

The purpose of the Scheme is to provide for McKesson UK to become the holder of the entire issued and to be issued ordinary share capital of System C. This is to be achieved by the cancellation of the Scheme Shares held by Scheme Shareholders and the application of the reserve arising from such cancellation in paying up in full such number of new ordinary shares of 1 pence each in System C which is equal to the number of Scheme Shares cancelled and issuing such new ordinary shares to McKesson UK. McKesson UK will subsequently pay the cash consideration to which System C Shareholders on the register of members at the Scheme Record Time are entitled pursuant to the terms of the Acquisition.

To become effective, the Scheme will require, amongst other things, the approval by a majority in number of Scheme Shareholders representing at least 75 per cent. in value of the Scheme Shares held by such Scheme Shareholders voting, either in person or by proxy, at the Court Meeting (or any adjournment thereof), and the passing by the System C Shareholders of a special resolution necessary to implement the Scheme (including approving appropriate amendments to the articles of association of System C) at the General Meeting (or any adjournment thereof). In addition, the Scheme must be sanctioned, and the Capital Reduction must be confirmed, by the Court.

The Scheme will also be subject to certain conditions and certain further terms referred to in Appendix I of this announcement and to be set out in the Scheme Document.

Once the necessary approvals from System C Shareholders have been obtained and the other Conditions have been satisfied or (where applicable) waived, the Scheme will become effective upon the delivery of the Reduction Court Order to the Registrar. The Scheme is expected to become effective by 6 May 2011. If the Scheme does not become effective on or before 30 June 2011, it will lapse and the Acquisition will not proceed (unless the parties agree otherwise with the consent of the Panel).

Upon the Scheme becoming effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting.

The new ordinary shares in System C to be issued to McKesson UK pursuant to the Scheme will be issued fully paid and free from all licences, charges, equities, encumbrances, rights of pre-emption and any other interests of any nature whatsoever and together with all rights attaching thereto, including voting rights and the rights to receive and retain in full all dividends and other distributions declared, made or paid on or after the date of their issue.

McKesson UK reserves the right, with the consent of the Panel (where necessary), to elect to implement the Acquisition by way of a Takeover Offer as an alternative to the Scheme. Any such Takeover Offer will be subject to an acceptance condition of McKesson UK having acquired (whether pursuant to the Acquisition or otherwise) such percentage (being more than 50 per cent.) of the System C Shares, as McKesson Corporation and McKesson UK may decide, having consulted with System C and the Panel, and will otherwise be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which would apply to the Scheme, and in compliance with applicable laws and regulations.

Further details of the Scheme, including an indicative timetable for its implementation, together with how Scheme Shareholders may participate in the Court Meeting and General Meeting, will be contained in the Scheme Document. It is expected that the Scheme Document, containing notices of the Court Meeting and the General Meeting together with the Forms of Proxy, will be posted to System C Shareholders and (for information purposes only) to participants in the System C Employee Share Schemes, as soon as practicable and in any event by no later than 21 March 2011.

15 Disclosure of interests in System C Shares

Aside from HSBC, a connected adviser for the purpose of the City Code, whose dealings will be set out in the Opening Position Disclosure referred to in 13 above, neither McKesson Corporation nor McKesson UK, nor any of the directors of McKesson Corporation or the McKesson UK Directors nor, so far as the directors of McKesson Corporation and the McKesson UK Directors are aware, any other person acting in concert with McKesson Corporation or McKesson UK for the purposes of the Acquisition, owns, controls, holds, or has borrowed or lent any System C Shares or any securities convertible or exchangeable into System C Shares or rights to subscribe for or purchase or options (including traded options) in respect of, or derivatives referenced to, any such System C Shares. In view of the requirement for confidentiality, McKesson Corporation and McKesson UK have not made any enquiries in respect of certain parties who may be deemed by the Panel to be acting in concert with either of them for the purposes of the Acquisition.

16 Overseas Shareholders

The availability of the Acquisition or distribution of this announcement to persons not resident in the United Kingdom may be prohibited or affected by the laws of the relevant jurisdictions. Such persons should inform themselves about, and observe, any applicable requirements. Further details in relation to overseas System C Shareholders will be contained in the Scheme Document.

17 Delisting and re-registration

Upon or shortly after the Effective Date, it is intended that McKesson Corporation will procure that System C applies to the London Stock Exchange to cancel admission of the System C Shares to trading on AIM.

On the Effective Date, System C will become a wholly-owned subsidiary of McKesson UK and share certificates in respect of the System C Shares will cease to be valid and should be destroyed. In addition, entitlements to System C Shares held within the CREST system will be cancelled on the Effective Date.

It is also proposed that on or following the Effective Date, System C will be re-registered as a private limited company.

18 System C issued share capital

In accordance with Rule 2.10 of the Code, System C confirms that as at the close of business on 2 March 2011, there were 116,394,316 System C Shares (ISIN GB00B0940H91) in issue.

19 General

The Acquisition will be made on the terms and subject to the conditions and further terms set out herein and in Appendix I to this announcement. The bases and sources of certain financial information contained in this announcement are set out in Appendix II to this announcement. A summary of the irrevocable undertakings and the letter of intent is contained in Appendix III to this announcement. Certain terms used in this announcement are defined in Appendix IV to this announcement.

HSBC is authorised by the Financial Services Authority. HSBC is acting exclusively for McKesson Corporation and McKesson UK and no one else in connection with the Acquisition and will not be responsible to anyone other than McKesson Corporation and McKesson UK for providing the protections afforded to clients of HSBC, or for providing advice in connection with the Scheme or any matter referred to herein.

Charles Stanley Securities is acting exclusively for System C and no one else in connection with the Acquisition and will not be responsible to anyone other than System C for providing the protections afforded to clients of Charles Stanley Securities or for providing advice in connection with the Acquisition or any matter referred to herein.

The Acquisition will be made on the terms and subject to the conditions and further terms set out herein and in Appendix I to this announcement and the further terms and conditions set out in the Scheme Document and Forms of Proxy when issued. The bases and sources of certain financial information contained in this announcement are set out in Appendix II to this announcement. A summary of the irrevocable undertakings given by the System C Directors and the irrevocable undertakings and a letter of intent given by certain other System C Shareholders is contained in Appendix III to this announcement. Certain terms used in this announcement are defined in Appendix IV to this announcement.

HSBC, which is authorised and regulated in the UK by the Financial Services Authority, is acting for McKesson Corporation and McKesson UK and no one else in connection with the Acquisition and this announcement and will not be responsible to anyone other than McKesson Corporation and McKesson UK for providing the protections afforded to clients of HSBC nor for providing advice in connection with the Acquisition or any matter referred to herein.

Charles Stanley Securities, a division of Charles Stanley & Co. Ltd, which is authorised and regulated in the UK by the Financial Services Authority, is acting exclusively for System C and no one else in connection with the Acquisition and this announcement and will not be responsible to anyone other than System C for providing the protections afforded to clients of Charles Stanley Securities nor for providing advice in connection with the Acquisition or any matter referred to herein.

This announcement is for information purposes only and does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to buy securities, pursuant to the Acquisition or otherwise. The Acquisition will be made solely by means of the Scheme Document, which will contain the full terms and conditions of the Acquisition, including details of how to vote in favour of the Scheme. System C will prepare the Scheme Document to be distributed to System C Shareholders. System C and McKesson Corporation urge System C Shareholders to read the Scheme Document when it becomes available because it will contain important information relating to the Acquisition.

This announcement does not constitute a prospectus or prospectus equivalent document.

This announcement has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements.

Unless otherwise determined by McKesson Corporation or McKesson UK or required by the City Code and permitted by applicable law and regulation, the Acquisition will not be made, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and the Acquisition will not be capable of acceptance from or within a Restricted Jurisdiction. Accordingly, copies of this announcement and all documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions as doing so may invalidate any purported acceptance of the Acquisition.

The availability of the Acquisition to System C Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

Further details in relation to overseas shareholders will be contained in the Scheme Document.

McKesson Corporation and McKesson UK reserve the right to elect, with the consent of the Panel (where necessary), to implement the Acquisition by way of a Takeover Offer. In such event, the offer will be implemented on substantially the same terms, subject to appropriate amendments, as those which would apply to the Acquisition.

Forward looking statements

This announcement, any oral statements made by McKesson Corporation or System C in relation to the Acquisition, and other information published by McKesson Corporation or System C may contain statements about McKesson Corporation, McKesson UK and System C that are or may be forward looking statements. All statements other than statements of historical facts included in this announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of McKesson Corporation's, McKesson UK's or System C's operations and potential synergies resulting from the Acquisition; and (iii) the effects of government regulation on McKesson Corporation's, McKesson UK's or System C's business.

Such forward looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. McKesson Corporation, McKesson UK and System C disclaim any obligation to update any forward looking or other statements contained herein, except as required by applicable law.

Not a profit forecast

No statement in this announcement is intended as a profit forecast or profit estimate and no statement in this announcement should be interpreted to mean that the future earnings per share of the McKesson Group as enlarged by the Acquisition, McKesson Corporation and/or System C for current or future financial years will necessarily match or exceed the historical or published earnings per share of McKesson Corporation or System C.

Disclosure requirements of the Takeover Code (the "Code")

Under Rule 8.3(a) of the Code, any person who is interested in one per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30pm (London time) on the 10th Business Day following the commencement of the offer period and, if appropriate, by no later than 3.30pm (London time) on the 10th Business Day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30pm (London time) on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

Publication on website

In accordance with Rule 19.11 of the Code, a copy of this announcement will be made available, free of charge, at www.systemc.com by no later than 12 noon (London time) on 4 March 2011.

Neither the content of the website referred to in this announcement nor the content of any website accessible from hyperlinks on System C's website (or any other website) is incorporated into, or forms part of, this announcement.

You may request a hard copy of this announcement, free of charge, by contacting Jane Conner on 01622 691616. You may also request that all future documents, announcements and information to be sent to you in relation to the Acquisition should be in hard copy form.

APPENDIX ICONDITIONS AND FURTHER TERMS OF THE SCHEME AND THE ACQUISITION

Part A: Conditions of the Acquisition

1 The Acquisition will be conditional upon the Scheme becoming unconditional and becoming effective by no later than 30 June 2011 or such later date (if any) as McKesson UK and System C may, with the consent of the Panel, agree and (if required) the Court may allow.

2 The Scheme will be conditional upon:

(a) approval of the Scheme by a majority in number of the Scheme Shareholders entitled to vote and present and voting, either in person or by proxy, at the Court Meeting or at any adjournment of such meeting, representing no less than 75 per cent. in value of the Scheme Shares so voted;

(b) all resolutions in connection with, or necessary to approve and implement, the Scheme as set out in the notice of the General Meeting being duly passed by the requisite majority at the General Meeting or at any adjournment of that meeting; and

(c) the sanction of the Scheme and the confirmation of the Capital Reduction in either case, without modification or with modification (on terms reasonably acceptable to McKesson UK and System C) by the Court and the delivery for registration of copies of the Court Orders and the statement of capital attached thereto to the Registrar of Companies.

3 In addition, System C and McKesson UK have agreed that, subject to Part B below, the Scheme will also be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme effective will not be taken unless the following Conditions (as amended if appropriate) have been satisfied (where capable of satisfaction) or where permitted, waived, prior to the Scheme being sanctioned by the Court in accordance with Condition 2(c) above:

(a) all necessary material notifications and filings having been made in connection with the Acquisition and all statutory and regulatory obligations in connection with the Acquisition in any relevant jurisdiction having been complied with in all material respects and all Authorisations deemed reasonably necessary or appropriate by McKesson UK in any relevant jurisdiction for, or in respect of, the implementation of the Acquisition and the Scheme having been obtained in terms reasonably satisfactory to McKesson UK from all appropriate third parties, all or any applicable waiting and other time periods under any applicable legislation or regulation of any relevant jurisdiction having expired, lapsed or been terminated (as appropriate) and all such Authorisations (together with all material Authorisations deemed reasonably necessary or appropriate to carry on the business of any member of the Wider System C Group) remaining in full force and effect at the Effective Date and there being no notice of any intention to revoke, suspend, restrict, amend or not to renew any such Authorisations;

(b) no third party having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or having required any action to be taken, or otherwise having done anything, or having enacted, made or proposed any statute, regulation or order, or taken any other step that would or might reasonably be expected to:

(i) require, prevent or delay the divestiture, or alter the terms envisaged for any proposed divestiture by any member of the McKesson Group or any member of the Wider System C Group of all or any material part of their respective businesses, assets or properties or impose any limitation on the ability of any member of the McKesson Group or the Wider System C Group to conduct their respective businesses (or any part of them) or to own any of their respective assets or property or any part of them which, in any such case, is material in the context of the Wider System C Group taken as a whole;

(ii) save pursuant to the Scheme or sections 974 to 991 of the Companies Act, require any member of the McKesson Group or of the Wider System C Group to make an offer to acquire any shares or other securities (or the equivalent) of any member of the Wider System C Group owned by any third party;

(iii) impose any limitation on, or result in a material delay in, the ability of McKesson UK directly or indirectly to acquire or to hold or to exercise effectively directly or indirectly all or any rights of ownership in respect of shares or loans or securities convertible into shares or any other securities (or the equivalent) in System C or the ability of McKesson UK to hold or exercise effectively any rights of ownership of shares, loans or other securities in, or to exercise management control over any member of the Wider System C Group or require a divestiture by McKesson UK or any member of the McKesson Group of any rights or ownership in respect of shares or other securities in System C which, in any case, is material in the context of the Wider System C Group as a whole;

(iv) otherwise adversely affect the business, assets, liabilities, financial or trading position of any member of the Wider System C Group, in each case to an extent which is material in the context of the Wider System C Group taken as a whole;

(v) result in any member of the Wider System C Group ceasing to be able to carry on business under any name under which it presently does so (the consequence of which would be material in the context of the Wider System C Group taken as a whole); or

(vi) make the Acquisition or the Scheme or, in each case, its implementation or the acquisition or proposed acquisition by McKesson UK or any member of the McKesson Group of any shares or other securities in, or control or management of, System C void, unenforceable or illegal under the laws of any jurisdiction, or restrict, prohibit or delay to a material extent or otherwise materially interfere with the implementation of, or impose material additional conditions or obligations with respect to, the Scheme or the Acquisition, or otherwise materially challenge or require material amendment of, the Scheme or the Acquisition or the acquisition or proposed acquisition of any System C Shares or the acquisition of control of System C or any member of the Wider System C Group by McKesson UK,

and all applicable waiting and other time periods during which any such third party could decide to take, institute, implement or threaten any such action, proceedings, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction having expired, lapsed or been terminated;

(c) since the Accounting Date and save as Disclosed, there being no provision of any arrangement, agreement, lease, licence, permit or other instrument to which any member of the Wider System C Group is a party or by or to which any such member or any of its assets is or may be bound or be subject, which as a consequence of the Scheme or the Acquisition or of the acquisition or proposed acquisition by McKesson UK or any member of the McKesson Group of any shares or other securities (or the equivalent) in System C or because of a change in the control or management of any member of the Wider System C Group or otherwise, would result, in any case to an extent which is material in the context of the Wider System C Group taken as a whole, in:

(i) any monies borrowed by, or any other indebtedness, actual or contingent, of, any member of the Wider System C Group being or becoming repayable, or being capable of being declared repayable immediately or prior to their or its stated maturity, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited;

(ii) the creation of any mortgage, charge or other security interest, over the whole or any part of the business, property or assets of any member of the Wider System C Group or any such mortgage, charge or other security interest (whenever arising or having arisen) becoming enforceable;

(iii) any such arrangement, agreement, lease, licence, permit or other instrument being terminated or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken thereunder;

(iv) any assets or interests of any member of the Wider System C Group being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged otherwise than in the ordinary course of business;

(v) the rights, liabilities, obligations or interests of any member of the Wider System C Group in, or the business of any such member with, any person, firm or body (or any arrangement or arrangements relating to any such interest or business) being terminated, adversely modified or affected;

(vi) any such member of the Wider System C Group ceasing to be able to carry on business under any name under which it presently does so;

(vii) the value or financial or trading position or profits of System C or any member of the Wider System C Group being prejudiced or adversely affected; or

(viii) the creation of any liability (actual or contingent) by any member of the Wider System C Group (other than in the ordinary course of business);

(d) since the Accounting Date and save as Disclosed, no resolution of System C Shareholders in relation to any acquisition or disposal of assets or shares (or the equivalent thereof) in any undertaking or undertakings (or in relation to any merger, demerger, reconstruction, amalgamation or scheme) being passed at a meeting of System C Shareholders;

(e) since the Accounting Date and save as Disclosed, no member of the Wider System C Group having:

(i) issued or agreed to issue or authorised or proposed or announced its intention to authorise or propose the issue of additional shares of any class, or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible securities (save as (i) between System C and wholly-owned subsidiaries of System C; (ii) for the issue of System C Shares pursuant to or in connection with the exercise of options granted under, or the grant of options under, the System C Employee Share Schemes; and (iii) any System C Shares issued pursuant to the implementation of the Scheme or the Acquisition);

(ii) recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus issue, dividend or other distribution whether payable in cash or otherwise other than dividends (or other distributions whether payable in cash or otherwise) lawfully paid or made by any wholly-owned subsidiary of System C to System C or any of its wholly-owned subsidiaries;

(iii) other than pursuant to the implementation of the Acquisition (and save for transactions between System C and its wholly-owned subsidiaries and transactions in the ordinary course of business) implemented, effected, authorised, proposed or announced its intention to implement, effect, authorise or propose any merger, demerger, reconstruction, amalgamation, scheme, commitment or acquisition or disposal of assets or shares (or the equivalent thereof) in any undertaking or undertakings that is material in the context of the Wider System C Group taken as a whole or any material change in its share or loan capital (save for the issue of System C Shares on the exercise or vesting of options or awards granted before the date of this announcement under the System C Employee Share Schemes or the issue of System C Shares pursuant to the implementation of the Scheme);

(iv) (save for transactions between System C and its wholly-owned subsidiaries and save for transactions in the ordinary course of business) disposed of, or transferred, mortgaged or created any security interest over any asset or any right, title or interest in any asset that is material in the context of the Wider System C Group taken as a whole or authorised, proposed or announced any intention to do so;

(v) (save for transactions between System C and its wholly-owned subsidiaries) issued, authorised or proposed or announced an intention to authorise or propose, the issue of any debentures or (save for transactions between System C and its wholly-owned subsidiaries or transactions under existing credit arrangements or in the ordinary course of business) incur any indebtedness or contingent liability;

(vi) entered into or varied or authorised, proposed or announced an intention to enter into or vary any contract, arrangement, agreement, transaction or commitment (whether in respect of capital expenditure or otherwise) otherwise than in the ordinary course of business which is of a long term, unusual or onerous nature or magnitude or which involves or is reasonably likely to involve an obligation of such a nature or magnitude which is, in any such case, or which is or is likely to be restrictive on the business of any member of the Wider System C Group, which is, in any such case, material in the context of the Wider System C Group;

(vii) entered into or varied to a material extent or authorised, proposed or announced its intention to enter into or vary to a material extent the terms of, or make any offer (which remains open for acceptance) to enter into or vary to a material extent the terms of, any service agreement with any director or senior executive of System C, save for salary increases, bonuses or variations of terms in the ordinary course;

(viii) other than as required by the implementation of the Scheme or the Acquisition, proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any person employed by the Wider System C Group, which is, in any such case, material in the context of the Wider System C Group;

(ix) purchased, redeemed or repaid or announced a proposal to purchase, redeem or repay any of its own shares or other securities (or the equivalent) or reduced or made any other change to or proposed the reduction or other change to any part of its share capital, save for the allotment of shares in connection with the System C Employee Share Schemes pursuant to rights granted before the date of this announcement or as between System C and wholly-owned subsidiaries of System C or pursuant to the implementation of the Scheme or the Acquisition;

(x) other than in the ordinary course of business, waived, compromised or settled any claim otherwise than in the ordinary course of business which is material in the context of the Wider System C Group as a whole;

(xi) save as disclosed on publicly available registers or as envisaged in accordance with the terms of the Acquisition or the Scheme, made any alteration to its articles of association;

(xii) made or agreed or consented to any significant change to the terms of the trust deeds constituting the pension schemes established for its directors and/or employees and/or their dependants or to the benefits which accrue, or to the pensions which are payable, thereunder, or to the basis on which qualification for or accrual or entitlement to such benefits or pensions are calculated or determined or to the basis upon which the liabilities (including pensions) of such pension schemes are funded or made, or agreed or consented to any change to the trustees involving the appointment of a trust corporation which is, in any such case, material in the context of the Wider System C Group taken as a whole;

(xiii) been unable, or admitted in writing that it is unable, to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of any business which is material in the context of the Wider System C Group as a whole;

(xiv) (other than in respect of a company which is dormant and was solvent at the relevant time) taken or proposed any corporate action or had any action or proceedings or other steps instituted against it for its winding-up (voluntary or otherwise), dissolution or reorganisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of all or any material part of its assets or revenues or any analogous proceedings in any jurisdiction or appointed any analogous person in any jurisdiction; or

(xv) entered into any agreement, arrangement or commitment or passed any resolution or made any proposal or announcement with respect to, or to effect, any of the transactions, matters or events referred to in this Condition (e);

(f) since the Accounting Date and save as Disclosed, there having been:

(i) no adverse change or deterioration in the business, assets, financial or trading position or profits or prospects of any member of the Wider System C Group which is material in the context of the Wider System C Group taken as a whole;

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings having been announced or instituted by or against or remaining outstanding against or in respect of any member of the Wider System C Group and no enquiry or investigation by or complaint or reference to any third party against or in respect of any member of the Wider System C Group having been threatened, announced or instituted or remaining outstanding, against or in respect of any member of the Wider System C Group and which in any such case is material in the context of the Wider System C Group taken as a whole;

(iii) no contingent or other liability having arisen or become apparent to any member of the McKesson Group which might reasonably be expected to materially adversely affect any member of the Wider System C Group which is material in the context of the Wider System C Group taken as a whole; and

(iv) no steps having been taken which are likely to result in the withdrawal (without replacement), cancellation, termination or modification of any licence held by any member of the Wider System C Group which is necessary for the proper carrying on of its business which is material in the context of the Wider System C Group taken as a whole; and

(g) save as Disclosed, McKesson UK not having discovered:

(i) that the financial, business or other information concerning the Wider System C Group that has been Disclosed at any time by or on behalf of any member of the Wider System C Group is misleading, contains a misrepresentation of fact or omits to state a fact necessary to make the information contained therein not misleading and which is in any case, material in the context of the Wider System C Group as a whole;

(ii) that any member of the Wider System C Group is, otherwise than in the ordinary course of business, subject to any liability, contingent or otherwise, which is material in the context of the Wider System C Group taken as a whole; or

(iii) any information which adversely affects the import of any information Disclosed at any time by or on behalf of the System C Group and which is material in the context of the Wider System C Group taken as a whole.

Part B: Certain further terms of the Acquisition

1 Subject to the requirements of the Panel, or if required, the Court, McKesson UK reserves the right to waive, in whole or in part, all or any of the Conditions set out in 3 above. The Scheme will not become effective and will lapse unless the Conditions have been fulfilled or (if capable of waiver) waived or where appropriate, have been determined by McKesson UK to be or remain satisfied by no later than the date referred to in Condition 1 (or such later date as McKesson UK, System C, the Panel and, if required, the Court, may allow).

2 McKesson UK shall be under no obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled any of the Conditions set out in 3(a) to (g) (inclusive) above by a date earlier than the latest date for the fulfilment of that Condition notwithstanding that the other conditions of the Acquisition may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

3 If McKesson UK is required by the Panel to make an offer for System C Shares under the provisions of Rule 9 of the Code, McKesson UK may make such alterations to any of the above Conditions, including Condition 1 above, and to the terms of the Acquisition as are necessary to comply with the provisions of that Rule.

4 McKesson UK reserves the right, with the consent of the Panel (where necessary), to elect to implement the Acquisition by way of a Takeover Offer (as defined in Part 28 of the Companies Act) as an alternative to the Scheme. Any such Takeover Offer will be implemented on substantially the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect the change in method of effecting the Acquisition including (without limitation and subject to the consent of the Panel) an acceptance condition set at such percentage as McKesson UK may decide, and in compliance with applicable laws and regulations.

5 The Scheme will lapse if there is a reference to the Competition Commission before the later of the time of the Court Meeting and the time of the General Meeting. In such event System C will not be bound by the terms of the Acquisition or the Scheme.

6 The availability of the Acquisition and this announcement to System C Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements. Further details in relation to overseas shareholders will be contained in the Scheme Document.

7 Under Rule 13.4 of the Code, McKesson UK may only invoke a Condition to the Acquisition so as to cause the Acquisition not to proceed, to lapse or to be withdrawn where the circumstances which give rise to the right to invoke the Condition are of material significance to McKesson UK in the context of the Acquisition. The Conditions set out in 1 and 2 above are not subject to Rule 13.4 of the Code.

8 The Acquisition and Scheme will be governed by English law and will be subject to the exclusive jurisdiction of the English courts.

APPENDIX IISOURCES OF INFORMATION AND BASES OF CALCULATION

In this announcement:

(i) The value placed by the Acquisition on the existing issued and to be issued share capital of System C (approximately £87.0 million) is based on 116,394,316 System C Shares in issue on 2 March 2011, being the last dealing day prior to the date of this announcement, and options being exercised prior to the Scheme Record Time over a further 7,902,336 new issue System C Shares. 

(ii) The closing mid-market share prices of System C Shares on 28 February 2011 referred to in this announcement are derived from the AIM Appendix to the Daily Official List of the London Stock Exchange.

(iii) Unless otherwise stated, the financial information relating to System C is extracted from the Annual Report and Accounts of System C for the financial year to 31 May 2010 and the Interim Report.

(iv) Unless otherwise stated, the financial information relating to McKesson Corporation is extracted from McKesson Corporation's Annual Report on Form 10-K for the fiscal year ended 31 March 2010.

APPENDIX IIIIRREVOCABLE UNDERTAKINGS AND LETTER OF INTENT

Directors

The System C Directors have given irrevocable undertakings to vote or procure the vote in favour of the Acquisition as follows:

McKesson Corporation has received irrevocable undertakings from the System C Directors in respect of their entire holdings in System C Shares, representing approximately 4.29 per cent. of the existing issued ordinary share capital of System C, among other things:

(i) to vote or procure the vote in favour of the Scheme and the General Meeting Resolutions; and

(ii) if McKesson UK exercises its right to structure the Acquisition as a Takeover Offer, to accept or procure the acceptance of such Takeover Offer.

These irrevocable undertakings remain binding in the event of a higher competing offer for System C. The irrevocable undertakings given by the System C Directors will cease to be binding if:

(i) this announcement is not released by 8.00am on 3 March 2011 (or such later date as System C and McKesson UK may agree); or

(ii) the Scheme does not become effective, lapses or is withdrawn in accordance with its terms, unless McKesson UK exercises its right to structure the Acquisition as a Takeover Offer, in which case they will cease to have effect on the withdrawal or lapsing of the Takeover Offer.

Certain Other System C Shareholders

Certain System C Shareholders have given irrevocable undertakings and a letter of intent to vote or procure the vote in favour of the Acquisition as follows:

* As at close of business on 1 March 2011, Blackrock had the ability to control voting rights in 10,656,454 System C Shares. This number may change at the Voting Record Time (see further below).

Irrevocable Undertaking

McKesson Corporation and McKesson UK have received irrevocable undertakings from Liontrust, Gartmore and Guy Hands in respect of the System C Shares set out above representing approximately 19.83 per cent. of the existing issued ordinary share capital of System C, among other things:

(i) to vote in favour of the Scheme and the General Meeting Resolutions; and

(ii) if McKesson UK exercises its rights to structure the Acquisition as a Takeover Offer, to accept or procure the acceptance of such Takeover Offer. 

These irrevocable undertakings will cease to be binding if:

(i) this announcement is not released by 8.00am on 4 March 2011 (or such later date as McKesson UK and System C may agree in writing);

(ii) the Scheme does not become effective, lapses or is withdrawn in accordance with its terms, unless McKesson UK exercises its right to structure the Acquisition as a Takeover Offer, in which case the irrevocable undertaking will cease to have effect on the withdrawal or lapsing of the Takeover Offer; or

(iii) an announcement is made by a third party of a firm intention to make an offer under Rule 2.5 of the Code (whether by way of a takeover offer or a scheme of arrangement) for all of the issued share capital of System C and such proposal provides for consideration of greater value than the value of the consideration under the Acquisition and McKesson UK has not announced a higher revised offer on terms which are no less favourable within seven days of the third party's announcement.

Letter of Intent

In addition, McKesson Corporation and McKesson UK have received a non-binding letter of intent to vote or to procure the vote in favour of the Scheme and the General Meeting Resolutions from Blackrock in respect of the number of shares held by Blackrock at the Voting Record Time. As at close of business on 1 March 2011, Blackrock had the ability to control voting rights in 10,656,454 System C Shares, representing approximately 9.16 per cent. of the existing issued share capital of System C.

APPENDIX IVDEFINITIONS

The following definitions apply throughout this announcement unless the context requires otherwise.

For the purposes of this announcement, "subsidiary", "subsidiary undertaking", "undertaking" and "associated undertaking" have the respective meanings given thereto by the Companies Act.

All references to "pounds", "pounds Sterling", "Sterling", "£", "pence", "penny" and "p" are to the lawful currency of the United Kingdom.

All references to "US$", "$" and "US Dollars" are to the lawful currency of the United States.

All the times referred to in this announcement are London times unless otherwise stated.

References to the singular include the plural and vice versa.