Dillistone : Issue of Loan Notes

Dillistone Group Plc

Issue of Convertible Loan Notes

Dillistone Group PLC ('Dillistone', the 'Company' or the 'Dillistone Group'), the AIM quoted supplier of software for the international recruitment industry through its Dillistone Systems and Voyager Software divisions, is pleased to announce that it has agreed to raise £400,000 through the issue of convertible loan notes ('Loan Notes').

On 5 June 2017, Dillistone updated the market on its new product under development ('GatedTalent'). Amongst other things Dillistone announced that it anticipated that development, marketing and other cash costs associated with GatedTalent in the period to 31 December 2018 would be in the order of GBP 2.4 million, excluding any revenue generated in the period. A significant part of these costs will be met by the Group's own cash resources, with the balance met through appropriate fund-raising exercises.

Accordingly, Dillistone is pleased to announce today that it has agreed to raise £400,000 through the issue of convertible loan notes, which will be drawn down fully in one tranche when required by the Company. The funds will be provided by the following Directors and other persons discharging managerial responsibilities ('Noteholders') of the Company:

Mike Love £250,000

Giles Fearnley £75,000

Jason Starr £24,250

Rory Howard £24,250

Julie Pomeroy £10,000

Alex James £1,000

Simon Warburton £8,000

Paul Mather £7,500

The Loan Notes carry an interest coupon of 8.15 per cent pa over their maximum term of 36 months, with a conversion price of 71.6 pence per new Dillistone ordinary share. The interest payments will be payable quarterly in arrears and will be satisfied through the issue of further new ordinary shares or in cash at the individual Noteholders' election. Various rights are built into the agreement for early repayment or conversion.

Prior to agreeing the terms of the Loan Notes, the Company had approached various independent institutional investors. The financial terms of the Loan Notes outlined above are equivalent to those of the most favourable proposal received from the institutional investors, in the Board's opinion, albeit without non-financial restrictions sought to be placed on the wider Dillistone Group.

The issue of the Loan Notes will constitute a related party transaction under AIM Rule 13. Alistair Milne, who is not participating in the Loan Notes and therefore represents an independent Director for this purpose, having consulted with WH Ireland, the Company's nominated advisor, considers that the terms of the Loan Notes are fair and reasonable in so far as the Dillistone shareholders are concerned.

The proceeds from the issue of the Loan Notes will be used, in conjunction with existing resources, to finance the costs initially incurred in connection with GatedTalent and will enable the Company to raise any further funds required for GatedTalent in light of the initial market response thereto.

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

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Notes to Editors:

Dillistone Group Plc (www.dillistonegroup.com) is a leader in the supply and support of software and services to the recruitment industry. It has five brands operating through three divisions: Dillistone Systems, which targets the executive search industry (www.dillistone.com); Voyager Software, which targets other recruitment markets (www.voyagersoftware.com); and GatedTalent, the next generation executive recruitment database (www.GatedTalent.com).

Dillistone has made three acquisitions: Voyager Software in September 2011, FCP Internet in July 2013 and ISV Software in September 2014. The Group operates under the FileFinder, Infinity, Evolve, ISV and GatedTalent brands.

Dillistone was admitted to AIM, a market operated by the London Stock Exchange plc, in June 2006. The Group employs over 100 people globally with offices in London (head office) Basingstoke and Southampton, Frankfurt, New Jersey and Sydney.