Sondrel Plc Regulatory News (SND)

FOR IMMEDIATE RELEASE 8 OCTOBER 2013

SANDERSON GROUP PLC

ACQUISITION OF ONE IOTA LIMITED FOR UP TO £5.43 MILLION;

cloud-based, mobile enabled, multi-channel solutions business

PLACING OF 6,363,636 NEW ORDINARY SHARES AT 55 PENCE PER SHARE TO RAISE £3.50 MILLION

Sanderson Group plc ("Sanderson", the "Group" or the "Company"), the software and IT services business specialising in multi-channel retail and manufacturing markets in the United Kingdom and Ireland, is pleased to announce that its subsidiary, Sanderson Multi-Channel Solutions Limited ("SMCS"), has acquired the entire issued share capital of One iota Limited ("One iota"), a leading provider of cloud-based multi-channel retail solutions, for a maximum aggregate consideration of £5.43 million (the "Acquisition"). In addition, Sanderson announces that it proposes to raise £3.50 million (before expenses) by way of a placing of 6,363,636 new ordinary shares at a price of 55 penceper share.

· One iota, based in Rossendale, Lancashire (within 15 miles of the Company's catalogue, ecommerce andonline sales business), provides cloud-based, multi-channel solutions via mobile, tablet and in-store devices.

· For the year ended 31 January 2013, One iota had unaudited turnover of £0.66 million (2012: £0.50million) and profit before taxation of £0.195 million (2012: £0.158 million). At 31 January 2013, One iota's net assets were £0.85 million. For the seven months ended 31 August 2013, One iota had unaudited turnover of £0.61 million and profit before taxation of £0.21 million.

· One iota has developed a proprietary cloud-based modular technology platform, MESH. MESH enablesthe delivery of enterprise grade solutions, delivered in a 'Software as a Service' (SaaS) business modelacross its key offerings which span mobile commerce, ecommerce, social media and a range of in-store technology.

· MESH is used by some of the UK's leading retailers to power their multi-channel retail solutions, hostingthousands of visitors on a daily basis, and securely processing large volumes of transactions.

· One iota is currently working with retailers including: Littlewoods; Very.co.uk; Footasylum; andSuperDry.

· The consideration payable will be satisfied on completion by the payment of an initial cash considerationof £2.38 million and a further £0.75 million by the allotment and issue by the Company of 1,314,636consideration shares at a price of 57.05 pence per share.

· Deferred consideration of £0.30 million will be paid unconditionally in six equal instalments of £50,000over the three year period immediately following completion. Further conditional deferred considerationof up to £2.00 million will be payable subject to One iota achieving certain performance targets over thethree years ending 30 September 2016.

· The Company has conditionally raised gross proceeds of approximately £3.50 million (before expenses)through the allotment and issue of 6,363,636placing shares at 55pence per ordinary share.

· Sanderson plans to make its usual pre-close trading statement towards the end of October 2013 and the directors continue to expect the trading results for the year ending 30 September 2013 to be in line withmarket expectations.

Commenting on the Acquisition, Christopher Winn, Chairman, said:

"We are delighted to welcome the One iota team, led by Damian Hanson and David Hague into the Sanderson Group. Following the acquisition of Catan Marketing Limited in August 2013, the One iota acquisition further strengthens the Company's position in the rapidly expanding mobile enabled ecommerce and online sales markets."

Enquiries

SANDERSON GROUP PLC

ACQUISITION OF ONE IOTA LIMITED

PLACING OF 6,363,636 NEW ORDINARY SHARES AT 55 PENCE PER SHARE

Sanderson Group plc is pleased to announce that its subsidiary, Sanderson Multi-Channel Solutions Limited, has acquired the entire issued share capital of One iota Limited, a leading provider of cloud-based multi-channel retail solutions, for a maximum aggregate consideration of £5.43 million.

Consideration for the Acquisition comprises an initial cash payment of £2.38 million and a further £0.75 million to be satisfied by the issue of 1,314,636Sanderson ordinary shares to be allotted fully paid by the Company at a price of 57.05 pence per share (the "Consideration Shares"), both on completion. Deferred consideration of £0.3m shall be paid unconditionally in six equal instalments of £50,000 over the three year period immediately following completion. Further conditional deferred consideration of up to £2.00 millionshall be payable subject to One iota achieving certain performance targets over the three years ending 30 September 2016.

Sanderson also announces that it proposes to raise £3.50 million (before expenses) by way of a placing (the "Placing") of 6,363,636 new ordinary shares at a price of 55 pence per share (the "Placing Shares").

The Placing is conditional, inter alia, on the directors being granted the necessary share capital authorities by shareholders to allot and issue the Placing Shares and a general meeting has therefore been convened at 10.00 a.m. on 25 October 2013 for such purposes. The approval of the Company's shareholders of the Acquisition itself is not necessary and the funds to be raised from the Placing are not intended to be employed to fund the payment of the consideration relating to the Acquisition.

Background to and reasons for the Acquisition and the Placing

It has been the directors' strategy to complement the organic growth of Sanderson with strategic acquisitions that enhance and broaden the Company's existing operations, particularly in the multi-channel retail division. Sanderson has continued to invest across all its divisions however the board of directors (the "Board") believes that significant market opportunities exist in developing the range and scope of solutions for online sales and ecommerce businesses as well as the development of mobile solutions across all of the Company's target markets.

On 12 August 2013, Sanderson completed the acquisition of Catan Marketing Limited, which provides ecommerce solutions under the 'PRIAM' trading name to over 30 multi-channel retailers. The acquisition of One iota further complements the Company's existing multi-channel retail solutions currently provided to its customers and will enable the acceleration of the Company's own ecommerce product development.

The maximum aggregate consideration for the Acquisition is £5.43 million, of which the initial consideration of £2.38 million in cash will be financed from the Group's existing cash resources. The purpose of the Placing is to maintain the strength of the Sanderson balance sheet, following the Acquisition and to provide funding to allow the Company to pursue opportunities for further growth. The Board anticipates utilising the proceeds of the Placing to accelerate the pace at which the Company is able to bring new solutions to the market, whilst retaining sufficient cash reserves to maintain financial flexibility.

Information on One iota

One iota was founded in January 2010 to develop ecommerce solutions across multiple new technology devices and channels. One iota's head office is based in Rossendale, Lancashire with two further offices in South Wales and London. One iota currently has 20 employees.

One iota has developed a proprietary cloud-based modular technology platform, MESH. MESH enables the delivery of enterprise grade solutions, delivered in a 'Software as a Service' (SaaS) business model across its key offerings which span mobile commerce, ecommerce, social media and a range of in-store technology.

MESH is cloud-based and developed to be channel agnostic, has the flexibility to handle integration into existing systems and can either be deployed as a managed service or utilised as a developer platform. MESH is used by some of the UK's leading retailers to power their multi-channel ecommerce solutions, hosting thousands of visitors on a daily basis, and securely processing large volumes of transactions. One iota is currently working with retailers including: Littlewoods; Very.co.uk; Footasylum; and SuperDry.

Financial overview

For the year ended 31 January 2013, One iota had an unaudited turnover of £0.66 million (2012: £0.50 million) and profit before taxation of £0.195 million (2012: £0.158 million). At 31 January 2013, One iota's net assets were £0.85 million. For the seven months ended 31 August 2013, One iota had unaudited turnover of £0.61 million and profit before taxation of £0.21 million.

Directors

Damian Hanson, CEO & Co-founder

Damian founded One iota in 2010 having worked for 2ergo Group plc ("2ergo") since 2002 as Group Sales Director. Prior to joining 2ergo, Damian worked for GE Capital ITS and National Computing Centre.

David Hague, CTO & Co-founder

David co-founded Wapfly, a mobile software business in 2004, which provided mobile media services for companies such as EMAP, Bauer Media and Condé Nast. In 2009 Wapfly was acquired by 2ergo. David held managerial roles at 2ergo before founding One iota in 2010 with Damian.

Terms of the Acquisition

Sanderson and SMCS have entered into an acquisition agreement in relation to the sale and purchase of the entire issued share capital of One iota. The maximum consideration payable under the acquisition agreement is £5.43 million.

The consideration payable will be satisfied on completion by the payment by SMCS of an initial cash consideration of £2.38 million and a further £0.75 million in Consideration Shares to be allotted fully paid by the Company at a price of 57.05 pence per share, being the average of the middle market quotations of an ordinary share of Sanderson as shown by the AIM section of the London Stock Exchange Daily Official List for the thirty consecutive business days ending on 30 September 2013. The initial cash consideration is being satisfied from the Company's own existing cash resources.

Deferred consideration of £0.30 million shall be paid unconditionally in six equal instalments of £50,000 over the three year period immediately following completion. Further conditional deferred consideration of up to £2.00 millionshall be payable subject to One iota achieving certain performance targets over the three years ending 30 September 2016. If One iota trades in line with its financial targets, consideration of approximately £0.50 million would be payable in respect of both financial years ending 30 September 2014 and 30 September 2015. Consideration of up to £1.00 millionwould be payable in respect of the year ending 30 September 2016. No deferred consideration will be payable in respect of any financial year in which profits before tax fail to exceed £0.30 million and where revenue growth expectations are not achieved.

Certain employees of One iota will be awarded options under the terms of the existing Sanderson enterprise management incentive ("EMI") plan as a replacement arrangement for One iota's existing EMI scheme and to provide an incentive to certain key staff.

Application will be made to the London Stock Exchange for the Consideration Shares to be admitted to trading on AIM. It is expected that admission of the Consideration Shares will occur at 8.00 a.m. on 11 October 2013.

The Consideration Shares will rank pari passu in all respects with the existing Sanderson ordinary shares, including the right to receive all dividends and other distributions declared, made or paid on or after admission.

Details of the placing

The Company has conditionally raised gross proceeds of approximately £3.5 million (before commission and transaction related expenses) through the proposed allotment and issue of the Placing Shares at the placing price of 55 pence per ordinary share, which represents a discount of approximately 3.51 per cent. to the middle market closing price of 57 pence on  7 October 2013, being the last practicable date prior to the publication of this document. The Placing Shares will represent approximately 12.36 per cent. of the enlarged issued share capital of Sanderson.

The proceeds of the Placing, when added to the existing resources available to the Company will be used to finance:

· the development of synergies of the MESH technology with existing Sanderson ecommerce solutions;

· the acceleration of the development of Sanderson mobile solutions; and

· increased sales and marketing activities.

The Placing is conditional upon, inter alia, the resolutions being passed at the general meeting and admission of the Placing Shares becoming effective on or before 8.00 a.m. on 28 October 2013 (or such later time and/or date as the Company and Charles Stanley may agree, but in any event no later than 8.00 a.m. on 11 November 2013).

Current trading and prospects

At the time of the acquisition of Catan Marketing Limited, which was announced on 13 August 2013, Sanderson made the following statement: "Sanderson is continuing to trade well in the second half of the financial year ending 30 September 2013 and management expects trading results to be in line with market forecasts. There are some early signs of improving general economic conditions and this should assist future organic growth."

The Company plans to make its usual pre-close trading statement towards the end of October 2013 and the Board expects the trading results for the year ending 30 September 2013 to be in line with market expectations.

Settlement and dealings

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that admission of the Placing Shares will occur at 8.00 a.m. on 28 October 2013.

The Placing Shares will rank pari passu in all respects with the existing ordinary shares of Sanderson, including the right to receive all dividends and other distributions declared, made or paid on the existing ordinary shares on or after admission.

Following admission of the Placing Shares and Consideration Shares, the total issued share capital of the Company will increase to 51,479,218 ordinary shares. The Company does not hold any shares in treasury and therefore the total number of voting rights in Sanderson is 51,479,218 ordinary shares. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a charge to their interest in, the Company under the Financial Conduct Authority's Disclosure and Transparency Rules.

General meeting

A notice convening the general meeting to be held at the offices of the Company at Sanderson House, Manor Road, Coventry CV1 2GF at 10.00 a.m. on 25 October 2013 is set out in a circular being posted to shareholders today. At the general meeting, the following resolutions will be proposed:

· In the first resolution, the directors are seeking shareholder approval to allot up to an additional 6,363,636new ordinary shares pursuant to the Placing. The new ordinary shares will amount to approximately 14.53 per cent. of the existing issued share capital of the Company and 12.36 per cent. of the enlarged issued share capital. This approval is in addition to the authority given to the Directors at the Company's annual general meeting on 28 February 2013 to allot relevant securities up to an aggregate nominal amount of £1,455,865 (and not in substitution for such authority). The authority sought to be given to the Directors, pursuant to this resolution, to allot shares in the capital of the Company requires an ordinary resolution of the Shareholders at a general meeting under section 551 of the Companies Act 2006 (the "Act"). This authority will expire at the conclusion of the next annual general meeting of the Company or on the date falling 15 months after the date on which this resolution is passed (whichever is the earlier).

· In the second resolution, subject to the passing of the first resolution, the Directors are seekingshareholder approval under section 570 of the Act to allot for cash up to 6,363,636 new ordinary shares in accordance with the Placing without being required first to offer such securities to Shareholders in accordance with the statutory pre-emption rights set out in section 561 of the Act. This authority will also expire at the conclusion of the next annual general meeting of the Company or on the date falling 15 months after the date on which this resolution is passed (whichever is the earlier). The statutory pre-emption rights set out in section 561 of the Act do not apply to the allotment of the Consideration Shares on the basis that the shares are being allotted for non-cash consideration.

Circular

A circular is being posted to shareholders today. Copies of the circular will be available to the public free of charge from the registered office of the Company at Sanderson House, Manor Road, Coventry CV1 2GF and from the offices of Charles Stanley at 131 Finsbury Pavement, London EC2A 1NT, during normal office hours, (Saturdays, Sundays and bank holidays excepted) from the date of this document until the date which is one month following Completion and on the Company's website, at www.sanderson.com.