LPS (p) (0.04) (0.01)

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1 Media Speculative Buy, 22.5p, Market Cap. 35.4m* is the only independent and publicly quoted esports company in Europe, describing itself as one of the world s leading esports companies. esports or electronic sports is watching or playing competitive video gaming. According to the company, leading titles within the sector include League of Legends, Counter Strike: Global Offensive, Defence of the Ancients 2 (DoTA 2), Call of Duty and Rocket League. The company notes that it enjoys strong relationships with game publishers, players and the wider esports community and has built a strong reputation for delivering high quality competitions, both online and off-line and producing industry leading esports broadcasts. The esports sector is continuing to grow rapidly. Market analysts Newzoo estimate that the global esports audience will reach 385.5m during 2017, a 19.6% rise on the prior year, as more sponsors and broadcasters seek to enter the market. With the majority of this audience being male, under the age of 35 and relatively affluent, this is seen as an attractive demographic for broadcasters and sponsors, with many of these people difficult to reach via conventional channels. According to Newzoo, global esports revenue is expected to grow 41% to $696m in 2017 and by 2020 it forecasts that esports revenue will rise to nearly $1.49bn. Recent newsflow has been positive with deals/ relationships with Microsoft, Mediacom and HP with it to launch in June its inaugural Elite Series, a dynamic new UK esports league format. However, represents a speculative investment opportunity and hence is not without risk given it needs to execute on its strategy going forward. On 12 May 2017, the company announced it had raised 6.25m (gross) in an oversubscribed placing with new and existing institutional and other investors at 20p. The net proceeds will be used for additional working capital, launch the Elite Series, develop proprietary software, invest in personnel and broadcast technology. Application will be made for the placing shares to be admitted to trading on AIM and it is expected that dealings in these new shares will commence on 17 May aiso confirmed that current trading is in line with management expectations. Key Strengths Only independent and publicly quoted esports company in Europe. esports is a fast growing sector - Newzoo estimating that the global esports audience will reach 385.5m in 2017 with revenue expected to grow to $696m in Developed physical and digital assets to host and stream esports competitions online, providing an end-to-end esports solution. Enjoys strong relationships with game publishers, players and the wider esports community. Key Weaknesses Company remains at an early stage of development with currently loss making. Business model yet to be proven in a niche sector with execution and monetarisation of its strategy key going forward. Operates in an evolving industry and developing new technologies involves technical and people risks and ongoing investment which may not be ultimately successful/taken up. may need further funding going forward. Research Disclosures Important Notice Please see pages 4 to 5. Year end 30 June 2016A H1 2017A Revenue 1,446, ,212 LBT (3,136,751) (1,710,876) LPS (p) (0.04) (0.01) Shares in issue Pre* Post placing AIM Ticker 52 week high/low (p) Price spread (p) NMS Analyst Date 157,413, ,663,570 GFIN 28.9p/6.5p 22p/23p 7,500 Trisha Reay 12 May 2017 SVS Securities Plc. Registered in England and Wales no Authorised and regulated by the Financial Conduct Authority, Firm No A Member of the London Stock Exchange and a HM Revenue & Customs Approved ISA Manager. Registered Office: 2 nd Floor, 20 Ropemaker Street, London, EC2Y 9AR. t: +44 (0) f: +44 (0) w: e: info@svssecurities.com 1

2 Background Founded in September 2012 and admitted to trading on AIM in December 2014, notes that it has established itself as one of the world s leading esports* companies. The London-based business enjoys strong relationships with game publishers, players and the wider esports community and notes that it has built a strong reputation for delivering high quality competitions, both online and off-line, and producing industry leading esports broadcasts. * electronic sports & a global term for organised multi-player video game competitions. The company operates a market leading tournament platform, with over 700,000 registered users eligible to compete in its online competitions across a number of leading game titles. It also stages high profile live off-line events, which sees the top players in the world travel to the Arena in London to take part in competitions, which are broadcast online to millions of viewers around the world. stages events featuring a number of top video gaming titles, across PCs, consoles and mobile devices. aims to monetise its position in esports by exploiting the commercial rights relating to its own events, including the Elite Series, launching in June 2017 (see Recent Newsflow section below), and by creating and delivering bespoke events for sponsors and game publishers seeking to engage with the growing esports community. Strategy and esports Sector The company s strategic objective is to establish itself as a leading player in the fast-growing e-sports sector and is the only independent and publicly quoted esports company in Europe. esports is watching or playing competitive video gaming. According to, leading titles within the sector include League of Legends, Counter Strike: Global Offensive, Defence of the Ancients 2 (DoTA 2), Call of Duty and Rocket League. The industry is growing rapidly, not only as a new independent business and industry but according to market analysts Newzoo it is also accelerating the convergence of various established industries. According to Newzoo s 2017 esports market report, esports provides an opportunity for brands, media and entertainment companies to capitalise on the favourite pastime of digital natives and Millennials: playing games and watching game content (see below). noted that the competition between broadcasters for content rights is increasing, with a number of streaming platforms challenging Twitch s market leading position (a video platform and community for gamers) and several leading linear broadcasters, most notably, Turner Sports in the USA, now broadcasting esports content for the first time. Sports teams, clubs and leagues see esports as a new opportunity. For example, Newzoo notes that Paris Saint- Germain was a driving force behind the recently established e-league 1, the French FIFA competition. Newzoo added that the club s marketing efforts proved a success with its League of Legends team generating over 300,000 views on YouTube. Newzoo has estimated that the global esports audience will reach 385.5m in 2017, a 19.6% increase on the prior year, comprising 191m esports enthusiasts and 194m occasional viewers. Growth in emerging markets, such as South East Asia and the Middle East & Africa, increased viewership from TV broadcasts and new franchises such as FIFA and Overwatch are seen as the main drivers of this global audience growth. The esports enthusiast is skewed towards the young and male, the majority in full-time employment and having a good income with them more likely to be consuming content online rather than through traditional media outlets. According to Newzoo, this makes them a desirable target group for different parties, especially big brands. Global revenue in 2017 is forecast to grow by 41.3% year-onyear by Newzoo to $696m. Brands are expected to spend nearly $517m, split into $266.3m on sponsorship, $155.3m on advertising and another $95.2m on media rights. Newzoo estimates revenues will grow with a CAGR ( ) of 35.6% to reach nearly $1.49bn by 2020 with sponsorship seen as the largest revenue stream. Recent Newsflow This has included the following highlights: Delivered Gears of War Pro-Circuit and Halo Championship Series events in both London and Mexico City. Announced the launch of the Elite Series UK in November 2016, a dynamic new esports league format for gamers of any level to be able to compete for the opportunity to be selected into professional esports teams. It will provide the esports community with a new platform to play and watch games in a competitive environment on com. The series in June 2017 is expected to attract an active audience of esport enthusiasts and competitive gamers to generate sponsorship and broadcasting rights for the company and provide a unique set of sponsorship, media and franchise opportunities for potential partners. Contracted with Valve (Counter-Strike: Global Offensive), Capcom (Street- Fighter V) and Rocket League (Psyonix) for these games to form part of the inaugural Elite Series. In January 2017, announced a partnership with Mediacom, one of the world s leading media agencies, to identify, develop and value the sponsorship proposition around the Elite Series. Delivered in January 2017 the first European event as part of the Call of Duty World League, presented by PlayStation 4 programme at the Arena in London. In March 2017, announced OMEN by HP as official hardware provider to the Elite Series. Announced in March 2017 that Rocket League, the awardwinning video game, will be the final game to feature in the Elite Series. Rocket League, the vehicle-based soccer game, has become a growing feature of the esports scene and will be played in multi-player teams of three versus three. This followed the two announcements made earlier in the month that Counter-Strike: Global Offensive and Street Fighter V are to be the other two games to feature and thus completes the full Elite Series programme. 2

3 On 29 March 2017, announced the first four professional esports teams to compete in the Elite Series. They are Team Infused, Excel esports, Reason Gaming and Prophecy and according to represent some of the best of UK-based gaming talent. 30 March announced that Team EnVyUs, the UK esports Industry Awards 2016 Team of the Year, as the fifth team to have signed up to compete in the Elite Series. Envy, the multi-award winning esports team based in the US, will establish new teams to compete in each of the three gaming titles comprising the Elite Series. The team, founded in 2007, is globally-renowned in the esports community and are expected to bring a huge fan base to the series. The company expects to announce three further teams to complete the Elite Series tournament shortly. On 13 April 2017, announced that it had been appointed as the official global tournament partner for Microsoft s Turn 10 Studios Forza Racing Championship on Xbox. Forza RC is a four week competition beginning with an invitational event at Microsoft s flagship store on Fifth Avenue, New York, showcasing 18 of Forza RC s Elite players from around the world. will provide the bespoke platform technology which will host the tournament and broadcast both the online and offline Forza RC competitions around the world for the first time via Twitch, a video platform and community for gamers. Interim Results and Fundraising Assuming completion of the placing, two existing shareholders post admission, Charles Street International Holdings, and Euroblue Investments (latter headed by Nigel Wray) who are subscribing for 9,375,000 and 4,353,125 placing shares will hold 29.99% and 13.93% respectively. The CEO, Neville Upton s holding remains unchanged with his interest falling to 7.8% and Mike McTighe maintaining his % holding at 3.18%. Application will be made for the placing shares to be admitted to trading on AIM and it is expected that dealings in these new shares will commence on 17 May Following admission, the company will have 188,663,570 ordinary shares in issue. The company also confirmed that current trading was in line with management expectations. Conclusion represents a speculative investment opportunity and hence is not without risk with execution key going forward. However, the company is operating in the rapidly growing esports sector and is the only pure play UK quoted entity. Recent newsflow has been positive with the Board believing that the opportunity for the company is now far greater than initial estimates and it is committed to capturing a significant market share as this nascent esports market begins to establish itself in the US and more recently across Europe. Having created a strong reputation, the proceeds of this fundraise will enable to further invest in the Elite Series, as well as investing further in its market leading technology platform and personnel. On 28 March 2017, released its Interim Results for the 6 months to end December These showed revenue up 45% on the same period in the prior year to 902,212 from a mix of sponsorship fees from game publishers, premium subscriptions and ticket sales. There was a LBT of 1.71m reflecting investment in events, the technology platform and people. Cash and cash equivalents as of 31 December 2016 stood at 2.71m. In July 2016, the company raised 3.7m in an oversubscribed placing at 5p. This resulted in the introduction of a new strategic investor, Charles Street International Holdings Ltd on 29.9%, who has strong sector experience. Fundraising On 12 May 2017, announced that it had raised 6.25m (gross) in an oversubscribed placing of 31,250,000 new ordinary shares at 20p with new and existing institutional and other investors. The net proceeds of the placing will be used by the company for additional working capital and to: Further establish s position as a leader in the esports industry via further investment in the Elite Series with 1.7m being utilised to invest in new commercial opportunities. Develop an industry leading proprietary esports technology platform to automate esports competition building with it to invest 0.6m to further develop its technology to increase usability for third parties. Invest in new senior management with 0.5m going towards new personnel. 3

4 Research Disclosures This document has been issued in the UK by SVS Securities Plc (SVS) which is authorised and regulated by the Financial Conduct Authority ( FCA ) and is a member of The London Stock Exchange PLC. This report has been prepared by its author(s) as non-impartial research in relation to Company (the Company ), and is provided for background information only. Analyst Certification: The analyst(s) responsible for preparing this research report or sections of this report, in whole or in part, hereby certify/ies that, with respect to any and all of the securities or issuers that the analyst(s) cover(s) in this report, the views expressed in this report accurately reflect the individual research analyst s personal views. In addition, no part of the research analyst s compensation was, is, or will be directly or indirectly, related to the specific recommendations or view expressed in this report or summary. Disclosure Lists: Author: Trisha Reay Investment Analyst Publication date: 12 May Research Disclosures Applicable to this Recommendation: N/A The clauses below apply to this recommendation: 1. SVS Securities Plc (SVS) is acting as broker, market maker or placing agent. 2. SVS has previously acted for the Company as broker, market maker or placing agent within the last 12 months. 3. SVS holds 0.5% or more of the Company s total issued share capital. 4. SVS holds 5% or more of the Company s total issued share capital. 5. SVS and or its affiliates, holds options or warrants in the Company which on conversion would represent 0.5% or more of the Company s total issued share capital. 6. The authoring analyst or any associate of the authoring analyst has a long or short position in the Company s securities held directly, or through derivatives. 7. A director, officer, employee or agent of SVS Securities Plc is an officer, director, partner, employee or agent of the Company. Recommendation Definitions: Buy - stocks are recommended with this rating where we have a reasonable basis to expect significantly positive share price performance. Speculative buy - stocks are recommended with this rating where we have a reasonable basis to expect significantly positive share price performance with a significantly higher level of downside risk than a buy recommendation. Such stocks may not be generating profits or revenues at the present time. Hold - stocks are recommended with this rating where we have a reasonable basis to expect neither significantly positive or negative share price performance. Sell - stocks are recommended with this rating where we have a reasonable basis to expect significantly negative share price performance. Recommendation history for this recommendation for previous 12 months: Not applicable. Recommendation history for previous 12 months: During the 12 months ended 12 May 2017, 0 of SVS Securities principal recommendations have been on a hold basis and 28 of SVS Securities principal recommendations has been on a speculative buy basis. Recommendation update frequency: Our research is primarily event driven and as a result, there is no planned frequency for updates and rather updates will be published as and when the analyst believes there is a reason to publish. 4

5 Material sources of information: Any facts historical or present relating to the Company, its senior management team or market conditions contained within this report have been obtained from public sources and sources of information that are made available to market professionals such as SVS Securities. The price quoted on page 1 of this report represents the mid-price on 12 May Important Notes: This report is solely intended for clients of SVS Securities as defined under the FCA rules. It is not to be distributed to any other parties. SVS Securities is to be under no responsibility or liability if this document is distributed to other individuals or parties, who have not been invited by the company to receive such information, since our research is not directed at, may not be suitable for and should not be relied upon by any other person. The information presented in this report has not been presented on an independent basis, and is not covered by a policy of independence. SVS Securities may actually or may seek to do business with companies covered in its research reports. Investors should be aware and take into consideration that the firm may have a conflict of interest that could affect the objectivity, independence and impartiality of this report. All statements made and opinions expressed are made as at the date on the face of the material and are subject to change without notice. The facts and opinions in this report have been verified to the best of our ability. SVS Securities conflict management policy and definitions of analyst ratings can be viewed on our website in the section entitled conflicts policy. See Risk Warnings: The Alternative Investment Market (AIM) is a market designed primarily for emerging or smaller companies. The rules of this market are less demanding than those of the official List of the London Stock Exchange and therefore carry a greater risk than a company with a full listing. A prospective investor should be aware of the risks of investing in AIM securities and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities. Forecasts are not a reliable indicator of future performance. You should carefully consider your own financial circumstances before dealing in the stock market. There is an extra risk of losing money when shares are bought in a period of high volatility. The price of shares may change quickly and it may go down as well as up. You may not get back the full amount invested. Past performance is no guarantee of future success. This marketing communication does not constitute an offer to buy or sell such securities. It is presented solely for your information and is provided on the basis and understanding that SVS Securities Plc is to be under no responsibility or liability whatsoever except that which it has under the regulatory system. Comments made represent the opinion of SVS Securities Plc and have been arrived at in good faith. No representation or warranty either actual or implied is made to the accuracy, precision, completeness or correctness of the statements, opinions and judgements contained within this marketing communication. This information does not have regard to your specific investment objectives, investment risk profile or financial background. For this reason, this information may not be suitable for all investors, and if you have any doubts, you should consult your SVS Investment Advisor or an Independent Financial Advisor. SVS Securities Plc. Registered in England and Wales no Registered Office: 2 nd Floor, 20 Ropemaker Street, London, EC2Y 9AR. Authorised and regulated by the Financial Conduct Authority, Firm No A Member of the London Stock Exchange and a HM Revenue & Customs Approved ISA Manager. Contact us for more information Phone : +44 (0) Fax : +44 (0) Web : info@svssecurities.com 5