Digital Bros S p A : Acquisition of 100% of Kunos Simulazioni S.r.l. and decided beneficiaries of the 2016-2026 Stock option plan

PRESS RELEASE

DIGITAL BROS TO ACQUIRE A 100% EQUITY INTEREST IN KUNOS SIMULAZIONI, DEVELOPER OF THE ASSETTO CORSA VIDEO GAME "2016-2026 STOCK OPTION PLAN" BENEFICIARIES HAVE BEEN NAMED

Digital Bros has entered into a preliminary agreement for the acquisition of 100% of Kunos Simulazioni

S.r.l. via the payment of Euro 2,750 thousand and 150,000 newly issued Digital Bros shares

The beneficiaries of the 2016-2026 Stock option plan, the number of options assigned, the exercise windows and the subscription price have been decided

Milan, 20 January 2017 - The Board of Directors of Digital Bros, which is listed on the Star segment of Borsa Italiana and which operates in the digital entertainment sector, met today and approved the execution of an agreement for the acquisition of a 100% equity interest in Kunos Simulazioni S.r.l., the Italian developer of Assetto Corsa. At the same Board meeting, the beneficiaries of the "2016-2026 Stock option plan" (the "Plan"), the number of options assigned, the exercise windows and the unitary subscription price were decided.

Acquisition of 100% of Kunos Simulazioni S.r.l.

Kunos Simulazioni S.r.l. is an Italian company based in Formello (RM) with many years of state-of-the-art experience in the construction of simulators for Italy's leading car manufacturers. Taking advantage of this experience, in 2014 it developed and launched Assetto Corsa, a video game, the Steam PC, Sony Playstation 4 and Microsoft Xbox One versions of which were well received by critics and the public, with more than 1.4 million copies sold globally to date.

In 2015, 505 Games, the Digital Bros Group division that handles international publishing of video games, entered into an agreement for the console versions.

Assetto Corsa provides gamers with 150 vehicles, reproduced in every aspect, sourced from the world's most prestigious automotive brands, such as Alfa Romeo, Audi, BMW, Ferrari, Porsche and many others. Thanks to the use of laser scan technology, every single detail of the world's most famous race tracks has been reproduced with the utmost level of precision making the video game a real sport car simulator.

With this acquisition, Digital Bros Group intends to grow further as a game publisher and developer, capable of achieving success worldwide and of always being ready to satisfy the needs of an increasingly demanding public. The acquisition brings with it full control over intellectual property and the possibility for the Group to invest in future developments of new versions of Assetto Corsa, thus providing the chance to benefit from a brand that is extremely well positioned in the global video games market. The fact that the Group already holds publishing rights for the console version of Assetto Corsa will lead to synergies in terms of brand positioning and the optimisation of advertising expenditure when the rights shall be fully held by the Group.

The transaction envisages the acquisition by Digital Bros S.p.A. of 100% of the quotas of Kunos Simulazioni S.r.l., which is held equally by the two founding owners Stefano Casillo and Marco Massarutto, for a total nominal consideration of Euro 4,341,500 that shall be paid as follows:

• Euro 1,375,000 entirely in cash on the closing date;

• Euro 1,375,000 entirely in cash within one year from the closing date;

• Euro 1,591,500 via the issue of 150,000 new Digital Bros ordinary shares at a price of Euro 10.61 each equating to the average reference price of Digital Bros shares in the previous six months. The issue shall be subject to approval by the shareholders in general meeting on 13 March.

  In the absence of financial statements for Kunos Simulazioni S.r.l. for the year ended 31 December 2016, the purchase price was determined assuming equity at that date amounted to Euro 10,000 and any difference with respect to this amount shall be deemed to be a positive or negative adjustment to the second cash instalment.

  In the year ended 31 December 2015 (latest available financial statements), Simulazioni S.r.l. reported revenue of Euro 3.3 million and profit for the year of Euro 1.7 million. Equity at 31 December 2015 amounted to Euro 3.1 million.

  No particular form of financing has been envisaged for the transaction that will be financed by existing lines of credit and the planned closing date is 30 April 2017.

  The agreement is binding on the parties and is subject to a condition precedent concerning the impact of any significant findings that may arise from due diligence that shall be performed once the financial statements for the year ended 31 December 2016 become available as well as being subject to approval by Digital Bros' shareholders in general meeting.

  The shares to be issued to the two sellers shall be deemed to be fully available once the Board of Directors of Digital Bros has completed the formalities provided for by Art. 2343 of the Italian Civil Code.

  It is not envisaged that the acquisition will significantly impact the Group's previously released prospective financial information.

  "2016-2026 Stock Option Plan" ("the Plan")

  The Board of Directors, in accordance with the mandate granted thereto by the general meeting of shareholders held on 11 January 2017, has approved the assignment of 744,000 options to 14 beneficiaries of the Plan, the number of options assigned, the exercise windows and the unitary subscription price.

  The duration of the Plan shall be until 30 June 2026 and, following the assignment, 744,000 Digital Bros ordinary shares may be subscribed at a price of Euro 10.61 per share, as follows:

  • 223,200 shares as from 1 July 2019;

  • 223,200 shares as from 1 July 2022;

  • 297,600 shares as from 1 July 2025.

    Subscription shall take place upon the payment of Euro 10.61 per share, equating to the average reference price of Digital Bros shares in the six months prior to today's date.

    The assignees of the option rights are:

  • the Chairman of the Board of Directors, Abramo Galante, who has been assigned 200,000 options;

  • the Managing Director, Raffaele Galante, who has been assigned 200,000 options;

  • the Executive Director, Stefano Salbe, who has been assigned 200,000 options;

  • the Executive Director, Dario Treves, who has been assigned 50,000 options;

  • 10 Digital Bros Group employees, who have been assigned 174,000 options.

Raffaele Galante, Managing Director of Digital Bros S.p.A. has announced - "These two transactions clearly highlight the long-term strategy that the Group intends to pursue, that is, to remain present, competitive and professionally prepared in the video game sector, which is constantly evolving. In fact, on one hand, we believe that the Stock Option Plan constitutes a key long-term motivation tool by means of which the Group intends to retain its human capital. On the other hand, the acquisition of Kunos strengthens the IP (Intellectual Properties) portfolio held by the Group and we are certain that, thanks to the undoubtedly, talented professional members of staff that make up Kunos's team, we will achieve great things".

Other motions passed by the Board of Directors:

The Board of Directors has approved the granting of a specialist mandate to Banca Akros effective as of 5 March 2017.

This press release is available on the websites www.digitalbros.com and www.1info.it

DIGITAL BROS GROUP

Listed on the Star segment of Borsa Italiana, Digital Bros Group is a global company that has been operating since 1989 as a developer, publisher and distributor of game entertainment content - video games - in a global market through various channels: retail and digital - web, social, mobile.

Digital Bros Group is active around the world through its own direct operations in Italy, the United States, the UK, France, Spain, Germany and China, with approximately 240 employees.

The Group's head office is located in Milan, from where all activities are coordinated. Digital Bros operates in three markets, namely, development, publishing and distribution, under its own brands 505 Games and Halifax.

For further information:

Digital Bros S.p.A. Stefano Salbe CFO

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