SJH.L Regulatory News (SJH)

St James House plc

New Lottery Joint Venture

("SJH" the "Group" or the "Company")

2 August 2019

Further to the announcement of 8 March 2019, SJH announces it has agreed to establish a lottery joint venture with ZeU Crypto Networks Ltd ("ZeU") a wholly owned subsidiary of St Georges Eco Mining Corp of Montreal Canada ("SGEM"), whose shares are quoted on the Canadian Securities Exchange (the "JV").

As previously announced the material terms are:

1. The Group will hold a 45.0 per cent equity interest in the JV and the other shareholders will be ZeU with 19.9 per cent, SGEM with 19.9 per cent and the balance with outside shareholders.

2. All costs of the JV will be met by ZeU and in return ZeU will charge a service fee that will not exceed 90.0 per cent of the revenues from the JV.

3. The remaining 10.0 per cent of the revenues of the JV will be distributed as a dividend to the shareholders, so the Group will receive 4.5 per cent of the revenues of the JV by way of dividend.

4. SJH will appoint three directors to the JV, from existing Group directors, consultants and employees, and ZeU will appoint two directors.

5. The Group's interest in the JV will be held by PPS Blockchain Ltd, a newly incorporated, wholly owned subsidiary of SJH ("PPSB"). PPSB will issue within three months after the issue of the audited accounts of the JV from the second year of trading, 100,000 non-voting, zero coupon redeemable preference shares of 2p each at par value to ZeU (the "Preference Shares"). The Preference Shares will be redeemable in 21 years from issue, the redemption price to be fixed on issue based on an independent valuation report of the value of the Group's equity interest in the JV at that time. At the discretion of ZeU, the Preference Shares may be exchanged on the basis of 1 Preference Share for every 2 ordinary shares of 1 pence each in SJH ("Ordinary Shares") with notice to be given one day before the Preference Shares are due to be redeemed in 21 years from issue (the "Exchange"), i.e. a maximum of 200,000 Ordinary Shares may be issued, which today would represent 6.42 per cent of the Company's issued share capital, as enlarged by the Exchange.

The purpose of the JV will be to establish and run a blockchain-based lottery using ZeU's blockchain technology, which enables the generation of random numbers to determine winners in a fair and transparent manner. This may be expanded into other gaming and gambling related areas.

The JV will be incorporated and established in Malta and the relevant licence will be applied for from the Maltese authorities once the JV has suitably progressed. Establishment and regulatory approval are anticipated to take several months, but the Group hopes to have this achieved during the current financial year.

The expertise of our management team at the Company's subsidiary, Prize Provision Services Ltd will be made available to the JV. The necessary blockchain technology will be licenced to the JV by ZeU at no additional cost.

As ZeU is meeting the costs of the JV, the risks to the Company are minimal and the potential upside for the Company could be significant, if, as anticipated blockchain-based lotteries capture an increasing share in the lottery market.

Lord Razzall, previously the Non-Executive Chairman of SJH, is a Director of ZeU, and has recused himself from board meetings and resolutions regarding the JV. He holds no common shares in ZeU and owns less than 1 per cent of the common shares of SGEM; he is not a director of SGEM. Lord Razzall is expected to be proposed by the Group as Chairman of the JV.

Graeme Paton, the Group CEO commented, "The establishment of PPSB and the agreement to establish the JV is an exciting development for the Group. Like many FinTech businesses, we have explored the potential to use blockchain-based systems in our product operations, and this JV is our first step, helping us build our expertise in the area, while leveraging our existing skills in lottery management."

Regulatory disclosures

Further to the Company's announcement of 31 July 2019, Roger Matthews is also a director of Solo Asset Management Limited and JRL Investments Limited.

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