BLINKX PLC ANNOUNCES AUDITED FINANCIAL YEAR 2016 RESULTS

Company records 68% growth in Core programmatic revenues while simultaneously reducing annualized

operating expenses by $40M, during a year of rapid Industry evolution and reaffirms its expectation to

return to full year profitability1 in Financial Year 2017.

London, England and San Francisco, CA – 17 May 2016 – blinkx PLC (BLNX.L, “Company” or

“Group”), today reports audited 2016 results for the year ended 31 March 2016 (“FY2016” or “the

Period”). The Company’s FY2016 conference call will be webcast live at www.blnx.com on 17 May 2016

at 8:30AM BST; 3:30AM EST; 12:30AM PST.

Financial Highlights

Year ended

Year ended

31 March

31 March

2016

2015

$000

$000

Operating Metrics:

Core Programmatic2 Revenue

75,150

44,862

Core Direct Revenue

40,898

58,500

Total Core Revenue

116,048

103,362

Non-Core Revenue

50,668

111,607

Adjusted EBITDA3

(10,476)

3,526

Headcount

274

363

Statutory Metrics:

Revenue

166,716

214,969

Loss before Taxation

(94,284)

(24,800)

Net Cash Used in Operating Activities

(6,288)

(2,989)

Cash, Cash Equivalents & Marketable Securities

78,486

95,734

Cents

Cents

Basic - Loss per Share

(22.88)

(5.19)

Adjusted Basic4 - Loss per Share

(4.42)

(0.94)

Rationalized product portfolio and realigned resources to focus on “Core” mobile, video and

programmatic trading, which grew to $116M (FY2015: $103M) and now represent 70% of total

revenues (FY2015: 48%, FY2014: 25%);

Invested approximately $20M in research and development to build and launch integrated

programmatic platform, ending the Period with a strong debt-free balance sheet with over $78M

in cash, cash equivalents and marketable securities;

Achieved profitability in third quarter of FY2016, ahead of expectations, which was followed by

the usual fourth quarter seasonality;

Executed planned draw down of certain historical, Non-Core product lines, which are no longer

strategic to Company or Industry growth, reducing annual revenues by over $60M;

Approximately $81M of the statutory loss before taxation of $94M was non-cash in nature, due to

depreciation and amortization, share-based compensation and the impairment of goodwill and

accelerated amortization of intangible assets related to the draw down of “Non-Core” product

lines;

Reduced over $40M in annualized operating expenses through extensive Group-wide

restructuring at a cost of $3M, to better align the Company’s cost structure with Core products,

operations and market dynamics;

Operational Highlights

Launched the “RhythmOne” (“1R”) brand and built a massively scalable and highly competitive

programmatic trading platform that drove over 68% growth in programmatic revenues year-on-

year, well ahead of Industry growth rates;

Programmatic platform volumes grew over 1,200% during the Period, trending to almost 1.2

trillion requests per month in Q42016, since production launch in September 2015:

Metric Q12016 Q22016 Q32016 Q42016

Volume Billions 961.8 2,484.4 3,080.4 3,748.9

Desktop5 % n/a n/a 56.7% 54.4%

Mobile5 % n/a n/a 43.3% 45.6%

Fill Rate6 % 0.25 0.22 0.25 0.15

8

Price7 $, (CPM) 0.78 1.02 1.53 1.53

The RhythmOne platform ranks #5 in quality and #6 by volume, as measured by Pixalate (April

2016) and comScore (March 2016) respectively, featuring within the top 5% of the competitive

set;

Introduced market-leading brand safety technology (“RhythmGuard”) to ensure quality of traffic –

inventory scores 97% clean by top measurement partners;

Enhanced viewability and verification measurement through technology integrations with leading

traffic quality partners that include Integral Ad Science, DoubleVerify and Moat, and ad quality

partners, The Media Trust and RiskIQ;

Added 27 programmatic demand side partners, including marquee platforms such as DataXu,

MediaMath, BidSwitch, Criteo and The Trade Desk;

Expanded programmatic supply relationships – adding 38 new partners that include OpenX,

Pubmatic, Sovrn, Rubicon Project and AOL;

Forged or expanded direct relationships with major brands such as UPS, Verizon, AutoZone,

Macy’s, JC Penney, Iams, Pedigree and Kellogg’s Froot Loops;

Signed over 500 publisher partners, including Monster, Topix, Hubbard Broadcasting, The Daily

Beast, Vice Media, Venture Beat and Mail.com;

Appointed Mr. Raj Chellaraj as Chairman of the blinkx Board of Directors; and

Appointed Ms. Andy Cunningham as an Independent, Non-Executive Director.

Commenting on the results, S. Brian Mukherjee, CEO of blinkx, said: “As anticipated, FY2016 was a year

of integration and investment for the Company, during a Period of rapid Industry evolution. We undertook

a broad restructuring of the business to focus on our Core capabilities of mobile, video and programmatic

trading, under the RhythmOne brand – perfectly aligned with dominant Industry growth trends.

Simultaneously, we accelerated the draw down on certain legacy “Non-Core” product lines that are no

longer considered strategic to the Company’s future, resulting in short-term impact on revenue and

profitability. As a result of this deliberate shift, Core products now represent over 70% of our revenues,

compared with less than less than 25% two years ago.

Within the course of the financial year, blinkx rebranded the majority of its commercial offerings and

launched “RhythmMax,” its fully integrated programmatic trading platform. The platform brings together

our comprehensive, cross-device, cross-format inventory through a single point of access. Through

RhythmMax, the Company aims to unify the entire supply side of the value chain – eliminating

intermediary, margin-compressed point solutions and streamlining the value exchange between consumers

and advertisers, via the content users consume. Programmatic revenues for FY2016 grew far in excess of

Industry growth rates, driven by the RhythmMax platform. This platform now provides us the structural

foundation and critical mass upon which to build momentum for future growth.

During the Period, blinkx aligned its engineering, product, sales, marketing and operations teams around

the Company’s unified RhythmOne proposition. This resulted in a reduction of approximately $40M, or

over 40%, of the Company’s annualized operating expenses. We believe the significant steps we took in

FY2016 to realign the business around our Core capabilities and achieve operational efficiency have set

the stage for higher quality top-line growth and a return to full year profitability1 in FY2017.”

Notes:

1. On an adjusted EBITDA basis, which is a close proxy for cash flow from operations.

2. “Programmatic” characteristically refers to the use of software to purchase digital advertising on a data-driven basis, as

opposed to the “direct” process, where person to person negotiations, “insertion orders” and a manual process is used to

execute campaigns.

3. This press release contains references to adjusted EBITDA and adjusted Loss for the Period attributable to equity holders of

the parent. These financial measures do not have any standardized meaning prescribed by IFRS and are therefore referred to

as non-GAAP measures. The non-GAAP measures used by blinkx may not be comparable to similar measures used by other

companies. Adjusted EBITDA is defined as profit/(loss) attributable to equity holders of the parent before interest, other

expenses, taxes, depreciation and amortisation, share based payment expense, acquisition and exceptional costs and other

expense. Management believes that this measure is a useful supplemental metric as it provides an indication of the results

generated by the Company’s principal business activities prior to consideration of how the results are impacted by non-

recurring costs, how the results are taxed in various jurisdictions, or how the results are affected by the accounting standards

associated with the Group’s share based payment expense.

4. Adjusted Loss for the Period attributable to equity holders of the parent before acquisition and exceptional costs,

amortization of purchased intangibles and other (expense)/income.

5. Volume of transactions (ad requests) processed through the platform. Q12016 and Q22016 split not available, as the platform

was still in pre production (select beta release) state.

6. Proportion of the above transaction volume monetized. Note the significant but usual sector wide Q42016 (Calendar Q1)

slowdown in demand.

7. Average price across all ad formats, expressed as Cost per Mille or Thousand Impressions.

8. Q42016 fill rate represents the seasonally-weaker calendar Q1, i.e., the period covering Jan-March 2016.

For further information please contact:

Analyst and Investor Contact Dan Slivjanovski

blinkx plc

(US) 415 655 1450

Financial Media Contacts Edward Bridges/Charles Palmer

FTI Consulting

(UK) 020 3727 1000

NOMAD and Joint Broker for blinkx plc Christopher Wren

Citigroup Global Markets Limited

(UK) 020 7986 9756

Joint Broker for blinkx plc Lorna Tilbian/Mark Lander/Nick Westlake

Numis Securities Limited

(UK) 020 7260 1000

Overview

FY2016 was a Period of rapid evolution within the online advertising Industry. As the Company indicated

at the start of the Period, the operating themes for financial year 2016 were integration and investment.

Over the past year, the Company strengthened its Core strategic capabilities of mobile, video and

programmatic trading and took the difficult but necessary decision to completely restructure the way in

which it does business – launching a unified, cross-device programmatic platform and consolidating the

Company’s comprehensive supply channels through a centralized point of access. Concurrently, blinkx

accelerated its drawdown of certain historical product lines that are considered Non-Core to future growth

and will no longer be the focus of ongoing operations.

Performance for FY2016 was led by strong growth in Core revenues – specifically programmatic trading.

While blinkx experienced an overall operating loss in FY2016 as a result of the anticipated decline in

Non-Core revenues, management took decisive steps to align the Group’s cost structure with changing

market conditions and profitability profiles of its product mix. Despite the active elimination of Non-Core

revenues, the Company’s adjusted2 EBITDA loss for the Period was in line with expectations, while

intense financial and operating discipline resulted in a balance of cash, cash equivalents and marketable

securities that slightly exceeded expectations.

For the first time in 2015, US programmatic ad spend outpaced traditional digital ad spend to account for

59% of total digital display ad spend – a trend that is expected to continue. The market has also changed in

the way it buys advertising. Advertisers have shifted from buying publishers’ inventory in the traditional

sense to buying audiences regardless of device and format. To match these shifts, blinkx invested

significantly in its programmatic capabilities during the Period, launching its unified and unique

programmatic platform, RhythmMax, which provides a comprehensive marketplace for automated buying

and selling of online ads. Importantly, the RhythmMax platform was purpose built to reach highly targeted

audiences across all devices and all formats, at significant scale. The Company consolidated its inventory

through RhythmMax, including owned, controlled and extended supply sources. As a result of the

platform launch and supply consolidation, RhythmMax now represents one of the Industry’s highest

quality (ranked #5 according to Pixalate) and largest (ranked #6 in the US by comScore) supply footprints

by volume, as at April 2016 and March 2016, respectively. By bridging the entire supply chain,

RhythmMax helps to streamline advertiser-consumer interactions, and lets blinkx capture a greater share

of each advertising dollar spent.

During the Period, blinkx integrated RhythmMax with nearly 30 Industry-leading programmatic demand

partners, such as The Trade Desk, Media Math, DataXu, Criteo and Bidswitch. blinkx expects demand-

side integrations to ramp steadily, with a corresponding increase in programmatic revenues. On the brand

side, blinkx has attracted new and repeat advertisers, including Kellogg’s, UPS, Verizon, AutoZone,

Macy’s, JC Penny, and Mars Petcare. The Company also bolstered supply side integrations with

approximately 40 top-tier programmatic supply partners, including OpenX, Pubmatic, Rubicon Project,

Sovrn and AOL. All of these integrations are now live within RhythmMax.

Through RhythmMax, blinkx has taken highly visible measures around brand safety – a prerequisite to

attracting and maintaining programmatic advertising demand spend. According to a study released by the

IAB in 2015, ad fraud is costing the US marketing and media Industry an estimated $8.2 billion each year.

During FY2016, the Company launched its proprietary brand safety filtering technology, RhythmGuard,

which is designed to eliminate suspicious and underperforming traffic before it reaches the marketplace –

enhancing ROI for advertisers and maximizing yield for quality publisher partners. Designed to

complement third-party verification tools, RhythmGuard represents the Company’s initiative to combat

fraud, and aligns RhythmMax with emerging traffic and ad quality standards and requirements. These

infrastructure and technology enhancements have required investments in hardware and software, as well

as traffic and ad quality detection and monitoring technology, which blinkx believes will be critical for the

future of the Company and Industry.

Complementing its RhythmGuard brand safety initiative, blinkx also has partnered with high profile, well-

respected viewability and verification vendors the Company believes will be instrumental in establishing

common standards for the Industry. blinkx has contributed to help shape these standards through its work

with OpenVV.org, membership in Interactive Advertising Bureau (“IAB”), participation in the

Trustworthy Accountability Group (“TAG”) initiative, and work with several leading third-party experts,

including Nielsen, Pixalate, comScore, Integral Ad Science, Moat and DoubleVerify. The combination of

these partnerships and RhythmGuard helps to ensure blinkx’s audience quality consistently meets

advertisers’ requirements in this competitive environment. blinkx expects to see a corresponding increase

in price and margins over the long term.

blinkx also has continued to enhance its mobile and video advertising offerings for brands. As users’

attention is increasingly fragmented due to multi-screen, simultaneous viewing across devices, advertisers

are tasked with targeting individuals, not devices or sites. This cross-screen expansion is especially

apparent in mobile and video growth rates. According to eMarketer, mobile ad spend in the US is

expected to exceed desktop spend, with channel growth of 15% Compound Average Growth Rate

(CAGR) over the next five years. Online video leads segment growth, with 14% CAGR, while mobile

video ad spend is expected to grow at an impressive 18% CAGR. As the lines between mobile and

desktop blur, blinkx’s ability to execute user-centric cross-screen advertising is critical to growth, and will

be an area of ongoing investment within its marketplace.

Finally, the Company consistently displayed strong operating discipline throughout the year. blinkx took

critical steps to optimize the Group’s cost structure and better align with changing Industry conditions,

revenue mix and profitability profile. As a result of these actions and the Company’s integration efforts,

blinkx was able to reduce over $40M in annualized operating costs across all areas of the business. This

included consolidating its physical locations from 21 to 12 globally, building a highly efficient and

scalable hybrid cloud infrastructure and decreasing the number of data centers from 12 to 5. In addition,

the Company reduced overall headcount by almost a third – a reflection of integration synergies. Such

moves, while difficult, resulted in significant business efficiencies. blinkx’s ability to preserve and extend

its resources during a time of significant Industry change will be instrumental as the Company looks to

drive future organic and acquisition-related growth.

Market

Online advertising continued to grow in 2015. Today, worldwide digital ad spending accounts for 34% of

total media ad spending, or approximately $187 billion – and is projected to grow at a 13% CAGR over

five years (2016-2020). By 2020, worldwide digital ad spending is projected to ramp significantly to $301

billion, which would equate to almost half (45%) of total media ad spending.

Programmatic trading, or the automated buying, selling and fulfillment of ads using technology, is

becoming the most popular buying modality for display, mobile and video advertising. In the US,

eMarketer estimates that programmatic display ad spending will reach $22 billion in 2016. Of that

amount, mobile programmatic accounts for two out of three programmatic dollars (68%, or $15 billion)

spent. Currently, however, a significant majority of mobile advertising bought programmatically is

performance-focused (e.g., driving an app install). However, video – and especially mobile video – is

quickly becoming the advertising format of choice, and is expected to gain programmatic adoption. Like

TV, mobile video allows for immersive and engaging advertising experiences in extended and short

forms. Unlike linear TV, however, mobile video can be targeted and customized to consumers wherever

and whenever they are viewing content, offering the potential for far more personalization.

The ability to identify individuals using first-party data regardless of the device they are using is fast

becoming an Industry imperative. The potential for true user targeting has driven major deals in the

Industry. This trend will likely continue, with key partnerships being forged between telecoms and ad tech

firms as they combine user data with the ability to deliver, optimize, measure and monetize ad campaigns.

Key sector trends of note include the following:

1. Programmatic buying in 2015 has surpassed direct sales. According to eMarketer, for the first time,

programmatic spending outpaced direct spending in 2015, accounting for 59% of total US digital display

ad spend, or $16 billion. The programmatic share of total US digital display ad spending is expected to

surge to 72.0% by 2017 ($27 billion), fueled by growth of private marketplace and programmatic direct

deals, the rapid rise of programmatically-driven mobile ad revenues, and the increased availability of more

premium inventory via such channels. Real-Time Bidding (auction-based) remains an important part of

the programmatic equation as well, representing 47% of estimated programmatic ad spend in 2016 at over

$10 billion. Mobile programmatic ad spending will reach $15 billion in 2016 and account for 70% of total

US Programmatic display ad spending.

2. An overwhelming majority of Internet users consumes video. In the US, nearly two-thirds of the

population views digital video. According to Cisco, global consumer Internet traffic will constitute 80% of

all consumer traffic by 2019 – up from 64% in 2014. Concurrent with increased consumption, video

advertising spending is projected to increase at 14% CAGR over the next five years. According to

eMarketer, advertisers will spend $10 billion on video this year and that figure is projected to increase

significantly by 2020, reaching an estimated $17 billion.

3. Smartphone and tablet use is surging – and advertising dollars are following suit. In 2016, nearly

80% of US Internet users use a smartphone and 63% use a tablet. Moreover, at over three hours per day

(3:06) in 2016, over one-quarter (26%) of US users’ total time spent with media occurs on mobile devices

(non-voice) – a figure that exceeds daily desktop/laptop Internet use by almost an hour (55 minutes). In

line with this trend, mobile advertising spending in 2016 is expected to outpace desktop/laptop spending

by $18.4 billion. Within mobile, video ad spending is projected to reach nearly $4.2 billion in 2016

(almost 10% of total mobile spending).

4. New consumer preferences are emerging. According to Deloitte (March 2016), 27% of US Internet

users use some variety of ad blockers. This issue came into relief in September 2015 with the launch of

Apple’s iOS 9 with ad blocking options built into the operating system. While consumer backlash to the

proliferation of online advertising and data collection tools may be understandable, ads are an integral part

of the value exchange between consumers and content providers. In response to ad blocking, participants

from across the ecosystem have adopted strategies to encourage ad viewing. Publishers are employing a

number of tactics to preserve monetization – serving more “native” ads that are delivered directly from

publishers’ content management systems so that they are harder to block, installing anti-ad blocking

software and enabling pay walls to access content. Advertisers, brands and media technology companies

are seeking to develop advertising that is more engaging and relevant to consumers. During the Period,

the IAB issued standards for L.E.A.N (Light, Encrypted, Ad choice supported, Non-invasive) ad formats,

which blinkx has adopted and made them available to advertisers. Currently, the impact of ad blocking on

blinkx’s business has been minimal. However, ad blocking does highlight a larger trend – the need to

develop a sustainable value exchange proposition that is respectful of consumer choice, impactful for the

advertiser and sustainable for the content owner.

5. Technology is shifting. Technology shifts to enhance consumer experiences online continue to

proliferate. A key development has been the blocking of Flash ads by browsers (used extensively for

online video but blocked on iOS devices) in favor of the more universal HTML5 standard that runs

seamlessly on all mobile and desktop devices. This technology change is driving faster load times for

mobile web pages, which are becoming indistinguishable from those of mobile apps and deliver a better

consumer experience in the long term.

6. Big data is growing in importance as a means of targeting: Increasingly, brands are looking to marry

their first-party data with third-party proprietary data to better segment, target and deliver relevant

advertising messages to their audiences. This is part of an overall trend in the Industry that sees

advertising technology converging with marketing technology. One of the key benefits of aggregating

supply is blinkx’s ability to leverage the data across its significant supply footprint, including 300M

device IDs and data from campaigns run across the Company’s platform. Not only will this allow blinkx

to offer more effective cross-device targeting, it also presents an opportunity to enhance location and

beacon-based targeting, as well as ad customization. The Company has already begun to explore

packaging this data in ways that resonate with advertisers, making its campaigns more attractive because

of their ability to reach discreet user segments with a compelling message any time, on any device, at

scale.

7. Consolidation is increasing. Industry consolidation continues to be an ongoing trend as the ad tech

space matures. According to Ad Exchanger, there were over 120 major M&A transactions in the ad tech

sector in 2015 alone – primarily oriented around programmatic and mobile deals. Point solutions are

becoming increasingly unsustainable and some platforms that have achieved substantial scale have not yet

hit key profitability milestones. Industry consolidation also represents a potential path to scale quickly. As

parts of the ecosystem combine, there will be opportunity to augment the Company’s supply footprint.

Technology

During the Period, blinkx invested approximately $20M in products, platforms, research and development,

with a priority focus on programmatic trading and cross-screen advertising – inter-related elements that

are essential to the Company’s future growth. blinkx launched its RhythmMax programmatic platform and

has seen exchange requests increase by more than 1,200% from April to March, trending to almost 1.2

trillion requests/month. To support this growth, blinkx has updated its regional data centers and increased

capacity (server and network). The platform is now integrated with nearly 30 of the largest programmatic

partners globally, including The Trade Desk, Media Math, DataXu, Bidswitch, Feature Forward and

Criteo, to name a few. These integrations let agencies and brands access blinkx’s inventory on-demand.

With programmatic trading gaining in prominence, blinkx’s unified platform allows the Company to

represent its inventory through automated trading channels in a manner that maximizes revenue share for

the enterprise. The volume of impressions within the platform is currently being monetized at average rate

0.23% for the Period – representing an inherent growth opportunity for the Company, as additional

demand integrations are completed. Importantly, high-value ad formats such as video, rich media and

native, remain to be fully integrated and scaled, which could materially increase average price.

blinkx also made critical enhancements to its RhythmGuard technology, including additional automated

protections against malware ads and post-bid domain masking by publishers. These added protections help

to increase transparency around supply quality and brand safety. The result is a highly differentiated

marketplace proposition that allows the Company to enrich inventory made available to advertisers

through its programmatic channels, and drive greater demand. Through RhythmMax, the Company can

provide one of the cleanest sources of pre-filtered, verified and targetable inventory in the Industry, at

scale – over 97% clean according to key measurement partners. These capabilities make the platform

strategically important to key ecosystem partners, including Mobile and Cable Carriers, Web, Video and

App Developers, Content Publishers, Trading Desks, Agencies and Marketers. As at April 2016, the

Company ranked #5 on Pixalate’s Trusted Seller Index.

On the supply side, blinkx released a comprehensive management platform for publishers and developed a

single, universal “tag,” that helps publishers better manage and monetize their inventory, and enables

blinkx to take advantage of opportunities for exclusive and first look inventory. The tag provides greater

transparency into ad placements and deepens the Company’s relationships with key publisher partners. In

addition, the Company released a new version of its software development kit (SDK) for mobile app

developers, allowing for easier installation and campaign management as well as deeper reporting features

– including integration with one of the Industry’s the top mobile performance and viewability partners,

Moat. The SDK supports all standard video and rich media ad units and includes emerging viewability

standards for both display and video.

blinkx also made significant enhancements to its Advanced Creative Platform (ACP), a self-serve utility

that allows demand partners to dynamically build custom rich media ads. ACP is expected to drive parallel

revenue streams – a modest software-as-a-service (SaaS) revenue from demand partners that access the

tool independently for ad production, and greater incremental media fees for advertisers that use the tool

as a value-add platform within the blinkx programmatic marketplace.

The Company also designed new creative ad units in support of its mobile video business, and converted

all Flash ad units and infrastructure to HTML5, ensuring creative is no longer Flash- dependent as demand

partners switch to HTML5.

Taken together, these developments represent a significant step forward as the Company coalesces its

products and technology to better serve advertisers and publishers in a competitive and challenging

marketplace, and continues to invest in capacity to drive future growth.

Integration

Integration efforts during the Period have been focused on eight key areas: Products, Technology,

Operations, Marketing, Sales, Finance, Legal and Human Resources. Achievements included aggregation

of all supply sources so that they are now accessible through our unified programmatic platform,

RhythmMax, consolidation of office locations, strategic staff reductions, and integration of legacy

infrastructure and technology to reduce redundancies and streamline operations.

blinkx’s signature achievement for FY2016 was the launch of the RhythmMax platform at mid-year and

the subsequent integration of all supply sources and ad servers. RhythmMax now provides a centralized

platform to access cross-device, cross-format RhythmOne inventory across Owned, Controlled and

Extended supply sources. It also provides advertisers with the flexibility to purchase ads through their

desired buying modality, whether traditional direct deals, private “walled garden” marketplaces with

closed site lists, or via auction-based mechanisms, all of which use the OpenRTB (Real-Time Bidding)

protocol. Through RhythmMax, advertisers can reach target audiences to achieve measurable ROI at their

desired spend level through a single entry point.

During FY2016, the Company closed or consolidated nine physical locations. In line with its integration

initiatives, the Company made staff reductions across sales, advertising operations and publisher

operations. As a result, headcount was reduced to approximately 274 from a peak of over 364 employees,

and the Company consolidated its offices from 21 to 12 globally. blinkx also built a highly efficient and

scalable hybrid cloud infrastructure that facilitated reduction of its operations infrastructure from 12

legacy and acquired to 5 globally distributed data centers.

During the Period, key integration milestones included consolidation of reporting, invoice and HR

platforms, the streamlining of banking and vendor relationships, and transition to a new human resources

management platform. Marketing launched both RhythmOne and RhythmMax brands, built new corporate

and trade websites, and significantly ramped content development and lead generation efforts. Sales teams

have been fully integrated across regions, and a comprehensive training program was launched to facilitate

unified, cross-platform sales that advance the RhythmOne proposition.

The progress of integration is in line with or ahead of expectations and provides a strong foundation from

which to realize growth and profitability. These measures have resulted in a reduction of $40M in

operating costs on an annualized basis, through Group-wide restructuring at a cost of $3M. Moreover, the

Company has now fully integrated its technology stack and is poised to reap the benefit of having a true

cross-screen, cross-format offering that will enable advertisers to reach their target audiences whenever

and wherever they consume content and to meet their desired KPIs.

Board Changes

During the Period, blinkx made several changes to the Board and Executive teams. Mr. Raj Chellaraj, the

Group’s independent Non-Executive Director, assumed the role of Chairman of the blinkx Board of

Directors. In addition to his role as Chairman of the Board, Mr. Chellaraj serves on the Company’s

Nomination and Audit Committees.

During the Period, Mr. Anthony Bettencourt, former Chairman and Non-Executive Director of blinkx’s

Board, resigned from the Board. Mr. Bettencourt had been Chairman of the blinkx Board of Directors

since 2008.

Additionally, Ms. Andrea Lee “Andy” Cunningham joined the Board as an independent Non-Executive

Director. Andy brings over 30 years’ experience in corporate, product and brand marketing with some of

the most world’s most recognizable brands.

Financial Highlights

Total revenue for FY2016 was $166.7M compared with $215.0M in FY2015, materially in line with

Company guidance. The change in revenue was principally driven by a planned reduction of our Non-

Core revenue streams, which was partially offset by an accelerating trend toward programmatic trading of

ads. Cost of revenue for the Period was $100.4M, which was down 17% from prior year figures, but

increased as a percent of revenue by 4%. We continued to see the shift in product mix toward fast growing

but lower margin products. Total headcount reduced to 274 (2015: 363) primarily driven by proactive

steps taken during the year to reduce its Operating Expenses by approximately $40.0M on an annualized

basis to better align its operations with its emerging product lines. The Group delivered an adjusted2

EBITDA loss of $10.5M (FY2015: adjusted2 EBITDA of $3.5M). Basic loss per share was 22.88 cents

(FY2015: Loss per share: 5.19 cents) and diluted loss per share was 22.88 cents (FY2015: Diluted Loss

per share: 5.19 cents).

The Company has taken decisive steps to draw down various historical product lines that were considered

Non-Core. These steps have simplified operational complexity, addressed certain issues impacting the

Industry and established the foundation for future growth. Based on these actions and an adjusted forecast

due to weaker than expected performance of some products, certain value of Goodwill related to Non-

Core legacy assets acquired was considered impaired, as the recoverable amount was less than its carrying

value, leading to a non-cash impairment charge of $50.3M. In addition, the Company accelerated a

$12.0M non-cash write off of certain intangible assets related to legacy platforms and products. As a

consequence, the Company reported a Net loss of $92.3M for FY2016 compared with a Net loss of

$20.8M for FY2015.

The Group’s balance sheet remains strong, with a closing cash, cash equivalents & marketable securities

balance of $78.5M (FY2015: $95.7M). Excluding payments for exceptional costs of $3.0M the Company

used $3.3M in operating activities. Excluding investments in marketable securities, net cash used in

investing and financing activities totaled $11.0M, principally reflecting the cash outflows for investments

in the technology platform, payment of deferred acquisition consideration and capital lease payments.

Outlook

FY2016 was a transformational year for the Industry and the Company. The digital advertising Industry is

projected to show continued strong structural growth, as offline spend continues to migrate online. Key

growth vectors of mobile, video and programmatic trading are expected to outpace all other formats and

channels. Against this backdrop, however, the market continues to polarize between entities that provide

a fully integrated offering and are gaining share, at the expense of fragmented point solutions that face

deficits of scale and scope, and will need to consolidate in order to overcome challenged economics.

blinkx made enormous strides during the past year in restructuring its operations and integrating its

offering through RhythmMax. RhythmMax not only provides the Company with an Industry-leading

technology platform to drive scale, but also a unique commercial platform to integrate and consolidate the

value chain, and accelerate organic growth and recapture margins.

In the coming year, the Company expects to intensify its focus on Core products and, specifically, its

programmatic initiatives to fuel high quality organic growth – deriving from a number of well understood

growth drivers. These include: the continued migration and consolidation of diversified inventory sources

onto the RhythmMax platform; higher pricing as a result of value-added targeting through proprietary

data; increased throughput from existing supply and demand side partners; new direct and programmatic

supply and demand side partners; delivery of high impact, high margin video and rich media campaigns

programmatically; and the establishment of private (trading) marketplaces to directly connect preferred

supply and demand partners within the RhythmMax platform.

blinkx enters the new financial year in a strong, competitive position, with a product portfolio that is well

aligned with Industry growth trends. The Company continues to anticipate that FY2017 will be a Period of

revenue stabilization, with strong growth in Core revenues and a return to full year profitability1.

The Company now has the unique combination of technology, talent and relationships in place to scale

both organic and inorganic growth as the Industry continues to evolve and consolidate. With Core product

areas constituting a critical mass of revenues, the Company expects FY2017 to show continued mobile,

video and programmatic growth. The scale of RhythmMax – in both volume and revenue terms – will be

a major driver of growth, as advertisers seek to maximize their return on advertising spend by reaching

highly targeted audiences, across devices and formats.

BLINKX PLC

CONSOLIDATED INCOME STATEMENT

Results for the year to 31 March 2016

(in thousands, except per share amounts)

YEAR

ENDED

YEAR

ENDED

31 MARCH

2016

31 MARCH

2015

NOTE

$'000

$'000

Revenue

166,716

214,969

Cost of revenue

(100,440)

(120,445)

Research and development

(30,196)

(30,068)

Sales and marketing

(41,536)

(58,591)

Administrative expenses

(14,478)

(13,651)

Total cost and expenses

(186,650)

(222,755)

Loss from operations before acquisition and exceptional costs and

amortization of purchased intangibles*

(19,934)

(7,786)

Amortisation of purchased intangibles

Research and development

(3,030)

(3,525)

Sales and marketing

(5,830)

(8,763)

Administrative expenses

(250)

(72)

(9,110)

(12,360)

Acquisition and exceptional costs

6

(65,295)

(4,662)

Loss from operations

(94,339)

(24,808)

Other expense

(39)

(12) Finance income

256

58

Finance costs

(162)

(38) Loss before taxation

(94,284)

(24,800)

Tax

3

2,031

4,001 Loss for the year attributable to equity holders of the parent before

acquisition and exceptional costs, amortization of purchased intangibles

and other (expense)/income**

(17,809)

(3,765)

Loss for the year attributable to equity holders of the parent

(92,253)

(20,799)

Note

Cents

Cents

LOSS PER SHARE

BASIC

4

(22.88)

(5.19)

ADJUSTED BASIC**

4

(4.42)

(0.94)

DILUTED

4

(22.88)

(5.19)

ADJUSTED DILUTED**

4

(4.42)

(0.94)

* Adjusted for acquisition and exceptional charges of $65.3m (2015: $4.7m) and amortization of purchased intangibles of $9.1m (2015: $12.3m). ** Adjusted for acquisition and exceptional charges of $65.3m (2015: $4.7m), amortization of purchased intangibles of $9.1m (2015: $12.3m) and other

expense of $0.04m (2015: $0.01m).

BLINKX PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Results for the year to 31 March 2016

(in thousands)

YEAR

ENDED

YEAR

ENDED

31 MARCH

2016

31 MARCH

2015

$'000

$'000

Loss for the year

(92,253)

(20,799)

Other comprehensive loss which is potentially reclassifiable to loss:

Exchange difference on translation of foreign operations

(34)

(333)

Unrealized gains on Marketable Securities

19

-

TOTAL COMPREHENSIVE LOSS FOR THE YEAR

(92,268)

(21,132)

BLINKX PLC

CONSOLIDATED BALANCE SHEET

As at 31 March 2016

(in thousands)

AS AT

AS AT

31 MARCH 2016

31 MARCH 2015

$'000

$'000

ASSETS

NON-CURRENT ASSETS

Goodwill

37,207

87,520

Intangible assets

24,200

43,806

Property, plant and equipment

3,358

3,340

Other receivables and restricted cash

828

1,071

Deferred tax asset

19,208

19,128

Marketable securities

29,539

-

114,340

154,865

CURRENT ASSETS

Trade receivables

22,825

37,741

Other receivables

2,422

7,193

Cash and cash equivalents

18,222

95,734

Marketable securities

30,725

-

74,194

140,668

TOTAL ASSETS

188,534

295,533

LIABILITIES

NON-CURRENT LIABILITIES

Deferred tax liability

(318)

(59)

Other payables

(1,679)

(1,189)

Provisions for liabilities and charges

(5)

(172)

(2,002)

(1,420)

CURRENT LIABILITIES

Trade and other payables

(29,894)

(49,839)

Provisions for liabilities and charges

(700)

(577)

(30,594)

(50,416)

TOTAL LIABILITIES

(32,596)

(51,836)

NET ASSETS

155,938

243,697

SHAREHOLDERS' EQUITY

Share capital

7,537

7,502

Share premium account

168,045

168,008

Shares to be issued

24

1,686

Share based compensation reserve

26,590

22,175

Currency translation reserve

(8,836)

(8,802)

Merger reserve

65,208

63,554

Accumulated other comprehensive income

19

-

Retained deficit

(102,649)

(10,426)

TOTAL EQUITY

155,938

243,697

BLINKX PLC

CONSOLIDATED CASH FLOW STATEMENT

Results for the year to 31 March 2016

(in thousands)

Year ended

Year ended

31 March

31 March

2016

2015

$'000

$'000

CASH FLOWS FROM OPERATING ACTIVITIES

Loss from operations

(94,339)

(24,808)

Adjustments for:

Depreciation and amortization

26,180

18,819

Share based payments

4,415

4,853

Non-cash acquisition and exceptional costs

-

240

Impairment of goodwill

50,322

-

Loss on sales of computer equipment

56

25

Change in provisions

(490)

712

Foreign exchange gain

3

143

Operating cash flows before movements in working capital

(13,853)

(16)

Changes in operating assets and liabilities:

Decrease in trade and other receivables

18,350

9,863

Decrease in trade and other payables

(14,967)

(10,367)

(10,470)

(520)

Income tax (paid) / refund received

4,182

(2,469)

Net cash used in operating activities

(6,288)

(2,989)

CASH FLOWS FROM INVESTING ACTIVITIES

Net interest received

134

20

Purchase of property, plant and equipment

(741)

(730)

Purchase of software

-

(1,587)

Capitalization of internal development charges

(4,353)

(3,885)

Proceeds from the sale of property, plant and equipment

4

49

Purchase of marketable securities

(60,245)

-

Acquisition payment of deferred consideration

(5,000)

-

Acquisitions, net of cash acquired

-

(21,747)

Net cash used in investing activities

(70,201)

(27,880)

CASH FLOWS FROM FINANCING ACTIVITIES

Net payments on finance lease

(1,080)

(92)

Proceeds from issuance of shares

64

84

Net cash used in financing activities

(1,016)

(8)

Net decrease in cash and cash equivalents

(77,505)

(30,877)

Beginning cash and cash equivalents

95,734

126,909

Effect of foreign exchange on cash and cash equivalents

(7)

(298)

Ending cash and cash equivalents

18,222

95,734

BLINKX PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Results for the year to 31 March 2016

(in thousands)

ORDINARY SHARE SHARES SHARE BASED

CURRENCY

RETAINED

SHARE PREMIUM TO BE COMPENSATION

TRANSLATION MERGER OTHER (DEFICIT)/ TOTAL

CAPITAL ACCOUNT ISSUED RESERVE

RESERVE RESERVE RESERVES EARNINGS EQUITY

$'000 $'000 $'000 $'000

$'000 $'000 $'000 $'000 $'000

BALANCE AS AT 31 MARCH 2014

7,461 167,945 3,579 17,322

(8,469) 61,681 - 12,372 261,891

Net loss for the year

- - - -

- - - (20,799) (20,799)

Other comprehensive loss

- - - -

(333) - - - (333)

Total comprehensive loss for the year

- - - -

(333) - - (20,799) (21,132)

Issue of shares, net of costs

41 63 (1,893) -

- 1,873 - - 84

Credit to equity for Share based payments

- - - 4,853

- - - - 4,853

Tax movement on share options

- - - -

- - - (1,999) (1,999)

BALANCE AS AT 31 MARCH 2015

7,502 168,008 1,686 22,175

(8,802) 63,554 - (10,426) 243,697

Net loss for the year

- - - -

- - - (92,253) (92,253)

Other comprehensive loss

- - - -

(34) - 19 - (15)

Total comprehensive loss for the year

- - - -

(34) - 19 (92,253) (92,268)

Issue of shares, net of costs

35 37 (1,662) -

- 1,654 - - 64

Credit to equity for Share based payments

- - - 4,415

- - - - 4,415

Tax movement on share options

- - - -

- - - 30 30

BALANCE AS AT 31 MARCH 2016

7,537 168,045 24 26,590

(8,836) 65,208 19 (102,649) 155,938

BLINKX PLC

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. Basis of preparation

This consolidated financial information has been prepared in accordance with the EU adopted

International Financial Reporting Standards (IFRSs), IFRS Interpretations Committee and those

parts of the Companies Act 2006 applicable to companies reporting under IFRS. The accounting

policies adopted are consistent with those described in the Annual Report and Accounts 2015

which have not changed. The financial information set out in this document does not constitute

statutory accounts for the years ended 31 March 2015 or 31 March 2016 but is derived from the

Annual Report and Accounts 2016. The Annual Report and Accounts for 2015 have been

delivered to the Registrar of Companies and the Annual Report and Accounts for 2016 will be

delivered to the Registrar of Companies in due course. The auditors have reported on those

accounts and have given an unqualified report which does not contain a statement under Chapter 3

of Part 16 of the Companies Act 2006. Full financial statements that comply with IFRSs are

included in the Annual Report and Accounts 2016 which will be made available to shareholders in

due course.

The Directors have considered the financial resources of the Group and the risks associated with

doing business in the current economic environment and believe that the Group is well placed to

manage these risks successfully. In doing this, the Board has prepared a business plan and cash

flow forecast setting out key business assumptions, including the rate of revenue growth, discount

rate, terminal growth rate and cost control. The Directors have considered these assumptions to be

reasonable and that the Group has adequate resources to continue in operational existence for the

foreseeable future being a period of no less than 12 months from the date of this announcement.

Accordingly, they continue to adopt the going concern basis in preparing these financial

statements.

2. Share-based payments

Included within cost and expenses are the following amounts in respect of share based payments:

YEAR ENDED

YEAR ENDED

31 MARCH 2016

31 MARCH 2015

$'000

$'000

Sales and marketing

1,041

2,004

Research and development

588

852

Administrative expenses

2,786

1,997

4,415

4,853

3. Taxation

The tax credit of $2.0 million (2015: $4.0 million tax credit), includes a prior year adjustment of

$3.8 million in the year. The effective tax rate for the year is 2%, compared to an effective tax rate

in FY15 of 16%.

4. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following information.

YEAR ENDED

YEAR ENDED

31-MARCH 2016

31-MARCH 2015

$'000

$'000

LOSS

Loss used in calculation of basic and diluted earnings per share

(92,253)

(20,799)

Loss used in calculation of adjusted basic earnings per share*

(17,809)

(3,765)

SHARES

SHARES

NUMBER OF SHARES

Weighted average number of shares for the purpose of basic and adjusted* basic earnings per share

403,198,763

400,908,111

Weighted average number of shares for the purpose of diluted and

adjusted* diluted earnings per share

403,198,763

400,908,111

* Adjusted for acquisition and exceptional charges of $65.3m (2015: $4.7m), amortization of purchased intangibles of $9.1m (2015: $12.3m)

and other expense of $0.04m (2015: $0.01m).

5. Goodwill impairment During the year the Company took decisive steps to build out its Core Mobile, Video and

Programmatic capabilities and began to limit investments in historical product lines that are

considered Non-Core, including certain Desktop products, services and technologies. Based on

these actions and an adjusted forecast to weaker than expected performance of some products,

certain value of Goodwill related to Non-Core legacy assets acquired was impaired as the

recoverable amount was less than its carrying value, leading to a non-cash impairment charge of

$50.3M.

Goodwill:

As at

31 March 2015

Reclassifications

and acquisition

adjustments

Impairment

charge

As at

31 March 2016

$'000

$'000

$'000

$'000

Burst 25,000

(25,000)

-

-

Rhythm NewMedia 24,306

(24,306)

-

-

LYFE Mobile 2,242

(2,242)

-

-

All Media Network 1,892

(1,892)

-

-

RhythmOne -

53,449

(32,363)

21,086

blinkx 2,417

-

(2,417)

-

PVMG 21,663

-

(15,542)

6,121

AdKarma 10,000

-

-

10,000

Total 87,520

9

(50,322)

37,207

6. Acquisition and exceptional costs

In line with the way the Board and the Chief Operating Decision Maker reviews the business,

large one-off acquisition and exceptional costs are separately identified and adjusted results are

reviewed. The types of costs included within acquisition costs are those that are directly

attributable to an acquisition, such as legal and accounting expenses, integration costs, severance

costs and retention remuneration. The types of costs that are considered exceptional include

goodwill impairment, accelerated charges related to change in intangible asset lives, severance

costs and one-time integration charges.

Acquisition and exceptional costs:

Year ended

Year ended

31-Mar

31-Mar

2016

2015

$'000

$'000

Acquisition costs:

Severance and retention costs

825

2,255

Professional fees

309

838

Total acquisition costs

1,134

3,093

Exceptional costs:

Goodwill impairment

50,322

-

Change in intangible assets lives

12,027

-

Restructuring charges

595

643

Severance costs

1,217

926

Total exceptional costs

64,161

1,569

Total acquisition and exceptional costs

65,295

4,662

7. Share capital

During the current year 2,136,359 shares were issued, of which 512,877 shares related to the

acquisition of Rhythm NewMedia Inc., 255,980 shares were issued related to exercise of

employee share options and 1,367,502 shares were issued related to restricted stock units (2015:

2,418,132 shares were issued, of which 511,197 shares related to the acquisition of Rhythm

NewMedia Inc., 541,408 shares were issued related to exercise of employee share options,

1,258,973 shares were issued related to restricted stock units and 106,554 related to consideration

for the acquisition of Burst Media Corporation).

8. Shares to be issued and Merger reserve

The shares to be issued represent the shares that are expected to be issued to former Burst

shareholders as part of the consideration, who have not yet submitted the paperwork to effect the

exchange of Burst shares for blinkx shares.

The merger reserve arises in business combinations where shares are issued as whole or part

consideration. The difference between the fair value and the nominal value of the shares

transferred as consideration is taken to the merger reserve.

9. Related party transactions

Balances and transactions between the Company and its subsidiaries, which are related parties,

have been eliminated on consolidation and are not disclosed in this note.

For the purposes of IAS 24 "Related Party Disclosures" the Directors are considered to be the

Group's Key Management Personnel. Comprehensive details concerning Directors’ remuneration

and share activity for the financial year ended 31 March 2016 will be included in the Directors’

Remuneration Report of the annual report which does not form part of this preliminary

announcement. There were no other related party transactions in the current or prior year.