7DIG.L Regulatory News (7DIG)

UBC Media Group plc

("UBC" or "the Company")

Proposed Acquisition of 7digital Group, Inc

Proposed Placing and Subscription to raise £6 million

Proposed Change of Name to 7digital Group plc

Restoration of Dealings

UBC Media Group (AIM: UBC), the multimedia content and services company, is pleased to announce the final step in its strategy to transform its business with the proposed acquisition of 7digital Group, Inc. ("7digital").

In June last year, UBC outlined that its strategic aim was to build a balanced business around its interactive assets, including its patent portfolio, its broadcast software solutions business and its minority investment in the fast growing audio social network business Audioboo. In November 2013 the Company announced its intention to create a separate listing for Audioboo whilst retaining a significant holding in it, and to reverse the remaining assets of UBC into privately-owned 7digital.

The listing of Audioboo will become effective this morning via the re-admission to trading of Audioboom Group plc ("Audioboom") (formerly One Delta plc) following shareholder approval of Audioboom's reverse takeover of Audioboo on 19 May 2014. UBC today holds 18.7% of the share capital of Audioboom which has recently raised £3.5 million to fund the business. By reference to the closing price of an Audioboom share on 19 May 2014, UBC's shareholding in Audioboom is valued at just over £3 million. In addition UBC has warrants to subscribe for ordinary shares in Audioboom at a price of 1.5 pence per share which would take its holding to 19.7%.

UBC is now pleased to announce that it has conditionally agreed to purchase 7digital for an aggregate consideration of £16.5 million to be satisfied by the issue of New Ordinary Shares, and a conditional Placing and Subscription to raise proceeds of £6 million. In addition, Imagination Technologies Group plc, an existing shareholder in both UBC and 7digital, has pre-funded 7digital by way of a £1 million bridging loan which will be converted into New Ordinary Shares at the Placing Price on Admission.

The Acquisition creates a powerful business to business supplier at the heart of the fast developing global business in digital music and radio. The Enlarged Group will have:

· Significant experience in both digital music and radio as the two industries come together to address a mainstream and under-served market of music consumers

· A number of new products and services: on-demand music and radio streaming, music downloads, personalised radio, playlisting and curated content

· An open and scalable platform which currently serves 95 customers in 42 countries

· Matching rights agreements with record companies, content creators and publishers as well as a full management system including ingestion, secure file storage and reporting

· Leading global technology and media industry customers including Samsung, the BBC, Blackberry, Bell Astral Media, HTC and Pioneer

· A significantly strengthened Board of Directors with: Sir Donald Cruickshank, a director of Qualcomm Inc, becoming non-executive chairman; and Sir Hossein Yassaie, chief executive of Imagination Technologies Group plc and Eric Cohen, SVP Corporate Development at Dolby Inc. becoming non-executive directors

· The Enlarged Group is expected to have a post new money valuation of approximately £29 million on Admission

The Acquisition

The Acquisition will be undertaken by the Company's Delaware subsidiary, 7digital Acquisition. Simultaneously with the Acquisition, the Company is proposing to undertake a 1 for 10 share consolidation to consolidate the Company's existing ordinary shares of 1 penny each into new ordinary shares of 10 pence each. The consideration for the Acquisition will be in the form of New Ordinary Shares at a price of 27 pence per New Ordinary Share (2.7 pence per Ordinary Share pre the Share Consolidation).

Placing and Subscription

In order to fund the Enlarged Group's further development, including its working capital needs, as well as the costs associated with the Acquisition, the Company also announces the conditional placing of and subscription for New Ordinary Shares at 27 pence per New Ordinary Share (2.7 pence per Ordinary Share pre the Share Consolidation) with new and existing investors to raise proceeds of £6 million.

The Directors of UBC are making other consequential proposals, comprising the Share Consolidation as described above, the adoption of new articles of association, the change of the Company's name to 7digital Group plc and approval of an employee share scheme.

The Acquisition constitutes a reverse takeover under Rule 14 of the AIM Rules for Companies and is therefore subject to shareholder approval. Accordingly, the Company has today published an AIM Admission Document containing detailed information about UBC, 7digital, the Enlarged Group and the Consequential Proposals (extracts of which are included below) and explains why the Directors consider that the Proposals are in the best interests of the Company and its Shareholders as a whole and recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, notice of which is set out at the end of the Admission Document. The general meeting will be held at the offices of DAC Beachcroft LLP, 100 Fetter Lane, London EC4A 1BN at 10.00 am on Monday 9 June 2014 and re-admission of the Enlarged Issued Share Capital is expected to occur at 8.00 a.m. on 10 June 2014.

On 25 November 2013, trading in the Company's shares was suspended pending an announcement and publication of an Admission Document relating to the proposed Acquisition. The Directors have requested the AIM team to permit restoration of UBC's Ordinary Shares to trading on AIM following publication of the Admission Document and the related announcement, and this is expected to occur at 7.45 a.m. today.

Simon Cole, CEO of UBC Media Group, commented:

"This transaction will create a world leading digital music and radio platform that is ideally positioned to exploit the convergence of radio and digital music services. The new business will also be well-placed to drive consolidation of the fragmented B2B digital music industry. As we have been putting this transaction together, our joint management teams have already started winning business together and I am confident that the combination of our combined global networks in technology and media will create an opportunity on the London market for investors to benefit from the growth of this dynamic sector."

Ben Drury, CEO of 7digital, added:

"Digital music has come a long way since the invention of MP3 in the nineties but it is only now that the majority of consumers are beginning to embrace music streaming and download services. The 7digital open platform simplifies access to the world's music and the combination with UBC will help further enhance the platform to include radio-style capability and services to help unlock the mass market for our customers and partners."

 Enquiries:

Below are extracts from the Admission Document which will be sent to shareholders today. The full Admission Document is available on the Company's website: www.ubcmedia.com

Definitions in this announcement are the same as those included in the Admission Document.

INTRODUCTION

On 20 May 2014, the Company announced that it had conditionally agreed to purchase, through its Delaware subsidiary, 7digital Acquisition, the entire issued and to be issued share capital of 7digital for an aggregate consideration consisting of 61,335,286 New Ordinary Shares. At the Placing Price, this values 7digital at approximately £16.5 million. The Acquisition will be completed by way of a Delaware reverse triangular merger under the terms of the Merger Agreement. In order to fund the Enlarged Group's further development, including its working capital needs, as well as the costs associated with the Acquisition, the Company has also today announced the conditional placing of 21,995,761 New Ordinary Shares at 27 pence per share and the conditional subscription of 259,266 New Ordinary Shares at 27 pence per New Ordinary Share to raise £6 million (£4.8 million net of costs). The Acquisition constitutes a reverse takeover of the Company for the purposes of the AIM Rules for Companies and accordingly requires Shareholder approval.

At the same time as the Acquisition and the Placing, the Directors are now making other consequential proposals, comprising a share consolidation, the adoption of new articles of association, the change of the Company's name to 7digital Group plc and approval of the Employee Share Scheme.

The Proposals and the Consequential Proposals are conditional, inter alia, upon the passing of the Resolutions at a General Meeting to be held at the offices of DAC Beachcroft LLP, 100 Fetter Lane, London EC4A 1BN at 10.00 a.m. on 9 June 2014, and Admission taking place. It is expected that Admission will become effective and that dealings in the Enlarged Issued Share Capital will commence on AIM on 10 June 2014.

The Admission Document contains information about 7digital, the Acquisition, the Placing, the Subscription and the Consequential Proposals, explains why the Board considers the Proposals to be in the best interests of the Company and its Shareholders as a whole, and recommends that you vote in favour of the Resolutions to be proposed at the General Meeting, notice of which is set out at the end of the Admission Document.

BACKGROUND ON UBC

UBC was established in June 2000 as the holding company for a group of companies whose core business was as a content provider to the radio industry. The Company was admitted to trading on AIM on 3 July 2000 and raised funds for expansion into the developing market for DAB technology in the United Kingdom. UBC invested in new technology to create new interactive services, which allowed the purchase of music prompted by radio broadcasts, and used the DAB spectrum to send multimedia content to PCs. UBC owns patents created by its technology in these areas.

Despite the changes in technology, the vision itself was not embraced by the broader radio industry, which for the most part has continued to pursue its traditional broadcasting and revenue models. The radio industry went through a period of decline, led by a decline in advertising revenues in 2006/7 and the lack of uptake of digital radio by the general public. In 2009, UBC sold its commercial division, which distributed traffic news to radio stations in exchange for the ability to sell advertising, to US quoted Global Traffic Network. The sale was for £11 million in cash representing a multiple of approximately 20 times the net profit of the division. Some cash was returned to shareholders via dividend payments over the next two years. The remainder was used by the Company to terminate its commitments to DAB and return to its core production businesses and set about finding a new direction.

After a major strategic review, the Board decided that the production businesses, whilst reliable, were likely to continue to be low-growth. The Directors believed that if there were to be a successful future for UBC, it would come from a more radical transformation and a concentration on the digital technology expertise that the Company had gained during its original foray into digital radio. This direction was led primarily by the belief that, at last, the radio industry was beginning to embrace the online and digital future and the fact that companies such as Imagination were seeking UBC's products and expertise. Imagination has been working with UBC since 2004 and became a co-investor in the audio social media platform Audioboo, which began to grow user numbers strongly 18 months ago. Imagination is now a shareholder in UBC, transferring an original holding in Audioboo into shares in UBC.

UBC has two divisions, Production and Interactive:

Production

UBC has three content production businesses which produce approximately 1,200 hours of video and audio content every year. The content companies benefit from regular commissions with BBC's national radio networks as well as one-off commissions from Sky Television. In addition, UBC's Entertainment News content is distributed to around 150 commercial radio stations. The division now also has a growing business in video entertainment news with Yahoo! Europe which is generating advertising revenues and is watched on average by 1.4 million people a month.

Interactive

As the radio industry started to move online, UBC's interactive division has developed an expertise in the creation of technology products that allow streaming services and has created powerful tools for the management of the data services which accompany audio streaming online. This work has included, amongst other projects, the development of the Radioplayer software, used by the majority of licenced UK radio stations for online streaming, and the development of a suite of mobile apps for 75 Bell Astral radio stations in Canada.

In June 2010, UBC took a minority holding in Audioboo, an innovative audio social media platform that allows for the simple recording of high quality audio from any location. The Directors believe that Audioboo has developed a technology solution which bridges the gap between creators of quality audio content and the rapidly expanding world of social media. Uploading clips to Audioboo allows content producers to easily distribute their content on Twitter and Facebook, where the clips are embedded and played quickly without opening any other applications.

As Audioboo continued to show promising development and at the same time required further funding, UBC increased its involvement, consolidating its shareholding with that of Imagination. UBC currently holds 51.62 per cent. of the ordinary share capital of Audioboo and has made loans to Audioboo which are convertible into shares of Audioboo. On 2 May 2014, UBC announced that it had signed a sale and purchase agreement with One Delta, a cash shell quoted on AIM, under the terms of which One Delta agreed to acquire UBC's holding of ordinary A shares in Audioboo for a mixture of new ordinary shares in One Delta and warrants to subscribe for new ordinary shares in One Delta. Following completion of the acquisition of Audioboo by One Delta which is expected to occur at the end of May 2014, UBC will hold 18.9 per cent. of the enlarged One Delta group. Following exercise of the warrants held by UBC, UBC will hold 19.9 per cent. of the enlarged One Delta group.

UBC's involvement with Audioboo sits as part of an overall interactive business, which has, over the last year, seen further development of the Group's work on the Radioplayer project and delivery of a portfolio of mobile applications for Jazz FM. Furthermore, UBC was commissioned to create iOS and Android applications for Rhema Broadcasting in New Zealand and Bell Media has commissioned an updating of its suite of mobile apps provided by UBC.

BACKGROUND TO THE ACQUISITION

As detailed above, UBC identified the emerging interactive media market as the sector of its business that the Directors believed offered the best opportunity for growth as so-called 'connected' devices became more important for the consumption of content.

UBC has invested in its software and interactive business alongside more traditional radio programme production and has created a business providing broadcasters around the world with software to power online and mobile services.

UBC and 7digital first worked together in 2004 when UBC was developing its "Cliq" music purchase system for digital radio. 7digital has developed alongside the online music industry over that period providing download and streaming services to a number of partners including leading consumer device manufacturers such as Samsung.

On 25 November 2013, UBC announced that it had lent £1 million to 7digital by way of the purchase of a convertible loan note from 7digital. The convertible loan note accrued interest at a rate of 5 per cent per annum until 30 April 2014 and accrues interest at a rate of 7 per cent per annum thereafter.

At the same time, UBC and 7digital signed a non-binding letter of intent outlining the detailed material terms of a potential acquisition of 7digital by UBC.

On 17 March 2014, UBC announced that it had signed heads of terms with 7digital, outlining the detailed material terms of the potential acquisition of 7digital by UBC. UBC and 7digital have now agreed the terms of the acquisition by UBC, via its Delaware subsidiary, 7digital Acquisition, of 7digital, details of which, including the reasons for and background to, are set out in the Admission Document.

BACKGROUND ON 7DIGITAL

Ben Drury and James Kane co-founded 7digital Limited in 2003 as a digital music services company initially building download stores for record labels, brands and retailers. 7digital has raised growth and development capital from a number of investors, both financial and strategic, including current shareholders Dolby and Imagination. 7digital is now a global business with licences to distribute content in 42 countries providing access to over 26 million music tracks via download and streaming services. 7digital's music catalogue is similar in size with the market-leading consumer services. 7digital provides its customers with access to a cloud-based software platform that allows them to create and develop their own music service. 7digital has a PaaS offering, a cloud-based service which makes it simpler and more cost effective for 7digital's customers to access the rights and technology necessary to run a music service. 7digital allows consumer-facing companies, which include mobile device manufacturers, telecom and television service providers, retailers and consumer brands, to provide innovative new music services to their end users.

7digital operates B2B technology and music services and B2C music services under the 7digital brand.

B2B

(a) Platform

7digital's core business is to provide an API for third parties who want to create digital music services, either standalone or bundled within their own device or product offering. 7digital's platform simplifies access to music by offering a combination of a licenced music catalogue alongside the cloud-based technology platform and client-side software, being software hosted by 7digital's clients. These are needed to create on-demand music streaming and download services, radio-style services and other services. The 7digital platform is open, with open-source code wrappers to reduce complexity and time to market for its potential customers and can be used for building products on any type of connected device.

Customers of the 7digital platform include Samsung, BlackBerry, Sky Communications, Astro (Malaysia), and HMV (UK and Canada). Typically, customers pay a set-up fee, monthly licence fees for using the 7digital platform and 7digital will also take a revenue share of any music-based revenue generated by the service, including transaction or subscription revenues.

(b) Devices and operating systems

In addition to providing an open API-based platform from which third parties can build their own services, 7digital also provides client-side software applications for the leading OS and device platforms, including Android, iOS, BlackBerry, Windows 8 and Windows Phone, Tizen, Firefox OS, HTML5 and Sonos.

(c) Music licences

7digital has obtained music licences in 42 countries in North America, Latin America, Europe, Asia-Pacific and Africa. These licences are obtained from hundreds of individual record labels, music publishers and music collecting societies. Music licences vary from country to country and by usage type. As of April 2014, the catalogue consists of more than 26 million tracks.

B2C

7digital.com is a licenced digital music store, one of the UK's first when launched in 2004. 7digital.com operates 20 download stores, of which 18 are country specific, one is offered to those located in the EU and one is offered globally. The 7digital.com music download store offers a catalogue of high quality digital music from the major labels and independent aggregators in Europe, North America and parts of Asia Pacific. The 7digital 'Locker' service stores the user's music purchases in the cloud for access from any device. Users have the option to download their purchases as zip files or by using the 7digital download manager to input directly into their media player of choice. 7digital has apps for different devices as well as an HTML5, mobile-optimised web store. Additionally, streaming of a consumer's purchased music is available on Sonos devices. 7digital.com is available with localised features such as local currency, language and catalogue throughout Europe, North America and parts of Asia Pacific.

FINANCIAL INFORMATION ON 7digital

The following financial information relating to 7digital has been extracted from the Accountants' Report set out in Part IV of the Admission Document:

Year ended Year ended Year ended

31 December 31 December 31 December

2011 2012 2013

£'000 £'000 £'000

 MARKET OPPORTUNITY AND REASONS FOR THE ACQUISITION

Since 2008 the global recorded music industry has experienced year-on-year declines in the value of sales of music in physical formats. In the same period the value of sales of digital music in the form of downloaded data files or streamed content has grown year-on-year. Currently, 39 per cent. of sales globally come from digital formats and it is forecast that in 2015 global sales of digital music will exceed sales of physical music. The streaming of digital music content is now a significant part of digital music consumption and it is estimated that 35 per cent. of consumers globally now access streamed digital music content in the form of both premium and free content services. This can be attributed in part to the fact that smartphone proliferation, 4G networks with increased data access speeds and high broadband penetration have enabled better quality streaming services particularly in Western economies. App-based delivery via smartphones is driving changes in music consumption patterns as individuals move increasingly to mobile services that stream content rather than traditional download-to-own services like iTunes.

The markets for online music and streamed radio have converged significantly in recent years, with services like Pandora and iTunes Radio creating 'radio-like' music services where consumers are presented with 'curated' or 'playlisted' music rather than having to build their own collections. In the meantime, online and mobile streaming has become the fastest growing segment of the radio industry, with 25 per cent. of all listeners now saying that they listen at some time to radio on their mobile phones and nearly six per cent. of all radio being listened to either online or on mobile: a 20 per cent. increase in the twelve months to 31 December 2013.

The Directors and Proposed Directors believe that digital music services, including radio and radio-like streaming, and hybrid services, which contain both streamed radio and music services, are growth areas. Services from B2C providers such as Apple, Pandora and Spotify are likely to lead the market. However, it is the view of the Directors and the Proposed Directors that the customer base of both UBC and 7digital, including the broadcast and consumer electronics industries, as well as mobile operators and brands, will continue to need to offer competing music experiences to their customers and will not want to adopt services from B2C users or often competitors, creating need for an independent B2B service provider.

It is believed by the Directors and Proposed Directors that as global sales of digital music have grown in recent years an increasing number of consumers are willing and able to access and purchase digital music and this trend can be expected to continue. In addition, it is estimated that 90 per cent. of mobile users have access to one or more music apps on their mobile device and one in three consumers has a preference for listening to music on their mobile device. It is also forecast by Cisco that there will continue to be significant growth in the total number of devices able to access digital content, increasing from 12.5 billion units globally in 2010 to a forecast 25.0 billion units in 2015 and 50.0 billion units in 2020.

The global radio industry has experienced significant growth in online revenues in recent years, increasing from US$250 million in 2005 to US$827 million in 2013. In addition, there also exist a number of providers of 'radio-like services' engaged in audio streaming, such as Pandora, iHeart Radio and iTunes Radio. In recent years a number of providers of 'radio-like services' have built significant audience penetration in markets such as the USA. It is the view of the Directors and Proposed Directors that the prospect exists for the further growth of 'radio-like services' as a result of the convergence between traditional radio and digital music technologies.

The Acquisition will create a global digital music and radio services business operating in 42 countries with at least 95 B2B customers. The Directors and Proposed Directors believe that the Acquisition brings together two companies with complementary assets in the digital music and radio sector, combining 7digital's existing music technology and global music rights with UBC's radio industry experience and relationships with leading international broadcasting companies, proprietary content and patented digital content purchasing technology.

The Directors and Proposed Directors believe the Acquisition and Placing will enable the combined businesses of 7digital and UBC to grow current digital music and radio offerings and expand into other product and service areas.

In addition, the Directors and Proposed Directors believe the B2B music services market is fragmented and opportunities exist to consolidate a number of small-scale competitors with complementary technology and service offerings.

As well as the revenue opportunities noted above, the Directors and Proposed Directors believe that cost synergies will be gained from joining the two businesses. These are expected to result from merging the administrative functions and co-locating both businesses.

STRATEGY OF THE NEW BOARD & ENLARGED GROUP'S PROPOSITION

The online audio market is changing fast and the Directors and Proposed Directors believe it is reaching an inflexion point. The early adopters of digital music have been those for whom music is a passion and who have also been reasonably technically aware. At present, whilst digital sales of music are expected in the next twelve months to overtake physical sales, it is still the case that a significant majority of music is listened to either on broadcast radio or via CD. As those consumers who listen to music on broadcast radio or via CD embrace digital listening, the Directors and Proposed Directors expect the pattern of usage to change, driven by radio-like services.

The Directors and Proposed Directors expect the Enlarged Group's customers to range from software developers and hardware manufacturers who want to create services on mobile devices and 'connected' devices for the home to media owners who want unique music experiences for their customers: telecom and broadcasters, retailers and consumer brands.

The Enlarged Group will provide B2B solutions to its customers' businesses through a software platform and associated services. The services offered will include production of unique content as well as licensing new technologies to customers. In addition, the Enlarged Group offers the following services:

· Radio aggregation and search

· Curated and programmed channels

· HD audio

· Personalised radio

· Music and radio streaming

· Music download services

These services will be delivered using the Enlarged Group's combined technological expertise and experience in technology and content development and music rights management. The Directors and Proposed Directors believe that the major benefits to the Enlarged Group's customers will be:

· Time-to-market - the Enlarged Group will provide a lower cost of entry to the market for its customers than developing the technology and content in-house;

· Quality of product - the Enlarged Group will continue to ingest new content providing access to an up-to-date library of audio and music assets;

· Access to rights - the Enlarged Group will offer comprehensive rights management and reporting services;

· Flexibility - the Enlarged Group's modular API will enable customers to take advantage of new developments on the core software, as a result of which new devices and business models can be rapidly enabled; and

· Multiple revenue models - customers can adapt their monetization method based on different models (including pay per download, subscription service or advertising-funded).

7digital and UBC currently have three main revenue streams:

· Subscription revenues, principally in the form of up front and monthly recurring revenues from software and rights licensing and software licensing revenues from radio broadcasting clients;

· Digital content revenues, principally derived from sales of digital content in the form of a digital download sale or a subscription from a streaming service; and

· Production revenues, for example those resulting from radio or television commissions.

The revenue model for the combined business is based on expected strong growth from the B2B service offerings. The Directors and Proposed Directors believe that growth in monthly recurring B2B revenues will be principally driven by:

(i) growth in connected devices;

(ii) new customers coming to market;

(iii) continued product innovation; and

(iv) international expansion.

COMPETITION

The digital music market has a number of significant B2C services such as iTunes, Google Play Music, Amazon MP3 and Spotify which have captured a large market share of the digital music market and represent indirect competition to 7digital's offering.

7digital's primary business is the provision of B2B music and radio platform-as-a-service and direct competitors include 247 Entertainment (based in Germany and controlled by MediaSaturn Holdings), MediaNet (based in the US and owned by Baker Capital) and Omnifone Group Limited (based in the UK and owned by its founders and other investors).

The Directors and Proposed Directors believe that the Enlarged Group will benefit from the following factors:

(i) Open API - 7digital's B2B music platform is differentiated in the market as it offers an open API withopen-source code wrappers to reduce complexity and time to market for its potential customers. 7digital also provides a mobile SDK that helps App developers create services using the 7digital platform quickly and easily. The Directors and Proposed Directors believe that this combination of services is unique in the market.

(ii) Experienced senior management - the operational senior management team draws its experience from the music and technology industries including companies like Warner Music, Universal Music, Sony Music, YouView, BT, Dolby and BBC Worldwide. The Directors and Proposed Directors believe that the management team will provide strong operational leadership to execute the Enlarged Group's strategic plan.

CURRENT TRADING AND PROSPECTS UBC

UBC's results for the six months to 30 September 2013 showed an operating loss at £350,000 (2012: £355,000) though turnover decreased 30 per cent. to £1,534,000 (2012: £2,201,000). The production of programmes for traditional broadcasters is a shrinking business with margins challenged by the changing economics of traditional media.

The results for the second half of the year were below the Directors' expectations as a result of one-off factors which affected the underlying operations of the business, such as the bankruptcy of AudioGo, the decision of Sky Television not to repeat its coverage of the Cambridge Folk Festival, and a number of replacement projects, such as the Sky Television commission in relation to the Bolshoi ballet, falling outside that financial period. As a consequence full year revenue for the year ending 31 March 2014 is expected to be circa. £2.9 million (2013: £3.8 million).

7digital

7digital's unaudited management accounts for the quarter ended 31 March 2014 showed a 34 per cent. year-on-year increase in monthly recurring technology licensing revenue to £1,075,000 (2013: £800,000) with an overall gross margin for the business of 50.3 per cent. (2013: 45.2 per cent.). Total turnover of £2,462,000 was recorded in the quarter ended 31 March 2014 which was 16 per cent. down on the same quarter in 2013. This was ahead of internal expectations and reflects some expected declines in digital content sales.

At the end of December 2013 the normalised yearly run-rate of monthly recurring technology licensing revenue was £4.6 million (2012: £2.5 million).

Enlarged Group

The Directors and Proposed Directors expect that the combined sales, technical and operational resources available to the Enlarged Group following Completion will enable it to grow organically and capitalise on the accelerating growth now being experienced in the online audio market and digital music industry. The Directors and Proposed Directors would also consider taking advantage of merger and acquisition opportunities.

Accounting Reference Date

The Directors have resolved, conditional upon Admission, to change UBC's accounting reference date from 31 March to 31 December in order to bring UBC's accounting year end in line with that of 7digital.

DIRECTORS AND PROPOSED DIRECTORS

Details of the current Directors of UBC are as follows:

Paul Henry Barron Pascoe (aged 53), Non-Executive Chairman

Paul Pascoe was appointed to the role of Non-Executive Chairman of UBC in November 2008. He became a director of The Unique Broadcasting Company Limited in 1995. Paul is a member of UBC's Audit Committee and Remuneration Committee.

Timothy John Blackmore M.B.E. (aged 69), Non-Executive Director

Tim Blackmore co-founded The Unique Broadcasting Company Limited in 1989 with Simon Cole, after a career in radio production with BBC Radio 1 and Capital Radio. Tim was appointed as a Non-Executive Director of UBC and he continues to act as Group Editorial Director and is Chairman of Smooth Operations. Tim has been awarded an MBE for services to independent radio production.

Kelvin Frank Harrison, (aged 58), Non-Executive Director

Kelvin Harrison is a chartered engineer with significant experience of the software, electronics and communications sectors in various positions, including chief executive of public and private companies. Kelvin was formerly Chairman and Chief Executive of Maxima Holdings plc. Kelvin is chairman of UBC's Remuneration Committee and Chairman of the Audit Committee.

Simon Andrew Cole (aged 56), Chief Executive Officer

Simon Cole co-founded The Unique Broadcasting Company Limited in 1989 in partnership with Tim Blackmore, having pioneered the market for national sponsored programmes whilst at Piccadilly Radio, where he was Head of Programmes. Simon has been awarded a fellowship of the Radio Academy.

John Christopher Stewart Dent (aged 33), Finance Director

Chris Dent was appointed as Finance Director of UBC in April 2012. He previously worked at Deloitte where he spent ten years within audit and corporate finance, specialising in working with media and technology clients. He is a member of the ICAEW. Chris holds a BA (Hons) degree in Modern History & Economics from Magdalen College, Oxford.

On Completion, it is proposed that Paul Pascoe, Tim Blackmore and Kelvin Harrison will resign as Directors.

Proposed Directors

On Completion, it is proposed that the following will be appointed to the Board of the Enlarged Group:

Sir Donald Gordon Cruickshank (aged 71), Proposed Non-Executive Chairman

Sir Donald Cruickshank has been Chairman of Audioboo Limited since April 2010. Sir Donald has served as a director of Qualcomm Incorporated since June 2005. He was Chairman of Clinovia Group Limited from January 2004 to February 2007 and Formscape Group Limited from April 2003 to December 2006 and was a member of the Financial Reporting Council, the body in the UK responsible for oversight of the Accountancy and Actuarial professions and for corporate governance standards, from June 2001 to June 2007.

Sir Donald has extensive experience in a number of areas, including European regulation and telecommunications. Sir Donald's career has included assignments at McKinsey & Co. Inc., Times Newspapers, Virgin Group plc., Wandsworth Health Authority and the National Health Service in Scotland. Sir Donald served as Chairman of the London Stock Exchange from 2000 to 2003 and as Director General of the UK's Office of Telecommunications (Oftel) from 1993 to 1998. From 1997 to 2000, he served as Chairman of Action 2000, the UK's Millennium Bug campaign. In 1998 Sir Donald was appointed as Chairman of the Government's Review of the UK banking sector, and from 1999 to 2004, he served as Chairman of SMG plc.

Sir Donald holds an M.A. degree in Law and an honorary L.L.D. degree from the University of Aberdeen and an M.B.A. degree from Manchester Business School, the University of Manchester.

Benjamin Charles Drury (aged 38), Proposed Chief Strategy Officer

Ben Drury co-founded 7digital in 2003 after previously working at BT as Head of Music and leading the sale of the Dotmusic business to Yahoo.

Ben graduated from King's College London with a BSc (Hons) Physics with Philosophy of Science. Ben was appointed to the board of AIM-listed Intercede plc as a non-executive Director in April 2014. He is an active angel investor and has served as Deputy Chairman of the Entertainment Retailers Association (ERA) and on the board of the Official UK Charts Company. Ben also acts as an advisor to the Entrepreneur First programme.

Sir Hossein Yassaie (aged 57), Proposed Non-Executive Director

Sir Hossein Yassaie has been Chief Executive Officer of Imagination Technologies plc since June 1998. After attaining his PhD, Hossein was a research fellow at the University of Birmingham. He then joined STMicroelectronics/Inmos, where he spent eight years, ultimately becoming responsible for the system divisions, including research and development, manufacturing and marketing.

After joining Imagination Technologies in 1992 as Technical Director, Sir Hossein refocused the business on advanced technology development and created Imagination's successful silicon IP business model. Sir Hossein is a Non-Executive Director of Toumaz Limited.

Eric Cohen (aged 56), Proposed Non-Executive Director

Eric Cohen is Senior Vice President, Corporate Development at Dolby Laboratories, Inc., where he oversees corporate development, mergers and acquisitions activities, and corporate strategy.

Eric previously worked for 30 years in investment banking, where he gained diverse experience advising clients in strategic transactions and financings across a broad range of industries. Eric was formerly a Managing Director and senior member of the technology investment banking team at Cowen and Company, where he headed the firm's digital media, Internet, and new media business. and founded Cowen and Company's digital media practice in 2001. Prior to that, Eric held the position of Managing Director at J.P. Morgan and also worked for 11 years at Credit Suisse First Boston.

Eric holds a BS degree from Brown University and an MBA degree from Stanford University.

Following Admission it is intended to appoint two additional independent directors of suitable calibre to strengthen the composition of the New Board.

 PRINCIPAL TERMS AND CONDITIONS OF THE ACQUISITION

On 20 May 2014, the Company entered into the Merger Agreement with, among others the Indemnitors' Representative, as detailed in paragraph 14.3 of Part VI, pursuant to which the Company's wholly owned Delaware subsidiary, 7digital Acquisition, will merge with 7digital (7digital being the surviving corporation). In consideration for the merger, it was agreed that the shareholders of 7digital would receive 61,335,286 New Ordinary Shares (in aggregate).

Completion of the Merger Agreement, as detailed in paragraph 14.3 of Part VI, is conditional, amongst other things, upon:

· Shareholder approval of the Resolutions; and

· Admission.

Additional information relating to the Merger Agreement is set out in paragraph 14.3 of Part VI of the Admission Document.

To secure the obligations of 7digital under the Merger Agreement, the Main Vendors have agreed, pursuant to the Escrow Agreement, to put 20,445,095 Vendor Consideration Shares into escrow with Capita Trust Company Limited. If no claims are notified within 12 months from Completion, half of the Escrow Shares will be released and the other half will be released if no claims are notified within 24 months from Completion. If any claims are agreed between the parties or determined by a Court, the Escrow Shares will be available to be bought back by the Company (subject to the relevant shareholders' consent being obtained) for an aggregate sum up to £20.

Additional information relating to the Escrow Agreement is set out in paragraph 14.4 of Part VI of the Admission Document.

IMAGINATION BRIDGE LOAN

On 16 May 2014, Imagination extended a bridge loan to 7digital, at nil interest, in the amount of £1 million to fund its working capital needs. At completion of the Acquisition, 7digital will novate the loan to UBC, immediately following which UBC will issue an aggregate of 3,703,703 New Ordinary Shares to Imagination at the Placing Price, in full settlement of the liability under the Imagination Bridge Loan. Following Admission the Imagination Shares will rank pari passu with the New Ordinary Shares.

THE PLACING AND SUBSCRIPTION

In order to fund the transaction costs of the Acquisition and the Proposals as well as provide working capital for the Enlarged Group, the Company is seeking to raise £6 million (gross) (£4.8 million net of expenses) pursuant to the Placing and the Subscription through the issue of the Placing Shares and the Subscription Shares at the Placing Price. The Placing Shares and the Subscription Shares will represent approximately 20.7 per cent. of the Enlarged Issued Share Capital immediately following Admission. Further details of the Placing Agreement, which contains the terms upon which the Placing is being undertaken, are described in paragraph 14.6 of Part VI to the Admission Document.

The Placing and the Subscription are not being underwritten. Following Admission the Placing Shares and the Subscription Shares will rank pari passu with the New Ordinary Shares. Application will be made for the admission of the Enlarged Issued Share Capital to trading on AIM which is expected to take place on 10 June 2014.

The proceeds of the Placing and the Subscription will be used to fund the Enlarged Group's further development, including its working capital, as well as the costs associated with the Acquisition.

DETAILS OF THE CONSEQUENTIAL PROPOSALS Proposed New Articles of Association

At the same time as approving the Acquisition the Company is taking advantage of this opportunity to adopt the New Articles. The Directors believe that the Company's Existing Articles should be updated to reflect and take full benefit of some of the new provisions of the Act which have now been brought into full effect. Accordingly, the Board considers it prudent to replace the Company's Existing Articles with the New Articles which take account of those developments and to reflect the Share Consolidation. A summary of the New Articles and the principal changes arising from the adoption of the New Articles, other than changes which are of a minor, technical or clarifying nature, are set out in paragraph 5 of Part VI of the Admission Document and the Existing Articles and the New Articles are available for review at the Company's website at www.ubcmedia.com.

Proposed Share Consolidation

As part of the Proposals, the Company is seeking Shareholder approval for the Share Consolidation, whereby the Ordinary Shares are consolidated into New Ordinary Shares on the basis of one New Ordinary Share for every 10 Ordinary Shares held at the record date.

The purpose of the Share Consolidation is to reduce the total number of shares in issue following completion of the Proposals. The Directors believe that this may reduce the volatility in the price of the Company's shares, may avoid large dealing spreads in the shares and may ensure that the price of the shares is more appropriate for a company of the Enlarged Group's size.

It is proposed that the Share Consolidation will consist of the following steps:

(i) every 10 Ordinary Shares held at the record date will be consolidated into one New Ordinary Share;and

(ii) fractional entitlements arising out of the consolidation under sub-paragraph (i) above by reason of there being either less than 10 Ordinary Shares or a number not divisible by 10 shall be rounded down to the nearest whole number. All such fractional entitlements shall be aggregated into New Ordinary Shares and the whole number of New Ordinary Shares so arising shall be sold in the market and the net proceeds of sale (less expenses) distributed proportionately among the relevant Shareholders entitled to them (unless the sums due are less than £3).

The Existing Articles require that Shareholder consent is sought for the Share Consolidation and approval will be sought at the General Meeting which has been convened at the offices of DAC Beachcroft LLP, 100 Fetter Lane, London EC4A 1BN at 10.00 a.m. on 9 June 2014. It is anticipated that certificates in respect of New Ordinary Shares will be issued and dispatched by 30 June 2014 and that CREST holders will have their CREST accounts credited with their new holdings on 10 June 2014. Pending the issue of a new share certificate, existing share certificates will remain valid.

The record date in respect of the Share Consolidation is 9 June 2014, being the date of the General Meeting. Subject to the adoption of the New Articles at the General Meeting, the New Ordinary Shares will carry the rights and will be subject to the restrictions set out in the New Articles.

The resolution to effect the Share Consolidation is set out in the Notice which can be found at the end of the Admission Document.

Proposed Incentivisation Arrangements

The Directors and Proposed Directors believe that the success of the Enlarged Group will depend to a high degree on management and other members of staff being appropriately motivated and rewarded. The Enlarged Group is therefore proposing to establish the Employee Share Scheme, designed to assist in the recruitment, motivation and retention of staff and which, for executive directors and senior managers, will carry performance conditions that will align the interests of the management team with those of Shareholders.

Further details of the Employee Share Scheme are set out in paragraph 25 of Part VI of the Admission Document. Approval of the Employee Share Scheme will be sought at the General Meeting. It is intended that shortly after Admission, subject to Shareholder approval of the Employee Share Scheme at the General Meeting, initial awards thereunder will be made to certain members of the New Board and other members of staff.

LOCK-INS AND ORDERLY MARKET ARRANGEMENTS

The Locked In Parties have entered into a lock-in agreement with the Company, finnCap and Investec pursuant to which, they have agreed, conditional upon Admission, not to sell, transfer or dispose of any interest in New Ordinary Shares held by them or any related parties (as defined in the AIM Rules for Companies) for a period of 12 months following Admission save for certain exceptions. In addition, each of the Locked In Parties has agreed that, for a further 12 months, save for certain exceptions, he/it will not sell, transfer or dispose of any interest in New Ordinary Shares without the prior written consent of each of the Company, finnCap and Investec and any such sale or disposal of New Ordinary Shares will generally be effected through finnCap, Investec or the Company's incumbent corporate broker (with a view to ensuring an orderly market in such securities), subject to certain exceptions. In addition, to certain exceptions to lock-in and orderly market arrangements which apply to the Locked In Parties, Goodmans is also permitted to transfer its interests in New Ordinary Shares to Hilco or to members of the Goodmans Group, provided that such members remain part of the Goodmans Group.

As at Admission the Locked In Parties will hold 59,445,655 New Ordinary Shares in total, representing 54.9 per cent. of the Enlarged Issued Share Capital.

Further details of the lock-in and orderly market arrangements relating to the Vendors and the Directors are set out in paragraph 14.21 of Part VI of the Admission Document.

CHANGE OF NAME

To reflect the proposed changes to the Company, its management and its operations as a result of the Acquisition, it is proposed that, conditional on Completion, the Company will change its name to 7digital Group plc pursuant to Resolution 6.

RELATED PARTY TRANSACTIONS

The issue of New Ordinary Shares to Imagination, pursuant to the terms of the Merger Agreement, the Imagination Bridge Loan and the Imagination Convertible Loan, as a substantial shareholder in the Company, constitutes a related party transaction for the purposes of AIM Rule 13. Furthermore, the participation by Imagination and DC Thomson, also a substantial shareholder in the Company in the Placing, constitutes a related party transaction for the purposes of AIM Rule 13 (together, "the Related Party Transactions").

The independent directors, being Tim Blackmore, Kelvin Harrison and Paul Pascoe, having consulted with the Company's nominated adviser, finnCap, consider that the terms of the Related Party Transactions are fair and reasonable insofar as independent Shareholders are concerned.

DIVIDEND POLICY

The Directors and Proposed Directors intend to commence the payment of dividends only when it becomes commercially prudent to do so, having regard to the availability of the Enlarged Group's distributable profits and funds required to finance future growth.

IRREVOCABLE UNDERTAKINGS

Insofar as they are interested in Ordinary Shares, the Directors and persons connected with them have given irrevocable undertakings to the Company to vote in favour of the Resolutions (and, where relevant, to procure that such action is taken by the relevant registered holders if that is not them), in respect of their entire beneficial holdings totaling, in aggregate, 51,155,958 Ordinary Shares, representing approximately 25.9 per cent. of the Existing Total Voting Rights.

In addition, certain other Shareholders have given irrevocable undertakings to the Company to vote in favour of the Resolutions to be proposed at the General Meeting (and, where relevant, to procure that such action is taken by the relevant registered holders if that is not one of them) in respect of their holdings totaling, in aggregate, 61,065,211 Ordinary Shares, representing approximately 30.9 per cent. of the Existing Total Voting Rights.

In total, therefore, the Company has received irrevocable undertakings to vote in favour of the Resolutions in respect of holdings totaling in aggregate 112,221,169 Ordinary Shares, representing approximately 56.8 per cent. of the Existing Total Voting Rights. Further details of the irrevocable undertakings received by the Company are set out in paragraph 16 of Part VI of the Admission Document.

RECOMMENDATION

The Directors consider, for the reasons set out above, that the Proposals are in the best interests of the Company and Shareholders as a whole. Accordingly, the Directors recommend that you vote in favour of the Resolutions at the General Meeting as they intend to do in respect of their own beneficial holdings amounting, in aggregate, to 51,032,840 Ordinary Shares, representing 25.8 per cent. of the Existing Total Voting Rights.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Publication date of the Admission Document 20 May 2014

Latest time and date for receipt of Forms of Proxy 10.00 a.m. on 7 June 2014

General Meeting 10.00 a.m. on 9 June 2014

Record date for Share Consolidation 6.00 p.m. on 9 June 2014

Completion of the Acquisition 10 June 2014

Admission effective and dealings in the Enlarged Issued Share Capital 10 June 2014

expected to commence on AIM

CREST accounts expected to be credited with the New Ordinary Shares, 10 June 2014

Placing Shares and Vendor Consideration Shares

Definitive share certificates for the New Ordinary Shares, Placing Shares, 30 June 2014

Subscription Shares and Vendor Consideration Shares to be dispatched by

Each of the times and dates above is subject to change. Any such change will be notified by an announcement on a Regulatory Information Service.

ADMISSION AND ACQUISITION STATISTICS

Number of Ordinary Shares in issue at the date of the Admission Document 206,619,545

Basis of Share Consolidation 1 New Ordinary Share for every 10 Ordinary Shares

New Ordinary Shares in issue following the Share Consolidation and 20,661,954

immediately prior to Admission

Number of Placing Shares and Subscription Shares 22,255,027

Placing Shares and Subscription Shares expressed as a percentage of the Enlarged Total 20.7 per cent.

Voting Rights

Number of Escrow Shares 20,445,095

Escrow Shares expressed as percentage of the Enlarged Total Voting Rights 19.0 per cent.

Number of Vendor Consideration Shares 61,335,286

Vendor Consideration Shares expressed as a percentage of the Enlarged Total 57.1 per cent.

Voting Rights

Number of Imagination Shares 4,074,073

Placing Price per New Ordinary Share (before consolidation/after consolidation) 2.7/27 pence

Enlarged Issued Share Capital on Admission 108,326,340

Gross proceeds receivable by the Company pursuant to the Placing and Subscription £6.0 million

Market capitalisation of the Company at Admission at the Placing Price £29.2 million

Current ISIN GB0009021063

ISIN on Admission GB00BMH46555

TIDM on Admission 7DIG