7DIG.L Regulatory News (7DIG)

17 January 2017

7digital Group plc

("7digital" or "the Company")

Year end trading update

7digital (AIM:7DIG), the B2B digital music and radio services company, today issues a trading update for the year ended 31 December 2016.

7digital performed well in the second half of the year; the Company delivered against the Board's commitment to achieve profitability by the year-end, and returned an operating profit for the final quarter. Results for the year are in line with market expectations, including a modest gain from the strength of the US dollar. The Board remains committed to being profitable at the operating level for the full year in 2017.

Total Group revenue grew by 7.2% to £11.1m, with good growth across all revenue streams. The Group achieved its target of £1m of annualised cost savings by the year end.

 The cash balance at 31 December 2016 was £730,000.

During Q4 2016, 7digital was awarded contracts with a combined value of approximately £1.6m, including set up fees and monthly recurring revenues, with growth coming both from new customer wins and from existing customers to whom 7digital is providing additional services. These contracts extend 7digital's customer base and activity in a number of strategically important sectors, such as mobile telco services, radio, high resolution (Hi-Res) and automotive, continuing also to extend the geographic reach of our services. During the final quarter, 7digital also signed a further label development deal so that it is now working with all three of the major record labels as clients.

7digital's market continues to show accelerating growth. BPI, leading British music industry association, announced last week that audio streams served in the UK grew by 68% in 2016 to 45 billion. Likewise, in the US, Nielsen reported streaming 76% year-on-year growth.

The Group continues to make particular progress in Hi-Res audio with its strategy being further validated at the recent Consumer Electronics Show ("CES") in Las Vegas. The record industry and hardware manufacturers - including Sony and Samsung - came together at CES to highlight the benefits of higher quality digital sound. In particular, the MQA streaming technology which 7digital has pioneered received significant attention.

Simon Cole, Chief Executive of 7digital, said:

"The second half of our financial year 2016 was always an important time for 7digital and I am pleased that we delivered on our commitment to reach operating profit by the year end and continued to make good progress in line with our stated strategy. The New Year has started well and we remain confident that the Group will be profitable at the operating level for the full year 2017."

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7digital is a B2B digital music and radio services company. The core of its business is the provision of robust and scalable technical infrastructure and extensive global music rights used to create music streaming and radio services for a diverse range of customers - including consumer brands, mobile carriers, broadcasters, automotive systems, record labels and retailers. 7digital also offers radio production and music curation services, editorial strategy and content management expertise.

7digital fosters industry growth and innovation by simplifying access to music for clients such as Onkyo, Fnac, Musical.ly, Global Radio and E.Leclerc. From years of being the largest independent producer of programming for the BBC, launching Radioplayer in multiple territories, and powering services for partners like HMV, Panasonic and ROK Mobile, 7digital is perfectly positioned to lead innovation at the intersection of digital music and next-generation radio services.