BLINKX

ANNUAL REPORT AND ACCOUNTS

YEAR ENDED3 1 M A R C H 2 0 1 6

COMPANY NO: 06223359

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This Annual Report contains forward-looking statements. These include, but are not limited to, statements regarding:

the growth of our business and revenues;

our expectations about the factors that

business;

forecasts regarding Internet usage and advertising spend, which are likely to cause

our plans to continue to invest in our people, processes and products;

our plans to continue our current pace of acquisitions;

the potential for declines in our revenue,

projected levels of growth in our markets;

our investments in international and emerging markets and sectors;

estimates of future compensation expenses;

our plans to use funds;

operating expenses; and

other statements regarding our future

prospects, and business strategies.

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, US and UK domestic and global economic and business conditions, the effects of blogs and media coverage, the effects of continued volatility in credit markets, market-related risks such as changes in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards (IFRS) applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of pending and future litigation, the success of future acquisitions and other strategic transactions, and the impact of competition—a number of which are beyond blinkx’s control.

As used herein, “blinkx,” “the Company,” “the Group,” “we,” “our,” and similar terms include blinkx plc and its subsidiaries, unless the context indicates otherwise. “blinkx” and other trademarks of ours appearing in this report are our property. This report contains additional trade names and trademarks of other companies. We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.

Except as required by the Financial Conduct Authority (FCA), Alternative Investment Market (AIM), or applicable law, blinkx expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking

any changes in blinkx’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Neither the content of the Company’s website (or any other website) nor the content of any website accessible from hyperlinks on the Company’s website (or any other website) is incorporated into, or forms part of, this report. None of these statements should

recommendation to invest in the Company.

SAFE HARBOR DISCLOSURE

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STRATEGIC REPORT

KEY HIGHLIGHTS 1

BUSINESS OVERVIEW 2

CHAIRMAN’S STATEMENT 5

THE CEO’S REPORT 6

THE CFO‘S REPORT 8

STRATEGY AND BUSINESS MODEL 12

COMMERCIAL MODEL 16

GOVERNANCE

CORPORATE GOVERNANCE REPORT 19

BOARD OF DIRECTORS 22

REMUNERATION COMMITTEE REPORT 25

AUDIT COMMITTEE REPORT 28

NOMINATION COMMITTEE REPORT 30

D IRECTORS’ REPORT 3 1

F INANCIALS

F INANCIAL STATEMENTS 34

INDEPENDENT AUDITOR’S REPORT 35

CONSOLIDATED INCOME STATEMENT 37

CONSOLIDATED BALANCE SHEET 39

CONSOLIDATED CASH FLOW STATEMENT 41

NOTES TO F INANCIAL STATEMENTS 42

SHAREHOLDER INFORMATION AND ADVISORS 71

GLOSSARY 72

AS ANTIC IPATED, FY2016

WAS A YEAR OF INTEGRATION

AND INVESTMENT AS THE

INDUSTRY CONTINUED TO

TRANSFORM AND EVOLVE.

THE COMPANY FOCUSED ON ITS

CORE CAPABIL IT IES OF MOBILE,

V IDEO AND PROGRAMMATIC

TRADING, WHICH NOW

REPRESENT OVER 70% OF

REVENUES, COMPARED TO

LESS THAN 50% LAST YEAR.

1

REVENUE$166.7M$215.0M

ADJ. EBITDA-$10.5M$3.5M

NET CASH & MARKETABLE SECURITIES

$78.5M$95.7M

As anticipated, FY2016 was a year of integration and investment as the Industry continued to transform and evolve. The Company focused on its Core capabilities of mobile, video and programmatic trading, which now represent over 70% of revenues, compared with less than 50% last year. The Company deliberately drew down certain historical Non-Core product lines that were

top-line growth.

Key business highlights for the year include:

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;

the usual fourth quarter seasonality;

Executed planned drawdown 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 $94.3M was non-cash in nature,

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

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;

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;

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;

Pubmatic, Sovrn, Rubicon Project and AOL;

Macy’s, JCPenney, Iams, Pedigree and Kellogg’s Froot Loops;

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

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

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

KEY HIGHLIGHTS

2

BLINKX

blinkx (LSE AIM: BLNX) is an online advertising company that connects digital audiences with brands through premium

marketplace for digital advertising.

FY2016 was a year of integration and investment, set against a rapidly evolving Industry backdrop. During the year, the Company undertook a broad restructuring of the business and deliberately

growing segments within online advertising. Simultaneously, blinkx

lines. As a result of this shift, Core products constituted 70% of revenues in FY2016, compared with less than 50% in FY2015.

integrated programmatic trading platform. The platform offers a common point of access to RhythmOne inventory across owned, controlled and extended supply sources. As a result, blinkx now represents one of the largest supply footprints in the Industry, ranking #6 US platform by comScore and #12 by Quantcast, as at

supply side of the value chain, streamlining interactions between

effectiveness of online advertising campaigns.

blinkx believes the online advertising sector will continue to grow and transform at a rapid pace. The Company also believes that advertisers will continue to reward fully integrated supply partners that deliver audience-centric, cross-screen advertising capabilities and clear measurement around campaign effectiveness and supply quality.

The Company’s recent product integration efforts are expected to augment supply scale, enhance audience targeting and provide greater return on spend for advertisers, as a result of eliminating intermediary point-solutions from the value chain. blinkx is

United States and Canada.

MARKET OUTLOOK

A number of key trends are driving evolution of the digital consumer and Industry.

More than ever, users are consuming content online, bypassing traditional television service providers. Cord cutting, and the rise of Over-the-Top (‘OTT’) service providers, demonstrates the convergence between traditional television and digital video. US advertising spend is growing at 11% per year and budgets continue to shift from traditional to digital channels, as advertisers follow

outpace television spend over the next few years.

In addition, users’ attention is becoming increasingly fragmented,

encompassing both user-generated and professionally produced content. Advertisers are challenged with following consumers across devices, targeting them with the right message at the right time, and managing a more diverse suite of channels and formats than ever. As a result, cross-screen advertising has emerged as a high-growth industry sub-sector, with advertisers seeking seamless audience targeting across devices. This cross-screen expansion is especially apparent in the growth of mobile and video spend. Mobile ad spend is expected to exceed desktop spend, with channel growth

mobile video spend is expected to grow at an impressive 18%

campaigns are viewed. By all accounts, audience targeting across devices will become a required capability in every supply provider’s arsenal.

Media buying mechanics also have shifted. Media buying is executed

Programmatic trading is now the dominant buying modality as the majority of media inventory is bought and sold through automated trading mechanisms, including auction-based Real-Time Bidding

was bought programmatically (59%) than through direct channels.

double by 2019. RTB is expected to account for 48% of display ad spending in 2020, with non-RTB programmatic accounting for an additional 17% of spend. Within RTB sales, mobile and video are

62% between 2015 and 2018.

This dynamic landscape is coupled with increased advertiser

audience quality and brand safety. A number of third parties have

assessing inventory quality. The Company has grown its quality supply footprint through the addition of owned and operated web

fraud screening technology that is integrated within the RhythmMax platform.

Finally, ad blocking and consumer privacy concerns are dominating headlines. This has resulted in an active dialogue around the value exchange that governs content consumption, as well as increased pressure on advertisers and brands to create compelling, relevant ad experiences for consumers. It has also led to increased interest in native advertising (where the ad experience mirrors the natural form and style of the digital medium in which it is placed), longer-form and experiential advertising.

BUSINESS OVERVIEW

BLINKX PLATFORM

CONTENT

APPS

BLINKX

CONSUMERSADVERTISERS

3

F O R W A R D I N T E G R A T I O NTHROUGH THE VALUE CHAIN

Unified, Unique Programmatic Platform to target engaged audiences at scale.

ATD: Agency Trading Desk, DSP: Demand Side Platform, SSP: Supply Side Platform, NWK: Network

BRAND AGENCY ATD DSP EXCHANGE SSP NWK WEBSITE CONSUMER

PURPOSE AND OBJECTIVE

The Company’s purpose is to connect digital audiences and brands through premium content across devices, at scale. By achieving this goal, blinkx adds value and aligns the interests of the three key constituents in its value chain:

CONSUMERS: Facilitate access to digital content.

and sustain the fair value exchange.

STRATEGY

blinkx’s strategy for Core product line growth incorporates a number of key components:

(video, search, display, social, etc.) and channel (desktop, mobile,

simplify the dialogue with customers, harnessing the breadth of the Company’s supply footprint, cross-screen targeting capabilities

reach discrete audiences across devices at scale, using the most appropriate formats to achieve campaign goals. This results in more

resulting in greater demand and cross-sell opportunity.

Today, over 2/3 of the US population consumes video online. Online

targeting and tracking capabilities inherent to online user activity. blinkx continues to focus heavily on video as a priority advertising format, and has enabled video advertising within its programmatic marketplace. As technology continues to develop and video buying continues to shift toward programmatic channels, this strategy will allow blinkx to capture migrating spend and position its inventory at premium rates within its marketplace.

THE SUPPLY CHAIN

blinkx historically has occupied portions of the supply side of the ecosystem. As the value chain has become more complex to accommodate programmatic trading, the revenue share equation has fragmented further to accommodate supply side platforms, demand side platforms and exchanges. blinkx has deliberately forward-integrated within the value chain, and assembled the

at scale to a buying platform for advertisers. The Company’s integrated programmatic platform further includes proprietary brand safety technology that screens and eliminates suspicious

around supply quality and brand safety. As a result, blinkx can

ranked #5 on Pixalate’s Trusted Seller Index, as at April 2016. This

one-stop shop for all advertiser needs, the opportunity to capture a greater share of each advertising dollar spent, and the ability to overlay data, quality metrics and targeting attributes on the Company’s supply base, resulting in greater demand and higher pricing.

OPERATING MODEL

The blinkx operating model consists of four key components: supply partners, demand partners, content (including desktop and mobile app providers) and underlying technology. blinkx matches audiences across thousands of sites and apps with content and ads in real time, using its contextual algorithms and programmatic trading capabilities. The Company earns revenue from advertisers seeking to present their messages to relevant consumers across devices and formats, and distributes a share of this revenue to the publishers, app owners and content providers within its ecosystem.

operating model, with supply and demand entities supported by

and legal functions. The sales function is fully consolidated to encourage cross-platform, integrated campaign selling.

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

device programmatic platform and consolidating the Company’s

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.

In addition to the supply consolidation within RhythmMax, further integration achievements during the Period included consolidation of

infrastructure and technology to reduce redundancies and streamline

cost structure and better align with changing Industry conditions,

OUTLOOK

blinkx anticipates a number of positive outcomes as a result of executing against its strategy. In the coming year, the Company

deriving from a number of well-understood growth drivers. These

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.

with a product portfolio that is well aligned with Industry growth trends. The Company continues to anticipate that FY2017 will be a

I FEEL CONFIDENT IN

OUR COMPANY’S FUTURE

AS WE CONTINUE TO

DIL IGENTLY STREAMLINE

OPERATIONS, DEVELOP

INNOVATIVE PRODUCTS

AND FOCUS ON OUR

MISSION TO BE THE

DOMINANT PROVIDER

OF QUALITY DIGITAL

AUDIENCES, ACROSS

DEVICES, AT SCALE.

4

Financial Year 2016 was a pivotal year for the online advertising industry in general and blinkx in particular. Consolidation dominated

supply side players seeking to complete end-to-end technology

scale challenges. Consumer privacy and concerns about supply quality placed additional pressure on the ecosystem as advertisers

challenges, digital advertising spend projections remain strong,

programmatic trading. The Company’s investment in Core product areas, integration achievements and actions to streamline operations place blinkx in a position of strength and differentiation in this dynamic environment.

During this past year, blinkx consolidated its offerings under a new brand, RhythmOne, which allowed the Company to make inroads with advertisers and brands looking for turnkey, cross-device solutions at scale. The Company actively focused on integration and investment in its Core mobile, video and programmatic offerings, which have grown from 50% of revenues in FY2015 to over 70% in FY2016. The Company successfully aggregated supply through its

its owned and operated web properties, and direct relationships with publishers and app developers. The platform is also one of the few

their digital marketing investments.

In addition to a strong, integrated product offering, the Company has also taken deliberate steps to drawdown on historical products that were considered Non-Core to future growth. As a result,

the expense of revenue associated with Non-Core streams. This operating discipline enabled the Company not only to preserve cash in an uncertain industry environment but, more importantly, build

future as we continue to diligently streamline operations, develop innovative products and focus on our mission to be the dominant provider of quality digital audiences, across devices, at scale. The entire blinkx team deserves recognition and praise for their

over the past year, which have helped to re-position the Company

During the year, blinkx also made several executive hires in product, sales, technology and marketing, who will play a critical role in driving future growth. This past year, the Board continued to bolster

was pleased to announce the appointment of Ms. Andy Cunningham as an independent Non-Executive Board member. She brings

management and strategic communications. Concurrently, after almost nine years on the Board (eight as Chairman), Mr. Anthony Bettencourt stepped down from the Board. The Company is grateful for his service and invaluable contributions to the Company over the years.

I would like to offer my thanks to all our shareholders, both private and institutional, as well as our customers, employees and partners, for their support of blinkx during this transformative year. The Board continues to be inspired by monumental changes that blinkx and the management team successfully executed during FY2016

I am enthusiastic about the near- and long-term prospects for the Company and its shareholders, and am looking forward to a successful FY2017.

Raj Chellaraj Chairman of the Board of Directors blinkx plc 16 May 2016

Raj Chellaraj Chairman of the Board of Directors

CHAIRMAN’S STATEMENT

5

one that was focused on integration and investment designed to reposition the Company given the rapid sector changes. blinkx

programmatic products and consolidated the Company’s supply sources, enabling advertisers to access inventory across devices and formats from a single platform. Simultaneously, blinkx accelerated the drawdown of certain historical Non-Core product lines that were no longer aligned with advertiser requirements.

alignment with Industry trends.

During FY2016, the online advertising industry continued

advertisers followed consumers online. As a testament to this trend, digital advertising spend in the US is set to overtake television spend in the next few years. Within digital, mobile

time this year, more display ads were bought programmatically than through direct channels. While the growth trajectory for mobile, video and programmatic trading remains strong, factors such as brand safety, viewability and consumer privacy have continued to impact industry dynamics. This has triggered scrutiny of supply quality, and highlighted a discrepancy in the value exchange equation between digital consumers, advertisers

integrated offering, and point solutions that face challenges of scale and scope, making them ripe for consolidation.

Against this industry backdrop, blinkx successfully grew its Core

over 70% of revenue during the Period, compared with 50% last year. As part of the RhythmOne portfolio, the Company launched

RhythmOne inventory across Owned, Controlled and Extended supply sources. The Company now boasts one of the largest supply footprints in the Industry, ranking #6 US platform by comScore and #12 by Quantcast, as at 31 March 2016. Our offering covers a comprehensive range of formats and devices, including desktop and mobile, video, rich media, social and native. Through RhythmOne, advertisers can reach target audiences to achieve measurable ROI at their desired spend level through a single entry point.

With growing advertiser concerns around viewability and

approach to brand safety. Our RhythmMax platform includes

our marketplace. The ability to prevent fraud before it occurs, rather than just measure fraud after a campaign has run, is a radically different approach to operating a programmatic

and enrich the inventory made available to advertisers through our

inventory quality.

been the ability to mine data across our inventory, covering over 300M users and all campaigns that run across our platforms. Increasingly, brands seek partners with proprietary data that

segment, target and deliver relevant advertising messages to their audiences. These capabilities support the Company’s audience-centric value proposition and help us break down traditional format- or channel-centric silos in how online

to the advertiser’s target audience and campaign performance. Indeed, the delineation between mobile and desktop spend will continue to blur, as advertisers focus instead on integrated

performance regardless of device.

The Company has also continued to innovate around its creative

blindness and the prevalence of ad blockers has become a distinct concern. In today’s environment, however, the need for high-impact creative must be balanced with practical requirements

enhanced its creative offering by adopting the Interactive Advertising Bureau’s LEAN (Light, Encrypted, Ad-choice supported, Non-invasive) formats and investing in a proprietary creative

ad units that can be deployed in direct or automated buying environments. Through these developments, blinkx is able to

teams and improving the experience for consumers.

Throughout the year, the Company consistently displayed strong

cost structure and better align with changing industry conditions,

as well as the Company’s integration efforts, we were able to

areas of the business. This included consolidating our physical

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

industry change will be instrumental as we look to drive future organic and acquisition growth.

In closing, FY2016 was transformative for the industry and pivotal for the Company. We believe that we now have the technology, talent and relationships in place to scale both organic and inorganic growth as the industry continues to evolve and consolidate. Through strong cost discipline and a strategic focus on Core mobile, video and programmatic products, we are now aligned

Subhransu (“Brian”) Mukherjee

blinkx plc 16 May 2016

THE CEO’S REPORT

6

Subhransu (“Brian”)

Mukherjee Chief Executive

THROUGH STRONG COST

D ISCIPLINE AND A STRATEGIC

FOCUS ON CORE MOBILE,

V IDEO AND PROGRAMMATIC

PRODUCTS, WE ARE NOW

ALIGNED WITH BROADER

STRUCTURAL MARKET TRENDS.

WE FEEL ENERGIZED AS WE

ENTER A NEW FINANCIAL YEAR

AND PLAN TO FOCUS OUR

ATTENTION ON REVENUE

GROWTH AND PROFITABIL ITY.

7

During the year we focused on integrating the acquisitions of the prior years, investing in our Core product lines, and made tremendous progress to increase the scale, scope and reach of the business in mobile, video and programmatic trading. Simultaneously, the Company drew down certain Non-Core product lines,

via an advertising-supported distribution model, where revenues are derived from online advertising. Advertisers select from several product types that are priced based on criteria of their choosing. Almost

bespoke online advertising goals. It is therefore not meaningful to separate the revenues by primary

operating segment, namely online advertising.

Total revenue for the year ended 31 March 2016 was $166.7 million compared with $215.0 million for the year ended 31 March 2015. The change in revenue was principally driven by a deliberate reduction of our Non-Core revenue streams that was partially offset by an accelerated trend toward programmatic trading.

Cost of revenue decreased to $100.4 million in the current year, compared to $120.4 million for the year

percentage of revenue increased due to a shift in product mix towards higher volume but lower margin products, which was in line with management expectations. The product mix shift supports management

operating expenditures.

2016, and represented 18% of revenue (2015: 14%) as we continue to invest in our Core programmatic platform.

Sales and marketing expenditure decreased by $17.1 million to $41.5 million for the year ended 31 March 2016, compared to $58.6 million for the year ended 31 March 2015. The decrease was attributable to cost reduction and integration initiatives, and the draw down of certain Non-Core product lines.

31 March 2016 from $13.7 million for the year ended 31 March 2015. Overall cost consistent with prior

incremental headcount and costs from the acquisitions.

Edward Reginelli THE CFO’S REPORT

8

KPI 2016 VS. 2015

2016 2015 2016 2015

Revenue 166.7 215.0 Headcount at 31 March 274 ees 363 ees

Research & Development Spend 30.2 30.1

Adjusted EBITDA* (10.5) 3.5 # of Publisher Partners 4,196 5,950

Net Loss (92.3) (20.8) # of Advertising Partners 656 1,269

Net Cash Used By Operating Activities (6.3) (3.0)

Cash and Marketable Securities 78.5 95.7

FINANCIAL ($’000) NON-FINANCIAL

EARNINGS AND TAX

by the non-cash impairment of $62.3 million of carrying values of goodwill and intangibles related to historical acquisitions, and the transition in our industry as a whole toward mobile and programmatic trading.

tax rate was 2% compared with 16% in the prior year.

CASH FLOW

loss from operations, technology investments and payment of deferred acquisition consideration. Net cash used in operating activities during the period was $6.3 million compared with $3.0 million of net used for the year ended 31 March 2015. Excluding payments of acquisition and exceptional costs of $3.0 million, the Company used $3.3 million

during the Period, compared to $2.5 million payment in the prior year.

The net cash used in investing activities was $70.2 million, compared to $27.9 million for the year ended 31 March 2015.

existing infrastructure and platforms.

31 March 2015. The current year activity primarily represents the payment of capital lease obligations made during the Period for the technology platform.

EXPENDITURE AND INTANGIBLES

Capital expenditures of $0.7 million for the Period ended 31 March 2016 with was consistent with prior year spend. The current year spend was principally driven by the acquisition of computer equipment and servers, which are complementary to the software license and needed to support the programmatic platform.

Investments in intangible assets of $4.4 million for the year ended 31 March 2016 decreased from the prior year spend

FINANCIAL POSITION AND OUTLOOK

million as of 31 March 2015. Net trade receivables at 31 March 2016 were $22.8 million compared with $37.7 million at 31 March 2015, which equates to 49 days sales outstanding, a decrease from the prior year which was 63 days.

OPERATING METRICS

Staff count at 31 March 2016 was 274 compared with 363 last year, the change primarily driven by restructuring reductions. The number of Publisher partner relationships decreased to 4,196 compared with 5,950 last year, driven by commercial efforts to improve quality supply and the shift in business to programmatic. The count of Advertiser

advertiser concentration.

CONCLUSION

invested in our key strategic priorities of mobile, video and programmatic trading to better align with broader Industry trends. Key hires were recruited in the product, sales, and technology and marketing teams, further strengthening our ability to respond to the continuing changes in the Industry landscape. We have taken major cost-reduction initiatives

continues to explore acquisition opportunities to further accelerate the scale, scope and reach of our business.

Edward Reginelli

blinkx plc 16 May 2016

FY2016 HAS BEEN A YEAR OF INTEGRATION AND INVESTMENT

FOR THE GROUP. WE HAVE INVESTED IN OUR KEY STRATEGIC

PRIORIT IES OF MOBILE, V IDEO AND PROGRAMMATIC TRADING

TO BETTER ALIGN WITH BROADER INDUSTRY TRENDS. WE HAVE

TAKEN MA JOR COST-REDUCTION INIT IATIVES DURING THE YEAR

TO ENSURE THAT WE PROTECT OUR CASH BASE, AND TO ENABLE

THE GROUP TO TAKE ADVANTAGE OF BOTH CURRENT AND

FUTURE OPPORTUNIT IES.

9

PRINCIPAL RISKS AND UNCERTAINTIES

New devices, content and ad formats, targeting features and distribution channels are constantly being introduced in the online advertising sector. There is therefore risk

latest innovations across the industry. We support internal research and development, and actively seek partnerships that allow us to access and serve ads against new and emerging digital content types. Moreover, we have a proprietary creative platform through which we are regularly introducing new ad types, features and functionality in response to competitor offerings or the unique needs of the brands and advertisers with whom we work.

The advertising technology industry has undergone rapid consolidation. Margin-compressed point solutions are being eliminated in favor of full-stack, end-to-end solutions. The newly consolidated environment presents risks in terms

both the supply and demand sides of the value chain as advertisers and publishers look to streamline relationships and platforms.

supply chain, allowing us to offer one of the few truly end-to-end solutions for advertisers and publishers. As

including owned and operated web properties and direct or exclusive relationships with top-tier publishers and app developers. In addition, one of the key differentiators

technology. The ability to prevent fraud before it occurs, rather than just measure fraud post-campaign, is a radically different approach to operating a programmatic

omni-channel providers.

The digital advertising space is rapidly changing and common standards around quality assurance have yet

viewability and other key advertising requirements could cause us to incur substantial development costs, and failure to comply with these industry standards could harm our reputation and business.

respected partners that we believe will lead the way to establishing this common bar for the industry. We are contributing to help shape these standards through our

and our work with several leading third-party experts to continuously test our product offerings. By continuously monitoring and contributing to this ongoing convergence of standards, we intend to stay on the cutting edge of what is expected and required of industry leaders.

Our business model is built on the value exchange between consumers and content providers. Ad blocking and consumer privacy concerns pose potential risks to our ability to serve and target advertising at scale.

the IAB’s LEAN (Light, Encrypted, Ad choice supported,

mitigate this risk by serving ads natively, in partnership with publishers, while still adhering to consumer preferences.

Our business depends on our core technology and we will continue to develop both the technology and its applications in online advertising. Technology that

claims against our technology, would present a risk

Management continually reviews the competitive landscape and newly developing technology in the sector.

and take appropriate action as necessary.

based and capture discretionary advertising spend. Such advertising spend is dependent on macro environmental industry conditions and elements outside of our direct control. If there is a negative change in economic and market conditions, this could impact the growth of the business.

product mix addresses multiple advertiser objectives, helping us avoid risk associated with product concentration.

Within the online advertising value chain, we use

Our business relies on our relationships with these entities, on which we place a high degree of importance.

to address different marketing objectives. The Company focuses on continuously expanding both its customer base and relationships with its commercial partners.

RISK MITIGATION

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RISK MITIGATION

properties for advertising inventory. Because only a small

third-party supply is variable and must be carefully

detect fraud or other actions that impact advertising

in our products, which could cause our business to suffer.

advertising environment for users and advertisers. Our

and screening technology and processes that make use of multiple sources of internal and external data, including whitelists, blacklists, scoring and blocked IPs. In addition, we have partnered with several third-party providers that offer independent and objective screening of our inventory

technology and partnerships, as well as publisher teams

pace with the industry. We have also appointed a Senior

Interruptions of services from our bandwidth providers, data centers, electricity providers and service providers may disrupt our business.

several geographic regions, each with their own service providers; bandwidth is provided by multiple ISPs in each physical location; data centers provide redundant power with battery and generator back-up in each physical location; and functions are distributed across the data

infrastructure for redundant and burst capacity.

interests may use personal communication platforms to freely disseminate information, which may be incorrect or misleading, and even sensational, damaging our reputation and commercial relationships.

that may impact commercial and investor relationships.

showcasing all aspects of the business. We intend to host further events to take the opportunity to communicate

foster a clear understanding of its business model.

Acquisitions have been, and are likely to remain, a critical

management attention. Any acquisitions we undertake may adversely affect our operations and, if not properly integrated, could disrupt our business model

impact, and ensure timely integration. This process covers

cultural match, deal execution and post-merger integration. The timely and impactful integration of our previous acquisitions, both throughout our history and over the past

for inorganic growth in the future.

and acquisitions since its inception. These growth paths

able to derive the full value of its acquisitions if it is unable to successfully integrate these acquisitions into its existing infrastructure and culture.

targets post-acquisition. This includes appointing a Corporate

processes, procedures and culture, and help integrate all key

the best available options for key functions or technologies to upgrade its infrastructure and staff.

Our contracts with buyers are generally not exclusive and do not typically require minimum volumes or long-term commitments leading to demand side risk. Our buyers generally work with competitors as well, meaning that any strain in the relationship due to service failures or other reasons may lead to that buyer canceling or scaling back their spend with us in favor of a competitor.

continuously develops new products and services designed to capture demand and further extend our relationships with partners. Additionally, we aim to comply with high service levels to ensure partner satisfaction and retention rates.

and its peers may lead to stock price volatility, negative

The Company works closely with analysts and shareholders to help explain the changes in the Industry, and has taken cost-control actions to align its cost structure to current market conditions.

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STRATEGY AND BUSINESS MODEL

2015 2016 2017 2018 2019 2020

Source: eMarketer, March 2016

69 6977

87

105

71 72 74 75 77

52 52 52 52

SECTOR OVERVIEW

The advertising industry continues to demonstrate healthy growth with spend estimated to be $192 billion in the US in

is currently the largest spend category, estimated at $71 billion in 2016. US online ad spend represents approximately 36% of total ad spend, but is growing at over double that of advertising

eMarketer estimates that digital advertising spend will be on par

This aligns with increasing online consumption trends

2016 alone, this translates to 5 hours and 43 minutes of time spent with connected devices compared with only 4 hours and

slow to transition, advertising spend is beginning to align with

mobile and video.

TOTAL US AD SPEND BY MEDIA, 2015-2020 ($B)

Digital TV Traditional (Ex. TV)

6054

96

53

12

Digital Ad Spend: Continued Strong Growth

Today, digital advertising is still dominated by search, which is estimated at 44% of total digital ad spend in 2016. While this direct response-focused channel is highly effective for advertisers, it’s estimated that display advertising (including

This growth is led by mobile and video, which are expected

users regularly consume video content through their smartphones.

Mobile & Video: Where Consumption Happens

Within online advertising, reaching consumers on mobile devices, and especially through video ad formats,

connected devices per capita is expected to reach 1.5 by 2020 (Cisco). According to eMarketer, while 34% of media

smartphones and tablets. Mobile is quickly becoming the device of choice for consumers. Time spent on mobile vs. desktop devices was approximately equal only three years ago. In 2016, consumers will spend over three hours/day on mobile devices, while just over two hours per day on their desktops (eMarketer, April 2016). Increased mobile consumption is driving budget shifts away from desktop to the mobile channel

consumers. By 2020, mobile spend will be well over double that of desktop ad spend ($77B vs. $28B) and mobile spend

years. While time and budgets spent on mobile devices are increasing, because of the fundamental technical convergence of the two channels (mobile and desktop), the opportunity

challenge being to target the user, not the device.

Concurrent with the growth of mobile is also a rise in digital video consumption. With 213 million viewers in the US this year, digital video is reaching over 2/3 of the US population (based on 2016 Census estimates, which put the US population at 323 million). According to Cisco, global consumer

and tracking capabilities inherent to digital experiences, making it an ideal format to deliver brands to an engaged

$10 billion in 2016 to approximately $17 billion by 2020. This healthy growth is due in part from shifting budgets from television, but also from additional digital channels (connected

consumption.

With mobile networks that enable consumers to watch video content anytime, anywhere, it is not surprising that mobile video, as a device and format combination, is one of the

a relatively small base. This spend is expected to grow from an estimated $4.2 billion in 2016 to approximately $8.1 billion in 2020.

US DIGITAL AD SPEND, BY FORMAT 2015-2020 ($B)Search Banners & other Video Rich media

27

12 14 15 17 18 20

8 10 12 13 15 17

6 8 9 11 13 14

2 2 2 2 2 2

3330

2015 2016 2017 2018 2019 2020

3742

46Sponsorships

US DIGITAL AD SPEND BY DEVICE, 2015-2020 ($B)

Desktop Mobile

28 2532

2015 2016 2017 2018 2019 2020Source: eMarketer, March 2016

25 25 27

4453

61

28

6977

TOTAL US DIGITAL VIDEO VIEWERS, 2015-2020 (M)

206 219213

2015 2016 2017 2018 2019 2020

225 229 232

TOTAL US DIGITAL VIDEO AD SPEND 2015-2020 ($B)

8

1210

2015 2016 2017 2018 2019 2020Source: eMarketer, March 2016

1315

17

13

Source: eMarketer, March 2016

Source: eMarketer, March 2016

Programmatic: The New Norm

display advertising was bought programmatically (59%) than through direct buys. This trajectory is anticipated to continue through 2017, at which time it is estimated it will represent almost three-fourths of all digital display ad spend (72%).

There are several ways to trade programmatically, one of the

model that allows advertisers to bid on advertising placements

over four years, RTB budgets in the digital display space will

nearly double from $12 billion in 2016 to $23 billion by 2019, according to BI Intelligence. Further, RTB will grow to be the dominant approach to programmatic buying by 2020, where it is estimated to represent 48% of spend in this category. Within RTB sales, mobile and video are projecting strong growth with an

These sector trends reinforce blinkx’s strategy to focus on Core areas of mobile, video and programmatic trading. Product, technology and integration efforts have coalesced around these growth vectors as we seek to create a turnkey environment for

buying methods.

GROWTH AND OPPORTUNITIES

Enhancing Our Core

Revenue, growth and investment in FY2016 focused on our Core areas of mobile, video and programmatic trading. The Company has

this investment and commitment deepening over the next 12 months.

to make enhancements and integrate supply sources through

included bringing together supply from our owned-and-operated properties (All Music, All Movies, SideReel, blinkx.com and

our extended network of aggregated supply. Integral to this were the 2015 acquisitions of All Media Networks and AdKarma. Collectively representing over 25M unique users per month, All Media represented an important step forward in the Company’s

bolstered the Company’s position within the programmatic segment of the digital video advertising market. The addition of transparent desktop and mobile video inventory at scale enabled the Company to expand its premium video advertising footprint through its direct and programmatic demand side relationships.

After its mid-year launch, the RhythmMax platform grew exponentially and now offers one of the largest supply footprints

in the industry. According to comScore, a leading cross-platform measurement company, in the US, blinkx currently boasts 176.7M

platform. According to Quantcast, a prominent data-intelligence

(as at 31 March 2016). The Company will continue to deepen and broaden its supply partnerships, looking to expand beyond

out-of-home. In addition, the Company will explore opportunities

these audiences continues to represent one of our key organic

today represent a captive and well-understood organic growth opportunity for the Company, which we are actively seeking to convert through direct and programmatic demand side relationships. In support of this, the Company has formed or renewed relationships with over 27 demand side platforms this year, including industry leaders such as The Trade Desk, Media Math, DataXu, BidSwitch, Criteo and Feature Forward, to name a few.

US PROGRAMMATIC DIGITAL DISPLAY AD SPEND, 2014-2017 ($B)

Source: eMarketer, October 2015

$10

$22

$15

2014 2015 2016 2017

$27

49%59%

67% 72%

Programmatic digital display ad spending% of total

14

SHARE OF DIGITAL AD REVENUE (US), 2015-2020

Source: BI Intelligence estimates based on historical data from IDC, PubMatic, and Magna Global

RTB Non-RTB Non-Programmatic

36%37%38%42%48%

2015 2016 2017 2018 2019

18%19%20%22%22% 47%44%42%37%31%

35%

2020

17%

48%

RTB AD SALES BY FORMAT, 2015-2018 ($B)

Desktop Display Mobile Video

Source: BI Intelligence Estimates, IDC

2015 4.9 1.4 1.1

6.5 2.9 2.02016

2017

2018

7.1 4.9 3.1

7.5 6.8 3.9

DEMAND SUPPLY

RHYTHMEXCHANGE

DIRECT

NETWORK

PROGRAMMATIC

RHYTHMGUARD

ADSERVER

TAGMANAGER

RHYTHMMAX FOR PUBLISHERS

OWNED

CONTROLLED

EXTENDED

T E C H N O L O G Y P L A T F O R M

Integral to the success of the RhythmMax programmatic platform has been the Company’s focus on audience quality and ad viewability. The mobile and video advertising space is rapidly changing and standards around quality assurance have yet to converge, though downward pressure from demand partners

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

enhance its supply quality. In addition to integrating our high-quality owned and operated properties into our supply footprint,

marketplace. Through this technology, we now operate one of the

inventory according to our measurement and demand partners.

the way to establishing a common bar for the industry. We are contributing to help shape these standards through our work

Bureau (‘IAB’), our participation in the Trustworthy Accountability

party experts, including Nielsen, Pixalate, comScore, Integral Ad

test our audience quality.

In addition to ongoing enhancements to the programmatic platform, blinkx has also improved the experience for its publishers and mobile app developers by providing a new publisher portal and universal ad tag, and making improvements to our mobile software development kit (SDK) to allow for faster installation, easier management and improved reporting. This aligns with our overall strategy to provide industry-leading management tools and reporting to our publisher partners to help

opportunities. These direct-to-publisher relationships help strengthen our controlled supply footprint, and offer additional and unique placement and targeting opportunities to brands.

Data and Targeting

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, and a compression in the number of intermediaries and point solutions between the consumer and the advertisers. Brands are willing to pay a premium for data that provides insight and transparency

of aggregating supply has been our ability to leverage the data we

IDs and data from campaigns run across our platforms. Not only will this allow the Company to offer more effective cross-device

targeting, it also presents an opportunity to enhance location and

Company has already begun to explore packaging this data in ways that resonate with advertisers, making our supply and ad units more attractive because of their ability to reach consumers with a compelling message any time, on any device, at scale.

Creative Innovation

Throughout the Company’s history, blinkx has provided differentiated ad units that enable an advertiser’s message to stand out in an often crowded marketplace, including unique video, rich media and native ad units. The call for this kind of

2016), 27% of US Internet users use some variety of ad blockers. This is due, in part, to the impact of less relevant, distracting, or performance-hindering creative. Thus, the need for creativity

and trackability. This trend is what has driven the IAB to create standards for L.E.A.N (Light, Encrypted, Ad choice supported, Non-invasive) ad formats. Not only has the Company adapted to support these formats, but blinkx has also invested in a creative management platform that allows for simple development and

buying environments. Through these developments, blinkx is able to streamline operations and simplify campaign execution,

experience for consumers.

The Impact of Consolidation

There are other factors that will likely impact the Company’s trajectory. Key among these is consolidation. According to Ad Exchanger, there were over 120 major M&A transactions in

programmatic and mobile deals. Point solutions are becoming increasingly unsustainable and some platforms that have achieved

by developing a full-stack, end-to-end platform that connects audiences with brands across devices, at scale, from a

Through our Core focus on key growth areas of mobile, video and programmatic, blinkx is well-positioned to capture the budgets

solutions to reach their audience in compelling and dynamic ways. Over the next 12-18 months, the Company will remain focused on deepening our supply footprint, maintaining the highest quality standards, and innovating around data targeting and

operating environment. We are fortunate to have a capable,

15

US RANKINGS

RANK SELLER NAME FINAL SCORE REACH SCORE NETWORK SCORE1 OpenX 93 A 98 A 88 B 89 A 98 A 91 A 92 A2 Sovrn 93 A 96 A 91 B 89 A 98 A 91 A 89 A

3 Google AdExchange 92 A 99 A 85 B 85 B 97 A 89 A 99 A

4 Index Exchange 92 A 95 A 92 B 90 A 92 A 89 A 87 A

5 RhythmOne 91 A 93 A 90 B 88 B 97 A 88 A 97 A

INTERNATIONAL (EX-US)

RANK SELLER NAME FINAL SCORE REACH SCORE NETWORK SCORE1 Sovrn 94 A 95 A 96 A 92 A 99 A 92 A 86 A2 RhythmOne 94 A 92 B 97 A 93 A 98 A 86 B 89 A3 OpenX 93 A 96 A 90 B 93 A 96 A 89 A 89 A4 PubMatic 93 A 96 A 94 B 93 A 94 A 85 B 87 A

5 Google AdExchange 93 A 99 A 91 B 85 B 98 A 87 B 99 A

Pixalate’s Global Seller Trust Index, April, 2016

QUALITY RANKINGS

ECOSYSTEM

The digital advertising ecosystem functions on the principle of fair value exchange. Consumers gain access to quality content online

producer and advertiser.

In exchange for the consumer’s engagement, the advertiser pays the web publisher or app developer, who shares a portion of the revenue with the content producer. This event is repeated millions of times daily, creating a massive fragmentation challenge that must be solved in milliseconds at scale. blinkx solves this challenge by aggregating audiences from thousands of supply sources, and matching these audiences with relevant content and ads, using sophisticated algorithms and high-speed trading technology. Looking at our value exchange diagram, the left side of the diagram represents demand. The right half represents supply. We have grown our supply footprint through organic audiences and acquisitions to extend the scale, scope and reach of our revenue model. On the demand side, we have

prevalent means of buying and selling inventory. In the future, we expect to continue to add audiences from new and emerging sources,

The majority of blinkx’s revenue is generated from online advertising through a wide range of formats and pricing options that include video, mobile, social, display, native, text and rich media covering brand and performance advertising campaigns, sold both directly and programmatically. Through organic growth, selective acquisitions and unique technological advancements, we have created a growing ecosystem of audiences, publishers and app developers. In addition to our scale, scope and reach across the online advertising ecosystem, we believe that blinkx is uniquely positioned within our competitive arena. We have strategically forward-integrated to enable us to service the entire supply side of the value chain, across all connected devices. This breadth includes access to professionally generated content through our extensive web publisher and mobile app developer

programmatic advertising relationships. As purchasing behavior within the sector has transitioned to automated, omni-channel

adapted in response.

At the core of blinkx’s commercial model is technology that lets us target consumers by deeply understanding the context of any online medium, including the device they are using to access the

they are viewing (text, video, etc.) and the type of consumer

enabling us to serve the right message, at the right time. This proprietary technology helps us deliver ROI to the advertiser and relevance to the consumer. Coupled with our brand safety

the ad impression is viewed, and avoid the waste generated by

has enabled us to move from selling units to executing integrated, goals-driven campaigns on behalf of advertisers.

products that include display, rich media, contextual advertising, social media solutions and more.

audiences these partners have built. Content partners achieve distribution of existing content assets to an incremental audience, with the associated revenue share. Demand partners can access audiences at scale within a brand-safe environment, based on blinkx’s audience data and targeting capabilities. Over time, we have built a thriving partner ecosystem and network-effects model that grows in all dimensions each day, and constitutes a

COMMERCIAL MODEL

16

AWARENESS(Video, Display)

INTEREST(Social)

CONSIDERATION(Email)

CONVERSION(Search)

VISITS$0.01/Visit

AUDIENCES$0.05/Profile

SIGNUPS$0.25/Lead

PURCHASE$1.00/Click

BRAND

PERFORMANCE

OBJECTIVES(FORMATS)

METRICS(EXAMPLE PRICING)

D I G I T A L M A R K E T I N G

THE VALUE EXCHANGE

ATD: Agency Trading Desk, DSP: Demand Side Platform, SSP: Supply Side Platform, NWK: Network

P U B L I S H E R SWEBSITE, APP

C O N T E N T P R O D U C E RTEXT, VIDEO, PHOTOS

C O N S U M E RAUDIENCE

A D V E R T I S E RAGENCY / BRAND

BRAND AGENCY ATD DSP EXCHANGE SSP NWK WEBSITE CONSUMER

$$

ATTENTION!

PROGRAMMATIC TRADING

An increasingly dominant subset of our commercial model is devoted to programmatic buying and selling of inventory. The programmatic value chain has supply and demand sides, with a central stack of technology that enables Real-Time Bidding (RTB). The edges of this

planning and creative execution. The center tends to be high-tech, with value chain elements devoted to scale and trade automation. On the supply side, consumers are aggregated by publishers that are aggregated by ad networks, which in turn are aggregated by SSPs.

aggregated by agencies (and their trading desks), which in turn are aggregated by DSPs.

brand-safe environment across devices programmatically. It also enables the Company to offer its publisher partners a universal platform

Traditional exchanges serve as brokers between supply and demand partners, leaving advertisers to assess and measure inventory

blinkx’s ability to run query-time algorithms to identify poor quality impressions and block them from entering its marketplace. By

PRODUCTS

T E C H N O L O G Y ( P L A T F O R M )

RHYTHMONE PLATFORM TECHNOLOGY

C O N T E N T ( T E X T, V I D E O , A P P S )

RHYTHMONE FOR CONTENT

C O N S U M E R S( P U B L I S H E R S )

RHYTHMONE FOR PUBLISHERS

B R A N D S( A D V E R T I S E R S )

RHYTHMONE FOR ADVERTISERS

ATD: Agency Trading Desk, DSP: Demand Side Platform, SSP: Supply Side Platform, NWK: Network

17

BRAND AGENCY ATD DSP EXCHANGE SSP NWK WEBSITE CONSUMER

BLINKX BELIEVES THE ONLINE

ADVERTIS ING SECTOR WILL CONTINUE

TO GROW AND TRANSFORM AT A RAPID

PACE. THE COMPANY ALSO BELIEVES

THAT ADVERTISERS WILL CONTINUE

TO REWARD FULLY INTEGRATED

SUPPLY PARTNERS THAT DELIVER

AUDIENCE-CENTRIC , CROSS-SCREEN

ADVERTIS ING CAPABIL IT IES AND CLEAR

MEASUREMENT AROUND CAMPAIGN

EFFECTIVENESS AND SUPPLY QUALITY.

18

CORPORATE GOVERNANCE REPORT

OVERVIEWThe Directors recognize the value and importance of the highest standards of Corporate Governance. We strive to comply with theprinciples and provisions of corporate governance as far as practicable for a Group of its size and structure, even though as the Group islisted on the AIM Market of the London Stock Exchange, it is not required to comply fully with the principles of Corporate Governance asset out in the UK Corporate Governance Code (the Code). This report sets out the Governance approach.

ROLE AND COMPOSITION OF THE BOARDThe Board’s role is to provide entrepreneurial leadership of the Company within the controls framework of the Group, which enables riskto be assessed and mitigated. The Board is focused on ensuring that the risk register and management of those risks remain pertinentin the face of a continually evolving business. The principal risks and uncertainties are reviewed regularly, and are set out on pages 10to 11. Whilst it is recognized that the Group is subject to a number of risks greater than this list, we include those that are of mostconcern and relevance to the business at this point in time. The Board is also responsible for articulating the Company’s strategic aimsand ensuring that the business has the resources necessary to enable the Company to meet its objectives. It also determines theCompany’s values and standards, and ensures that its obligations to shareholders are met.

The Board is comprised of one Executive Director, and the remaining six Board members are Non-Executive Directors. Corporategovernance guidelines for AIM companies issued by the Quoted Companies Alliance require that boards should be “balanced betweenExecutive and Non-Executive Directors, and should have at least two independent, Non-Executive Directors.” At the year-end date,blinkx exceeds this requirement, with six of the seven Board Directors being independent, Non-Executive Directors.

The beneficial interests of the Non-Executive Directors in the share capital of the Company are set out on page 26. In the opinion of theBoard, these interests do not detract from the Directors’ independence. In the event of a conflict of interest, the relevant Director isrequired to declare the conflict and, where appropriate, abstain from voting on any resolutions connected to it.

DIVISION OF RESPONSIBILITIESThere is a clear division of responsibility at the head of the Company between the running of the Board, which is delegated to theChairman, Mr. Raj Chellaraj, and the executive responsibility for the running of the Company’s business, which is delegated to the ChiefExecutive Officer, Mr. Subhransu (“Brian”) Mukherjee. As Chairman, Mr. Chellaraj is responsible for leadership of the Board, setting theBoard’s agenda, and ensuring that there is sufficient time available for discussion of all agenda items. The Non-Executive Directors donot have any day-to-day involvement in the running of the business. They work together to constructively challenge and assist in thedevelopment of strategic proposals and to fulfill the Board committee roles.

The Board convenes at regular scheduled intervals and follows a formal agenda of matters specifically reserved for discussion, includingsuch matters as:

! determine the Group’s strategy;! ensure open and informative communication with shareholders;! review and manage risks;! evaluate major capital expenditures;! evaluate material contracts to be entered into;! shape key operational policies;! review and approve the Group’s business plan and forecasts;! measure performance; and! approve the annual and interim financial statements.

It also meets outside of the formal schedule of meetings as and when required. The number of formal meetings of the Board during theyear ended 31 March 2016, and attendance at each are summarized below:

DIRECTORNUMBER OF MEETINGS

DURING APPOINTMENTNUMBER OF MEETINGS

ATTENDED

Raj Chellaraj 14 14

Subhransu (“Brian”) Mukherjee 14 13

Suranga Chandratillake 14 11

Mark Opzoomer 14 13

Ujjal Kohli 14 11

Judy Vezmar (resigned 18 August 2015) 7 3

Anthony Bettencourt (resigned 31 March 2016) 14 8

Andrea Lee (“Andy”) Cunningham (appointed 1 March 2016) - -

In the event that any Director is unable to attend a meeting, they have the opportunity to relay their comments through the Chairman.If the Chairman is absent, another Non-Executive Director is appointed Chairman for that meeting. At certain times, where there maybe a perceived conflict due to the subject matter of a meeting, a Director is recused from that meeting. The size and composition of the

19

Board is regularly reviewed to ensure that it is of an appropriate size and structure. The Directors may take independent professionaladvice at the Group’s expense, and all are covered by Directors and Officers insurance.

BOARD COMMITTEESThe Board has established an Audit Committee, Nomination Committee and a Remuneration Committee. These Committees comprise asmall sub-committee of the main Board and are entirely made up of Non-Executive Directors. Each has its own terms of reference andresponsibilities. The reports of each Board Committee are set out later in this document.

EFFECTIVENESSWe have considered the overall balance between Executive and Non-Executive Directors and believe that the structure of the Board,coupled with the integrity and commitment of the individuals which make up the Board, ensures that no one individual has a greaterproportion of decision-making power. The Board has a good balance between financial, industry-specific and general businessknowledge experience, with a highly experienced executive management team. All Directors are considered able to dedicate sufficienttime to their role to ensure that they can discharge their responsibilities effectively.

On joining the Board, all new Directors receive a comprehensive induction to introduce them to the business, enhance their knowledgeof the industry and to meet the key personnel across the Group. The Board is committed to a culture of continued personaldevelopment, and all members of the Board are encouraged to undertake any training which will enhance their understanding or abilityto serve the Board and refresh their knowledge. Regular updates on Corporate Governance are also provided.

Board effectiveness is reviewed regularly. The most recent review, shortly after the year end, concluded that the Board and itsindividual members continue to perform effectively. The review considered a general overview as to the operation of the Board, opinionson shareholder relationships, views on the Board’s inputs into strategy, governance and compliance, risk management and successionplanning.

INFORMATION AND SUPPORTThe Board is supplied with information in a form that enables it to discharge its responsibilities effectively. Board papers are supplied ona timely basis, with sufficient time for the Board to review and raise questions ahead of the formal meeting to which they relate. Theculture of the Board is to encourage participation and active debate in a constructive and supportive manner.

RELATIONSHIPS WITH SHAREHOLDERSThe Board believes in open and regular dialogue with shareholders to ensure that the objectives and overall business strategy of theGroup are effectively communicated. As such, the Chief Executive Officer, Chief Financial Officer and the Chairman, working inconsultation with the Group’s corporate brokers and advisors, make themselves available to meet shareholders at least once a year atthe Annual General Meeting. There are also a series of meetings with analysts and institutional investors in relation to the Company’sannual and interim financial statements.

The Non-Executive Directors make themselves available to meet shareholders on an ad hoc basis as necessary, and consider the AnnualGeneral Meeting a good opportunity to canvas opinion and hold discussions with individual shareholders. The Board makes constructiveuse of the Annual General Meeting to communicate with investors and encourages full participation.

Trading updates and press releases are issued as appropriate and the Company’s brokers provide information on shareholder opinionand compile independent feedback from investor meetings.

INTERNAL CONTROL AND RISK MANAGEMENTThe Board acknowledges its responsibility for ensuring that the Group maintains a sound system of internal control to provide them withreasonable assurance that the assets of the Group are safeguarded and that the shareholders’ investments are protected. It hasestablished a continuous process for identifying, evaluating and monitoring the significant risks to which the Group is exposed.

The Board has overall responsibility for ensuring the Group maintains an adequate system of internal control and risk management,while the Audit Committee reviews the effectiveness of those systems on behalf of the Board. This review is performed at leastannually. The implementation of internal control systems is the responsibility of executive management. The organizational structure ofthe Group has clearly defined lines of responsibility and delegation of accountability and authority.

The Board’s review of the significant risks in the year covered financial, operational, commercial, regulatory, fraud and R&D risks. Therisk review is an ongoing process with at least annual input and review from the Board. The prime purpose of this review is to ensurethat, having considered the controls that are in place to mitigate risks, the Board is satisfied with the residual level of risk being taken inpursuit of the Company’s strategy.

Our risk review comprised:

! the review of the risk register, considering the ongoing pertinence of each risk, and whether changes in the business meant thatadditional risks had been identified which should be added to the register. All risks were recorded in a centrally maintained register;

20

! risk assessment, which is performed in terms of the likelihood of occurrence and the potential impact on the Group; and! identification of appropriate mitigating actions for each risk, with responsible parties and a timetable for completion assigned.

Any system of internal control is designed to manage, rather, than eliminate, the risks inherent in a fast-moving industry, and cantherefore, only provide reasonable, and not absolute assurance against the possibility of material misstatement or loss. However, duringthe course of its reviews of the system of internal control during the year, the Board has not identified, nor been informed of anyinstances of control failings or significant weaknesses.

The Board also operates a whistleblowing policy which provides for all employees to raise concerns to the Audit Committee, in strictconfidence about any unethical behaviors, suspected fraud, misconduct or wrongdoing without fear of recrimination. There were nowhistleblowing reports throughout financial year 2016, and to the date of this report.

FINANCIAL REPORTINGThe Board is responsible for reviewing and approving the annual and half year financial statements, and for ensuring that they present afair, balanced and understandable assessment of the Group’s position and performance. The Strategic Report, on pages 12 to 18 setsout the information necessary to enable readers to understand the business model and strategy.

Drafts of the annual and half year financial statements are reviewed by the Board prior to approval with a formal process for addressingcomments from the Board.

The Board is cautious and measured in respect to investing the Group’s surplus funds and in relation to treasury planning. The Board’sobjectives are to minimize risk whilst achieving maximum return on liquid assets. Risk is limited by investing cash surplus only inhighly-rated financial institutions and instruments. Foreign currency risks are managed through natural hedges with currency bankaccounts. The Group has not experienced any material exposure to price risk, liquidity risk or cash flow risk that would affect theultimate objectives of the Group. Further details on the Group’s financial risk management policies are included in note 25 to thefinancial statements.

Detailed working capital projections and forecasts are prepared by management, and reviewed and approved by the Board at leastannually. These are updated throughout the year for significant events. Actual monthly results are compared to forecasts and variancesinvestigated and explained by the executive management team. There are no external capital requirements or financial covenants thatthe Group has to abide by, and the Board’s consideration of going concern is discussed on page 32.

21

BOARD OF DIRECTORS

The Directors who served throughout the year to 31 March 2016 and to the date of this report were as follows:

NAME AGE POSITION

Raj Chellaraj 60 Non-Executive Chairman

Suranga Chandratillake 38 Non-Executive Director

Andrea Lee (“Andy”) Cunningham 59 Non-Executive Director

Ujjal Kohli 57 Non-Executive Director

Subhransu (“Brian”) Mukherjee 49 Executive Director

Mark Opzoomer 59 Non-Executive Director

Ms. Judy Vezmar indicated her intention to resign from the Board of Directors, which was accepted by the Board on 19 May 2015.Ms. Vezmar served out her notice period on the Board, through 18 August 2015.

On 1 July 2015, Mr. Anthony Bettencourt stepped down as Chairman of the Board of Directors and concurrently Mr. Raj Chellarajassumed the role.

Mr. Anthony Bettencourt indicated his intention to resign from the Board of Directors, which was accepted by the Board on 1 March2016. Mr. Bettencourt’s resignation was effective on 31 March 2016.

On 1 March 2016, Andrea Lee (“Andy”) Cunningham joined the Board of Directors as a Non-Executive Director.

RAJ CHELLARAJBased in Palo Alto, California, Raj currently serves as the Non-Executive Chairman of blinkx.He also serves as Associate Dean for Finance and Administration at the Stanford BusinessSchool and as the Chief Operating Officer at the Stanford Institute for Innovation inDeveloping Economies (SEED). Prior to joining Stanford University, Raj held several seniorgovernment positions. Most recently, he was the Assistant Secretary of State forAdministration in the United States Department of State, to which he was nominated byPresident George W. Bush and confirmed unanimously by the United States Senate.Previously, he was a Senior Executive Officer at the United States Mint in Washington DC. Inaddition to his public sector expertise, Mr. Chellaraj has several years of senior corporateleadership experience, most recently as Vice President, Planning, at Hostess BrandsCorporation, part of Ripplewood Holdings, where he was a member of the CEO’s SeniorLeadership Team. Earlier, he served as Director of Corporate Development at CelaneseCorporation, a Blackstone Group Company. He also held various management, finance,operations and planning roles at Exxon Corporation, Strategic Analysis Inc. and FMC

Corporation. Raj holds an M.P.A. in Business and Government Policy from Harvard University, an M.B.A. in Finance from New YorkUniversity, an M.S. in Chemical Engineering from Clarkson University and a B.S. in Chemical Engineering from Madras University, India.

SURANGA CHANDRATILLAKESuranga is a General Partner at Balderton Capital. He was previously an entrepreneurand engineer. Suranga founded blinkx, the intelligent search engine for video andaudio content, in Cambridge in 2004. He then led the company for eight years as CEOthrough its journey of moving to San Francisco, building a profitable business andgoing public in London. He continues to serve on the blinkx Board. Before foundingblinkx, Suranga was an early employee at Autonomy Corporation—joining as anengineer in the Cambridge R&D team and ultimately serving as the company’s USCTO in San Francisco.

Suranga has an M.A. in Computer Science from the University of Cambridge. Heholds patents in the areas of video discovery and online video advertising, waselected a Fellow of the Royal Academy of Engineering in 2012, and was chosen as oneof the World Economic Forum’s Young Global Leaders in 2009.

22

ANDREA LEE (“ANDY”) CUNNINGHAMAndy brings over thirty years’ experience in building world class brands, helping to acceleratecommercial growth, increase shareholder value and advance corporate reputation. Shecurrently serves as founder and president of Cunningham Collective, a brand strategy firmdedicated to bringing innovation to market. The firm has worked with numerous premierbrands in various sectors including telecommunications, search, energy, media and publishing,finance, mobile, healthcare and big data.

Andy began her career at Regis McKenna and helped Steve Jobs and Apple launch theMacintosh computer in 1984. When Jobs left Apple to form NeXT and acquire Pixar, heselected Andy to represent him for several years. Following her work with NeXT, Andy hasfocused on marketing, branding and communication strategies for game-changingtechnologies and companies. She directed product launches within a number of emergingcategories such as video games, personal computers, desktop publishing, digital imaging,

microprocessors, software, performance jet aviation and clean technology. Andy has previously served as CMO for both Avaya (formerlya part of Lucent Technologies and AT&T) and Deem (formerly Rearden Commerce), and as CEO of several organizations namely BiteCommunications, CXO Communication and Citigate Cunningham.

Ms. Cunningham currently serves on several Boards: Specialized Bicycle Components, Inc., Finelite, Inc., The Aspen Institute, MenloCollege, Northwestern University Medill School of Journalism, and ZERO1: The Art & Technology Network. Her past Board positionsinclude the international Board of Young Presidents’ Organization (YPO), the Northern California chapter of the World Presidents’Organization (WPO), the international Board of Chief Executives Organization (CEO), the Peninsula Open Space Trust (POST) and theComputer History Museum. She is an Aspen Institute Henry Crown Fellow and holds memberships in WPO, CEO, TED and WomenCorporate Directors. Andy holds a B.A. from Northwestern University.

UJJAL KOHLIUjjal Kohli joined the Board of Directors in 2014 as a Non-Executive Director. Ujjal brings overtwenty-five years of executive management, engineering, marketing, strategy, M&A andBoard level experiences to blinkx. Ujjal co-founded and led Mountain View-headquarteredRhythm NewMedia (“Rhythm”) as CEO, before its acquisition by blinkx in December 2013.Under his leadership, Rhythm emerged as a dominant mobile video technology and advertisingplatform for tablets and smartphones—working with ultra-premium media partners, includingNBC Universal, CBS, ABC, Fox, and Warner Bros., as well as top brand advertisers, such asDisney, McDonald’s, General Motors, Ford, AT&T, Verizon, and Macy’s.

Ujjal is currently the CEO of Preact, a SaaS company in predictive analytics, and before Rhythm,Ujjal co-founded and served as CEO of Meru Networks (NASDAQ: MERU). Prior to this he wasEVP of Marketing and National Sales for AirTouch Cellular, and was part of the Executive teamthere. AirTouch merged with Vodafone (LSE: VOD) in a $60B transaction in 1999.

Previously, Ujjal was a consultant with McKinsey and Company in London, Los Angeles and Silicon Valley. Mr. Kohli has also been aninvestor, advisor, and a previous Board member at several technology companies, including Magma Design Automation, BerkeleyNetworks, ByteMobile, Maverick Semiconductor, Convergenet, and WirelessHome. Ujjal holds an M.B.A. from Harvard Business School,an M.S. in Electrical Engineering from the University of Rochester and a BTech in Electrical Engineering from the Indian Institute ofTechnology, New Delhi.

SUBHRANSU (“BRIAN”) MUKHERJEEBrian is the Chief Executive Officer of blinkx (LSE: BLNX.L). With a strong Strategy,Operations and Engineering background, Brian has helped build and transform several publicand private Technology and Media businesses globally. Brian joined the Company in 2011through the acquisition of Prime Visibility Media Group, Inc. (PVMG), where he was thePresident & CEO after its sale to blinkx. Before PVMG, Brian was the Senior Vice President &Group Managing Director of Miva, Inc. (NASDAQ: MIVA), responsible for the turnaround andeventual sale of its global Media Division. Earlier in his career, Brian held executive, staff andline management positions at several Private Equity and Venture-backed Internet, mobile andsoftware companies where he played pivotal roles in building high performance teams,accelerating growth and profitability, raising capital, mergers, acquisitions and exits. Brianstarted his career as an Engineer and a Strategy Consultant. He currently serves on theBoard of Directors of Strategic Pharma Solutions, LLC and Inflexxion, Inc. Brian holds B.E.(Honors) and M.S. (Honors) degrees in Engineering, and an M.B.A. (Honors) from theUniversity of Chicago, Booth School of Business.

23

MARK OPZOOMERMark Opzoomer has extensive knowledge of Internet, communications and media markets inmany different countries and 25 years of corporate operating and deal making experience. Markis currently a partner in Bond Capital Partners, a Non-Executive Director of Entertainment OneLimited, Benross Golf Limited and Non-Executive Chairman of Somo Global Limited. PreviousNon-Executive directorships include Web Reservations International Limited, Newbay SoftwareLimited, Autonomy plc and Miva Inc. Previous operating experience includes CEO of RamblerMedia Limited, regional Vice-President of Yahoo! Europe, Deputy Chief Executive of HodderHeadline plc, Commercial and Finance Director of Sega Europe Ltd and Commercial Director ofVirgin Communications Ltd. Mark qualified as a chartered accountant through the CanadianInstitute of Chartered Accountants and has an M.B.A. from IMD, Lausanne, Switzerland.

24

REMUNERATION COMMITTEE REPORT(UNAUDITED UNLESS STATED OTHERWISE)

The Remuneration Committee (hereafter referred to as “the Committee” in this report) is appointed by the Board, and is formed of Non-Executive Directors. The Committee was chaired by Ms. Vezmar, up to her resignation date of 19 May 2015, and subsequently chairedby Mr. Ujjal Kohli. Other members of the Committee included Anthony Bettencourt and Suranga Chandratillake. Mr. Bettencourtresigned from the Board and Remuneration Committee effective 31 March 2016 and was replaced by Andy Cunningham.

The Committee’s principal responsibilities are:

! to review and make recommendations in relation to the remuneration policy;! consult with key shareholders on compensation-related proposals and recommendations;! apply these recommendations to the Executive Director, and senior members of the executive management team;! determine the metrics for the bonus scheme of the executive management team;! ensure that the policies and metrics are aligned with the Company strategy; and! to consider and award other performance-related benefits such as Restricted Stock Units (RSUs) and Market Value Share Options

(MVSOs), as and when appropriate.

The Committee met twice during the year, and details of the attendance at the meetings of the Committee are as shown below. TheCommittee’s terms of reference are available for public inspection on the Company’s website—www.blnx.com

26 JUNE 2015 4 FEBRUARY 2016

Ujjal Kohli ✓ ✓

Suranga Chandratillake ✓ ✓

Anthony Bettencourt ✓ ✓

Judy Vezmar - -

An external consultant, New Bridge Street (NBS), was appointed to advise on all aspects of senior executive remuneration. NBS has noother connection with the Company other than in the provision of advice on executive and employee remuneration. In addition, theCompany participates in the Global Technology Survey conducted by Radford, a division of the AON Hewitt Company, to benchmarkcompensation structures across functions, levels and locations.

PAY PHILOSOPHY

The remuneration policy continues to be designed to ensure that senior managers and Executive Directors are appropriately incentivizedand rewarded for their performance, responsibility and experience. The Remuneration Committee aims to ensure that the policy alignsthe interests of the Executive Director with those of the shareholders.

The Company’s pay policy is designed to ensure salaries and bonus amounts are paid at or around market levels. Equity awards arelinked to performance conditions which more closely aligns with long-term value creation for shareholders.

PAY POLICY FOR EXECUTIVE DIRECTORS

Remuneration at the Company for Executive Directors is comprised of three elements: base salary, annual bonus and long-term equityincentives. Details of the CEO’s remuneration are indicated below.

BASE SALARY AND ANNUAL BONUS

The Chief Executive’s base salary and bonus opportunity was adjusted in FY2016 to bring in line with market levels when compared toboth US and UK competitors. The bonus opportunity for FY2016 was based on achievement of FY2016 Revenue, adjusted EBITDAtargets and Management Business Objectives (‘MBOs’).

LONG-TERM INCENTIVES

During FY2016, equity awards were made in MVSOs that vest quarterly and have been in use within the Company since the IPO, butwith an additional performance component where the equity awards require a minimum stock price threshold for options to vest and anaccelerated vesting schedule upon the stock price reaching certain predetermined thresholds above the stock price at grant. TheCommittee believes that along with the performance criteria for bonus eligibility that addresses operational excellence, the quantum andperformance criteria for the equity grants fully aligns the interests of the shareholders and management team to drive long-term value.No other long-term plan awards, such as Restricted Share Units (RSUs), were granted during the fiscal year 2016.

25

The table below sets out the beneficial interests in shares and vested share options of the Directors holding office at year end (audited).

INTERESTS INORDINARY SHARES

INTERESTS INSHARE OPTIONS

INTERESTS INRSUs TOTAL

DIRECTOR

AT31 MARCH

2015NUMBER

AT31 MARCH

2016NUMBER

AT31 MARCH

2015NUMBER

AT31 MARCH

2016NUMBER

AT31 MARCH

2015NUMBER

AT31 MARCH

2016NUMBER

AT31 MARCH

2015NUMBER

AT31 MARCH

2016NUMBER

Anthony Bettencourt 50,000 50,000 - - - - 50,000 50,000

Suranga Chandratillake 93,102 159,770 2,487,179 2,487,179 100,000 33,330 2,680,281 2,680,279

Ujjal Kohli 46,867 46,867 - - - - 46,867 46,867

Subhransu (“Brian”)Mukherjee 550,000 750,000 2,080,000 9,080,000 300,000 100,000 2,930,000 9,930,000

Mark Opzoomer 400,000 400,000 - - - - 400,000 400,000

Raj Chellaraj 50,000 50,000 - - - - 50,000 50,000

PAY POLICY FOR NON-EXECUTIVE DIRECTORS

Fees for Non-Executive Directors are set with reference to time commitment, the number of committees chaired and relevant externalmarket benchmarks. Other than covering travel expenses, no additional fees or equity compensation is provided to Non-ExecutiveDirectors for ad hoc services, such as Committee memberships, Board meetings, etc.

PAY AND CONDITIONS ELSEWHERE IN THE GROUP

No element of remuneration is operated exclusively for Executive Directors and the philosophy of using variable remuneration to drivethe Company’s performance is applied to all roles throughout the Group. All employees are eligible for an annual bonus and some seniorroles are eligible to receive share options. When setting the quantum of remuneration for Executive Directors, the Committee considersthe pay differential between Executive Directors and other roles.

SERVICE AGREEMENTS

The Chief Executive’s Service Agreement provides that his employment with the Company is on an “at will” basis which means thateither the Executive or the Company shall be entitled to terminate employment at any time, and for any reason, with or without cause.In line with typical US practice, the Service Agreement includes a number of protections for the Chief Executive in the event of atermination of his employment in certain circumstances.

All Non-Executive Directors’ appointments are terminable on at least three months’ notice on either side.

The current service contracts and letters of appointment of the Directors include the following terms:

DIRECTOR DATE OF CONTRACT NOTICE PERIOD

EXECUTIVE DIRECTORS:

Subhransu (“Brian”) Mukherjee 19 July 2012 3 months

NON-EXECUTIVE DIRECTORS:

Ujjal Kohli, Chairman 20 February 2014 3 months

Suranga Chandratillake 9 May 2007 3 months

Mark Opzoomer 9 May 2007 3 months

Raj Chellaraj 1 October 2014 3 months

Andrea Lee (“Andy”) Cunningham 1 March 2016 3 months

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DIRECTORS’ REMUNERATION REPORT (AUDITED)The Directors received the following remuneration for the years ended 31 March 2016 and 31 March 2015.

DIRECTOR

BASESALARY/NED FEES

$

ANNUALBONUS

$

LONG-TERMINCENTIVES

$

OTHERFEES PAID

IN RSUs$

YEAR ENDED31 MARCH

2016 TOTAL$

YEAR ENDED31 MARCH

2015 TOTAL$

EXECUTIVE DIRECTOR ANDHIGHEST PAID DIRECTOR:

Subhransu (“Brian”) Mukherjee 500,000 62,0002 913,0003 - 1,475,000 992,000

NON-EXECUTIVE DIRECTORS:Anthony Bettencourt 75,000 - - - 75,000 81,000Suranga Chandratillake 75,000 - 87,000 - 162,000 175,000Raj Chellaraj 108,000 - - - 108,000 69,000Ujjal Kohli 75,000 - - - 75,000 109,000Mark Opzoomer 75,000 - - - 75,000 81,000Judy Vezmar 30,000 - - - 30,000 81,000

AGGREGATE EMOLUMENTS 938,000 62,000 1,000,000 - 2,000,000 1,588,000

1 Non-Executive Directors’ fees are set at £50,000 for all Directors except for the Chairman of Board whose fees are set at £80,000. Theabove table includes the value in $ using an exchange rate of $1.50 to £1.2 Bonus payments are made to Executive Directors only and are determined based on the following performance conditions: individualExecutive Directors’ MBOs and Company operating performance. Annual Bonus amount was earned in FY2015, but paid in FY2016. Noadditional Bonus was earned or paid in FY2016.3 Long-term incentive awards represent awards of MVSOs and RSUs issued to Executive Directors which vested during the year. Long-term incentive value represents the notional gain on MVSOs or RSUs, but are not realized until the awards are sold. The aggregatevalue of the long-term incentives as at 31 March 2016 was $nil.

None of the Directors had pension, retirement benefits or similar entitlement. No payment or awards were made to former Directorsduring the year, and no payments were made in compensation for loss of office.

Aggregate emoluments disclosed above do not include any amounts for the value of MVSOs to acquire ordinary shares or restrictedstock units in the Company granted to or held by any Directors. Details of the options and RSUs exercised during the year are asfollows:

DIRECTOR SCHEME NUMBER

RANGE OFMARKET

PRICES ATVEST DATE

£

GAINS ONVEST IN

YEAR ENDED31 MARCH 2016

$

GAINS ONVEST IN

YEAR ENDED31 MARCH 2015

$

Subhransu (“Brian”) Mukherjee RSUs 200,000 0.17–0.28 72,000 125,000Suranga Chandratillake RSUs 66,670 0.17–0.28 24,000 42,000

TOTAL 266,670 96,000 167,000

Details of options and RSUs for Directors who served during the year are as follows:

DIRECTOR SCHEME(S)

AT 31 MARCH2015

NUMBERGRANTEDNUMBER

VESTEDNUMBER

LAPSEDNUMBER

AT 31 MARCH2016

NUMBER

Subhransu (“Brian”) Mukherjee OptionsRSU

2,080,000300,000

7,000,000-

-(200,000)

--

9,080,000100,000

Suranga Chandratillake OptionsRSU

2,487,179100,000

--

-(66,670)

--

2,487,17933,333

LONG-TERM INCENTIVESDetails of the contractual RSU awards and long-term incentive awards vesting during the year are as follows:

DIRECTOR SCHEME(S)NUMBERVESTED

RANGE OFMARKET PRICESAT AWARD DATE

£

RANGE OF MARKETPRICES AT

VESTING DATE£

Subhransu (“Brian”) Mukherjee blinkx US share option planRSUs

2,272,802200,000

0.28–0.841.55

0.17–0.280.17–0.28

Suranga Chandratillake blinkx US share option planRSUs

88,41666,670

0.49–0.841.55

0.17–0.280.17–0.28

TOTAL 2,627,888

27

AUDIT COMMITTEE REPORT

The Audit Committee (hereafter referred to as “the Committee” in this report) is appointed by the Board, and is formed of Non-Executive Directors, chaired by Mark Opzoomer. Other members of the Committee are Suranga Chandratillake and Raj Chellaraj.

Its principal responsibilities are:

! monitoring the integrity of the financial statements of the Group and any formal announcements relating to the Group’s financialperformance;

! overseeing the involvement of the Group’s external auditors, in planning and reviewing the audit of the financial statements;! recommending the appointment and fees of the external auditor, including maintaining an appropriate policy on the level of non-

audit fees;! reviewing and monitoring the independence and objectivity of the external auditor, and the effectiveness of the external audit

process;! reviewing, at least annually, the need for an internal audit function;! reviewing the risk management process, and the effectiveness of internal controls, including identifying and implementing

improvements; and! reviewing the arrangements through which staff may raise concerns about possible improprieties in confidence.

The Committee met five times during the year, and details of the attendance at the meetings of the Committee are as shown below. TheCommittee’s terms of reference are available for public inspection on the Company’s website—www.blnx.com

12 MAY2015

19 OCTOBER2015

9 NOVEMBER2015

4 FEBRUARY2016

17 MARCH2016

Mark Opzoomer, Chairman ✓ ✓ ✓ ✓ ✓

Suranga Chandratillake - - ✓ ✓ -

Raj Chellaraj ✓ ✓ ✓ ✓ ✓

Ujjal Kohli ✓ - - - -

As of 26 June 2015, Mr. Kohli was no longer a member of the Audit Committee.

The Committee promotes the highest standards of integrity, financial reporting, risk management and internal control. In addition to themembers of the Committee, meetings are typically also attended by the Chief Executive Officer and the Chief Financial Officer. TheCommittee meets the external auditors at least three times a year, including at least one meeting each year without members ofexecutive management present. The Committee should include at least one financially qualified individual with recent and relevantexperience, and currently Mark Opzoomer, a qualified chartered accountant who trained with Coopers & Lybrand, and Raj Chellaraj, whohas an M.B.A. in Finance from New York University, fulfill these criteria.

The Board has overall responsibility for the establishment and oversight of the Group’s risk register, including the identification andevaluation of any newly recognized risks and implementing mitigating actions on a timely basis. The Committee assists the Board in itsoversight and monitoring of financial reporting, risk management and internal controls.

The Committee has considered the recent FRC guidance on audit committees, and has expanded its report to include more informationon significant matters considered by the Committee.

There has been a particular focus throughout the year on ensuring that the Group’s risk management and internal controls areadequately evolving and developing in line with changes in the Group and best practices in the industry. During the year, theCommittee engaged Moss Adams LLP to continue a review of its controls over the key financial reporting areas, to ensure that controlsremained robust and enabled executive management to be satisfied as to the reliability of the Group’s internal systems and processes.

ASSESSMENT OF THE EXTERNAL AUDITOREach year the Committee assesses the expertise, independence and quality of the external auditor, and the objectivity and effectivenessof the audit process. This assessment was carried out on the basis of the Committee’s own appraisal of the performance of the auditorand the views of its senior management team as well as consideration of materials provided by the auditor.

The criteria used for this assessment remained unchanged from last year and were as follows:

! delivery of a thorough and efficient audit in compliance with agreed plan and timescales;! provision of accurate, robust and perceptive advice on key accounting and audit judgments, technical issues and best practices;! a high level of professionalism and technical expertise consistently demonstrated by all audit staff;! plans for ensuring the maintenance of continuity within the core audit team; and! strict adherence to independence policies and other regulatory requirements.

Independence and objectivity are regularly considered by the Committee, taking into consideration, the relevant UK professional andregulatory requirements and the audit firm’s own policies to maintain auditor independence, which include rotation of the SeniorStatutory Auditor every five years.

Our policy on non-audit services is to appoint the adviser who we believe is in the best position to advise the Company on the matter inquestion, and, where we believe we are best served by our audit firm, auditor objectivity and independence is carefully considered andsafeguarded via the monitoring of fees paid in respect of audit and non-audit work and approving all additional work performed by theexternal auditor.

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REVIEW OF FINANCIAL STATEMENTS AND AUDIT FINDINGSThe Committee reviews the full- and half-year financial statements, and the reports from the auditor on these statements. It takes theopportunity to discuss key accounting matters with the auditor and the range of approaches to each.

Significant matters which were specifically considered by the Committee in the year were as follows:

ISSUE SPECIFIC CONSIDERATIONS

Impairment of goodwill and intangible assets In light of the current trading conditions and in accordance with IAS 36, managementprepared an impairment review on a CGU basis.The Committee discussed the calculations, including the assumptions within, themethodology applied and the anticipated forecasts. It also reviewed the auditor’sreport detailing the results and conclusion of the audit testing.

Revenue recognition The Committee keeps under close review, the revenue recognition policies of theGroup, with particular reference to the appropriateness of the revenue recognitionpolicies of acquired businesses, and the continued pertinence of the policies in thelegacy blinkx business.

INTERNAL AUDITThe Committee considers the need for an internal audit function at least annually. Given the size of the Group and the organization ofthe finance team into centers of excellence, which are overseen by an experienced CFO, and considering the robustness and integrity ofthe internal controls of the Group which are overseen centrally, the Committee is of the opinion that no internal audit function isrequired at this time, but will keep this matter under close scrutiny.

The Committee has however, engaged Moss Adams to document the Group’s key controls, and initiate a rolling testing strategy of thosecontrols, similar to the controls oversight that would be exercised by an internal audit function.

29

NOMINATION COMMITTEE REPORT

The Nomination Committee is appointed by the Board and is responsible for:

! the structure, size and composition of the Board;! the diversity on the Board, and across the Group;! advising the Board on areas where further recruitment may be appropriate;! the overall leadership needs of the organization;! consideration of succession planning for Directors; and! the search for and selection of suitable candidates for the appointment or replacement of additional Directors.

The Nomination Committee (hereafter “the Committee” throughout this report) was chaired by Anthony Bettencourt. Mr. Chellaraj andUjjal Kohli are also members of the Committee. Mr. Bettencourt resigned from the Board and Nomination Committee effective 31 March2016 and his responsibilities were absorbed by Raj Chellaraj.

The Committee met four times during the year, and details of the attendance at the meetings of the Committee are as shown below.The Committee meets as required to initiate the selection process of, and make recommendations to the Board with regard to theappointment of new Directors. The Committee’s terms of reference are available for public inspection on the Company’swebsite—www.blnx.com

15 JULY2015

4 SEPTEMBER2015

4 FEBRUARY2016

5 MARCH2016

Raj Chellaraj ✓ ✓ ✓ ✓

Anthony Bettencourt ✓ ✓ ✓ ✓

Ujjal Kohli ✓ ✓ ✓ ✓

APPOINTMENT OF NEW DIRECTORSDuring the year, the Committee met and made recommendations to the Board regarding the appointment of Andrea Lee (“Andy”)Cunningham as Non-Executive Director.

Ms. Cunningham’s appointment was made in order to increase the Board’s independent Director base, strengthen marketing and publicrelations experience, enhance the Board’s independence and to maintain the Board’s size and composition following AnthonyBettencourt’s decision to step down from the Board effective 31 March 2016.

Where considered appropriate, the Committee will engage recruitment consultants to assist in the identification of and communicationwith potential Board members. During the year the Committee engaged the consulting firm of Heidrick & Struggles to assist in theBoard of Directors search.

The Articles of Association require that any Director appointed by the Board shall, unless appointed at such meeting, hold office onlyuntil the dissolution of the next Annual General Meeting of the Company following appointment.

RE-ELECTION TO THE BOARDFollowing evaluation of the Board, we consider that the performance of all members of the Board continues to be effective, and that allindividuals demonstrate appropriate commitment to their roles. In accordance with best practice and the Company’s articles ofAssociation, which require at least one third of Directors to be subject to re-election at each Annual General Meeting, Mark Opzoomerand Ujjal Kohli retire by rotation and will stand for reappointment while Andrea Lee (“Andy”) Cunningham will stand for appointment atthe AGM on 16 June 2016.

DIVERSITY POLICYThe Board recognizes the value in diversity in its richest sense, and considers it essential in maximizing its effectiveness. The Groupapproaches diversity comprehensively, in order to recruit the best talent available at all levels in the business, based on merit, andassessed against criteria such as: range of skills, experience and independence.

30

DIRECTORS’ REPORT

The Directors present their annual report on the affairs of the Group, together with the Financial Statements and auditor’s report for theyear ended 31 March 2016. This report contains certain statutory, regulatory and other information and incorporates, by reference, thestrategic report and Corporate Governance reports included earlier in this document.

The table below sets out the location of certain information specifically related to the business review:

CONTENT SECTION PAGE(S)

Review of the Business and Future Developments Strategic Review, Chairman and CEO Reports 1–7

Principal Risk and Uncertainties CFO Report 10–11

Corporate Governance Corporate Governance Report 19-21

Directors, Re-election and Appointment Corporate Governance Report and Nomination Committeereport 19-30

Directors’ Interests Remuneration Committee Report 25-27

Key Performance Indicators CFO Report 8–9

Research and Development CFO Report 8–9

CAPITAL STRUCTUREDetails of the issued share capital, together with details of the movements in the Company’s issued share capital during the year,including the issue of 2,136,359 shares, are shown in note 20. The Company has one class of ordinary shares, which carry no right tofixed income. Each share carries the right to one vote at general meetings of the Company.

There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the generalprovisions of the Articles of Association and prevailing legislation. The Directors are not aware of any agreements between holders ofthe Company’s shares that may result in restrictions on the transfer of securities or on voting rights. Details of employee share schemesare set out in note 24.

There are shares reserved to be issued relating to former Burst shareholders, as part of the consideration, who have not yet submittedthe paperwork to affect the exchange of Burst shares for blinkx shares. No person has any special rights of control over the Company’sshare capital and all issued shares are fully paid.

FINANCIAL INSTRUMENTSThe Group’s financial risk management objective is to minimize risk whilst achieving maximum return on liquid assets. The Directors areaverse to principal loss and manage the safety and preservation of the Group’s invested funds by limiting default and market risks byinvesting only with highly-rated financial institutions.

The Group’s financial instruments primarily comprise cash and cash equivalents, marketable securities, loans, trade receivables andpayables from operations. No derivative financial instruments are used. Foreign currency risks are managed through natural hedgesarising from currency bank accounts.

The Group has not faced any material exposure to price risk, liquidity risk, or cash flow risk that would affect the ultimate objectives ofthe business. See note 25.

RESULTS AND DIVIDENDSThe results of the Group are set out in the Consolidated Statement of Comprehensive Income on page 38.

The Directors do not recommend the payment of a dividend (2015: $nil). The Group’s current policy, which is kept under regularreview, is to retain future earnings for the development and expansion of the business.

CHARITABLE AND POLITICAL DONATIONSNo charitable or political donations were made during the year.

DIRECTORS’ INDEMNITIESThe Group has made qualifying third party indemnity provisions for the benefit of its Directors which remain in force at the date of thisreport.

EMPLOYEE CONSULTATIONThe Group places considerable value on the involvement of its employees and has continued to keep them informed on mattersaffecting them as employees and on the various factors affecting the performance of the Group. This is achieved through formal andinformal meetings, the Group Intranet site and internal communications from the management team.

31

Employees are consulted regularly on a wide range of matters affecting their current and future interests. We value employees’ opinionsand seek to actively consult them in the decision making process and keep them apprised of company news. Company-wide briefingsand communications are held and feedback is actively sought from all employees.

The employee share option scheme has been running successfully since its inception and is open to all employees. In addition,employees typically receive an annual bonus related to the overall profitability of the Group.

EQUAL OPPORTUNITIESOur employment policies, including a commitment to equal opportunity, are designed to attract and retain high-caliber individuals,regardless of age, sex, religion, disability, marital status, race, ethnicity, nationality or sexual orientation.

blinkx is an equal opportunities employer and ensures that applications for employment from people with disabilities and other under-represented groups are given full and fair consideration.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned.In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the Group continues andthat appropriate training is arranged and support provided, including flexible working to assist re-entry into the workplace and makingany necessary alternate provisions. It is our policy to provide equally to all staff, training and career development for growth within theCompany, and to explore objectively, through performance appraisal, opportunities for employee advancement.

We take measures to ensure good working conditions. Employees are expected at all times to act honestly, respectfully, and inaccordance with our Company ethos. The Company does not tolerate misconduct or harassment in any form and will diligentlyinvestigate and, where necessary, take action against any complaints therein, including those of confidential “whistle blowers.”

SUBSTANTIAL SHAREHOLDINGSOn 31 March 2016, the Company had been notified of the following voting rights as a shareholder of the Company:

NUMBER SHARES %

Toscafund Asset Management 116,407,105 28.78%

Hargreaves Lansdown Asset Mgt 29,821,496 7.37%

Mr. Richard Griffiths 29,677,915 7.34%

TD Direct Investing 22,325,674 5.52%

Barclays Wealth Mgt (UK) 21,637,200 5.35%

Total shares outstanding at 31 March 2016 404,462,870

During the period between 29 April 2016 and 1 May 2016 the Company received notification of the following voting rights as ashareholder of the Company:

NUMBER SHARES %

Toscafund Asset Management 116,401,705 28.76%

Mr. Richard Griffiths 29,677,915 7.33%

Hargreaves Lansdown Asset Mgt 29,505,668 7.29%

TD Direct Investing 22,434,545 5.54%

Barclays Wealth Mgt (UK) 20,669,330 5.11%

Total shares outstanding at 29 April 2016 404,723,075

POST BALANCE SHEET EVENTSThere are no significant post balance sheet events.

GOING CONCERNThe Directors have considered the financial resources of the Group and the risks associated with doing business in the current economicclimate and believe the Group is well placed to manage these risks successfully. In doing this, the Board has reviewed management’sbusiness plan and cash flow forecast setting out key business assumptions, including the rate of revenue growth, margins and costcontrol. The Directors consider the assumptions therein to be reasonable and that the Group has adequate resources to continue inoperational existence for the foreseeable future, being a period of no less than 12 months from the date of signing this Annual Report.Accordingly, they continue to adopt the going concern basis in preparing these financial statements.

32

ANNUAL GENERAL MEETINGThe Annual General Meeting will be held at 200 Aldersgate Street, London, EC1A 4HD, United Kingdom on 16 June 2016 at 9:00 AMBST. Members of the Board will present on recent developments and the performance of the business and shareholders will have theopportunity to ask questions of the Board members present.

AUDITOREach of the persons who is a Director at the date of approval of this Annual Report confirms that:

! so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and! the Director has taken all of the steps that he/she ought to have taken as a Director in order to make him/herself aware of any

relevant audit information and to establish that the Company’s auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

STATEMENT OF DIRECTORS’ RESPONSIBILITIESThe Directors are responsible for preparing the Annual Report and the financial statements, in accordance with applicable law andregulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have preparedthe Group and parent Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adoptedby the European Union. Under Company law the Directors must not approve the financial statements unless they are satisfied that theygive a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. Inpreparing these financial statements, the Directors are required to:

! select suitable accounting policies and then apply them consistently;! make judgments and accounting estimates that are reasonable and prudent;! state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed

and explained in the financial statements; and! prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and the Group

will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’stransactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them toensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of theCompany and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governingthe preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

33

FINANCIAL STATEMENTS

34

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OFBLINKX PLC

REPORT ON THE FINANCIAL STATEMENTSOUR OPINION

In our opinion:

! blinkx plc’s group financial statements and company financial statements (the “financial statements”) give a true and fair view of thestate of the group’s and of the company’s affairs as at 31 March 2016 and of the group’s loss and the group’s and the company’scash flows for the year then ended;

! the group financial statements have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”)as adopted by the European Union;

! the company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and asapplied in accordance with the provisions of the Companies Act 2006; and

! the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

WHAT WE HAVE AUDITED

The financial statements, included within the Annual Report and accounts (the “Annual Report”), comprise:

! the Consolidated and company balance sheets as at 31 March 2016;! the Consolidated income statement and the Consolidated statement of comprehensive income for the year then ended;! the Consolidated and company cash flow statements for the year then ended;! the Consolidated and company statements of changes in equity for the year then ended; and! the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.

Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial statements.These are cross-referenced from the financial statements and are identified as audited.

The financial reporting framework that has been applied in the preparation of the financial statements is IFRSs as adopted by theEuropean Union, and applicable law and, as regards the company financial statements, as applied in accordance with the provisions ofthe Companies Act 2006.

In applying the financial reporting framework, the directors have made a number of subjective judgments, for example in respect ofsignificant accounting estimates. In making such estimates, they have made assumptions and considered future events.

OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006In our opinion, the information given in the Strategic Report and the Directors’ Report for the financial year for which the financialstatements are prepared is consistent with the financial statements.

OTHER MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTIONADEQUACY OF ACCOUNTING RECORDS AND INFORMATION AND EXPLANATIONS RECEIVED

Under the Companies Act 2006 we are required to report to you if, in our opinion:

! we have not received all the information and explanations we require for our audit; or! adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from

branches not visited by us; or! the company financial statements are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

DIRECTORS’ REMUNERATION

Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors’ remunerationspecified by law are not made. We have no exceptions to report arising from this responsibility.

RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDITOUR RESPONSIBILITIES AND THOSE OF THE DIRECTORS

As explained more fully in the Statement of Directors’ Responsibilities set out on page 33, the directors are responsible for thepreparation of the financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and InternationalStandards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”). Those standards require us to comply with the Auditing PracticesBoard’s Ethical Standards for Auditors.

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This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility forany other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreedby our prior consent in writing.

WHAT AN AUDIT OF FINANCIAL STATEMENTS INVOLVES

We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence about the amounts anddisclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from materialmisstatement, whether caused by fraud or error. This includes an assessment of:

! whether the accounting policies are appropriate to the group’s and the company’s circumstances and have been consistently appliedand adequately disclosed;

! the reasonableness of significant accounting estimates made by the directors; and! the overall presentation of the financial statements.

We primarily focus our work in these areas by assessing the directors’ judgments against available evidence, forming our ownjudgments, and evaluating the disclosures in the financial statements.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide areasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantiveprocedures or a combination of both.

In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with theaudited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistentwith, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatementsor inconsistencies we consider the implications for our report.

Jaskamal Sarai (Senior Statutory Auditor)for and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsUxbridge17 May 2016

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CONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 MARCH 2016

NOTE

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

Revenue 5 166,716 214,969

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 ofpurchased intangibles* (19,934) (7,786)

Amortization of purchased intangiblesResearch 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 26 (65,295) (4,662)

Loss from operations (94,339) (24,808)Other expense (39) (12)Finance income 256 58Finance costs (162) (38)

Loss before taxation (94,284) (24,800)Tax 10 2,031 4,001

Loss for the year attributable to equity holders of the parent before acquisitionand 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 11 (22.88) (5.19)

ADJUSTED BASIC** 11 (4.42) (0.94)

DILUTED 11 (22.88) (5.19)

ADJUSTED DILUTED** 11 (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).

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 MARCH 2016

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘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)

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CONSOLIDATED BALANCE SHEETAS AT 31 MARCH 2016

NOTE

AS AT31 MARCH 2016

$‘000

AS AT31 MARCH 2015

$‘000

ASSETS

NON-CURRENT ASSETSGoodwill 12 37,207 87,520Intangible assets 13 24,200 43,806Property, plant and equipment 14 3,358 3,340Other receivables and restricted cash 16 828 1,071Deferred tax asset 18 19,208 19,128Marketable securities 17 29,539 -

114,340 154,865

CURRENT ASSETSTrade receivables 16 22,825 37,741Other receivables 16 2,422 7,193Cash and cash equivalents 18,222 95,734Marketable securities 17 30,725 -

74,194 140,668

TOTAL ASSETS 188,534 295,533

LIABILITIES

NON-CURRENT LIABILITIESDeferred tax liability 18 (318) (59)Other payables 19 (1,679) (1,189)Provisions for liabilities and charges 19 (5) (172)

(2,002) (1,420)

CURRENT LIABILITIESTrade and other payables 19 (29,894) (49,839)Provisions for liabilities and charges 19 (700) (577)

(30,594) (50,416)

TOTAL LIABILITIES (32,596) (51,836)NET ASSETS 155,938 243,697

SHAREHOLDERS’ EQUITYShare capital 20 7,537 7,502Share premium account 21 168,045 168,008Shares to be issued 22 24 1,686Share-based compensation reserve 26,590 22,175Currency translation reserve (8,836) (8,802)Merger reserve 65,208 63,554Accumulated other comprehensive income 19 -Retained (deficit)/earnings (102,649) (10,426)

TOTAL EQUITY 155,938 243,697

Note 1 to note 28 form on integral part of the financial statements

The consolidated financial statements of blinkx plc (registered number 06223359) were approved by the Board of Directors andauthorized for issue on 17 May 2016. They were signed on its behalf by:

Subhransu (“Brian”) MukherjeeChief Executive Officerblinkx plc17 May 2016

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2016

ORDINARYSHARE

CAPITAL$‘000

SHAREACCOUNTPREMIUM

$‘000

SHARESTO BE

ISSUED$‘000

SHARE BASEDCOMPENSATION

RESERVE$‘000

CURRENCYTRANSLATION

RESERVE$‘000

MERGERRESERVE

$‘000

OTHERRESERVES

$‘000

RETAINED(DEFICIT)/EARNINGS

$‘000

TOTALEQUITY

$‘000

BALANCE AS AT31 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 forthe year - - - - (333) - - (20,799) (21,132)

Issue of shares, net of costs 41 63 (1,893) - - 1,873 - - 84Credit to equity for Share-

based payments - - - 4,853 - - - - 4,853Tax movement on share options - - - - - - - (1,999) (1,999)

BALANCE AS AT31 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 forthe year - - - - (34) - 19 (92,253) (92,268)

Issue of shares, net of costs 35 37 (1,662) - - 1,654 - - 64Credit to equity for Share-

based payments - - - 4,415 - - - - 4,415Tax movement on share options - - - - - - - 30 30

BALANCE AS AT31 MARCH 2016 7,537 168,045 24 26,590 (8,836) 65,208 19 (102,649) 155,938

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CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MARCH 2016

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

CASH FLOWS FROM OPERATING ACTIVITIESLOSS FROM OPERATIONS (94,339) (24,808)Adjustments for:

Depreciation and amortization 26,180 18,819Share based payments 4,415 4,853Non-cash acquisition and exceptional costs - 240Impairment of goodwill 50,322 -Loss on sales of computer equipment 56 25Change in provisions (490) 712Foreign exchange gain 3 143

OPERATING CASH FLOWS BEFORE MOVEMENTS IN WORKING CAPITAL (13,853) (16)

CHANGES IN OPERATING ASSETS AND LIABILITIESDecrease in trade and other receivables 18,350 9,863Decrease 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 ACTIVITIESNet interest received 134 20Purchase 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 computer equipment 4 49Purchase 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 ACTIVITIESNet 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 95,734 126,909Effect of foreign exchange on cash and cash equivalents (7) (298)

ENDING CASH AND CASH EQUIVALENTS 18,222 95,734

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 GENERAL INFORMATIONblinkx plc is a Company incorporated in England and Wales under the Companies Act 2006. The address of the registered office is40 Dukes Place, London, EC3A 7NH, United Kingdom. The nature of the Group’s operations and its principal activities are set out inthe Strategic Report.

The Company’s functional currency is Sterling, being the currency of the primary economic environment in which the Companyoperates. The presentational currency of the Group is US Dollars as that is the currency of the primary economic environment inwhich the Group operates. Foreign operations are included in accordance with policies set out in note 3.

2 ADOPTION OF NEW AND REVISED STANDARDSThe following new and revised Standards and Interpretations have been adopted in the current Period. Their adoption has not hadany significant impact on the amounts reported in these consolidated financial statements but may impact the accounting forfuture transactions and arrangements.

Amendments to IAS 19, ‘Employee benefits’ on defined benefit plansAnnual improvements 2010-2012:IFRS 2, ‘Share based payment’ on definition of a vesting conditionIFRS 3, ‘Business combinations’ to clarify obligations to pay contingent considerationIAS16, ‘Property plant and equipment’ and IAS 38, ‘Intangible assets’ on gross carrying amount and depreciation are treated withrevaluation modelIFRS 8, ‘Operating segments’ on disclosure of judgmentsIAS 24, ‘Related party disclosures’ regarding disclosures of the reporting entity

At the date of authorization of these consolidated financial statements, the following Standards and Interpretations which have notyet been applied in these consolidated financial statements were in issue but not yet effective:

IFRS 5, ‘Non-current assets held for sale and discontinued operations’ regarding methods of disposalIFRS 7, ‘Financial instruments: Disclosures’IAS 19, ‘Employee benefits’IAS 34, ‘Interim financial reporting’IFRS 14, ‘Regulatory deferral accounts’Amendment to IFRS 11 ‘Joint arrangements’ on Accounting for acquisitions of interests in joint operationsAmendments to IAS 16, ‘Property plant and equipment’ and IAS 41, ‘Agriculture’ on Agriculture: Bearer plantsAmendments to IAS 16, ‘Property plant and equipment’ and IAS 38, ‘Intangible assets’ on clarification of acceptable methods ofdepreciation and amortizationAmendments to IAS 27, ‘Separate financial statements’ on equity method in separate financial statementsAmendments to IFRS 10, ‘Consolidated financial statements’ and IAS 28, ‘Investments in associates’, on Investment entities:Applying the consolidation exceptionAmendments to IAS 1, ‘Presentation of financial statements’ Disclosure initiativeAmendments to IFRS 10, ‘Consolidated financial statements’ and IAS 28, ‘Investments in associates’ on the sale or contributionbetween an investor and its associate or joint ventureAmendment to IAS 12, ‘Income taxes’, ‘Recognition of deferred tax assets for unrealised losses’Amendment to IAS 7, ‘Cash flow statements’, Disclosure initiativeIFRS 9, ‘Financial instruments’IFRS 15, ‘Revenue from contracts with customers’IFRS 16, ‘Leases’

The Directors do not expect that the adoption of the other standards listed above will have a material impact on the financialstatements of the Group in future periods other than IFRS 15 “Revenue from contracts with Customers” which may impact the waythe Group recognizes revenue in future periods.

3 SIGNIFICANT ACCOUNTING POLICIESBASIS OF ACCOUNTING

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union and the Companies Act 2006applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historicalconvention as modified.

The preparation of the financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It alsorequires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving ahigher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financialstatements are disclosed in note 4.

The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are set outbelow.

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GOING CONCERN

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Grouphave adequate resources to continue in operational existence for the foreseeable future. They continue to adopt the going concernbasis of accounting in preparing the financial statements. Further detail is contained in the Directors’ Report on page 32.

BASIS OF CONSOLIDATION

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company(its subsidiaries) prepared up to 31 March each year. Control is achieved where the Company has the power to govern the financialand operating policies of an investee entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from theeffective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to thefinancial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

GOODWILL

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of theidentifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition.

Goodwill is initially recognized as an asset at cost and is subsequently measured at costs less any accumulated impairment losses.Goodwill which is recognized as an asset is reviewed for impairment at least annually. Any impairment is recognized immediately inprofit or loss and is not subsequently reversed.

Goodwill is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If therecoverable amount is less than the carrying amount, the impairment loss is allocated to reduce the carrying amount of goodwill.An impairment loss recognized for goodwill is not reversed in a subsequent period.

REVENUE RECOGNITION

The Group earns its revenue from providing online advertising services.

The Group’s business is based on the principle of facilitating free access to technology and content via an advertising-supporteddistribution model and its revenues are derived from advertising on the Internet. The Group applies its technology across a set ofstandard and inter-related products to connect its audience with contextually relevant advertising in a variety of formats.Advertisers select from these formats which are priced on different pricing schemes that include both impression-based, Cost perMille (CPM), and performance-based, Cost per Click (CPC) and Cost per Action (CPA) options.

Contracts containing multiple deliverables are split into their constituent parts and each deliverable’s fair value is separatelydetermined and recognized accordingly.

The policies for each of the Group’s key revenue streams in relation to services are set out below:

ADVERTISING REVENUEWhen sales values are based on the volume of impressions (Cost per Mille), revenue is based on an agreed amount per impressionand the number of impressions displayed. This revenue is recognized as the volumes are reported either by the Group’s customers,the Group’s internal reporting system or an authoritative third party, based on the contractual terms. When sales values are basedon volume of clicks (pay per click), revenue is based upon an agreed amount per click that the end user makes after viewing theadvertisement and the number of clicks made by the users, in the period in which the clicks occur.

SHARE OF ADVERTISING REVENUESWhere customers use the blinkx technology to retrieve their own content, contractual arrangements may provide for the Group toreceive a share of the customer’s advertising revenues. The amount of revenue is dependent upon the amount paid per click or peradvert shown. This revenue is recognized as reported by the Group’s customers, in the period to which it relates.

MEDIA BUYING REVENUESRevenue from media buying services may consist of various arrangements involving commissions, fees, incentive-based revenue ora combination of the three, as agreed upon with each client. Revenue arising is recognized ratably over the term of an agreement.

E-COMMERCE REVENUESThe Group generates revenues from e-commerce partners when an e-commerce transaction is referred to the partner from anothervendor. Revenues are recognized upon completion of the transaction.

UPFRONT LICENSE PAYMENT AND RELATED REVENUESIn certain cases customers will enter into a license agreement to license the right to use the blinkx technology. The revenue is inthe form of an up-front non-refundable payment with all future advertising revenues accruing directly to the customer.

43

Revenues from software license agreements are recognized where there is persuasive evidence of an agreement with a customer(a signed contract and/or binding purchase order), delivery of the software has taken place, the price is agreed upon andcollectability is probable.

Revenue from subscription-based services is recognized ratably over the contract term beginning on the commencement date ofeach contract.

INVESTMENT REVENUEInvestment revenues include bank interest and income from short-term deposits.

CLASSIFICATION OF EXPENSES

COST OF REVENUESCost of revenues consists primarily of traffic acquisition costs (TAC) that are directly attributable to revenue generated by theGroup.

RESEARCH AND DEVELOPMENTResearch and development expenses consist primarily of compensation and related costs for personnel responsible for the researchand development of new and existing products and services, in addition to co-locations and facilities charges.

Where required, development expenditures are capitalized in accordance with the Group’s standard internal capitalizeddevelopment policy. All research costs are expensed when incurred.

SALES AND MARKETINGSales and marketing expenses consist primarily of compensation and related costs for personnel engaged in customer service,sales, and sales support functions, as well as advertising and promotional expenditures that are not directly attributable torevenue, in addition to facilities charges.

GENERAL AND ADMINISTRATIVEGeneral and administrative expenses consist primarily of compensation and related costs for personnel and facilities, and includecosts related to our facilities, finance, human resources, information technology, and legal organizations, and fees for professionalservices. Professional services are principally comprised of outside legal, audit, information technology consulting, and outsourcingservices.

ACQUISITION AND EXCEPTIONAL COSTS

In line with the way the Board and chief operating decision-maker review the business, large one-off acquisition and exceptionalcosts are separately identified and shown in the financial statements. The types of costs included within acquisition costs are thosewhich are directly attributable to an acquisition, for example legal and accounting expenses, integration costs, severance andretention remuneration. An example of the type of cost considered exceptional is severance costs, impairment losses and othersignificant assets writedowns.

LEASING

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownershipto the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognized as assets of the Group at their fair value or, if lower, at the present value of theminimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in thebalance sheet as a finance lease obligation.

Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rateof interest on the remaining balance of the liability. Finance expenses are recognized immediately in profit or loss, unless they aredirectly attributable to qualifying assets, in which case they are capitalized in accordance with the Group’s general policy onborrowing costs.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease exceptwhere another more systematic basis is more representative of the time pattern in which economic benefits from the lease assetare consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which they areincurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. Theaggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where anothersystematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

FOREIGN CURRENCIES

Transactions in currencies other than the functional currency of the entity concerned are recorded at the rates of exchangeprevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated inforeign currencies are retranslated into the presentational currency, US Dollars, at the rates prevailing on the balance sheet date.The Group has selected US Dollars as its presentational currency as that is the currency of the principal economic environment inwhich the Group operates.

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Exchange differences are recognized in profit or loss in the period in which they arise except for exchange differences on monetaryitems receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (thereforeforming part of the net investment in the foreign operation), which are recognized initially in other comprehensive income andreclassified from equity to profit or loss on disposal or partial disposal of the net investment.

On consolidation, the assets and liabilities of the Group’s foreign denominated operations are translated at exchange ratesprevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the Period unlessexchange rates fluctuate significantly. Exchange differences arising, if any, are classified as equity and transferred to the Group’stranslation reserve. Such translation differences are recognized as income or as expenses in the period in which the operation isdisposed of.

TAXATION

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable or receivable is based on taxable loss/profit for the year. Taxable loss/profit differs from net loss/profitas reported in the income statement because it will exclude items of income or expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using taxrates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilitiesin the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for usingthe balance sheet liability method.

Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized to the extentthat it is probable that taxable profits are available against which deductible temporary differences can be utilized. Such assets andliabilities will not be recognized if the temporary difference arises from goodwill or from the initial recognition (other than in abusiness combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries and associates, andinterests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probablethat the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longerprobable that sufficient taxable profits are available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset isrealized. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directlyto equity, in which case the deferred tax will also be dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against currenttax liabilities and when they relate to income taxes levied by the same tax authority and the Group intends to settle its current taxassets and liabilities on a net basis.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost less accumulated depreciation and any recognized impairment loss. Cost includesexpenditure that is directly attributable to the acquisition of the assets.

Depreciation is charged so as to write off the cost of assets, over their estimated useful lives, using the straight-line method, onthe following bases:

Fixtures, fittings, office and computer equipment Over 3–5 yearsLeasehold improvements Over shorter of economic life or lease term

The gain or loss arising from the disposal or retirement of an asset is determined as the difference between the sales proceeds andthe carrying amount of the asset and is recognized in income.

INTERNALLY-GENERATED INTANGIBLE ASSETS—RESEARCH AND DEVELOPMENT EXPENDITURE

Expenditure on research activities is recognized as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from the Group’s product development is recognized only if all of the followingconditions are met:

! the product from which the asset arises meets the Group’s criteria for technical feasibility, so it will be available for use;! the asset is intended to be completed, and will be used or sold;! the asset created is expected to generate demonstrable future economic benefits;! the development cost of the asset can be measured reliably; and! adequate technical, financial and other resources are available to complete development of the asset.

45

Internally-generated intangible assets are amortized on a straight-line basis over their useful life, which is considered to be threeyears starting when the associated technology is available for use. Where no internally-generated intangible asset can berecognized, development expenditure is recognized as an expense in the period in which it is incurred.

OTHER INTANGIBLE ASSETS EXCLUDING GOODWILL

Other intangible assets excluding goodwill are measured initially at purchase cost or at fair value if acquired as part of a businesscombination, and are amortized on a straight-line basis over their estimated useful lives, on the following bases:

Tradenames, patents and trademarks 3–10 yearsSoftware licences 3 yearsPurchased technology 3–5 yearsRelationships with publishers and customers 3–12 years

IMPAIRMENT OF ASSETS EXCLUDING GOODWILL

At each balance sheet date, the Group will review the carrying amounts of its tangible and intangible assets to determine whetherthere is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount ofthe asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cashflows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to whichthe asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated futurecash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the timevalue of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carryingamount of the asset (cash-generating unit) is reduced to its recoverable amount.

An impairment loss is recognized as an expense immediately, unless the relevant asset is carried at a revalued amount, in whichcase the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to therevised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount thatwould have been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. Areversal of an impairment loss is recognized as income immediately, unless the relevant asset is carried at a revalued amount, inwhich case the reversal of the impairment loss is treated as a revaluation increase.

PROVISIONS

Provisions are recognized when the Group has a present obligation as a result of a past event, it is probable that the Group will berequired to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured atthe Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date, taking into account risksand uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the presentobligation, its carrying amount is the present value of those cash flows.

A restructuring provision is recognized when the Group has developed a detailed formal plan for the restructuring and has raised avalid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its mainfeatures to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising fromthe restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with theongoing activities of the entity.

Present obligations arising under onerous contracts are recognized and measured as provisions. An onerous contract is consideredto exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceedthe economic benefits expected to be received under it.

SHARE-BASED PAYMENTS

The Group applies IFRS 2 Share-based Payments in accounting for its Share-based Compensation plans.

The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measuredat fair value at the date of grant by use of an appropriate valuation model. The fair value determined at the grant date of theequity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate ofshares that will eventually vest.

Fair value is measured by use of the Black-Scholes and Monte Carlo models. The expected life used in the model has beenadjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioralconsiderations.

At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of theeffect of non market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognized in profitand loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.

46

When the options are exercised, the Company issues new shares. The proceeds received, net of any directly attributable costs arecredited to share capital (nominal value) and share premium.

RETIREMENT BENEFITS

Payments to a defined contribution scheme are charged as an expense as they fall due.

FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are recognized in the Group’s balance sheet when the Group becomes a party to thecontractual provisions of the instrument.

LOANS AND RECEIVABLESTrade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active marketare classified as loans and receivables. Loans and receivables are measured at amortized cost using the effective interest method,less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables whenthe recognition of interest would be immaterial.

RESTRICTED CASHWhere required, the Group keeps amounts on deposit with financial institutions as a condition of certain property leases. This cashmay not be used by the Group and is held as security against the lease. At the cessation of the lease, the cash restrictions cease,and the cash will be immediately accessible. Until this time, the cash is classified as “Restricted cash” in non-current assets.

IMPAIRMENT OF FINANCIAL ASSETSFor certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually aresubsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables couldinclude the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio pastthe average credit period, as well as observable changes in national or local economic conditions that correlate with default onreceivables.

For financial assets carried at amortized cost, the amount of the impairment is the difference between the asset’s carrying amountand the present value of the estimated future cash flows, discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception oftrade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable isconsidered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written offare credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit orloss.

CASH AND CASH EQUIVALENTSCash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that arereadily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

MARKETABLE SECURITIESMarketable securities represent the Group’s investments in corporate bonds, commercial papers, government bonds, collateralizedsecurities and certificates of deposit. These are recognized either as current or non-current assets, in accordance with theirmaturity. Marketable securities are carried at fair value with the change in its fair value recognized directly in the Statement ofComprehensive Income. Interest income and dividends on marketable securities is recognized in the Income Statement, as well asany foreign exchange gains and losses and impairment losses.

FINANCIAL LIABILITIES AND EQUITYFinancial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.

EQUITY INSTRUMENTSAn equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

FINANCIAL LIABILITIESAll financial liabilities are classified as ‘other financial liabilities.’

OTHER FINANCIAL LIABILITIESOther financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financialliabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on aneffective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and ofallocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated futurecash payments through the expected life of the financial liability or, where appropriate, a shorter period, to the net carryingamount on initial recognition.

DERECOGNITION OF FINANCIAL LIABILITIESThe Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, canceled or they expire.

47

DERIVATIVE FINANCIAL INSTRUMENTSThe Group does not use derivative financial instruments.

BUSINESS COMBINATIONS

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisitionis measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, andequity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognized in profit orloss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent considerationarrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost ofacquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of contingentconsideration classified as an asset or liability are accounted for in accordance with relevant IFRSs. Changes in the fair value ofcontingent consideration classified as equity are not recognized.

Where a business combination is achieved in stages, the Group’s previously-held interests in the acquired entity are remeasured tofair value at the acquisition date (i.e., the date the Group attains control) and the resulting gain or loss, if any, is recognized inprofit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized inother comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest weredisposed of.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 (Revised2008) are recognized at their fair value at the acquisition date, except that:

! deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognized and measuredin accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;

! liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment awards aremeasured in accordance with IFRS 2 Share-based Payment; and

! assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale andDiscontinued Operations are measured in accordance with that Standard.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combinationoccurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts areadjusted during the measurement period or additional assets or liabilities are recognized, to reflect new information obtained aboutfacts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as ofthat date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about factsand circumstances that existed as of the acquisition date, and is subject to a maximum of one year.

Acquisition costs are as defined in IFRS 3 and are written off as incurred.

Exceptional costs are defined as non-recurring costs incurred outside of the Group’s normal operations.

4 CRITICAL JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTYCRITICAL JUDGMENTS IN APPLYING THE GROUP’S ACCOUNTING POLICIES

The following are the critical judgments apart from those involving estimations (which are dealt with separately below), that theDirectors have made in the process of applying the Group accounting policies and that have the most significant effect on theamounts recognized in the financial statements.

REVENUE RECOGNITION

In making its judgment with regard to revenue recognition, the Directors have considered the detailed criteria for the recognitionof revenue for the provision of services set out in IAS 18 ‘Revenue’ and the policy in note 3, in particular regarding whether thedebt is collectable.

There is a policy in relation to the sales and doubtful debt allowance and the Directors have exercised judgment in relation to this.

IDENTIFICATION AND VALUATION OF ACQUIRED INTANGIBLES

In making judgments in relation to the identification, valuation and useful economic life of acquired intangibles, the Directors basetheir assessment on valuation reports prepared by an expert third party at the time of an acquisition.

KEY SOURCES OF ESTIMATION UNCERTAINTY

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have asignificant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period,are discussed below.

48

IMPAIRMENT OF GOODWILL

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating unit (CGU) to whichgoodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows of the CGU and asuitable discount rate in order to calculate present value. The carrying amount of goodwill at the balance sheet date was$37,207,000 (2015: $87,520,000).

SUBSIDIARY INVESTMENTS

The Company’s initial valuation of its investments in its subsidiary undertakings are based on cost and subsequent capitalcontributions. The Directors have considered the criteria in IAS 36, Impairment of Assets, in assessing the carrying value.

DEFERRED TAX ASSET

In determining the level of recognition of the deferred tax assets, the Directors have considered the level of future taxable profitsthat are expected to be received in the foreseeable future.

SHARE OPTION CHARGE

In calculating the share option charge, the Directors have considered the expected life of the option, the volatility of the Company’sshare price, the risk free rate and anticipated rate of leavers.

5 SEGMENTAL ANALYSISblinkx plc is organized internally along function lines with each line reporting to the Group’s chief operating decision-maker, theChief Executive Officer. The primary function lines include: finance, human resources, operations, marketing, sales, businessdevelopment, technology and product development. Each of these functions supports the overall business activities; however, theydo not engage in activities from which they earn revenues or incur expenditure in their operations with each other. No discretefinancial information is produced for these functional lines. The Group’s chief operating decision-maker is ultimately responsible forentity-wide resource allocation decisions and evaluates the performance of the Group on a Group-wide basis. The Companyintegrates acquired businesses and products into the blinkx business model such that separate management financial data onthese entities is not generally maintained post-acquisition. Acquired businesses immediately benefit from the primary function linesnoted above and their products and services are enhanced by the inclusion of blinkx technology, functionality and the Group’swider sales channels to the market.

The Group operates a global Internet business and its commercial activity is not generated from distinguishable geographic origins.Although the Group has operations in several geographic locations, no discrete financial performance information is maintained ona regional basis because of the globally distributed nature of the revenues and high degree of functional integration among thedifferent geographic locations. Consequently, decisions around the allocation of resources are not determined on a regional basisand the chief operating decision-maker does not assess the Group’s performance on a geographic basis. Consequently, the Group’schief operating decision maker reviews financial information for the Group as a whole, determining where to allocate resources anddrive business forward by examining consolidated results showing underlying results adjusted for acquisition and exceptionalcharges and amortization of purchased intangibles.

The Group’s business is based on the principle of facilitating free access to content via an advertising-supported distribution modeland its revenues are derived from online advertising. The Group applies its technology across a set of standard and inter-relatedproducts to connect its audience with contextually relevant advertising. Advertisers select from several product types which arepriced on different pricing schemes. Each of the products generates revenues from a mix of the various pricing methodologies.There is considerable overlap among the products and advertisers and it is not meaningful to separate the revenues by primarypricing scheme or product. Consequently, separate financial information is not reviewed by the chief operating decision-maker forthe various products to assess their performance or for the purpose of resource allocation decisions.

As a consequence of the above factors the Group has one operating and reportable segment in accordance with IFRS 8 “OperatingSegments.”

IFRS 8 also requires information on any customer who accounts for 10% or more of the combined revenue. There is one customerwho accounts for 12.56% of the combined current year revenue (2015: one customer accounted for 10.02% of combinedrevenue).

Geographical analysis of the Group’s revenues, including analysis between the Group’s country of domicile and other countries, isnot disclosed under IFRS 8 as materially all the customers are US-based.

As required in accordance with IAS 18 “Revenue” an analysis of the Group’s revenue is as follows:

NOTE

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

CONTINUING OPERATIONSRendering of services 166,716 214,969

49

6 LOSS FOR THE YEARLoss for the year is stated after charging/(crediting):

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

Net foreign exchange losses 3 143Operating lease payments (see note 23) 3,461 3,463Research and development costs (excluding amortization of intangibles below) 16,198 21,961Depreciation of property, plant and equipment: (see note 14)

- Owned 1,050 1,776- Leased 1,122 100

Amortization of intangibles: (see note 13)- Relationships with customers & publishers (included in Sales and marketing) 8,994 4,557- Purchased technology (included in Research and development) 6,525 3,525- Capitalized development costs (included in Research and development) 6,816 3,836- Trade names, trademarks and patents (included in Sales and marketing) 766 4,206- Software licenses (included in Research and development) 657 746- Non-compete agreement (Administrative expenses) 250 72

Loss on disposal of property and equipment 56 25Acquisition and exceptional costs (see note 26) 65,295 4,662Staff costs (see note 8) 45,588 50,434Impairment loss recognized on trade receivables (see note 16) 585 1,846

7 AUDITORS REMUNERATIONThe analysis of auditor’s remuneration is as follows:

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

Fees payable to the Company’s auditor for the audit of the Company’sannual financial statements 362 371

Fees payable to the Company’s auditor and their associates for other servicesto the Group:- The audit of the Company’s subsidiaries pursuant to legislation 32 33- Audit related assurance services 70 -

Total audit fees 464 404

Tax services 145 36

Total non-audit fees 143 36

TOTAL 609 440

2016 non-audit services include legal entity restructuring advice.

8 STAFF COSTSThe average monthly number of employees (including Directors) and related staff costs was:

YEAR ENDED31 MARCH 2016

NUMBER

YEAR ENDED31 MARCH 2015

NUMBER

Sales and marketing 185 191Research and development 86 90Administration and operations 45 40

TOTAL 316 321

50

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

Wages and salaries 36,066 41,869Share based compensation 4,415 4,853Social Security costs 2,579 2,892Other pension costs 5 9

43,065 49,623Other employee benefits and costs 4,291 4,297Costs allocated to internally-generated assets (1,768) (3,486)

INCLUDED IN LOSS FROM OPERATIONS 45,588 50,434

Refer to Directors’ Remuneration Report for details of amounts paid to Directors.

9 INVESTMENT INCOME AND EXPENSEYEAR ENDED

31 MARCH 2016$‘000

YEAR ENDED31 MARCH 2015

$‘000

Interest receivable on cash and cash equivalents 256 58Interest on obligations under finance leases (162) (38)

NET FINANCE INCOME 94 20

10 TAX

NOTE

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

Current tax — current year 1,514 (3,411)— prior year adjustment (3,755) 3,080

Deferred tax 210 (3,670)

(2,031) (4,001)

The Finance Act 2013 which provided for reductions in the main rate of corporation tax for 23% to 21% effective from 1 April 2014and to 20% effective from 1 April 2015, was substantively enacted on 22 July 2013, These rate reductions have been reflected inthe calculation of deferred tax at the balance sheet date. Taxation for other jurisdictions is calculated at the rates prevailing in therespective jurisdictions. A change to the UK corporation tax rate was announced in the Chancellor’s Budget on 16 March 2016. Thechange announced is to reduce the main rate to 17% from 1 April 2020. Changes to reduce the UK corporation tax rate to 19%from 1 April 2017 and to 18% from 1 April 2020 had already been substantively enacted on 26 October 2015. As the change to17% had not been substantively enacted at the balance sheet date its effects are not included in these financial statements. Theoverall effect of that change, if it had applied to the deferred tax balance at the balance sheet date, would not be material.

The credit for the year can be reconciled to the loss per the income statement as follows:

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

Loss before tax (94,284) (24,800)

Tax at UK corporation rate of 20% (2015: 21%) (18,857) (5,208)Adjustment for overseas tax rate (14,814) (2,694)Tax effect of expense not deductible in determining taxable profit/loss 1,700 185Tax effect of impairment not deductible in determining taxable profit/loss 16,797 -Reduced tax in subsidiaries operating in other jurisdictions (1,347) (2,695)Research and development tax credits - (1,245)Deferred tax not recognized/utilisation of tax losses 16,850 3,273Impact of share-based payments 1,394 1,303Adjustment in respect to prior years (3,755) 3,080

TAX (CREDIT)/CHARGE (2,031) (4,001)

Under IAS 12 Income Taxes the amount of tax benefit that can be recognized in the income statement is limited by reference tothe IFRS 2 “Share-based payment charge.” A charge of $30,000 (2015: $1,999,000 tax benefit) in respect of share options wasrecognized in equity. This comprises a current tax charge recognized in equity of $1,000 (2015: $40,000 benefit) and a deferredtax benefit recognized in equity of $31,000 (2015: $1,959,000 charge).

51

11 EARNINGS PER SHAREYEAR ENDED

31 MARCH 2016$‘000

YEAR ENDED31 MARCH 2015

$‘000

LOSSLoss 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 SHARESWeighted 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).

In accordance with IAS 33 “Earnings per share” as the Group made a loss for the year. The inclusion of potentially dilutive optionsand shares to be issued would have an antidilutive effect on the loss per share for the Period. The impact of these has thereforebeen excluded from the calculation for the year ended 31 March 2016.

12 GOODWILLThe Group tests goodwill for impairment annually or more often if there are indications that it may be impaired. The carryingamount of goodwill has been allocated between the CGUs:

AS AT31 MARCH 2015

$‘000

RECLASSIFICATIONSAND ACQUISITION

ADJUSTMENTS$‘000

IMPAIRMENTCHARGE

$‘000

AS AT31 MARCH 2016

$‘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) 21,086blinkx 2,417 - (2,417) -PVMG 21,663 - (15,542) 6,121AdKarma 10,000 - - 10,000

TOTAL 87,520 9 (50,322) 37,207

During the Period, blinkx launched a major initiative to consolidate certain product, infrastructure, sales and marketing effortsunder a single trade name, RhythmOne. Due to these integration steps, the CGUs of Burst, Rhythm NewMedia, LYFE Mobile and AllMedia Network have been combined into the RhythmOne CGU. In addition, the Company took decisive steps to build out its Coremobile, video and programmatic capabilities and began to limit investments in historical product lines that are consideredNon-Core, including certain Desktop products, services and technologies. Based on these actions and an adjusted forecast due toweaker than expected performance of some products, certain value of Goodwill related to Non-Core legacy assets acquired wasimpaired as the recoverable amount was less than its carrying value, leading to a non-cash impairment charge of $50.3 million.

The key assumptions for the value in use calculations are those regarding the discount rates, revenue growth rates and terminalgrowth rate.

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next fiveyears and extrapolates cash flows into perpetuity using a terminal growth rate of 2% [RhythmOne and AdKarma] and 0% [PVMGand blinkx] (2015: 2% all CGUs). This rate is based on an estimated long-term growth rate for the industry and countries in whichblinkx operates, and does not exceed the average long-term growth rate for the relevant markets based on the historicalConsumer Price Index in the United States.

The rate used to discount the forecast cash flows is 19% (2015: 16%) for all CGUs. Management estimates discount rates usingpre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs.

52

The assumptions for growth rates are based on past experience of each CGUs trading performance and are consistent with industryanalyst expectations. The assumptions used differ between CGUs, reflecting the differences in products, customers and suppliersbetween each CGU. The compound annual growth rates of the assumptions applied over the forecast period for each CGU are asfollows:

2016REVENUEGROWTH

RATE

2015REVENUEGROWTH

RATE

RhythmOne 14.90% -blinkx (5.00%) 5.00%AdKarma 6.21% 17.90%PVMG 2.45% 1.52%Rhythm NewMedia - 8.32%LYFE Mobile - 33.37%All Media - 15.55%Burst - 4.42%

13 INTANGIBLE ASSETSRELATIONSHIPS

WITHCUSTOMERS &

PUBLISHERS$‘000

PURCHASEDTECHNOLOGY

$‘000

CAPITALIZEDDEVELOPMENT

COSTS$‘000

TRADENAMES,TRADEMARKS

& PATENTS$‘000

SOFTWARELICENSES

$‘000TOTAL$‘000

COSTAt 31 March 2014 30,747 15,725 10,523 7,117 5,425 69,537Additions - - 3,885 - 1,592 5,477Acquired through acquisitions 8,480 2,100 - 3,110 - 13,690Exchange differences (47) (71) (871) (50) (215) (1,254)

At 31 March 2015 39,180 17,754 13,537 10,177 6,802 87,450Additions - - 4,283 24 46 4,353Acquired through acquisitions - 60 - 10 - 70

At 31 March 2016 39,180 17,814 17,820 10,211 6,848 91,873

ACCUMULATED AMORTIZATIONAt 31 March 2014 (10,531) (6,728) (4,157) (1,889) (4,500) (27,805)Amortization (4,629) (3,525) (3,836) (4,206) (746) (16,942)Exchange differences 76 71 725 16 215 1,103

At 31 March 2015 (15,084) (10,182) (7,268) (6,079) (5,031) (43,644)Amortization (8,994) (6,525) (6,816) (1,016) (657) (24,008)Exchange differences - - (21) - - (21)

At 31 March 2016 (24,078) (16,707) (14,105) (7,095) (5,688) (67,673)

NET BOOK VALUEAt 31 March 2016 15,102 1,107 3,715 3,116 1,160 24,200

At 31 March 2015 24,096 7,572 6,269 4,098 1,771 43,806

53

14 PROPERTY, PLANT AND EQUIPMENT

COMPUTEREQUIPMENT

$‘000

FIXURES, FITTINGSAND OFFICEEQUIPMENT

$‘000

LEASEHOLDIMPROVEMENTS

$‘000TOTAL$‘000

COSTAt 1 April 2014 5,132 1,502 673 7,307Additions 2,146 257 50 2,453Acquired on acquisitions of subsidiaries 88 136 20 244Disposal (180) - - (180)Exchange differences (50) (13) (15) (78)

At 31 March 2015 7,136 1,882 728 9,746Additions 1,880 38 341 2,259Acquired on acquisitions of subsidiaries - - - -Disposal (162) (88) (4) (254)Exchange differences (13) (3) (3) (19)

At 31 March 2016 8,841 1,829 1,062 11,732

ACCUMULATED DEPRECIATIONAt 1 April 2014 (3,488) (872) (326) (4,686)Depreciation (1,418) (358) (100) (1,876)Disposal 106 - - 106Exchange differences 44 6 - 50

At 31 March 2015 (4,756) (1,224) (426) (6,406)Depreciation (1,695) (317) (160) (2,172)Disposal 133 60 1 194Exchange differences 7 2 1 10

At 31 March 2016 (6,311) (1,479) (584) (8,374)

NET BOOK VALUEAt 31 March 2016 2,530 350 478 3,358

At 31 March 2015 2,380 658 302 3,340

The carrying value of assets under finance lease at 31 March 2016 was $2.0m (2015: $1.6m).

15 SUBSIDIARIES

NAME OF COMPANYNATURE OFBUSINESS

PROPORTION OF ALLOTTEDSHARE CAPITAL HELD

(DIRECTLY OR INDIRECTLY)COUNTRY OF

REGISTRATION

RhythmOne (US) Holdings, Inc. Holding company 100% United StatesBlinkx (UK2), Ltd Holding company 100% United KingdomBlinkx UK Ltd Trading company 100% United KingdomRhythmOne, LLC Trading company 100% United StatesPinball (Canada), Inc. Holding company 100% CanadaBlinkx (Canada), Inc. Trading company 100% CanadaPrime Visibility Media Group, LLC Trading company 100% United StatesPrime Visibility, LLC Trading company 100% United StatesVerti Technology Group, Inc Trading company 100% United StatesPinball Corporation Holding company 100% United StatesAdKarma, LLC Trading company 100% United StatesBlinkx (UK) Holding Ltd Holding Company 100% United KingdomAdOn Network LLC Trading Company 100% United States

54

16 OTHER RECEIVABLES AND RESTRICTED CASH(i) Trade and Other Receivables

AS AT31 MARCH 2016

$‘000

AS AT31 MARCH 2015

$‘000

CURRENT ASSETSTrade receivables 24,246 39,846Sales and doubtful debts allowance (1,421) (2,105)

NET TRADE RECEIVABLES 22,825 37,741

Other receivables and deposits 39 466Prepayments 2,383 6,727

OTHER RECEIVABLES 2,422 7,193

NON CURRENT ASSETSOther receivables 200 237Restricted cash amounts 628 834

OTHER RECEIVABLES AND RESTRICTED CASH 828 1,071

The average credit period taken on sales is 49 days (2015: 63 days).

Refer to the financial instruments note 25 for information on credit risk.

Movement in the sales and doubtful debts allowance is as follows:

AS AT31 MARCH 2016

$‘000

AS AT31 MARCH 2015

$‘000

Balance at beginning of the Period 2,105 1,389Receivables written off during the year as uncollectible (1,269) (1,130)Provision for receivables impairment 585 1,846

Balance at end of the Period 1,421 2,105

AGING OF PAST DUE BUT NOT IMPAIRED RECEIVABLES

As at 31 March 2016, trade receivables of $8.0 million (2015: $11.3 million) were past due but not impaired. These relate to anumber of independent customers for whom there is no recent history of default. The aging analysis of these trade receivables isas follows:

AS AT31 MARCH 2016

$‘000

AS AT31 MARCH 2015

$‘000

1 – 90 days 3,728 10,578in excess of 90 days 4,264 731

TOTAL PAST DUE BUT NOT IMPAIRED 7,992 11,309

AGING OF PAST DUE AND IMPAIRED RECEIVABLES

As at 31 March 2016, trade receivables of $1.4 million (2015: $1.7 million) were impaired. The aging of these receivables is asfollows:

AS AT31 MARCH 2016

$‘000

AS AT31 MARCH 2015

$‘000

1 – 90 days 17 41in excess of 90 days 1,404 1,620

TOTAL PAST DUE AND IMPAIRED 1,421 1,661

55

The Directors have considered the credit quality of assets neither past due nor impaired and do not consider further creditprovision is required in excess of the allowance for sales and doubtful debts. No interest has been charged for overdue debts in theperiod.

The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

(ii) Cash and Cash Equivalents

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of one monthor less. The carrying amount of these assets approximates their fair value.

(iii) Restricted Cash

Restricted cash is classified in non–current assets as it is not immediately accessible by the Group.

17 MARKETABLE SECURITIES2016 2015

Balance at beginning of the Period - -Additions 60,245 -Net gain recorded in other reserves 19 -

Balance at the end the Period 60,264 -Less non-current portion (29,539) -

Current portion 30,725 -

Marketable securities include the following:2016 2015

Listed securities:Corporate and government debt instruments 59,461 -Unlisted securities:Certificates of deposit 803 -

TOTAL 60,264 -

Marketable securities are denominated in US dollar.

The maximum exposure to credit risk at the reporting date is the carrying value of the debt securities classified as marketablesecurities.

None of these financial assets are either past due or impaired.

18 DEFERRED INCOME TAXDeferred tax is calculated in full on temporary differences under the liability method using the substantively enacted tax rates ofthe jurisdictions in which the temporary differences are expected to reverse.

(i) Recognized Deferred Tax Assets/Liabilities

Deferred tax assets have been recognized in respect of tax losses and other deductible temporary differences where it is probablethat these assets will be recovered.

The movements in deferred tax assets and liabilities (including offsetting of balances within the same jurisdiction as permittedunder IAS 12) during the period is shown below. Deferred tax assets and liabilities are only offset where there is a legallyenforceable right of offset and there is an intention to settle the balances net.

ASSETS2016$‘000

ASSETS2015$‘000

LIABILITIES2016$‘000

LIABILITIES2015$‘000

NET2016$‘000

NET2015$‘000

Property, plant and equipment andintangible assets (3,145) (2) - 12,568 (3,145) 12,566

Tax credit and loss carry forward (12,021) (26,120) - - (12,021) (26,120)Share based payments (387) (562) - - (387) (562)Other deductible temporary differences (3,723) (4,953) 386 - (3,337) (4,953)

Deferred tax (assets)/liabilities (19,277) (31,637) 386 12,568 (18,890) (19,069)Offset tax 68 12,509 (68) (12,509) - -

Net deferred tax (assets)/liabilities (19,208) (19,128) 318 59 (18,890) (19,069)

56

(ii) Unrecognized Deferred Tax Assets

There is an unrecognized deferred tax asset arising from unrecognized temporary differences of $18.2m (2015: $7.3m) which hasnot been recognized due to insufficient certainty that taxable profits will be available against which this asset could be used.

(iii) Movement in Temporary Differences

BALANCE AT31 MARCH 2015

$‘000

RECOGNIZEDIN INCOME

$‘000

RECOGNIZEDIN GOODWILL

$‘000

RECOGNIZEDIN EQUITY

$‘000

BALANCE AT31 MARCH 2016

$‘000

Property, plant and equipment andintangible assets 12,566 (15,711) - - (3,145)

Tax credit and losses carry forward (26,120) 14,099 - - (12,021)Share based payments (562) 206 - (31) (387)Other deductible temporary differences (4,953) 1,616 - - (3,337)

TOTAL (19,069) 210 - (31) (18,890)

The amount of credit that can be recognized in the income statement is limited under IAS 12 and any remaining credit is taken toequity.

19 OTHER PAYABLES AND PROVISION FOR LIABILITIESTRADE AND OTHER PAYABLES

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

CURRENT LIABILITIESTrade payables 18,722 25,977Customer deposits 709 1,214Onerous lease provision 700 577Other accrued liabilities (including the amount of finance leases due within 12 months) 10,463 22,648

30,594 50,416

NON CURRENT LIABILITIESOnerous lease provision 5 172Non current liabilities 1,679 1,189

Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average creditperiod taken for trade purchases is 68 days (2015: 82 days). No interest has been charged by suppliers in respect of overdueamounts in the year.

Non current liabilities include deferred rent of $0.5m (2015: $0.6m) and obligations under financing leases of $1.2m (2015:$0.6m).

The Directors consider that the carrying amount of trade payables approximates to their fair value.

PROVISIONS FOR LIABILITIES AND CHARGES

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

Balance at beginning of the Period 749 512Additional provision in the year 193 237Utilization of provision (237) -

Balance at end of the Period 705 749

The onerous lease provision comprises obligations for future rents payable on properties that are vacant or only partially utilized.These provisions are expected to be utilized by 31 March 2019.

57

Obligations under finance lease:

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

AMOUNTS PAYABLE UNDER FINANCE LEASESWithin one year 910 1,005In second to fifth years inclusive 1,172 639

2,082 1,644Less: Amounts due for settlement within 12 months (shown under current liabilities) (910) (1,005)

Amounts due for settlement after 12 months 1,172 639

For the year ended 31 March 2016, the average effective borrowing rate was 8.7% (2015: 11.6%).

Lease obligations are denominated in dollars. There is no material difference between the minimum lease payment and theirpresent values.

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreedrepayment period

LESS THAN3 MONTHS

$‘000

3–12MONTHS

$‘000

1–5YEARS$‘000

TOTAL$‘000

Finance lease liability 335 575 1,172 2,082

The Group’s obligations under finance leases are typically secured on the assets to which the lease relates.

20 SHARE CAPITALAS AT

31 MARCH 2016$‘000

AS AT31 MARCH 2015

$‘000

ISSUED AND FULLY PAID404,462,870 ordinary shares of 1 pence each 7,537 7,502

(2015: 402,326,511 ordinary shares of 1 pence each)

The Company has one class of ordinary share which carry no right to fixed income.

During the current year 2,136,359 shares were issued, of which 512,877 shares related to the acquisition of Rhythm NewMediaInc., 255,980 shares related to exercise of employee share options and 1,367,502 shares 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 sharesrelated to exercise of employee share options, 1,258,973 shares related to restricted stock units and 106,554 related toconsideration for the acquisition of Burst Media Corporation).

21 SHARE PREMIUM ACCOUNTSHARE

PREMIUM$‘000

Balance at 31 March 2014 167,945Premium arising on issue of equity shares, net of costs 63

Balance at 31 March 2015 168,008Premium arising on issue of equity shares, net of costs 37

Balance at 31 March 2016 168,045

22 SHARES TO BE ISSUED AND MERGER RESERVEThe shares to be issued reserve relates to shares that are expected to be issued to former Burst shareholders as part of theconsideration 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 differencebetween the fair value and the nominal value of the shares transferred as consideration is taken to the merger reserve.

58

23 OPERATING LEASE ARRANGEMENTS

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

Lease payments under operating leases recognized as an expense in the year 3,461 3,463

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancelableoperating leases which fall due as follows:

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

Within one year 2,386 2,933In the second to fifth years inclusive 5,236 7,545More than five years 182 182

7,804 10,660

Operating lease payments represent rentals payable by the Group for certain of its office properties, computer equipment andsoftware. Lease terms range from two to ten years.

24 SHARE-BASED PAYMENTS AND EQUITY SETTLED SHARE OPTION SCHEMESOn the demerger from Autonomy Corporation plc the Company established the following share options schemes:

! The blinkx 2007 Enterprise Management Incentive Plan (the ‘blinkx EMI Scheme’)! The blinkx US Share Option Plan (the ‘blinkx US Plan’)! The blinkx Autonomy Employee Discretionary Share Option Scheme 2007 (the ‘Autonomy Discretionary Scheme’)! The blinkx Autonomy Employee US Share Option Plan (the ‘Autonomy US Plan’)

The blinkx EMI Scheme and the blinkx US Plan allow for the grant of options over ordinary shares to employees of the Companyand its subsidiaries. At the time of demerger two special grants were made under these plans. The first allowed a fully vested grantat nominal value and the second was a grant at nominal value but with a three-year vesting period. Since then grants have beenmade at market value and with a three- or four-year vesting period with options vesting in varying sized tranches over that period.No option may be granted for a term in excess of 10 years. Vested options are exercisable following termination of employment fora period ranging from 40 to 90 days. Vesting criteria are based on continued employment with the Company.

On 16 September 2013, the Board of Directors approved the amendment of blinkx Plc US Share Option Plan to allow the grant ofRestricted Stock Units to be made under its terms.

On 3 July 2015 the Board of Directors approved the Executive Plan for Market Value Share Options (MVSOs) that vest quarterlywith an additional performance component. The equity awards require a minimum stock price threshold for options to vest andhave a further accelerated vesting schedule when the stock price reaches a certain predetermined threshold above the stock priceat grant.

The Autonomy Discretionary Scheme and the Autonomy US Plan allowed a one-time grant of blinkx options to certain Autonomyemployees who at the time of the demerger had vested Autonomy options. Options granted under this plan were granted atmarket price and vest over a period of three years.

Share-based compensation charges have been charged in the income statement within the following functional areas:

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

Sales and marketing 1,041 2,004Research and development 588 852Administrative expenses 2,786 1,997

4,415 4,853

59

The following table summarizes options outstanding at 31 March 2016 relating to the blinkx EMI scheme and the blinkx US plan. Alloption exercise prices are quoted in sterling.

NUMBER

2016WEIGHTED

AVERAGE£ NUMBER

2015WEIGHTED

AVERAGE£

Outstanding balance at beginning of year 23,690,152 0.50 14,102,777 0.69Granted during the year 12,747,500 0.27 11,642,000 0.30Exercised during the year (255,980) 0.10 (516,952) 0.05Forfeited during the year (6,912,011) 0.59 (1,537,673) 0.92

Outstanding balance at end of year 29,269,661 0.38 23,690,152 0.50

Exercisable at end of year 11,669,968 0.52 9,882,822 0.59

The weighted average share price at the date of exercise for share options exercised during the period was £0.27 (FY2015:£0.08).The options outstanding at 31 March 2016 had a weighted average exercise price of £0.38 (2015: £0.50). The weighted averageremaining contractual life of the options was 8 years (FY2015: 8 years).

The inputs to the Black-Scholes and Monte Carlo models were as follows:

2016 2015

Weighted average share price 0.27 0.30Weighted average exercise price 0.27 0.30Expected volatility 51-85% 46-58%Expected life 6, 10 years 6 yearsRisk free rate 2.17-2.37% 2.00-2.75%Expected dividend - -

Expected volatility was determined by calculating the historical volatility of the Group’s share price for the last 90 days prior togrant. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioral considerations.

Options were granted on 3 July 2015, 9 July 2015, 25 August 2015, 15 December 2015 and 5 February 2016. The weightedaverage of the fair value of the options granted in the year was £0.27 per share, (2015: £0.30 per share).

The following table summarizes options outstanding as at 31 March 2016 in relation to the Autonomy Discretionary Share Schemeand Autonomy US Plan options.

NUMBER

2016WEIGHTED

AVERAGE£ NUMBER

2015WEIGHTED

AVERAGE£

Outstanding balance at beginning of year 543,938 0.45 604,286 0.45Lapsed during the year (62,799) 0.45 (60,348) 0.45

Outstanding balance at end of year 481,139 0.45 543,938 0.45

Exercisable at end of year 481,139 0.45 543,938 0.45

No options were exercised during the year from the Autonomy plan. (2015: the weighted average share price at the date ofexercise for share options exercised during the period was £0.45). The options outstanding at 31 March 2016 had a weightedaverage exercise price of £0.45 (2015: £0.45). The weighted average remaining contractual life of the options was 1 year (2015: 2years).

No options were granted during the current or prior year.

The following table summarizes Restricted Stock Units (RSUs) outstanding as at 31 March 2016.

NUMBER OFRSUs

NUMBER

NUMBER OFRSUs

NUMBER

Outstanding balance at beginning of year 2,933,184 2,231,667RSUs granted - 2,257,712RSUs vested (1,367,502) (1,258,973)RSUs forfeited (240,274) (297,222)

Exercisable at end of year 1,325,408 2,933,184

60

No RSUs were granted in the current year. The weighted average of the fair value of the RSUs granted in the year was nil(2015: £0.29).

The majority of RSUs that vested in fiscal year 2016 were net-share settled such that the Company withheld shares with valueequivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remittedthe cash to the appropriate taxing authorities. The weighted average vesting share price during the period was £0.24 (2015:£0.37).

25 FINANCIAL INSTRUMENTSCAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue operating as a going concern whilemaximizing shareholder returns. The capital structure of the Group consists of cash and cash equivalents, marketable securities,and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. The Group’soverall strategy remains unchanged from the prior year. The Group finances its operations through a combination of retainedprofits and interest received on bank accounts. Management maintains its capital structure and makes adjustments as necessary inlight of changes in the economic environment and strategic objectives of the Group, ensuring that there are sufficient liquidresources available to take advantage of opportunities as they arise.

The Group’s capital risk management policies are unchanged from prior year. The Group is not subject to externally imposedcapital requirements.

Categories of financial instrument:

NOTE2016$‘000

2015$‘000

FINANCIAL ASSETSCash and cash equivalents 18,222 95,734Marketable securities 60,264 -Loans and receivables 16 22,825 37,741Restricted cash and other receivables 828 1,071

FINANCIAL LIABILITIESAmortized cost (28,787) (47,003)

FINANCIAL RISK MANAGEMENT

Management is responsible for monitoring and managing the financial risks relating to the operations of the Group, which includecredit risk, market risk arising from interest rate risk and currency risk, and liquidity risk. The Board of Directors and the AuditCommittee review and approve the internal policies for managing each of these risks as summarized below. The Group is notsubject to any externally imposed capital requirements.

The Group’s financial function provides services to the business, monitors and manages the financial risks relating to theoperations of the Group. These risks (together with the related risk management policy) include:

CREDIT RISKCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.The Group’s credit risk is primarily with cash and cash equivalents and amounts owing from customers. The Group’s principalfinancial assets are cash and cash equivalents, trade and other receivables.

The Group’s customer base is highly diversified. One customer represents 12.56% of revenue in the year. This is not consideredindicative of a high credit risk. (2015: one customer represented 10.02% of revenue). The Group does not have any significantcredit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group definescounterparties as having similar characteristics if they are related entities.

Concentration of credit risk did not exceed 13% of gross monetary assets at any time during the year. Before accepting any newcustomer, the Group uses an external credit rating system to assess the potential customer’s credit quality. All customers havecredit limits set by credit managers and are subject to standard terms of payment. The Group has adopted a policy of only dealingwith counterparties that are considered to be creditworthy by management, having completed various credit checks.

The risk of default from a financial institution is considered limited because counterparties are a number of different banks withhigh credit ratings assigned by international credit-rating agencies, which range from A to AA.

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents theGroup’s maximum exposure to credit risk.

MARKET RISK (INCLUDING INTEREST RATE RISK AND CURRENCY RISK)

Interest rate riskThe Group has no loans and borrowings outside finance leases and as such, the Directors are satisfied that interest rate risk isnegligible.

61

Currency riskThe Group does not enter into or trade financial instruments, including derivative financial instruments, for any purpose. The Groupmaintains the majority of its cash in US Dollars as a natural hedge, in line with our revenue and costs which are predominantly US-based.

The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates as it undertakescertain transactions denominated in foreign currencies. The Group’s presentational currency is US dollars and the Company’sfunctional currency is Sterling. The Group operates subsidiaries in the US, UK and Canada and as a result cash is heldpredominantly in sterling and US Dollars. The Group holds its funds in several different financial institutions.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting dateare as follows:

2016LIABILITIES

$‘000

2015LIABILITIES

$‘000

2016ASSETS

$‘000

2015ASSETS

$‘000

Sterling 634 1,567 222 3,092

Liquidity riskThe Group seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs and to invest cashsafely and profitably by maintaining adequate reserves and cash on hand by continuously monitoring forecast and actual cashflows and by matching the maturity profiles of financial assets and liabilities. The Group reviews its cash flow requirements on amonthly basis, to ensure that it maintains adequate cash reserves, diversifying its cash accounts across several bankinginstitutions and constantly monitoring forecast and actual cash flows.

The following table details the Group’s sensitivity to a 20% increase and decrease in the functional currency of the entity againstthe relevant foreign currencies. 20% is the sensitivity rate used (2015: 20%) when reporting foreign currency risk internally to keymanagement personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates.The sensitivity includes outstanding foreign currency denominated monetary items and adjusts their translation at the year-end fora 20% change (2015: 20%) in foreign currency rates. The sensitivity analysis includes loans to foreign operations within the Groupwhere the denomination of the loan is in a currency other than the currency the lender or the borrower. A positive numberindicates an increase in profit and other equity where the sterling strengthens 20% against the relevant currency. For a 20%weakening of the sterling against the relevant currency there would be an equal and opposite impact on the profit and other equityand the balances below would be negative.

2016$‘000

2015$‘000

Cash and cash equivalents 44 484Amounts due from customers - 134Trade payables 127 313

No sensitivity has been performed on a change in interest rates, as the impact of interest rate risk is so low.

The fair value of all of the Group’s financial instruments is derived from inputs other than unadjusted quoted prices that areobservable for the asset or liability, either directly or indirectly. The carrying amount of financial assets and financial liabilitiesrecorded at amortized cost in the financial statements approximate their fair values. Therefore there is no difference between thecarrying value and fair value of the above financial assets and liabilities.

FAIR VALUE OF ASSETS AND LIABILITIES

The Group has assets and liabilities that have been fair valued, on a non-recurring basis, which have arisen through theacquisitions in the previous years.

These assets have been fair valued by an external valuation specialist. The assets and liabilities are all at level 3 in the fair valuehierarchy set out in IFRS 13. Level 3 is fair value measurements that are derived from valuation techniques that include inputs forthe asset or liability not based on observable market data (unobservable inputs).

The only asset carried as fair value is marketable securities. These relate to level 2 assets, which have been valued by an externalspecialist or non-listed certificates of deposits.

62

26 ACQUISITION AND EXCEPTIONAL COSTSIn line with the way the Board and chief operating decision-maker reviews the business, large one-off acquisition and exceptionalcosts and other costs related to acquisitions are separately identified and adjusted results shown. The types of costs includedwithin acquisition costs are those which are directly attributable to an acquisition, such as legal and accounting expenses,integration costs, severance and retention remuneration. The types of costs which are considered exceptional include severancecosts, impairment losses and other significant assets writedowns.

YEAR ENDED31 MARCH 2016

$‘000

YEAR ENDED31 MARCH 2015

$‘000

Acquisition costs:Severance and retention costs 825 2,255Professional 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 643Severance costs 1,217 926

Total exceptional costs 64,161 1,569

TOTAL ACQUISITION AND EXCEPTIONAL 65,295 4,662

27 RELATED PARTY TRANSACTIONSBalances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated onconsolidation and are not disclosed in this note.

The remuneration of the Directors, who are the Group’s key management personnel, in accordance with IAS 24 Related PartyDisclosures, is disclosed in the Directors’ Remuneration Report on page 27.

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

28 EVENTS AFTER THE BALANCE SHEET DATE (GROUP AND COMPANY)There are no post balance sheet events to report.

63

COMPANY BALANCE SHEETAS AT 31 MARCH 2016

NOTE

AS AT31 MARCH

2016£‘000

AS AT31 MARCH

2015£‘000

NON-CURRENT ASSETSInvestment in subsidiaries 30 110,443 209,381

CURRENT ASSETSAmounts due from subsidiary undertakings 31 4,435 19,135Other receivables 30 9Cash and cash equivalents 31 505 22,708

Total assets 4,970 41,852

CURRENT LIABILITIESTrade and other payables 31 (197) (188)Amounts due to subsidiary undertakings 31 (233) (7,114)

Total liabilities (430) (7,302)

NET ASSETS 114,983 243,931

CAPITAL AND RESERVESShare capital 34 4,045 4,023Share premium account 35 98,119 98,096Stock compensation reserve 11,013 8,129Shares to be issued reserve 15 1,033Merger reserve 9,984 138,031Retained loss 36 (8,193) (5,381)

TOTAL EQUITY 114,983 243,931

Note 29 to note 38 form an integral part of this balance sheet.

The financial statements of blinkx plc (registered number 06223359) were approved by the Board of Directors and authorized forissue on 17 May 2016. They were signed on its behalf by:

Subhransu (“Brian”) MukherjeeChief Executive Officerblinkx plc17 May 2016

64

COMPANY STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2016

ORDINARYSHARE

CAPITAL£‘000

SHAREPREMIUMACCOUNT

£‘000

SHARESTO BE

ISSUEDRESERVE

£‘000

STOCKCOMPENSATION

RESERVE£‘000

MERGERRESERVE

£‘000

RETAINEDLOSS£‘000

TOTAL£‘000

BALANCE AS AT1 APRIL 2015 3,999 98,059 2,192 5,134 136,881 (7,536) 238,729

Net income for the year - - - - - 2,155 2,155Other comprehensive income - - - - - - -

Total comprehensive income forthe year - - - - - 2,155 2,155

Issue of shares, net of costs 24 37 (1,159) - 1,150 - 52Capital contribution - - - 2,995 - - 2,995

BALANCE AS AT31 MARCH 2015 4,023 98,096 1,033 8,129 138,031 (5,381) 243,931

Net loss for the year - - - - - (131,942) (131,942)Other comprehensive income - - - - - - -

Total comprehensive net loss forthe year - - - - - (131,942) (131,942)

Reclassification of theimpairment loss from retainedloss to merger reserve - - - - (129,060) 129,060 -

Issue of shares, net of costs 22 23 (1,018) - 1,013 - 40Tax movement on share options - - - - - 70 70Capital contribution - - - 2,884 - - 2,884

BALANCE AS AT31 MARCH 2016 4,045 98,119 15 11,013 9,984 (8,193) 114,983

65

COMPANY CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MARCH 2016

NOTE

AS AT31 MARCH 2016

£‘000

AS AT31 MARCH 2015

£‘000

NET CASH USED IN OPERATING ACTIVITIES 38 (5,037) (21,112)

CASH FLOWS FROM INVESTING ACTIVITIESInvestment in subsidiary (15,948) -Interest received 13 -

NET CASH GENERATED BY INVESTING ACTIVITIES (15,935) -

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issuance of shares 40 52

NET CASH GENERATED BY FINANCING ACTIVITIES 40 52

Net decrease in cash and cash equivalents (20,932) (21,060)Beginning cash and cash equivalents 22,708 39,711Effect of foreign exchange on cash and cash equivalents (1,271) 4,057

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 505 22,708

66

29 SIGNIFICANT ACCOUNTING POLICIESThe separate financial statements of the Company are presented in accordance with the Companies Act 2006. As permitted by thatAct, the separate financial statements have been prepared in accordance with International Financial Reporting Standards adoptedby the European Union. The Company has one Executive Director and five Non-Executive Directors. Their remuneration is shown inthe Directors’ Remuneration Report on page 27.

The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are the same asthose set out in note 3 to the consolidated financial statements except as noted below.

Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.

These Company financial statements are presented in sterling as that is the currency of the primary economic environment inwhich the Company operates.

As permitted by section 408 of the Companies Act 2006, the income statement of the parent Company is not presented as part ofthese financial statements. The parent Company’s loss for the financial year amounted to £131,942,000 (2015: profit of£2,155,000). The Company’s loss/profit for each year is the same as its total comprehensive income and hence no separatestatement has been presented.

30 INVESTMENTS IN SUBSIDIARIES£‘000

COST AND NET BOOK VALUEAt 31 March 2014 206,386Investment in subsidiaries 2,995

At 31 March 2015 209,381Capital contribution due to share-based payments 2,884Investment in subsidiaries 27,238

Impairment of investment in subsidiary (129,060)At 31 March 2016 110,443

Investments in subsidiary companies are subject to review for impairment. Following the review, the Company impaired thecarrying value of investments in subsidiaries by £129,060,000 (2015: nil).

The capital contribution is in respect of equity settled share-based payments made to employees of the Company’s subsidiaries forwhich the Company receives no reimbursement. Refer to note 37 for further details on the Groups Share Option Schemes.

All subsidiary companies within the Group’s operation at 31 March 2016 are as follows:

NAME OF COMPANY NATURE OF BUSINESS

PROPORTION OF ALLOTTEDSHARE CAPITAL HELD

(DIRECTLY OR INDIRECTLY)COUNTRY OF

REGISTRATION

RhythmOne (US) Holdings, Inc. Holding company 100% United StatesBlinkx (UK2), Ltd Holding company 100% United KingdomBlinkx UK Ltd Trading company 100% United KingdomRhythmOne, LLC Trading company 100% United StatesPinball (Canada), Inc. Holding company 100% CanadaBlinkx (Canada), Inc. Trading company 100% CanadaPrime Visibility Media Group, LLC Trading company 100% United StatesPrime Visibility, LLC Trading company 100% United StatesVerti Technology Group, Inc Trading company 100% United StatesPinball Corporation Holding company 100% United StatesAdKarma, LLC Trading company 100% United StatesBlinkx (UK) Holding Ltd Holding Company 100% United KingdomAdOn Network LLC Trading Company 100% United States

Operating subsidiaries of the above companies have been excluded to the extent such subsidiaries’ operations are consolidated inthe operating companies’ operations and results. These include operating subsidiaries in the UK, US and Canada.

31 FINANCIAL INSTRUMENTSFINANCIAL ASSETS

AMOUNTS DUE FROM SUBSIDIARY UNDERTAKINGSAt the balance sheet date there are receivables from fellow Group companies amounting to £4,435,000 (2015: £19,135,000). Thecarrying amount of these assets approximates their fair value. There are no past due or impaired receivable balances (2015:none). Amounts due from subsidiary undertakings are unsecured, interest free, have no fixed date of repayment and are repayableon demand.

67

CASH AND CASH EQUIVALENTSThese comprise cash held by the Company and short-term bank deposits with an original maturity of three months or less.

The carrying amount of these assets approximates their fair value.

FINANCIAL LIABILITIES

AMOUNTS DUE TO SUBSIDIARY UNDERTAKINGSAt the balance sheet date there are payables to fellow Group companies amounting to £233,000 (2015: £7,114,000). The carryingamount of these liabilities approximates to their fair value. Amounts due to subsidiary undertakings are unsecured, interest free,have no fixed date of repayment and are repayable on demand.

TRADE AND OTHER PAYABLESTrade payables principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period takenfor trade purchases is 54 days (2015: 18 days).

The carrying amount of trade payables approximates to their fair value.

The financial risk and risk management policies are the same as those of the Group, which are discussed in note 25.

FOREIGN CURRENCY RISK MANAGEMENTThe Company is mainly exposed to movements in US dollar. The table below shows the carrying amounts of the Company’s foreigncurrency monetary assets and monetary liabilities at the reporting date:

2016LIABILITIES

£‘000

2015LIABILITIES

£‘000

2016ASSETS

£‘000

2015ASSETS

£‘000

US Dollar 181 5,671 536 41,275

FOREIGN CURRENCY SENSITIVITY ANALYSISThe Company has maintained its sensitivity at 20% in 2016 (2015: 20%).

The following table details the Company’s sensitivity to a 20% increase and decrease (2015: 20%) in the functional currency of theentity against the relevant foreign currencies. 20% is the sensitivity rate used when reporting foreign currency risk internally tokey management personnel and represents management’s assessment of the reasonably possible change in foreign exchangerates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translationat the year end for a 20% change in foreign currency rates. The sensitivity analysis includes loans to foreign operations where thedenomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number below for 2016indicates an increase in profit and other equity where the Sterling strengthens 20% against the relevant currency. For a 20%weakening of the Sterling against the relevant currency, there would be an equal and opposite impact on the profit and otherequity, and the balances below would be negative.

2016£‘000

2015£‘000

Cash and cash equivalents 80 4,428Amounts due from subsidiary undertakings 887 3,826Amounts due to subsidiary undertakings 47 1,134

Categories of financial instrument:

YEAR ENDED31 MARCH 2016

£‘000

YEAR ENDED31 MARCH 2015

£‘000

FINANCIAL ASSETSCash and cash equivalents 505 22,708Other receivables 30 9Amounts due from subsidiary undertakings 4,435 19,135

4,970 41,852

FINANCIAL LIABILITIESTrade payables 197 188Amounts due to subsidiary undertakings 233 7,114

430 7,302

The fair value of all of the Group’s financial instruments is derived from inputs other than unadjusted quoted prices that areobservable for the asset or liability, either directly or indirectly. The carrying amount of financial assets and financial liabilitiesrecorded at amortized cost in the financial statements approximate their fair values. Therefore there is no difference between thecarrying value and fair value of the above financial assets and liabilities.

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32 DEFERRED TAXNo deferred tax assets or liabilities have been recognized by the Company in the year. At the balance sheet date there is anunrecognized deferred tax asset of £0.8m (2015: £0.9m ).

33 RELATED PARTY TRANSACTIONSThe amount owed by subsidiary undertakings is £4,435,000 (2015: £19,135,000). The amount owed to subsidiary undertaking is£233,000 (2015: £7,114,000). Amounts are repayable on demand. No interest is payable and the amounts are unsecured.

The remuneration of the Directors, who are the Group’s key management personnel, in accordance with IAS 24 Related PartyDisclosures, is disclosed in the Directors Remuneration Report on page 27.

34 SHARE CAPITALYEAR ENDED

31 MARCH 2016£‘000

YEAR ENDED31 MARCH 2015

£‘000

ISSUED AND FULLY PAID404,462,870 ordinary shares of 1 pence each 4,045 4,023

(2015: 402,326,511 ordinary shares of 1 pence each)

The Company has one class of ordinary share which carries no right to fixed income.

During the current year 2,136,359 shares were issued, of which 512,877 shares related to the acquisition of Rhythm NewMediaInc., 255,980 shares were issued related to exercise of employee share options and 1,367,502 shares were issued related torestricted stock units (2015: 2,418,132 shares were issued, of which 511,197 shares related to the acquisition of RhythmNewMedia Inc., 541,408 shares were issued related to exercise of employee share options, 1,258,973 shares were issued relatedto restricted stock units and 106,554 related to consideration for the acquisition of Burst Media Corporation).

35 SHARE PREMIUMSHARE

PREMIUM£‘000

Balance at 31 March 2014 98,059Premium arising on issue of equity shares, net of costs 37

Balance at 31 March 2015 98,096Premium arising on issue of equity shares, net of costs 23

Balance at 31 March 2016 98,119

36 RETAINED EARNINGS£‘000

Balance at 31 March 2014 (7,536)Net profit for the year 2,155

Balance at 31 March 2015 (5,381)Net loss for the year (131,942)Tax movement on share options 70

Balance at 31 March 2016 (137,253)

37 SHARE-BASED PAYMENTSSee note 24, Share-based Payments Equity Settled Share Option Schemes.

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38 NOTES TO THE CASH FLOW STATEMENTAS AT

31 MARCH 2016£‘000

AS AT31 MARCH 2015

£‘000

Cash Flow From Operating Activities(Loss)/Profit from operations (131,942) 2,155Impairment in subsidiary 129,060 -Foreign exchange loss/(gain) 1,271 (4,057)

Operating cash flows before movements in working capital (1,611) (1,902)Decrease/(increase) in amounts due from group undertakings 14,703 (17,379)Decrease in amounts due to subsidiary undertakings (18,171) (1,908)Decrease in receivables 33 -Increase in payables 9 77

Cash generated by/(used in) operations (5,037) (21,112)

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SHAREHOLDER INFORMATION AND ADVISORS

REGISTRARS AND BLINKX SHAREHOLDER SERVICESAll administrative inquiries regarding shareholdings such as questions about lost share certificates should be directed to theCompany’s registrars as follows:

Computershare Investor Services PLCThe PavilionsBridgwater RoadBristolBS99 6ZYUnited KingdomTel: +44 870 707 1593email: web.queries@computershare.co.uk

STOCK EXCHANGESblinkx’s ordinary shares are listed on the London Stock Exchange (AIM) under the symbol “BLNX.” blinkx does not maintain listingson any other stock exchanges.

SHAREHOLDER COMMUNICATIONSTopics featured in this Annual Report can be found via the blinkx home page on the Internet (http://www.blnx.com). Financialresults, news on blinkx products, services and other activities can also be found via that address.

ADVISORS/AUDITORAIM NOMINATEDADVISOR AND BROKER CO-BROKER INVESTOR RELATIONS

PricewaterhouseCoopers LLP Citigroup Global Markets Numis Securities Limited FTI Consulting, Inc.The Atrium Citigroup Centre The London Stock 200 Aldersgate1 Harefield Road Canada Square Exchange Building Aldersgate StreetUxbridge, UB8 1EX Canary Wharf 10 Paternoster Square London, EC1A 4HDUnited Kingdom London, E14 5LB London, EC4M 7LT United Kingdom

United Kingdom United Kingdom

CORPORATE LEGAL ADVISORS REGISTERED OFFICE

Bird & Bird LLP DLA Piper LLP 40 Dukes Place15 Fetter Lane 2000 University Avenue LondonLondon, EC4A 1JP East Palo Alto, CA 94303 EC3A 7NHUnited Kingdom USA United Kingdom

Headquarters: 251 Kearny Street, 2nd Floor, San Francisco, CA 94108Tel: +1 (415) 655-1450 // Fax: +1 (415) 665-1440

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GLOSSARY

Ad Blocking – Using technology to remove or alter advertising content in a webpage. Advertising can exist in a variety of forms includingstatic banners, rich media, video, text, or pop-up windows.

Ad Exchange – An online marketplace for advertisers and publishers to buy and sell inventory, often through real-time auctions.

Ad Network – A company that has deals with advertisers and publishers to manually buy and sell ads across the Internet.

Ad Server – Company whose technology relays an ad buy to a website and reports on how it performed.

Agency Trading Desk – A division within an ad agency focused on buying ads using ad technology.

Audience Extension – Sometimes called “look-alike modeling,” a process that takes a known audience segment and catalogs variousshared characteristics that can be used to target people who bear similarities.

Audience Verification – Third-party reporting to provide validation that a site, and the ads on it, reach a legitimate, verifiable audience.

Behavioral Targeting – Showing ads to people based on the type of sites they visit.

Click Through Rate (CTR) – Measure of how many people clicked on an ad or a piece of digital content. Used as a proxy to determine thelevel of engagement of the ad or content by the consumer.

Connected TV – Television sets and set-top boxes with built-in integration of web features, such as streaming services and apps. Alsoknown as Smart TVs.

Cookie – Identifier attached to a person’s Internet browser to track the site he or she visits.

Cost Per Click (CPC) – Represents the cost an advertiser pays each time a user clicks on their ad.

Cost Per Download/Install (CPD/CPI) – Represents the cost an advertiser/software provider pays each time a consumer downloads orinstalls their software.

Cost Per Mille/Thousand Advertising Impressions (CPM) – Represents the cost of an advertising placement divided by the number ofimpressions generated (in thousands).

Cost Per View (CPV) – The price an advertiser pays for a single view of their content or ad, typically measured and priced in increments ofone thousand views.

Data-Management Platform (DMP) – Company that provides technology to store and catalog marketer data.

Demand – Advertisers’ need for advertising inventory to place their ads on digital properties. Typically represented by volume, price andad format for a specified timeframe. Demand is typically executed on behalf of advertisers by their agency who may also use a series ofintermediaries, such as trading desks, demand side platforms and advertising exchanges to execute ad campaigns.

demand side platform (DSP) – A company that provides technology for media buyers to purchase ad placements, typically via bids inexchange’s real-time auctions.

First-Party Data – Data that a company has collected directly, like a retailer’s list of loyalty members.

Fraudulent Advertising – When a company knowingly serves ads that no one will actually see as a way to drive “views” and revenue (AdFraud).

Geo-targeting – Showing ads to people based on their mobile device’s location; ZIP code information they submit when registering for asite/service; or GPS coordinates collected by a site/service.

Hashing – A way for separate companies to match their data sets without either side being able to access the other’s data.

Identifier for Advertisers (IDFA or IFA) – A temporary device identifier used on mobile devices for targeted advertising, which providesdevice identification without compromising personally identifiable information. Replaces Apple’s Unique Identifier (UDID) and Android IDand used instead of cookies that are common on desktop devices.

Impression – Measure of the number of times an ad is seen.

In-Stream – An ad that appears within a piece of content.

Mobile Apps – Specialized computer programs designed to run on smartphones, tablets and other mobile devices.

Mobile Web – Access to the web from a handheld mobile device, such as a smartphone or tablet.

Pixel – A piece of code placed on websites so companies can recognize which cookies have already been dropped on a person’s browserand put in new cookies.

Programmatic Direct – An ad buy done directly between a publisher and advertiser through automated ad-buying systems.

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Real-Time Bidding (RTB) – The purchase and sale of ads through computer-run auctions that happen within milliseconds.

Retargeting – Showing an ad to a person who visited your site while that person is visiting another site.

Second-Party Data – When a company makes its first-party data directly available to another company.

Supply – Advertising inventory offered by publishers or owners of digital properties. Typically supply is represented by volume, price andad format for a specified time period. Supply may be offered up directly by the owners of the inventory (owned and operated supply) orthrough a series of intermediaries (such as ad networks, exchanges and Supply Side Platforms).

Supply Side Platform (SSP) – An ad-tech company that works with publishers to help them sell their inventory at scale.

Third-Party Data – Information that a company collects indirectly (such as through cookies) or aggregated from others (such as creditcard companies and magazine publishers) and then sells to ad buyers to aid in targeting.

Traffic – The result of the act of browsing the Internet or other digital properties by consumers. Such browsing behavior generatesadvertising inventory. Used as a proxy for the volume and level of user attention or engagement and typically priced and aggregatedinto and sold as audiences to agencies who represent advertisers.

Unique-User/Device ID – Identifier assigned to a device or user that lasts until the device in reset or the account is deleted.

Viewability – Measuring an ad to make sure that it was visible to the user. The industry is moving toward this as a new standard forimpression.

VTR (View-Through Rate) – The measurement of how many people saw an ad and eventually visited the advertiser’s site.

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