ANNUAL REPORT ANNUAL REPORT AND ACCOUNTS2017 MARCH 31 ENDED YEAR AND ACCOUNTS YEAR ENDED 31 MARCH 2017 COMPANY NO: 06223359 SAFE HARBOR DISCLOSURE This Annual Report contains forward-looking By their nature, forward-looking statements involve statements. These include, but are not limited to, risk and uncertainty because they relate to future statements regarding: events and circumstances, including, but not limited to, US and UK domestic and global economic and the growth and prospects of the digital business conditions, the effects of blogs and media advertising industry; coverage, the effects of continued volatility in credit markets, market-related risks such as changes in forecasts regarding Internet usage and interest rates and exchange rates, the policies and advertising spend; actions of governmental and regulatory authorities, changes in legislation, the further development of projected levels of growth in our markets; standards and interpretations under International our expectations about the factors that Financial Reporting Standards (IFRS) applicable to drive business; past, current and future periods, evolving practices with regard to the interpretation and application of the growth of our business and revenues; standards under IFRS, the outcome of pending and future litigation, the success of future acquisitions the potential for declines in our revenue; and other strategic transactions, and the impact our plans to continue to invest in our of competition—a number of which are beyond people, processes and products; RhythmOne’s control. our plans to continue our current pace As used herein, “RhythmOne,” “the Company,” of acquisitions; “the Group,” “we,” “our,” and similar terms include RhythmOne plc and its subsidiaries, unless the our investments in international context indicates otherwise. “RhythmOne” and other and emerging markets and sectors; trademarks of ours appearing in this report are estimates of future compensation expenses; our property. This report contains additional trade names and trademarks of other companies. We do our plans to use funds; not intend our use or display of other companies’ trade names or trademarks to imply an endorsement operating expenses; and or sponsorship of us by such companies, or any relationship with any of these companies. other statements regarding our prospects, and business strategies. Except as required by the Financial Conduct Authority (FCA), Alternative Investment Market (AIM), or applicable law, RhythmOne expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward- ORRNLQJVWDWHPHQWVFRQWDLQHGLQWKLVUHSRUWWRUHÀHFW any changes in RhythmOne’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 be construed as a recommendation to invest in the Company. CONTENTS STRATEGIC REPORT KEY HIGHLIGHTS 2 BUSINESS OVERVIEW 4 CHAIRMAN’S STATEMENT 9 CEO’S REPORT 10 CFO‘S REPORT 12 CORPORATE STRATEGY 16 COMMERCIAL MODEL 23 GOVERNANCE CORPORATE GOVERNANCE REPORT 25 BOARD OF DIRECTORS 28 REMUNERATION COMMITTEE REPORT 31 AUDIT COMMITTEE REPORT 34 NOMINATION COMMITTEE REPORT 36 DIRECTORS’ REPORT 37 FINANCIALS INDEPENDENT AUDITORS’ REPORT 41 CONSOLIDATED INCOME STATEMENT 43 CONSOLIDATED BALANCE SHEET 45 CONSOLIDATED CASH FLOW STATEMENT 47 NOTES TO FINANCIAL STATEMENTS 48 SHAREHOLDER INFORMATION AND ADVISORS 80 GLOSSARY 81 KEY HIGHLIGHTS FY2017 was a pivotal year for RhythmOne. 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THE COMPANY REINFORCED ITS POSITION AS A LEADING MULTI-CHANNEL, MULTI-FORMAT PROGRAMMATIC PLATFORM WITH SIGNIFICANT SCALE, CUTTING-EDGE TECHNOLOGY AND UNIQUE, HIGH-QUALITY INVENTORY. TOTAL NET CASH & ADJ. EBITDA REVENUE3 MARKETABLE $175.4M $1.4M SECURITIES $166.7M ($10.5M) $75.2M $78.5M Time Period: FY2017 (top) , FY2016 (bottom) 3 BUSINESS OVERVIEW RHYTHMONE 5K\WKP2QH /6($,057+0 LVDQDGYHUWLVLQJWHFKQRORJ\FRPSDQ\WKDWFRQQHFWVDXGLHQFHVZLWKEUDQGVWKURXJKFRQWHQWDFURVV GHYLFHV7KH&RPSDQ\¶VPLVVLRQLVWRPD[LPL]HUHWXUQRQLQYHVWPHQWE\SURYLGLQJWKHPRVWHI¿FLHQWDQGHIIHFWLYHPDUNHWSODFH IRUGLJLWDODGYHUWLVLQJDQGFRQWHQWGLVWULEXWLRQ7KURXJKLWVVHFRQGJHQHUDWLRQPXOWLFKDQQHOPXOWLIRUPDWSURJUDPPDWLFSODWIRUP 5K\WKP0D[WKH&RPSDQ\DPDVVHVVXSSO\DFURVVRZQHGFRQWUROOHGDQGPDUNHWSODFHVRXUFHVDQGGHPDQGIURPEUDQGV DJHQFLHVDGYHUWLVLQJQHWZRUNVWUDGLQJGHVNVDQGGHPDQGVLGHSODWIRUPVWRGHOLYHUDFRPSOHWHLQWHJUDWHGVROXWLRQIRUHQJDJHG GLJLWDODXGLHQFHVDWVFDOH Advertising ECOSYSTEM CONTENT RhythmOne BRANDS AUDIENCES DEVICES )<ZDVDFULWLFDOWXUQLQJSRLQWIRUWKH&RPSDQ\FKDUDFWHUL]HGE\VWURQJJURZWKDUHWXUQWRXQGHUO\LQJSUR¿WDELOLW\RQDQ DGMXVWHG(%,7'$EDVLV7KLVSHUIRUPDQFHPDUNHGWKHVXFFHVVIXODFFRPSOLVKPHQWRIWKHIXQGDPHQWDOWUDQVIRUPDWLRQEHJXQWZR \HDUVDJR'XULQJWKH3HULRGWKH&RPSDQ\UHLQIRUFHGLWVSRVLWLRQDVDVLJQL¿FDQWVXSSO\VLGHSOD\HUZLWKPDVVLYHVFDOH FXWWLQJHGJHWHFKQRORJ\DQGTXDOLW\GLIIHUHQWLDWHGLQYHQWRU\