7digital : 2021 Annual Report

Contents

2021 Overview	2
Chairman's Statement	3
Chief Executive Officer's Review	4
Chief Financial Officer's Review	7
Strategic Report	9
Section 172 Statement	11
Board of Directors	14
Directors' Report	16
Corporate Governance Statement	20
Directors' Remuneration Report	23
Independent Auditors' Report to the Members of 7digital Group plc	26
Consolidated Income Statement and Statement of Comprehensive Income for the Group	32
Consolidated Statement of Financial Position	33
Consolidated Cash Flow Statement	34
Consolidated Statement of Changes in Equity	35
Notes to the Consolidated Financial Statements	37
Parent Company Statement of Financial Position	69
Parent Company Statement of Changes in Equity	70
Notes to Parent Company Financial Statements	71
Company Information	79

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> Overview

> Strategic Report

> Governance

> Financial Statements

2021 OVERVIEW

FINANCIAL SUMMARY

Year ended 31 December 2021

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> Overview

> Strategic Report

> Governance

> Financial Statements

CHAIRMAN'S STATEMENT

Tamir Koch

Chairman

29 June 2022

2021 was a year in which we successfully executed on our strategy to focus on key verticals and consolidated our leading position across fitness & wellness and social media. Our market-leadingmusic-as-a-service platform and strategic focus on core sectors enabled us to grow the number of customers licensing our technology as well as the scale and reach of our offering. As a result, we ended the year with a significantly higher contracted order book than we entered with. 2021 was also a year in which we further aligned ourselves with the interests of artists and consumers of their music, through our eMusic Live joint offering. The rise of livestreaming continues to gather pace and become mainstream with major players now entering the space. With eMusic Live, we are centrally positioned in this market, and it will take us towards our aim of becoming a leading platform providing end-to-end artist services beyond traditional streaming.

Our ability to capitalise on the growth opportunities in fitness & wellness and social media and become the dominant music solutions provider in these target markets is mainly due to the strength of our platform combined with our significant industry expertise and experience. Paul Langworthy, our CEO, and the senior management team have done a superb job of taking advantage of these opportunities. At the same time, we all would have liked this year's sales growth to have been greater - which was not the case primarily due to the pace of closing deals being dependent on our clients completing their licensing deals with labels, which, in some instances, took longer than anticipated. However, we didn't lose business to our competitors and our clients tell us they choose to work with us as we have the best product in the market - it is just a right- shift in the timeline for completing some deals and we remain on track for strong growth in 2022.

As Paul discusses further in the Chief Executive Officer's Review, during the year we signed 11 new licensing customers and 13 contract expansions and renewals. Significantly, many of these are multi-year contracts, which provides us with greater visibility of revenues going forward. It also reflects how our superior technology and service offering has offered real value to

our customers, and how we support them with their own expansion.

Our eMusic Live platform also continued to thrive in 2021 and the momentum has carried on in 2022. The venture has evolved multi-genre partnerships to bring music and customised artist experiences to music fans. During the pandemic lockdowns, eMusic Live provided an alternative to live gigs for a struggling music industry, uniting both big names and relatively unknown artists to fan bases. Livestreaming, however, is increasingly being recognised beyond the pandemic as a way of monetising artists' and other rightsholders' work singly or in tandem with live concerts. In May 2022, Netflix and Apple, for example, both revealed their interest in livestreaming, with the latter announcing it will be launching a new concert livestreaming series - Apple Music Live. As a dedicated music livestreaming platform, with partnerships established with the biggest organisations in live entertainment such as AEG Presents and iHeart Media, and as one of the most commercial platforms available, eMusic Live is in prime position to capitalise on this trend.

The music industry is never static. It continues to be transformed by the emergence of new digital platforms and formats, which are constantly redefining how consumers engage with music and creating new sources of growth. We expect this to continue to benefit us in fitness and social media markets. We are also starting to the see the gaming industry as a key vertical market for our music-as-a-service platform in 2022. Transformation through the emergence of new digital formats is also a key driver for our eMusic Live venture. Bringing together our technology, our industry expertise and our experience, we are establishing solid foundations on which 7digital can build to become the leading end-to-end platform providing artist services globally.

I would like to thank Paul Langworthy, our CEO, and Michael Juskiewicz, our CFO, for their tremendous efforts in navigating the evolving music landscape. Many thanks, also, to our senior management team and my Board colleagues for their considerable contribution as well as to all of our employees. Their dedication, skills and professionalism are greatly appreciated.

Mostly, I would like to thank our loyal shareholders for their ongoing support. As a Board, we all are committed to creating value for our shareholders, and we believe that we are in the right market, at the right time and with the right experience and offering to be able to deliver this. I look forward to reporting on our progress.

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> Overview

> Strategic Report

> Governance

> Financial Statements

CHIEF EXECUTIVE OFFICER'S REVIEW

Paul Langworthy

Chief Executive Officer

29 June 2022

In 2021, we progressed the delivery of our new strategy that we established in the previous year to focus on core sectors in our licensing business and on artist monetisation, which we believe offer significant growth potential. Our success is demonstrated by the substantial increase in our contracted order book at year end compared with when we entered the year as well as the expansion in our pipeline.

As Michael discusses further in the Chief Financial Officer's Review, we increased total revenue to £6.7m (2020: £6.5m), which included good growth in our licensing business.

In our licensing business, which is the largest contributor to our revenue and increasingly so, we are focusing on the strategic growth markets of fitness and wellness and social media and expanding our presence into gaming. During the year, we signed 11 new customers (2020: 5). We also secured contract extensions with 13 existing customers (2020: 4) - of which 10 included fee expansions, reflecting the value of our platform and services to our customers. Many of these new and renewed contracts are multi-year agreements, which enhances our visibility over future revenues.

During the year we actively worked with our partners to facilitate the licensing process for customers. Our music-as-a-service platform provides customers with access to pre-approved music in our global catalogue based on the licensing agreements held by those customers with music labels. As we have discussed previously, the licensing process in some of these new sectors has taken longer than we had initially anticipated, resulting in a right-shift in the timing for some of our expected revenue. However, by supporting our customers and partners in finding opportunities to streamline the process, we can enhance our offering to customers and reduce the sales cycle for securing our own contracts going forward.

During the year, we also continued to enhance our music-as-a-service platform and increase our offer to global brands through establishing several pre-built

integrations that enable customers to easily access complementary services from other providers.

Our eMusic Live virtual concert and artist monetisation platform that we launched last year in collaboration with eMusic has continued to grow, entering partnerships with further artists, agencies and venues as the music industry increasingly seeks new engagement and monetisation opportunities. During the year, eMusic Live livestreamed events globally with some world- renowned artists while also evolving the digital merchandising platform, including the first offering of NFTs alongside ticketed events.

As a result, we ended the year in a far stronger position than when we started, with exciting prospects ahead of us. Now to go into our activities during the year in more detail.

Fitness and Wellness

Our solution for fitness and wellness brands enables customers to seamlessly incorporate music into their offering and it is designed to make it easy for them to maximise the benefits of music. Based on our music-as-a-service platform, we provide features such as end-to- end global rights and reconciliation management, access to our global catalogue and an easy-to-use playlisting tool. We believe that we have established a dominant position in this global growth market.

During the year, we converted multiple sales leads into long-term contracts - adding seven new fitness and wellness companies to our customer base. In particular, we continued to grow our roster of home fitness clients, signing contracts with:

• Barry's, the global fitness brand, which is using our instructor playlisting tool in the US and Canada to access a fully cleared catalogue of music to power Barry's X, a new digital product offering a fully integrated, many-to-manycamera-on experience.
• FORME, a premium home fitness system that delivers one-on-one fitness experiences through elegant, full-length mirrors that transform into immersive personal training studios.
• Stryde, a provider of immersive cardio and strength workouts on a high-performance bike in the home, which is using our platform in the US to access a fully rights-cleared music that can be synchronised with video programmes and made available on-demand.

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