Final Results for the year ended 31 March 2012

11 June 2012

UBC Media Group plc

("UBC" or "the Company")

Final Results for the year ended 31 March 2012

UBC Media Group (AIM: UBC), the multimedia content and services company, today announces its results for the year ended 31 March 2012. In addition, UBC is today updating investors on the results of its strategic review.

Operational highlights

§ Continued progress on key strategic goals; developing digital and lowering reliance on BBC

§ Growth in interactive business

o Group revenues from mobile apps rise 108%

o 642,000 apps downloaded in Canada alone

o Revenue from web streaming players ("Radioplayer") up 61%

·; Appointment to market Radioplayer IP globally with Imagination Technologies Group plc announced today

o First paid app launched, early revenues encouraging

o 'Audioboo' audio social networking tool adopted as official BBC technology

§ Content businesses flat in a difficult market

o New 'strand' programmes for BBC Radio 2, BBC Radio 3 and BBC 6 Music

o BBC revenue now reduced to 48% of turnover

o Web video service launched for Entertainment News

o Video revenues represent 15% of total content revenues

Financial highlights

§ Continued strong balance sheet with £3.5m of cash (2011: £4.3m)

§ Turnover down 5% at £4,246,000 (2011: £4,460,000)

§ Pre-exceptional operating loss down by 1% at £670,000 (2011: £680,000)

§ Pre-exceptional LBITDA increased 3% at £351,000 (2011: £342,000)

§ Statutory Loss for the period, after Goodwill write-downs, of £3,618,000 (2011: profit £59,000)

§ Cash burn in last six months excluding dividend payments of £158,000 (2011: £620,000)

§ Final dividend proposed of 0.07 pence per share, total dividend for the year of 0.14 pence per share (2011: 0.263)

Simon Cole, Chief Executive, said: "We are today announcing important strategic developments for the company. Our strong balance sheet and cash-generative traditional content businesses have allowed us to take a measured approach to deciding where growth will come from in what is now a radically different media marketplace. The explosive growth in "connected" media devices from smartphones to Internet TV's is already benefiting our interactive business. With the partnerships we are creating today, we see exciting opportunity here on an international scale."

Enquiries:

Chief Executive's review

Overview and strategic direction

Three years ago, UBC sold its commercial business for cash. The proceeds of this sale allowed the Company to divest itself of legacy liabilities from a period spent investing in digital radio services. Since that time, the Company has been paying dividends to shareholders from the remaining cash and has been exploring a strategic direction which it is confident will deliver long-term shareholder value. Our strong balance sheet with a healthy cash balance and no debt or long-term liabilities has allowed us to conduct that exploration in a measured way.

The Company has two divisions: the Content division is a leading producer of audio and, more recently, video content for broadcasters and advertisers in the UK; for 20 years it has been one of the largest suppliers of radio programming to the BBC and has more recently become a supplier of music television to BskyB.

The Interactive division, which grew from the Company's involvement in digital media, provides software and services to the broadcasting industry. From small beginnings, with no significant investment, the division has grown to have customers on three continents and has specialised in solutions for the 'connected' media world where broadcast and the Internet meet.

In the challenging climate of the last two years, the performance of the Content division has been broadly flat with any growth coming from Interactive and especially from mobile apps. Management has concentrated on cost cutting to protect margins and show any overall growth. At the same time, we have conducted analysis of both the organic growth potential of the two divisions and the potential for acquisition and consolidation.

The Content division enjoys strong and relatively reliable cash flows from a customer base that has not changed much: some 80% of its budgeted commissioned programme revenues for the next 12 months are already contracted. However, the business of content production is a low growth one. Wherever we have looked for acquisitions in the last two years, we see the same story: a mature industry with gross margins weakening and a customer base challenged by fundamental change in its business models. We are currently producing, for example, 50% more hours of programming for the BBC but for the same turnover. There are plenty of opportunities for acquisition and consolidation in this sector but, after the benefits of overhead savings, real growth is hard to predict. The business is also very focused on the UK with little real opportunity for expansion into new territories.

The Interactive business, conversely, is more nascent and, in the last two years, has changed its customer base considerably, relying less on smaller UK customers and more on large international media businesses. Europe, and the UK in particular, is recognised as leading the emerging field for software that controls the interface between content and consumers in the world of the Internet. UBC's Interactive business has developed tools for tasks like search and scheduling which are now embedded in services ranging from the UK radio industry's successful 'Radioplayer' media player to the 22 million subscription radios that receive programming from SiriusXM in the United States. Interactive's mobile apps are delivering over 100 radio stations to consumers worldwide, with a healthy and growing business, particularly in Canada. Revenues in this area have grown from zero to £143,000 in two years.

There are few companies globally who are in this emerging interactive media market and those that are need to grow rapidly and are currently finding raising cash difficult. The sector therefore provides acquisition opportunities for a company like UBC with cash reserves, which can deliver real growth. We have identified several specific acquisition targets.

18 months ago, UBC took a strategic investment in a UK based Internet start-up called Audioboo (www.audioboo.fm) which had developed a system for quickly and easily distributing audio via Internet and social networks. Audioboo has since raised more money and attracted strategic investments from Imagination Technologies Group plc ("Imagination") (LSE:IMG), XIX Management and AudioGo, the leading digital audio book retailer. The BBC recently adopted Audioboo for the collection and distribution of audio over the Internet. Audioboo's registered users have grown to over 300,000 in 18 months and are now growing at more than 7% a month.

Working with Imagination at Audioboo has led to a partnership on other projects and we are pleased to have been able to announce today our appointment together to market the Radioplayer IP globally on behalf of the UK radio industry. Both companies see the benefits in many areas of combining Imagination's leading position in silicon with UBC's software and knowledge of the media industry. This is particularly the case in the fast emerging field of connected devices, where several areas of possible co-operation are being explored. Imagination enjoys partnerships with some of the world's leading technology companies and has identified 'connected services' as a significant area of future growth.

Taking these developments together, UBC considers that the area of its business which is likely to lead to the growth required by today's public markets is its Interactive business. We intend to explore acquisitions in this area and, by developing our partnerships with Imagination and others, expect to grow both our product range and our geographical spread.

We continue to believe strongly in our content production businesses, especially in the reliable recurrent revenues that they provide and the cash-flow they generate but we do not believe that they will be the engine of our growth in the next 5 years. We have today written down the value of these businesses on our balance sheet in order to acknowledge the broadcasters' contracting commission budgets and consequent shrinking margins, which have led to our decision to re-focus.

Overview of the year

For UBC, in common with much of our industry, this last year saw us having to work much harder simply to maintain our position. I am proud of the efforts our teams have made in a challenging climate to maintain our sales at their current levels, whilst keeping our focus on our strategic objectives and building our video content and interactive businesses. We believe that maintaining turnover, reducing cash burn and lowering the operating loss are noteworthy achievements in these conditions.

Content

In 2012 we have produced some 1,200 hours of programming for the BBC, representing a 50% increase on the previous year. New productions included the launch of the Mark Radcliffe and Stuart Maconie afternoon show on BBC 6 Music and the winning of the contract to produce Radio 2's popular "Sounds of the Sixties" Saturday breakfast show. We launched a new situation comedy, "Pollyoaks", on BBC Radio 4 and won our first 'strand' programme commissions on BBC Radio 1.

This creative success, however, should be viewed in the context of shrinking commission budgets from broadcasters everywhere, meaning that effectively production needs to increase just to maintain turnover. Our revenues from the BBC in the last year have in fact decreased marginally from £2.1m to £2m despite the increase in hours.

These revenues, however, have the advantage of being reliable and recurrent. Our budgeted BBC business for the current year is already more than 80% contracted.

Our strategy, as previously outlined, has been to move away from reliance on the BBC, develop new customers for our content and increase our revenues from video production. We have moved our commercial radio entertainment news service into video, producing twice daily web bulletins for our radio customers' web sites and also for IPC magazines whose Heat magazine website now features our content. We expect shortly to announce new customers in this area.

Lynx Content, the division of UBC which produces content for the advertising market, has been adversely affected by the reduction in the marketing budgets of our clients. Turnover was relatively flat at £1m but margins were adversely affected by a competitive marketplace for our services and the priority we have given to retaining key customers like Jaguar Land Rover and the tourist authorities in Australia and Canada.

The past year also saw our second major production for Sky Arts - the Cambridge Folk Festival and this relationship will deliver considerably increased revenues this year. This summer UBC will be providing 15 hours of live music programming to BskyB's 'Sky Arts' channel around the Cambridge Folk Festival.

UBC, via its Manchester-based production unit Smooth Operations, has provided radio coverage of the Cambridge Festival to BBC Radio 2 for 14 years. Two years ago, the Company began to provide television coverage to Sky. This year's coverage, hosted by Mark Radcliffe and Zoe Ball, is considerably enhanced with an increased production budget and, for the first time, will all be transmitted live. The event will still also be featured on BBC Radio 2.

UBC will retain rights to the audio and video performances and will produce DVDs, CDs and digital downloads of the shows for sale after the event.

Software and Interactive

In Interactive, we have not only seen growth but a significant shift in our customer base, with a reduced reliance on small UK based radio clients and an increase in our relationships overseas with some of the world's leading media companies.

Astral Media in Canada ("Astral") have become a major new client in the last 18 months. We have created a mobile app business for Astral covering over 80 of their radio stations and have delivered approximately 642,000 app downloads for them this year. Revenues in our app business are up by 108% and this is evidence of the shift we identified at this stage last year; media companies around the world are increasingly focused on revenues from Internet streaming, web content and social media. In this respect, we have positioned ourselves well for growth.

One of the global success stories in this area is the UK Radioplayer, a web-based media player which unites the entire UK radio industry in one place, allowing listeners to seamlessly jump from BBC to commercial services, from live to listen again, all in one place. It is a model that has been studied closely around the world as radio companies come to terms with the increased competition from Internet streaming services like Pandora, Last FM and Spotify. Radioplayer has increased listening to UK radio stations online by 32% in the last year and now has 7 million unique users every month.

UBC's Interactive division has been a major part of Radioplayer from the start, delivering the software that runs the Radioplayer's central systems. In 2011 we were additionally appointed to manage the search functionality, developing new tools to allow dynamic search of station schedules, 'now playing' information and listen again content. We are delighted today to be able to announce that, in partnership with Imagination Technologies plc we have been appointed to licence the IP behind Radioplayer to international broadcasters where we have seen significant initial interest.

Another innovative radio industry business model with which we have been involved for many years is the subscription service operated by the now merged Sirius XM Radio Inc. in the USA. Sirius XM is the world's largest radio broadcaster measured by revenue and has more than 22 million subscribers to its commercial-free music and sports channels. Just as in the case of Radioplayer, UBC provides software which manages the distribution of programme-related data to device screens and which also feeds the internet and mobile app services which Sirius XM have identified as a major area of growth.

In the last six months we have released our first paid for iPhone app, "Name This", based on the popular radio game "Beat the Intro". Revenues come from a combination of in-app purchases and commissions from music sales, and we are encouraged by the early results.

The media industry is now changing at a rapid rate and we believe that our Interactive division is well positioned to benefit from these developments. We believe the future is about how broadcast services interact with 'connected' devices, whether that is a smartphone or connected TV. We have both experience and patented technology in these areas.

 Finance Director's Review

In the year to 31 March 2012 Group revenues from continuing operations decreased by 4.8% to £4.24m (2011: £4.46m). The Content division reported revenues down by 6.8% to £3.6m (2011: £3.85m) and the Software and Interactive division revenues were increased by 3.9% to £0.64m (2011: £0.61m).

Gross profit decreased by 43% to £0.65m (2011: £1.14m) and administrative expenses decreased to £1.32m (2011: £2m).

Pre-exceptional results

Pre-exceptional EBITDA, which excludes return on investments, taxation, depreciation of tangible assets, amortisation of intangible assets and exceptional items, was a £351,000 loss (2011: loss: £342,000). The pre-exceptional operating loss was £670,000 (2011: loss £680,000).

After interest and dividend income of £13,000 (2011: £109,000), the Group's pre exceptional loss from continuing operations before tax was £657,000 (2011: loss £571,000).

After tax charge of £nil (2011: charge: £56,000), the Group's pre exceptional loss for the period was £657,000 (2011: loss: £515,000).

Exceptional items

In the year to 31 March 2012, following the annual impairment review, management impaired the goodwill and intangibles relating to both our Commissioned Content and Ad Funded CGUs by a total of £3.1m. This impairment was off-set by the release of the related net deferred tax liabilities. This write-down is the result of continued margin pressure within our Commissioned Content division, and weakness within our Ad Funded business driven by continued economic weakness, culminating in the UK economy re-entering recession.

In the previous year the main exceptional item was the profit of £797,000 from discontinued operations.

A reconciliation of the statutory loss for the period of £3.6m (2011: profit £59,000) to the pre-exceptional operating profit and pre-exceptional EBITDA is shown below:

Reported earnings per share, including the profit from discontinued operations, was a loss of 2.00 pence per share (2011: profit of 0.03 pence).

Cash and cash flow

In the year to 31 March 2012 UBC had a cash outflow of £0.785 million (2011: £4.14 million outflow) including a cash outflow of £0.32 million from operating activities (2011: £0.04 million outflow). Cash outflow from discontinued activities was £nil (2011: £2.39 million outflow which included a £2.20 million payment to Bauer for the settlement of the multiplex spectrum contracts which ran until 2013 and £0.45m on the purchase of the companies own shares which are held in treasury). £ 0.41m was distributed as a dividend (2011: £0.2m) and £0.09m was spent on investing activities (2011: £1.12m). At 31 March 2012, UBC had cash in the bank of £3.49 million (2011: £4.28 million).

Dividend

During the year the Group paid the final 2011 dividend of 0.158 pence per share (total dividend £282,310), and an interim dividend for 2012 of 0.07 pence per share (total dividend £124,074) The Board of Directors is proposing a final dividend of 0.07 pence per share, being the same as the interim dividend, taking the total dividend for 2012 to 0.014 pence per share. In accordance with IAS10 the final dividend has not been recognised within the 2012 financial statements.

Directors' Responsibility Statement

The responsibility statement below has been prepared in connection with the Annual Report and Financial Statements for the year ended 31 March 2012, which is not included within this announcement.

We confirm that to the best of their knowledge:

• the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

• the management report, which is incorporated into the directors' report, includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

This responsibility statement was approved by the board of directors on 11 June 2012 and is signed on its behalf by:

Simon Cole Chris Dent

Chief Executive Officer Finance Director

1. Accounting policies

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2012 or 2011, but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company will publish full financial statements that comply with IFRSs in June 2012.

New Standards and Interpretations

There were no material changes in the accounts as a result of adopting new or revised accounting standards during the year.

A complete list of the standards that are in issue but not yet effective is included on our website along with a complete list of our accounting policies.

Principal risks and uncertainties

There is a risk that the Group will lose key programming contracts with the BBC, but this is mitigated by the fact that the majority of contracts by value are long-term and the BBC has committed to increase the percentage of its output that is commissioned from the independent radio production sector. The Group is also seeking to increase its revenues from programming commissions from parties other than the BBC. There are uncertainties surrounding the ultimate size of the markets for the Group's digital software products. However, the Group believes there is commercial potential for these products and continues to invest in both product and market development.

The other main risk to the Group is the retention of people, especially key executives. Retention of the key executives of the Group is recognised as a risk and is managed by the incentive and remuneration arrangements referred to in the report and accounts. Financing of the Group's activities is covered in the Financial Review in the report and accounts.

Going concern

The Group has considerable financial resources together with long-term programme production and software contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.

After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

An analysis of the Group's revenue is as follows:

3. Business and geographical segments

Business segments

For management purposes, the Group is organised into two continuing operating divisions - Content and Software and Interactive. The principal activity of the content division is the production of audio and video programming for broadcasters and advertising to domestic markets. The principal activity of the interactive division is the development and sale of software and data services to the radio industry both in the UK and overseas markets. These divisions comprise the Group's operating segments for the purposes of reporting to the group's chief operating decision maker, the Chief Executive Officer.

\* The Group's unallocated assets and liabilities include central administrative tangible fixed assets, cash and working capital, group tax deferred tax liability and deferred tax asset.

In the year ended 31 March 2012, revenues of £2,536,000 (2011: £2,099,000) are included within the Content revenues from sales to the Group's single largest customer. No other customer formed greater than 10% of external revenues within the years ended 31 March 2012 and 2011.

Geographical Information

The Group's operations and assets are located in the United Kingdom. The Group's sales outside the United Kingdom are predominantly made by the Software and Interactive division.

The group's revenue from external customers and information about its segments by geographical location is detailed below:

4. Tax

Corporation tax is calculated at 26% (2011: 28%) of the estimated assessable profit for the year.

The Company has re-measured its deferred tax assets and liabilities following the reduction in future rates of corporation tax to 24%, for the year ended 31 March 2012, which has increased the deferred tax income by £33,000.

The charge for the year can be reconciled to the profit per statement of comprehensive income as follows:

5. Earnings per share

Basic earnings per share is calculated by dividing the profit/(loss) attributable to shareholders by the weighted average number of ordinary shares in issue during the year.

IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease earnings per share. For a loss-making company with outstanding share options, net loss per share would only be increased by the exercise of out-of-the-money options.

Reconciliation of the profit and weighted average number of shares used in the calculation are set out below:

6. Exceptional Items

During the year ending 31 March 2012, following a review of the carrying value of goodwill in line with the requirements of IAS36, the directors wrote down the carrying value of goodwill and intangible assets in both the Commissioned Content and Ad Funded Content CGUs of the Content segment of the business. As further explained in the Chief Executive's and Finance Director's reviews, the write-down of the goodwill and intangibles has arisen due to continued margin pressure within our Commissioned Content division, and weakness within our Ad Funded business driven by continued economic weakness, culminating in the UK economy re-entering recession. The write-down, as shown in note 1 and note 11 is within the Content division, and affects both the CGUs within that division: Commissioned Content and Ad Funded Content.

The acquisition costs relate to due diligence work on aborted potential acquisitions.

7. Goodwill

7. Goodwill (continued)

The carrying amount of goodwill has been allocated to the following CGUs:

Both of the CGUs are part of the Content division of the Group. The Commissioned Content division is a leading producer of audio for broadcasters, which for 20 years has been one of the largest suppliers of radio programming to the BBC and has more recently become a supplier of music television to BskyB. The Ad Funded Content produces audio and video content for advertisers.

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.

The recoverable amounts of the CGU are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using benchmark cost of capitals for the sector along with the cost of capital of the Group. Management has assessed the appropriateness of the discount rate for the different CGU and determined it is appropriate to the nature of each business. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next year, applies industry growth rates and extrapolates cash flows into perpetuity. The Group then prepares a sensitivity analysis on the variables to ensure robustness of the carrying value.

The key assumptions used in these calculations are:

- FY 2012-13 budgeted earnings before interest, tax, depreciation and amortisation ("EBITDA")

- Pre tax discount rate 12% (2011: 8.80%)

- Growth rate of 1% as per the long-term growth rate of the U.K., reducing to nil% for those businesses which have not shown headline growth.

- Sensitivity analysis applied of 10% reduction in budgeted EBITDA and nil% EBITDA growth

- The Group projects cash flow derived from the most recent financial information used by management for the next year based on growth as stated above.

These assumptions resulted in impairment losses being recognised in both the Commissioned Content and the Ad Funded Content CGUs. In the case of the Commissioned Content business the CGU was written down to its calculated Value in Use, and any change in the underlying assumptions would cause a further write-down; a 1% increase in the discount rate would cause a further write-down of £102,000. The Ad Funded Content business has been written down to fair value less cost of disposal, as management believes that this is the higher recoverable amount for this business. This estimation of the recoverable amount has been based on earnings multiple valuations observed within the market segment, which both reflect management's past experience and is consistent with available external sources of information. The key assumptions in this calculation are the FY 2012-13 budgeted earnings of the business, and earnings multiples based on available market data.

8. Deferred tax

On 26 March 2012, the UK government substantively enacted a reduction in the UK corporate income tax rate to 24% with effect from 1 April 2012, utilising the Provisional Collection of Taxes Act 1968. Accordingly deferred tax balances have been re-measured at this rate as the change in effective rate was substantively enacted at the year end. This change has resulted in a decrease to the deferred tax expense by £33,000 (note 8). At the balance sheet date, the Group has unrecognised deferred tax assets of £3,756,000 at a rate of 24% (2011: £3,574,000 (26%)) in respect of unused trading tax losses and £66,400 at a rate of 24% (2011: £96,000(26%) of accelerated capital allowances which have not been recognised on the grounds that there is insufficient evidence that these will be recoverable. These assets will be recovered when future tax charges are sufficient to absorb these tax benefits. The UK government has also announced its intention to further phase a reduction in the UK corporate income tax rate to 23%, this further rate changes was not substantively enacted and therefore have not been reflected above.