Chief Executive's Statement

I am pleased to report our results for the period 29 December 2020 to 30 June 2021 (the "Period") which for the first time reflect the activities of the enlarged group, incorporating the activities of the Napster business which was acquired on 28 December 2020.

Our vision for the enlarged group is to create the music platform of the future, serving music fans all over the world with the broadest range of music content, available in multiple formats and across multiple connected devices. Our ability to offer high-definition music streaming, curated radio and playlisting, short form video series, long-form video such as documentaries and films, as well as exclusive immersive audio-visual experiences and live events will provide for a content focused acquisition strategy with an owned and operated proprietary technology platform enabling a new era in music content consumption.

The development of our new platform has been one of the key areas of focus for the Company since the acquisition of the Napster business. This focus is well illustrated by the fact that as we move in to Q4, nearly 65% of our staff are involved in the development of our new platform with its enhanced offering, and we anticipate this resource to continue to expand until launch in early 2022. The funding initiatives secured at the start of the year have allowed us to further strengthen our balance sheet and supplement our development efforts. Both Davis Capital and Nice & Green, two material sources of finance and two of our most significant shareholders have shown invaluable support and belief in our vision for the future of music.

During the period we have also made some key hires, notable amongst these being Emmy Lovell, a seasoned music industry executive leader who joins us from Warner Music Group as Chief Strategy Officer, having developed digital promotions for artists including Kylie Minogue and The Chemical Brothers, as well as leading campaigns for the major artists including Gorillaz, Deadmau5, Danger Mouse and Tinie Tempah. In addition, Mark Kortekaas, a veteran of more than 30 years in digital media having formerly served as CTO of Univision and prior to that General Manager for the BBC's Online Technology Group joins us as Chief Technology Officer. Mark leads the technical creation of our new service, which will provide us with the ability to monetise our extensive content via multiple tiered subscription packages, live ticketed events and, in time, traditional merchandising sales. We believe the combination of our platform technology, unique immersive content, curation and monetisation will provide for unrivalled appeal and herald a new era of growth.

We have continued to refine our launch and content strategy with a significant program of market research and testing which underpin our assumptions and aspirations for 2022 and beyond.  As we approach Q4, we have now completed the rebranding of our business which features throughout the user journey within our new music platform. In preparation for launch we have been able to share our vision of the future with many of our strategic partners who for the first time have been able to see visuals and "mockups" of the new combined App in advance of our beta launch. We expect the App to be available for preview by our partners next month.

The 5G roll out across the globe provides the opportunity for mobile operators to showcase their high-speed technology and for us to work with key strategic partners that have significant consumer followings. To date we have engaged with more than 20 mobile operators across 5 continents, as we seek to lay solid foundations for the Company so as to maximise potential consumer engagement at the time of our forthcoming launch. These partnerships will accelerate awareness and provide a catalyst for consumer growth.

As a business with annual revenues approaching $100m and a loyal subscriber base spread across 33 territories, the new music service that we are developing seeks to attract new users whilst preserving the existing subscriber base. Over the course of the first half of the current financial year, we have seen our monthly global streams increase by 18% per user and with an average customer lifetime exceeding 5 years, the preservation of our existing user base is important to us.

Despite this progress, our shareholders have experienced erosion in the value of their holding. We are committed to delivering long term shareholder value and to securing a valuation more appropriate to the scale of our operations, our revenues and the opportunity that stands before us. Our major stakeholders which include rightsholders, investors, artists, consumers and a growing employee base are now predominantly concentrated in the US. As a largely US centric business, we now believe that the interests of our shareholders would be better served by securing a listing in the US and accessing a valuation more aligned to the metrics which have been attributed to some of our music competitors and peers. We are therefore in the process of exploring the possible options available to the Board to deliver a listing in the US. Shareholders will be kept informed of any developments in this regard.

Principal Risks and Uncertainties

The success of our business is dependent upon the launch of our new music platform and its appeal to both consumers and partners throughout the various territories in which we operate. Our new platform will provide access to a broad range of music content including our immersive VR and 2D 360 content library and access to live ticketed events. This aspect will differentiate our service from all other music streaming services and the resumption of mass attended events and artist performances is essential if we are to generate new and exciting content for our platform. For the optimum user experience access to the full suite of platform content will require an uninterrupted high-speed internet connection through which to upload our content. For this we are dependent on the continued roll out of by the mobile operators of 5G technology, where increased bandwidth will facilitate heightened engagement for the billions of smartphone users on the move. Our proven ability to monetise our live and immersive content as demonstrated at the end of last year with Liam Gallagher in combination with our core streaming platform will provide for a peerless service to excite both music fans and shareholders alike.

Results

The results for the Group reflect the performance of the enlarged Napster Group for the period 29 December 2020 to 30 June 2021, and as such incorporate the consolidated activities of the Napster business for the first time.

During the Period the Group reported revenues of £32.9m, increasing from £0.2m in the period to 30 June 2020. After cost of sales comprising payments to rights holders and content capture and creation costs, the Group reported a gross profit of £8.3m (2020 : loss of £(1.1)m).

Adjusted Operating Loss before non-recurring and non-cash items totaled £(8.1)m  compared with the previous year's first half result of £(9.4m).

Cost control is a key operational focus particularly during this pre-launch period when development resourcing is at its height. Integration of all business functions is now complete with the integration process delivering annualized saving of approximately $5.7m, primarily from a reduction in our work force in areas where functions overlapped. An efficient process of cash collection has been key in managing our working capital requirements and we are pleased to report a debtor day figure of 52 days (2020 : 66 days)

Cash on hand at the end of June 2021 totaled £9.7m (2020 : £2.6m). On 20 December 2020, the Company announced that it had entered into a US$25 million secured loan facility arrangement with Davis Capital Partners LLC an investment company and significant shareholder owned by Lanse Davis, one of the Company's non-executive Directors.  At the half year US$15 million of the loan had been drawn down.

In addition, on February 2021, the Company entered in to an £8.0m convertible loan note facility with Nice & Green S.A a Swiss Investment firm, all of which had been advanced by the end of the half year.

At 30 June 2021, the Group's net assets totaled £18.6m (2020 : £12.2.m).

Outlook

With the technical development of our music platform at an advanced stage and discussions with key strategic partners progressing to a stage of commercial substance, we are confident that our technology will provide us with the ability to scale and that the launch of our new music service will set new standards for content and the way in which it is delivered. As set out above, we are committed to delivering shareholder value and believe that securing a US listing will enable the Group to secure an appropriate valuation that is consistent with our industry peers. With new 5G mobile networks providing the conduit for content delivery, we will be able to provide an unrivalled mobile experience for music fans around the world.  We have a committed and capable leadership team supported by staff drawn from all corners of the music and digital industry. I would like to thank all of our team for their commitment, energy and vision and I look forward to the second half of the year and the planned launch of our new platform with great anticipation.