REG-One Media iP Group Plc: Final Results and Notice of A.G.M.
31/03/2020 07:05
31 March 2020
One Media IP Group Plc
(“One Media”, “the Company” or the “Group”)
Final Results and Notice of A.G.M.
One Media iP (AIM:OMIP), the digital media content provider which exploits
intellectual digital property rights around music, video and copyright
technology, announces its Full Year Results for the 12-month period ended 31
October 2019.
Financial Highlights
· Revenue increased 30% to £3,508,891 (2018: £2,702,374)
· EBITDA increased 39% to £1,076,724 (2018: £773,701)
· Operating profit increased 38% to £878,914 (2018: £638,758)
· Cash at 31 October 2019 of £860,611 (2018: £5,576,379)
Operational and Post-Period Highlights
* Completed five acquisitions totalling US $6.9 million
* Catalogue of Locomotive Records for US $750,000
* Publishing and songwriter’s rights of Michael Dulaney for US $850,000
* Songwriter’s share of Cole Taylor songs for an initial consideration of US
$260,000
* Publishing and songwriter’s of ‘God’s not Dead’ by Daniel Bashta
for US $725,000
* Publishing and master rights of Philip Wesley for a total cash consideration
of US $4.25m
* Board re-constitution with the appointments of Claire Blunt, Brian Berg,
Alice Dyson-Jones and Steven Gunning
* Appointment of Cenkos Securities plc as Sole Broker.
Chairman’s Statement
The Group achieved strong financial results in 2019, delivering double digit
growth in revenues, operating profit and EBITDA, and made considerable
progress in delivering on its strategy by expanding and diversifying its music
library, with five catalogue acquisitions. These acquisitions were
completed between February 2019 and September 2019 and the Board is very
pleased with their post-acquisition performance. New music rights contributed
£515,530 and organic revenues grew by 23.4% in the period.
Having demonstrated its ability to successfully execute these types of
transactions, the Group has now decided to focus on enhancing the value of its
existing catalogue and on leveraging its in-house technical capabilities to
build additional value and profitable revenue streams for the business. Having
already made an impressive start to 2020 and with a solid pipeline of
opportunities ahead, the Group will continue to focus on growth and will look
to maximise its potential in 2020.
Following the recent COVID-19 developments, the Group is confident that
business will continue as normal, subject to ongoing market dynamics, and that
our services will continue uninterrupted with our team working remotely. The
safety and well-being of our employees is paramount and we will adhere to
government and Public Health England guidance at all times. The business is
now successfully operating remote working and sharing regular communications
whilst liaising with customers and suppliers to ensure business continuity.
Claire Blunt
Non-Executive Chair
For further information, please contact:
One Media IP Group Plc
Michael Infante Chief Executive Tel: +44 (0)175 378 5500
Claire Blunt Chairman Tel: +44 (0)175 378 5501
Cairn Financial Advisers LLP Nominated Adviser
Liam Murray / Jo Turner / Ludovico Lazzaretti Tel: +44 (0)20 7213 0880
Cenkos Securities plc Broker
Max Hartley / Max Gould (Corporate Finance) Michael Johnson (Sales) Tel: +44 (0)20 7397 8900
Yellow Jersey PR PR and IR
Charles Goodwin / Annabel Atkins Tel: +44 (0)20 3004 9512
Chief Executive’s Statement
The Company made significant progress and built further value in 2019. Using
the funds raised in September 2018, One Media completed five acquisitions
totalling US$6.865 million. These acquisitions have considerably grown the
Company’s list of music catalogues and have the potential to increase their
streaming revenue due to their popularity and longevity.
Whilst the Company has demonstrated its ability to execute transactions, One
Media has recently begun to reassess its longer-term strategy and debt
position and how best to capitalise on the rapidly evolving music streaming
market. The Board remains unanimous in its view that One Media’s global
business environment has changed, and therefore it should adapt the
Company’s business model to embrace and maximise the opportunities
available, to protect and grow shareholder value.
Significant advancements were made over the course of 2019 in streamlining our
proprietary copyright technology, Technical Copyright Analysis Tool
(“TCAT”). Increased interest in TCAT’s features from some of the major
players in the music industry has led the Company to explore various
opportunities to enable further investment in the technology and scale the
platform. By leveraging our technology for wider use across the industry, the
Board believes the increase in recurring revenues will add value to the Group.
At the period end, the
carrying value for research and development in TCAT was £610,943.
One Media is also looking at possibilities to grant music rights holders’
advanced access to the future earnings of their intellectual property (IP) by
purchasing a portion of their rights upfront. ‘Harmony IP’ will look at
offering the industry a form of ‘asset release’ in music IP. This would
allow the Group to spread its investment across many more catalogues and
partnering with artists and composers, while using its expertise and TCAT to
expand the earnings for all parties.
Enhancing the value of our existing catalogue remains core to our business. We
are committed to improving the capabilities of our Creative Technicians to
ensure our tracks have the metadata required to maximise discoverability.
Whilst TCAT optimises the distribution of our content across global markets,
synchronisation deals also offer a further avenue from which to generate
income. In 2019, we licensed songs for synchronisation deals with a number of
TV series, such as NBC show ‘Empire’, and films, including American
thriller ‘Ready or Not’.
Acquisitions
In February 2019, the Company acquired the catalogue of Locomotive Records for
US $750,000. This collection of contemporary Spanish progressive rock music
features a number of tracks from the acclaimed band Mägo de Oz, which is
expected to enhance the Group’s growth of streaming in territories including
Spain, Latin America and the USA.
In April 2019, the Company acquired the publishing and songwriter’s rights
to 93 songs written by Grammy nominated country music songwriter, Michael
Dulaney, for US $850,000, who has had major hit songs performed by the likes
of Faith Hill and Jason Aldean.
In May 2019, One Media purchased the songwriter’s share of a number of songs
written by Cole Taylor, a country singer-songwriter for a total consideration
of US $260,000 at completion, and a maximum deferred consideration based on
financial performance of US $30,000 within 24 months. The catalogue includes
some of his major hits including two that reached No.1 in the Billboard Cou
ntry charts.
In July 2019, One Media announced the acquisition of the income from the
publishing and songwriter’s share of the song ‘God’s not Dead’ by
Daniel Bashta for US $725,000. The song has become the signature tune to the
films of the same name ‘God's Not Dead’, ‘God’s Not Dead 2’ and
‘God’s Not Dead: A Light in Darkness’. The films have grossed close to
US $100m. The song was first released as a single on 12 October 2011, peaking
at No. 2 on 9 June 2012 after spending 22 weeks on the Billboard Hot
Christian Songs chart and then charting again when the film of the same name
was released in 2014.
In September 2019, One Media completed its largest IP deal to date, acquiring
the publishing and master rights of the entire catalogue of award-winning
American composer and solo piano artist, Philip Wesley, for a total cash
consideration of US $4.15m. An additional US $100,000 cash consideration will
be payable on the date falling one year from the date of execution of the
agreement, subject to certain deliverables contained within the agreement.
To date, the five catalogues, acquired for a total of US $6.865 million,
represent a blended historical net publisher share multiple of circa 8.7x.
With these acquisitions the Company has now broadened the breadth and depth of
content in the One Media library to include Spanish, Country and New Age
music, areas which are seeing tremendous growth in global consumption. Latin
America has seen the highest rate of music revenue growth globally for four
consecutive years according to research by the International Federation of the
Phonographic Industry, and Country music amassed almost 51 billion streams in
2018, a 46% growth over the 2017 numbers according to Nielsen Music.
Board and Management
One Media was delighted to welcome Alice Dyson-Jones and Steven Gunning to the
Board as Executive Director and Finance Director, respectively, in October
2019. Prior to joining the Board, both Alice and Steve had been instrumental
in the development of the business in their respective roles as Managing
Director and Finance Director. Their wealth of industry experience will serve
to strengthen the Board as we execute our strategy going forwards.
Post period end, in November 2019, Ivan Dunleavy and Lord Michael Grade
resigned as Directors of the Company, whilst Philip Miles also stepped down
from his Board position but remains committed to the Group in his technical
role. Claire Blunt, COO & CFO of Hearst UK, and Brian Berg, Chairman of
Eclipse Global Entertainment and former President of Universal Music
Enterprises, were immediately appointed to the Board as Non-Executive Chair
and Non-Executive Director, respectively. With their extensive industry and
financial experience, the appointments of Claire and Brian have significantly
strengthened the Board, and we now have the perfect blend of skills to take
the business forward.
Financial Overview
The year under review has seen revenues grow by 30% up to £3,508,891 and our
EBITDA up by 39% to £1,076,724 (2018: £773,071), driven by increased
consumer demand on streaming platforms and other revenue distributions from
digital platforms. Our operating profit is up to £878,913, a notable increase
over our 2018 figure of £638,738. At the end of the period, our cash balance
was £860,611 (2018: £5,576,379). Our Gross margin remains robust at 50% and
overheads for the year are reported at £1,016,010 (2018: £853,229).
A profit after tax attributable to equity shareholders of £458,444 (2018:
£405,016) is reported for the financial year, reflecting an increase in
revenues and the maintenance of strong margins. The corporation tax expense
of £88,778 in the period (2018: £81,488) includes Research and Development
allowances available to the Group. At the end of the year our cash position is
reported at £860,611 (2018: £5,576,379).
The board continues to review its dividend policy. Given the current economic
climate, the board believes any future strategy should be reviewed following a
more settled global economic environment.
Outlook
One Media has had a history of acquiring music content, either outright or
under licence. We have acquired over 200 catalogues of music. When we first
initiated this campaign in 2005 the digital music market was less than 2% of
the market.
We are now witnessing the demise of the digital download (MP3 model) and we
are benefiting from the rise of streaming. In a very short period of time,
streaming has begun to globalise how we consume our entertainment in both
video and music, whether on the move or at home. In 2018, the current global
spend for the music industry was USD $19.1 billion. Goldman Sachs now predicts
that, by 2030, the global recorded music industry will be pulling in $45
billion annually. It also believes that paid streaming will generate $27.5
billion for labels and artists in that year and that the overall annual global
trade streaming revenues (including ad-funded) will reach $37.2 billion. One
Media, with its various new initiatives, is now coming of age. Its cautious,
risk averse policies, reoccurring revenue model and cash generation will
continue to serve its shareholders as it meets new challenges within this
growth market.
One Media enters H1 2020 positively and continues to capitalise on the
evolving music streaming market. We look forward to updating shareholders on
progress in due course as we head into another year of global digital growth.
The COVID-19 virus presents us all with an unprecedented challenge. Our entire
team are now working from home under government guidelines for the duration.
We have a robust reoccurring income model that lends itself to remote working
and our major partners have the same. Whilst none of us can predict whether
digital music consumption will be affected, all our business operations
continue to operate.
Michael Infante
Chief Executive and Founder
Consolidated Statement of Comprehensive Income
For the year ended 31 October 2019
Year ended 31 October 2019 Year ended 31 October 2018
£ £
Revenue 3,508,891 2,702,374
Cost of sales (1,756,464) (1,325,448)
Gross profit 1,752,427 1,376,926
Administration expenses (873,513) (738,168)
Operating profit 878,914 638,758
Share based payments (142,497) (115,061)
Finance costs (189,322) (37,201)
Finance income 127 8
Profit on ordinary activities before taxation 547,222 486,504
Tax expense (88,778) (81,488)
Profit for period attributable to equity shareholders and total comprehensive income for the year 458,444 405,016
Basic earnings per share 0.34p 0.44p
Diluted earnings per share 0.26p 0.40p
The Consolidated Statement of Comprehensive Income has been prepared on the
basis that all operations are continuing activities.
Consolidated Statement of Changes in Equity
For the year ended 31 October 2019
Share Capital Share redemption reserve Share premium Share based payment reserve Retained earnings Total equity
£ £ £ £ £ £
At 1 November 2017 355,268 239,546 1,457,645 107,198 1,576,749 3,736,406
Proceeds from the issue of new shares 322,750 - 2,983,000 - - 3,305,750
Fund raise costs - - (126,425) - - (126,425)
Share based payment charge - - - 115,061 - 115,061
Profit for the year - - - - 405,016 405,016
At 1 November 2018 678,018 239,546 4,314,220 222,259 1,981,765 7,435,808
Share based payment charge - - - 142,497 - 142,497
Profit for the year - - - - 458,444 458,444
At 31 October 2019 678,018 239,546 4,314,220 364,756 2,440,209 8,036,749
Consolidated Statement of Financial Position at 31 October 2019
At 31 October 2019 At 31 October 2018
£ £
Assets
Non-current assets
Intangible assets 8,900,408 3,351,304
Property, plant and equipment 7,648 12,221
8,908,056 3,363,525
Current assets
Trade and other receivables 987,054 680,960
Cash and cash equivalents 860,611 5,576,379
Total current assets 1,847,665 6,257,339
Total assets 10,755,721 9,620,864
Liabilities
Current liabilities
Trade and other payables 1,011,131 526,224
Deferred tax 85,573 58,574
Total current liabilities 1,096,704 584,798
Borrowings 1,622,268 1,600,258
Total liabilities 2,718,972 2,185,056
Equity
Called up share capital 678,018 678,018
Share redemption reserve 239,546 239,546
Share premium account 4,314,220 4,314,220
Share based payment reserve 364,756 222,259
Retained earnings 2,440,209 1,981,765
Total equity 8,036,749 7,435,808
Total equity and liabilities 10,755,721 9,620,864
Consolidated Cash Flow Statement
For the year ended at 31 October 2019
Year ended 31 October 2019 Group Year ended 31 October 2018 Group Year ended 31 October 2019 Company Year ended 31 October 2018 Company
£ £ £ £
Cash flows from operating activities
Operating profit before tax 547,222 486,505 (70,475) 109,186
Amortisation 332,423 247,406 - -
Depreciation 7,885 7,653 - -
Share based payments 142,497 115,061 142,497 115,061
Finance income (127) (8) (115) (1)
Finance costs (Increase) in receivables 189,322 (306,094) 37,201 (202,155) 189,322 (4,453,635) 37,201 (195,110)
Increase/(decrease) in payables 333,210 (87,013) (175,307) (13,472)
Corporation tax - 27,104 - -
Finance cost paid (99,404) - - -
Net cash inflow (outflow) from operating activities 1,146,934 631,754 (4,367,713) 52,865
Cash flows from investing activities
Investment in intellectual property rights and TCAT (5,881,529) (215,113) - -
Investment in property, plant and equipment (3,310) (2,904) - -
Finance income 127 8 115 1
Net cash used in investing activities (5,884,712) (218,009) 115 1
Cash flows from financing activities
Proceeds from the issue of new shares - 3,305,750 - 3,305,750
Share issue costs - (126,425) - (126,425)
Loan notes 22,010 1,600,258 22,010 1,600,258
Net cash inflow (outflow) from financing activities 22,010 4,779,583 22,010 4,779,583
Net change in cash and cash equivalents (4,715,768) 5,193,328 (4,345,588) 4,832,449
Cash at the beginning of the year 5,576,379 383,051 4,894,080 61,631
Cash at the end of the year 860,611 5,576,379 548,492 4,894,080
Notes to the Preliminary Results
Basis of preparation
The Company is a public limited company incorporated and domiciled in England
under the Companies Act 2006. The Board has adopted and complied with
International Financial Reporting Standards (IFRS) as adopted by the European
Union. The Company's shares were admitted for trading on the AIM market of the
London Stock Exchange on 18 April 2013.
Taxation
Year ended 31 October 2019 Year ended 31 October 2018
£ £
Analysis of the charge for the year
Adjustments to tax charge in respect of prior years - 2,272
UK corporation tax charge 61,779 55,018
Deferred tax 26,999 24,198
88,778 81,488
The standard rate of tax for the year, based on the UK standard rate of
corporation tax is 19% (2018: 19%). The actual tax charge for the periods is
different than the standard rate for the reasons set out in the following
reconciliation:
Reconciliation of current tax charge Year ended 31 October 2019 Year ended 31 October 2018
£ £
Profit on ordinary activities before tax 547,221 486,504
Tax on profit on ordinary activities at 19% (2018: 19%) 103,972 92,436
Effects of:
Non-deductible expenses 29,624 24,660
Adjustments to tax charge in respect of previous periods 1,696 1,878
Fixed asset timing differences 26,999 24,198
Depreciation in excess of capital allowances (4,109) 520
Share scheme deduction -
Research and development (69,404) (62,204)
Total tax charge 88,778 81,488
Earnings per share
The weighted average number of shares in issue for the basic earnings per
share calculations is 135,603,699 (2018: 92,244,794) and for the diluted
earnings per share assuming the exercise of all warrants and share options is
173,237,032 (2018: 100,714,200).
The calculation of basic earnings per share is based on the profit for the
period of £458,433 (2018: £405,016). Based on the weighted average number of
shares in issue during the year of 135,603,699 (2018: 92,244,794) the basic
earnings per share is 0.34p (2018: 0.44p). The diluted earnings per share is
based on 173,237,032 shares (2018: 100,714,200) and is 0.26p (2018: 0.40p).
EBITDA
Profit from continuing activities before interest, tax, depreciation and
amortisation for the twelve months ended 31 October 2019 was £1,076,724
(2018: £773,071).
Amendment of option agreement with director
Michael Infante, a director of the Company, has an option over 500,000
ordinary shares in the Company exercisable at a price of 2.75 pence per share
for an exercise period to 6 March 2020. The Company has agreed to amend the
terms of this option agreement by extending the exercise date to 6 March
2021. All other terms of the option agreement remain unchanged.
Directors’ responsibilities
The Annual Report, including the financial information contained therein, is
the responsibility of, and was approved by the directors on 30 March 2020.
Availability of Report and Accounts and Notice of the Annual General Meeting
Copies of the Company’s Report and Accounts together with the Notice of the
Annual General Meeting, will be posted to shareholders shortly. Please note
that arrangements for the AGM this year are different from those of previous
years. As we expect significant restrictions on personal movement to still be
in place due to Covid-19, we are utilising provisions in our articles of
association, and certain associated discretionary powers for the orderly
conduct of meetings, to facilitate the holding of the meeting on an electronic
platform. Accordingly, this year’s AGM will be an electronic meeting only.
All voting at the resolutions at the AGM will be conducted on a poll which
means that you should submit your proxy as soon as possible. We ask that all
question which shareholders wish to raise be submitted to agm@onemediaip.com
in advance. The platform that we will be using will allow shareholders the
option to submit a separate poll card as they "exit" the electronic meeting
but, to ease administration, we request that proxies be lodged in advance
wherever possible. Full details of the operation and arrangements for the AGM
are set out in the Notice of AGM. We do not intend to make this arrangement
permanent, as we value the opportunity to meet our shareholders in person. To
that end we anticipate organising an informal shareholder meeting once
restrictions on movement are lifted and it is safe to do so. Copies of the
Company’s Report and Accounts will also be available at the registered
office of the Company and can be viewed on the Company’s website,
www.omip.co.uk.
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014.
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