REG - One Media iP Group - Half-year Report
19/07/2022 07:00
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RNS Number : 8863S One Media iP Group PLC 19 July 2022
19 July 2022
One Media iP Group Plc
("One Media", the "Group" or the "Company")
Interim Results for the six months ended 30 April 2022
Strong first half performance with double digit revenue and earnings growth
One Media iP (AIM: OMIP), the digital media content provider which specialises
in the active exploitation of music and video intellectual property rights
together with copyright infringement technology, announces its unaudited
interim results for the six months ending 30 April 2022.
Financial Highlights
· 13% increase in revenue to £2.4m (H1 2021: £2.1m), driven by
contribution from new acquisitions, organic growth and active management of
portfolio
· 39% uplift in EBITDA to £1.0m (H1 2021: £0.7m), notwithstanding
addition of TCAT overhead expenses
· 20% uplift in net revenue to £1.6m (H1 2021: £1.3m)
· EPS up 24% to 0.19p (H1 2021: 0.15p)
· Net margin increased to 67% (H1 2021: 63%)
· Cash balances at 30 April 2022 of £2.1m (H1 2021: £6.4m)
· Operative NAV per Ordinary Share of 17p*
· Final dividend of 0.055p per share distributed in June 2022
Operational Highlights
· Acquisition of the licensor's share of the royalties to the Orbital
Digital Ltd/Rapier Music catalogue of rights comprising over 40 branded record
labels and several thousand diversified recordings with proven revenue streams
from artists including Joe Strummer, Chic, Kool & The Gang, Sid Vicious
and the Irish Tenor Trio
· TCAT business plan progressing, with software operating across 178
territories and trials with three major record labels expected to translate
into long term contracts
Outlook
· Ongoing supportive market backdrop with music industry growth
projections continuing to accelerate and increasing opportunities to generate
royalty income through digital platforms
· Positive industry developments, including Copyright Royalty Board ruling
in July 2022 increasing headline royalty rate in the US from 10.5% to 15.1%
Michael Infante, CEO said: "We are very pleased with the results delivered for
the first half of this year, building on the positive progress we made in
2021. Our core strategic focus on diversified catalogues of songs that have
proven their value over many years continues to deliver, with our specialist
teams helping to maximise their revenue potential alongside our other
investments. Against a strengthening industry backdrop, our expertise in
driving royalty income from digital recordings and disciplined approach to
acquisitions have enabled us to deliver significant growth that positions us
well for the remainder of the year."
* Operative NAV is calculated by using the IFRS NAV, adjusting for the
revaluation of catalogues assets to fair value and then adding back the
catalogue amortisation.
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation. The person who arranged the release of this
information is Michael Infante, Chief Executive Officer of the Company.
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 Gould/Giles Balleny Corporate Finance) Tel: +44 (0)20 7397 8900
Michael Johnson (Sales)
Claire Turvey, Fourth Pillar Financial PR
Tel: +44 (0)7850 548 198
About One Media iP Group Plc
One Media is a digital music rights acquirer, publisher and distributor with a
catalogue independently valued at £34.8 million (as at April 2022). The Group
specialises in purchasing and monetising intellectual property rights with
proven, repeat income streams. One Media adds value to its content by
maximising its availability in over 600 digital stores globally, including
Apple Music, YouTube, Amazon and Spotify.
One Media's music is also widely used for synchronisation in film and TV
whilst its video content is primarily viewed on YouTube where One Media
operates over 20 YouTube channels as a certified partner. Additionally its
copyright infringement and digital music audit tool software TCAT is used by
major record labels and the world leading digital international distributor.
Men & Motors, the Company's branded car channel, is now available via
YouTube www.youtube.com/channel/UCNLiybn_9jgQaV0NZlSRwCg
(https://www.youtube.com/channel/UCNLiybn_9jgQaV0NZlSRwCg)
One Media is listed on the AIM Market of the London Stock Exchange under the
ticker 'OMIP'.
For further information, please visit www.omip.co.uk (http://www.omip.co.uk)
and www.harmonyip.com/ (http://www.harmonyip.com/)
Chairman's Statement
Financial performance
In the first half of 2022, the Company has continued to build on the momentum
created during the prior year enabling the delivery of another set of positive
results from our diversified portfolio of music and video intellectual
property rights, which includes investments in Take That's 'A Million Love
Songs'; Culture Club's 'Karma Chameleon'; as well as music performed by
artists such as Kid Creole and the Coconuts, Joe Strummer, Sex Pistols, Kool
& the Gang and Chic.
Revenues have increased by 13% to £2.4 million (H1 2021: £2.1 million),
driven by contributions from new acquisitions, organic growth and active
management of portfolio. EBITDA grew by an impressive 39% to £1.0 million (H1
2021: £0.7m), notwithstanding the new inclusion of TCAT overhead expenses in
this period. As a result, Earnings Per Share increased by 24% to 0.19p.
A 20% uplift in net revenue was delivered and net margin was increased to 67%
(H1 2021: 63%) reflecting the relatively low overall cost base and ongoing
efforts of the specialist team to sweat the portfolio and maximise its income
potential. The Operative NAV per Ordinary Share was 17p.
One Media trades in a global market and is therefore required to convert its
digital income from the many territories' currencies in which it operates on a
monthly basis. All of these local currencies are converted to US Dollars which
are ultimately reported in Sterling. With approximately 89% of the Company's
revenues generated in US dollars, management carefully monitors exchange rates
to ensure the Company can seek to take advantage of the best exchange rates
available. The average monthly rate for the first half of 2022 moved to 1.3325
from 1.3678 in the same period last year.
Following a positive performance in 2021, on 22 April 2022 the Company
declared a final dividend of 0.055p per ordinary share which was distributed
to shareholders in June 2022.
When we released our full year results in April, we also announced that our
content catalogue had been independently valued at £34.8 million, which
reflects an implied value of 16.1p per share and the fair value of the
portfolio that has been carefully assembled over the last 16 years. With the
results the Company has announced today, we are well positioned for the year
ahead and continue to work hard on behalf of our shareholders to maintain our
positive performance and deliver returns.
Operations and investments
During the period the Company acquired the licensor's share of the royalties
to the Orbital Digital Ltd/Rapier Music catalogue of rights comprising over 40
branded record labels and several thousand diversified recordings with proven
revenue streams from artists including Joe Strummer, Chic, Kool & The
Gang, Sid Vicious and the Irish Tenor Trio. The investment is fully meeting
performance expectations and brings further diversification and additional
income to our portfolio at a multiple that is in line with our acquisition
strategy.
The transaction was undertaken through One Media's Harmony IP asset release
initiative which enables rights owners to release portions of equity from
their music, providing greater flexibility to access future earnings while
retaining majority ownership of their intellectual property.
The acquisition opportunity resulted from an existing long-term relationship
that management had with the vendor, reflecting the importance of the team's
long and respected track record in the music industry, which is built on
relationships. It continues to exploit these carefully held networks and is
actively seeking new opportunities that meet our investment criteria as we
look to deploy our cash into proven income streams.
In August 2020 the Company raised £5.6 million of equity (net of costs), of
which £5.4 million has been invested into the acquisition of eight portfolios
of rights. These transactions have been completed at an attractive blended
multiple of 9x with an 11% yield.
Alongside our core focus on royalties, the business plan for the Company's
proprietary anti-privacy software platform investment, TCAT Ltd ("TCAT")
continues to progress in line with expectations. Established in 2016 to
automate the difficult and time-consuming task of detecting copyright
infringement, TCAT operates across the major digital stores, including Apple,
Spotify, Amazon Deezer and YouTube, and is currently being deployed across 178
territories.
The TCAT team are working with three major record labels globally with the
expectation of entering into long term contracts.
A full board has been appointed, including CEO Nick Stewart, and TCAT now
employs a team of 10 people plus two consultants. Nick Stewart is deploying
his extensive experience of the global music market, royalty collection and
music piracy to build the profile of TCAT and its ground-breaking A.I.
software, which monitors millions of music tracks across the world, saving
rights holders millions in unpaid or fraudulently claimed royalties.
The One Media Board together with the newly formed TCAT board has been active
in seeking funding directly into the TCAT subsidiary. Currently that process
is undergoing due diligence and we will report to the market when it is
completed.
Market backdrop and outlook
The outlook for the music industry grows ever stronger, with technology
advancements and positive developments creating a fairer and more efficient
system for all of us who depend on royalty streams for income.
In June 2022, Goldman Sachs issued its 'Music in the Air' report into the
global music industry, reiterating its confidence that music streaming will
remain resilient in an economic downturn. It once again raised its global
revenue forecasts, projecting a 24% increase in 2022 revenues across all
sectors followed by 8% growth in 2023, driven by higher streaming revenues,
revenues from emerging platforms and physical sales.
In July 2022, a legal ruling in the US paved the way for an increase in the
headline royalty rate paid from streaming services in the US from 10.5% to
15.1%, which has been backdated to 2018. The new rates imposed by the
Copyright Royalty Board (CRB) is the largest rate increase in the history of
the CRB.
With the headline rate change, the streaming services are about to pay out
arrears to publishers and songwriters/composers to cover the now official
15.1% CRB (2022) rate for the five years covered by the ruling on a
prorated basis. The CRB has commenced negotiations for the next five-year
period (2023 to 2027) on behalf of the composers and publishers and want to
see a mechanical streaming royalty rate of 20%. The Company does not expect
this to be a material payment.
Not only will this ruling have a positive impact on the Company's revenues,
but it sets another welcome marker for the industry generally, in recognising
the value of music and its creators as well as underlining the robust
investment potential of music composition and publishing rights.
Against this positive backdrop we'd finally like to thank our shareholders for
their ongoing support, and also pay tribute to the One Media team for their
efforts on your behalf.
Claire Blunt
Chairman of One Media
Unaudited Consolidated Statement of Comprehensive Income
For the six months ended 30 April 2022
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended 31 October 2021
30 April 2022 30 April 2021
£ £ £
Revenue 2,381,784 2,102,848 4,389,581
Distribution charges (526,466) (529,501) (1,107,127)
Royalty costs (232,036) (212,125) (435,386)
Other costs (26,155) (31,436) (66,542)
_________ _________ _________
Net revenue 1,597,127 1,329,786 2,780,526
Amortisation of catalogues (378,251) (256,998) (599,308)
Administration expenses (611,342) (555,026) (1,040,706)
FOREX gains/(losses) 18,134 (35,564) (64,554)
_________ _________ _________
Operating profit 625,668 482,198 1,075,958
Share based payments (30,228) (30,125) (77,178)
Finance costs (90,205) (92,956) (184,045)
Finance income - - 1
_________ _________ _________
Profit from continuing activities 505,235 359,117 814,736
Asset disposal - - (93,939)
Profit on ordinary activities before taxation 505,235 359,117 720,797
Tax expense (90,031) (61,780) (176,222)
_________ _________ _________
Profit for period attributable to equity shareholders and total comprehensive 415,204 297,337
income for the year
544,575
========= ========= =========
Basic earnings per share 0.19p 0.15p 0.24p
========= ========= =========
Unaudited Consolidated Statement of Financial Position
As at 30 April 2022
Unaudited Unaudited Audited
30 April 2022 30 April 2021 31 October 2021
£ £ £
Assets
Non-current assets
Intangible assets 14,562,132 9,403,844 13,484,077
Property, plant and equipment 23,486 86,849 44,007
_________ _________ _________
14,585,618 9,490,693 13,528,084
_________ _________ _________
Current assets
Trade and other receivables 1,443,787 1,385,946 1,481,077
Cash and cash equivalents 2,138,294 6,373,525 2,565,813
_________ _________ _________
Total current assets 3,582,081 7,759,471 4,046,890
_________ _________ _________
Total assets 18,167,699 17,250,164 17,574,974
========= ========= =========
Liabilities
Current liabilities
Trade and other payables 1,055,961 821,704 937,622
Deferred tax 137,512 117,356 132,830
_________ _________ _________
1,193,473 939,060 1,070,452
Borrowings 1,769,987 1,724,243 1,745,735
_________ _________ _________
Total liabilities 2,963,460 2,663,303 2,816,187
_________ _________ _________
Equity
Called up share capital 1,112,231 1,112,231 1,112,231
Share redemption reserve 239,546 239,546 239,546
Share premium account 9,484,577 9,484,577 9,484,577
Share based payment reserve 534,627 457,346 504,399
Retained earnings 3,833,258 3,293,161 3,418,054
_________ _________ _________
Total equity 15,204,239 14,586,861 14,758,807
_________ _________ _________
_________ _________ _________
Total equity and liabilities 18,167,699 17,250,164 17,574,974
========= ========= =========
Unaudited Consolidated Statement of Changes in Equity
For the six months ended 30 April 2022
Share capital Share redemption reserve Share premium Share based payment reserve Retained earnings Total equity
£ £ £ £ £ £
At 1 November 2020 1,109,731 239,546 9,473,327 427,221 2,995,824 14,245,649
Proceeds from the issue of new shares 2,500 - 11,250 - - 13,750
Profit for the six months to - - - - 297,337 297,337
30 April 2021
Share based payment charge - - - 30,125 - 30,125
________ _________ _________ ________ _________ _________
At 30 April 2021 1,112,231 239,546 9,484,577 457,346 3,293,161 14,586,861
Proceeds from the issue of new shares - - - - - -
Dividends paid - - - - (122,345) (122,345)
Profit for the six months to - - - - 247,238 247,238
31 October 2021
Share based payment charge - - - 47,053 - 47,053
________ _________ _________ ________ _________ _________
At 31 October 2021 1,112,231 239,546 9,484,577 504,399 3,418,054 14,758,807
Proceeds from the issue of new shares - - - - - -
Profit for the six months to - - - - 415,204 415,204
30 April 2021
Share based payment charge - - - 30,228 - 30,228
________ _________ _________ ________ _________ _________
Balance at 30 April 2022 1,112,231 239,546 9,484,577 534,627 3,833,258 15,204,239
======== ========= ========= ======== ========= ========
Unaudited Consolidated Cash Flow Statement
For the six months ended 30 April 2022
Unaudited Unaudited Audited
6 months 6 months 12 months ended
ended ended 31 October 2021
30 April 2022 30 April 2021
£ £ £
Cash flows from operating activities
Profit before taxation 529,487 386,118 720,798
Amortisation 384,388 240,411 599,169
Depreciation 24,840 7,552 50,509
Share based payments 30,228 30,125 77,178
Finance income - - (1)
Finance costs 90,205 92,455 184,045
(Increase)/decrease in receivables 3,703 (252,240) (313,783)
(Decrease)/increase in payables 30,031 (94,780) (69,144)
Corporation tax paid - - (72,063)
_________ _________ _________
Net cash inflow from operating activities 1,092,882 409,641 1,176,708
_________ _________ _________
Cash flows from investing activities
Investment in copyrights / licenses (1,050,897) (303,733) (4,356,814)
Net TCAT Investment (411,548) (456,362) (842,273)
Investment in fixed assets (4,319) (3,141) (3,257)
Finance income - - 1
_________ _________ _________
Net cash used in investing activities (1,466,764) (763,236)
(5,202,343)
_________ _________ _________
Cash flow from financing activities
Proceeds from the issue of new shares - 13,750 13,750
Finance cost paid (53,637) (53,054) (114,873)
Loan notes - - 48,492
Dividend paid - - (122,345)
_________ _________ _________
Net cash inflow from financing activities (53,637) (39,304) (174,976)
_________ _________ _________
Net change in cash and cash equivalents (427,519) (392,899) (4,200,611)
Cash at the beginning of the period 2,565,813 6,766,424 6,766,424
_________ _________ _________
Cash at end of the period 2,138,294 6,373,524 2,565,813
========= ========= =========
Notes to the Interim Report
For the six months ended 30 April 2022
1. Nature of operations and general information
One Media iP Group Plc and its subsidiaries' ("the Group") principal
activities are the acquisition and licensing of audio-visual intellectual
copyrights and publishing for distribution through the digital medium and to a
lesser extent through traditional media outlets.
One Media iP Group Plc is the Group's ultimate parent company incorporated
under the Companies Act in England and Wales. The address of One Media iP
Group Plc registered office is 623 East Props Building, Goldfinger Avenue,
Pinewood Road, Iver Heath, Buckinghamshire, SL0 0NH.
The financial information set out in this Interim Report does not constitute
statutory accounts. The Group's statutory financial statements for the year
ended 31 October 2021 are available from the Group's website. The auditor's
report on those financial statements was unqualified.
2. Accounting Policies
Basis of Preparation
These interim consolidated financial statements are for the six months ended
30 April 2022. They have been prepared following the recognition and
measurement principles of IFRS. They do not include all the information
required for full annual statements, and should be read in conjunction with
the consolidated financial statements of the Group for the year ended 31
October 2021.
This unaudited interim statement has not been subject to a review by the
Group's auditors James Cowper Kreston.
Comparatives
The comparative periods represent the unaudited results for the six months
period ended 30 April 2022 and the audited twelve months figures for the year
ended 31 October 2021.
3. Earnings per share
The calculation of the earnings per share is based on the profit for the
financial period divided by the weighted average number of shares in issue
during the period.
Unaudited Unaudited Audited
Basic earnings per share 6 months ended 6 months ended 12 months ended
30 April 2022 30 April 2021 31 October 2021
Profit for period attributable to equity shareholders 415,204 297,337 544,575
Weighted average number of shares in issue at period end 222,446,249 192,069,005 222,446,249
_________ _________ _________
Basic earnings per share 0.19p 0.15p 0.24p
========= ========= =========
The diluted earnings per share would be lower than the basic profit per share
as the exercise of warrants and options would be dilutive.
4. Share capital
Unaudited Unaudited Audited
30 April 2022 30 April 2021 31 October 2021
Group and company £ £ £
Authorised:
200,000,000 ordinary shares of 0.5p each 1,000,000 1,000,000 1,000,000
========== ========== ==========
Issued:
Ordinary shares of 0.5p each
222,446,249 ordinary shares of 0.5p each 1,112,231 1,112,231 1,112,231
========== ========== ==========
5. Interim statement
Copies of this statement are available from the Group's registered Office at:
623 East Props Building, Goldfinger Avenue, Pinewood Road, Iver Heath,
Buckinghamshire, SL0 0NH.
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward-looking statements are not
based on historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount,
nature and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.
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