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.