One Media Ip Share Discussion Threads

[yump] 29/11/2018 15:59

Well that didn't exactly create a flurry of buying did it ?

[advfn_sales] 21/11/2018 16:31

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[davidosh] 18/11/2018 23:09

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[yump] 14/11/2018 16:23

Well I've still got a stake on the basis that if it does what it looks like it could do in theory, I'll be happy with the gains, but I can't work it out enough to pencil stuff in for myself - which I'm never overly keen on. Yes agree with you on weighted average it will be decent growth, despite transaction costs and with the momentum comment. So without any contribution from acquisitions, next year would be 0.67p - based on that original 900K forecast. I might try and work out some very simple figures for earnings per £1mln of acquired rights, depending on multiple paid and interest paid on loan. Good excuse for not doing DIY - "I'll have to work on our investments quite a bit this weekend". Now where's the Hobgoblin ?

[microscope] 14/11/2018 16:03

I don't blame you yump, it's a share where I think you have to take a view at this point, whether you believe they can deliver the right acquisitions. Obviously my view is different from your's but it takes two to make a market as they say. The metric is 'weighted number of average shares in issue' for the period, so the new shares will only count for the last six weeks or so of the financial year to end October. When weighted it will be something like 92 million for the year. If they doubled the interim profit it would be about 425k, so about .46p eps on 92 million shares. I pencilled in for 500k as they talked of momentum at interims or about .55p. As the placing costs will be exceptionals they won't impact the ebitda figure. Then they have twelve months to find earnings enhancing acquisitions that will make some contribution to 2018-19. I don't think you can ignore cash as it is intended to be the driver of future profit growth, via acquisitions. Just my view.

[yump] 14/11/2018 15:45

Oh yes, 0.3 ! I just took 200k off the forecast 600K profit figure, then divided by 135mln shares as they've been issued before year end. Which should give 0.3p. I tend to ignore cash as it never seems to compensate for lack of growth in something people have bought for growth. If they only do 0.3p-0.4p it won't look very attractive to new investors as it won't be growing. Also if I've got my head around this, presumably if they buy royalties at say a multiple of 10 using the loans, then for every £1mln spent they'll earn £30K net in the first year after interest payment on the loan (assuming no payback of loan) and then an increasing amount in subsequent years. I imagine there's a spreadsheet somewhere with some assumptions on rate of return. It doesn't look as if this will catapult OMIP's earnings for a while yet. I've sold out about half recently - not a massive stake - bit worrying that I couldn't do any of it online automatically, but could have bought a load. I don't like having to work this hard on stuff that is not just the figures from the business itself. Can't help feeling that its potentially just a plaything for the big names, mainly because I've always reckoned that there are usually much more competent and driven people working lower down the ladder. Everywhere you look.

[microscope] 14/11/2018 13:57

Yes 200k would seem reasonable; but 3p eps would be a p/e of 2.... (I think you mean 0.3, though looking closer to 0.5p for this year myself) For the next trading year there will be a large rise to 135 million or so shares in issue, which at 6p would equate to a market cap of just over 8 million. Of that they should be starting the year with the best part of 4 million in "unencumbered" cash. So nearly half the market cap in cash in addition to profit and no debt. The 1.9 million drawdown can be added to that but will obviously be subject to the 7%pa repayments from September 2019 as will the subsequent two tranches. So the pivotal clearly refers imho to the company's ability to make decent earnings enhancing acquisitions. 2019 should be an exciting year I think for holders here.

[yump] 13/11/2018 16:39

On reflection, depending on the level of 'transaction' fees associated with the fund-raising (anyone's guess but mine would be 200K), the results in March could make the rating look a bit racy for what's actually happening eg. say only 3p eps. I think it depends a lot on what is announced in the way of rights purchases between now and then and also what level of information accompanies any announcements. Without any clarity, I can imagine the share price dropping back in boredom until such time as actual increases in trading are announced - which could be in perhaps the year end statement. There's certainly nothing to fix on at the moment. I also discovered today that I could buy quite large amounts of shares online and sell nothing above 10,000. That didn't feel great.

[yump] 13/11/2018 14:20

Interesting that Spotify and other streaming generates both mechanical and performance royalty payments, although of course if OMIP buy the rights, they'll get royalties from all parts.

[harrogate] 13/11/2018 11:32

I Really don't pretend to understand the moving parts of all this but that site has some interesting stuff - this was an extract from one of the items for sale Income Mix. The winner of this auction can receive income from three different royalty streams: Mechanical: Royalties paid to songwriters and artists when music is sold (think CD or vinyl) but also when music is streamed (streaming mechanicals) “on-demandR21; (like Spotify). Performance: Royalties paid to songwriters when music is performed publicly. Music played over the radio, in a restaurant or bar, or over a service like Spotify or Pandora is considered a public performance. Synchronization: Royalties paid to songwriters and publishers for the licensing of a song in music for a movie, TV show, or commercial. This catalog’s income mix is fairly evenly split between mechanical and performance royalties. The majority of income in the last year has come from mechanicals at 54%, with performance royalties right behind at 44%. Increased Mechanical Rates. The US Copyright Royalty Board recently raised the rates digital music services must pay for mechanical royalties by nearly 44% over the next 5 years. Historically, this catalog has earned the 49% of its revenue from mechanical royalties. As the winner of this auction, you will benefit from the mechanical rate increases for the next five year

[yump] 13/11/2018 11:27

Unfortunately I can't afford Zep or Pink Floyd ;-)

[harrogate] 13/11/2018 10:06

Yump - thanks for that - fascinating to look through - let's cut out the middle man and just buy the rights ourselves !

[yump] 13/11/2018 09:49

If anyone wants to do bit more research that actually gives real information, have a look at Royalty Exchange and similar that give details of multiples for purchasing royalty streams: hTTps://www.royaltyexchange.com/artist-guides/how-investors-value-royalties I find it intensely irritating that amongst all the general market information, mention of who bought who out for $$$$$$$$$$$ and how the market is supposed to grow by xxx% by 2030, that OMIP put out in the fundraising doc., they did not include any market information that is already in the public domain, about multiples. I would expect that as OMIP are not buying top artist catalogues, that their aimed-for purchasing multiple might be significantly less than 10. Which, if they spent say £4mln over a year or so, would imo be transformational, specifically because of the relatively fixed overheads/admin costs, with a revenue stream that is very scalable.

[horndean eagle] 13/11/2018 09:06

double entry book keeping dictates that if you have just taken on debt without buying anything yet then there will be a corresponding entry on the other side with a credit of cash. So a bit of a red herring to talk about the company taking on debt.

[yump] 13/11/2018 08:56

Just done a few calcs. If you take a fairly high multiple for purchasing royalties - say 10 (top artist level), in theory every £1mln spent should earn about £100K. (We have no information on this from OMIP and we don't know how much has been spend on royalties in the past to give the current revenue, so I've just been looking at purchase multiples for buying royalties.) Lets say OMIP get an extra £300K a year from this, so a 10% rise in revenue. As seen from recent results, profit will rise much faster than 10%. That's without any increasing levels of revenue from the existing rights. There, I've talked myself into thinking its OK !

[microscope] 13/11/2018 08:56

If you want a fuller breakdown Dobbs, see my post 746. The first tranche of 1.9 million had been drawn down, but as none of it has been touched it is hardly debt, at least unless or until used. No repayment is due until September 2019, when the first 133k becomes due. And I don't see any debt from the existing core business as of interims.

[harrogate] 13/11/2018 08:52

But it is not net debt is it as the cash is in the bank - unless they use the same auditors as Patisserie Valerie!!

[dibs61] 13/11/2018 08:49

microscope - yes of course they now have debt in the form of a Loan note for £1.9m drawn down in September. And if they draw down tranches 2 and 3 that will go up to £6m. I realise it is for the purchase of music rights but debt it nonetheless is until it is repaid.

[yump] 13/11/2018 08:45

The company isn't in debt. Its just borrowed some money and paying interest on it like any other business.

[microscope] 13/11/2018 08:39

Yump don't forget the placing was heavily oversubscribed, they raised almost 3 million, before the draw-downs, plus they already had nearly a million in the bank as of interims. They will of course use a bit of that for placing costs, but they have a healthy and growing cash position from the core business - and no debt as far as I can see.

[dibs61] 13/11/2018 08:34

Posters are talking about the possible profits but they will be eaten into by interest payments on Tranche 1 of the Loan Notes - £1.9m x 7% = £133k interest pa. The company is now in debt. The first loan notes plus redemption penalty are repayable in full if they don't make an acquisition within 12 months. I hope this does not force them into making any hasty or unwise decisions. Also there are 30m share options to BGF @ 6p attached to the Loan deal. The pressure is on to make some good deals now. Long gone are the days of steady organic growth. Its acquire or die!

[yump] 13/11/2018 08:24

Having said all that, once they start spending on rights, earnings will jump more than they were forecast to. The old forecasts were for 900K pre-tax and 1p earnings for 2019. That would now be about 7p earnings, allowing for the new shares. That's without any contribution from any new rights acquired. Currently, I think they've got £1.9mln from the share issue and £1.9mln from the first loan tranche. That should bump the revenue significantly. I suppose have to wait and see. If it works out the growth will be rapid and everyone will be happy because the rating will jump together with earnings and the share price will multiply.

[microscope] 13/11/2018 08:22

In a geeky sort of way I actually found it very informative. It's clear how they accepted they'd been too slow to react, and how they'd dealt with it. And I learnt a lot about the competition and where they could be looking for acquisitions.Margins/price will likely drive the final choices, but they do now have an impressive war chest for a company of this size.

[yump] 13/11/2018 08:06

I thought the analysis at fundraising was way over-inclusive and as a result clouded the whole thing. As for the 'arrangements' with various parties and loan notes, I have seen a lot in my time but that was impossible to figure out, certainly in terms of whether it was good for my investment or not. Particularly all the stuff about the overall market. All very interesting, but not relevant to OMIP. In particular, the comments about the music industry recovering, because it was not that that caused OMIP's problems, it was the move from CD's to downloads to streaming. The fact of the matter is that OMIP had an outdated model. The real clever folk with industry knowledge would have seen that coming.

[microscope] 13/11/2018 08:00

Given that they said strong trading and cash generation at the interims and now say in line, it seems all is ok to me. Agreed though that the lack of detail is frustrating, though in fairness we got a very thorough analysis at the time of the fundraising.