One Media Ip Share Discussion Threads

[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.

[yump] 13/11/2018 08:00

If they're on target to make £600,000 pre tax, then that ends up at about 0.45p per share. So 6p is about a p/e of 15, which I guess is OK, but growth will have to happen next year. Given the gearing of profit to revenue, they could easily post % gains at 30%+ if revenue jumps up. Its just the mushroom management of investors that hacks me off. They haven't exactly been short of words in the past. Its the content that matters.

[yump] 13/11/2018 07:55

To be fair its only a few months since they got the money for acquiring rights, so I suppose expecting something significant on that front is being a bit impatient.

[dibs61] 13/11/2018 07:47

How right you are yump. Vague to say the very least. Absolutely no detail.

[davidosh] 28/10/2018 19:39

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[microscope] 15/10/2018 16:48

They talk in depth about the acquisition strategy in the placing document and because it's something that does interest me as to how the industry works I had a decent read of it. The section headed 'acquisition of music publishing rights and songwriters’ rights' is the most relevant one i think about how they plan to deal with the different facets of managers/artists etc https://uk.advfn.com/stock-market/london/one-media-OMIP/share-news/One-Media-iP-Group-Plc-Proposed-Fundraise-of-a-m/78169465

[yump] 15/10/2018 16:40

I think you're right most rights deals will already have been done. Whether the artist then gets a say on any further deals or sales directly I don't know.

[harrogate] 15/10/2018 15:36

I agree on the commercial sensitivity but you would hope and expect we would get some sort of steer - such as the acquisition will be earnings enhancing in the first full year and the broker notes should start to build in some revenue modelling. The point you make about artists is interesting - I had assumed we would be buying blocks of publishing rights that have already been licenced / sold by the performer rather than negotiating with individual artists.

[yump] 15/10/2018 15:17

In theory of course, they have forever to get a return on any rights purchased, especially rights that involve music with a very long shelf life. I suspect the only clues that we'll get about whether purchases are worthwhile or not, is just in the results. I can't imagine they're going to spell it out, as that would be competitively sensitive information. So wondering what puts the cap. on the purchase cost ? Presumably they've got some sort of internal target for payback, but again that will never be public knowledge I guess. Just have to hope that all the talk of building skills in the digital domain means that OMIP have a higher/earlier return than others, or perhaps more importantly ? that they appear to be nicer people to deal with than other publishers. Knowing a few musicians, I think that's a factor, not just what the lawyer can negotiate. Perhaps the balance sheet was an issue, which led to the requirement for more funding. If you're an artist about to sign over your rights, the publisher you're relying on to continue earning money for you needs to look financially sound.

[microscope] 15/10/2018 13:47

Yeah euclid I think everyone invested here is well aware that in order to grow the company, there is almost sure to be future dilution, as long as they identify the 'right' acquisitions, as Harrogate has mentioned. They've effectively said that is a part of the strategy. I don't have a problem with that, the key as Harrogate also says is whether these acquisitions will deliver the goods. It's a high powered board for such a small company, I'm obviously hopeful that they will.

[harrogate] 15/10/2018 13:23

Of course it will only be dilution if the equity they raise isn't used to buy rights that produces more increased profit return than the % of new shares. But it is fair to say that the jury is out as to how they are going to do that and the first couple of deals they do now should be fairly instructive on what the future might look like.