One Media iP Group Plc - Final Results

09 April 2019

One Media IP Group Plc

(“One Media” 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 2018.

Financial Highlights

• Revenue increased 16% to £2,702,374

• EBITDA increased 44% to £773,071 (2017: £535,678)

• Operating profit increased 94% to £638,758 (2017: £330,174)

• Cash at 31 October 2018 of £5,576,379 (2017: £335,664)

Operational Highlights

• Fundraise of £8.9m gross (before costs) in equity and debt to acquire music publishing rights, artist recordings and songwriters’ rights

• Appointment of Lord Michael Grade and Ivan Dunleavy to strengthen the Board

• Another year of solid development for OMiP’s proprietary software, TCAT (Technical Copyright Analysis Tool), which signed its second major international record label client

• Strong growth across the Group driven by a resurgent music industry which saw its longest period of revenue growth since the 1990s, driven by increased consumer demand and dividends from streaming platforms

• Post period end, acquisition of Locomotive Records’ music catalogue for US$750,000, including a direct artist royalty agreement with Spanish folk metal band, Mägo de Oz

• Announced today, the acquisition of certain rights relating to the composition and writers share of the income in the Michael Dulaney catalogue of songs, an American country music songwriter from Nashville, Tennessee, for a total consideration of US $850,000, to be satisfied in cash.

Michael Infante, CEO of One Media iP commented:

 “2018 demonstrated our determination to bring continued strong progress across the Group, within the context of a resurgent music industry that is seeing on-going growth in streaming. We appointed Lord Michael Grade and Ivan Dunleavy to enhance the Board and, subsequently, raised capital to scale up OMiP through the acquisition of music publishing rights and master rights.

“We continue to operate a selective approach with our acquisition programme and, post period end, have made two acquisitions since the fundraise, consisting of the Locomotive music catalogue and the acquisition of the certain rights relating to the composition and writers share of the income in the Michael Dulaney catalogue. Moving forward, we remain focused on acquiring IP content and maximising our digital music and video income via the growing global streaming stores such as Apple Music, Spotify, Amazon, Facebook and Deezer.” 

For further information, please contact:

One Media IP Group Plc
Michael Infante	Chairman and Chief Executive Tel: [phone]
Alice Dyson-Jones	Corporate Communications Tel: [phone]
Cairn Financial Advisers LLP	Nominated Adviser
Liam Murray / Jo Turner	Tel: [phone]
Panmure Gordon (UK) Ltd	Broker
Karri Vuori	Tel: [phone]

Chief Executive’s Statement

This has been a milestone year for One Media, during which we welcomed Lord Grade and Ivan Dunleavy onto the Board, raised £8.9m in equities and debt to fund acquisitions of music rights and saw growth across the Group.

Our operating profit for the Full Year was up 94% to £638,758 and cash at the end of the period stood at £5,576,379. The Company achieved growth through its technical ability and by developing our relationships with our distribution partners.

Music

Over the last few years we’ve witnessed significant change, driven by streaming which has now become the biggest single source of revenue in the industry. However, it is the emerging technology in the sector where we now see significant opportunities to further monetise our content. Artificial Intelligence (AI) and smart, Voice Activated (VA) speakers have already begun revolutionising how music is consumed. One Media’s in-house creative technicians, using ‘best practices’, maximise the discoverability of One Media’s recordings and ensure that they are curated in as many playlists as possible. We are also now witnessing established giants such as YouTube Music and Facebook add new royalty income sources as music is monetised on their sites. All of these factors endorse our continued investment into content and underpin our ability to keep pace with this fast-changing sector.

Focused on maximising the value of our existing catalogue of over 250,000 tracks, we were pleased to successfully place a number of synchronised music pieces in film and TV during the year. This included our recording of Chopin’s Nocturne Op No 2 in E-Flat Major from the Point Classics catalogue featuring in Marvels Daredevil and Jim Carrey’s new TV series ‘Kidding’.

Video

Our archive Men & Motors footage grew in popularity on YouTube, generating over 43 million minutes of viewing in 2018 and increasing to over 114,000 subscribers.

The Group’s music video, documentaries and special interest programs are finding new platforms for distribution. We have seen content appear on Amazon and other independent distributors as well as our country music videos being broadcast on Keep It Country, a leading UK Freeview channel.

TCAT

Development work on TCAT is progressing and the team has made further strides into digital fingerprinting. Over the year, the TCAT development team has been focusing not just on One Media’s requirements but that of the industry, and we were delighted to be able to announce that we successfully signed our second major record label client as a result. At the period end the carrying value for research and development in TCAT was £427,852.

Management and Team

The departure of Scott Cohen from the Board was announced on 6 February 2019, and becomes effective today. Scott joined OMiP in 2007 and has been a huge part of the journey thus far. Once again, I’d like to thank him on behalf of the Board for his fantastic contribution and wish him every success for the future.

I would also like to take this opportunity to thank all the One Media Team for their continued hard work and dedication throughout the year.

Financial Overview

The year under review has seen revenues grow by 16% up to £2,702,374 and our EBITDA up by 44% to £773,071 (2017: £535,678), driven by increased consumer demand on streaming platforms and other revenue distributions from digital platforms. Our operating profit is up to £638,758, a significant increase over our 2017 figure of £330,174. In September the Company issued 48,250,001 new shares raising £2,895,000 of cash and drew down debt of £1,600,258 (net of fees) from a new facility of £6,000,000. At the end of the period, our cash balance was £5,576,379 (2017: £335,664). Our Gross margin has increased to 51%. Overheads for the year are reported at £853,229 compared to 2017 at £758,311.

The profit after tax attributable to equity shareholders of £405,016 (2017: £266,772) is reported for the financial year. Reflecting an increase in revenues, a reduced foreign exchange charge and increased margins. The corporation tax expense of £81,488 in the period (2017: £30,829) includes Research and Development allowances available to the Group. At the end of the year our cash position is reported at £5,576,379 (2017: £383,051).

Acquisitions

Post period end we were delighted to announce the acquisitions of two significant catalogues. Firstly, the catalogue of Locomotive Records in February for $750,000, broadening our music library with contemporary Spanish progressive rock music predominantly featuring the band Mägo de Oz. A great addition to our catalogue and one which will enhance the Group’s growth of streaming in regions like Spain and Latin America.

Following this, in April 2019 we were also extremely pleased to announce the acquisition of the publishing and songwriter rights to songs written by Michael Dulaney for $850,000. Dulaney has been a prolific songwriter over the years and has had major hit songs performed by the likes of Faith Hill and Jason Aldean.

Outlook

The Company is well placed to benefit from growth in the music industry and growing its own catalogue of music rights. We have a strong pipeline of opportunities and the Board looks to the future with confidence.

Michael Antony Infante

Chief Executive and Founder

Consolidated Statement of Comprehensive Income

For the year ended 31 October 2018

			Year ended  31 October 2018		Year ended  31 October 2017
			£		£
Revenue			2,702,374		2,337,624
Cost of sales			(1,325,448)		(1,281,897)
Gross profit			1,376,926		1,055,727
Administration expenses			(738,168)		(725,553)
Operating profit			638,758		330,174
Share based payments			(115,061)		(32,758)
Finance costs			(37,201)		-
Finance income			8		185
Profit on ordinary activities before taxation			486,504		297,601
Tax expense			(81,488)		(30,829)
Profit for period attributable to equity shareholders and total comprehensive income for the year			405,016		266,772
Basic earnings per share			0.44p		0.38p
Diluted earnings per share			0.40p		0.35p

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 2018

	Share Capital	Share redemption reserve	Share premium	Share based payment reserve	Retained earnings	Total equity
	£	£	£	£	£	£
At 1 November 2016	355,268	239,546	1,457,645	74,440	1,309,977	3,436,876
Share based payment charge	-	-	-	32,758	-	32,758
Profit for the year	-	-	-	-	266,772	266,772
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 31 October 2018	678,018	239,546	4,314,220	222,259	1,981,765	7,435,808

Consolidated Statement of Financial Position at 31 October 2018

			At 31 October 2018		At 31 October 2017
			£		£
Assets
Non-current assets
Intangible assets			3,351,304		3,383,597
Property, plant and equipment			12,221		16,970
			3,363,525		3,400,567
Current assets
Trade and other receivables			680,960		478,804
Cash and cash equivalents			5,576,379		383,051
Total current assets			6,257,339		861,855
Total assets			9,620,864		4,262,422
Liabilities
Current liabilities
Trade and other payables			526,224		491,619
Deferred tax			58,574		34,397
Total current liabilities			584,798		526,016
Borrowings			1,600,258		-
Total liabilities			2,185,056		526,016
Equity
Called up share capital			678,018		355,268
Share redemption reserve			239,546		239,546
Share premium account			4,314,220		1,457,645
Share based payment reserve			222,259		107,198
Retained earnings			1,981,765		1,576,749
Total equity			7,435,808		3,736,406
Total equity and liabilities			9,620,864		4,262,422

Consolidated Cash Flow Statement

For the year ended at 31 October 2018

	Year ended  31 October 2018 Group		Year ended  31 October 2017 Group		Year ended  31 October 2018 Company		Year ended  31 October 2017 Company
	£		£		£		£
Cash flows from operating activities
Operating profit before tax	486,505		297,601		109,186		245,496
Amortisation	247,406		234,911		-		-
Depreciation	7,653		3,350		-		-
Share based payments	115,061		32,758		115,061		32,758
Finance income	(8)		(185)		(1)		(7)
Finance costs (Increase) in receivables	37,201 (202,155)		- (15,229)		37,201 (195,110)		- (255,691)
Increase/(decrease) in payables	(87,013)		(267,761)		(13,472)		7,585
Corporation tax	27,104		-		-		-
Net cash inflow (outflow) from operating activities	631,754		285,445		52,865		30,141
Cash flows from investing activities
Investment in intellectual property rights and TCAT	(215,113)		(224,375)		-		-
Investment in property, plant and equipment	(2,904)		(13,868)		-		-
Finance income	8		185		1		7
Net cash used in investing activities	(218,009)		(238,058)		1		7
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	1,600,258		-		1,600,258		-
Net cash inflow (outflow) from financing activities	4,779,583		-		4,779,583		-
Net change in cash and cash equivalents	5,193,328		47,387		4,832,449		30,148
Cash at the beginning of the year	383,051		335,664		61,631		31,483
Cash at the end of the year	5,576,379		383,051		4,894,080		61,631

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 2018		Year ended  31 October 2017
			£		£
Analysis of the charge for the year
Adjustments to tax charge in respect of prior years			2,272		(22,940)
UK corporation tax charge			55,018		24,833
Deferred tax			24,198		28,936
			81,488		30,829

The standard rate of tax for the year, based on the UK standard rate of corporation tax is 19% (2017: 19.41%). 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 2018		Year ended  31 October 2017
			£		£
Profit on ordinary activities before tax			486,504		297,601
Tax on profit on ordinary activities at 19% (2017: 19.41%)			92,436		57,765
Effects of:
Non-deductible expenses			24,660		9,304
Adjustments to tax charge in respect of previous periods			1,878		(8,270)
Fixed asset timing differences			24,198		11,579
Depreciation in excess of capital allowances			520		(660)
Share scheme deduction			-		-
Research and development			(62,204)		(38,889)
Total tax charge			81,488		30,829

Earnings per share     

The weighted average number of shares in issue for the basic earnings per share calculations is 92,244,794 (2017: 71,053,698) and for the diluted earnings per share assuming the exercise of all warrants and share options is 100,714,200 (2017: 75,653,698).

The calculation of basic earnings per share is based on the profit for the period of £405,016 (2017: £266,772). Based on the weighted average number of shares in issue during the year of 92,244,794 (2017: 71,053,698) the basic earnings per share is 0.44p (2017: 0.38p). The diluted earnings per share is based on 100,714,200 shares (2017: 75,653,698) and is 0.40p (2017: 0.35p).

EBITDA

Profit from continuing activities before interest, tax, depreciation and amortisation for the twelve months ended 31 October 2018 was £773,071 (2017: £535,678).

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 2019. The Company has agreed to amend the terms of this option agreement by extending the exercise date to 6 March 2020. 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 08 April 2019.

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, to be held at 09:30 a.m. on Thursday 16 May 2019 2019 at Panmure Gordon One New Change, London EC4M 9AF will be posted to shareholders shortly. 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.onemediaip.com.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

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