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One Media iP Group Plc - Final Results

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·18-min read
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31 March 2021

One Media IP Group Plc
(“One Media”, “the Company” or the “Group”)

Final Results and Notice of AGM

Milestone Year. EBITDA up 38%. Strong Cash in Bank

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 2020.

Financial Highlights

· Revenue increased 14% to £4.0 million (2019: £3.5 million)

· EBITDA increased 38% to £1.49 million (2019: £1.07 million)

· Operating profit increased 16% to £1.02 million (2019: £0.88 million)

· Cash at 31 October 2020 of £6.8 million (2019: £0.9 million)

· Cash placing of £6 million in August 2020

· Final dividend declared of 0.055p per share

Operational and Post-Period Highlights

  • Formation of TCAT Limited subsidiary and recruitment of the team; part of TCAT’s next phase of development to become a leading anti-piracy service

  • Acquisition of Take That producer royalties including 'A Million Love Songs', 'Could It Be Magic' and 'I Found Heaven'

  • Launch of new Men & Motors TV channel, hosted by Boyzone’s Shane Lynch and One Second in F1 Racing’s Torie Campbell

  • Acquisition of the licensor’s share of the royalties to the 21 Vision catalogue of rights, which contains over 2,000 recordings including Glenn Millar, The Andrews Sisters, The Ink Spots, Vera Lynn, Count Basie, Flanagan & Allen and Cole Porter

Michael Infante, CEO of One Media iP, commented:

“I am pleased to report another successful year of growth for the Company. The year under review could have been a most unpredictable and turbulent time for any small business operating under COVID-19, but even in the midst of challenges our music business model saw its EBITDA grow by 38%.

“Separating TCAT (www.tcat.media) from the core business underpins our two activities. Primarily, the core business of the Group, being the continuation of content exploitation within our genres, offers a bespoke ‘antipiracy detection’ service not only to ourselves, but also the music industry at large. TCAT, we believe, can become a major player to both record labels and artists alike, whose content is exploited in over 167 territories globally within the 130 million-music tracks traded daily on digital stores.

“As 2021 progresses, and further to our successful fundraise of £6 million, Harmony iP www.harmonyip.com is being offered as an alternative method of allowing copyright holders to partially cash-out and partner with One Media, taking a share in the asset income and giving TCAT care to the content now under joint ownership. This both enhances the contents’ future earning ability and gives the original owner an opportunity to participate in the growth of future earnings of their life’s work. Working in unison for the first time, with both author and label, sees a joint mission of ensuring transparency in the future values of content. I remain excited for the future and, as always, grateful for the experienced team of directors, staff, consultants and professionals within across the Group whom have contributed to our continued success.”

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

Dominic Barretto

Tel: +44 (0)20 3004 9512

Chairman’s Statement

The Company continues to trade in line with market expectations, despite the ongoing macro challenges and we are pleased to report revenues for year of £4.0 million and EBITDA of £1.49 million, an increase of 14% and 38%, respectively, on the prior year. One Media retains a strong cash position with an audited cash balance of £6.8 million as at 31 October 2020.

Following the successful fundraising in August 2020, the Company continues to evaluate acquisition opportunities to be executed, primarily, through its Harmony IP asset release programme, as well as full catalogue acquisitions.

We remain encouraged to observe that the sector continues to attract significant investment from outside of the industry, which we believe will help to build further interest in our business and strategy.

The safety and well-being of our employees remains paramount and we have successfully operated within all government and Public Health England guidance at all times. Our employees work in an agile and flexible way, operating remotely and from our Pinewood offices, and we all look forward to more normalised days ahead.

Claire Blunt

Non-Executive Chairman

Chief Executive’s Statement

The Company reported a milestone fundraising of £6 million in August 2020 to fund the acquisition of exclusive rights to create and expand digital assets over a portion of copyrights in performance and writers’ shares, primarily through the Harmony iP asset release program. It remains paramount to the Board not to rush M&A activities and remain highly selective, keeping in mind the best interest of all shareholders.

In November 2020, the Company reported that it had incorporated a new subsidiary, TCAT Limited, and appointed an experienced management team for its Technical Copyright Analysis Tool (“TCAT”).

TCAT is a ‘Software as a Service’ (SaaS) platform, which was developed in-house at One Media to detect copyright infringement within legitimate digital music stores. The creation of the subsidiary is part of TCAT’s next phase of development to become a leading anti-piracy service for the music industry. Piracy costs the UK economy £9 billion a year, according to a 2019 report by the government's Intellectual Property Office.

TCAT currently provides a range of services to two major record labels and the world’s largest media distributor on a retained basis, and its services are also used by organisations that represent the interests of the recording industry worldwide. TCAT Limited is based in Belfast, a leading technology hub with a large pool of highly qualified employees. TCAT is eligible for financial government support from the regional development agency, Invest Northern Ireland.

In January 2021, and to much fanfare from the UK media, the Company announced that it had acquired the producer royalties of a selection of tracks by one of the most renowned pop groups in the world, Take That, from Ian Levine, British songwriter, producer and DJ.

Take That has achieved 28 top 40 singles and 17 top 5 singles in the UK Singles Chart since the band's formation in Manchester in 1990, 12 of which have reached number one, including 'Back for Good' and 'Greatest Day'. The Group has also had eight number one albums on the UK Albums Chart. Internationally, Take That has had 56 number one singles and 39 number one albums, and has received eight Brit Awards and an Ivor Novello Award.

As part of the deal, One Media has acquired the producer royalties of great hits 'A Million Love Songs', 'Could It Be Magic' and 'I Found Heaven', all from Take That's 1992 debut studio album, Take That & Party, which has been certified two-times platinum in the UK. The Company has also acquired the producer royalties of two other recorded Take That tracks which have never been released.

Earlier in the calendar year, the Company announced the launch of a new Men & Motors TV channel, hosted by Shane Lynch, best known as a member of Boyzone, and Torie Campbell, best known for fronting One Second in F1 Racing.

The channel, which will deliver an additional income stream for One Media from advertising revenue (ad-funded) and sponsorship, will air the best shows from its comprehensive archive of 3,400 automotive videos in a new on-demand format to engage the next generation of car enthusiasts. The channel went live on 1 February 2021.

The Company acquired the rights to Men & Motors from Granada Television Productions and ITV Digital Channels in 2012, following 15 years as one of the UK’s most popular and celebrated channels that helped launch the careers of the likes of Richard Hammond and John Inverdale. During 2020, Men and Motors achieved 134 million minutes of viewing on YouTube equating to 2.5 million viewing minutes per week.

Last month saw the acquisition of the licensor’s share of the royalties to the 21 Vision catalogue of rights (‘the Catalogue’), which contains over 2,000 recordings from some of the all-time music greats from over the last seven decades.

Since 2009, the Catalogue has been licensed to One Media on a royalty-sharing basis. As part of the deal, One Media has acquired the licensor's royalty share of the catalogue on an in perpetuity basis, which allows the Company to continue to exploit the catalogue via all of its digital mediums and collect all revenues associated with the licence.

The Catalogue includes rare music concerts and live recordings performed by over 70 artists who, since the digital era began, have a renewed popularity as they are rediscovered by growing global audiences. Such performers include Glenn Millar, The Andrews Sisters, The Ink Spots, Vera Lynn, Count Basie, Flanagan & Allen and Cole Porter, music reminiscent of the Dads Army generation (over 60+) whose age group now form 29% of digital streaming consumers according to Statista.

Financial Overview

The year under review has seen revenues grow by 14% to £4,005,385 (2019: £3,508,891) and our EBITDA by 38% to £1,485,645 (2019: £1,076,724), driven by increased consumer demand on streaming platforms and other revenue distributions from digital platforms.

Operating profit is also up to £1,018,924, a notable increase over our 2019 figure of £878,914. At the end of the period, our cash balance was £6,766,424 (2019: £860,611). Our Gross margin remains robust at c.50% and overheads for the year are reported at £979,723 (2019: £1,016,010). The gross profit, excluding amortization, shows strong catalogue performance of £2,459,352 (2019: £2,085,850) an increase of 18%.

A profit after tax attributable to equity shareholders of £630,197 (2019: £458,444) is reported for the financial year, reflective of an increase in revenues and the maintenance of strong margins. This performance enabled the payment of a dividend in the period of £74,582 (2019: £nil). The corporation tax expense of £103,846 in the period (2019: £88,778) includes Research and Development allowances available to the Group.

Development work on TCAT is progressing and has moved to the next phase, including the incorporation of a new subsidiary and the appointment of an experienced management team. At the period end the value invested in TCAT was £1,062,054.

The Board continues to review its dividend policy, especially given the current economic climate, but looks to maintain an equilibrium between retention of profit to finance long-term growth plans whilst rewarding shareholders for their support. This was supported by the payment of a dividend during the year.

On the back of the Group’s annual profit, the directors have declared a final dividend for year ended 31 October 2020 of 0.055p per share, the details of which will be separately announced, subject to shareholder approval at the Company’s forthcoming annual general meeting. The continued steady growth delivered by the Group shows encouragement for the continuation of future dividends.

Outlook

One Media enters H1 2021 with a strong cash balance and continues to capitalise on the evolving music streaming market.

The music market at large has attracted much attention from investment communities globally. We have seen companies successfully investing in music catalogues ‘Intellectual Property’ (IP) and rapid growth in values of existing recurring monetary income streams, largely attributed to the recognition that music income is now seen as a robust form of investment and return.

In 2020, the industry was yielding $20.5 billion (IFPI Source) with a forecasted growth to 2030 of circa $40 billion. Consumers’ appetite for streaming, whether advert-funded or subscription, is growing, not just because of the recent pandemic restrictions but because there is now little audience fall off as there was with the old physical formats such as CD or tape. Previously, buying habits were age led with teenagers being the larger consumers and tapering off with age. Now consumers may change their supplier but their content demands are met by most of the major digital stores such as Amazon, Spotify, YouTube and Apple. Each store offers all genres of music with very little differences in the number of tracks available. It is only financial enticements that educe consumers to shop between digital music suppliers – not the content being offered.

We look forward to updating shareholders on progress in due course as we head into another year of global digital growth.

Michael Infante
Chief Executive and Founder


Consolidated Statement of Comprehensive Income
For the year ended 31 October 2020


Note

Year ended
31 October 2020

Year ended
31 October 2019

£

£

Revenue

1

4,005,385

3,508,891

Cost of sales

(2,069,203)

(1,756,464)

Gross profit

1,936,182

1,752,427

Administration expenses

(916,298)

(873,513)

Operating profit

2

1,019,884

878,914

Share based payments

15

(62,465)

(142,497)

Finance costs

3

(223,384)

(189,322)

Finance income

3

8

127


Profit on ordinary activities before taxation


4

734,043

547,222

Tax expense

(103,846)

(88,778)

Profit for period attributable to equity shareholders and total comprehensive income for the year

630,197

458,444

Basic earnings per share

7

0.42p

0.34p

Diluted earnings per share

7

0.33p

0.26p

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 2020

Share Capital

Share redemption reserve

Share premium

Share based payment reserve

Retained earnings

Total equity

£

£

£

£

£

£

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 1 November 2019

678,018

239,546

4,314,220

364,756

2,440,209

8,036,749

Proceeds from the issue of new shares

431,713

-

5,159,107

-

-

5,590,820

Share based payment charge

-

-

-

62,465

-

62,465

Profit for the year

-

-

-

-

630,197

630,197

Dividends paid

-

-

-

-

(74,582)

(74,582)

At 31 October 2020

1,109,731

239,546

9,473,327

427,221

2,995,824

14,245,649



Consolidated Statement of Financial Position at 31 October 2020


Note

At
31 October 2020

At
31 October 2019

£

£

Assets

Non-current assets

Intangible assets

8

8,884,158

8,900,408

Property, plant and equipment

9

91,260

7,648

8,975,418

8,908,056

Current assets

Trade and other receivables

11

1,141,555

987,054

Cash and cash equivalents

12

6,766,424

860,611

Total current assets

7,907,979

1,847,665

Total assets

16,883,397

10,755,721

Liabilities

Current liabilities

Trade and other payables

13

823,151

1,011,131

Deferred tax

14

117,356

85,573

Total current liabilities

940,507

1,096,704

Borrowings

21

1,697,241

1,622,268

Total liabilities

2,637,748

2,718,972

Equity

Called up share capital

15

1,109,731

678,018

Share redemption reserve

239,546

239,546

Share premium account

9,473,327

4,314,220

Share based payment reserve

427,221

364,756

Retained earnings

2,995,824

2,440,209

Total equity

14,245,649

8,036,749

Total equity and liabilities

16,883,397

10,755,721


Consolidated and Company Cash Flow Statement
For the year ended at 31 October 2020

Year ended
31 October 2020
Group

Year ended
31 October 2019
Group

Year ended
31 October 2020
Company

Year ended
31 October 2019
Company

£

£

£

£

Cash flows from operating activities

Operating profit before tax

734,043

547,222

(57,627)

(70,475)

Amortisation

523,170

332,423

-

-

Depreciation

18,504

7,885

-

-

Share based payments

62,465

142,497

(38,560)

142,497

Finance income

(8)

(127)

(3)

(115)

Finance costs
(Increase) in receivables

223,384
(162,150)

189,322 (306,094)

-
275,472

189,322
(4,453,635)

Increase/(decrease) in payables

(238,909)

333,210

178,193

(75,903)

Corporation tax paid

(127,735)

-

-

-

Net cash inflow (outflow) from operating activities

1,032,764

1,246,338

357,475

(4,268,309)

Cash flows from investing activities

Investment in intellectual property rights and TCAT

(506,919)

(5,881,529)

-

-

Investment in property, plant and equipment

(102,117)

(3,310)

-

-

Finance income

8

127

3

115

Net cash used in investing activities

(609,028)

(5,884,712)

3

115

Cash flows from financing activities

Net proceeds from the issue of new shares

5,590,820

-

5,590,820

-

Finance cost paid

(109,136)

(99,404)

(109,136)

(99,404)

Loan notes

74,975

22,010

74,975

22,010

Dividend paid

(74,582)

-

(74,582)

-

Net cash inflow (outflow) from financing activities

5,482,077

(77,394)

5,482,077

(77,394)

Net change in cash and cash equivalents

5,905,813

(4,715,768)

5,839,555

(4,345,588)

Cash at the beginning of the year

860,611

5,576,379

548,492

4,894,080

Cash at the end of the year

6,766,424

860,611

6,388,047

548,492



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.

Year ended
31 October 2020

Year ended
31 October 2019

£

£

Analysis of the charge for the year

UK corporation tax charge

72,063

61,779

Deferred tax

31,783

26,999

103,846

81,488

The standard rate of tax for the year, based on the UK standard rate of corporation tax is 19% (2019: 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 2020

Year ended
31 October 2019

£

£

Profit on ordinary activities before tax

734,043

547,221

Tax on profit on ordinary activities at 19% (2019: 19%)

139,468

103,972

Effects of:

Non-deductible expenses

14,869

29,624

Adjustments to tax charge in respect of previous periods

-

1,696

Fixed asset timing differences

31,783

26,999

Depreciation in excess of capital allowances


(4,430)


(4,109)

Share scheme deduction

Research and development

(77,844)

(69,404)

Total tax charge

103,846

88,778

Earnings per share

The weighted average number of shares in issue for the basic earnings per share calculations is 149,252,562 (2019: 135,603,699) and for the diluted earnings per share assuming the exercise of all warrants and share options is 189,047,539 (2019: 173,237,032).

The calculation of basic earnings per share is based on the profit for the period of £630,197 (2019: £458,444). Based on the weighted average number of shares in issue during the year of 149,252,562 (2019: 135,603,699) the basic earnings per share is 0.42p (2019: 0.34p). The diluted earnings per share is based on 189,047,539 shares (2019: 173,237,032) and is 0.33p (2019: 0.26p).

EBITDA

Profit from continuing activities before interest, tax, depreciation and amortisation for the twelve months ended 31 October 2020 was £1,485,645 (2019: £1,076,724).

Directors’ responsibilities

The Annual Report, including the financial information contained therein, is the responsibility of, and was approved by the directors on 30 March 2021.

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 11.00 a.m. on Thursday 13 May 2021, 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 utilizing 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 toagm@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 the UK Market Abuse Regulation.