Final Results and Notice of A.G.M.

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: [phone]
Claire Blunt	Chairman Tel: [phone]
Cairn Financial Advisers LLP	Nominated Adviser
Liam Murray / Jo Turner  / Ludovico Lazzaretti	Tel: [phone]
Cenkos Securities plc	Broker
Max Hartley / Max Gould (Corporate Finance) Michael Johnson (Sales)	Tel: [phone]
Yellow Jersey PR	PR and IR
Charles Goodwin / Annabel Atkins	Tel: [phone]

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 [e-mail] 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.