One Media Regulatory News (OMIP)

10th March 2015 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 exploitsintellectual digital property rights around music, video and spoken word, ispleased to announce its Final Results for the year ended 31 October 2014. Financial Highlights * Revenue up 9.5% to £2,900,090 (2013: £2,649,130); * EBITDA increased by 23.6% to £827,794 (2013: £669,996); * Profit before tax up 94.7% to £642,273 (2013: £329,889); * Cash balances of £1,219,466 at 31 October 2014 (2013: £1,688,093); * Dividends paid in year ending 31 October 2014, totalling £100,598 (2013: £70,135). The first on 25 November 2013 at 0.077p per share and on 8 July 2014 a further dividend of 0.071p per share; * A further USD$2.0m (GBP£1.2m) advance against royalties received from The Orchard, the Group's digital distributor. Operational Highlights * Acquisition of the Point Classics Catalogue of rights for US $1.6m comprising over 4,000 classical music tracks; * Acquisition under a long-term license for £300,000 of the Church Street Station and Rock `n' Roll Palace catalogues of audio-visual rights; * One Media was awarded 2nd place in the Rising Star category, chosen from companies representing 27 countries in the FESE European Small and Mid-Cap Awards; * The consolidation and buyout for US $75,000 of one of the Group's long term licensors for nostalgic content that previously had an on-going royalty; * Sponsorship for the Royal Armouries and association with British heritage based at the Tower of London; * US $100,000 acquisition of a variety of smaller content catalogues including the following: * Irish singing star Rose-Marie in a 20 album deal; * Over 250 lifestyle/special interest digital video programs from Delta Leisure; * Spoken word content featuring the fictional works of the `Lost Elvis Diaries and * Converting a long-term, exclusive licensor Tropicana into complete ownership by the Group. One Media CEO & Chairman, Michael Infante, commented: "Once again I am pleased with the Group's performance despite a verychallenging year within our industry. We have maintained a positive set ofresults with continued growth in revenue and profitability, and maintained ourdividend policy. As more customers embrace `streaming', it creates shifts inuser demand and in the way that consumers enjoy digital content. The`subscription' model, adopted by Spotify, challenges the iTunes `download'model, and once again produces changes in the music and video landscape. Welook forward to continuing our strategy of `rights' acquisitions and theexploitation of our content via the many new services that are emergingalongside those that are now well established. I would like to thank all of the One Media team for their support alongside ourprofessional advisers and shareholders." The financial information set out in this Final Results announcement has beenextracted from the audited Report and Financial statements and does notconstitute the Company's statutory accounts for the year ended 31 October 2014. The report of the auditor in the Report and Financial Statements for the yearended 31 October 2014 is unqualified and the results announcement can be viewedon the company's website, www.onemediaip.com, with effect from Tuesday 10thMarch 2015. For further information, please contact: One Media Publishing Group PlcMichael Infante Chairman and Chief Executive Tel: +44 (0)175 378 5500 Alice Dyson-Jones Brand & Communications Manager Tel: +44 (0)175 378 5501 Cairn Financial Advisers LLP Nominated AdviserLiam Murray / Jo Turner Tel: +44 (0)20 7148 7900 Charles Stanley Securities BrokerMark Taylor Tel: +44 (0)20 7149 6000 CEO & Chairman's Statement Leading and embracing change is what One Media was born to do. When the Groupwas founded in August 2005, and subsequently listed on Ofex (now ISDX) in 2006,it was amidst a changing world of music formats. Then it was the era of thebirth of digital and the downsizing of the Compact Disc markets. Ten years onand we are witnessing a new generation of digital music and video marketinginitiatives with another shift in consumer behaviour. Let's take a brief lookat how we have consumed music over the life of our industry. It all startedlong before the ability to capture sound was possible. Musicians were hired toplay for those that could afford it, every live performance a one-off. A puristindustry one might say. Along came Leon Scott in 1857 with his Phonoautograph,the precursor to Thomas Edison's Phonograph in 1877, and within a decade thegramophone was established. The ability to record and replay sound was here tostay and by 1890 a fledgling recording entertainment industry was born. Thephysical format existed as the mainstream commercial method of selling musicfor the next 110 years. We saw LPs, Cassette Tapes, Compact Discs, and finallyat the end of the 1990s people `in the know' were talking about MP3s. Theability to transfer music digitally existed several years before the ability tomonetise it. Apple's iTunes store revolutionised digital music sales in 2002with the launch of the iPod. So why do I mention this history? Well, whilst ourdigital age is not about to change, the model of how we pay for content is.Paying for content was always a given. You bought a record for money that youpassed to shopkeeper and over the last 12 years much of this has been donedigitally. You paid your money to "Mr Apple" and others and you downloaded atune to your preferred device. This was now yours to keep. Subscription storessuch as Spotify have now changed this model forever. The invention by Apple of the smartphone (the iPhone) has transformed the waywe consume music. The iPod was an isolated music device for storing tunes,enabled by connectivity to your PC. The smartphone with its connectivity and 4Gability does not need to store music in the same way, it just needs a signal.So enter the new players in the form of the telecom providers, such as Vodafoneand O2, that now facilitate the many `streaming services' to your smartphone.Your mobile phone no longer needs to hold gigabytes of music as this is nowstored remotely in the cloud by the many music and video providers that offerin excess of 20 million songs, all for the asking on a variety of terms. Allyou need to do is subscribe. This revolution has taken less than five years tochange the way we acquire our music and in the last year it has come of age.iTunes previously dominated the market with approximately 85% but today, theirdownload model controls approximately 44%, and continues to reduce. The phrase`ad-funded' has also crept into our vocabulary, which basically means `free tolisten so long as you endure a commercial'. Alternatively, you can pay amonthly subscription to your service provider and have the adverts removed. All of this leads to a change in the consumption of music and the way it ismonetised. Never before have there been so many music transactions worldwideand never before has music become a commodity attached to the many serviceproviders and the emerging music stores. All of this ultimately will be goodfor content owners like ourselves, but currently we are experiencing a shift asthe market takes a new shape for the future. We maintain a cautious acquisition strategy where value is paramount as is theability to enhance earnings, and as the industry adjusts to its newmonetisation model, we are examining our potential acquisition opportunitiesvery carefully. Financial Overview Once again this year we have seen our revenue grow with a final reported figureof £2,900,090, an increase of 9.5% on the £2,649,130 from last year. Profitfrom continuing operations is reported at £637,623, a 21.7% improvement on theequivalent figure of £523,648 for 2013. This has been achieved by a combinationof revenue growth, achieving gross margins at 51.7% (2013: 51.9%) and holdingour overheads to £861,814 (2013: £851,890), despite incurring a foreignexchange loss of £56,360 (2013: £16,592). This demonstrates the operationalleverage within our business whilst maintaining tight control of administrativecosts. Revenue increased by 9.5% despite the volatility in the USD$ exchange rateexperienced during the year, which ranged between $1.60 to $1.71. Compared tothe rates experienced in the previous financial year we estimate that there wasan adverse impact of approximately £125,000 on our digital income received inUSD$. The profit after tax attributable to equity shareholders of £620,360 isreported for the financial year, an increase of £381,451 from the £238,909reported for 2013. A significantly reduced corporation tax provision of £21,913(2013: £90,980) has been made. Advantage has been taken, within this provision,to utilise the beneficial allowances given by HMRC resulting from the exerciseof options and warrants by employees and directors. It is estimated that thefull year corporation tax charge would be £129,317 higher if advantage had notbeen taken of these HMRC provisions. EBITDA, calculated on profit from continuing activities before interest, tax,depreciation and amortisation, increased by 23.6% to £827,794 (2013: £669,996). At the end of the year we have cash balances of £1,219,466 (2013: £1,688,093),having raised £92,500 through the exercise of options and warrants.Operationally we received from The Orchard, the Group's digital distributor, anadvance of USD$2m (GBP£1.2m) against royalties the outstanding balance of whichis included in current liabilities. Net cash generated by operating activitieswas £1,116,074 (2013: £1,155,701), cash outflow relating to the acquisition ofcontent and rights of £1,576,463 (2013: £485,354) and dividends of £100,598 (2013: £70,135). We continue to operate a steady, considered approach with our acquisitionprogramme and will broaden our IP search for content, considering forums andavenues outside of the traditional music platforms to expand our investmentportfolio as we mature. Finally two dividends were paid in the year totalling £100,598 (2013: £70,135).These dividends were paid in two instalments, on 25 November 2013 at 0.077p pershare and on 8 July 2014 a further dividend of 0.071p per share was paid. Content and Rights Acquisition Our acquisition of the Point Classics catalogue is one that has most excited usin 2014. This catalogue, of over 4,000 exclusively owned classical recordingsis well known to us, and forms the basis of a solid commercial enterprise thatwill scale. This extensive collection containing works by over 100 composersincluding Mozart, Vivaldi, Beethoven performed by acclaimed Orchestras,positions us with a well-rounded, world-class commercial classical catalogue.We believe the acquisition price of US $1.6m represented great value. We arecurrently ingesting the recordings into the One Media in-house system, anddistribution to the many digital stores is underway. Additionally, we havecreated a dedicated Point Classics YouTube channel, initially featuring30-second video `shorts' utilising the `best bits' so that consumers can take atour of our catalogue with the aid of colourful graphic animation.www.youtube.com/user/PointClassics In the period under review we also made other significant investments of bothaudio and video content. We acquired, under license, the Church Street Stationand Rock `n' Roll Palace catalogues for £300,000 which are now available on ourdedicated YouTube channels. One Media, acting as a Multi Channel Network (MCN),operates 18 such channels which can all be viewed via the front page of ourwebsite. (www.onemediaip.com) We continue to develop our YouTube network and are very pleased with thegrowing audience to our Men & Motors channel, which we acquired from Granada/ITV in 2012 and subsequently launched online during 2013. We continue toexplore new opportunities as we rebuild the Men & Motors brand and audienceawareness. Our newly appointed in-house Brand and Communications Manager (AliceDyson-Jones) will be communicating `trade news' and brand enhancement via themusic and financial press from time to time. All stories will appear on theGroup's website, Twitter and Facebook. Any acquisitions of material size willbe reported via the Regulatory News Channels in the normal way. Our investment of US $100,000 on the acquisition of a variety of smallercontent catalogues is as follows: * The Group acquired the exclusive rights to Irish diva Rose-Marie's back catalogue of 20 Gold and Platinum selling albums, including songs from the `Old Country' and great standards such as Danny Boy, Ave Maria, Crazy and Beautiful Dreamer to name a few. * The Delta Leisure video deal featured over 250 hours of special interest programmes, and is now presented on our Great British Channel. These instructional or `Well-Being' videos are of particular interest to YouTube audiences, with viewing figures growing steadily. Programmes like `Easy Yoga' and "How to" videos on Massage and Relaxation, as well as classic `Cold War Aircraft' and `Military Memorabilia' all perform well on this platform. www.youtube.com/user/GreatBritishChannel * After acquiring the spoken word version of Aubrey Malone's fictional work, the `Lost Elvis Diaries' in 2013, it was always our intention to convert this from an audio-only product to a visual programme. From assets acquired within the deal, we have created a YouTube channel of animated video diary entries read by an Elvis impersonator. This concept really brings the story alive and if it proves its worth, paves the way to exploit the vast quantity of high quality spoken word files we have within our library, to view follow the link: www.youtube.com/user/elvisdiaries * Using the company's cash resources to convert long-term licenses into ownership has always been part of our modus operandi. Often when we enter deals the target is not a seller. In the early stages we usually enter long-term license arrangements with an `option to buy'. This we have now done with longstanding licensor Tropicana, featuring the music of legendary producer Ian Levine. One Media now owns this exciting catalogue of over 3,000 exclusive Motorcity, Hi-NRG and Northern Soul tracks. Songs performed by Evelyn Thomas, Frankie Gaye, Syreeta, Martha Reeves, Johnny Bristol, Miquel Brown Dobie Gray, The Miracles and the Ladies of the Supremes to name just a few of the hundreds of artists featured in this collection. Follow the link to view: www.youtube.com/user/IanLevine Market Overview Recording industry revenues in the UK, as published by the BPI (BritishPhonographic Industry), fell by 4.1% in 2014 to stand at £699.6m. Streaming wasagain the bright spot for the industry with revenues climbing to £114.7m, ayear-on-year increase of almost 50%. Streaming's impressive performance in 2014meant that its share of industry turnover reached 16.4% across subscription,ad-funded and cloud platforms. Subscriptions were the sector demonstrating thestrongest rate of growth with revenues rising by 58.4% to £86.6m. Digitaldownloads all suffered losses in 2014 with revenues across track, album andvideo sales down by 12.2%. (Source: BPI) One Media has continued to out-perform the market given these numbers in suchtransformational times, considering our entire market presence resides only inthe digital sector with no physical side (CD/DVD) to our business. Internally, we have implemented a department for copyright enforcement. Usingour bespoke system software we are able to search music sites and YouTube forunlawful use, resulting in content being removed from stores and the claimingof any unpaid Royalties. Employees Our systems are robust and coping with growth without the need for additionalsignificant investment in staff or new systems. As our team grows in experiencewe are remunerating them based on ability, experience and responsibility. Ourteam of eight in-house Creative Technicians, that are responsible for ingestingall of the Groups digital content, have all been accredited in accordance withthe `YouTube Creator Academy' (An in-depth training program in channelmanagement and best practice). In 2015, we created a new position of Brand &Communications Manager. Alice Dyson-Jones joined the team in November 2014bringing vast experience in the video and broadcast industry. Alice willadditionally be responsible for Financial PR. Mary Kuehn (our USA based tradingdirector of One Media iP Ltd) is liaising with our emerging American clientsfor the groups licensing activities, specifically on our newly acquired PointClassics catalogue. Philip Miles, our UK trading company's Technical Directorhas undertaken a review of all system procedures and is enhancing our technicalabilities to ensure the Group's system management is market leading. All of theteam contribute to a very high level and I would like to thank them all and myco-directors, Nigel Smethers, Scott Cohen and Roman Poplawski, for theirdedication, experience and effort throughout 2014. Outlook `Content is King' remains our basic mantra. An expansion into manipulating datafor other uses is something that the Group is exploring. As we reach out tomore consumers and collect intelligence on buying patterns and digitalrequirements, our focus is honed more specifically to matching what consumerswant to listen to and view. We are currently exploring technical methods ofcopyright enforcement utilising both in-house and propriety software.Additionally research into `platform hosting' is being undertaken by thetechnical team for information sharing and monetising the data we hold into newarenas. It is early days, but we are enthused by the many new monetisationopportunities that this may present to the Group. As previously stated the UKmusic market declined and there has been a shift from `Downloading' to`Streaming' of music and video. We anticipate that downloading market sharewill continue to reduce but that streaming will grow. It is then a question asto whether the streaming model picks up the downloading shortfall on a balancedbasis. In the long term, as the streaming consumer market matures, companieslike One Media will benefit. The reason for this is as follows: Downloadpurchases are limited to single track or album search made by the consumer on adecisive purchase objective. Under this model you will rarely download and payfor a track or multiple artist tracks in which you merely have a passinginterest. It becomes cost prohibitive. Streaming is different, here you canlisten/stream millions of tracks for a set price within a period and theconsumer will experiment and consequently consume far deeper back-catalogue asoffered by your Group. So we would anticipate a shift in the old 80/20 ruleswhereby 80% of our turnover is governed by 20% of our catalogue. The fact isthat we have already noticed `album tracks' that hitherto were undiscoveredsince the fall of the CD, being streamed and are now gaining traction and newaudiences. This is very encouraging and good for the music and monetisation ofour deeper unknown content. One Media generates revenues from the streamingstores every time the track is streamed, so for popular tracks reaching higherincome is no longer capped by the download price that is currently achieved. The landscape has evolved unrecognisably since the early days of thegramophone, each evolution presenting new challenges and whilst the mediums mayhave changed along the way, the opportunity to monetise audio and visual IP isundeniable. We remain confident in our activities and are flexible enough tomove with the changes and set new horizons and opportunities for all of ourcontent. I would like to thank the management and staff of One Media, and ourprofessional advisory teams. The Group, which remains profitable, debt free andcash resourced, is well positioned to pursue its strategy of continued growththrough the acquisition of intellectual copyrights. Michael Infante JPChairman and CEO10 March 2015 Consolidated Statement of Comprehensive IncomeFor the year ended 31 October 2014 Note Year ended Year ended 31 October 31 October 2014 2013 £ £ Revenue 2,900,090 2,649,130 Cost of sales (1,400,653) (1,273,592) Gross profit 1,499,437 1,375,538 Administration expenses (861,814) (851,890) Profit from continuing 637,623 523,648operations Other expenses -AIM - (196,559)float and associatedcosts Operating profit 637,623 327,089 Finance income 4,650 2,800 Profit on ordinary 642,273 329,889activities beforetaxation Tax expense (21,913) (90,980) Profit for period 620,360 238,909attributable to equityshareholders Basic adjusted earnings 0.91p 0.70pper share Diluted earnings per 0.83p 0.61pshare Basic earnings per 0.91p 0.40pshare Diluted adjusted 0.83p 0.35pearnings per share The Consolidated Statement of Comprehensive Income has been prepared on thebasis that all operations are continuing activities. Consolidated Statement of Changes in EquityFor the year ended 31 October 2014 Share Share Share Share Retained Total Capital redemption premium based earnings equity reserve payment reserve £ £ £ £ £ £ At 1 November 2012 273,143 239,546 718,271 12,416 387,783 1,631,159 Proceeds from the 51,625 - 670,874 - - 722,499issue of newshares Share based - - - 13,776 - 13,776payment charge Profit for the - - - - 238,909 238,909year Dividends - - - - (70,135) (70,135) At 1 November 2013 324,768 239,546 1,389,145 26,192 556,557 2,536,208 Proceeds from the 28,750 - 63,750 - - 92,500issue of newshares Share based - - - 10,615 - 10,615payment charge Release from share (15,592) 15,592 -based paymentreserve Profit for the - - - - 620,360 620,360year Dividends - - - - (100,598) (100,598) At 31 October 2014 353,518 239,546 1,452,895 21,215 1,091,911 3,159,085 The following share capital the following transactions were undertaken: For the year ending 31 October 2013: * During the year a total of 9,375,000 ordinary shares of 0.5p each were issued at 8p pursuant to the Placing on the AIM market, a total of £750,000 being raised with costs associated with the issue at £50,501. * In addition Employees exercised, at various time during the year, a total of 700,000 options at 2.75p a share and 250,000 warrants at 1.5p a share over ordinary shares of 0.5p each. The total raised as a result of these exercises was £23,000. .For the year ending 31 October 2014: * On 4 November 2013 one employee exercised 500,000 options at 2.75p a share over ordinary shares of 0.5p each with a total of £13,750 raised as a result of this exercise. * On 9 April 2014 an institution exercised their right to convert 1,800,000 1.5p warrants in ordinary shares of 0.5p each, bought from Michael Infante, and the Directors collectively exercised a further 3,450,000 1.5 p warrants in ordinary shares of 0.5p each. A total of 5,250,000 ordinary shares of 0.5p each were issued raising £78,750. Consolidated Statement of Financial Position at 31 October 2014 At At 31 October 31 October 2014 2013 £ £ Assets Non-current assets Intangible assets 3,214,744 1,808,535 Property, plant and equipment 11,312 26,439 3,226,056 1,834,974 Current assets Trade and other receivables 517,255 481,453 Cash and cash equivalents 1,219,466 1,688,093 Total current assets 1,736,721 2,169,546 Total assets 4,962,777 4,004,520 Liabilities Current liabilities Trade and other payables 1,803,692 1,468,312 Total liabilities 1,803,692 1,468,312 Equity Called up share capital 353,518 324,768 Share redemption reserve 239,546 239,546 Share premium account 1,452,895 1,389,145 Share based payment reserve 21,215 26,192 Retained earnings 1,091,911 556,557 Total equity 3,159,085 2,536,208 Total equity and liabilities 4,962,777 4,004,520 Consolidated Cash Flow StatementFor the year ended at 31 October 2014 Year ended Year ended 31 October 31 October 2014 2013 Group Group £ £ Cash flows from operating activities Operating profit before tax 642,273 329,889 Amortisation 170,254 118,959 Depreciation 19,917 27,389 Share based payments 10,615 13,776 Finance income (4,650) (2,800) (Increase) in receivables (35,802) (75,691) Increase/(decrease) in payables 416,742 819,873 Corporation tax paid (103,275) (75,694) Net cash inflow from operating activities 1,116,074 1,155,701 Cash flows from investing activities Investment in intellectual property rights (1,576,463) (485,354) Investment in property, plant and equipment (4,790) (6,073) Finance income 4,650 2,800 Net cash used in investing activities (1,576,603) (488,627) Cash flows from financing activities Proceeds from the issue of new shares 92,500 773,000 Share issue costs - (50,501) Dividends paid (100,598) (70,135) Net cash inflow(outflow) from financing (8,098) 652,364activities Net change in cash and cash equivalents (468,627) 1,319,438 Cash at the beginning of the year 1,688,093 368,655 Cash at the end of the year 1,219,466 1,688,093 Notes to the Preliminary Results Basis of preparation The Company is a limited company incorporated and domiciled in England underthe Companies Act 2006. The board has adopted and complied with InternationalFinancial Reporting Standards (IFRS's) as adopted by the European Union. TheCompany's shares are listed on the AIM Market (a share trading platform of theLondon Stock exchange). Taxation Year ended Year ended 31 October 31 October 2014 2013 £ £ Analysis of the charge for the year Adjustments to tax charge in respect (2,501) (15,543)of prior years UK corporation tax charge 24,414 106,523 UK corporation tax 21,913 90,980 The standard rate of tax for the year, based on the UK standard rate ofcorporation tax is 21% (2013: 23%). The actual tax charge for the periods isdifferent than the standard rate for the reasons set out in the followingreconciliation: Reconciliation of current tax charge Year ended Year ended 31 October 31 October 2014 2013 £ £ Profit on ordinary activities before 642,273 329,889tax Tax on profit on ordinary activities 140,210 77,326at 21.83% (2013: 23.44%) Effects of: Non-deductible expenses 9,494 45,191 Marginal relief - (4,227) Adjustments to tax charge in respect (2,501) (15,543)of previous periods Depreciation in excess of capital 4,056 5,734allowances Share scheme deduction (129,327) - Other differences (19) (17,501) Current tax charge 21,913 90,980 Earnings per share * The weighted average number of shares in issue for both the basic earnings per share calculations is 68,421,508 (2013: 59,999,725) and for both the diluted earnings per share assuming the exercise of all warrants and share options is 74,587,534 (2013: 69,244,109). * The calculation of adjusted earnings per share, on profit after tax from continuing activities, is based on the profit for the period of £620,360 (2013: £329,889, after adding back Other expenses - AIM float and associated costs of £196,559 and adjusting for a tax charge of £104,683 to reflect the underlying profit with a profit after tax of £421,765 resulting). Based on the weighted average number of shares in issue during the year of 68,421,508 (2013: 59,999,725) the basic earnings per share is 0.91p (2013: 0.70p). The diluted earnings per share is based on 74,587,534 shares (2013: 69,244,109) and is 0.83p (2013: 0.61p). * The calculation of the basic earnings per share is based on the profit for the period of £620,630 (2013: £238,909) divided by the weighted average number of shares in issue of68,421,508 (2013: 59,999,725), the basic earnings per share is 0.91p (2013:0.40p). The diluted earnings per share, assuming the exercise of all warrantsand options is based on 74,587,534 (2013: 69,244,109) shares and is 0.83p(2013: 0.35p). EBITDA Profit from continuing activities before interest, tax, depreciation andamortisation for the twelve months ended 31 October 2014 was £827,794 (2013: £669,996). Directors' responsibilities The Annual Report, including the financial information contained therein, isthe responsibility of, and was approved by the directors on 6 March 2015. 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 theAnnual General Meeting, to be held at 2.30 p.m. on Wednesday 16 April 2015 willbe posted to shareholders on or by Monday 23 March 2015.Copies of the Company'sReport and Accounts will also be available at the registered office of theCompany and can be viewed on the company's website, www.onemediaip.com 623 East Props BuildingPinewood StudiosPinewood RoadIver HeathBuckinghamshireSL0 0NH