ONE MEDIA iP GROUP Plc
ANNUAL REPORT & ACCOUNTS FOR
THE YEAR ENDING 31 OCTOBER 2013
LISTED ON PLUS SX
RAISING £825,000
ACQUISITION
OF A FURTHER
15000 NOSTALGIC
MUSIC TRACKS
OMiP JOINS THE BPI
INDIE COMMITTEE
STRATEGIC DEAL
WITH THE ORCHARD
ITS DIGITAL
DISTRIBUTOR
FIRST DIGITAL
TRACK RELEASED
ON ITUNES -
EVELYN THOMAS
GOOGLE
PURCHASES YOUTUBE
TWITTER LAUNCHES
ITUNES SELLS ITS
ONE BILLIONTH SONG
OMiP EXCEED 50,000
TRACKS IN THE
LIBRARY
AMAZON MP3
STORE OPENS
DIGITAL ACCOUNTS FOR
15% OF GLOBAL MUSIC
INDUSTRY REVENUE
100 MILLIONTH APPLE
IPOD SOLD
APPLE INTRODUCES
THE IPHONE
ONE MEDIA iP
COMPANY FOUNDED
BY MICHAEL INFANTE
ESTABLISHED AT
PINEWOOD STUDIOS
ACQUISITION OF 2500
NORTHERN SOUL,
MOTORCITY &
HI-NRG TRACKS
A DEAL WITH
GERRY ANDERSON
ON DICK SPANNER
ITUNES DOWNLOADS
EXCEEDS HALF A
BILLION SONGS
5
0
0
2
6
0
0
2
7
0
0
2
THOUSANDS MORE
TRACKS ADDED TO
THE LIBRARY NOW
OVER 75,000
ACQUIRED
HUNDREDS HOURS
OF CLASSICAL MUSIC
DIRECTOR
NIGEL SMETHERS
JOINS THE BOARD
SPOTIFY LAUNCHES
NETFLIX STORE OPENS
ITUNES TOPS 5
BILLION SONGS SOLD
ACQUIRED HUNDREDS OF
LIVE TRACKS BY NEW WAVE
ARTISTS INCLUDING THE
SEX PISTOLS, LOU REED
AND IGGY POP
GROUP’S MAIDEN PROFIT
REPORTED
NOW OVER 100,000 TRACKS
LOVEFILM HAS OVER 1
MILLION SUBSCRIBERS
MUSIC LIBRARY EXPANDED
TO OVER 125,000 TRACKS
OMiP BUYS BACK 52.7% OF
ITS OWN SHARES
ELIGIBLE FOR EIS AND
VCT INVESTMENT
APPLE RELEASES THE
FIRST IPAD
ITUNES STORE TOPS 10
BILLION SONGS SOLD
8
0
0
2
9
0
0
2
0
1
0
2
DISTRIBUTION OF
JONGLEURS COMEDY
RECORDINGS
MICHAEL INFANTE WON
THE CEO / CHAIRMAN OF
THE YEAR PLUS AWARD
MAIDEN DIVIDEND
DECLARED
INVESTMENT IN DIGITAL
STORAGE AND DELIVERY
PLATFORM (PINEWOOD
DATA CENTRE)
LIBRARY NOW OVER
150,000 TRACKS
LAUNCHED OUR FIRST 100
MUSIC VIDEOS ON ITUNES
CHILDREN’S SPOKEN WORD
RELEASED PERFORMED BY
BRITAIN’S CELEBRITY ELITE
PREMIER PARTNERSHIP
AGREEMENT SIGNED WITH
YOUTUBE
NORTHERN SOUL YOUTUBE
VIDEO CHANNEL ACQUIRED
WITH OVER 20M VIEWS
TO DATE
EARLY SOOTY TV SHOWS
ACQUIRED
ACQUISITION OF MEN &
MOTORS FROM ITV & GRANADA
ONE MEDIA PUBLISHING
GROUP Plc. BECOMES ONE
MEDIA iP GROUP Plc
THE ITUNES STORE IS
AVAILABLE IN 119 COUNTRIES
REPORTED PROFIT
INCREASED BY 32.5%
EU RECOMMENDS
EXTENSION TO
COPYRIGHT TERMS
3.6 BILLION DOWNLOADS
WERE PURCHASED
GLOBALLY IN 2011, UP
17% FROM 2010
DIGITAL NOW ACCOUNTS
FOR 50% OF MUSIC
SALES IN THE USA
OVER 100,000,000
MILLION MINUTES OF
OUR CONTENT VIEWED
ON YOUTUBE
$2.5M ADVANCE
RECEIVED IN
DISTRIBUTION DEAL
APPOINTMENT OF AIM
ADVISORS
CONTINUING GROWTH
ON THE MUSIC LIBRARY
NOW OVER 170,000
TRACKS
1
1
0
2
2
1
0
2
3
1
0
2
MORE MUSIC &
VIDEO ACQUISITION
5,000 VIDEOS
CONTINUED GROWTH, PROFIT
AND DIVIDEND POLICY
OVER 17,000 DIGITAL
ALBUMS AVAILABLE
CONTENT IS KING
> ITUNES SELLS ITS 25
BILLIONTH SONG
> SPOTIFY
> ITUNES
> AMAZON MP3
> DEEZER
> EMUSIC
> GOOGLE PLAY
> YOUTUBE
> RAPSODY
> 7 DIGITAL
GREATER DIGITAL MARKET
EXPANSION, WITH DIGITAL NOW
AVAILABLE ON SMART TV’S,
WI FI IN CAR ENTERTAINMENT
APPOINTMENT OF
AIM ADVISORS
LOOKING AHEAD
170,000 MUSIC TRACKS OVER 600 DIGITAL STORES SUPPLIED MORE MUSIC & VIDEO ACQUISITION
Company Information
Directors
Michael Antony Infante JP
Nigel Smethers
Scott Cohen
Roman Poplawski
Secretary
Nigel Smethers
Registered Office
Nomads
Brokers
Solicitors
Bankers
Registrars
Auditors
Pinewood Studios
623 East Props Building
Pinewood Road
Iver Heath
Buckinghamshire SL0 0NH
Cairn Financial Advisers LLP
61 Cheapside
London EC2V 6AX
Charles Stanley Securities
131 Finsbury Pavement
London EC2A 1NT
Hamlins LLP
Roxburghe House
273-287 Regent Street
London W1B 2AD
Barclays Bank Plc
180 Oxford Street
London W1D 1EA
Share Registrars Ltd
9 Lion and Lamb Yard
Farnham
Surrey GU9 7LL
James Cowper LLP
3 Wesley Gate
Queen's Road
Reading, Berkshire
Berkshire RG1 4AP
Marriott Harrison
Staple Court
11 Staple Inn Buildings
London WC1V 7QH
Contents
Executive Chairman's Statement
Report of the Directors
Corporate Governance
Operating and Financial Review
Independent Auditors' Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated and Company Cash Flow Statement
Principal Accounting Policies
Notes to the Consolidated Financial Statements
Page
1 - 4
5 - 7
8 - 9
10 - 13
14 - 15
16
17
18
19
20
21 - 27
28 - 40
Executive Chairman’s Statement
For the year ended 31 October 2013
2013 was a transformational year for the Group as One Media continued to build on its strong foundation of
solid profitability and commercial expertise.
This year under review marks the end of a highly productive and busy period for One Media: achieving key
financial targets, successfully listing the Group on AIM and maintaining growth. The Board is pleased with
the Group’s financial performance and sees its dividend policy to be continuing and sustainable.
Following a period of uncertainty surrounding the future of the ICAP Securities & Derivatives Exchange
(“ISDX”), the Board concluded that the time was opportune for One Media to move to AIM to further grow
and protect shareholder value. This was achieved in April 2013 following a successful placing. The decision
to move markets followed months of careful planning and resulted in a swift, cost effective and well-
publicised transaction where Group shares were placed to a ‘core’ number of institutional investors
raising £750,000. The total cost of the listing was completed at a comparatively low cost of £247,060 of
which £196,559 is in the profit and loss account and £50,501 set against the share premium account.
I would like to thank management, staff and our advisory teams for all their hard work during this intensive
period. The Group, which remains profitable, debt free and cash resourced, is well positioned to pursue its
acquisitive policy of intellectual copyrights and growth.
Financial Overview
Once again this year we have seen our revenue grow with a final reported figure of £2,649,130, an increase
of 26.8% on the £2,089,841 last year. Profit from continuing operations, before the £196,599 spent on the
AIM float, is reported at £523,648, a 22.4% improvement on the equivalent figure of £427,674 for 2012. On a
“like for like“ basis, profit after tax from continuing operations in 2013 is, after an estimated tax charge of
£104,683 (2012: £88,668), up 24.3% at £421,765 from the reported £339,220 for the financial year ended in
October 2012.
The profit after tax attributable to equity shareholders of £238,909 (2012: £339,220), reported for the
financial year, is after costs of £196,559 relating to the AIM float (2012: £nil) and a tax charge of £90,980
(2012: £88,668).
At the end of the year we have cash balances of £1,688,093 (2012: £368,655), having raised in the Placing
on AIM a gross amount of £750,000, which after all costs, revenue and capital resulted in a net fundraising
of £502,940. In addition, during the year employees exercised at various times, options and warrants raising
a further £23,000. Operationally we received from The Orchard, the Group’s digital distributor, an advance of
USD$2.5m (GBP£1.6m) against royalties.
Finally two dividends paid in the year totaled £70,135 (2012 £70,974). The first was paid on the 29th
November 2012 at 0.037p per share and the second on 9th July 2013 of 0.078p per share.
Content and Rights Acquisition
Historically, the Group has regularly reported its various catalogue acquisitions and marketing initiatives via
the Regulated News Service (RNS) system. As part of our AIM strategy this will be reserved for price
sensitive information and key corporate news. We will be using the RNS Reach services for non-price
sensitive information and followers of One Media will find us very proactive on both Twitter and Facebook
together with our web site www.onemediaip.com for more day to day information.
Before I expand into the content and rights acquisitions of the past financial year, I would firstly like to
address One Media’s corporate strategy and how it monetises content is outlined below. There are many
misnomers on how money is earned when it comes to consuming content on legitimate, free-to-view web
sites. It is obvious when it comes to ‘downloading’ an audio track from an online retailer such as iTunes, the
consumer pays a set fee for a music track/video and receives the content to their device. So how do
YouTube and other free streaming sites work for us?
1
1
Executive Chairman’s Statement
For the year ended 31 October 2013
Review of Activities - continued
Advertising revenues or ‘Ad-funded’ as it is known, achieves this. For every second that a track/video is
streamed One Media receives a portion of the advertising revenues paid by the advertisers that appear
either within the film (as a banner) or on the ‘side bars’ of a screen or as pre-roll adverts that the consumer
must view prior to engaging in the chosen video. Additional revenue is earned should the consumer ‘click
through’ for further information on a particular advert. On some sites there is additionally a subscription to
pay in which the content provider becomes a share participant based on the number of tracks/minutes
consumed.
Video content
During the period under review, the Board made some significant investments into both audio and video to
enhance One Media’s content libraries.
Our intention to focus primarily on video content was spearheaded by the deal secured with Granada/ITV;
following Granada’s decision to take the Men & Motors TV Channel off air in 2010 to make way for their High
Definition (HD) broadcast channels, One Media acquired the 3,000+ episodes for its ‘on-line’ digitally
delivered initiative via YouTube and other similar sites. The first task was to disseminate the original
broadcast tapes into a digital format that could be easily manipulated into a data friendly format, compatible
with
that our Creative Technicians could
repackage/repurpose the shows.
internal music management system, so
the Group’s
Utilising the services available here at Pinewood Studio it is pleasing to see in a short time we have
converted all of the 3,000 programs and created a further 12,500 short excerpts from the original programs
within the first year. The excerpts are predominantly short two to three minute clips from the shows that have
been deemed entertaining for digital broadcast via YouTube for home or mobile entertainment. These have
been well received and we are creating a strong following of digital video viewers. In addition, the Group is in
discussions with third parties for further usage of the Men & Motors brand and content and we look forward
to bringing you more news on this in the future.
To further the Group’s initiative of focusing on nostalgic videos, One Media acquired control under license of
a variety of TV shows.
In November 2012, the Group acquired the classic Sooty TV shows. This included eight TV shows
presented by Sooty's creator, Harry Corbett. The shows date back to the original Sooty episodes of the
1950s through to the 1970s including such classics as ‘The Sooty Olympics’ and ‘Sooty's Birthday’. The
popularity of the Sooty brand, which we believe is a British media icon, remains popular with today’s ‘pre-
school’ groups.
In the first half of this financial year, One Media acquired under license ‘The Adventures of Skippy', as well
as `Skippy the Movie', that were first produced in the 1990s. These episodes follow on from the original
`Skippy' series of the 1960s, and developed a widespread following when first broadcast. These have been
made available for viewing on the Group’s YouTube, ‘Skippy Channel’.
During this period, the Group also acquired the footage of an `Alien Autopsy' and the documentaries relating
to the 1990s autopsy on the body of an extra-terrestrial purported to have been recovered from the crash of
a UFO near Roswell, New Mexico.
The Group’s acquisition initiative often involves revisiting previously completed deals to either extend or
improve the terms of agreement. The Board is pleased to report that it has secured exclusive digital rights
to a catalogue of video programs first licensed to the Group in September 2011. Containing over 400 hours
of content, the 200+ music video-documentaries feature behind-the-scenes and `fan-based special feature'
looks at artists such as; David Bowie, the Rolling Stones, Marc Bolan, Limp Bizkit, Lennon & Harrison (the
Guitars that Gently Weep), Thin Lizzy, Elvis, Bob Marley, The Royal Philharmonic Orchestra, Andy Williams
and the late Tony Bennett.
2
2
Executive Chairman’s Statement
For the year ended 31 October 2013
Review of Activities - continued
Along with extending licensing deals One Media is also committed to profit margin improvement. The Board
does not hesitate to use the Group’s cash resource to invest in content that has a proven track record under
our stewardship. This was demonstrated by the USD$122,550 used to buy-out various onward royalty
commitments on past deals, which the Group believes to be a sound investment.
Finally, at the end of October 2013, we acquired under license the video distribution rights for over 300
`Animal video documentaries' targeted at younger viewers, `Keep Fit’ video material for the health
conscience and `Underground Breakdance' video content for the acrobatic. This has further diversified our
portfolio of video offering, which we believe is essential in growing our market share.
Market Overview
The digital world is evolving at a fast pace and we are making sure that we keep up with the developments.
iTunes and Amazon remain the largest digital download retailers but the ‘streaming stores’ such as Spotify
and Deezer and are becoming increasingly important as the digital markets mature. The Board anticipates
these models becoming stronger over the coming years with new streaming services such as ‘Beats Music’,
‘Apple Radio’ and the anticipated launch of ‘YouTube Music’ set to enhance this growing sector. It is still too
early to analyse the worldwide music industry digital data for Calendar year 2013 on the growth of digital
music, but what we do know is that according to Nielson (an industry data source), in the USA, music
streaming grew 32% to 118bn transactions.
“Despite shifts in how music is consumed, we see continued growth in overall music consumption,” reported
Nielsen, “the industry remains vibrant as consumption continues to change and expand.”
As a cautious management team, we carefully analyse the impact of streaming over downloading as part of
our day-to-day business. We greet the streaming models with enthusiasm and anticipate their importance to
the digital market will be as important as the introduction of downloading changed the markets back in 2006
when One Media first started and physical product had the lion’s share of the market.
We also see social media playing a far greater role in the marketing of the Group’s content via the many
digital stores with which we trade. We have dedicated Twitter and Facebook pages which can be accessed
via our website and are used to further our interaction with the market.
Broadband providers with their increasing band width now cater for film in high definition to be streamed to
every device, whether static or on the move and the advent of ‘Smart TVs will completely change the way
we engage with our video entertainment. A ‘Smart TV’ is now fully enabled to receive more than just the
programming broadcasted by either terrestrial or satellite broadcasters constrained within our shores, but
also Wi-Fi. Furthermore, the new world of ‘Apps’ gives access to both national and international viewing via
Wi-Fi from ones broadband supplier. This will allow content delivery services to supply the public with ‘genre
friendly content’ tailored to their individual viewing requirements and made available as and when the
consumer is ready to view. In the same way that web pages work, ‘Play listing’ and recommendations from
your previous viewing experiences are immediately ‘on hand’ to guide you through the millions of hours now
available on-line to view. At present YouTube leads this advance but we expect many more ‘free-to-view’
platforms to launch within the near future. One Media believes this will significantly increase the amount of
content that users are consuming on a daily basis.
The new challenge facing viewers is how to find time to watch everything that is available. From the home
entertainment revolution, as aforementioned, coupled with the in-car revolution, with cars moving to
‘Bluetooth’ and ‘4G’, One Media anticipates a growing demand of content, both old and new, to meet this
new technologically savvy audience.
3
3
Executive Chairman’s Statement
For the year ended 31 October 2013
Review of Activities – continued
Employees
As Chairman and Chief Executive, and on behalf of my fellow Board members, I would like to formally thank
our staff for the contribution they have made in a year where we have continued to grow our business
successfully. It is our aim to become a leading player within our space. It is the enthusiasm, dedication and
creativity of our wider team that realises the delivery of our strategy each year. Our staff remains motivated
and are committed to the achievement of our agreed 2014 business plan, which projects further growth
across all aspects of the Group.
Outlook
The Group’s modus operandi of supplying all routes to market with nostalgic content is now well established
within the digital community; ‘Content is King’ remains our basic mantra. We are repurposing our vast
library of content to suit consumer requirements, whether it is for a three minute clip for a mobile device or a
full length version of a programme for television. This will be key in our success in light of the developments
we have identified in the market overview above.
One Media’s team of Creative Technicians remain diligent in the preparation of both audio and visual
content in defining the metadata, our digital DNA, which remains key to identifying and finding One Media
content online and adhering to the moving pace of the digital stores individual ‘style guides’. This is the ‘hub’
of One Media’s marketing initiative. The Board anticipates further expansion and investment in the Group’s
expansive library of content in the coming period.
One Media invests time and expertise to fully understand the changing nature and viewing habits of its
consumers, in order to adapt content to match consumer routines. With the considerable amount of content
being input into cyberspace on the increase, our teams are trained to not only monitor the content being
produced but also further promote and market our content through all aspects of social media.
We believe 2014 will continue to be a progressive year for One Media. The digital music and video industry
remains in a state of evolution and your Company will continue to exploit and develop its model to meet the
demands of these changes as it has done since its launch in 2006. One Media has continued to acquire
further content, within our digital arena, enhancing our catalogue and library of rights. The Group retains a
strong cash position; is debt free; profitable and is paying a healthy dividend.
The digital music and video industry remains in a state of evolution and your Company will continue to
exploit and develop its model to meet the demands of these changes as it has done since its launch in 2006.
We are focussing on greater exploitation combined with our growing industry market knowledge to deliver
more shareholder-enhanced value within the sectors in which we operate.
The Board looks forward to enhancing both shareholder value and consumer digital experiences in 2014
and beyond, capitalising on its new listing on AIM and growing underlying value.
Michael A Infante
Chairman
12 February 2014
4
4
Report of the Directors
For the year ended 31 October 2013
The Directors present their annual report together with the audited consolidated statements of the Group for
the year ended 31 October 2013.
Principal activities
The principal activities of the Group throughout the year were the acquisition and exploitation of mixed
media intellectual property rights including music, video, spoken word and digital books for distribution
through the digital medium and to a lesser extent through traditional media outlets. The Group also licenses
its music content for use in TV and film, advertising, video games and corporate websites. The Group is a
B2B and B2C content supplier. The Group continues to believe that the creation of its own dedicated
consumer website is not yet of interest as that is the primary activity of its major customers. The Group
outsources the supply of its digital content to this market primarily through The Orchard, its strategic partner
for digital music and spoken-word services, and for video product via YouTube and other emerging visual
market places.
Directors
The following Directors held office during the year:
Michael Antony Infante JP
Scott Cohen
Nigel Smethers
Roman Poplawski
Directors and their interests
The Directors' interests (including family interests) in the shares of the Company were as follows:
Ordinary share of 0.5p each
At 31 October 2012
At 31 October 2013
Michael Antony Infante JP
Nigel Smethers
Scott Cohen
Roman Poplawski
Nos
Nos
25,577,862
1,343,371
500,000
3,943,377
26,044,737
1,343,371
500,000
3,943,377
Warrants in Ordinary share of 0.5p each
At 31 October 2013
At 31 October 2012
Michael Antony Infante JP
Nigel Smethers
Scott Cohen
Roman Poplawski
at 1.5p each
Nos
at 1.5p each
Nos
4,000,000
250,000
250,000
750,000
4,000,000
250,000
250,000
750,000
The above warrants were granted on 17 September 2012 and are due to expire on 15 September 2015.
5
5
Report of the Directors
For the year ended 31 October 2013 – continued
Directors and their interests continued
Michael Antony Infante JP
Nigel Smethers
Scott Cohen
Roman Poplawski
Share Options in Ordinary share of 0.5p each
At 31 October 2012
At 31 October 2013
at 2.75p each
Nos
at 2.75p each
Nos
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
The options are exercisable at 2.75p per share on or by 6 March 2018.
Future Developments
Likely future developments in the company's business have been included within the Executive Chairman's
Statement on pages 1 to 4.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Report of the Directors and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law
the Directors have elected to prepare the Group financial statements in accordance with International
Financial Reporting Standards (IFRS) as adopted for use in the European Union. Under company law the
Directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and the Group and of the Profit or Loss of the Group for that
period. In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
•
• make judgments and estimates that are reasonable and prudent;
•
state whether IFRS as adopted by the European Union and applicable UK Accounting Standards have
been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the Company and Group will continue in business.
•
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s and the Group’s transactions and disclose with reasonable accuracy at any time the
financial position of the Company and the Group and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
Statement of disclosure to auditor
Each of the persons who are Directors of the Group at the time when the Report of the Directors
is approved has confirmed that they have:
•
•
taken all necessary steps that ought to have been taken as Directors to be aware of any information
needed by the Company and Group Auditor in connection with preparing this report, and
so far as they are aware there is no relevant audit information of which the Company and Group Auditor
is unaware.
6
6
Report of the Directors
For the year ended 31 October 2013 - continued
Auditors
James Cowper LLP have expressed their willingness to continue in office. A resolution to re-appoint James
Cowper LLP in accordance with section 489 of the Companies Act 2006 will be proposed at the Annual
General Meeting.
On behalf of the Board
Michael Antony Infante JP
Director
12 February 2014
7
7
Corporate Governance Report
For the year ended 31 October 2013
Directors
The Group supports the concept of an effective Board leading and controlling the Group, supported by a
Management Team responsible for the operating subsidiaries. The Group Board is responsible for approving
Group policy and strategy. It meets formally, at least quarterly, with regular face to face weekly contact
maintained between most members as well as the dissemination of information using the most up to date
electronic communication methods. All Directors have access to independent professional advice at the
Group's expense.
Relation with shareholders
The Group values the views of its shareholders and recognises their interest in the Group's performance and
strategy. Regular updates on performance and significant events are provided through the AIM Market
platform, using the medium of the RNS, and through specially arranged investor updates with institutions
and representative shareholder groups.
The Annual General Meeting is used to communicate with private investors who are encouraged to
participate. The Directors are available to answer questions. Separate resolutions will be proposed on each
issue so that they can be given proper consideration and there will be a resolution to approve the annual
report and accounts.
Internal control
The Board is responsible for maintaining a strong system of internal control of safeguarding shareholders'
investment and the Group's assets and for reviewing effectiveness. The system of internal financial control is
designed to provide reasonable, but not absolute statement against material misstatement or loss.
In addition to the traditional financial internal controls the Group seeks to protect our licences by a well
structured and controlled process of drafting, reviewing, approving and then subsequently monitoring. This
process applies to both the purchase of our music rights and the distribution of our products to all our
customers.
During the year, consequent on the move to the AIM Market, an Audit Committee has been established
chaired by Roman Poplawski supported by Scott Cohen, both of whom are Non-Executive Directors. The
Committee is responsible for ensuring that the financial performance of the Group is properly monitored and
reported on. The Audit Committee meets with the auditors at the audit planning stage and for the final audit
meeting prior to Board approval of the accounts.
8
8
Corporate Governance Report
For the year ended 31 October 2013 continued
Report on Remuneration
Directors' remuneration
The Board recognises that Directors' remuneration is of legitimate concern to shareholders. The Group
operates within a competitive environment where performance depends on the individual contributions of the
Directors and employees and the Group believes in rewarding vision and innovation.
Policy on Executive Directors' remuneration
A separate Remuneration Committee has been established chaired by Scott Cohen supported by Roman
Poplawski, both of whom are Non-Executive Directors. There are no specific performance conditions with
any bonus or additional payments made at the discretion of the board following the recommendation of the
remuneration committee.
Remuneration of the Directors for the year ended 31 October 2013 is as follows:
Fees and
emoluments
Year ended
31 October 2013
Fees and
emoluments
Year ended
31 October 2012
£
108,280
60,998
13,498
40,998
223,774
£
103,452
33,498
5,998
25,998
168,946
Michael Antony Infante JP
Nigel Smethers
Scott Cohen
Roman Poplawski
Bonuses and Performance Conditions
Included in the Fees and Emoluments for Michael Antony Infante are taxable benefits in respect of health
insurance £2,820 (2012: £2,454), taxable benefit for a company car of £4,462 (2012: £nil) and attributable
share option cost of £998 (2012: £998). Michael Antony Infante did not receive a bonus in the year (2012:
£10,000). Fees and Emoluments for Nigel Smethers includes attributable share option costs of £998 (2012:
£998). Nigel Smethers did not receive a bonus in the year (2012: £5,000). R Poplawski's Fees and
Emoluments includes £12,500 (2012: £5,000) for his role as Non-Executive Director, £27,500 (2012:
£20,000), in respect of his role as Business Affairs Adviser providing advice on legal and contractual
matters, and £998 (2012: £998) attributable to share option costs. S Cohen received £12,500 (2012: £5,000)
for his role as non-executive director and £998 (2012: £998) attributable to share option costs.
Directors’ contracts do not include any specific performance criteria but implicit within their terms of their
engagements is that at all times they will seek to enhance shareholder value. Apart from warrants and share
options granted there are no other specific long term incentive plans for any of the Directors. The Company
received qualifying services from 4 (2012: 4) Directors under long term incentive qualifying schemes.
During the year the four Directors did not exercise any warrants or share options. In the year ended 31
October 2012 a total of 10,500,000 warrants were exercised. The aggregate amount of taxable gain by
exercise of warrants during the year ended 31 October 2012 was £40,000.
Notice periods
The Directors have contracts which are terminable on twelve months notice on either side for Michael
Infante and three months on either side for all the other Directors.
9
9
Operating and Financial Review
For the year ended 31 October 2013
Business review and future developments
The results of the Group are shown within the financial statements and a detailed review of the business for
the year and future developments is given in the Executive Chairman's statement on pages 1 to 4.
Whilst the Group focus is primarily on the digital market place, traditional routes to market are not being
ignored. Changes in the retail sector are accelerating and there continues to be both national and global
economic problems. The Directors consider there is still substantial potential whilst recognising that risks
exist.
The Group has continued to enter into representative deals with independent record labels and content
owners to market their rights in the digital arena and to invest in copyrights and intellectual property that are
considered to attract a suitable and sustainable rate of return.
A dividend of £70,135 (2012: £70,974) was paid in the year.
The key financial and non-financial performance indicators the Directors use to monitor the performance of
the Group are as follows:
Financial and non-financial key performance indicators
Cost of catalogue acquisition and number of tracks "ingested"
Management are continually searching to acquire additional music, video, spoken word and digital book
catalogues to exploit through the digital medium and other routes to market. The costs of catalogue
acquisition “ingestion” are constantly monitored to ensure that a safe and adequate return on investment is
made. During the year £485,354 (2012: £643,431) was spent on catalogue and intangible asset additions.
Rate of commercialisation of licences and intellectual property
Measured by the growth in value and volume of digital revenues, license deals and sales contracts signed.
During the year revenue increased to £2,649,130 (2012: £2,089,841) a 26.8% year on year increase.
Progress assessment includes regular updates on key partners, distribution outlets and market segments.
Overhead growth
Management closely monitors the growth in overheads, carefully balancing the need to reward people
properly based on both performance and external market factors, and other overhead expenditure. Where a
step change in overheads is predicted this must be justified in both financial and strategic terms. During the
year overheads increased to £851,890 (2012: £678,793) a 25.5% increase.
Share price movements and changes in shareholders are constantly monitored as a major
contributor to long term planning
The Board constantly review share price movements both for the impact of Regulated News Service
announcements and trading in shares on the AIM Market. This indicator is a major contributor to medium
and long term decisions.
Management of capital
The Group has no external financing and is not therefore currently subject to any external constraints on its
management of working capital. Dividend policy is determined by the availability of profit and reserves from
which to pay dividends, the Group’s policy and cost of acquiring additional music catalogues and the desire
to reward shareholders for their investment in the Group.
Financial reporting
Financial reporting is monitored monthly against budgets and forecasts, by both the main Board and the
Board of the principal operating subsidiary. Profit and Loss and Cash Flow projections are updated as
significant changes to performance and operating conditions occur.
10
10
Operating and Financial Review
For the year ended 31 October 2013 - continued
Business risks
Reliance on key personnel
The Group is dependent on the knowledge, expertise and experience of its key personnel. In total, the
Group employs fewer than 15 people. In the event that a key member of the team was to leave the
employment of the Group this could lead to significant disruption and could have a material impact on the
future profitability of the Group.
Reliance on The Orchard – concentration of distribution risk
In the financial year ending 31 October 2013 approximately 94% of the Group’s turnover was channeled via
The Orchard, the distribution aggregator that the Group uses to sell its content to end-user download and
streaming sites such as iTunes and Spotify. In the event that The Orchard agreement was terminated or that
The Orchard ceased to operate, this could have a material impact on the Group’s operations and
profitability, whilst the Group changed its systems to work either with a new aggregator or trade directly with
the end-user distribution sites.
Rights acquired may not be wholly exclusive
The Group has acquired a large number of catalogues of music, video and spoken word since its formation.
It is not uncommon for rights attached to such catalogues to have been previously transferred prior to the
Group’s acquisition of such rights. A risk exists that the title to such rights may be challenged in which
event, the Group may have to forego potential revenue and/or incur legal costs whilst securing exclusive
title.
Sales of digital content
Digital stores may at their discretion delist or remove tracks, albums or content from their store, without any
prior notice to the Group. If this was to occur it could have a detrimental effect on the Group’s revenue
growth.
Piracy
Piracy or the illegal download of content from the internet could have a detrimental impact on the Group’s
growth plans.
Currency – revenues received in US$
In the financial year to 31 October 2013 approximately 96% of the Group’s turnover was generated in US
dollars, whilst the majority of the Group’s costs are denominated in Sterling. The Group is therefore
exposed to the US$/£ exchange rate and so any material adverse movement in this exchange rate can have
a material financial impact on the Group.
Market dominance of Big 4
The Group operates in a market dominated by established traditional companies such as EMI, Universal,
Warner and Sony (the “Big 4”). The Big 4 own or have the rights to a vast amount of content, a large
amount of which may be similar to that owned or exploited by the Group. There is a risk that the Big 4 could
exploit their recognised brands and use their marketing budgets to compete with the Group’s targeted
market, the consequence of which could lead to reduced sales and profitability for the Group.
Digital retailers’ pricing policy changes
The Group is dependent upon digital retailers such as iTunes and Spotify in order to sell its products in the
digital market place. Changes in their pricing policies or terms of sale would impact the performance of the
Group.
Bad Debts
The traditional risk associated with customer insolvency, and inability or unwillingness to pay debts
continues to be a threat which the Group constantly monitors.
11
11
Operating and Financial Review
For the year ended 31 October 2013 - continued
Digital route to market
The digital market place has its own challenges with a reliance on consumers becoming internet literate and
homes achieving a decent broadband connection. OMiP is a B2B and B2C supplier. We have no digital site
of our own but supply over 200 legitimate digital stores worldwide through our key business partner. We are
not dependent on any one store’s marketing strengths as we supply our content to all.
Financial risk management objectives and policies
The Group's principal financial instruments comprise cash and cash equivalents. The Group has various
other financial instruments such as trade receivables and trade payables, which arise from its operations.
The Group is exposed to a variety of financial risks which result from its operating activities. The Directors
are responsible for co-ordinating the Group's risk management and focus on actively securing the Group's
short and medium term cash flows. Long term financial investments are managed to generate lasting
returns. The Group does not actively engage in the trading of financial assets and has no financial
derivatives. The most significant risks to which the Group is exposed are described below:
Currency risk
The Group is exposed to foreign exchange risk in connection with its digital business where the revenue is
transacted largely in US$ and the settlement of royalty and other liabilities arising from this revenue is partly
denominated in US$.
Credit risk
The Group's credit risk is primarily attributable to its trade receivables and other debtors. The amounts
presented in the Consolidated Statement of Financial Position are net of any allowances for doubtful
receivables. The Group has a significant concentration of credit risk associated with its distributor of digital
income.
Liquidity risk
The Group seeks to manage risks to ensure sufficient liquidity is available to meet foreseeable needs and to
invest cash and assets safely and profitably. Short term flexibility is achieved by the use of money markets
to deposit excess cash which is not required in the short term. The Directors prepare cash flow forecasts on
a regular basis to identify at an early stage any short term funding difficulties.
Significant shareholding
Apart from the Directors’ shareholdings above the Company has been notified that there are two holdings in
excess of 3% of the issued share capital of the Company at 31 January 2013. Helium Special Situations
Fund is holding 11.2 % (7,300,000 ordinary shares of 0.5p each), and Hugh Martin Oliver Bett 3.2%
(2,100,000 ordinary shares of 0.5p each).
Employee involvement
The Group has continued its practice of keeping employees informed of matters affecting them as
employees and the financial and economic factors affecting the performance of the Group. This is achieved
through regular formal and informal updates and open access between all employees of the Group.
Disabled employees
Applications for employment by disabled persons are given full and fair consideration for all vacancies in
accordance with their aptitudes and abilities. In the event of an employee becoming disabled, every effort
will be made to retain them in order that their employment within the Group may continue. It is the policy of
the Group that training, career development and promotion opportunities are available to all employees.
Technology
The Group takes a progressive view on the impact of technological developments. Changes to technology
and related systems are openly embraced with the aim of giving the Group the most up to date platforms to
work on and exploit its assets.
12
12
Operating and Financial Review
For the year ended 31 October 2013 - continued
Research and development
The Group, in developing its internal technology based systems, undertakes Research and Development
work the outcome of which may be uncertain. Work proven to have an on-going value is capitalised all other
costs are expensed to the Profit and Loss account.
Payment to suppliers
The Group's policy is to agree the terms of payment with each supplier, when agreeing contracts and
purchasing terms, and to settle each transaction in accordance with those terms. Group trade payables at
the year end were £72,958 (2012: £63,081). The Directors do not consider, because of the nature of
Group’s business, that the traditional calculation of day’s purchases outstanding is relevant. Therefore no
calculation of day’s purchases outstanding is provided.
Key accounting policies
Principal accounting policies are included on pages 21 to 27, including critical accounting estimates and
judgements on page 25.
Cash flows
Full details of cash flows generated by the business are disclosed within the Consolidated Cash Flow
Statement on page 20. The group generates sufficient cash flows through its ordinary operations, in
combination with funds generated by company's listing on AIM, to achieve its objectives set out in the
Executive Chairman's Report on pages 1 to 4.
Compliance
This statement has been prepared in accordance with ASB's 2006 Reporting Statement.
On behalf of the Board
Michael Antony Infante JP
Director
12 February 2014
13
13
Independent Auditors' Report
to the Shareholders of One Media iP Group Plc
We have audited the Group financial statements of One Media iP Group Plc for the year ended 31st October
2013, which comprise the Group Statement of Comprehensive Income, the Group and Parent Company
Statement of Changes in Equity, the Group and Parent Company Statement of Financial Position, the Group
and Parent Statement of Cash Flows and the related notes set out on pages 16 to 40. The financial
reporting framework that has been applied in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted for use in the European Union and, as regards the parent
company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's
members those matters we are required to state to them in an Auditors’ Report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company's members as a body, for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of the Directors and Auditors
As explained more fully in the Statement of Directors' Responsibilities, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit the financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices
Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Auditing Practices Board's
website at www.frc.org.uk/apb/scope/private.cfm.
Unqualified opinion on financial statements
In our opinion the financial statements:
•
•
•
•
the financial statements give a true and fair view of the state of the Group's and of the Parent
Company's affairs as at 31 October 2013 and of the Group's profit for the year then ended;
the financial statements have been properly prepared in accordance with IFRS adopted for use in the
European Union; and
the parent company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in accordance with the provisions of the Companies Act
2006; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Executive Chairman's Statement and Directors' Report for the
financial year for which the financial statements are prepared is consistent with the financial statements.
14
14
Independent Auditors' Report
to the Shareholders of One Media iP Group Plc
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
•
•
adequate accounting records have not been kept by the parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
the parent Company financial statements are not in agreement with the accounting records and returns;
or
•
certain disclosures of Directors' remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Alexander Peal BSc. (Hons) FCA DChA (Senior Statutory Auditor)
12 February 2014
for and on behalf of
James Cowper LLP
Chartered Accountants and Statutory Auditor
3 Wesley Gate
Queen's Road
Reading, Berkshire
RG1 4AP
15
15
Registered Number: 05799897
Consolidated Statement of Comprehensive Income
For the year ended 31 October 2013
Note
1
2
2
3
4
7
7
7
7
Revenue
Cost of sales
Gross profit
Administration expenses
Profit from continuing
operations
Other expenses –AIM float and
associated costs
Operating profit
Finance income
Profit on ordinary activities
before taxation
Tax expense
Profit for period attributable to
equity shareholders
Basic adjusted earnings per
share
Diluted adjusted earnings per
share
Basic earnings per share
Diluted earnings per share
Year ended
31 October
2013
Year ended
31 October
2012
£
£
2,649,130
2,089,841
(1,273,592)
(983,374)
1,375,538
1,106,467
(851,890)
(678,793)
523,648
427,674
(196,559)
-
327,089
427,674
2,800
214
329,889
(90,980)
427,888
(88,668)
238,909
339,220
0.70p
0.61p
0.40p
0.35p
0.73p
0.62p
0.73p
0.62p
The Consolidated Statement of Comprehensive Income has been prepared on the basis that all operations
are continuing activities.
The accompanying principal accounting policies and notes form part of these financial statements.
16
16
Registered Number: 05799897
Consolidated Statement of Changes in Equity
For the year ended 31 October 2013
Share
Capital
Share
redemption
reserve
Share
premium
£
£
£
Share
based
payment
reserve
£
Retained
earnings
Total equity
£
£
At 1 November 2011
218,143
239,546
643,271
4,791
119,537
1,225,288
Proceeds from the issue
of new shares
55,000
Share based payment
charge
Profit for the year
Dividends
-
-
-
-
-
-
-
75,000
-
-
-
-
7,625
-
-
-
-
130,000
7,625
339,220
339,220
(70,974)
(70,974)
At 1 November 2012
273,143
239,546
718,271
12,416
387,783
1,631,159
Proceeds from the issue
of new shares
51,625
Share based payment
charge
Profit for the year
Dividends
-
-
-
-
-
-
-
670,874
-
-
-
-
13,776
-
-
-
-
722,499
13,776
238,909
238,909
(70,135)
(70,135)
At 31 October 2013
324,768
239,546
1,389,145
26,192
556,557
2,536,208
As detailed in note 14 Share capital the following transactions were undertaken:
For the year ending 31 October 2012:
• During the year a total of 11,000,000 warrants were exercised by Directors and Employees between
June and September 2012. As summarised above, the nominal value of the warrants exercised was
£55,000 and the Share premium arising was £75,000.
.
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.
•
17
17
Registered Number: 05799897
Consolidated Statement of Financial Position at 31 October 2013
Note
Year ended
31 October
2013
Year ended
31 October
2012
£
£
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Equity
Called up share capital
Share redemption reserve
Share premium account
Share based payment reserve
Retained earnings
Total equity
8
9
11
12
13
14
15
15
15
15
1,808,535
26,439
1,442,140
47,755
1,834,974
1,489,895
481,453
1,688,093
405,762
368,655
2,169,546
774,417
4,004,520
2,264,312
1,468,312
1,468,312
324,768
239,546
1,389,145
26,192
556,557
633,153
633,153
273,143
239,546
718,271
12,416
387,783
2,536,208
1,631,159
Total equity and liabilities
4,004,520
2,264,312
The notes on pages 28 to 40 form part of these financial statements.
The Consolidated Financial Statements were approved by the Directors on 12 February 2014 and signed on
their behalf by
:
Michael Antony Infante JP
Director
The accompanying principal accounting policies and notes form part of these financial statements.
18
18
Registered Number: 05799897
Company Statement of Financial Position at 31 October 2013
Note
Year ended
31 October
2013
Year ended
31 October
2012
£
£
Assets
Non-current assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Equity
Called up share capital
Share redemption reserve
Share premium account
Share based payment reserve
Retained earnings
Total equity
10
11
12
13
14
15
15
15
15
493,817
493,817
1,419,427
647,270
1,057,030
214,778
2,066,697
1,271,808
2,560,514
1,765,625
22,842
22,842
324,768
239,546
1,389,145
26,192
558,021
25,571
25,571
273,143
239,546
718,271
12,416
496,678
2,537,672
1,740,054
Total equity and liabilities
2,560,514
1,765,625
The notes on pages 28 to 40 form part of these financial statements.
The Company Financial Statements were approved by the Directors on 12 February 2014 and signed on
their behalf by:
Michael Antony Infante JP
Director
The accompanying principal accounting policies and notes form part of these financial statements.
19
19
Registered Number: 05799897
Consolidated and Company Cash Flow Statement
For the year ended at 31 October 2013
Year ended
31 October
2013
Group
Year ended
31 October
2012
Group
Year ended
31 October
2013
Company
Year ended
31 October
2012
Company
£
£
£
£
329,889
118,959
27,389
13,776
(2,800)
(75,691)
819,873
(75,694)
427,888
98,296
25,106
7,625
(214)
(102,229)
210,176
(82,410)
131,478
-
-
13,776
-
(362,397)
(2,729)
-
308,320
-
-
7,625
-
(298,684)
(1,071)
-
1,155,701
584,238
(219,872)
16,190
(485,354)
(643,431)
(6,073)
2,800
(41,162)
214
(488,627)
(684,379)
-
-
-
-
-
-
-
-
773,000
(50,501)
(70,135)
130,000
-
(70,974)
773,000
(50,501)
(70,135)
130,000
-
(70,974)
652,364
59,026
652,364
59,026
1,319,438
(41,115)
432,492
75,216
368,655
409,770
214,778
139,562
Cash flows from operating
activities
Operating profit before tax
Amortisation
Depreciation
Share based payments
Finance income
(Increase) in receivables
Increase/(decrease) in payables
Corporation tax paid
Net cash inflow from
operating activities
Cash flows from investing
activities
Investment in intellectual
property rights
Investment in property, plant
and equipment
Finance income
Net cash used in investing
activities
Cash flows from financing
activities
Proceeds from the issue of new
shares
Share issue costs
Dividends paid
Net cash inflow(outflow)
from financing activities
Net change in cash and
cash equivalents
Cash at the beginning of
the year
Cash at the end of the year
1,688,093
368,655
647,270
214,778
20
20
Principal Accounting Policies
For the year ended 31 October 2013
Basis of preparation
The Company is a limited company incorporated and domiciled in England under the Companies Act 2006.
The Board has adopted and complied with International Financial Reporting Standards (IFRSs) as adopted
by the European Union. The Company's shares were admitted for trading on the AIM market of the London
Stock Exchange on 18th April 2013.
Basis of consolidation
The Group financial statements consolidate those of the Company and all its subsidiary undertakings drawn
up to the balance sheet date. Subsidiaries are entities over which the Group has the power to control the
financial and operating policies so as to obtain benefits from their activities. The Group obtains and
exercises control through voting rights.
Unrealised gains or losses on transactions between the Group and its subsidiaries are eliminated. Amounts
reported in the financial statements of subsidiaries are adjusted where necessary to ensure consistency with
the accounting policies adopted by the Group.
Acquisitions of subsidiaries are dealt with by the equity method. The equity method involves the recognition
of the fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the
acquisition date, regardless of whether or not they were recorded in the financial statements of the
subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in
the consolidated balance sheet at fair values, which are also used as the basis for subsequent
measurement in accordance with the Group accounting policies. Goodwill is stated after separating out
identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the
Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition.
Revenue
The Group follows the principles of IAS18 "Revenue" in determining the appropriate revenue recognition
policies. In principle therefore, revenue is recognised to the extent that the Group has obtained the right to
consideration through its performance.
Revenue, excluding VAT, represents the value of digital income, licences and goods delivered or title
passed. In the case of digital income revenue is recognised when reported to the Group and where
reasonable estimates can be made of digital stores income still to be reported at any point of time.
In line with normal accounting practice revenue is reported gross received and receivable.
Commercial advances
To the extent that commercial advances are un-recouped at the year end any outstanding amount are
included in Other payables. The outstanding balances are calculated in line with underlying contractual
obligations.
21
21
Principal Accounting Policies
For the year ended 31 October 2013
Taxation
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities
relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are
calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based
on the taxable result for the year. All changes to current tax assets or liabilities are recognised as a
component of tax expense in the income statement.
Deferred income taxes are calculated using the liability method of temporary differences. This involves the
comparison of the carrying amounts of assets and liabilities in they consolidated financial statements with
their respective tax bases. However deferred tax is not provided on the initial recognition of goodwill, nor on
the initial recognition of an asset or liability unless the related transaction is a business combination or
affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries
is not provided if reversal of these temporary differences can be controlled by the Group and it is probable
the reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as
well as other income tax credits to the Group are assessed for recognition as deferred tax assets.
Intangible assets
Licences and other intangible assets
Licences and other intangible assets, including labour capitalised under IAS38 Intangible Assets, are valued
at cost less accumulated amortisation. Capitalised labour represents costs incurred in "ingesting" products
and the compilation of existing content into new and revised albums. Amortisation is calculated to write off
the cost in equal amounts over the life of the licences and other intangible assets (between 26 months and
25 years). Licences and intangible assets are subject to annual impairment reviews.
Assets acquired as part of a business combination
In accordance with IFRS 3 revised “Business Combinations", an intangible asset acquired in a business
combination is deemed to have a cost to the Group of its fair value at the acquisition date. The fair value of
the intangible asset reflects market expectations about the probability that the future economic benefits
embodied in the asset will flow to the Group. The fair value is then amortised over the economic life of the
assets. Where an intangible asset might be separable, but only together with a related tangible or intangible
asset, the Group of assets is recognised as a single asset separable from goodwill where the individual fair
values of the assets in the Group are not reliably measurable. Where the individual fair value of the
complimentary assets are not reliably measurable, the Group recognises them as a single asset provided
the individual assets have similar useful lives.
Impairment intangible assets, property, plant and equipment
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash generating units). As a result, some assets are tested individually for
impairment and some are tested at cash-generating unit level.
Individual assets or cash-generating units, other than intangible assets with an identifiable useful life, and
those intangible assets not yet available for use are tested for impairment at least annually. All other
individual assets or cash-generating units are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recovered.
22
22
Principal Accounting Policies
For the year ended 31 October 2013
Impairment of intangible assets, property, plant and equipment – continued
An impairment loss is recognised in the income statement for the amount by which the asset's or cash-
generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted
cash flow evaluation. Impairment losses recognised for cash-generating units are charged to the assets in
the cash generating unit. All assets are subsequently reassessed for indications that an impairment loss
previously recognised may no longer exist. An impairment loss is reversed if there has been a favourable
change in the estimates used to determine the assets recoverable amount and only to the extent that the
asset's carrying amount does not exceed the carrying amount that would have been determined net of
amortisation, if no impairment had been recognised.
Financial assets
The Group's financial assets include cash and other receivables.
All financial assets are recognised when the Group becomes party to the contractual provisions of the
investment. All financial assets are initially recognised at fair value, plus transaction costs.
Non-compounding interest and other cash flows resulting from holding financial assets are recognised in the
income statement when received, regardless of how the related carrying amount of financial assets is
measured.
Available for sale financial assets include non-derivative financial assets that are either designated as such
or do not qualify for inclusion in other categories of financial assets. Available for sale assets are measured
subsequently at fair value with changes in value recognised in equity through the statement of changes in
equity. Where fair value cannot be measured reliably such financial assets are held at cost. Gain or losses
arising from investments classified as available for sale are recognised in the income statement when they
are sold or when the investment is impaired.
Trade and other receivables are subsequently measured at amortised cost. Trade and other receivables are
provided against when objective evidence is received that the Group will not be able to collect all amounts
due to it in accordance with the original terms of the receivables. The amount of the write-down is
determined as the difference between the asset's carrying amount and the present value of estimated cash
flows.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank deposits, together with short-term highly liquid
investments that are readily convertible into known amounts of cash and which are subject to an insignificant
risk of change in value with original maturities of three months or less from the date of acquisition.
Equity
The share capital is determined using the nominal value of shares that have been issued.
The share premium account represents premiums received on the initial issuing of share capital. Any
transaction costs associated with the issuing of shares are deducted from share premium, net of any related
income tax benefits.
Retained earnings include all current and prior period results as disclosed in the income statement.
23
23
Principal Accounting Policies
For the year ended 31 October 2013
Financial liabilities
The Group's financial liabilities include trade and other payables. Financial liabilities are obligations to pay
cash or other financial assets and are recognised when the Group becomes party to the contractual
provisions of the instrument.
All financial liabilities are recognised initially at fair value, net of direct issue costs, and are subsequently
recorded at amortised cost using the effective interest method with interest charges recognised as an
expense in the income statement.
Dividend distributions to shareholders are included in "other short term financial liabilities" when dividends
are approved by the shareholders' before the year end.
Provisions, contingent liabilities and contingent assets
Provisions are recognised when present obligations will probably lead to an outflow of economic resources
from the Group and they can be estimated reasonably. Timing or the amount of the outflow may still be
uncertain. A present obligation arises from the presence of a legal or constructive commitment that has
resulted from past events. For example, legal disputes or onerous contracts.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the
most reliable evidence available at the balance sheet date, including the risks and uncertainties associated
with the present obligation. Any reimbursement expected to be received in the course of the settlement of
the present obligation is recognised, if virtually certain as a separate asset, not exceeding the amount of the
related provision. Where there are a number of similar obligations, the likelihood that an outflow will be
required in settlement is determined by considering the class of obligations as a whole. In addition, long term
provisions are discounted to present values, where the time value of money is material. All provisions are
reviewed at each balance sheet date and adjusted to reflect the current best estimate.
In those cases where the possible outflow of economic resource as a result of the present obligation is
considered improbable or remote, or the amount to be provided cannot be measured reliably, no liability is
recognised in the balance sheet. Probable inflows of economic benefits to the Group that do not yet meet
the recognition criteria are considered contingent assets.
Property, plant and equipment
Measurement basis
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The
cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to the
working condition and location for its intended use. In the case of new internally generated software creation
and improvements this includes capitalised labour. Subsequent expenditure relating to property, plant and
equipment is added to the carrying amount of the assets only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All
other costs, such as repairs and maintenance are charged to the income statement during the period in
which they are incurred.
When assets are sold any gain or loss resulting from their disposal, being the difference between the net
disposal proceeds and the carrying amount of the assets is included in the income statement.
24
24
Principal Accounting Policies
For the year ended 31 October 2013
Property, plant and equipment - continued
Depreciation
Depreciation is calculated so as to write off the cost of property, plant and equipment, less its estimated
residual value, which is revised annually, over its useful economic life as follows:
Furniture and fixtures - 33.33% straight line
Office equipment - 33.33% straight line
Investment in subsidiary
Investment in subsidiary undertakings is shown at cost, less any provision for impairment.
Foreign currency
The Consolidated Financial Statements are presented in UK Sterling which is also the functional currency of
the parent Company. Monetary assets and liabilities in foreign currencies are translated into sterling at the
rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into
sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into
account in arriving at the Income Statement.
Non-monetary items measured at historical cost are translated using the exchange rates at the date of the
transaction (not retranslated). Non-monetary items measured at fair value are translated using the exchange
rates at the date when the fair value was determined.
Operating segments
A segment is a distinguishable component of the Group that is engaged either in a particular business
(business segment) or conducting business in a particular geographic area (geographic segment), which is
subject to risks and rewards that are different from other segments.
The Group operates in one significant business segment which is the digital “net-label” market, the results of
which are seen in the Consolidated Statement of Comprehensive Income.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions about the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting
year are discussed below.
Business combinations
On initial recognition, the assets and liabilities of the acquired business are included in the Consolidated
Statement of Financial Position at their fair values. In measuring fair value management use estimates about
future cash flows and discount rates.
25
25
Principal Accounting Policies
For the year ended 31 October 2013
Impairment of assets
The Group conducts impairment reviews of assets when events or changes in circumstances indicate that
the carrying amounts may not be recoverable annually, or in accordance with the relevant accounting
standards. An impairment loss is recognised when the carrying amount of an asset is higher than the greater
of its net selling price or the value in use. In determining the value in use, management assesses the
present value of the estimated future cash flows expected to arise from the continuing use of the asset and
from its disposal at the end of its useful life. Estimates and judgements are made in respect of the potential
impairment of goodwill, intellectual property, licences and other intangible assets.
Internally generated intangible assets and software systems
The Group capitalises labour in respect of intangible assets and internally generated software. Significant
judgement is required in estimating the time and cost involved in these activities and distinguishing the
research from the development phase. Development costs are recognised as an asset whereas research
costs are expensed as incurred.
Share option and warrant policy
The Group has applied the requirements of IFRS 2 Share-Based Payment.
The Group operates both approved and unapproved share option and warrant schemes for the Directors,
senior management and certain employees.
Where share options and warrants are awarded, the fair value of the instruments at the date of grant is
charged to the Statement of Comprehensive Income over the vesting period. Non-market vesting conditions
are taken into account by adjusting the number of equity instruments expected to vest at each reporting date
so that ultimately the cumulative amount recognised over the vesting period is based on the number of
options that eventually vest. Market vesting conditions are factored into the fair value of the options granted,
as long as other vesting conditions are satisfied. The cumulative expense is not adjusted for failure to
achieve a market vesting condition.
Where the terms and conditions of the instruments are modified before they vest, any increase in fair value
of these instruments, measured immediately before and after the modification is also charged to the
Statement of Comprehensive Income over the remaining vesting period.
Fair value is measured using the Black-Scholes model. The expected life used in the model has been
adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions
and behavioral conditions.
Adoption of new or amended IFRS's
a) The Group has adopted the following revisions and amendments to IFRS issued by the International
Accounting Standards Board, which are relevant to and effective for the Group’s financial statements for the
year beginning 1 November 2013.
• Amendments to IFRS 7 Financial Instruments: Disclosures
• Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12)
26
26
Principal Accounting Policies
For the year ended 31 October 2013
Adoption of new or amended IFRS’s - continued
(b) The following new standards, amendments to existing standards or interpretations have been issued, but
are not effective for the financial year ending 31 October 2013 and have not been adopted early:
IFRS 9 Financial Instruments ( date to be confirmed)
IFRS 10 Consolidated Financial Statements (effective 1 January 2013)
IFRS 11 Joint Arrangements (effective 1 January 2013)
IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2013)
IFRS 13 Fair Value Measurement (effective 1 January 2013)
IAS 19 Employee Benefits (Revised June 2011) (effective 1 January 2013)
IAS 27 (Revised), Separate Financial Statements (effective 1 January 2013)
IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2013)
•
•
•
•
•
•
•
•
• Presentation of Items of Other Comprehensive Income - Amendments to IAS 1 (effective 1 July
2012)
• Disclosures - Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7
(effective 1 January 2013)
• Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 (effective 1 January
2014)
• Mandatory Effective Date and Transition Disclosures - Amendments to IFRS 9 and IFRS 7
(effective 1 January 2015)
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine (effective 1 January 2013)
• Government Loans - Amendments to IFRS 1 (effective 1 January 2013)
•
• Annual Improvements 2009-2011 Cycle (effective 1 January 2013)
• Transition Guidance - Amendments to IFRS 10, IFRS 11 and IFRS 12 (effective 1 January 2013)
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have
no material impact on the financial statements of the Company.
27
27
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
1. Revenue
Revenue is the amount attributable to the Group's principal activity undertaken in the United Kingdom. The
geographic split of Group revenue is as follows:
United Kingdom
North America and Canada
Europe
Year ended
31 October
2013
Year ended
31 October
2012
£
£
86,868
2,558,999
3,263
99,876
1,988,939
1,026
2,649,130
2,089,841
The Group considers it has one business segment with all its Profit ultimately earned in the United Kingdom
as shown in the Consolidated Statement of Comprehensive Income shown on page 16.
Included in revenues for the year ended 31 October 2013 is £1,163,614 (2012: £1,059,746) from its largest
ultimate customer and £513,362 from its second largest (2012: £300,192). Together these represent 63.3%
(2012: 65.1%) of the total Group revenue for the year.
2. Operating profit
Operating profit is stated after charging:
Group
Directors' remuneration
Amortisation of licences and other intangible
assets
Depreciation of plant, property and equipment
Operating leases
Auditors' remuneration - audit fees
Auditors' remuneration - taxation
Auditors' remuneration - other
Bad debts
Difference on foreign exchange
Other expenses – AIM float and associated costs
Included in audit fees above is £4,650 (2012: £4,500) for the audit of the parent Company.
Year ended
31 October
2013
Year ended
31 October
2012
£
223,774
118,959
27,389
49,723
9,650
3,100
40,000
384
16,592
196,559
£
168,946
98,296
25,106
37,170
8,400
1,300
1,300
(1,280)
11,892
-
28
28
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
3. Finance cost and finance income
Interest receivable
4. Taxation
Analysis of the charge for the year
Adjustments to tax charge in respect of prior years
UK corporation tax charge
UK corporation tax
Year ended
31 October
2013
Year ended
31 October
2012
£
2,800
£
214
Year ended
31 October
2013
Year ended
31 October
2012
£
£
(15,543)
106,523
90,980
468
88,200
88,668
The standard rate of tax for the year, based on the UK standard rate of corporation tax is 23% (2012: 24%).
The actual tax charge for the periods is different than the standard rate for the reasons set out in the
following reconciliation:
Reconcilation of current tax charge
Year ended
31 October
2013
Year ended
31 October
2012
£
£
Profit on ordinary activities before tax
329,889
427,888
Tax on profit on ordinary activities at 23.44% (2012:
24.83%)
Effects of:
Non deductible expenses
Marginal relief
Adjustments to tax charge in respect of previous
periods
Depreciation in excess of capital allowances
Other differences
Utilisation of tax losses
Current tax charge
77,326
106,244
45,191
(4,227)
(15,543)
5,734
(17,501)
-
90,980
7,508
(5,045)
468
(8,467)
(8,061)
(3,959)
88,668
29
29
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
4. Taxation - continued
The Group has estimated trading losses of £17,020 (2012: £374) available for carry forward against future
trading profits.
No deferred taxation asset has been recognised as it is not material. If deferred taxation on losses was
recognised the amount would be £3,404 (2012: £90).
5. Employee information
Directors' emoluments - excluding applicable share option
charge
Fees paid to directors
Share option charge
Wages and salaries
Social security costs
Year ended
31 October
2013
Year ended
31 October
2012
£
£
167,282
52,500
13,776
379,929
65,539
134,954
30,000
7,625
296,018
42,169
679,026
510,766
Included within fees paid to Directors is £27,500 (2012: £20,000) in respect of legal services provided by Mr
R Poplawski in his role as Business Affairs Adviser to One Media iP Limited.
The average monthly number of Group employees (excluding non-executive directors) during the year was
as follows:
Year ended
31 October
2013
Year ended
31 October
2012
Office and management
11
11
6. Parent Company Profit and Loss Account
The profit for the year to 31 October 2013 dealt within in the financial statements of the parent Company
was £131,478 (2012: £308,320). As permitted by section 408 of the Companies Act 2006, no separate profit
and loss account is prepared for the parent Company.
30
30
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
7. Earnings per share
The weighted average number of shares in issue for both the basic earnings per share calculations is
59,999,725 (2012: 46,769,794) and for both the diluted earnings per share assuming the exercise of all
warrants and share options is 69,244,109 (2012: 54,639,657).
7 .1 The calculation of adjusted earnings per share, on profit after tax from continuing activities, is based
on the profit for the period of £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. A profit
after tax of £421,765 results, which is directly comparable with the previously reported figure for 2012
of £339,220. Based on the weighted average number of shares in issue during the year of 59,999,725
(2012: 46,769,794) the basic earnings per share is 0.70p (2012: 0.73p). The diluted earnings per
share is based on 69,244,109 shares (2012: 54,639,657) and is 0.61p (2012: 0.62p).
7 .2 The calculation of the basic earnings per share is based on the profit for the period of £238,909
(2012: £339,220) divided by the weighted average number of shares in issue of 59,999,725 (2012:
46,769,794), the basic earnings per share is 0.40p (2012: 0.73p). The diluted earnings per share,
assuming the exercise of all warrants and options is based on 69,244,109 (2012: 54,639,657) shares
and is 0.35p (2012: 0.62p).
8. Intangible assets - Group
Cost
At 1 November 2011
Additions
At 31 October 2012
Additions
At 31 October 2013
Amortisation
At 1 November 2011
Charge for the year
At 31 October 2012
Charge for the year
At 31 October 2013
Net book value
At 31 October 2013
At 31 October 2012
Licenses and
other
intangible
assets
£
1,213,671
643,431
Total
£
1,213,671
643,431
1,857,102
1,857,102
485,354
485,354
2,342,456
2,342,456
316,666
98,296
316,666
98,296
414,962
414,962
118,959
118,959
533,921
533,921
1,808,535
1,808,535
1,442,140
1,442,140
All amortisation is included in Cost of sales in the Consolidated Statement of Comprehensive Income.
31
31
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
9. Property, plant and equipment - Group
Office
equipment
Fixtures and
fittings
£
£
Cost
At 1 November 2011
Additions
Disposals
At 31 October 2012
Additions
Disposals
At 31 October 2013
Amortisation
At 1 November 2011
Charge for the year
Disposals
At 31 October 2012
Charge for the year
Disposals
At 31 October 2013
Net book value
At 31 October 2013
At 31 October 2012
77,880
34,238
(22,848)
89,270
6,073
(31,756)
63,587
52,648
20,797
(22,848)
50,597
21,470
(31,756)
40,311
23,276
38,673
Total
£
93,948
41,162
(28,082)
16,068
6,924
(5,234)
17,758
107,028
-
-
6,073
(31,756)
17,758
81,345
9,601
4,309
(5,234)
8,676
5,919
-
62,249
25,106
(28,082)
59,273
27,389
(31,756)
14,595
54,906
3,163
9,082
26,439
47,755
All depreciation is included in administrative expenses in the Consolidated Statement of Comprehensive
Income.
32
32
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
10. Investment in subsidiary undertakings
At 1 November 2012 and 31 October 2013
The Company holds interests in the following subsidiary undertakings.
Total
£
493,817
Company
Country of
incorporation
Nature of
business
Class of
shares
Share held %
Status
One Media iP Limited
Company number 05536271
England and Wales
Collecting Records LLP
Company number OC307927
England and Wales
One Media Intellectual Property
Limited
Company number 08224199
England and Wales
One Media Publishing Limited
Company Number 082123128
England and Wales
Audio-visual
content
Audio-visual
content
Audio-visual
content
Audio-visual
content
Ordinary
100% Operating
Partnership
99%
Dormant
Ordinary
100%
Dormant
Ordinary
100%
Dormant
The Company's investment at the balance sheet date is 100% of the share capital of the unlisted companies
One Media iP Limited, One Media Intellectual Property Limited and One Media Publishing Limited.
One Media iP Group Plc owns 99% of the Limited Liability Partnership Collecting Records LLP with the other
1% of the Limited Liability Partnership Collecting Records LLP held by One Media iP Limited.
All the above activities are included in the consolidated financial statements.
11. Receivables
Year ended
31 October
2013
Group
Year ended
31 October
2012
Group
Year ended
31 October
2013
Company
Year ended
31 October
2012
Company
£
£
£
£
-
14,815
425,827
40,811
-
41,451
345,905
18,406
1,400,299
-
3,921
15,207
1,053,292
-
1,428
2,310
481,453
405,762
1,419,427
1,057,030
Amounts owed by group
undertakings
Trade receivables
Other receivables
Prepayments
Trade and other receivables are usually due within 30 to 60 days and do not bear any effective interest. No
provision was made for doubtful debts at 31 October 2013 (2012: £2,860). The movement in the provision
for impairment during the year is as follows:
33
33
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
11. Receivables - continued
At 1 November 2011
Decrease in the provision for impairment
At 31 October 2012
Decrease in the provision for impairment
At 31 October 2013
12. Cash and cash equivalents
Total
£
4,140
(1,280)
2,860
(2,860)
-
An analysis of cash and cash equivalent balances by currency is shown below:
Year ended
31 October
2013
Group
Year ended
31 October
2012
Group
Year ended
31 October
2013
Company
Year ended
31 October
2012
Company
£
£
£
£
1,603,661
84,242
190
295,522
72,403
730
647,270
-
-
214,778
-
-
1,688,093
368,655
647,270
214,778
Year ended
31 October
2013
Group
Year ended
31 October
2012
Group
Year ended
31 October
2013
Company
Year ended
31 October
2012
Company
£
£
£
£
72,958
17,962
105,776
906,977
364,639
63,081
14,470
87,604
160,733
307,265
1,468,312
633,153
16,792
-
-
6,050
-
22,842
-
-
-
25,571
-
25,571
GB£
US$
Euro
13. Trade and other payables
Current
Trade payables
Social security and other taxes
Corporation tax
Accruals & deferred Income
Other payables
The fair value of trade and other payables has not been disclosed as, due to their short duration, management
considers the carrying amounts recognised in the balance sheet to be a reasonable approximation of their fair
value.
34
34
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
14. Share capital
Group and Company
Authorised:
2013
£
2012
£
200,000,000 ordinary shares of 0.5p each
1,000,000
1,000,000
Issued:
64,953,698 (2012: 54,628,698) ordinary shares of 0.5p each
324,768
273,143
The movement in the issued share capital over the last two years has been as follows:
For the year ending 31 October 2012:
• During the financial year ended 31 October 2012 a total of 11,000,000 warrants were exercised by
Directors and employees as follows:
Number of
warrants
exercised
Date exercised
Par
Value
1,000,000
4,000,000
4,000,000
500,000
500,000
500,000
500,000
11 June 2012
13 June 2012
10 August 2012
10 August 2012
11 September 2012
17 September 2012
17 September 2012
0.5p
0.5p
0.5p
0.5p
0.5p
0.5p
0.5p
Share
Capital
£
5,000
20,000
20,000
2,500
2,500
2,500
2,500
Share
Premium
arising
£
10,000
20,000
20,000
7,500
5,000
5,000
7,500
11,000,000
55,000
75,000
For the year ending 31 October 2013:
• On 10th April 2013, pursuant to the Placing on the AIM Market, 9,375,000 ordinary shares of 0.5p
were issued at price of 8p per share. The difference between the total consideration received of
£750,000 and the nominal value of shares issued of £46,875 has been transferred to the share
premium account. The costs associated with the issue dealt with through the share premium
account were £50,501.
• On 10th July 2013 an employee exercised options on 100,000 ordinary shares of 0.5p each at a
price of 2.75p per share. The difference between the total consideration received of £2,750 and the
nominal value of the shares issued of £500 has been transferred to the share premium account.
• On 27th September 2013 an employee exercised options on 500,000 ordinary shares of 0.5p each
and 250,000 warrants on ordinary shares of 0.5p each. The difference between the total
consideration received of £17,500 and the nominal value of the shares issued of £3,750 has been
transferred to the share premium account.
• Finally On 22nd October 2013 an employee exercised options on 100,000 ordinary shares of 0.5p
each at a price of 2.75p per share. The difference between the total consideration received of
£2,750 and the nominal value of the shares issued of £500 has been transferred to the share
premium account.
35
35
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
14. Share capital - continued
The movement in warrants during the year was as follows:
Date of grant
Number of
warrants
Par
Value
Exercise
price
Period of
subscription
17 September 2012
5,750,000
0.5p
1.5p
Warrants outstanding at
31 October 2012
Exercised in year
27 September 2013
Warrants outstanding
at 31 October 2013
5,750,000
(250,000)
0.5p
5,500,000
1.5p
1.5p
3 years
3 years
3 years
The number of Directors holding warrants at 31 October 2013 was 4 (2012: 4) and senior staff 1 (2012: 2).
The fair value of the outstanding warrants at 31 October 2013, based on the Black-Scholes model was 1.5p
per share based on a risk free interest rate of 1% and a volatility of 30%. The warrants have been issued to
underpin key Directors and senior staff service conditions. The share based payment charge in relation to
these warrants is spread over the period of subscription. A share based payment charge of £6,588 has been
made for the year ended 31 October 2013 (2012: £439).
During the year none of the Directors exercised warrants, 250,000 warrants were exercised by a senior
member of staff. In the year ended 31 October 2012 11,000,000 warrants were exercised by Directors and
employees.
Included in the financial statements is £8,400 due to the Group by an employee in respect of PAYE & NI due
on the exercise of warrants on 27th September 2013. This amount was repaid in December 2013. Included
in the Consolidated Statement of Financial Position at 31 October 2012 was £16,800 due to the Group by
Michael Antony Infante in respect of PAYE and NI due on the exercise of his warrants during the year. This
amount was repaid on 20 February 2013 at the same time as the Group settling the equivalent outstanding
liability to HMRC.
At 31 October 2013 2,900,000 (2012: 3,600,000) share options of 2.75p were outstanding. The number of
Directors holding share options at 31 October 2013 was 4 (2012: 4) and senior staff and employees 4
(2012: 5). The share options have been issued to underpin key Directors and senior staff service conditions.
The share based payment charge in relation to these share options is spread over the period of subscription
The options were granted on 7 March 2011 when the share price was 2.75p per share. The Fair Value of
these options, based on the Black Scholes model, was 4.15p per share based on a risk free interest rate of
5% and a volatility of 40%. The options are exercisable on or before 6th March 2018. A share option charge
of £7,188 has been made for the year ended 31 October 2013 (2012: £7,186).
36
36
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
15. Company reserves
Share
redemption
reserve
Share
premium
£
£
Share
based
payment
reserve
£
Retained
earnings
Total
£
£
At 1 November 2011
239,546
643,271
4,791
259,332
1,146,940
Proceeds from the issue of new
shares
Share based payment charge
Profit for the year
Dividends
-
-
-
-
75,000
-
-
-
-
7,625
-
-
-
-
75,000
7,625
308,320
308,320
(70,974)
(70,974)
At 1 November 2012
239,546
718,271
12,416
496,678
1,466,911
Proceeds from the issue of new
shares
Share issue costs
Share based payment charge
Profit for the year
Dividends
-
-
-
-
-
721,375
(50,501)
-
-
-
-
-
13,776
-
-
-
-
-
721,375
(50,501)
13,776
131,478
131,478
(70,135)
(70,135)
At 31 October 2013
239,546
1,389,145
26,192
558,021
2,212,904
The Consolidated Statement of Changes in Equity is shown on page 17.
16. Dividends per share
The total dividends paid in the year ended 31 October 2013 was £70,135 (2012: £70,974). These dividends
were paid in two installments. On 29th November 2012 at 0.037p per share and on 9th July 2013 a further
dividend of 0.078p per share was paid.
17. Contingent liabilities
Due to the nature of the business, from time to time, claims will be made against the Group. Nonetheless,
the Directors are not aware of any claims that are likely to be successful and, in their opinion, result in a
material liability. In 2013 and 2012 the Directors were not aware of any claims that were likely to be
successful and result in a material liability.
18. Capital commitments
There were no capital commitments at 31 October 2013 or at 31 October 2012.
37
37
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
19. Operating lease commitments
Rent
Vehicles
Within
one year
£
34,489
7,070
41,559
1 to 5 years
£
-
4,252
2013
Total Within one
year
£
£
1 to 5
years
£
34,489
11,322
47,362
9,083
31,575
9,083
2012
Total
£
78,937
18,166
4,252
45,811
56,445
40,658
97,103
The lease for rent is due to expire on 31 July 2014 and for the vehicles leases during 2014 and 2015. The
Company has no operating lease commitments.
20. Financial instruments
The Group uses financial instruments comprising cash and cash equivalents, other loans and various other
short-term instruments such as trade receivables and trade payables which arise from its operations. The
main purpose of these financial instruments is to fund the Group's business strategy and the short-term
working capital requirements of the business.
Financial assets by category
The IAS 39 categories of financial asset included in the Consolidated Statement of Financial Position are as
follows:
Loans and
receivables
Non financial
assets
2013
Total
Loans and
receivables
£
£
£
Non
financial
assets
£
2012
Total
£
£
-
-
14,815
425,827
40,811
Licenses and other
intangible assets
Property, plant and
equipment
Trade receivables
Other receivables
Prepayments
Cash and cash
equivalents
1,808,535 1,808,535
- 1,442,140
1,442,140
26,439
-
-
-
26,439
14,815
425,827
40,811
-
41,451
345,905
18,406
47,755
-
-
-
47,755
41,451
345,905
18,406
1,688,093
- 1,688,093
368,655
-
368,655
2,169,546
1,834,974 4,004,520
774,417 1,489,895
2,264,312
Included within loan and receivables above are cash and cash equivalents of £647,270 (2012: £214,778),
and trade and other receivables of £19,128 (2012: £3,738) excluding amounts owed by group undertakings
in relation to the company.
38
38
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
20. Financial instruments - continued
Financial liabilities by category
The IAS 39 categories of financial liabilities included in the Consolidated Statement of Financial Position are
as follows:
Other
financial
liabilities
at
amortised
cost
£
72,958
17,962
105,776
-
364,639
Liabilities
within the
scope of
IAS 39
£
-
-
-
2013
Total
£
Other
financial
liabilities
at
amortised
cost
£
72,958
63,081
17,962
105,776
14,470
87,604
Liabilities
within
the
scope of
IAS 39
£
-
-
-
2012
Total
£
63,081
14,470
87,604
906,977
-
906,977
364,639
-
307,265
160,733
-
160,733
307,265
561,335
906,977 1,468,312
472,420
160,733
633,153
Trade payables
Social security and
other taxes
Corporation tax
Accruals and deferred
income
Other payables
Included within other financial liabilities are trade payables of £16,792 (2012: £Nil), and other payables of
£6,050 (2012: £25,571) in relation to the company.
The Group is exposed to a variety of financial risks which result from its operating activities. The Board is
responsible for co-ordinating the Group's risk management and focuses on actively securing the Group's
short to medium term cash flows. Long term investments are managed to generate lasting returns.
The Group does not actively engage in the trading of financial assets and has no financial derivatives. The
most significant risks to which the Group is exposed are described below:
Credit risk
The Group's credit risk is primarily attributable to its trade receivables, other receivables and cash and cash
equivalents. The amounts presented in the Consolidated Statement of Financial Position are net of any
allowances for doubtful receivables. The Group has a significant concentration of credit risk associated with
its distributor of digital content, The Orchard. Cash at bank is all held with highly rated banks or deposit
takers, the suitability of which is constantly reviewed. The maximum credit to which the Group is exposed,
including Cash at bank of £1,688,093 is £2,169,546 (2012: £774,417).
Liquidity risk
The Group seeks to manage risks to ensure sufficient liquidity is available to meet foreseeable needs and to
invest cash and assets safely and profitably. Short term flexibility is achieved by the use of money markets
to deposit excess cash which is not required in the short term. The directors prepare cash flow forecasts on
a regular basis to identify at an early stage any short term funding difficulties.
All the financial liabilities noted above, with the exception of the liability to corporation tax of £105,776
(2012: £87,604) are expected to result in cash outflow within six months of the year end. At 31 October
2013, £455,559 (2012: £384,816) of the financial liabilities were expected to result in cash outflow within six
months of the year end.
39
39
Notes to the Consolidated Financial Statements
For the year ended 31 October 2013
20. Financial instruments - continued
Currency risk
The Group is exposed to foreign exchange risk in connection with its digital downloading business where the
revenue is largely transacted in US$ and the settlement of royalty and other liabilities arising from this
revenue is largely denominated in US$.
21. Related party transactions
There were no related party transactions in the year under review or in the year ended 31 October 2012,
other than transactions with the directors as disclosed in the Directors' Report and note 5 to the financial
statements.
At 31 October 2013 the principal operating subsidiary One Media iP Limited owed the Company £1,400,298
(2012: £1,053,292). No formal inter-company loan agreement is in existence between the Company and its
subsidiaries. During the year the Company made a management charge of £297,000 (2012: £208,122)
against One Media iP Limited and received a dividend of £300,000 (2012: £300,000).
40
40
ONE MEDIA iP GROUP Plc
(Formerly One Media Publishing Group Plc)
623 East Props Building Pinewood Studios Iver Heath
Bucks Sl0 0NH United Kingdom
TEL: +44 (0)1753 785500 EMAIL: info@onemediaip.com
www.onemediaip.com
Company No. 05799897