Company Information
Directors
Secretary
Registered Office
Nomads
Brokers
Solicitors
Bankers
Registrars
Auditors
Michael Antony Infante
Scott Cohen
Philip Miles
Steven Gunning
Pinewood Studios
623 East Props Building
Pinewood Road
Iver Heath
Buckinghamshire SL0 0NH
Cairn Financial Advisers LLP
61 Cheapside
London EC2V 6AX
Panmure Gordon (UK) Limited
One New Change
London EC4M 9AF
Marriott Harrison
Staple Court
11 Staple Inn Buildings
London WC1V 7QH
Coutts & Co
440 Strand
London WC2R 0QS
Barclays Bank Plc
Level 27, 1 Churchill Place
London E14 5HP
Share Registrars Ltd
9 Lion and Lamb Yard
Farnham
Surrey GU9 7LL
James Cowper Kreston
Reading Bridge House
George Street
Reading, Berkshire
Berkshire RG1 8LS
Contents
Executive Chairman's Statement
Report of the Directors
Corporate Governance
Strategic Report
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 - 5
6 - 8
9 - 10
11 - 14
15 - 19
20
21
22
23
24
25 - 31
32 - 44
Executive Chairman’s Statement
For the year ended 31 October 2017
I left off last year by stating that I was beginning to sound like a worn out record being played at the
wrong speed. Well I am pleased to report that like the music we sell, we are back on track. The music
industry is reporting growth and the press have been bullish in their analysis on music streaming. Album
and track downloading is giving way to the subscription based and advert-funded method of consumer
music buying. We have experienced the green shoots of recovery and are positioning ourselves to meet
the new demands of a more fully rounded copyright business. As we approached our year-end,
strategic changes in both our systems and personnel supported our continued growth. We have
engaged in further system development with TCAT and employed additional ‘software developers’. We
have rationalised our management team to have the right skill sets in place to take us forward and kept
a firm grip on financial control. Over the year under review we have continued to invest in system and
sales development for the Company, which is always hard to bear in a downward trend, but has proven
to be the correct route. We have managed this situation without any borrowing or additional equity
funding. Yes, it has meant a suspension of our dividend program and has been reflected in rigorous
control measures, but we are now better positioned to meet the new challenges. What are the Group’s
new challenges?
Firstly we have aligned ourselves with the predicted growth path of the music and video industry over
the next five years. Our core business is still audio based but as we grow we can fully expect to see an
increase in revenues coming from a proactive sales initiative from the Group’s video library into
emerging territories such as Russia, India and China. Our Men & Motors back catalogue and newly
formatted show initiative has found a partnership with industry specialists Global Genesis Group, a TV &
Film distributor based in North America, who are tasked with finding the sponsorship and broadcasters
for a new Men & Motors show format developed in the UK. Meanwhile TCAT is making progress with
the major record distributors and post year-end has signed its second international record label as a key
account. We anticipate further progress with TCAT, as its service becomes a recognised industry
standard in copyright enforcement and protection.
As confidence returns into our sector we anticipate further acquisitions in keeping with our original buy
and build strategy. Music, video and publishing opportunities, will all be on our radar. At the half year I
stated that the music industry’s trade revenues were expected to grow by 5.1% (source BPI Official
Charts Company) and the Group is pleased to say that we surpassed that benchmark achieving 14%
growth over the year under review. In the financial overview below are further industry statistics.
Currency still impacts our profitability. Shifts in both the US Dollar and the Euro continue to affect both
our revenue and profits and we continue to anticipate a fluctuating currency exchange rate.
The market overview below will provide a greater in-depth look at the state of the global music market.
We maintain a ‘measured pace’ on rights acquisitions whilst the market place stabilises and multiples
adjust accordingly. Most acquisitions are based on the ‘targets’ previous financial performance, so a
return to music industry growth should benefit our rights acquisition initiative.
Our in-house team of Creative Technicians that manage our metadata, design our digital artwork and
are all ‘YouTube accredited’ by the YouTube annual exam programme, have adapted their skillsets to
include digital audio publishing. The Group has introduced a series of ‘digital on-demand’ printed books,
uploaded to Amazon’s ‘Print on Demand’ service. The original sound master to many of our ‘spoken
word’ recordings has been transliterated and presented as paperback books or ‘ebooks’. This
necessitates no stock holding and no print runs. Basically a digital file is uploaded and acts as ‘master’
to each ‘printout’ on a one-off basis. The service is fully automated and operated by our distribution
partner, Amazon.
Our music library continues to be used for synchronisation purposes. This is the use of our audio
behind film, TV or advertising. In the year under review we have had placements in shows such as
Nashville, Hawaii Five-0, Marvel’s The Flash, Ghosted, Bad Moms and American Gods to name a few.
We are pleased to report that TCAT has been successfully trialled with one major international music
aggregator and subsequently we have entered into a commercial arrangement monetising the service.
Post year-end we are pleased to confirm that another major international record company has
contracted with TCAT and started using our service. We are now offering TCAT as a 'Software as a
Service' (SAAS) analysis tool to the wider major record industry with a variety of bespoke services. Each
new client requires a varying rights management service and undertakes to an exacting ‘brief’ prior to
the service being activated. We anticipate, as our experience grows and in-house developers create
1
Executive Chairman’s Statement
For the year ended 31 October 2017
‘industry-first’ data sets for our TCAT clients, that the value of TCAT will be fully realised as we roll out
the service. For more information on TCAT please visit www.tcat.media.
Review of Activities
Financial Overview
The year under review has been encouraging and we have seen revenues grow by 14% up to
£2,337,624 and our EBITDA up by 121% to £535,678 (2016: £242,326). Our operating profit is up to
£297,416, a significant increase over our 2016 figure of £28,959. Despite our cash investment into our
new technologies, rights investments, exhibitions and the cost of certain staff realignments, our year-end
cash balance is up by 14% at £383,051. Our Gross margin is stable at 45%. Overheads for the year,
after the strict administrative controls implemented by the Group in reaction to the previous year’s drop
in revenues, are reported at £758,311 compared to 2016 at £876,742.
A profit after tax attributable to equity shareholders of £266,772 is reported for the financial year.
Increased from the £62,871 in 2016 and due to the combined effects of increased revenues, a reduced
foreign exchange charge and maintained margins. The corporation tax expense of £30,829 in the period
(2016: credit of £32,852) includes Research and Development allowances available to the Group
(£38,812 prior year and £35,315 current year). At the end of the year our cash position is reported at
£383,051 (2016: £335,664). Due to the uncertainties in our business, mentioned elsewhere in this
report, we have been careful over the investment in content and rights with this year showing a spend of
£228,543, reduced from the £280,176 in 2016.
The board has considered the year under review and has recommended that no dividend be paid (2016:
£100,896). As always this will be a matter for review by the board semi annually. We continue to operate
a steady, considered approach with our acquisition programme. We will broaden our search for IP
content, technical development, publishing and live events. We will consider all methods of rights
exploitation outside of the traditional music platforms.
Acquisition and RNS Updates Nov 2016 to Oct 2017
We have taken a consolidative view of the market whilst the buying trends shift. We are preserving our
resources regarding content acquisition until the merry-go-round settles. However as certain
opportunities present themselves we are ready to make acquisitions where bargains may exist. I
believe there will be some such deals on the horizon. We are underpinning existing contracts by
extending existing rights and ensuring that our library of rights remains robust.
On 25 January 2017 we announced that we had renewed the exclusive rights to the MD Production
music catalogue for a recoupable advance of $18,000 (eighteen thousand US Dollars). The MD
catalogue comprises over 1,000 original recordings from the 1960s to the 1980s. With performances
from artists such as Don Fardon, The Cockerel Chorus, Dando Shaft, Gill Scott-Heron, Greyhound, Roy
Harper, Johnny Kidd & the Pirates, Kenny and Python Lee Jackson to name just a few. The tracks have
been marketed exclusively by One Media since 2007 on a royalty-sharing basis. MD Productions has
been a long-term music provider and has received three advances and on-going royalties from One
Media throughout the term. One Media is pleased to report that it has always fully recouped its
advances throughout the relationship.
On 30 January 2017 we started work on reorganising the Group’s websites. Five new websites were
created promoting the Group’s expanded activities. Firstly we have the new site; One Media iP Group
Plc (www.omip.co.uk). Here you will find all the investor relation information and dedicated summaries of
the Group’s subsidiaries. The day-to-day activities, artist information and social media activities of our
audio and video businesses is now housed under www.onemediaip.com. Our Technical Copyright
Analysis Tool (TCAT) is at (www.tcat.media/). Here you will find our informational video on the ‘Software
as a Service’ (SaaS) technology. Men & Motors can be found on (www.menandmotors.com) a new and
exciting style for this site showing the links to the archive of over 3,400 shows and information on our
initiative for a new format of TV show still being presented to various broadcasters. Point Classics, our
classical collection of over 3,000 recordings (www.pointclassics.com) is now the new home for this
collection. Music supervisors use this site to sort, search and compile classical recordings for film and
2
Executive Chairman’s Statement
For the year ended 31 October 2017
Review of Activities – continued
TV. We are pleased to report that all of the work in creating the new sites was completed on time and
within budget.
It is the Group’s intention to maximise the value on its brand ownership and to more clearly define their
individuality within the market place, as demonstrated on our new corporate website (www.omip.co.uk).
Men & Motors by way of example has already been registered (albeit dormant), as a stand-alone
subsidiary company in preparation for broadcast and trading demand. The same applies for TCAT and
the Group has registered TCAT Ltd should this be required in the future.
On 1 February 2017 we announced that we had moved our banking services to Coutts & Co ("Coutts")
of 440 Strand, London. We commenced the orderly handover from Barclays to Coutts during February
2017. The Group confirmed at the time that it has no debt and is cash generative. Coutts experience
within media and content, with many focussed services and seminars should prove invaluable to the
Group with its expansion programme into varying media and technology activities.
On 30 April 2017 the Group announced that One Media had signed an exclusive exploitation deal with
Getty Images for 'clips' from the Group’s moving image library rights. The deal will involve One Media
supplying ‘clips’ from its growing video content library to Getty Images for representation and
exploitation to Getty’s worldwide client base for multiple use in documentaries, advertising and all
moving image usages. Getty Images is one of the most esteemed sources of visual content throughout
the world, with over 200 million assets available through its industry-leading sites www.gettyimages.com
and www.istock.com. The distribution deal will see the Group create thousands of clips from its archive
to be made available to Getty Image’s clients on their web-based platforms. The Group’s video archive
has grown by acquisition over that last few years and we are now able to further exploit the content via a
‘clipping’ service and to supply the world leader in image hire. The Group’s Creative Technicians are
already trained and equipped to perform this function in-house and have been successful in building
billions of views with the Company’s content for sites like YouTube. Content from Men & Motors, Alien
Autopsy and the HiBrow film catalogue together with our cleared music video content will spearhead the
service.
On 25 May 2017 we announced that we had signed our first major music distributor to utilise the
services of the Group’s Technical Copyright Analysis Tool (“TCAT”). The global music distributor started
using the TCAT services from June 2017 to monitor its weekly release schedules, monitor music
conflicts and potential copyright infringements. Following two years of development the deal will see the
commercialisation of TCAT on an annual contract basis. Confidentiality clauses in the agreement
prevents us from disclosing the identity of our client at this time and any of the commercial terms but the
Group is very excited by having TCAT deployed as a technical resource to an international major record
aggregator & distributor.
On 12 September 2017 The Company accepted the resignation of Mr Poplawski a Non-Executive
Director (NED). This had been originally tended in February 2017 and we thank him for his input over
the years. It is the Company’s intention to announce new NED appointments during 2018.
Post Year end on 18 December 2017 and to much national press, it was announced that an equity
investment totalling £375,000 gross in the Company was made by Lord Michael Grade and Ivan
Dunleavy, and their proposed appointments as Non-Executive Directors.
Lord Grade said: “I firmly believe the music industry has turned a corner – led by streaming services,
which are seen as the basis of future growth by content owners. One Media is a very accomplished
business with strong credentials, and we share the management team’s view of the music business’
development. I look forward to working closely with them and using my experience to add value and
expedite the scale up of the business.”
“Our investment is a gesture of our firm commitment and a demonstration of our belief in One Media’s
future prospects,” added Ivan Dunleavy. “We have a long-established relationship with Michael Infante
and are impressed with how he has run this company and developed an excellent reputation in this
industry. With music streaming set to grow, not only will this company benefit from sales of its portfolio
of digital content, it is also able to provide a vital service to copyright owners through its in-house
developed proprietary software, TCAT, which tracks and monitors where their music is made available
for sale. We look forward to working with the One Media’s team to build on the strong foundations and
advancing to the next stage of development.”
3
Executive Chairman’s Statement
For the year ended 31 October 2017
Review of Activities – continued
Market Overview
The market has seen more turns in the last five years than Brands Hatch. It has taken (in market terms)
a very short period of time for downloading to become the poor relation to streaming. All the major
international record labels report a return to growth and most headlining industry news amplifies this.
The key figures published to April 2017 (source IFPI report) puts global revenue growth up by 5.9%. The
digital share of global revenues now represents 50% of total sales up 17.7% over the previous year and
a staggering growth in streaming revenues up 60.4% over 2016. Physical (CDs & Records) revenues
dropped despite the great hope of vinyl, falling by 7.6% and download digital (the iTunes model) sales
revenues fell by 20.5%. Many of the major labels do not disclose detailed music sales information
however the Warner Music Group (WMG) announced its headline growth at 10.2% in total revenues.
WMG saw its revenues grow from $3.25bn in the year ended 30 September 2016 to $3.58bn in the year
ended 30 September 2017. Within that, WMG’s digital revenues grew by 24.7% to £1.87bn being 52.3%
of the group’s total revenues. Overall, WMG reported a net profit of $149m for its latest fiscal year, up
from $30m the previous year (source Musically). Royalty bearing artists and publishers alike will be
benefiting as profits return to the industry. Streaming continues the march for the consumer-preferred
method of purchasing music as intuitive technology enables the user to engage with content legitimately
and meets commercial requirements for rights owning music businesses. A kind of West meets East.
As more territories are commercialised, we are seeing for the first time in many years, a happier music
industry. Still to be addressed is the ‘The Value Gap’. The value gap describes the growing mismatch
between the value that user uploaded services, such as YouTube, extract from music, and the revenue
returned to those who are creating and investing in music. The value gap is the next ‘bridge’ to be built.
But Rome was not built in a day.
Executive Chairman’s Statement
Over the last four years we have seen streaming grow from very low monetisation to being the
consumer-preferred method of buying music.
4
For the year ended 31 October 2017
Review of Activities – continued
Employees
Our headcount as of 31 October 2017 was 12 including all staff and executive and non-executive
directors (Group and Subsidiaries). On the 7th September 2017 Alice Dyson-Jones (managing director
of One Media IP Ltd (a Group subsidiary) was appointed as a director of the British Phonographic
Industry (BPI) as an independent music label representative. The Company has had history in the past
with both Michael Infante and Scott Cohen representing ‘the Indies’ over the last ten years at the BPI in
similar roles. It is a great achievement and we congratulate her.
I would also like to thank Scott Cohen, Philip Miles and Steve Gunning for their individual contributions
at board level especially in such a challenging year.
Litigation
On the 12 April 2017, we announced that further to our announcement of 20 February 2017 that we had
reached an amicable settlement to the on-going Middle District of Tennessee dispute with HHO
Licensing Ltd, Henry Hadaway Organisation Ltd and Henry Hadaway personally. The terms of the
settlement are confidential. The matter is now closed.
On the 1 November 2017 we announced that further to the Company’s announcement on 27 June 2017
the Company can confirm an end to the ‘action’ in which it was involved in the Southern District of
Florida Court USA. One Media has settled its involvement for a non-material amount in the case brought
by Kemar McGregor.
Outlook
I am delighted to welcome Ivan Dunleavy and Lord Grade as investors into One Media. I am also
excited by the wealth of experience that this will bring to the Company following their proposed
appointments as non-executive directors. They have an exceptional track record, both individually and
combined, with their partnership at Pinewood Studios overseeing a more-than fivefold increase in the
value of that business. In 2018, the music industry and One Media are both poised to benefit from uplifts
in the monetisation of content through streaming and we will also extend our reach with exciting
initiatives such as TCAT and future acquisitions into new areas of our industry. My team of directors
(both main board and subsidiary) and I remain committed to delivering value and will continue to meet
the challenges that our industry faces. Thank you for your continued support.
Michael Infante
Chairman and CEO
23 February 2018
5
Report of the Directors
For the year ended 31 October 2017
The Directors present their annual report together with the audited Consolidated financial statements of
the Group for the year ended 31 October 2017.
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
Scott Cohen
Roman Poplawski (resigned 12 September 2017)
Philip Miles
Directors and their interests
The Directors' interests (including family interests) in the shares of the Company were as follows:
Ordinary shares of 0.5p
each
At 31 October 2016
At 31 October 2017
Michael Antony Infante
Scott Cohen
Roman Poplawski
Philip Miles
Michael Antony Infante
Scott Cohen
Roman Poplawski
Philip Miles
Nos
Nos
25,577,862
500,000
n/a
438,340
25,577,862
500,000
3,793,377
438,340
Share Options in Ordinary shares of 0.5p each
At 31 October 2016
At 31 October 2017
at 2.75p each
Nos
at 2.75p each
Nos
500,000
500,000
n/a
-
500,000
500,000
500,000
-
The options are exercisable at 2.75p per share on or by 6 March 2018.
6
Report of the Directors
For the year ended 31 October 2017 – continued
Directors and their interests continued
Michael Antony Infante
Scott Cohen
Roman Poplawski
Philip Miles
Options in Ordinary shares of 0.5p each
At 31 October 2016
At 31 October 2017
at 9p each
Nos
500,000
500,000
n/a
500,000
at 9p each
Nos
500,000
500,000
500,000
500,000
The options are exercisable at 9p per share on or by 20 April 2022.
Options in Ordinary shares of 0.5p each
At 31 October 2016
At 31 October 2017
at 14.5p each
Nos
at 14.5p each
Nos
Philip Miles
100,000
100,000
The options are exercisable at 14.5p per share on or by 4 June 2021.
Future Developments
Likely future developments in the company's business have been included within the Executive
Chairman's Statement on pages 1 to 5.
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.
7
Report of the Directors
For the year ended 31 October 2017 - continued
Disclosure of information to auditors
Each of the persons who are directors at the time when this Directors' Report is approved has confirmed
that:
So far as that director is aware, there is no relevant audit information of which the company and the
group’s auditors are unaware, and that director has taken all the steps that ought to have been taken as
a director in order to be aware of any relevant audit information and to establish that the company and
the group’s auditors are aware of that information.
Auditors
James Cowper Kreston have expressed their willingness to continue in office. A resolution to re-appoint
James Cowper Kreston 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
Director
23 February 2018
8
Corporate Governance Report
For the year ended 31 October 2017
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 for 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 assurance against material
misstatement or loss.
In addition to the traditional financial internal controls the Group seeks to protect our licenses 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.
The Audit Committee is chaired by Philip Miles supported by Scott Cohen, a Non-Executive Director.
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.
9
Corporate Governance Report
For the year ended 31 October 2017 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
The Remuneration Committee is chaired by Scott Cohen, a Non-Executive Director supported by
Steven Gunning who is Group Company Secretary. The Remuneration Committee met with the
Executive Chairman at the beginning of the financial year to discuss, and subsequently agreed, his
recommendations for Executive Directors remuneration for the year.
Remuneration of the Directors for the year ended 31 October 2017 is as follows:
Michael Antony Infante
Philip Miles
Scott Cohen
Roman Poplawski
Fees and
emoluments
Year ended
31 October 2017
£
112,245
97,580
19,271
67,919
297,015
Fees and
emoluments
Year ended
31 October
2016
£
109,253
60,258
20,521
51,141
241,173
Bonuses and Performance Conditions
Included in the Fees and Emoluments for Michael Anthony Infante are taxable benefits in respect of
Health Insurance of £5,371 (2016: £4,082), taxable benefit for a company car of £7,280 (2016: £6,720),
attributable share option cost of £4,271 (2016: £4,271) and pension contributions of £4,323 (2016:
£3,180). Michael Infante did not receive a bonus in the year (2016: £nil). Fees and Emoluments for
Philip Miles include taxable benefit for a company car of £5,358 (2016: £3,827), attributable share option
cost of £4,326 (2016: £2,523) and pension contributions of £6,296 (2016: £nil). Philip Miles did not
receive a bonus in the year (2016: £nil). Scott Cohen received £15,000 (2016: £16,250) for his role as
non-executive director and £4,271 (2016: £4,271) attributable to share option costs. Roman Poplawski
Fees includes £12,500 (2016: £16,250) for his role as Non-executive Director, £32,500 (2016: £30,620)
in respect of his role as Business Affairs Adviser providing advice on legal and contractual matters,
£21,921 (2016: £nil) relating to loss of office and £998 (2016: £4,271) attributable 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 share options
granted there are no other specific long term incentive plans for any of the Directors. The Company
received qualifying services from 4 (2016: 5) Directors under long term incentive qualifying schemes.
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.
10
Strategic Report
For the year ended 31 October 2017
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 5.
Whilst the Group focus is primarily on the digital market place, traditional routes to market are not being
ignored. Changes in the retail sector continue to accelerate and there are still both national and global
economic problems. The Directors consider, however, that there are substantial opportunities and
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 £nil (2016: £100,896) 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 £80,152 (2016: £121,422) 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 rose to £2,337,624 (2016: £2,045,652) a 14.3% year on year increase.
Progress assessment includes regular updates on key partners, distribution outlets and market
segments.
Overhead
Management closely monitors 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 decreased to £758,311 (2016: £876,742) a 13.5% decrease.
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. Share price as at 31 October 2017 was 3.50p (2016: 3.50p).
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.
11
Strategic Report
For the year ended 31 October 2017 - 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 2017 approximately 71% (2016: 68%) 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 2017 approximately 83% (2016: 80%) of the Group’s revenue 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 3
The Group operates in a market dominated by established traditional companies such as Universal,
Warner and Sony (the “Big 3”). The Big 3 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 3
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’ terms of business
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 terms of business and type of content they will distribute, as
defined in their “style guides”, can affect 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.
12
Strategic Report
For the year ended 31 October 2017 - 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 five
holdings in excess of 3% of the issued share capital of the Company at 23 February 2018. Helium
Special Situations Fund is holding 10.7 % (9,300,000 ordinary shares of 0.5p each), Lord Michael Grade
is holding 8.7 % (7,500,000 ordinary shares of 0.5p each), Ivan Dunleavy is holding 8.7 % (7,500,000
ordinary shares of 0.5p each), Canaccord Genuity Group Inc (formerly Hargreave Hale Limited) 8.1%
(7,000,000 ordinary shares of 0.5p each) and Livingbridge VC LLP 5.7% (4,925,000 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.
13
Strategic Report
For the year ended 31 October 2017 - 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.
Key accounting policies
Principal accounting policies are included on pages 25 to 31, including critical accounting estimates and
judgements on page 29.
Cash flows
Full details of cash flows generated by the business are disclosed within the Consolidated Cash Flow
Statement on page 24. 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 5.
On behalf of the Board
Michael Antony Infante
Director
23 February 2018
14
Independent Auditors' Report
to the Members of One Media iP Group Plc
Opinion
We have audited the financial statements of One Media IP Group Plc (the ‘Company’) for the year
ended 31 October 2017 which comprise the Consolidated Statement of Comprehensive Income, the
Consolidated and Company Statement of Financial Position, the Consolidated Statement of Changes in
Equity, the Consolidated and Company Statement of Cash Flows and notes to the financial statements,
including a summary of significant accounting policies. The financial framework that has been applied in
their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted
by the European Union.
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the Group and of the parent
company’s affairs as at 31 October and of the Group’s profit for the year then ended;
the financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union and, as regard the parent company’s financial statements, as applied in
accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards of Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further discussed in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
Group and Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standards as applied to listed entities, and
we have fulfilled our ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require
us to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the Group and parent company’s ability to continue to adopt the
going concern basis of accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
An overview of the scope of our audit
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (‘ISAs
(UK and Ireland)’). Our audit approach was based on a thorough understanding of the company’s
business and is risk-based. We obtained an understanding the internal controls as required by Auditing
Standards and carried out appropriate substantive and analytical procedures. We undertook
substantive testing on significant transactions, balances and disclosures, the extent of which was based
on our assessment of general and specific audit risks.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
15
Independent Auditors' Report
to the Members of One Media iP Group Plc
material misstatement (whether or not due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy; the allocation of resources in the audit; and directing efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. We determined that there were no key matters applicable to the parent company to
communicate in our report.
Revenue recognition
Risk description
In common with most trading businesses, there is a risk of revenue being materially misstated, either by
error or fraud.
How the scope of our audit responded to the risk
To assess the appropriateness and completeness of revenue recognised in the year we performed the
following procedures:
•
•
•
•
•
•
examined a sample of revenue transactions by reference to underlying source documentation;
examined on a sample basis the different types of revenue recognised during the year and around
the period end;
reviewed manual journals posted to the revenue account in the period and subsequent to year-end
gaining an understanding of the appropriateness of these;
reviewed accrued income at the balance sheet date and assessed its accuracy by reference to
underlying commercial agreements and subsequent events;
considered the appropriateness and application of the Group’s accounting policy for revenue
recognition; and
considered the disclosures in the financial statements regarding revenue.
Key observations
The results of our testing were satisfactory.
Completeness of royalty accrual
Risk description
The Company has a number of royalty agreements in place. Royalties are payable based on sales
figures at certain rates. There is a risk that the royalty accrual may be understated or overstated.
How the scope of our audit responded to the risk
To assess the appropriateness and completeness of royalty accrual recognised in the year we
performed the following procedures:
•
•
•
gained an understanding through walkthroughs performed and discussions with management of the
process in place for recognising royalty accruals;
examined the calculation of the royalty accruals; and
examined a sample of royalty accruals and preformed a recalculation of the accrual.
Key observations
The results of our testing were satisfactory.
16
Independent Auditors' Report
to the Members of One Media iP Group Plc
Valuation and existence of intangible assets
Risk description
The Company has a number of intangible assets of varying types. There are various risks associated
with these assets including accurate capturing of costs to be capitalised, ensuring capitalised amounts
meet the recognition criteria, and impairment risk.
How the scope of our audit responded to the risk
To assess the appropriateness of the application of accounting standards and the assumptions and
judgements made by management in the recognition and measurement of intangibles we performed the
following procedures:
•
•
•
•
•
•
gained an understanding on how management recognise intangible assets of various classes;
examined the assets recognised and considered their recognition against the criteria detailed in IAS
38;
examined a sample of assets capitalised in the year to supporting evidence;
reviewed amortisation calculations and considered the appropriateness of the rates applied;
considered impairment risk and reviewed the impairment reviews prepared by management ;and
considered the disclosures in the financial statements regarding intangibles.
Key observations
The results of our testing were satisfactory.
Our application of materiality
We define materiality as the magnitude of misstatement or omission in the financial statements that
makes it probable that the economic decisions of a reasonably knowledgeable person would be
changed or influenced. We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgment we determined overall materiality for the financial statements as a
whole to be £23,000 (2016: £17,500), based on one per cent of turnover. As the company is in a growth
phase and management’s focus is on increasing the turnover of the Group, a turnover benchmark was
considered appropriate. Performance materiality of £17,000 (2016: £13,000) was applied for testing and
it was agreed with the board that we would report on all audit differences in excess of £1,000 (2016:
£1,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative
grounds. We also report on disclosure matters that we identified when assessing the overall
presentation of the financial statements.
Materiality in the prior year was based on an average of a revenue based benchmark and a profit based
benchmark.
Other information included in the annual report
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit of otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether there is a material misstatement in the financial statements or a material
misstatement in the other information. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
17
Independent Auditors' Report
to the Members of One Media iP Group Plc
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and parent company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report
or the directors’ report.
We have nothing to report in respect of the following matters in relation to which 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
the 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
•
the 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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 9, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are responsible for assessing the Group and parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors’ either intend to liquidate
the Group and parent company or to cease operating, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
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.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statement.
18
Independent Auditors' Report
to the Members of One Media iP Group Plc
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk. This description forms part of our auditors’
report.
Alan Poole BA (Hons) FCA (Senior Statutory Auditor)
For and on behalf of
James Cowper Kreston
Chartered Accountants and Statutory Auditors
Reading Bridge House
George Street
Reading
RG1 8LS
23 February 2018
19
Registered Number: 05799897
Consolidated Statement of Comprehensive Income
For the year ended 31 October 2017
Revenue
Cost of sales
Gross profit
Administration expenses
Operating profit
Finance income
Profit on ordinary activities before taxation
Tax (expense) / credit
Profit for period attributable to equity
shareholders and total comprehensive income
for the year
Basic earnings per share
Diluted earnings per share
Note
Year ended
31 October
2017
Year ended
31 October
2016
£
£
2,337,624
2,045,652
(1,281,897)
(1,139,951)
1,055,727
905,701
(758,311)
(876,742)
297,416
28,959
185
1,060
297,601
(30,829)
30,019
32,852
266,772
62,871
0.38p
0.35p
0.09p
0.08p
1
2
3
4
7
7
The Consolidated Statement of Comprehensive Income has been prepared on the basis that all
operations are continuing activities.
The notes on pages 25 to 44 form part of these financial statements.
20
Registered Number: 05799897
Consolidated Statement of Changes in Equity
For the year ended 31 October 2017
Share
Capital
Share
redemption
reserve
Share
premium
£
£
£
Share
based
payment
reserve
£
Retained
earnings
Total equity
£
£
At 1 November 2015
355,268
239,546
1,457,645
43,497 1,348,002
3,443,958
Share based payment
charge
Profit for the year
Dividends
-
-
-
-
-
-
-
-
-
30,943
-
30,943
-
-
62,871
62,871
(100,896)
(100,896)
At 1 November 2016
355,268
239,546
1,457,645
74,440 1,309,977
3,436,876
Share based payment
charge
Profit for the year
Dividends
-
-
-
-
-
-
-
-
-
32,758
-
32,758
-
-
266,772
266,772
-
-
At 31 October 2017
355,268
239,546
1,457,645
107,198 1,576,749
3,736,406
The notes on pages 25 to 44 form part of these financial statements.
21
Registered Number: 05799897
Consolidated Statement of Financial Position at 31 October 2017
Note
At
31 October
2017
At
31 October
2016
£
£
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
Deferred tax
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
3,383,597
16,970
3,394,134
6,452
3,400,567
3,400,586
478,804
383,051
463,574
335,664
861,855
799,238
4,262,422
4,199,824
491,619
34,397
756,988
5,960
526,016
762,948
355,268
239,546
1,457,645
107,198
1,576,749
355,268
239,546
1,457,645
74,440
1,309,977
3,736,406
3,436,876
Total equity and liabilities
4,262,422
4,199,824
The notes on pages 25 to 44 form part of these financial statements.
The Consolidated Financial Statements were approved by the Directors on 23 February 2018 and
signed on their behalf by:
Michael Antony Infante
Director
22
Registered Number: 05799897
Company Statement of Financial Position at 31 October 2017
Note
At
31 October
2017
At
31 October
2016
£
£
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
Deferred tax
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
16
16
16
16
493,817
493,817
2,980,036
61,631
2,724,346
31,483
3,041,667
2,755,829
3,535,484
3,249,646
33,419
24,995
58,414
355,268
239,546
1,457,645
107,198
1,317,413
25,835
-
25,835
355,268
239,546
1,457,645
74,440
1,096,912
3,477,070
3,223,811
Total equity and liabilities
3,535,484
3,249,646
The notes on pages 25 to 44 form part of these financial statements.
The Company Financial Statements were approved by the Directors on 23 February 2018 and signed
on their behalf by:
Michael Antony Infante
Director
23
Registered Number: 05799897
Consolidated and Company Cash Flow Statement
For the year ended at 31 October 2017
Year ended
31 October
2017
Group
Year ended
31 October
2016
Group
Year ended
31 October
2017
Company
Year ended
31 October
2016
Company
£
£
£
£
297,601
234,911
3,350
32,758
(185)
(15,229)
(267,761)
-
30,019
209,365
4,002
30,943
(1,060)
(23,320)
(290,186)
(57,900)
245,496
-
-
32,758
(7)
(255,691)
7,585
-
262,899
-
-
30,943
(174)
(276,743)
4,509
-
285,445
(98,137)
30,141
21,434
(224,375)
(280,176)
(13,868)
185
(2,436)
1,060
(238,058)
(281,552)
-
-
-
-
-
-
(100,896)
(100,896)
-
-
7
7
-
-
-
-
-
-
174
174
-
-
(100,896)
(100,896)
47,387
(480,585)
30,148
(79,288)
335,664
816,249
31,483
110,771
383,051
335,664
61,631
31,483
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 (outflow)
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
24
Principal Accounting Policies
For the year ended 31 October 2017
Basis of preparation
The Company is a public limited company incorporated and domiciled in England under the Companies
Act 2006. The Board has adopted and complied with International Financial Reporting Standards (IFRS)
as adopted by the European Union. The Company's shares were admitted for trading on the AIM market
of the London Stock Exchange on 18 April 2013.
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 amounts are
included in Other payables. The outstanding balances are calculated in line with underlying contractual
obligations.
25
Principal Accounting Policies
For the year ended 31 October 2017
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 the 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
24 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 of 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.
26
Principal Accounting Policies
For the year ended 31 October 2017
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.
27
Principal Accounting Policies
For the year ended 31 October 2017
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.
28
Principal Accounting Policies
For the year ended 31 October 2017
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.
29
Principal Accounting Policies
For the year ended 31 October 2017
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
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 period beginning 1 November 2016.
•
•
•
•
•
•
•
-‐
-‐
-‐
based Payment
IFRS 2 Share
IFRS 3 Business Combinations
-‐
IFRS 5 Non
disposal
IFRS 7 Financial Instruments: Disclosures
IFRS 7 Financial Instruments: Disclosures
-‐
interim financial statements
-‐
IFRS 8 Operating Segments
IFRS 8 Operating Segments
-‐
entity's assets
-‐
Definitions of vesting conditions
current Assets Held for Sale and Discontinued Operations
Changes in methods of
Accounting for contingent consideration in a business combination
Servicing contracts
Applicability of the offsetting disclosures to condensed
-‐
Aggregation of operating segments
Reconciliation of the total of the reportable segments’ assets to the
30
Principal Accounting Policies
For the year ended 31 October 2017
Adoption of new or amended IFRS – continued
•
•
•
•
•
•
•
•
•
•
•
-‐
-‐
Amendments to IFRS 10 and IAS 28
Amendments to IFRS 10, IFRS 12 and IAS 28
IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture
IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture
Amendments to IFRS 10 and IAS 28 IFRS 10, IFRS 12 and IAS 28 Investment Entities:
Applying the Consolidation Exception
IFRS 11 Accounting for Acquisitions of Interests in Joint Operations
-‐
IFRS 14 Regulatory Deferral Accounts
IAS 1 Disclosure Initiative
IAS 16 and IAS 38
Amendments to IAS 16 and IAS 38
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets
proportionate restatement of accumulated depreciation/amortisation
-‐
IAS 19 Employee Benefits
IAS 24 Related Party Disclosures
IAS 27
-‐
IAS 34 Interim Financial Reporting
report'
Clarification of Acceptable Methods of Depreciation and Amortisation
Disclosure of information 'elsewhere in the interim financial
Equity Method in Separate Financial Statements
Discount rate: regional market issue
Key management personnel
-‐
Revaluation method
Amendments to IFRS 11
Amendments to IAS 27
Amendments to IAS 1
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
The Directors have assessed that the adoption of these revisions and amendments did not have an
impact on the financial position or performance of the Group.
At the date of authorisation of these financial statements, the following Standards and Interpretations
which have not been applied in these financial statements were in issue but not yet effective:
Effective date – periods beginning on or after 1 January 2017
•
IAS 7 Disclosure Initiatives – Amendments to IAS 7
•
IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses – Amendments to IAS 12
• AIP IFRS 12 Disclosure of Interests in Other Entities - Clarification of the scope of the disclosure
requirements in IFRS 12
Effective date – periods beginning on or after 1 January 2018
•
IFRS 2 Classification and Measurement of Share based Payment Transactions- Amendments to
IFRS 2
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration
•
•
•
• AIP IFRS 1 First-time Adoption of International Financial Reporting Standards - Deletion of short-
term exemptions for first-time adopters
• AIP IAS 28 Investments in Associates and Joint Ventures - clarification that measuring investees at
fair value through profit or loss is an investment-by-investment choice
Effective date – periods beginning on or after 1 January 2019
•
IFRS 16 Leases
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 Group.
31
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
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
2017
Year ended
31 October
2016
£
£
130,708
1,941,944
264,972
138,108
1,622,522
285,022
2,337,624
2,045,652
The Group considers it has one business segment with all its Profit ultimately earned from its sole
activity in the United Kingdom.
Included in revenues for the year ended 31 October 2017 it is estimated that £602,000 (2016: £519,000)
is from its largest ultimate customer and £402,000 from its second largest ultimate customer (2016:
£346,000). Together these represent 43.0% (2016: 41.2%) of the total Group revenue for the year. In
addition, the company relies on a distribution aggregator (The Orchard) who channels approximately
71% (2016: 68%) of the Group’s turnover.
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
Bad debts
Difference on foreign exchange
Year ended
31 October
2017
Year ended
31 October
2016
£
£
297,015
234,911
3,350
53,862
12,750
4,000
(10,969)
5,507
276,714
209,365
4,002
51,442
11,600
3,400
15,064
59,081
Included in audit fees above is £5,500 (2016: £5,000) for the audit of the parent Company.
32
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
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
Deferred tax
Year ended
31 October
2017
£
Year ended
31 October
2016
£
185
1,060
Year ended
31 October
2017
Year ended
31 October
2016
£
£
(22,940)
24,833
28,936
(38,812)
-
5,960
30,829
(32,852)
The standard rate of tax for the year, based on the UK standard rate of corporation tax is 19.41% (2016:
20%). The actual tax charge for the periods is different than the standard rate for the reasons set out in
the following reconciliation:
Reconciliation of current tax charge
Year ended
31 October
2017
Year ended
31 October
2016
£
£
Profit on ordinary activities before tax
297,602
30,019
Tax on profit on ordinary activities at 19.41% (2016:
20%)
Effects of:
Non-deductible expenses
Adjustments to tax charge in respect of previous
periods
Fixed asset timing differences
Depreciation in excess of capital allowances
Share scheme deduction
Research and development
Total tax charge / (credit)
57,765
9,304
(8,270)
11,579
(660)
-
(38,889)
6,004
8,942
(38,812)
34,499
(285)
-
(43,200)
30,829
(32,852)
At the reporting date the tax rates substantially enacted are 20% from 1 April 2016, 19% from 1 April
2017 and 17% from 1 April 2020. Deferred tax has been measured using the average rate expected to
apply in the period in which the timing differences will reverse using these substantively enacted rates.
33
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
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
2017
Year ended
31 October
2016
£
£
195,870
60,000
32,758
234,326
39,284
193,986
63,120
30,943
310,392
43,009
562,238
641,450
Included within wages and salaries is £5,160 (2016: £4,380) paid to Mr C Miles, Mr P Miles son, in
respect of IT consultancy.
The average monthly number of Group employees (excluding non-executive directors) during the year
was as follows:
Year ended
31 October
2017
Year ended
31 October
2016
Technical, creative technicians and management
12
11
6. Parent Company Profit and Loss Account
The profit for the year to 31 October 2017 dealt within in the financial statements of the parent Company
was £220,501 (2016: £238,344). As permitted by section 408 of the Companies Act 2006, no separate
profit and loss account is prepared for the parent Company.
7. Earnings per share
The weighted average number of shares in issue for the basic earnings per share calculations is
71,053,698 (2016: 71,053,698) and for the diluted earnings per share assuming the exercise of all
warrants and share options is 75,653,698 (2016: 77,035,890).
The calculation of basic earnings per share is based on the profit for the period of £266,772 (2016:
£62,871). Based on the weighted average number of shares in issue during the year of 71,053,698
(2016: 71,053,698) the basic earnings per share is 0.38p (2016: 0.09p). The diluted earnings per share
is based on 75,653,698 shares (2016: 77,035,890) and is 0.35p (2016: 0.08p).
34
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
8. Intangible assets - Group
Cost
At 1 November 2015
Additions
Disposals
At 31 October 2016
Additions
Disposals
At 31 October 2017
Amortisation
At 1 November 2015
Charge for the year
Disposals
At 31 October 2016
Charge for the year
Disposals
At 31 October 2017
Net book value
At 31 October 2017
At 31 October 2016
Licences and
other intangible
assets
£
4,107,212
280,176
-
4,387,388
228,543
(5,000)
4,610,931
783,889
209,365
-
993,254
234,911
(831)
1,227,334
3,383,597
3,394,134
All amortisation is included in Cost of sales in the Consolidated Statement of Comprehensive Income.
35
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
9. Property, plant and equipment - Group
Office
equipment
Fixtures and
fittings
£
£
Cost
At 1 November 2015
Additions
Disposals
At 31 October 2016
Additions
Disposals
At 31 October 2017
Depreciation
At 1 November 2015
Charge for the year
Disposals
At 31 October 2016
Charge for the year
Disposals
At 31 October 2017
Net book value
At 31 October 2017
At 31 October 2016
45,285
2,437
-
47,722
13,868
-
61,590
38,389
3,471
-
41,860
2,819
-
44,679
16,911
5,862
Total
£
55,928
2,437
-
58,365
13,868
-
10,643
-
-
10,643
-
-
10,643
72,233
9,522
531
-
10,053
531
-
47,911
4,002
-
51,913
3,350
-
10,584
55,263
59
590
16,970
6,452
All depreciation is included in administrative expenses in the Consolidated Statement of Comprehensive
Income.
36
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
10. Investment in subsidiary undertakings
At 1 November 2016 and 31 October 2017
The Company holds interests in the following subsidiary undertakings.
Total
£
493,817
Company
Country of
incorporation
Nature of business
Class of
shares
Share
held %
One Media iP Limited
Company number 05536271
Collecting Records LLP
Company number OC307927
One Media Intellectual
Property Limited
Company number 08224199
One Media Publishing Limited
Company number 082123128
OMIP Ltd
Company number 10585974
TCAT Limited
Company number 10586072
Men & Motors Limited
Company number 10582506
England and Wales Audio-visual content
Ordinary
100%
England and Wales Dormant
Partnership
99%
England and Wales Dormant
Ordinary
100%
England and Wales Dormant
Ordinary
100%
England and Wales Dormant
Ordinary
100%
England and Wales Dormant
Ordinary
100%
England and Wales Dormant
Ordinary
100%
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, One Media Publishing
Limited, OMIP Ltd, TCAT Limited and Men & Motors 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 of the above subsidiaries
principal place of business is 623 East Props Building, Pinewood Studios, Iver Heath, Bucks SL0 0NH.
All the above activities are included in the consolidated financial statements.
11. Receivables
Amounts owed by group
undertakings
Trade receivables
Other receivables
Prepayments
Year ended
31 October
2017
Group
£
Year ended
31 October
2016
Group
£
Year ended
31 October
2017
Company
£
Year ended
31 October
2016
Company
£
-
101,070
351,609
26,125
-
120,425
315,919
27,230
2,965,945
-
1,983
12,108
2,706,637
-
3,677
14,032
478,804
463,574
2,980,036
2,724,346
37
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
11. Receivables – continued
Trade and other receivables are usually due within 30 to 90 days and do not bear any effective interest.
A provision of £nil (2016: £12,823) was made for doubtful debts at 31 October 2017. The movement in
the provision for impairment during the year is as follows:
At 1 November 2015
Provision for impairment
At 31 October 2016
Release of provision for impairment
At 31 October 2017
12. Cash and cash equivalents
Total
£
-
12,823
12,823
(12,823)
-
An analysis of cash and cash equivalent balances by currency is shown below:
Year ended
31 October
2017
Group
Year ended
31 October
2016
Group
Year ended
31 October
2017
Company
Year ended
31 October
2016
Company
£
£
£
£
323,788
48,816
10,447
198,749
121,710
15,205
383,051
335,664
61,631
-
-
61,631
31,483
-
-
31,483
GB£
US$
Euro
13. Trade and other payables
Current
Trade payables
Social security and other
taxes
Corporation tax
Accruals & deferred Income
Other payables
Year ended
31 October
2017
Group
£
Year ended
31 October
2016
Group
£
Year ended
31 October
2017
Company
£
Year ended
31 October
2016
Company
£
85,121
78,035
26,919
19,835
7,763
1,893
73,941
322,901
19,368
-
409,004
250,581
-
-
6,500
-
-
-
6,000
-
491,619
756,988
33,419
25,835
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.
38
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
14. Deferred tax liability
Group
Opening balance
Origination and reversal of timing differences
Losses carried forward
Adjustments in respect of prior periods
Total deferred tax liability
Year ended
31 October
2017
Year ended
31 October
2016
£
5,960
14,266
-
14,171
34,397
£
-
34,499
(28,539)
-
5,960
The Group has estimated trading losses of £nil (2016: £142,694) available for carry forward against
future trading profits.
Company
Opening balance
Other timing differences
Unrelieved tax losses
Total deferred tax liability
15. Share capital
Group and Company
Authorised:
Year ended
31 October
2017
Year ended
31 October
2016
£
-
28,823
(3,828)
24,995
£
-
-
-
-
2017
£
2016
£
200,000,000 ordinary shares of 0.5p each
1,000,000
1,000,000
Issued:
71,053,698 (2016: 71,053,698) ordinary shares of 0.5p each
355,268
355,268
There has been no movement in the issued share capital over the last two years.
39
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
15. Share capital - continued
At 31 October 2017 1,800,000 (2016: 2,300,000) share options of 2.75p, granted on 7 March 2011,
were outstanding. The number of Directors holding share options at 31 October 2017 was 2 (2016: 3)
and senior staff and employees 2 (2016: 2). The options are exercisable on or before 6 March 2018.
On 5 June 2014 a further 500,000 share options of 14.5p were issued to 1 director and 4 members of
staff and remain outstanding at 31 October 2017 (2016: 700,000). These options are exercisable on or
before 4 June 2021.
On 21 April 2015 a further 1,800,000 share options of 9p were issued to 3 directors and 2 members of
staff and remain outstanding at 31 October 2017 (2016: 2,900,000). These options are exercisable on or
before 20 April 2022.
On 2 September 2016 a further 500,000 share options of 5p were issued to 1 member of staff and
remain outstanding at 31 October 2017 (2016: 500,000). These options are exercisable on or before 1
September 2021.
All share options issues were made 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 share price of the options granted on 7 March 2011 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%. A share option charge of £4,591 has been made for the year ended 31
October 2017 (2016: £4,591).
The share price of the options granted on 5 June 2014 was 14.5p per share. The Fair Value of these
options, based on the Black Scholes model, was 21.87p per share based on a risk free interest rate of
5% and a volatility of 40%. A share option charge of £7,368 has been made for the year ended 31
October 2017 (2016: £7,368).
The share price of the options granted on 21 April 2015 was 9p per share. The Fair Value of these
options, based on the Black Scholes model, was 13.57p per share based on a risk free interest rate of
5% and a volatility of 40%. A share option charge of £18,984 has been made for the year ended 31
October 2017 (2016: £18,984).
The share price of the options granted on 2 September 2016 was 5p per share. The Fair Value of these
options, based on the Black Scholes model, was 7.54p per share based on a risk free interest rate of
5% and a volatility of 40%. A share option charge of £1,815 (2016: £nil) has been made for the year
ended 31 October 2017 (2016: £nil).
40
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
16. Company reserves
Share
redemption
reserve
Share
premium
£
£
Share
based
payment
reserve
£
Retained
earnings
Total
£
£
At 1 November 2015
239,546
1,457,645
43,497
934,910
2,675,598
Proceeds from the issue of
new shares
Share based payment charge
Release from share based
payment reserve
Profit for the year
Dividends
-
-
-
-
-
-
-
-
-
-
-
30,943
-
-
-
-
-
-
-
30,943
-
262,898
262,898
(100,896)
(100,896)
At 1 November 2016
239,546
1,457,645
74,440 1,096,912
2,868,543
Proceeds from the issue of
new shares
Share based payment charge
Profit/(loss) for the year
Dividends
-
-
-
-
-
-
-
-
-
32,758
-
-
-
-
-
32,758
220,501
220,501
-
-
At 31 October 2017
239,546
1,457,645
107,198 1,317,413
3,121,802
The Consolidated Statement of Changes in Equity is shown on page 21.
17. Dividends per share
The total dividend paid in the year ended 31 October 2017 was £nil (2016: £100,896).
18. 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.
41
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
19. Capital commitments
There were no capital commitments at 31 October 2017 or at 31 October 2016.
20. Operating lease commitments
Rent
Vehicles
Within
one year
£
40,911
16,123
1 to 5
years
£
-
6,017
2017
Total
£
Within
one year
£
1 to 5
years
£
40,911
22,140
53,263
13,356
41,111
2,071
2016
Total
£
94,374
15,427
57,034
6,017
63,051
66,619
43,182
109,801
The lease for rent is due to expire on 31 July 2018 and for the vehicles leases during 2018 and 2020.
Management are currently negotiating a new office lease. The Company has no operating lease
commitments.
21. 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
Categories of financial asset included in the Consolidated Statement of Financial Position are as follows:
Loans and
receivables
£
Non
financial
assets
£
2017
Total
Loans and
receivables
£
£
Non
financial
assets
£
2016
Total
£
Licenses and other
intangible assets
Property, plant and
equipment
Trade receivables
Other receivables
Prepayments
Cash and cash
equivalents
-
3,383,597 3,383,597
-
3,394,134
3,394,134
-
101,070
351,609
26,125
383,051
16,970
-
-
-
16,970
101,070
351,609
26,125
-
120,425
315,919
27,230
6,452
-
-
-
6,452
120,425
315,919
27,230
-
383,051
335,664
-
335,664
861,855
3,400,567 4,262,422
799,238
3,400,586
4,199,824
Included within loan and receivables above are cash and cash equivalents of £61,631 (2016: £31,483),
and trade and other receivables of £14,091 (2016: £17,710) excluding amounts owed by group
undertakings in relation to the company.
Trade Debtors at 31 October 2017 of £121,288 (2016: £131,492) include £63,503 (2016: £76,055)
payable in $USD and £6,948 (2016: £2,534) payable in Euro.
42
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
21. Financial instruments - continued
Financial liabilities by category
Categories of financial liabilities included in the Consolidated Statement of Financial Position are as
follows:
Other
financial
liabilities
at
amortised
cost
£
85,121
7,763
1,893
-
Liabilities
not within
the scope
of
IAS 39
£
-
2017
Total
£
Other
financial
liabilities
at
amortised
cost
£
85,121
78,035
-
-
34,397
7,763
1,893
34,397
19,368
-
-
Liabilities
not within
the scope
of
IAS 39
£
-
-
-
5,960
2016
Total
£
78,035
19,368
-
5,960
322,901
73,941
-
73,941
322,901
-
250,581
409,004
-
409,004
250,581
417,678
108,338
526,016
347,984
414,964
762,948
Trade payables
Social security and other
taxes
Corporation tax
Deferred tax
Accruals and deferred
income
Other payables
Included within other financial liabilities are trade payables of £26,918 (2016: £19,834) and other
payables of £6,500 (2016: £6,000) 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 £383,051 is £861,855 (2016: £799,238).
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 deferred tax of £34,397 (2016:
£5,960), are expected to result in cash outflow within six months of the year end. At 31 October 2017,
£415,785 (2016: £347,984) of the financial liabilities were expected to result in cash outflow within six
months of the year end.
43
Notes to the Consolidated Financial Statements
For the year ended 31 October 2017
21. Financial instruments - continued
Currency risk
The Group is exposed to foreign exchange risk in connection with its digital downloading and streaming
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$.
Included in Cash and cash equivalents, Trade receivables and Other receivables is USD$531,198
(2016: USD$553,720) equivalent to £402,423 (2016: £453,869) and Euro 19,656 (2016: Euro 20,755)
equivalent to £17,395 (2016: £17,740) payable in Euro. If the foreign exchange rate was 10% different
from the rate used at the year end there would be an under/over statement of assets of £46,646 (2016:
£52,401).
Included in Accruals & deferred income and Other payables is USD$32,912 (2016: USD$452,628)
equivalent to £24,933 (2016: £371,007) payable in USD$. If the foreign exchange rate was 10%
different from the rate used at the year end there would be an under/overstatement of liabilities of
£2,770 (2016: £41,223).
22. Related party transactions
There were no related party transactions in the year under review or in the year ended 31 October 2017
nor 31 October 2016, other than transactions with the directors as disclosed in the Directors' Report and
note 5 to the financial statements.
At 31 October 2017 the principal operating subsidiary One Media iP Limited owed the Company
£2,965,945 (2016: £2,706,637). 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 £198,509
(2016: £222,851) against One Media iP Limited and received a dividend of £300,000 (2016: £300,000).
23. Post balance sheet events
As announced on the 18 December 2017 the Company has raised £375,000 gross via a subscription for
15,000,000 new ordinary shares in the Company at a price of 2.5 pence per share by Lord Michael
Grade and Ivan Dunleavy.
44