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ONE MEDIA IP GROUP PLC - Half-yearly Report

June 16, 2014

One Media iP Group Plc ("One Media", the "Group" or the "Company") UNAUDITED INTERIM RESULTS Profit before taxation up 31.5%, turnover up 13% and interim dividend of 0.071p ence declared USD$2 million advance agreed with The Orchard One Media iP Group plc (AIM: OMIP), the digital media content provider that exploits intellectual property rights around music and video, is pleased to announce its half year results for the period ended 30 April 2014 and an interim dividend. Highlights: * Turnover up 13% to 1,492,412 (2013: 1,325,119); * Profit before tax up 31.5% to 344,865 (2013: 262,180); * Cash balances of 1,411,305 at 30 April 2014 (2013: 1,919,668); * Dividend of 0.077p per ordinary share paid in November in respect of the year ended 31 October 2013; and * Interim dividend of 0.071p per ordinary share declared in respect of the six month period ended 30 April 2014. As announced on 10 June 2014, a USD$2,000,000 advance against future royalties was agreed with the Company's distributor, The Orchard. Michael Infante, Chairman and CEO, commented: "I am very pleased with our ongoing progress and today's published results and post-balance sheet events. The Group continues to deliver shareholder value, both through improved financial performance and the acquisition of content, which the Board believes adds considerable value to One Media setting the Company apart. We do face challenges however in our digital world and the Board recognises that there is no room for complacency. Streaming music sites such as Spotify and YouTube are beginning to dominate what was, only a short time ago, the majority `selling space' held by the traditional digital stores such as iTunes" "We embrace all forms of digital exploitation but the shifts in digital models today are demanding and require us to keep ahead of the curve on all our distribution services. We are constantly monitoring trends and keep ahead by training our team in new methods of digital marketing utilising social media. We are confident that your Company is correctly positioned to meet the many demands within the industry." For further information, please contact: One Media iP Group Plc Chairman and Chief Executive Michael Infante Tel: +44 (0)175 378 5500 Cairn Financial Advisers LLP Nominated Adviser Liam Murray / Jo Turner Tel: +44 (0)20 7148 7900 Charles Stanley Securities Limited Broker Mark Taylor Tel: +44 (0)20 7149 6000 Yellow Jersey PR Limited Financial PR Kelsey Traynor/Dominic Barretto/Philip Ranger Tel: +44(0)7799 003 220 CHAIRMAN & CHIEF EXECUTIVE STATEMENT The Group has continued to show good progress in the six months period to 30 April 2014 with growth in both turnover and profit before taxation and has continued to develop its content portfolio with a number of small acquisitions of content and rights. Results for the six months ended 30 April 2014, the Group's consolidated turnover increased by 13% to 1,492,412 (2013: 1,325,119) and, an increase of 13% on the equivalent period last year when 1,325,119 was reported. Profit before tax and interest increased by 31.5% to 344,865 is reported for the six months, up 31.5% on the equivalent figure of (2013: 262,180). The Group continued to invest in intellectual property and copyrights, spending a further 375,901 in this area during the period. Following the exercise in November 2013 of employee share options and the exercise of warrants by directors and an institutional investor in April 2014 a total of 92,500 was raised in new equity. Cash balances at 30 April 2014 continued to remain strong at 1,411,305. As announced on 10 June 2014, a USD$2,000,000 advance against future royalties was agreed with The Orchard, the Company's primary digital distributor. The Group receives the majority of its income in US Dollars. Recent shifts in exchange rates have not favoured us and the Board is conscious to carefully monitor exchange rates to ensure best conversion deals from time to time. One Media deals in a worldwide market and we have to convert our digital income from the many territories currencies in which we deal on a monthly basis. All of these local currencies are converted to US Dollars which are ultimately are reported in Pounds Sterling. Dividend Pursuant to the dividend payment of 0.077p per share in November 2013, the Group is pleased to announce that it intends to pay an interim dividend of 0.071p per ordinary share in respect of the 6 month period ended 30 April 2014. The ex-dividend date of this payment is 25 June 2014, the record date is 27 June 2014 and the expected payment date 8 July 2014. Contents and Acquisitions During the period, the Company has not issued new shares as consideration for acquisitions and has used existing cash resources as consideration. In December 2013, One Media acquired various rights for a consideration of USD$100,000 for several back catalogues of music and video. The first of four was for the Irish singer `Rose-Marie'. This exclusive deal includes over 160 tracks (24 albums) of Irish and standard ballads. Rose-Marie is a prolific Irish performer well known within the cabaret, TV and recording circles. The catalogue includes a host of standards including Danny Boy, Ave Maria and Abide with Me. The second was for the exclusive license with an on-going royalty for certain titles taken from the `Delta Leisure Group' video library for digital exploitation. Over 250 programmes of trains, planes and automobiles and various special interest content including cookery, sports, fishing and keep fit instructional videos were included. All of the content will be made available through One Media's emerging video channels on YouTube and other advertising funded broadcast mediums. The third was for the exclusive audio book rights to the 'Lost Elvis Diaries' written and edited by Aubrey Malone. The book which is a recreation of Elvis's life is written in diary form. This audio-visual digital book deal which contains many previously unpublished photographs from Elvis's life will be offered in all formats including: electronic written publication (`Kindle' style) and via download in spoken word format for all the Group's digital stores such as iTunes, Amazon, Spotify and serialised on YouTube. The fourth deal concluded was a revisit to one of One Media's original licensors and royalty partners. One Media invested in the High Energy/Northern Soul/Motorcity catalogues (Tropicana) originally in 2006. This deal was extended in 2010 for a period of 25 years. The Group can now report that it has taken ownership of the 2,500 soul/dance music tracks and associated videos. The catalogue contains 80s chart topping artists like `Evelyn Thomas' performing her number one hit 'High Energy', performances from `Johnny Bristol', `Barbara Pennington', `Martha Reeves', `Marv Johnson' and the `Former Ladies of the Supremes' just to mention a few of the 200 artists featured within the catalogue. In January 2014, One Media consolidated a long term licensor's agreement for their audio rights for a consideration of USD75,000. We continue to actively pursue `buy-out' deals with our royalty partners as they impact positively on profitability but of course have no effect on turnover. Subsequent to the balance sheet date in May 2014, One Media announced that it had acquired, under an exclusive license with an on-going royalty, the 'Rock and Roll Palace' and 'Church Street Station' music-video catalogues; this deal was concluded with the `Henry Hadaway Organisation' ("HHO") for a total consideration of 300,000 plus VAT. The two catalogues contain hundreds of music-video performances by various artists such as; `Tammy Wynette', `Charlie Rich', `George Jones', `Lynn Anderson', `Mickey Giley', `Tanya Tucker', `The Bellamy Brothers', `The Osmonds', `Del Shannon', `The Platters', and the `Shirelles' to name just a few. Directors Share Trading The Group announced that on 9 April 2014, and to satisfy investor demand, the directors of the Company sold their warrants to institutional investors. A total of 5,250,000 warrants were realised in the Directors' Dealings. There are no outstanding warrants issued to the directors. We saw this as a tidying up event to remove the `overhang' and to increase liquidity within the market place. The Market At the beginning of this financial year (November 2013 to April 2014) the Board implemented several changes within the Group's internal technical operations, to ensure we keep `current' with digital market forces. As digital `streaming' begins to have greater traction in both our video and audio markets, we have commenced a series of cross-training exercises with our team of in-house creative technicians. As you may recall, I stated that we would be focused on investing in people this time last year to facilitate video. The day-to-day job of delivering both music and video to over 600 digital stores has advanced in line with industry changes. Our foresight and investment over the last nine years has made our systems, eminently flexible. Our bespoke ingestion system, developed in-house, caters for our needs and has been handling upwards of 20 million digital transactions per month. Couple this with the arrival of the monetisation and managing our emerging YouTube channels - there is a lot of data to monitor. What is changing is the diverse consumer choice between the iTunes (downloading) model and that of the Spotify `streaming' model. I have long believed - if one can say that in an industry less than ten years old- that `streaming' will be the driving force in both video and audio consumer preference. Liberating a consumer's chosen device's hard drive from having to contain `terabytes' and potentially `petabytes' of data is far too restrictive and not necessary. Therefore `streaming' and `on-demand' services will be the way forward. Additionally, sound purists will tell you that music and video can stand only so much `compression' before the quality of the content is challenged. As broadband becomes broader and more widely accessible via the static delivery of your home phone line or via the roaming services of 4G, more data is being delivered into our daily lives than ever before. It is therefore an engineering challenge (even with micro-chips and hard drives being miniscule) to store the quantity of data now required for the longer term onto your chosen device. This data (whether it be music or video) is available at any time anywhere in the world via a streaming service. The `Cloud' has no limits. This makes hardware cheaper and processors faster. There is the additional benefit to content owners and artists alike that the `streaming' model offers. Young consumers that do not have the ability of using credit cards to purchase music online are drawn to free illegal download sites. Many of these sites, and the various illegal torrent stores or file sharing sites offer vast amounts of music and video at no charge. If consumers can access safely and legitimately and without fear of `bugs' and `viruses' and/or at low subscription prices a legitimate music store (and sometimes free via ad-funded revenue sharing schemes), why risk the pirate sites. Additionally telecom companies (such as Vodafone) have offered subscription memberships to music stores as part of their monthly mobile tariffs. These initiatives I see as growing and ultimately good for the industry in the fight against piracy and growing legitimate continual revenue streams. Outlook A recent report by PriceWaterhouseCoopers ("PwC") has predicted that global streaming music revenues will see compound growth of 13.4% over the next five years, but that music downloads will still grow as well, albeit by just 3.3%. PwC thinks that the global media and entertainment industry will grow at a 5% compound annual growth rate to USD2.15 trillion by 2018, with digital spending growing at 12.2%, and accounting for 65% of the overall revenue growth in that period. By 2018, the report suggests that China, Brazil, Russia, India, Mexico, South Africa, Turkey, Argentina and Indonesia will account for 21.7% of global revenues. The first half of our year emulates the trend above in turnover. Stores such as iTunes are being repositioned by the competiveness and the affordability of streaming stores such as Spotify, Deezer and YouTube. Whilst we are not seeing a drop in revenues from the downloading stores such as iTunes we are seeing a slowing of growth in their model. Conversely we have seen enlarged growth in the "streaming' stores model as they ingratiate themselves with consumers. A final word on growth, not all consumers both here in the UK and the rest of the world have yet switched to digital consumption. We must not forget, albeit your Group does not trade in it, that physical product still exists in the form of CD and DVD. We are still only experiencing approximately 37% of music and video consumers worldwide who have embraced the digital medium so far, so with a headroom of circa 63% of worldwide consumers yet to discover digital music and video, we are very much still in a growth market. MICHAEL INFANTE CHAIRMAN AND CHIEF EXECUTIVE 17th June 2014 Unaudited Consolidated Statement of Comprehensive Income For the six months ended 30 April 2014 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 30 April 2014 30 April 2013 October 2013 Revenue 1,492,412 1,325,119 2,649,130 Cost of sales (712,822) (628,384) (1,273,592) _________ _________ _________ 779,590 696,735 1,375,538 Administrative expenses (434,725) (434,555) (851,890) _________ _________ _________ Profit from continuing 344,865 262,180 523,648 activities Other expenses - Aim float - (196,559) (196,559) and associated costs _________ _________ _________ Operating profit 344,865 65,621 327,089 Finance income 705 1,046 2,800 _________ _________ _________ Profit on ordinary activities 345,570 66,667 329,889 before taxation Taxation (21,000) (49,200) (90,980) _________ _________ _________ Profit for period 324,570 17,467 238,909 attributable to equity shareholders ========= ========= ========= Basic adjusted earnings per 0.49p 0.031p 0.40p share ========= ======= ========= Unaudited Consolidated Statement of Financial Position As at 30 April 2014 Unaudited Unaudited Audited 30 April 2014 30 April 2013 31 October 2013 Assets Non-current assets Intangible assets 2,108,759 1,661,416 1808,535 Property, plant and 18,547 38,388 26,439 equipment _________ _________ _________ 2,127,306 1,699,804 1,834,974 _________ _________ _________ Current assets Trade and other 585,119 435,198 481,453 receivables Cash and cash 1,411,305 1,919,668 1,688,093 equivalents _________ _________ _________ Total current assets 1,996,424 2,354,866 2,169,546 _________ _________ _________ Total assets 4,123,730 4,054,670 4,004,520 ========= ========= ========= Liabilities Current liabilities Trade and other payables 1,206,414 1,720,339 1,468,312 _________ _________ _________ _________ _________ _________ Total liabilities 1,206,414 1,720,339 1,468,312 _________ _________ _________ Equity Called up share capital 353,518 320,018 324,768 Share redemption reserve 239,546 239,546 239,546 Share premium account 1,452,895 1,370,895 1,389,145 Share based payment 40,629 18,835 26,192 reserve Retained earnings 830,728 385,037 556,557 _________ _________ _________ Total equity 2,917,316 2,334,331 2,536,208 _________ _________ _________ _________ _________ _________ Total equity and 4,123,730 4,054,670 4,004,520 liabilities ========= ========= ========= Unaudited Consolidated Statement of Changes in Equity For the six months ended 30 April 2014 Share Share Share Share Retained Total capital redemption premium based earnings equity reserve payment reserve At 1 November 273,143 239,546 718,271 12,416 387,783 1,631,159 2012 Issue of share 46,875 - 703,125 - - 750,000 capital Costs of share - - (50,501) - - (50,501) issue Profit for the - - - - 17,467 17,467 six months to 30 April 2013 Share option - - - 6,419 - 6,419 charge Dividends - - - - (20,213) (20,213) ________ _________ _________ _________ _________ _________ At 30 April 320,018 239,546 1,370,895 18,835 385,037 2,334,331 2013 Issue of share 4,750 - 18,250 - - 23,000 capital Profit for the - - - - 221,442 221,442 six months to 31 October 201 3 Share option - - - 7,357 - 7,357 charge Dividends - - - - (49,922) (49,922) ________ _________ _________ _________ _________ _________ At 31 October 324,768 239,546 1,389,145 26,192 556,557 2,536,208 2013 Issue of share 28,750 - 63,750 - - 92,500 capital Profit for the - - - - 324,570 324,570 six months to 30 April 2014 Share option - - - 14,437 14,437 charge Dividends - - - - (50,399) (50,399) ________ _________ _________ _________ _________ _________ Balance at 30 353,518 239,546 1,452,895 40,629 830,728 2,917,316 April 2014 ======== ========= ========= ========= ========= ========= On 8 November 2013 500,000 employee share options, over ordinary shares of 0.5p each, were exercised at 2.75p per share. Further, as announced on 10 April 2014, Michael Infante sold 1,800,000 warrants in ordinary shares of 0.5p each, with an exercise price of 1.5p directly to one institutional investors. The investor immediately exercised the warrants over 1,800,000 new ordinary shares. Also a further 3,450,000 million warrants, over ordinary shares of 0.5p each, with an exercise price of 1.5p were exercised by directors. Unaudited Consolidated Cash Flow Statement For the six months ended 30 April 2014 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 October 2013 30 April 2014 30 April 2013 Cash flows from operating activities Profit before taxation 345,570 66,667 329,889 Amortisation 75,677 53,933 118,959 Depreciation 10,557 13,267 27,389 Share based payments 14,437 6,419 13,776 Finance income (705) (1,046) (2,800) (Increase)/decrease in (103,666) (29,436) (75,691) receivables (Decrease)/increase in payables (282,898) 1,037,986 819,873 Corporation tax paid - - (75,694) _________ _________ _________ Net cash inflow from operating 58,972 1,147,790 1,155,701 activities _________ _________ _________ Cash flows from investing activities Investment in copyrights (375,901) (273,209) (485,354) Investment in fixed assets (2,665) (3,900) (6,073) Finance income 705 1,046 2,800 Corporation tax paid _________ _________ _________ Net cash used in investing (377,861) (276,063) (488,627) activities _________ _________ _________ Cash flow from financing activities Proceeds from the issue of new 92,500 750,000 773,000 shares Share issue costs - (50,501) (50,501) Dividend paid (50,399) (20,213) (70,135) _________ _________ _________ Net cash outflow from financing 42,101 679,286 652,364 activities _________ _________ _________ Net change in cash and cash (276,788) 1,551,013 1,319,438 equivalents Cash at the beginning of the 1,688,093 368,655 368,655 period _________ _________ _________ Cash at end of the period 1,411,305 1,919,668 1,688,093 ========= ========= ========= Notes to the Interim Report For the six months ended 30 April 2014 1. Nature of operations and general information One Media iP Group Plc and subsidiaries' ("the Group") principal activities are the acquisition and licensing of audio-visual intellectual copyrights and publishing for distribution through the digital medium and to a lesser extent through traditional media outlets. One Media iP Group Plc is the Group's ultimate parent company incorporated under the Companies Act in England and Wales. The address of One Media iP Group Plc registered office is 623 East Props Building, Goldfinger Avenue, Pinewood Road , Iver Heath, Buckinghamshire, SL0 0NH. The financial information set out in this Interim Report does not constitute statutory accounts. The Group's statutory financial statements for the year ended 31 October 2013 are available from the Group's website. The auditor's report on those financial statements was unqualified. 2. Accounting Policies Basis of Preparation These interim consolidated financial statements are for the six months ended 30 April 2014. They have been prepared following the recognition and measurement principles of IFRS. They do not include all the information required for full annual statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 October 2013. This unaudited interim statement has not been subject to a review by the Group's auditors James Cowper LLP. Comparatives The comparative periods represent the unaudited results for the six months period ended 30 April 2013 and the audited twelve months figures for the year ended 31 October 2013. 3. Earnings per share The calculation of the earnings per share is based on the profit for the financial period divided by the weighted average number of shares in issue during the period. Unaudited Unaudited Audited Basic earnings per 6 months ended 6 months ended 12 months ended share 30 April 2014 30 April 2013 31 October 2012 Profit for period 324,570 17,467 238,909 attributable to equity shareholders Weighted average number 66,037,498 55,716,405 59,999,725 of shares in issue at period end _________ _________ _________ Basic earnings per 0.49p 0.031p 0.40p share ========= ========= ========= The diluted earnings per share would be lower than the basic profit per share as the exercise of warrants and options would be dilutive. 4. Share capital Unaudited Unaudited Audited 30 April 2014 30 April 2013 31 October 2013 Group and company Authorised: 200,000,000 ordinary shares of 1,000,000 1,000,000 1,000,000 0.5p each ========== ========== ========== Issued: Ordinary shares of 0.5p each 70,703,698 at 30 April 2014 , 353,518 320,018 324,768 64,003,698 at 30 April 2013 and 64,953,698 at 31 October 2013 ordinary shares of 0.5p each ========== ========== ========== 5. Dividend The Directors are delighted to announce a second divided for the year of 50,200 (0.071p per share) following the earlier dividend of 50,399 (0.077p per share). Our intention is to reward those investors that have been loyal and to further demonstrate that One Media is an investment opportunity providing a return that we believe we will enhance shareholder value. 6. Interim statement Copies of this statement are available from Group's registered Office at: 623 East Props Building, Goldfinger Avenue, Pinewood Road, Iver Heath, Buckinghamshire, SL0 0NH. Notes to Editors: One Media is a digital music and video rights owner. The consumer led but B2B (Business-to-business) operation looks to exploit its catalogue of over 200,000 music tracks and over 7,000 hours of video by recompiling the content for sale through over 600 digital music and video stores worldwide. The Company has a team of Creative Technicians who digitise the content, create the metadata and re-compile and prepare the digital music & video releases using bespoke in-house software. Additionally, One Media makes its library of content available for TV shows, movies, adverts, games and websites. One Media operates an online sync database system that enables music supervisors to explore the library and select tracks for music briefs. One Media focuses on music performed by well known artists from every genre, including; pop, rock, reggae, R&B, children's music, karaoke, jazz, soul, blues, rap, hip-hop, gospel, world-music, plus stand-up comedy, spoken-word and over 1,000 hours of classical music. One Media is eligible for Enterprise Investment Schemes ("EIS") and Venture Capital Trusts ("VCT")

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Source: PR Newswire (UK Disclosure)

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