TIDMICON
RNS Number : 3221S
Iconic Labs PLC
08 July 2020
Iconic Labs Plc ("Iconic Labs" or the "Company")
New management services contract with JOE Media Business
generating revenues of at least GBP50,000 a month. Intention to
look at conventional financing options to replace current
facility.
Iconic Labs Plc (LSE:ICON), a multidivisional new media and
technology business, today announces that it has entered into a
management services contract with Greencastle MM LLP ("Greencastle
Capital"), which has at the same time, completed the acquisition of
the JOE media UK business, which includes the 'House of Rugby'
show, the most watched Rugby show in the world, out of
administration. The JOE media businesses already generate in excess
of GBP10m of revenue per year.
-- Under the terms of the management services contract, which
came into effect today, Iconic Labs will be paid a monthly
management fee of GBP50,000 plus external costs, and in addition
shall receive 25% of all profits if certain revenue and profit
targets are met.
-- Iconic Labs anticipates this management services contract
will contribute a significant amount of revenue to the Company and
will enable Iconic Labs to become operationally profitable within
three months.
-- Iconic Labs will immediately manage all operational and
commercial aspects of the JOE media businesses in the UK and will
do so in Ireland following regulatory clearance. JOE media is a
market leader in digital media in Ireland and in the UK described
as 'most influential publisher' by the BBC.
-- The JOE media businesses generated in excess of GBP10m of
revenue in FY 2019 with the UK part of the business having grown
annual revenue at an annual rate of 117.7% between 2016 and
2019.
JOE Media
Greencastle Capital has acquired the JOE media business in the
UK out of administration. It expects to imminently sign a contract
for the acquisition of the JOE media Irish business and once an
Irish Media Merger notification period has expired completion of
the acquisition of the JOE media Irish business will occur. This is
expected to take place within two months.
The management services contract with Greencastle Capital also
provides that Iconic Labs will manage the JOE media Irish business
once completion of the acquisition of the JOE Irish business has
occurred in Ireland.
JOE media is the largest independent digital media company in
the Republic of Ireland and has been one of the fastest growing
media companies in the UK since its launch in 2015. JOE media is
particularly well known for the 'House of Rugby' series which,
aside from live matches, is the most watched rugby show in the
world with the most recent series sponsored by Guinness. In 2019,
JOE media generated the majority of its revenue by working with
many global brands and blue-chip clients.
JOE media has developed ten digital lifestyle channels: JOE.uk,
JOE.ie, Her.ie, HerFamily.ie, FootballJOE, PoliticsJOE, MMAJOE,
SportsJOE, RugbyJOE and ComedyJOE. Having started as a single
website, JOE.co.uk has evolved into an active publisher with
distinct media brands and 17 original series. The combined social
following of JOE media now stands at over 11 million.
JOE media is a trusted and highly reputable brand regarded by
key industry figures as one of the brightest and most important
entities in the Irish and UK media landscape in the past decade. In
the past 12 months alone, JOE media has won the European Publisher
of the Year award, had the most viewed political video anywhere in
the UK during the 2019 general election period, and had the most
shared video on YouTube in 2019. JOE media has invested in its
journalistic and production capabilities, and this has resulted in
excellent and incisive writing combined with broadcast-quality
video production.
The Company believes that resolving the duplication of costs by
moving to a one-company structure covering both Ireland and the UK
(following completion of the acquisition of the JOE media business
in Ireland), together with a more disciplined focus on revenue
capture, will enable Iconic Labs to return JOE media to
profitability in 2021, or before. In parallel, the Company will
work on growing the existing channels and brands as well as
expanding the coverage into new areas and sports, while maintaining
rigorous quality control on writing and production. Iconic Labs
will also seek to create profitable links into mainstream media
content providers including terrestrial broadcasters.
Given the number of channels where JOE media currently has a
presence Iconic Labs believes there are several growth
opportunities even without the need to add additional resources. In
particular, Iconic Labs believe the Her and Her family brands have
got significant potential after previously being underutilised.
As part of managing all commercial aspects of the JOE media and
House of Rugby businesses, the Company will also manage the
existing JOE media team and be responsible for general day to day
management of the business. In consideration, Iconic receives a
monthly retainer fee of GBP50,000 plus external costs and shall
receive 25% of all profits if certain revenue and profit targets
are met.
The management services contract commenced today and is for an
initial period of one year, following which it renews automatically
every 12 months until terminated by both parties. It is intended to
run in perpetuity.
Balance sheet of Iconic Labs and future funding
Iconic Labs believes that the step change in revenues,
operations and prospects as a result of this management services
contract allows for a strategic financial review of Iconic Labs
itself. This will specifically include a review of how the Company
is funded. Consistent with the previously announced intention, it
is hoped that this will provide an opportunity for the Company to
raise sufficient capital to be able to clean up its balance sheet.
This could include a conventional equity fundraise and/or
conventional debt facilities, and the Company aims to have the new
funding in place in the autumn of 2020. Iconic Labs does not intend
to enter into another variable conversion facility or similar
arrangement.
John Quinlan, Chief Executive Officer of Iconic Labs, said :
"We are delighted to have been involved in Greencastle Capital's
successful bid for JOE media, which involved a very competitive
sales process among more than 15 different bidders.
The acquisition of the JOE media UK businesses by Greencastle
Capital is by far the biggest deal we have been involved with as a
Company so far. Both the JOE media business and the management
contract structure fit our strategy of leveraging scarce capital
while operating the best brands in digital media. With JOE media's
credibility in specific areas like politics and sport, Iconic Labs
now has access to some best in class assets through the management
services contract.
With access to these assets and significant immediate revenues,
the Company's business is now reached the stage where we can as
promised consider other financing arrangements. I hope this deal
will provide an opportunity for the Company to raise sufficient
equity capital to be able to look at the Company's options for more
conventional equity raises and/or conventional debt in order to
finance the Company's growth on a more conventional funding
basis."
Liam Harrington, Chief Business Officer of Iconic Labs, said
:
"The JOE product and brands are incredibly exciting. As well as
being the largest independent digital media business in Ireland it
is one of the most respected brands in the UK for it's coverage of
news, sport and politics. We, the team at Iconic Labs, are able to
transfer the skills used to build one of the World's largest
digital publishers in UNILAD, and use them to grow and develop in
JOE media what is already a prestigious brand with an offering that
is unique and unrivalled in quality within the market. We have many
unused plans that can now be rolled out to help JOE media further
develop further as the market leader within the digital space in
the UK and Ireland. We also intend to look at joint ventures or
other opportunities with existing broadcast media, and in Katharine
Lewis have a non-executive director who is perfectly placed to
assist us in doing so."
Paul O'Donohoe, Partner, Greencastle Capital, said:
"We are very excited by our acquisition of JOE media, which is
one of the most reputable and recognisable digital publishing
brands in the UK & Ireland. Greencastle Capital, alongside
Iconic Labs with its commercial expertise in this space, have plans
to invest in this business in a focused way that will ensure its
long-term sustainable growth. While the UK & Irish companies
were separate entities before, the intention, following completion
of the acquisition of the Irish business is to combine the two to
create one single JOE media business. In combining the two
entities, the sheer scale of the UK market makes that the key area
for growth opportunity for JOE media. However, JOE media is a brand
which is Irish to its roots and therefore it is expected that the
Irish acquisition company will be the holding company for the
structure of the JOE media businesses following completion of the
acquisition of the Irish JOE media business, and JOE media's global
headquarters will be in Dublin. In the current digital media
landscape, we are seeing more opportunities like this to
restructure valuable brands such as JOE media to set them up for
success and this addition to our portfolio is a major milestone in
our plans."
Note to Editors: JOE Media, Reasons for Sale and Deal
Structure
Having established itself in the market from the ground up, JOE
media was historically profitable in its core business in Ireland
but with expansion into the UK it made losses overall. However the
Irish and UK businesses were legally separate with each owned
directly by the same individual shareholders. The COVID-19 crisis
led to short term decrease in revenues and cash flow, as clients
and advertising agencies reduced spend due to falling consumer
demand and financial uncertainties. Of particular relevance to JOE
media was the cessation of all professional sport (primarily
football, rugby and cricket), on which several of its principal
series are based.
Both UK and Irish operating companies were funded by the same
financial investor, whose relationship with the individual
shareholders deteriorated over concerns about senior management
costs and the costs of expanding into the UK. When the JOE media
businesses breached their debt covenants the financial investor
declined to waive rights or agree to a standstill and the
businesses were put into Administration and Examinership processes
respectively. Seventeen bidders took part in the auction process,
with the eventual winner being Greencastle Capital.
Greencastle Capital is managed jointly by David Sefton and Paul
O'Donohoe. It is owned by Linton Capital, a 15 year old private
equity business, which is owned by David Sefton, the former
Chairman of Iconic Labs, who continues to work with Iconic Labs.
David's ownership of Linton Capital pre-dates the existence of
Iconic Labs and is run entirely separately from the Company.
Neither David Sefton or Paul O'Donohoe sit on the board of Iconic
Labs and all transactions between Iconic Labs and Linton or
Greencastle Capital are carefully considered by the board of Iconic
Labs and conducted on an arm's length basis.
The structure as set out in the management services contract is
that Iconic Labs provides it's commercial expertise in running all
commercial and operational activities of JOE media in consideration
for a GBP50,000 monthly management fee plus external costs and in
addition shall receive 25% of all profits if certain revenue and
profit targets are met. As part of negotiating the management
services agreement, the Company has entered into a GBP1 million
loan agreement with Greencastle Capital. The loan is repayable
within one year, or can, at the sole discretion and election of the
Company, be converted into equity in the JOE media Business using a
valuation which is a 20% discount to the enterprise value of the
JOE media Business as acquired by Greencastle Capital.
Greencastle Capital has now completed Greencastle Capital's
acquisition of the JOE media business in the UK and expects to
enter into a binding contract in respect of the Irish company
imminently, and following successful clearance under the Irish
merger notification process Greencastle Capital will own 100% of
JOE media in both the UK and Ireland.
David Sefton will be Chairman of JOE media and Paul O'Donohoe
will be Executive Vice Chairman of JOE media. Going forward they
intend to appoint representatives from Iconic Labs to the board of
JOE media.
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by
the Company to constitute inside information for the purposes of
the Market Abuse Regulation (EU) No. 596/2014. Upon the publication
of this announcement via a Regulatory Information Service, this
inside information is now considered to be in the public
domain.
**ENDS**
For further information, please visit the Company's website
www.iconiclabs.co.uk or contact:
Damon Heath Shard Capital Partners Tel: +44 (0) 20 7186 9950
LLP
Iconic Labs ir@iconiclabs.co.uk
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END
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