Update on Joe Media and Other Business Update

 

 

 

3 July 2020

 

 

 

Iconic Labs Plc ("Iconic Labs" or the "Company") update on Joe Media and Other Business Update

 

Iconic Labs Plc (LSE:ICON), a multi-divisional new media and technology business today announces the following business update in relation to various ongoing contracts and opportunities.

 

Supporting Greencastle Capital bid for Maximum Media and Joe Media

 

The Company has previously announced on 16 June 2020 that it was working with Greencastle Capital ("Greencastle") to support a bid by Greencastle to acquire Maximum Media Limited ("Maximum Media"), which is currently subject to an examinership process in the Republic of Ireland, and for the assets of Joe Media Limited ("Joe Media UK"), which is currently in administration in the UK. Both Maximum Media and Joe Media UK currently trade under the 'JOE' brand and are well known media companies in the UK and Ireland.

 

Greencastle is in continued discussions with Joe Media.  The bidding process is ongoing and there can be no assurance that the Greencastle bid will ultimately be successful.

 

The Company wishes to clarify that the only parties involved in the bid are Greencastle Capital and Iconic Labs as per the statement issued to the London Stock Exchange on 16 June 2020. For the avoidance of doubt, Mr Niall McGarry, the original founder of Maximum Media and Joe Media, is not involved in any aspect of the bid being made by Greencastle and supported by the Company.

 

Should the Greencastle bid be successful, Iconic Labs and Greencastle will enter into a management services agreement whereby Iconic will manage the JOE assets and negotiations in respect of this management services agreement are taking place. There can be no assurance that terms for a management services agreement will be agreed.

 

Greencastle is a subsidiary of Linton Capital LLP and is ultimately owned and controlled by David Sefton.  As announced on 14 April 2020, Iconic Labs has already entered into a management services agreement with another publisher majority owned by Greencastle, TheLondonEconomic (TLE).

 

The Company will update the market as and when there are further developments.

 

 

Social Alchemist

 

The Company stated in its latest prospectus, published on 26 March 2020, that it planned to complete the acquisition of Social Alchemist in the first quarter of 2020. Due to the ongoing Covid-19 pandemic the Company has been unable to conclude this acquisition. However, Iconic Labs has been in talks to renegotiate the terms of the agreement so as to give the Company maximum flexibility.   The Company is pleased to announce that it is now in the final negotiations to complete an agreement for the licence and management of the distribution services of Social Alchemist and will therefore not now need to acquire the Social Alchemist business. This results in the same economic benefit to the Company as the proposed acquisition, but without the need to deploy capital. The Company will provide a further update in due course.

 

Fintech services contract

 

The Company stated in July 2019 that it had agreed a deal worth up to £1m to provide marketing and consultancy services and that the deal was subject to final documentation. As of today's date this deal has not yet been completed. The Company is in regular communication with the client about a strategic partnership, however due to cash constraints from the client's perspective caused partly by the Covid-19 pandemic the contract is likely to be materially different than originally agreed.  The Company will provide a further update in due course.

 

 

Medium Channel Media Limited ("MCM") and Tab Media

 

The Company stated in an announcement issued on 12 September 2019 that it had taken a 24% shareholding in MCM, that it would be providing management and consultancy services to MCM pursuant to a management services agreement and in addition would be providing a loan for £150,000, to be used solely for working capital purposes. It was also announced on 12 September 2019 that MCM had entered into a conditional agreement to acquire Tab Media Ltd ("Tab Media"), publishers of The Tab, the UK's leading youth student culture focussed publisher.

 

MCM has informed Iconic Labs, that unfortunately, the conditions to the conditional agreement, which would have enabled MCM to acquire Tab Media, have not been met and that subsequently the agreement has lapsed. 

 

MCM is looking at other potential opportunities. At the current time the envisaged management and consultancy services, which related to The Tab, are not being provided. The Company is aware that the £150,000 has been used by MCM in connection with its proposed acquisition of Tab Media.  At the present, the Company has impaired the treatment of this loan on its balance sheet to reflect a current view that recovery is unlikely.

 

The Covid-19 pandemic has had a significant effect on the valuations of media and advertising businesses and this is likely to be factored into any future discussions for potential acquisitions.

 

 

Covid-19 Impact - Initial Assessment and Company Response

 

The Covid-19 pandemic has had a significant impact across the publishing, advertising and marketing industry and on the Company.

 

The Company has had a number of contracts delayed or cancelled. The Company has also seen an increase in consumptions across owned and managed properties, but this has been offset by a decline in advertising rates for programmatic advertising across the whole industry. This has materially affected the revenues and profitability of the Company in the last period quarter and has delayed the business's attempts to get to profitability. The management team of the Company have all agreed to continue to defer 40% of their salaries during this quarter.

 

However, as announced on 12^th June the Company has begun to sign contracts again in regards to marketing services and also has a pipeline for brands looking to be more flexible and cost effective in their advertising as a response to the impact of the Covid-19 pandemic.

 

Due to the Covid-19 pandemic the Company chose to accelerate its ability to deliver services that are not just related to content creation and advertising, but are also across a wider number of revenue streams.

 

By way of an example, the Company now offers data and insight packages combining its unique knowledge of social media, and its access to platforms like GSN and Infotagion. The initial reception for these has been very good and the pipeline of non-advertising related services is strong for Q3 and Q4 of 2020.

 

The Company will continue to look at other acquisition opportunities and strategic partnerships in the future.

 

Greencastle Capital and David Sefton

 

As highlighted above in respect of the Joe Media transaction, Iconic Labs continues to work with Greencastle Capital and David Sefton on a number of potential opportunities whereby the Company and Greencastle Capital can work together.  The Company will update the market as and when it is appropriate to do so in respect of such potential opportunities. 

 

David Sefton has also agreed to be part of the management team of the Company providing advice  on acquisition and related corporate finance matters in respect of the various potential opportunities being pursued.  However, David is not a director of the Company, does not intend to become a director and all discussions and agreements with Greencastle Capital or any associated parties are conducted on an arm's length basis, with the decisions concerning Iconic made by the Iconic Labs board, in which forum David Sefton does not participate and is not involved.

 

 

 

 




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 LLP	Tel: +44 (0) 20 7186 9950
	Iconic Labs	[email protected]