REG - Iconic Labs PLC - Management contract with JOE Media Ireland

Iconic LabsAnnouncement

16/07/2020 07:00

RNS Number : 1490T
  
Iconic Labs PLC
  
16 July 2020
  
 

 
Iconic Labs Plc ("Iconic Labs" or the "Company")
Management services contract with JOE Media Irish Business After Signing Contract of Acquisition for Maximum Media Network
Iconic Labs Plc (LSE:ICON), a multidivisional new media and technology business, today announces that, further to the Company's announcement on 8 July 2020, Greencastle Acquisition Limited ("Greencastle"), which is an affiliate of Greencastle MM LLP ("Greencastle Capital"), has entered into an agreement to acquire Maximum Media Network Limited ("MM"), the company through which the JOE Media Irish business operates, and for which Iconic Labs, through the management services contract it entered into with Greencastle Capital will provide management services to Greencastle in respect of the JOE Media Irish business.  
Completion of the acquisition of MM is conditional on successful Irish Media Merger clearance, which Greencastle hope to receive within two months, and thereupon the provision of the management services to Greencastle in respect of the JOE Media Irish business under the management services contract will similarly come into effect.
●     At present, JOE, Her, SportsJOE & HerFamily are the #1 online-only media platforms in Ireland.
●    In recent years, JOE, Her, SportsJOE & HerFamily have grown rapidly to become among the most recognisable brands in the Irish media landscape. 
●     Annual revenues of MM (The JOE Irish business) grew by 391% from €1.46m in 2014 to €7.18m in 2017.
●     As previously announced, the terms of the management services contract provide that Iconic Labs will be paid a monthly management fee of £50,000 plus external costs for managing the combined businesses, and in addition shall receive 25% of all profits if certain revenue and profit targets are met. 
●    Iconic Labs is already managing all operational and commercial aspects of the JOE Media businesses in the UK and will do so in Ireland once the Irish Media Merger notification period has expired and completion of the acquisition of the JOE Media Irish business by Greencastle has occurred.
 
JOE Media Irish Business (Maximum Media)
MM, trading as JOE & Her, was founded in Ireland in 2010. it started as a single website (JOE.ie) and has evolved into Ireland's largest distributed media business with valuable brands & attractive audience profiles, with a portfolio that includes JOE, Her, SportsJOE, & HerFamily. 
The business is Ireland's only distributed media business with real scale. As a result, it has capitalised on the structural shift in the media & advertising markets away from print mediums and towards digital platforms.
The creation of an Election 2020 podcast series, 'State of Us', became the focal point for a slew of video, audio and editorial content on JOE. This culminated on Sunday 9 February 2020, the day of the count and one of the biggest days in any Irish media year, when according to analysis of Crowdtangle data, JOE had the biggest share of voice of any publisher on Facebook and Instagram - including traditional politics media sources such as RTE News & The Irish Times. 
JOE, Her, SportsJOE & HerFamily offer a full suite of digital advertising products to clients (including brands & advertising agencies), which can be tailored to meet their individual marketing needs. These services can be broadly categorised into two categories - Branded Content and Programmatic/Display Advertising, but can be expanded in the future. 
The combined effect of the content, the team & the brand means JOE is the clear leader in Ireland among the 18-30 age group audience, which is a particularly attractive to  brands & advertisers. This demographic represents the future of media & advertising, having grown up with a fundamental change the way media is consumed.
MADE is the MM's in-house agency. It creates white label content solutions for brands to help them improve their social media offering and communication to their target market. Given JOE's market position and credibility there is significant potential to expand this service, as well as grow the branded content and display advertising parts of the business. 
SportsJOE
SportsJOE has established two flagship sports shows in 'The GAA Hour' and 'House of Rugby'. They have maintained their audience despite the onset of COVID 19 restrictions and the absence of any sporting action or fixtures. 
The GAA Hour has seen an increase in its audio downloads for March/April 2020 compared to the same period last year - an average of 222k downloads per month for 2020 vs. 209k per month for 2019. 
SportsJOE have worked with a portfolio of clients including EA Sports, FIFA and Guinness.
Her and HerFamily 
Launched in 2012, Her has gained significant market share from early adopters over eight years and is now one of the most popular sites for young Irish women (aged 25-34). Her have worked with a portfolio of clients including Clarins, Bacardi and Centra.
The weekly podcast, Girls With Goals, interviews successful women. It is aimed at listeners who are trying to juggle all 'the balls of life'. It has engaging and humorous conversations with impressive guests and has proven hugely attractive with viewers.
Iconic Labs feel there is potential to develop a powerful, lifestyle-focused content vertical that lives as a stand-alone offering; development of shows like Girls with Goals as a real alternative to terrestrial TV or streaming services.
Founded in 2015, HerFamily is the dominant market player targeting young Irish mothers with practical, funny & engaging content. HerFamily makes a big difference to the lives of hundreds of thousands of Irish parents with inspirational and informative content that aims to resonate with the audience. 
HerFamily have worked with a portfolio of clients including Mcdonalds, Danone, Avonmore and Cadbury.
Iconic Labs feel there is a real opportunity to establish Her's bridal and wedding credentials in conjunction with a commercial partner; becoming the most trusted and relevant destination for Irish brides-to-be.
There is significant potential for an enhanced E-commerce strategy across both Her brands and we feel particular focus around fashion and beauty content will likely produce an additional revenue stream.
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.
Financial Position 
MM was traditionally profitable but the business invested for very high growth in 2018 and as a result became significantly oversized. This led to an unsustainable cost base, compounded by  a culture of pursuing revenue growth over profitability. The result was a business that was vulnerable to changes in consumer demand like that caused by COVID 19.
Subsequently, JOE's existing management team did realise the mistakes and acted to produce a restructuring plan. They implemented several cost-cutting measures, principally the reduction of the workforce by approximately 40%. However, the full benefit of these cost reductions had not transpired once the COVID 19 pandemic hit.
As part of managing all commercial aspects of the JOE Media businesses, the Company will also manage the existing JOE Media team and be responsible for general day to day management of the business. 
 
John Quinlan, Chief Executive Officer of Iconic Labs, said:
 
"We have admired the JOE and Her brands and their output for a long time and are delighted to soon be working with them. As the leading independent digital media company in Ireland we are fully aware of the important role it plays in providing people with quality content on a daily basis. While the commercial growth of JOE to date has been impressive, we think there is still significant untapped potential and we look forward to working with all partners and stakeholders to achieve this."
 
Liam Harrington, Chief Business Officer of Iconic Labs, said:
 
"We are delighted to soon be working on the JOE and Her brands. The quality of work and the reach the business has achieved to date has been incredibly impressive. Working with both JOE UK and Irish businesses will enable us to create content that sits across both the UK and Ireland, allowing us to acquire an even bigger audience. We plan to build on the progress the brands have made so far and strive to not only put JOE at the forefront of modern media in Ireland, but also aspire to grow throughout the UK and the rest of Europe."
 
Paul O'Donohoe, Partner, Greencastle Capital, said:
 
"JOE is an iconic Irish brand and we are very pleased to have today signed the agreement with the Examiner to acquire the business.  We hope that the Media Merger process will proceed smoothly and look forward to completing the acquisition as soon as possible.  Once that has been done we can then more fully integrate the Irish and UK operations, with the headquarters to be based in Dublin.  With an integrated management structure, investment to grow and the expertise of the Iconic Labs team we can then see what JOE is capable of achieving."
 
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 both the UK and Ireland in consideration for a £50,000 monthly management fee plus external costs and in addition shall receive 25% of all profits if certain revenue and profit targets are met.  
Greencastle Capital has already completed Greencastle Capital's acquisition of the JOE Media business in the UK and, through its affiliate, Greencastle has now entered into a binding contract in respect of MM, the Irish company. Following successful clearance under the Irish merger notification process the contract will complete and Greencastle and 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 Greencastle. Going forward they intend to appoint representatives from Iconic Labs to the board.
 
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                                              ir@iconiclabs.co.uk                                     


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