REG - Iconic Labs PLC - Operational update

Iconic LabsAnnouncement

10/12/2020 07:00

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RNS Number : 1375I  Iconic Labs PLC  10 December 2020

 

 

 

Iconic Labs Plc ("Iconic Labs" or the "Company")

 

Operational Update

 

 

Iconic Labs Plc (LSE:ICON), a multidivisional new media and technology
business, today provides the following operational update covering activity
during the second half of 2020.

The second half of this year saw material positive progress in the business
activity of the Company.  In particular, monthly contracted revenues now
exceed £135,000 per month (more than £1.5 million on an annualised basis, up
from £0.1m for the entirety of 2020).  In parallel, legacy revenues have now
largely been dealt with and running costs for the Company are running at a
level similar to or less than revenues received.

The key transformative event was the acquisition by Greencastle Acquisition
Limited ("Greencastle Capital") of the JOE and HER media group and the
subsequent entering into of a management service contract ("MSC") with the
Company.  The management fee payable for the provision of all management
services to Greencastle Capital under a single combined MSC with the Company
is now £125,000 a month, which over the course of a 12 month contract alone
exceeds the amount of income that Iconic had generated in the financial year
ended 30 June 2020.

The management team have worked very hard with the JOE team to run the
business more efficiently, and JOE UK is now operationally profitable less
than 4 months after the commencement of the provision of the management
services under the MSC. This is particularly important, as in addition to the
£125,000 a month fee payable to the Company under the MSC, the Company is
also entitled to a 25% profit share of JOE Media. Since the management team
have been providing their services under the MSC a number of high value
contracts have been won on a regular basis, including most recently a series
of recent advertising and branded content partnerships with revenues totalling
more than £750,000. JOE Media is a business that has historically achieved
more than £10 million in annual revenue and has seen previous revenue growth
rates of over 100% a year. We are confident that with the experience and
expertise that the management team provides under the MSC, JOE Media can
increase its profits which in turn can become a significant source of revenue
to the Company in the future.

The directors believe there remains a number of further acquisition and
partnership opportunities in the digital media and advertising sector and
through which it can establish partnerships with brands and businesses. It is
the Company's belief that there are many potential partners that can benefit
from the experience and contacts of the Iconic Labs management team,
specifically dramatically scaling monetisation efforts across previously
under-monetised websites and digital brands via both programmatic advertising
and branded content contracts. The performance of JOE Media provides clear
verification of the ability of the management team of the Company to do so.

In addition to the success of the contract wins achieved by JOE Media, as a
result of the management services provided by the management team, there has
also been a focus on operational efficiencies, and in doing so under the MSC,
the management team have made JOE Media a more structured and streamlined
platform and business. This is not only about reducing unnecessary costs but
also structuring the business so it is optimised operationally and can benefit
from both economies of scale and accessing greater levels of revenues. Size
and scale are often limiting factors in a digital media company's revenue
prospects and that is why JOE Media was such a transformational partnership,
as this allowed the business to achieve enough of both so as to achieve a
different level of revenue growth. The result is that the JOE Media business
is now well positioned to achieve further synergies by working with other
owned and operated platforms.

The recently announced entering into of a further MSC in respect of the Lovin
Media business following its acquisition by Greencastle Capital is an example
of this model already being put into action. The JOE Media and Lovin Media
businesses are now being run as one and together form the largest independent
digital media company in Ireland. This will help create both revenue and cost
synergies which the Company believes should increase revenues and
profitability across all entities. As a result of this the fee that Iconic
Labs receive on a monthly basis has been to £125,000 (£1.5m annually),
together with the potential of receiving 25% of the profits. As previously
mentioned, the MSC for both businesses is now being undertaken under a single
combined MSC with Greencastle Capital.

 

In addition, the other owned and operated business, GSN and The London
Economic (TLE), are also benefiting from the centralized systems and resources
we have created. TLE provides regular revenue to Iconic Labs under a separate
MSC.  Importantly, TLE is now profitable. There are also exciting
opportunities for the JOE Media commercial team to upsell TLE distribution and
content onto JOE Media contracts. This should provide an opportunity to
substantially increase revenues from branded content campaigns. Similarly GSN
will not only benefit in all areas commercially but will also be able to share
resources such as production of content.  This should not only contribute to
revenues but also greatly enhance the capital value of the GSN brand.

 

Finally, one of the most important aims that the board of directors had for
this year was to build the underlying business to a level where it could
attract conventional capital funding, and in so doing move away from the
convertible loan note facility funding model that had been inherited from the
old WideCells business, and as previously announced, the Company has been
successful in doing so.  With the previous financing facility having been
terminated, and a recent equity raise being successfully completed, the
Company is well placed to grow the share price alongside the growth of the
Company.  There are ongoing discussions with the previous provider of the
convertible loan note facility as to the settlement of the outstanding amounts
due which are to be resolved.  Negotiations on this are not straight forward,
but the Company is determined to negotiate with the best interests of its
members and other stakeholders in mind and ensure that any final settlement is
one which can be fully justified to them.

 

 

John Quinlan, CEO of Iconic Labs, said: "We are delighted that the hard work
of the team, and the patience of the shareholders is beginning to be rewarded
by substantial positive progress in the Iconic Labs business. Increasing
revenues to more than £1.5m on annualised basis shows that the model and
playbook we have been working to is beginning to show the benefits of a
substantial amount of work over the previous 18 months."

 

 

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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