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Annual Results

7digital revenues up; to acquire 24-7 Entertainment

10 March 2017 07:49

7digital's revenues rose by 15% to £11.9m after currency gains in the year to the end of December and announced a £3m fundraising and talks on the potential acquisition of its only remaining significant European competitor, 24-7 Entertainment.

The group posts an adjusted LBITDA of £3.5m (2015: £2.1m), after £0.8m provision for bad debt at customer Guvera, costs relating to the move to a cloud-based IT system and reflecting the timing of R&D tax credit.

The statutory loss for the period was £5.2m - down from £7.9m in 2015.

The group also announced that it had agreed heads of terms with MediaMarktSaturn to acquire 24-7 Entertainment, 7digital's only remaining significant European competitor.

If the acquisition proceeds it would materially strengthen revenues from 2017 and be earnings enhancing in 2018.

The board also announced a proposed placing and an open offer to raise approximately £3.0m.

The placing will be at 6.5p per share to raise gross proceeds of approximately £2.26m.

The price represents a discount of 10.3% to last night's closing middle market price.

The company also announced and open offer of up to £0.75 million to qualifying shareholders.

Chief executive Simon Cole said: "2016 was a year in which many of our strategic objectives were achieved, including the delivery of a final quarter of positive EBITDA.

"The year saw our position in the emerging digital music ecosystem further strengthened, with the industry's three major record labels becoming customers and our investments in readying our platform for Hi-Res audio delivery beginning to show return through new customer signings.

"Our platform now delivers streams to over 16 million people worldwide - close to the level of Apple Music (20m subscribers) - through an increasingly diverse range of customers across a widening number of geographies.

"This growth will underpin long-term profitability as the music streaming industry develops to include mainstream listening.

"Our strategy to consolidate the market for supply of business-to-business streaming services included last year's successful integration of the French business 'Snowite'.

"Today we are announcing that we have agreed heads of terms for the acquisition of our only remaining significant European competitor, 24-7 Entertainment, which will include the contract to supply its current owner, MediaMarktSaturn, Europe's biggest electronics and entertainment retailer.

"We would expect to significantly strengthen our licensing revenues if the transaction completes as anticipated.

"The proposed capital raising announced today will strengthen our balance sheet as we move into our next phase of growth, and we are grateful for the support of current and new shareholders who are participating.

"7digital has a strong pipeline and is enjoying increasing momentum, and the Board remains committed to being profitable at the operating level for the full year in 2017."

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