LBi is boasting a positive cash flow that stands at €9.6 million, up €700k from last year. However, the current net debt of €8.5 million could rise further once the deal between LBi and Publicis is completed next year.
A one-off charge of €5.5 million relating to the sale of LBi was disclosed in the trading update. The fairly substantial chunk of change is down to fees relating to the investment bank, legal, audit, tax and other advisory fees. The total will rise to €6.5 million once the buyout is completed.
More details were revealed about the acquisition in LBi’s statement. An offer document from Publicis is planned for around mid-November. Once the offer period is concluded, it’s declared unconditional. The transaction in its entirety is then expected to close in the first quarter of next year.
EBITDA shows strong increase
The agency’s EBITDA was up 26% to €10.1 million, which is an improvement on the €8 million posted in the same quarter last year. Although it’s worth remembering that the EBITDA figure ignores changes in working capital, capital expenditures, taxes and potentially any interest payments associated with the servicing of LBi’s €8.5 million of debt.
Sales at LBi were very different from region to region. The UK and USA managed to completely outmuscle a flatlining Central and Southern Europe. LBi reported that key accounts continued to spend across the service mix in the UK. Whereas in the USA, the likes of Coca Cola and Sony made substantial income contributions to LBi.
CEO of LBi, Luke Taylor, admitted a tough Q4 could be around the corner due to uncertainty surrounding advertiser budgets in what is traditionally a strong Christmas period. He also mulled over the effect hurricane Sandy might have on various companies’ bottom line.
“Historically we have benefited from strong seasonal discretionary spend and it is not currently clear if the client budgets exist in Q4 to once again support this behaviour,” he said. “We are also assuming a degree of disruption as a consequence of the storm damage in New York.”