News & Press
Expansion of digital marketing capability by acquisition of Pavilion Communication
28th September 2007
Hasgrove (AIM: HGV, ‘Hasgrove’, “the Group”), the pan European marketing and communications group, has acquired Pavilion Communication Services (Holdings) Ltd and its subsidiary, an independent digital marketing agency, for a maximum consideration of £9.9m.
In a separate announcement today, Hasgrove has also acquired Odyssey Interactive, an independent supplier of intranet solutions. Both of these earnings enhancing acquisitions represent significant developments in Hasgrove’s strategy of increasing the digital focus of the Group and are part of a programme to acquire and develop a comprehensive portfolio of brand leaders in high growth areas in the UK and continental Europe. The Group sees considerable opportunities for revenue synergies from both acquisitions.
Hasgrove also published its interim results today for the six months to 30 June 2007 which showed the Group revenue jumped to £10.1m (four months to 30 June 2006: £4.7m), headline profit before tax was up to £1.2m (2006: £0.5m) and headline basic EPS was up to 4.6p (2006: 3.1p).
The consideration consists of an initial payment of £5.6m of which £3.9m is payable in cash and the balance satisfied by the issue of 1,205,960 new ordinary shares at 143.5p. There will be a deferred payment of up to £292k on the 2 January 2008. In addition there will be further deferred consideration of up to £4m based upon 65% of EBIT in the period to 28 February 2011. These further payments will be made in a mixture of short term loan notes and new shares with a minimum of 50% of the further consideration being paid in loan notes. The maximum deferred consideration will be payable provided that Pavilion generates an EBIT of over £6.2m over the next three and a half years. The funding for the transaction is from the Group’s own cash resources and a new facility provided by KBC Bank NV.
Formed in 1986, Pavilion has grown significantly in recent years with its focus on digital marketing. In the year to 30 November 2006, Pavilion produced an underlying EBIT of £456,000. The Net Assets of Pavilion at 30 November 2006 were £418,000. On completion the company held cash of £1m.
Pavilion’s clients include ODEON Cinemas, Siemens Enterprise Communications, The Co-operative Group and the Learning and Skills Council. Pavilion has been working with both ODEON Cinemas and The Learning and Skills Council for a number of years. It was also appointed by Siemens Enterprise Communications as its lead agency globally in September 2006 following successful activity for Siemens carried out earlier that year. Pavilion has also developed its own intellectual property including a content management system and a digital signage solution that is used in over 1,700 Co-op stores in the UK.
Vikki and Gerry Ashton will remain as directors of Pavilion.
Rod Hyde, Hasgrove Chief Executive commented:
“Pavilion is a very profitable agency that is enjoying rapid growth. The company’s success in developing its relationship with Siemens shows that it is capable of servicing large global accounts. Pavilion will spearhead the Group’s strategy of building a pan European digitally focussed marketing services agency.“
Rod Hyde, Chief Executive 0161 817 4200
Paul Sanders, Group Finance Director
Adrian Duffield/Ben Way 020 7457 2020
KBC Peel hunt
Capel Irwin/Richard Newman 020 7418 8900
Note to editors
Hasgrove, incorporated on 1 October 2004, is the holding company for a group of profitable and cash generative companies which provide communication services in public relations, public affairs, graphic design, advertising and online marketing.
Hasgrove was established to capitalise on the evolving world of communications. The Group provides services which encompass multi-channel, cross-disciplinary and cross-border activity. This is being achieved by a combination of organic development and acquisition within the fragmented marketing communications sector.
There are more than 250 personnel in the Group, serving a broad client base of more than 300 clients, working in the three well established, profitable and strongly cash generative operating businesses:
- Connectpoint specialises in advertising, public relations, public affairs and digital services.
- The Chase is a leading UK graphic design agency.
- Interel is a leading continental European communications consultancy specialising in corporate communications, European public affairs, Governmental relations and brand marketing communications. The Group acquired Cabinet Stewart, leading EU Public Affairs consultancy in February 2007.