Jaywing Regulatory News (JWNG)

2 Jul 2007 07:01

Digital Marketing Group PLC02 July 2007 Date: 2nd July 2007 On behalf of: Digital Marketing Group plc (the "Company" or the "Group") Embargoed: 0700hrs Digital Marketing Group plcAcquisitions of Graphico & Hyperlaunch for £12.1m • Acquisition of Graphico for a maximum consideration of £8.6m• Acquisition of Hyperlaunch for a maximum consideration of £3.5m Digital Marketing Group plc (AIM: DIGI), the digital direct marketing group, istoday pleased to announce the acquisitions of the entire share capital ofGraphico New Media ("Graphico"), a successful full service creative digitalagency with skills in mobile marketing and Hyperlaunch New Media ("Hyperlaunch"), an award-winning digital creative marketing agency. Digital Marketing Group is paying a maximum consideration of £8.6m for Graphicoand a maximum consideration of £3.5m for Hyperlaunch. The acquisitions will befunded via a combination of existing cash resources, loan notes, bankfacilities, and shares in Digital Marketing Group. Adjustments to considerationare in place in relation to agreed minimum net asset balance sheet positionsretained by the businesses. The acquisitions reaffirm the Group's 'buy and build' strategy of acquiringcompanies that have activities in 'online' marketing, 'offline' direct marketingand database marketing. Graphico and Hyperlaunch are both digital marketingspecialists which complement the Group's existing businesses and broaden itsdigital direct marketing offering, client and product base. Commenting on the acquisitions, Ben Langdon, Digital Marketing Group plc's ChiefExecutive, said: "I am delighted to announce the completion of these acquisitions. Thebusinesses will bring new expertise and skills into the Group and complementfurther our specialist digital marketing offering. We look forward to welcomingthem into the Group and working together to develop and create one of UK'sleading digital direct marketing groups." Graphico Graphico, founded in 1990, is an award-winning full service creative digitalagency with mobile marketing skills. The core business area lies in the design,development and maintenance of web-sites, from brand extension sites to fulle-commerce based applications. Since the business was established, it hasdeveloped by combining both creative and technical skills to provide tailoredsolutions for its clients. Graphico is based in Newbury and employsapproximately 70 people. Graphico won the 2007 Travel Category of the NMAEffectiveness Award for its work with First Great Western. Graphico has created a bespoke mobile system that offers an integrated solutionfor SMS, WAP, Voice and ECRM applications. It has a range of international andblue-chip clients including Pepsi, The London Eye, Walkers, Universal,Bacardi-Martini, BBC, Chivas Regal and First Great Western. Over the last two years Graphico has demonstrated considerable sales growth.This growth is reflected in its audited financials for the year ended 31December 2006; with turnover of £4.1m (up 70.8% on audited 2005 turnover of£2.4m) and operating loss before tax of £80,000 which, when adjusted forexceptional and non recurring costs, gives an operating profit of £176,000. Digital Marketing Group is acquiring the entire share capital of Graphico for amaximum consideration of £8.6m. The consideration comprises £4m cash oncompletion, up to £1.5m worth of loan notes contingent on achieving certainEBITDA performance targets for the six months to 30 September 2007 and up to amaximum £3.1m of shares in DMG contingent on Graphico achieving various EBITDAperformance targets. The maximum consideration figure of £8.6m is payable uponGraphico achieving annual EBITDA of £1.18m prior to December 2008. DigitalMarketing Group retains an option to pay the share element in loan notes ratherthan shares. Commenting on becoming part of Digital Marketing Group, Mark Bennett, ManagingDirector of Graphico said: "We are very excited to be joining Digital Marketing Group and are relishing theopportunity of working with the existing members of the Group to deliver best ofbreed digital direct marketing services. This acquisition represents a majormilestone in Graphico's 17 year long history and will ensure that we continue togrow the company and the specialist digital services that we offer our clients." Hyperlaunch Hyperlaunch, founded in 2001, is a digital creative marketing agency. TheCompany operates under three divisions: Creative/Development, Online PR (musicand non music) and Buzz Marketing. Hyperlaunch has an established reputation forcreativity and strong technical development focus particularly evident inentertainment, youth and lifestyle brands. Its client base includes blue-chip brands such as Universal Music, AtlanticRecords, Samsung and Warner Bros. Hyperlaunch is based in Clifton, Bristol andemploys 32 people. Hyperlaunch has grown organically year on year with a turnover of £1.6m andoperating profit of £326,000 for the financial period of 5 April 2007,unaudited. Digital Marketing Group is acquiring the entire share capital of Hyperlaunch fora multiple of 7.25 times the profit before interest and tax for a twelve monthperiod to 30 June 2007. The level of profit before interest and tax for theperiod to 30 June 2007 is not anticipated to exceed £350,000 (estimated andunaudited). The maximum consideration cannot exceed £3.5m and will be paid 60%in cash and 40% in shares. Commenting on becoming part of Digital Marketing Group, Jon Morgan ManagingDirector of Hyperlaunch, said: "We are very excited to become part of Digital Marketing Group. We are highlyattracted to the fact that Digital Marketing Group is not a "marketing services"group and traditional marketing services such as mass-marketing advertisingagencies, packaging, design, or sales promotion companies have no home there.As part of a specialist digital marketing group, we are confident we will beable to drive the growth of our business and provide our clients with anenhanced comprehensive digital marketing offering." Admission of new ordinary shares to AIM As part of the acquisition of Hyperlaunch, the Company is issuing 466,238ordinary shares to the shareholders of Hyperlaunch. Application has been madefor these shares to be admitted to trading on AIM and admission is expected tooccur on 2 July 2007. Following this issue of ordinary shares, there will be64,878,390 ordinary shares in issue. - Ends - Enquiries: Digital Marketing Group plc www.digitalmarketinggroup.co.ukBen Langdon, Chief Executive via Redleaf CommunicationsCenkos SecuritiesAdrian Hargrave / Max Hartley Tel: 020 7397 8900Redleaf CommunicationsEmma Kane/Sanna Lehtinen/Susan Quigley Tel: 020 7822 0200 Notes to Editors: • Publication quality photographs are available via Redleaf Communications. • Digital Marketing Group is not a "marketing services" group and will never seek to make investments in traditional marketing services such as mass-market advertising agencies, packaging, design, or sales promotion. • Digital Marketing Group aims to provide a range of integrated digital direct marketing services, coupled with database marketing skills. By doing this Digital Marketing Group offers clients the ability to coordinate their ''online'' and ''offline'' direct marketing strategy, thereby generating more effective digital direct marketing, higher brand-consumer loyalty and improved profitability. • Its strategy is to grow organically and by acquiring businesses with complementary skills in digital direct marketing. • Inbox Digital has enjoyed industry wide recognition having won the Games Category at the NMA Effectiveness Awards 2007 for their online game, 'Viva la volley'. Stan James commissioned Inbox Digital to create an online game to promote its betting services during the 2006 FIFA World Cup. The Awards were announced on Thursday 28th June 2007. • Graphico won the Travel Category at the NMA Effectiveness Awards 2007 for the First Great Western consumer-facing website. Graphico created a seamless online journey from route planning to ticket sales, integrating third-party information to create a destination site. The Group currently comprises five agencies: - Inbox Digital - plans, creates and manages end-to-end digital marketing campaigns. Further information is available at: www.inbox.co.uk- Dig for Fire - the largest direct marketing agency operating exclusively outside London. Further information is available at: www.digforfire.co.uk- HSM - combines outbound telemarketing, with digital and data marketing. Further information is available at www.hsm.co.uk- Cheeze - one of Europe's leading digital response agencies and the UK's fifth largest search marketing specialist. Further information is available at: www.cheeze.com- Jaywing - a leading UK data services specialist providing both online and offline data and information services. Further information is available at: www.jaywing.com This information is provided by RNS The company news service from the London Stock Exchange