Creston announces acquisition of London based digital agency How Splendid 

creston-logoCreston also announces the acquisition of 51 per cent of the share capital of How Splendid Ltd (‘Splendid’), a London-based digital design and development consultancy

On completion there is an initial cash consideration payment of £8.7 million funded from Creston’s existing cash resources and Splendid is expected to retain net current assets of £2.1 million, including cash of £1 million. A balance sheet surplus payment may be made of up to £500,000 for any excess net current assets in the completion balance sheet in excess of the pre-agreed minimum requirement. There will be a further final cash consideration payment of up to £7 million in June 2017 for the 51 per cent holding, based on average profit before interest and tax from April 2015 to March 2017. 

For the remaining share capital there are no put options, however Creston will have a call option over 24 per cent from April 2017 for a value up to £8.6 million and for the remaining 25 per cent from April 2019 for a value up to £11.9 million. The consideration, payable in cash, for both these call options will be calculated at a pre-agreed multiple applied to the average profit before interest and tax for the year in which the call option is exercised and the two years preceding the call. 

For the financial year ended 31 March 2014, Splendid’s audited statutory accounts reported revenues of £4.0 million and a profit before tax of £1.2 million with gross assets of £1.9 million. For the financial year ended 31 March 2015, Splendid has experienced material growth and is expected to continue its year on year growth in revenue and profit before tax. Post-acquisition, Splendid will be fully consolidated into the Group accounts and will be earnings enhancing in this current financial year.

Founded in 2003 and based in London, Splendid comprises User Experience (“UX”) specialists, designers and developers. It delivers work for a variety of multinational, blue-chip clients across the finance, utilities, retail and media sectors including: Barclaycard, Boots, eBay, Gamesys, News UK, Skrill, SSE and Star Alliance. While Splendid’s service is focused on the UX between a brand and a customer, its delivery can range from developing a client’s future digital strategy for consumer and brand interaction, to working alongside system integrators to ensure systems are optimised for a consumer’s usage, to designing, building and managing client websites.

The acquisition fits perfectly with Creston’s strategy to continue growing its digital marketing consultancy offer, which will help clients with a key element of their brand’s digital transformation. Splendid will be rebranded Splendid Unlimited and the complementary services of the two businesses are expected to create significant cross selling and referral opportunities.

Commenting on the acquisition, Barrie Brien, Group Chief Executive of Creston plc, said: “Splendid is an excellent business which enhances our Creston Unlimited offer perfectly. As part of Creston Unlimited, Splendid’s consultancy expertise, which focuses on evolving the way brands do business in the digital world, will complement the Group’s marketing communications strength and further evolve our compelling integrated digital services capability.”

Splendid Unlimited and the Group will continue to benefit from the experience and expertise of Splendid’s three founding partners and shareholders, Paul Bishop, Alex Eicke and Dan Morris, who will remain as Managing Partners. 

Paul Bishop, Managing Partner of Splendid added: “We are really excited to be joining the Creston family. Having looked long and hard to find the right partner for our next stage of growth, we believe Creston Unlimited’s range of services and attitude really add to our core proposition of digital transformation and allow us to create bigger conversations with our clients.”