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Acquisition costs hit Smyle profit as earnings fall to £22k

Agency records earnings before interest, tax, depreciation and amortisation of £22k after purchase of Pumphouse

Smyle MD Rick Stainton

The acquisition of event and communications agency Pumphouse Productions has hit profitability at Smyle Group.

Hertfordshire and London-based Smyle purchased Pumphouse for an undisclosed sum in February, and ‘significant’ associated costs have seen combined earnings before interest, tax, depreciation and amortisation (EBITDA) fall to £22k, although the two companies achieved a combined turnover of £10.5 million, said Smyle MD Rick Stainton. 

Last year, Smyle said EBITDA figures fell to £548k from £872 after turnover of £8.2m – those figures were affected by the last-minute cancellation of a significant £2.5m event. Stainton added that combined gross profit for Smyle and Pumphouse's operations was £3.1m for the year ending 31 March 2015.

The acquisition was part of a wider strategy that saw Smyle adopt a ‘refined’ approach to client services, set up a larger London office and increase staff numbers by 20 per cent to 46. 

Growth in existing accounts was supported by client wins in the media, telecommunications and financial sectors including Google, HP and EY.

Stainton said: “These figures demonstrate the bridge we have crossed in growing up as a business – a number of key one off exceptional items have compromised our profit in the short term, but we are now seeing great momentum as a result of these various investments. They are all designed to support our awesome team in delivering on our clients’ objectives, help them be better in the services they offer and enhance our reputation for producing creative winning ideas.

“As a result, our forecast for the current financial year as a whole is growth in turnover for Smyle Group to circa £12m, which is a great platform to build upon as we enter our most exciting chapter yet in the Smyle story.”

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