Share price: 105.50p

CCHM:PING ACQUISITION

6th July 2007

Cello expands financial services capability with the acquisition of cchm:ping

Cello Group plc (“Cello”, AIM: CLL), the market research and consulting group, has acquired a controlling interest in Hill Murray Group Limited, the holding company of cchm:ping Limited (“cchm:ping”), a specialist financial services marketing agency with options to acquire the balance of the shares. The total maximum consideration for the acquisition of 100% of Hill Murray Group Limited is approximately £5.3 million in cash, loan notes and new ordinary shares.

cchm:ping, which was established in 1997, has a number of blue chip financial services clients including Aegon, Bristol & West Mortgages, Legal & General, Nationwide, Lloyds TSB & Scottish Life.

Cello has acquired just over 76% of cchm:ping for an initial consideration of approximately £0.95 million of which £0.76 million is payable in cash and the balance satisfied by the issue of 127,307 new ordinary shares. The remaining 24% is subject to put and call options exercisable in the period 2008 to 2011 with the option prices being determined by the financial performance of cchm:ping during the period to 31 December 2010. The option consideration is payable in cash, loan notes and new ordinary shares with a minimum amount to be settled in cash, loan notes varying from 80% for an option exercised in 2008 to 25% for an option exercised in 2011.

As part of the transaction Cello has also agreed to acquire a controlling interest (60% on a fully diluted basis) in the issued share capital of the financial services consultancy, The Consultancy Practice Limited. The remaining minority interest is the subject of a put option whereby Cello can be required to purchase the 40% minority interest at any time in the period from March 2010 to March 2013. The option consideration is payable in a mixture of cash, loan notes and new ordinary shares at Cello’s discretion with a minimum loan note consideration of 25% for an option exercised before March 2011 and 35% thereafter. The maximum option consideration price is £1.75million and is based on demanding performance related criteria.

For the year to 30 September 2006, cchm:ping had an audited turnover of £8.0 million, gross profits of £5.6million and delivered a loss before tax of £0.3 million. Net assets as at 30 September 2006 were £0.7 million including cash of £0.6 million.

Application has been made to the London Stock Exchange for the new shares to be admitted to AIM and it is expected that admission will take place by 12 July 2007.

Kevin Steeds, Cello Chairman, said:

“cchm:ping is a highly regarded specialist financial services marketing agency with an excellent client base. As part of our Response division, based in London, it will complement our existing business and give us considerably more depth in the financial services sector vertical.”

 

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Dianna Hillier

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