TIDMCLL
RNS Number : 1965Y
Cello Group plc
22 January 2014
FOR IMMEDIATE RELEASE 22 January 2014
Cello Group plc
('Cello' or the 'Group')
PRE-CLOSE TRADING UPDATE - YEAR ENDED 31 DECEMBER 2013
Strong performance, ahead of consensus market expectations
Cello, the insight and strategic marketing group, today
publishes the following trading update for the year ended 31
December 2013.
Highlights
- Strong trading for the year, revenues and headline profit
before tax ahead of consensus market expectations
- Cello Health delivers double digit revenue growth and maintains 20% operating margin
- Cello Consumer delivers double digit revenue growth and
restores double digit operating margin
- Very strong cash conversion, reducing net debt to below expected levels
- Growth investments in healthcare ventures prove successful in first year
- Good new business pipeline in Q4 2013 underpins solid start to 2014
- Group rebranding initiatives proceeding to plan
Cello Health
Strong performance at both revenue and profit line
- Cello Health delivered double digit revenue growth, whilst
maintaining a competitive headline operating profit margin of over
20%.
Growing role of international operations
- The majority of revenues came from outside the UK, with the US
being the largest overseas market for Cello Health. An enlarged
senior team in New York and a new Chicago office sowed the seeds
for continued growth.
Successful growth investments
- The majority of growth investments made in 2012 proved
successful in 2013, notably in Consumer Health and in two overseas
offices. The acquisition of Mash proved a particular success in
2013. Further investments in start-ups were made in 2013, although
at a reduced level of c.GBP0.4m.
Solid new business gains
- The last quarter of 2013 established a strong new business
pipeline, providing confidence for the new financial year.
Launch of Cello Health brand
- Cello Health is increasingly selling integrated client
solutions, encompassing marketing consulting, market research and
medical communications. To achieve this, it is organised into
global speciality practices. The launch of the Cello Health brand
as a client facing brand will replace a number of the original
operating brands. This transition will be substantially complete by
early Q2 2014, helping the management team achieve its goal of
establishing Cello Health as one of the world's leading advisers to
the healthcare sector.
Cello Consumer
Strong revenue growth and a return to double digit operating
margin
- Cello Consumer delivered strong revenue growth, which fed
through into very strong profit growth. A single large,
non-recurring contract from an existing client expanded rapidly in
the second half of 2013, contributing to this particularly high
level of profit growth. This particular contract will not recur.
The diverse blue-chip client base of Cello Consumer provides
several opportunities to replace it during 2014. Continued emphasis
on margin improvement necessitated a GBP0.5m restructuring charge,
which is in line with previous guidance.
Increased international exposure
- An increasing proportion of revenue was won from outside the
UK. With three US offices and three Asian offices, the business is
now well positioned to sell and deliver global assignments.
Growing dominance of web-related services
- In its three core delivery areas of research, customer
engagement and communications delivery, Cello Consumer has
developed market-leading digital credentials, underpinned by a
strong systems-build capability.
Solid gains in contracted revenue
- The level of revenue of a contracted, longer term nature
continued to increase in 2013. An expanding suite of digital
software tools enabled a gradual transition to a partial licensing
model for some services.
Launch of Cello Signal brand
- Cello Consumer is being re-branded as Cello Signal, a client
centred brand that will enable better leverage of the Group's
capabilities against client opportunities, including systems-build
capability, customer engagement and management, social media and
mobile research, and digital communications services. This
transition will be complete by early Q2.
Balance sheet
Strong cash conversion in the last quarter of 2013 resulted in a
better than expected level of net debt, at less than GBP4.0m,
putting the Group in a very strong position. The Group has minimal
deferred payments due to vendors.
Outlook
The Group starts the year with good momentum from the last
quarter of 2013, and, although it is only early in the new year,
the Board is confident of a strong year for the Group.
Preliminary results
The preliminary results for the year ended 31 December 2013 will
be announced on 20 March 2014.
Enquiries:
Cello Group plc (www.cellogroup.com)
Mark Scott, Chief Executive 020 7812 8460
Mark Bentley, Group Finance Director
Cenkos Securities
Bobbie Hilliam 020 7484 4040
Buchanan
Mark Edwards, Sophie McNulty, Clare
Akhurst 020 7466 5000
www.buchanan.uk.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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