Cello Group plc PRE CLOSE TRADING STATEMENT (1748F)
July 26 2016 - 2:00AM
UK Regulatory
TIDMCLL
RNS Number : 1748F
Cello Group plc
26 July 2016
For immediate release 26 July 2016
Cello Group plc
('Cello' or the 'Group')
PRE CLOSE TRADING STATEMENT
Cello Group plc (AIM:CLL), the health and consumer strategic
marketing group, today publishes the following update for the six
months to 30 June 2016.
The Group has had a good first half, with robust performances
from the core of Cello Health and from Cello Signal. Accordingly,
the Board remains confident that the Group will deliver a strong
full year result in line with current expectations.
Cello Health
Cello Health has had a good six months, with particularly strong
performances from Cello Health Communications and Cello Health
Insight, both of which are focused on the core pharmaceutical
client base in the UK and the USA. Cello Health's US business
continues to increase its share of overall Group revenue. The
investment made in Cello Health BioConsulting in the US is starting
to generate good incremental project work which is further
enhancing the overall offer and the Board is confident it will
shortly move into a profitable position.
Cello Health's core operations, which focus on the
pharmaceutical and biotech business sectors, have continued to grow
gross profit organically in line with our overall growth strategy.
However, as outlined in previous recent announcements, the consumer
consulting business within Cello Health has experienced an ongoing
contraction in revenues. The decline of the consumer consulting
business has largely offset the overall growth of core Cello Health
for the first six months. As a consequence, overall like-for-like
gross profit growth of Cello Health for the six month period has
been modest, and overall operating margins have declined slightly.
Appropriate action has now been taken to reduce the size of the
consumer consulting unit.
The Board remains confident that Cello Health will show good
overall full-year gross profit growth and competitive margins.
Cello Signal
Cello Signal has had a very strong first half. Overall growth
has been robust across the whole of Cello Signal, reflecting the
investment in building the business behind the unified brand and
proposition.
Cello Signal enables clients to automate their regular
communications with customers, using a combination of software
solutions, distribution logistics capabilities and creative
campaign development skills. This core offer is growing strongly
and is particularly relevant to regulated clients who communicate
with customers on a regular basis, including financial services
clients, utilities and charities.
Pulsar, Cello Signal's social media analytics software
proposition, continues to grow strongly and is now operationally
profitable, with over 250 clients.
As a result, first half operating profit for Cello Signal is
considerably stronger than the prior year, with improved operating
margins. The Board expects, as usual, profits in Cello Signal to be
second half weighted.
Non headline charges
As previously announced, the Group made a payment of GBP0.9m to
the previous employer of a team of senior consultants which has
established CelloHealth Bioconsulting Inc in the USA. This business
is starting to gain good revenue traction as a result of this
investment which has enabled the key executives to operate free of
legal restriction.
Also, as previously announced, following the final settlement
reached with HMRC regarding the long standing VAT dispute, there
will be a charge of GBP2.1m in the accounts for the first six
months of the year. The full provision of GBP5.3m has been settled
in full in July 2016. Discussions are ongoing with clients
regarding recovery of these balances.
In order to further improve the margin in Cello Signal and
reduce costs in the consumer consulting unit of Cello Health, a
number of further cost saving measures have been implemented. As a
consequence, there is a non-headline redundancy charge of GBP0.6m
in 2016.
Dividend
The Board is actively reviewing its dividend policy, with a view
to increasing the payout ratio. A further update will be given with
the interim results.
Outlook
The Group has delivered a good underlying first half, and the
Board expects this to continue in the second half. Whilst profits
in the first half will be flat on the prior year as a result of the
decline of the consumer consulting unit of Cello Health, overall
revenue growth has nevertheless been good. There has been no
noticeable impact on client spending behaviour as a result of the
EU referendum vote and income pipelines remain robust. The Group
will also continue to benefit from a stronger dollar in the second
half if the dollar / sterling rate remains at current levels. The
Board remains confident that the Group will deliver a strong full
year result in line with current expectations.
Interim Results
The interim results for the six months to 30 June 2016 will be
announced on 14 September 2016.
This announcement contains inside information.
Enquiries
Cello Group plc (www.cellogroup.com)
Mark Scott, Chief Executive 020 7812 8460
Mark Bentley, Group Finance Director
Cenkos Securities
Bobbie Hilliam 020 7397 8900
Buchanan
Sophie McNulty, Jamie Hooper, Maddie
Seacombe 020 7466 5000
www.buchanan.uk.com
This information is provided by RNS
The company news service from the London Stock Exchange
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