Cello Group plc Pre Close Trading Statement (1924C)
January 18 2018 - 2:00AM
UK Regulatory
TIDMCLL
RNS Number : 1924C
Cello Group plc
18 January 2018
For Immediate Release 18 January 2018
Cello Group plc
('Cello' or the 'Group')
Pre Close Trading Statement
Cello Group plc (AIM:CLL), the healthcare-led marketing
consulting group, today publishes the following trading update for
the year ended 31 December 2017.
The Group traded well in 2017, with continued strong overall and
like-for-like growth from Cello Health. The Group has also
successfully integrated two US acquisitions into Cello Health.
Accordingly, the Group expects to report a full year result in line
with expectations.
Operating summary
Cello Health has continued to make good strides in expanding its
client reach. Overall, gross profit has grown at in excess of 25%
in the year and like-for-like growth in gross profit has been in
excess of 9%, after adjusting for exchange rates. The increasingly
integrated client offering is expanding its reach within existing,
long-standing pharmaceutical customers, as well as proving
successful in its new business drive. Bookings in late 2017 that
relate to ongoing 2018 work were strong, providing good momentum
going into the new year.
Cello Health continued to increase its presence in the high
growth biotech area, adding a substantial number of new client
accounts. Following their acquisition in February 2017 and July
2017 respectively, Defined Health and Advantage Healthcare have
both performed well and have helped expand Cello Health's offering
to biotech clients, as a complement to Cello Health's primary focus
on pharmaceutical clients.
The US continues to rapidly increase its share of Cello Health's
overall business, in line with the Board's stated growth strategy.
Cello Health's US biotech consulting unit moved out of its
investment phase half way through 2017 and is included in headline
results from June 2017. The Board continues to review earnings
enhancing acquisitions in the healthcare space, with a particular
focus on the US market.
Overall operating profit margins are slightly lower than in
2016, reflecting the substantial addition of professional resource
in the year to enable the business to meet its full year gross
profit growth target, as well as its longer-term growth goals.
Cello Signal has continued to make solid progress against its
strategic goals. In 2018 these goals will prioritise a much more
explicit linkage with Cello Health, reflecting the fast growing
demand from pharmaceutical and biotech clients for digital and
social communications. Approximately 14% of Signal's gross profit
already derives from health-related client activity, ranging from
healthcare charities to health and wellbeing propositions.
In line with earlier guidance, Signal has seen a decline in
gross profit over the year of c. 6%, reflecting the completion of
two large one-off contracts that were present in 2016. There has
also been a more cautious approach by some UK clients in 2017
towards commissioning project work. With careful cost management,
headline operating profit from Cello Signal is in line with
expectations.
During the year Signal has also substantially reduced its
headcount in bespoke consumer market research, particularly in the
US. Signal has also moved all its Scottish-based operations into
one office. These actions will increase profit margins in the
medium term but will mean a non-headline charge of GBP1.5m being
incurred in 2017.
Pulsar, Signal's social media software business, has continued
its rapid rate of growth in its monthly revenue run-rate, including
in the US where there will be ongoing start-up investment in 2018.
Cello Health is now actively selling the Pulsar solution into the
global healthcare market.
Balance sheet
As expected, and in line with the regular seasonality of cash
flow, the Group has experienced strong cash inflows in the second
half of the year. Accordingly, the Board is pleased to confirm that
the Group is in a net cash position at the end of the year. In
addition, the Board is also pleased to confirm that Group's banking
facilities have been renewed with RBS until 31 March 2022.
US tax changes
In 2017, the Group earned c. $6m in headline profit before tax
from businesses domiciled in the US. The Group is assessing the
impact of the significant changes that have now been enacted in the
US corporate tax regime. While the impact of the drop in the
headline rate is clearly expected to be positive to the Group, a
more thorough review of the detail and timing of the changes is
necessary to establish the quantum of the benefit.
Summary
The Group has had a good year, and is well placed to continue to
execute its growth strategy.
The full year results are expected to be reported on March 22,
2018.
-Ends-
Enquiries:
Cello Group plc
Mark Scott, Chief Executive 020 7812 8460
Mark Bentley, Group Finance
Director
Cenkos Securities
Bobbie Hilliam 020 7397 8900
Buchanan
Richard Oldworth
Jamie Hooper
Madeleine Seacombe 020 7466 5000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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