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Cello Group signals healthy order book momentum

Published: 21:45 27 Jan 2016 AEDT

genomics
The push into the US is paying off

Cello (LON:CLL), the health and consumer strategic marketing group, said revenues and headline profits for 2015 were in line with market expectations.

Its Health arm delivered good like-for-like revenue growth in 2015, the company said, and maintained a competitive operating profit margin.

As witnessed in previous trading updates, the US is steadily providing a larger proportion of the Health division's revenues and profits.

The main downside to the company's big US push was that the new start-up office in Boston required a larger investment cost than originally anticipated resulting in a larger start-up loss for the year.

Overall growth prospects for Cello Health in the US biotech area are strong as this sector continues to develop.

Its digital solutions unit, Cello Signal, which does web-based community management and activation services, delivered a strong second half of the year, with good full year like-for-like revenue growth and an improving operating profit margin.

The new office network in the US which has grown revenues strongly, achieved a break-even position and should now come into profit in 2016, albeit at a lower margin for a period, Cello said.

The company revealed that the unit will take an exceptional charge of around £700,000 for action taken to reduce costs during the year.

Net debt at the end of the year was less than £5mln.

On the thorny subject of its negotiations with Her Majesty's Revenues and Customs (HMRC) over the handling of value added tax on work for charities, the group continues to believe that its current provision for VAT and associated expenses of £3.2mln is appropriate.

Some progress has been made with HMRC on this issue, but it has as yet not been concluded. The provision made is before any client recovery of input VAT.

“The group begins 2016 with good bookings momentum from the last quarter of 2015 and, at this early stage of the year, the board is confident of a good trading year,” the company said.

Shares were up half a penny at 81p in mid-morning trading.

 

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