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Cello Group enjoys strong first half, on track to deliver full-year results in line with expectations

Published: 18:19 19 Jul 2017 AEST

red and white pills
Gross profits are on the rise in Health, while forward bookings at Signal are good too

Cello Group PLC (LON:CLL) has told investors it enjoyed a “good” first half of 2017 as it made strides in both its Health and Signal businesses.

First up, Cello Health – which provides expertise and services to the pharmaceutical sector – saw gross profits rise by more than 25% in the six months to 30 June, while like-for-like profits were up 9% after adjusting for currency movements.

Importantly for investors, Cello said it expects this profit momentum to continue for the foreseeable future.

READ: Cello set for active 2017 as it looks to achieve critical mass in the USA

Biotech a key focus for Health

The Health division has been looking to tap into the higher growth biotech sector recently and it continued to increase its presence in the area in the first half as it added a “substantial number” of new accounts.

Defined Health, which was acquired by Cello back in January, has helped contribute to the growth in biotech deals, the AIM-quoted firm said.

The US continues to increase its share of Cello Health’s overall business and that growth will only have been accelerated by the bolt-on acquisition of pharmaceutical product consultancy Advantage Healthcare yesterday.

There was also a hint that the Advantage acquisition may not be the last purchase made in the healthcare space, with Cello keeping tabs on a number of targets.

As for margins in the US operation, they’re slightly down at the halfway stage but that is just a reflection of the “substantial addition of professional resource” which Cello says is a necessary investment if it wants to hit its targets going forward.

Signal making ‘solid progress’

On to Cello Signal now. This division – which provides “web-centred marketing solutions for big corporates” in the technology, gaming, retail, consumer goods and charities sectors – made solid progress in the opening six months, the company said.

The division’s Pulsar social media analytics tool has continued its rapid rate of growth and Cello thinks this particular business is worthy of extra investment as it prepares for entry into the US market.

Gross profits in Signal have fallen slightly in the first half against tough comparatives as two large, one-off contracts were inked in the same period of last year.

That trend should reverse soon though after Cello reduced its headcount on the west coast of the US. This will result in a one-off charge for the full-year but should boost operating margins going forward.

“Good overall gross profit visibility allows the group to be confident about the full year outcome for Cello Signal,” the company said in this morning’s statement.

Overall, the board is expecting to deliver a “strong” set of full-year results in line with expectations, buoyed by gross profit momentum in its Health business and decent forward bookings in its Signal division.

Shares were down 0.7% to 125.6p.

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