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Cello Group traded in-line in 2017; expects some benefit from US tax changes

Published: 20:02 18 Jan 2018 AEDT

US tax
Uncle Sam will be taking less from Cello's wallet

Healthcare-led marketing consulting group Cello Group plc (LON:CLL) said it traded well in 2017 with continued strong growth from its Cello Health division.

The group successfully integrated two US acquisitions into Cello Health, which augmented like-for-like growth, as a result of which the group expects to report a full-year result in line with expectations.

READ: Cello Group confident of meeting full-year expectations after solid first half

Cello Health, which provides expertise, processes, intellectual property and market knowledge spanning the pharmaceutical, biotechnology, diagnostics, healthcare equipment and consumer health sectors, saw gross profit grow by more than 25% from 2016.

Like-for-like gross profit growth exceeded 9% after adjusting for exchange rate fluctuations.

Bookings in late 2017 that relate to ongoing 2018 work were strong, providing good momentum going into the New Year.

WATCH: Cello eyeing further US healthcare expansion in 2018

An increasing amount of Cello Health’s work is now in the US, and the group said it is still trying to work out the likely effects of the recently-introduced tax changes in the US.

Cello Health’s operating profit margins took a slight dip in 2017, reflecting the substantial addition of skilled personnel during the year.

Cello Signal, which provides “web-centred marketing solutions for big corporates” in the technology, gaming, retail, consumer goods and charities sectors, continued to make “solid progress” against its strategic goals, Cello said.

As previously flagged by the group, Cello Signal saw a year-on-year decline in gross profit of about 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, but thanks to careful cost management, headline operating profit from Cello Signal was in line with expectations.

During the year Signal substantially reduced its headcount in bespoke consumer market research, and moved all of its operations in Scotland into one office. These actions will increase profit margins in the medium term but will mean a non-headline charge of £1.5mln being incurred in 2017.

The board said the group was in a net cash position at the end of the year.

Shares in Cello eased 1.1p to 124.4p in early deals.

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