Cello says 2015 trading in line; new year has started well

Health and consumer strategic marketing company Cello Group said trading in the year ended 31 December 2015 was good, with revenue and profit in line with market expectations.

The group said its health division maintained good like-for-like revenue growth and a competitive profit margin as it benefited from trading as a unified business under its global client-facing brand and good US growth.

Cello Health Insight, Cello Health Consulting and Cello Health Communications maintained strong like-for-like revenue growth with “very competitive” overall operating profit margin.

Cello Health Consumer, however, experienced a slower year, as revenue and profit slipped on the back of project deferrals.

Cello said good progress was made in developing the new biotech client base, to complement the core pharmaceutical revenue base of the business, on the West Coast of the US with key client wins during the year.

The company said net debt at year end was less than £5m, reflecting solid cash flow conversion for the period.

Cello said it has kicked off 2016 with good bookings momentum from the last quarter of 2015, expressing confidence over the year ahead.

Finally, it said negotiations were ongoing with HMRC regarding potential VAT on work for UK charities.

“The group and its advisers continue to believe that its current provision for VAT and associated expenses of £3.2m is appropriate. Whilst progress has been made with HMRC on this issue, it has as yet not been concluded. The provision made is before any client recovery of input VAT.”

At 1224 GMT, Cello shares were up 0.4% to 80.80p.