interim results for the 6 months to 30 june 2016€¦ · interim results september 2016. financial...

Interim Results

Interim Results for the 6 Months to30 June 2016September 2016

Interim Results September 2016


CELLO – INTRODUCTION

• Two businesses – Cello Health and Cello Signal• We supply marketing advisory services primarily to the

pharmaceutical sector• Global infrastructure in Europe, USA and Asia • c.1000 professionals• £86.7m gross profit, £10.4m headline operating profit (2015)• Long term client relationships with good contracted profile and

visibility• Low client concentration• Low gearing and low earn out profile • Strong and growing dividend

2


FINANCIAL HIGHLIGHTS FOR H1 2016

• Gross profit up 4.0% to £43.5m (2015: £41.9m)• Like-for-like gross profit up 2.7% • Headline profit before tax £4.2m (2015: £4.2m)• Headline operating margin 10.2% (2015: 10.5%)• Interim dividend per share up 19.0% to 1.00p (2015: 0.84p)• 2016 Net debt £4.8m (December 2015: £4.2m; June 2015: £9.8m)

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SEGMENTAL ANALYSIS

4

H1 2016 H1 2015

Headline Gross Profit

£m

Headline Operating

Profit£m

Margin %

Headline Gross Profit£m

Headline Operating

Profit£m

Margin %

Cello Health 22.2 3.9 17.6% 21.7 4.3 19.9%

Cello Signal 20.8 1.6 7.9% 20.0 1.0 4.8%

Sub total 43.0 5.5 12.9% 41.7 5.3 12.6%

Central cost - (1.1) - - (0.9) -

Group 43.0 4.4 10.2% 41.7 4.4 10.5%

• Reported like-for-like gross profit growth - Health 1.5%; Signal 4.1%


CELLO HEALTH

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H1 2016£’000

2015£’000 % change

Gross profit 22,162 21,683 2.2%

Headline operating profit 3,906 4,310 (9.4%)

Margins 17.6% 19.9% -

• Reported like-for-like gross profit up 1.5% (H1 2015: 2.1%; FY 2015: 4.7%)• Like-for-like gross profit from Consulting, Insight and Communications up 6.0%• Operating margin 17.6% (2015: 19.9%)• Operating margin 20.8% (2015: 21.2%) in Consulting, Insight and Communications• Decline in Cello Health Consumer unit now stabilised, but unlikely to recover in

2017• Global footprint more robust, with increasing US focus• Strong pharmaceutical franchise, and growing biotech client base


CELLO SIGNAL

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H1 2016 2015 % change

£’000

Gross profit 20,774 19,993 3.0%

Headline operating profit 1,641 950 73%

Margins 7.9% 4.8% -

• Reported like-for-like gross profit growth of 4.1% (H1 2015: 1.0%; FY 2015: 3.7%)• Operating margin of 7.9% (2015: 4.8%)• Strong franchise in financial services and global tech clients• Increasingly international footprint, with significant investment in staff costs in US and Asia• Pulsar growth to over 240 clients – operationally profitable


2016 INCOME STATEMENT

H1 2016£m

2015£m

Gross profit 43.5 41.9

Headline operating profit 4.4 4.4

Interest (0.1) (0.2)

Headline profit before tax 4.2 4.2

Restructuring costs (0.7) (0.3)

VAT charges (2.1) (1.1)

Start-up investment* (0.5) (0.2)

BioConsulting settlement (1.1) -

Acquisition related employee expense (0.5) (0.5)

Amortisation (0.2) (0.3)

Share Options (0.1) (0.1)

Statutory (loss)/profit before tax (0.9) 1.7

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*start-up investments principally comprise Cello Health BioConsulting


ONE-OFF CHARGES

• Restructuring £0.7m – leads to higher margin, tighter management structure

• VAT - £2.1m – Settled dispute – recovery process ongoing

• Start-up - £0.5m – start-up investment in Bio Consulting

• Bio Consulting - £1.1m – payment to prior employer (plus costs)

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2016 BALANCE SHEET

30 June 2016£m

30 June 2015£m

Goodwill 74.2 73.4Intangible assets 0.8 1.1Fixed assets 2.3 2.1Deferred tax asset 0.8 1.0Trade and receivables 41.2 37.8Cash 4.0 1.2

Creditors < 1 year (43.6) (35.6)

Net current assets 1.6 3.4

Creditors > 1 year (10.9) (11.6)Net assets 68.8 69.4

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DIVIDEND

• Interim dividend increased by 19.0% to 1.00p (2015: 0.84p)• 10 year unbroken full year dividend growth record• Degearing allows revision of dividend policy• Aim is to distribute 40% of headline earnings

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DEFERRED CONSIDERATION

• Expected payment in May 2017 £2.8m (mainly cash)


CASH FLOW AND NET DEBT

H12016£m

2015£m Comments

Net cash inflow/(outflow) from operating activities 3.3 (0.4)

Interest (0.1) (0.1)

Tax (0.5) (0.2)

Capex (1.0) (0.5)

Acquisitions/loan note issuance (0.3) -

Share option proceeds 0.2 0.1

Dividends (1.7) (1.5)

Forex Movement (0.5) - Dollar denominated debt

Net debt movement (0.6) (2.6)

Opening net debt (4.2) (7.2)

Closing net debt (4.8) (9.8)

Adjusted net debt: ebitda 0.98 1.65

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Very strong working capital


OPERATIONAL REVIEW

12


13

CELLO HEALTH: INTRODUCTION

Clinically-led commercial advisory services

22 of the top 25 global pharmaceuticals companies are clients

450 professionals (scientific and/or industry backgrounds)

International footprint (US, UK)

£45.5m GP, £8.8m HOP (2015)


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CELLO HEALTH – AN INTRODUCTIONStephen Highley - ChairmanJane Shirley - CEO, EuropeJulia Ralston - CEO, USAJon Bircher - Chief Commercial Officer Andy Brown - Finance Director

CONSUMER

Farnham, UKPhiladelphia

Boston

LondonNew YorkChicago

San Francisco

Farnham, UKLondon

Philadelphia

LondonNew York


15

WHO DO WE WORK FOR ?


16

CONSUMER

Understanding the customer, the market, the competition and client

brand performance

Key decision making on strategy/execution and configuring the

organisation to deliver

From strategy to action; market activation

Our Capabilities


17

WHY DO CLIENTS NEED CELLO HEALTH?

CONSUMER

L A

U N

C H

P A

T E

N T

E

X P

I R Y

PHARMACEUTICAL COMMERCIAL LIFECYCLE

US$

(MIL

LIO

NS)

SALES INVESTMENT COST PRE-TAX PROFITTIME

9 – 11 years

Development

20 year patent life

Marketing


18

WILL THE MARKET GROW?

Sources: 1. Pharmaprojects, January 2016 2. Analysis Group Innovation in the Biopharmaceutical Pipeline: A Multidimensional View, January 2013.

5,99

5

6,19

8

6,41

6

6,99

4

7,36

0

7,40

6

7,73

7

9,21

7

9,60

5

9,73

7

9,71

3

10,4

52

10,4

79 11,3

07 12,3

00 13,

718

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Num

ber o

f ass

ets

Total WW R&D pipeline size by year 2001–2016


KEY COMPETITORS

Company MedComm Marketing AnalyticalSupport

MarketResearch

Regulatory & Compliance

Accenture plc

Cello Group plc

Healthcare Consultancy Group (s/o Omnicom Group)

HealthSTAR Communication

ICON plc

IMS Health

inVentiv Health, Inc.

Medical Knowledge Group

Medidata Solutions

MediMedia USA, Inc.

PAREXEL International Corp.

Publicis Group SA

UDG Healthcare plc

Huntsworth Health

19Source: Brocair Partners


CELLO HEALTH – GROWTH IN 2016/7

• Continued addition of professionals, particularly in US• Continued US office expansion – Chicago, San Francisco,

and Boston• Investment in Market Access capability in US• Investment in Biotech consulting capability in US• Investment in digital communications capabilities in US and UK• Push into quantitative research – showing through already• Launch of Pulsar Health product• Consolidation of UK operations into Farnham Hub Office

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CELLO SIGNAL – INTRODUCTION

21

John Rowley - CEOMinh Huynh - Finance DirectorRichard Marsham - Managing Partner, EdinburghBarney Hosey - Managing Partner, CheltenhamJob Muscroft - Managing Partner, LondonDoug Edmonds - Managing Partner, USA

AGENCY INSIGHT SPECIALIST SERVICES

EdinburghCheltenham

London

LondonNew York

San FranciscoLos AngelesSingaporeHong Kong

LondonEdinburgh


CELLO SIGNAL - OVERVIEW

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• Digital and social media marketing solutions for big corporates

• 500 professionals• Blue chip global client base:

Technology, Mobile, FMCG, Retail, Financial Services, Public Sector and Charities

• Solid revenue stream and visibility• Consolidated office structure:

Edinburgh, Cheltenham, London, US, Asia

• Strong technology underpinning and proprietary software licensing model

Signal Specialist Services 9%

Signal Insight 35%

Signal Agency56%

Share of 2015 gross profit

Chart1

Signal Specialist Services

Signal Insight

Signal Agency

Signal Specialist Services 9%

Signal Insight 35%

Signal Agency56%

%

0.09

0.35

0.56

Sheet1

%

Signal Specialist Services9%

Signal Insight35%

Signal Agency56%

To resize chart data range, drag lower right corner of range.


CELLO SIGNAL – INDUSTRY TRENDS

• Universal migration of customer acquisition and retention online• Integration with large scale CRM systems • Shift to continuous, ‘big data’ based customer engagement • Shift to social media format for data acquisition and engagement • Rapid supplier consolidation • Entry of large scale technology players – Adobe, Salesforce.com,

Microsoft and Google

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CELLO SIGNAL – BLUE CHIP CLIENT FRANCHISE

• Financial Services:

• Tech:

• Utilities:

• Gov & Charities:

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CELLO SIGNAL – A CONSOLIDATING SECTOR

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PULSAR KEY NUMBERS

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The global social media analytics market will grow from USD 1.60 Billion in 2015 to USD 5.40 Billion by 2020.

No of clients: 242

Average contract length:

11 months

MRR growth:(YoY) 45%

Monthly Recurring Revenue: (MMR)

(June 2016) £252K

Team: 20 people

(*Market and markets report 2016)


PULSAR KEY CLIENTS

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KEY COMPETITORS

Name Turnover Ownership

Brandwatch £30m PE $60m investment

Synthesio N/A PE $22m investment

Crimson Hexagon

$35m PE $11m investment

Sysomos N/A PE Backed

Radian 6 N/A Bought by Salesforce.com

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CELLO SIGNAL – GROWTH PLANS IN 2016 / 2017

• Margin enhancement through efficiency gains

– Office consolidation

– Eliminate legacy resources

• Focus on large, complex contracts

• Unified offer under one brand

• Focus on tech client franchise

• Ongoing investment in tech and product

• Push into US market, including launch of Pulsar

• Support Cello Health on digital side

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SUMMARY AND OUTLOOK FOR 2016

• Solid growth in fee income in both Cello Health and Cello Signal • Long standing client relationships remain strong and growing• Rapidly increasing exposure to US market• Leverage of aspects of Cello Signal into healthcare• Strong balance sheet• Significant dividend increase• Good 2016 outlook based on current pipeline

29


30

THANK YOU

Mark Scott, CEO Mark Bentley, Group Finance Director

Cello Group plc11-13 Charterhouse Buildings London EC1M 7AP020 7812 8460www.cellogroup.com


http://www.cellogroup.com/

Slide Number 1CELLO – INTRODUCTION FINANCIAL HIGHLIGHTS FOR H1 2016SEGMENTAL ANALYSISCELLO HEALTHCELLO SIGNAL2016 INCOME STATEMENTONE-OFF CHARGES2016 BALANCE SHEETDIVIDENDCASH FLOW AND NET DEBT ��OPERATIONAL REVIEW��Slide Number 17Slide Number 18KEY COMPETITORSCello Health – GROWTH in 2016/7�CELLO SIGNAL – INTRODUCTIONCello SIGNAL - overview�CELLO SIGNAL – INDUSTRY TRENDSCELLO SIGNAL – BLUE CHIP CLIENT FRANCHISECELLO SIGNAL – A CONSOLIDATING SECTORPULSAR KEY NUMBERS�PULSAR KEY CLIENTS��CELLO SIGNAL – GROWTH PLANS IN 2016 / 2017�Slide Number 29Slide Number 30

interim results for the 6 months to 30 june 2016€¦ · interim results september 2016. financial...

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