Share price: 104.00p

Acquisition of iS Healthcare Dynamics

13th May 2014

Cello Group plc (AIM: CLL, “Cello”, or “the Group”), the insight and strategic marketing group, announces the acquisition of iS Healthcare Dynamics Limited (“iS”), an award-winning healthcare communications agency, specialising in medical communication services to UK, European and global healthcare clients.

The initial consideration is approximately £2.5m of which £2.0m is payable in cash, with the balance satisfied by the issue of 567,376 new ordinary shares. Further cash consideration will be paid to vendors on a pound for pound basis to the extent that net current assets are over £500,000 at the date of completion.

In addition, there are payments of up to £3.3m dependent on performance over the period to 31 December 2016. These further payments are in a mixture of cash and new ordinary shares at Cello’s discretion, with a minimum overall cash consideration of approximately 80%.

For the year to 31 March 2014, iS had an unaudited turnover of £6.6m, gross profit of £3.9m and profit before tax of £1.1m. Net assets as at 31 March 2014 were £2.1m, including cash of £2.1m. Operating margins in the future are expected to normalise to around 20% of gross profit. This operating profit is expected to be weighted to the first half of the year, in line with the historical spending patterns of the client base. The transaction is expected to be immediately earnings enhancing.

iS was established by Isaac Batley and Steve Smith in 2003 and is based in Farnham, Surrey. The business employs around 50 people.

iS will join Cello’s healthcare division, Cello Health, and will further complement Cello Health’s insight, advisory and communication based capabilities in the healthcare sector. This is consistent with Cello Health’s aim of becoming a leading global health services company.

Stephen Highley, Chairman of Cello Health, commented: “Effective evidence based communications is a key imperative for our clients. iS adds significant strength and expertise in this area and complements Cello’s previous acquisitions. The acquisition of iS provides us with a significant global footprint in medical communications.”

Isaac Batley and Steve Smith, Founders of iS, commented “Our vision is to make a sustainable and beneficial change for patients, health services and our clients. The proposition is built on real customer understanding and insights that drive excellent strategic and creative thinking and delivery. The partnership with Cello Health and the broader Cello Group will significantly add to our offer and give us immediate access to like-minded people. It also offers us the capability to expand our geographic reach and breadth of solutions.”

Application has been made to the London Stock Exchange for the new shares to be admitted to AIM and it is expected that admission will take place on 19 May 2014.

Contact Us

Dianna Hillier

Dianna.Hillier@cellohealth.com

Phone 020 7812 8468

Address

Cello Health plc

Queens House

8-9 Queen Street

London

EC4N 1SP

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London

EC4N 1SP

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in England no.05120150