7th April 2020
Cello Health plc (AIM: CLL), the global healthcare-focused advisory group, today announces the following trading update in response to the potential impact of the COVID-19 virus on its business.
Current Trading and Operations
Following the publication of the Preliminary 2019 Results on 18 March 2020, the Group has continued to trade well in the first quarter of 2020 in line with management expectations, with good revenue growth in the Cello Health division and solid operating cash generation. The Group continues to have a strong cash position at the end of March of approximately £11.7m. The Group has total facilities of £24.0m with RBS, of which £7.0m are drawn down at 31 March 2020.
Our overriding objective in the current crisis has been to ensure the safety of our employees. We have followed appropriate advice in the countries where we operate. The entire employee base of the Group has been working remotely for over two weeks and delivering largely uninterrupted services to clients. The Group’s IT infrastructure is robust and the transition to full remote working has been achieved with great effectiveness. Where delivery methods have been compromised through the need for social distancing or because of more limited access to healthcare professionals (for example, in areas that are traditionally event based, or in the instance of face to face research) then alternative digital methodologies have been successfully deployed.
Within the Cello Health division, there is some evidence of deferral of certain types of work where live meetings are essential. However, in the majority of cases project work has continued and overall our recent booking levels have remained encouraging. Some of our non-healthcare clients have needed to delay or cancel certain projects.
The Group has a strong cash position and is encouraged by the good progress made in the first quarter against its plans. Nevertheless, the Board is prudently reviewing the cost base in light of the changed trading environment. In many cases, budgeted hiring plans and uncommitted expenditure are being reduced or deferred. In those parts of the Group which are impacted by client deferrals or cancellations, appropriate staff cost saving initiatives, including part-time working and furloughing, will be implemented. In addition, the Board have agreed not to proceed with their planned inflationary pay rises for 2020 and to institute a 10% reduction in their salary and fees for a three month period. In addition, cash flow is being tightly controlled, and major outgoings delayed where possible, including VAT payments and US tax payments where permitted by law. Capital expenditure will also be appropriately reduced.
The Group has a strong balance sheet and remains cash generative. However, in order to maintain as much flexibility as possible throughout this period of uncertainty, the Group has decided to withdraw its full year final dividend resolution of 2.95p which was to have been tabled at the AGM on 20 May 2020, and which was previously announced in the Preliminary Results on 18 March 2020. Instead, the Board has declared an interim dividend of 1.0p, payable on 22 May 2020 to all holders on the register as at 24 April 2020. The Group fully recognises the importance of dividends to shareholders, many of whom are also employees and accordingly the Board aims to declare a special dividend to be paid either before or alongside the next interim dividend, subject to future trading performance and the outlook for the Group.
Many clients, particularly in the pharmaceutical and health sectors, are continuing to commission new work. However, in other parts of the business where this is not the case, we have experienced some disruption as the wider economic effect of COVID-19 unfolds and we are enacting contingency plans to limit the impact. Due to the uncertainty around the level and duration of disruption, the Board is not currently able to provide clarity regarding the outlook for 2020. Further updates will be provided once there is greater visibility on the trading environment.
Cello Health plc
020 7812 8460
Mark Scott, Chief Executive
Mark Bentley, Group Finance Director
Cenkos Securities plc
020 7397 8900
020 7466 5000
Notes to Editors
Cello Health plc is a global healthcare-focused advisory Group comprised of a set of leading scientific, commercial advisory and digital delivery capabilities. Cello Health plc currently services 24 of the top 25 pharmaceutical clients globally, as well as a wide range of biotech, diagnostics, devices and other key non-healthcare clients.
Cello Health plc enables clients to commercialise, differentiate their assets, and drive brand success in ever more complex global markets. The business delivers its services through nearly 1,000 highly skilled professionals, utilising latest thinking, technology and digital solutions.
Cello Health plc delivers its services from an office network in the UK, USA, and Asia, with hub offices in New York City, Philadelphia, New Jersey, London, Edinburgh, and Farnham.
For further information, please visit: https://cellohealthplc.com