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Price (GBX) 104.99 Var% (+/-) -0.48% (-0.51)
High 105.50 Low 104.20
Volume 20,126 Last closed (16 Nov 2018) 105.00
Bid 104.00 Offer 106.00
Year High 139.50 Year Low 104.20
52 Week High 139.50 52 Week Low 104.20
Life High (20 Jul 2007) 158.00 Life Low (07 Aug 2009) 25.20

Major Shareholders

Liontrust Asset Management 12.99%
Ennismore Fund Management 9.47%
Miton Asset Group 6.28%
BlackRock 6.11%
Directors 4.93%
Octopus Investment 3.57%
Canaccord Genuity Wealth Management 3.15%

Calendar

22 March 2018

Prelim Announcement

4 May 2018

Dividend Record Date

9 May 2018

Annual General Meeting

25 May 2018

Dividend Pay Date

20 September 2018

Interim Announcement

History

March 2016

Announces full year results: Turnover £157.3m; PBT £10.0m; 900 staff

March 2015

Announces full year results: Turnover £169.9m; PBT £9.4m; 900 staff

December 2014

Acquisition of Promedica Inc

May 2014

Acquisition of iS Health Dynamics

March 2014

Announces full year results: Turnover £159.7m; PBT £8.5m; 800 staff

March 2013

Announces full year results: Turnover £135.1m; PBT £7.0m; 800 staff

January 2013

Acquisition of Mash Healthcare Limited

March 2012

Announces full year results: Turnover £133.5m; PBT £7.1m; 770 staff

April 2011

Acquisition of Red Kite

March 2011

Announces full year results: Turnover £125.0m; PBT £6.4m; 750 staff

March 2010

Announces full year results: Turnover £126.7m; PBT £5.1m; 760 staff

March 2009

Announces full year results: Turnover £139.1m; PBT £6.9m; 820 staff

March 2008

Announces full year results: Turnover £108.3m; PBT £7.6m; 800 staff

October 2007

Acquisition of 2CV

September 2007

Acquisition of Magnetic

July 2007

Acquisition of cchm:ping

June 2007

Acquisition of mruk research

March 2007

Acquisition of The MSI Consultancy

March 2007

Announces full year results: Turnover £74.7m; PBT £5.9m; 450 staff

January 2007

Acquisition of Rosenblatt and Digital People

September 2006

Acquisition of SMT

June 2006

Acquisition of Farm

March 2006

Announces full year results: Turnover £52.1m; PBT £4.2m; 348 staff

December 2005

Acquisition of TMI

August 2005

Acquisition of RS Consulting

July 2005

Acquisition of The Value Engineers

July 2005

Acquisition of Leapfrog

December 2004

Acquisition of Navigator

November 2004

Cello lists on AIM at price £1.00 per share. Simultaneous acquisition of Insight, Leith and Target

Advisors

Nominated Advisor and Broker

Cenkos Securities plc | 6.7.8 Tokenhouse Yard | London | EC2R 7AS

Auditors

PricewaterhouseCoopers LLP | 1 Embankment Place | London | WC2N 6RH

Bankers

Royal Bank of Scotland | 280 Bishopsgate | London | EC2M 4RB

Solicitors

Marriott Harrison | Staple Court | 11 Staple Inn Buildings | London | WC1V 7QH

Financial PR

Buchanan | 107 Cheapside | London | EC2V 6DN

Registars

Computershare | The Pavillions | Bridgwater Road | Bristol | BS13 8AE

Governance

Introduction

Until this year, Cello Health plc (“Cello Health) has modelled its corporate governance, as far as practicable, on the UK Corporate Governance Code (2012), although we were not formally required under AIM Rules to do so.

On 8 March 2018, the London Stock Exchange issued revised rules for AIM listed companies, within which was a requirement (Rule 26) for AIM companies to apply a recognised corporate governance code from 28 September 2018 and to describe how the company complies with that code.

Cello Health therefore has chosen to apply the recently published (April 2018) QCA Corporate Governance Code (the Code) with immediate effect and this statement of compliance with that code now follows:

The principal means of communicating our application of the Code are our Annual Report and Accounts (“Annual Report” and our website: (www.cellohealthplc.com)

Overview

As the Chairman of Cello Health, I welcome the new QCA Corporate Governance Code as an appropriate framework to assist the Board and me in articulating how we approach and apply good corporate governance.

As Chairman, I am responsible for leading the Board to ensure that Cello Health has in place the strategy, talent, structure and culture to deliver value to shareholders and other stakeholders of the Group, as a whole, over the medium to long-term.

In the remainder of this report, I have set out the Group’s application of the Code, including, where appropriate, cross reference to other sections of the Annual Report.

The Code sets out ten principles in three broad categories, as follows:

Deliver growth
1. Establish a strategy and business model that promotes long-term value for our shareholders.
2. Seek to understand and meet our shareholders’ needs and expectations.
3. Take into account wider stakeholder and social responsibilities and their implications for our long-term success.
4. Embed effective risk management, considering both opportunities and threats, throughout the Group.

Maintain a dynamic management framework
5. Maintain the Board as a well-functioning, balanced team led by the Chair.
6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities.
7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement.
8. Promote a corporate culture based on ethical values and behaviours.
9. Maintain governance structures and processes that are fit for purpose and support good decision making by the Board

Build trust
10. Communicate how Cello Health plc is governed and is performing by maintaining a dialogue with our shareholders and other relevant stakeholders.

Principle 1:
Establish a strategy and business model, which promote long-term value for shareholders.

Cello Health has a clearly articulated strategy and business plan as a leading global healthcare-focused advisory group comprised of a set of leading clinical, commercial advisory and digital delivery capabilities. The business model is predicated on strong long-term relationships with predominately pharmaceutical companies; delivering scientifically led advisory services to those clients, and also clients from other sectors where we deliver digital and data led marketing solutions. The Group’s growth strategy incorporates acquisition and strong organic growth, particularly in the United States. Full disclosure of our strategy and business model, as well as the key challenges faced by the business can be found in the Annual Report, which is available on the Company’s website (www.cellohealthplc.com)

Principle 2:
Seek to understand and meet our shareholders’ needs and expectations.

The Company engages with its shareholders through formal meetings, informal communications and through stock exchange announcements. Management (typically the Chief Executive Officer and Group Finance Director) meet formally with institutional shareholders, usually after the interim and full year results announcements, presenting Company results, articulating strategy and updating shareholders on progress.

In addition, the Chairman or Senior Independent Director is available to meet separately or together with shareholders to discuss matters pertaining to business performance and governance and receive shareholder feedback on any issues or concerns. Trading and other statements are made via the Regulatory News Service during the year and the company holds its Annual General Meeting (AGM), at which, all shareholders can attend and speak with management.

Shareholders also communicate with the Company via email and by telephone and we respond to their specific questions and inputs as required. The Chief Executive and Group Finance Director are primarily responsible for shareholder liaison, and their contact details are included in all announcements and available on the Company’s website.

Principle 3:
Take into account wider stakeholder and social responsibilities and their implications for long-term success.

Our most important stakeholder groups are our shareholders, clients, suppliers and employees.

We enjoy long lasting relationships with many of our clients, and engage with them on a partnership basis to understand the issues they face and develop solutions to their challenges. Our relationships with suppliers are also constructive, we aim to pay on time and establish long-standing relationships with key suppliers, many of whom directly and indirectly support our client work.

Suppliers are contracted with on purely commercial terms but recognising that their margins must allow for them to sustain their business if the Group is to continue to benefit from their services. The Group considers itself to be a ‘prompt payer’.

The Group pays great attention to employee communication and support. This includes regular update meetings at outside venues and opportunities for feedback and development.

We also place great importance on continuous training and development via in-house and external programmes. We run Cello Academy, an in-house training programme for our rising leaders. A training programme for our established leaders is also proposed.

All employees are participants in company specific bonus plans, which exist to share the financial results of out-performance against agreed internal targets and budgets.

There are several charitable and social initiatives, for example our official charity for Europe is Findacure, which is a UK charity that is building the rare disease community to drive research and develop treatments. In the US, we support NORD, the North American rare disorder advocacy group, and many local organisations under its “Give Where You Live” programme.

Principle 4:
Embed effective risk management, considering both opportunities and threats, throughout the organisation.

The Board has ultimate responsibility for the Group’s system of internal controls and for reviewing its effectiveness. However, any such system of internal control can only provide reasonable, but not absolute, assurance against material misstatement or loss.

The Board considers that the internal controls in place are appropriate for the size, complexity and risk profile of the Group. The Group operates a risk assessment and monitoring process with regular updates provided to the Board and the Audit and Risk Committee.

The Company’s latest Annual Report sets out further detail on the key issues faced by the business.

The principal elements of the Group’s internal controls include management structure, financial monitoring, approval limits, internal policies, codes of conduct and training on IT controls.

The Group uses a structured performance management process which includes strategic planning, annual budgets, monthly performance reviews, and regular forecast updates. Areas covered by this process include revenue, profit, working capital, cash flow and capital investment.

The Board approves the strategy and the budget on an annual basis and receives regular performance updates throughout the year.

The Group applies consistent accounting policies and control procedures across its subsidiary operations, including newly acquired entities, and relies upon local management to ensure those policies and procedures are followed. This is managed and reviewed by the central finance team. The Group also relies on third party reviews and audits to ensure compliance with local financial regulations, for example, sales and corporate Tax compliance in overseas subsidiaries.

The Group also has opportunities to grow through acquisition. The Board maintains an overview of acquisition opportunities identified and management provides regular updates on the progress of discussions. All acquisitions are approved by the Board.

Operational controls

The Audit and Risk Committee receives feedback on the effectiveness of internal controls from executive management and correlates that with separate reports from the external audit process. Until just recently, the Audit and Risk Committee was purely an Audit Committee, and the terms of reference did not specifically include Risk. However, this is shortly to be amended, and expanded terms of reference will be available on the Company’s website. There is currently no formal internal audit function.

Principle 5:
Maintain the Board as a well-functioning, balanced team led by the Chair.

The Board is currently comprised of four Non-Executive Directors (including the Chairman), all of whom are considered to be independent and four executive Directors. The Board currently consists of six male and two female members. The experience of the Board members is varied and relevant to the Group’s activities, including such skills as finance, management of professional service businesses, and experience of the broader markets in which the Group operates.

The Non-Executive Directors have letters of appointment with three to six months’ notice either side and are required to be available to attend Board meetings and to deal with both regular and ad hoc matters. An indicative time commitment is twenty days per annum, but the letters of appointment indicate that this is an estimate and that Directors are expected to commit sufficient time to fully discharge their responsibilities. All Non-Executive Directors have confirmed and demonstrated that they have adequate time available to meet the requirements of the role and they have no conflicts of interest.

Executive Directors work full-time in the business and have no other significant outside business commitments. Executive Directors hold service contracts with a six to twelve month notice period. The Board is satisfied that it has a suitable balance between independence and knowledge of the business to allow it to discharge its duties and responsibilities effectively.

The Board typically meets six times per annum. There were six meetings in 2017, each one attended by all Board Directors. Further meetings are held as necessary.

Principle 6:
Ensure that between them the Directors have necessary up-to-date experience, skills and capabilities

The Board is satisfied that, between the Directors, it has an effective balance of skills and experience. For example, specialist knowledge of the pharmaceutical industry and professional service firms as well as finance, corporate transactions and capital markets. Each Board member brings a different mix of capabilities, which blend well into a successful and effective team.

Board composition is kept under review and the Board is committed to ensuring diversity of skill, experience and gender balance. Biographies for each Board member are published both on the Company’s website and in the Annual Report.

Board members maintain their skill-sets through practice in day-to-day roles, enhanced with attending specific training where required. The Board uses external advisors where necessary to enhance knowledge or to gain access to particular skills or capabilities. Accountants and lawyers are used for diligence work on certain acquisitions; both nomination and remuneration committees use recruitment and employment consultants and specialist advisors have been used by the Board to ensure compliance in specific areas. A recent example of this is the response to the requirements of GDPR.

The role of Company Secretary includes preparing for and running an effective Board, including the timely dissemination of appropriate information. In addition, the Company Secretary is responsible for assisting the Directors in ensuring that the Group entities are managed, controlled, and administered within the parameters of their governing documents and are compliant with regulatory requirements and filing obligations

Further details on the experience and skills of each of the Directors are set out on the Company’s website and in the latest Annual Report.

Principle 7:
Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement.

There has been regular informal assessment of the individual contributions of each of the members of the team to ensure that, their contribution is relevant and effective, that they are committed and where relevant, they have maintained their independence

Over the next 12 months, once the new Non-Executives are fully embedded in the business, we intend to review the performance of the team as a unit.

Succession planning is regarded by the Board as vitally important in maintaining the continued success of the business. Through regular reviews and management discussions, the Company’s future senior staff are identified and plans are made for their job growth and career progression.

Principle 8:
Promote a corporate culture that is based on ethical values and behaviours.

The Board is committed to promoting a strong ethical and values driven culture throughout the organisation. We have developed and constantly communicate a set of values that we consider important to our success.

Our culture is founded on a set of values that guides how we work with each other and our clients. These values are intrinsic to who we are, how we differentiate ourselves and form the basis of our service offerings and project methodologies.

All employees are recruited, trained, performance assessed, rewarded and promoted on the basis of fairness, professional competence and contribution. Our values can be summarised as follows:

Feedback from stakeholders in the business, as described in further detail in relation to Principle 3, allows the Board to monitor the Company’s corporate culture, as well as the ethical values and behaviours within the business.

governance

Principle 9:
Maintain governance structures and processes that are fit for purpose and support good decision making by the Board.

The Board typically meets six times per annum. There were six meetings in 2017, each one attended by all Board Directors. Further meetings are held by telephone as necessary. The Board programme is structured, as far as possible, to align with the Group’s annual financial calendar. A full pack of papers is made available to all Board members in advance of scheduled meetings, covering both operational and strategic matters. In addition, the Board receives presentations from operational management as appropriate.

The Chairman is responsible for leading the Board and ensuring appropriate focus is given to strategy and the key operational and financial issues in the business. The Chief Executive is responsible for implementing strategy and managing the Company through its Divisional Executive Teams.

During the year the Senior Independent Director also arranges calls and face to face meetings of the Non-Executive Directors. These provide an informal opportunity to align views and determine areas of focus at future Board meetings. The Board is responsible for the long-term performance of the Group.

Specific matters are reserved for the Board. These are set out on the Company’s website and include, Group strategy, corporate and capital structures, approval of key financial matters (annual and interim results, budgets, and dividend policy), material contracts and Board membership and remuneration.

The Board is supported by the Audit and Risk, Nomination and Remuneration committees. The membership and main roles of each committee are included in the Annual Report and the Company’s website, along with the terms of reference of each committee.

Each committee has access to the resources, information and advice that it deems necessary, at the cost of the Group, to enable the committee to discharge its duties. The Board is committed to a process of continuous improvement in its governance approach and aims to enhance and develop compliance with best practice.

In 2018 the Board has been actively engaged in the appointment of two new Non-Executive Directors. Outside recruitment consultants supported the recent recruitment of Clifford Tompsett and Jo LeCouilliard as Non-Executive Directors, both of whom will join respective Board sub-committees. Clifford Tompsett is the Senior Independent Director.

The role of Company Secretary has also been recently separated from that of the Group Finance Director.

Principle 10:
Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.

The Group communicates with shareholders through the Annual Report and Accounts, half yearly trading updates, the AGM, occasional capital markets days and one-to-one meetings with certain existing or potential new shareholders. Reports from the Remuneration Committee and Independent Auditors are set out within the Annual Report. The Company’s website includes historic annual accounts and AGM notices (since the Group’s admission to AIM), and we intend to publish the results of all shareholder votes in respect of each resolution proposed at general meetings.

In formally adopting the QCA code (as revised April 2018) as its governance framework, the Board has reviewed all aspects of compliance and has taken action to improve disclosures on its website. As a result of reviewing the disclosure requirements of AR 26 (as revised), the Board has confirmed that it complies with the requirements of the QCA code as disclosed herein.

Allan Rich

27 September 2018

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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

Registered Office

Queens House

8-9 Queen Street

London

EC4N 1SP

Company Registered

in England no.05120150