Share price: 162.00p

Pre-Close Trading Statement

16th January 2020

Cello Health plc (AIM: CLL), the global healthcare-focused advisory group, today announces the following trading update for the year ended 31 December 2019.

Overall, the Group traded very well in 2019, with continued excellent like-for-like growth from Cello Health balanced against a weaker outcome from the Cello Signal division. Accordingly, the Group expects to report full year results in line with consensus market expectations on an IFRS 16 basis.

The Group is well placed to continue to execute its organic and acquisitive growth strategy in 2020 and beyond. The Group will announce its full year results on 18 March 2020.

Operating summary 

Cello Health had an excellent year, with strong like-for-like net revenue growth well ahead of plan, combined with an expanding operating profit margin, leading to a very good headline operating profit performance. The Communications business in the US performed particularly well.

ISS, which was acquired in August 2019, performed in line with the Board’s expectations. The acquisition has extended Cello Health’s offering into critical regulatory approval processes and has increased Cello’s focus on the US market. The Group continues to actively seek additional relevant acquisition opportunities.

Cello Signal had a slower year than anticipated, particularly in the final quarter, reflecting in part slower decision-making by some UK based clients impacted by the UK election and uncertainty surrounding Brexit. However, core operations in Edinburgh performed well.

Reflecting the Group’s strategic focus on Cello Health, the Group has taken the decision to reorganise the structure of the Cello Signal division. In October 2019, the Group sold the Pulsar business to Access Intelligence PLC in a deal valued at £4.5m. Additionally, the Group is separating out from Signal the Edinburgh based digital and marketing communications capability. This business now forms part of the Cello Health operating structure, under the name Cello Connect, and will support the digital and marketing communications needs of our healthcare clients as well as continuing to grow its existing client base. It is expected that the reduced Signal business will constitute around 20% of the total net revenue and less than 10% of operating profit for the Group for 2019. Further details will be set out in the Group’s full year results.

Balance sheet

The Group experienced strong cash inflows in the second half of the year, in line with normal seasonal patterns of cash flow. Conversion of operating profit into cash flow was strong. Accordingly, the Board is pleased to confirm that the Group was in a strong net cash position ahead of consensus expectations at the end of the year.

Non-headline items

The Group has continued to invest in new locations and start-up ventures which the Group considers to be a low risk complement to its acquisition programme. The costs of these new activities are separately disclosed as start-up losses during their initial period of a maximum of two years.

In 2019 start-up losses of approximately £0.5m were attributable to the establishment of the German office of Cello Health, and the development of the Health offer within Cello Signal. It is anticipated that these activities will be profitable in future periods.

Following the reorganisation of the Cello Signal structure, the Signal business will be restructured to restore profit levels quickly. This action is likely to incur an exceptional restructuring cost of approximately £0.5m in the first half of 2020.

Discontinued operations

As a consequence of the disposal of Pulsar in October 2019, the Group will incur a non-cash impairment charge estimated to be in the region of £1.5m.  This charge equates to the book loss on disposal being the difference between the value of consideration received and the total of the goodwill held and the net assets of Pulsar at the date of disposal. In addition, as part of the completion procedures, the level of net current assets disposed of is being agreed with the purchaser. This process may lead to a cash payment to the purchaser. Any such losses would be disclosed within discontinued operations.

Notification of full year results

Cello Health will announce its full year results on 18 March 2020. A meeting for analysts will be held at 9.30am on the day of the announcement at the offices of Buchanan, 107 Cheapside, London EC2V 6DN. Please contact Buchanan for further information on 020 7466 5000 or email


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