12th July 2007
Pre Close Trading Statement – six months to 30 June 2007
Cello Group plc (“Cello” AIM: CLL), the research and consulting group, today provides the following pre-close trading update for the six months to 30 June 2007.
Cello has continued to make good progress and the Board is confident about the Group’s outcome for the full year.
The research and consulting business continues to perform well and on a full year basis is expected to deliver healthy growth. Our response business will be more heavily second half weighted than in the past, but given good revenue visibility which has strengthened since the AGM statement on 22 May, we are confident about the full year outcome for both this business and for the Group as a whole.
Our research and consulting business which now accounts for around 75% of the Group on an operating profit basis has benefited from the investments made in new staff and product offering during the course of 2006 and the first half of 2007. We have seen significant revenue growth from existing clients as well as a number of large new client wins, particularly internationally. International work now accounts for 45% of the revenues of this division. The size of contracts we are pitching for and also winning has increased markedly, helping drive good like for like revenue growth.
During the first six months of 2007, we further strengthened our healthcare research and consulting capability with the acquisition of The MSI Consultancy in March. In June, mruk research also joined the Group, strengthening our research offer to the public sector.
We have also made significant strides in building our online research business. In February we acquired a controlling interest in Digital People and Rosenblatt, and more recently we purchased a significant minority share in nqual, a dynamic online qualitative research company.
Our response business which comprises 25% of the Group continues to build a strong position in the sector, with healthy like for like revenue growth based on good levels of revenue visibility. The seasonal split between the first and second half has continued to widen as the growth of the business has seen a particular focus on clients with a seasonal spending pattern in both charities and financial services. This seasonality will affect like for like growth at a profit level for the six months to 30 June but not on a full year basis where we are confident of good profit growth.
We continue to increase the online component of our response offering, both through our separate branded offerings, Blonde and Oomph, as well as the increasing component of our core offer that is now digital.
On 6 July we announced the acquisition of cchm:ping, a specialist financial services marketing agency and the establishment of a consulting offer in this sector vertical.
In line with our prudent financing policy, Cello has maintained a strong balance sheet with low gearing.
Cello expects to announce its interim results for the six months to 30 June 2007 on Tuesday 11 September 2007. These results will be prepared under IFRS, and a transition statement will be issued prior to that date.