Pre-close Trading Update
18th July 2019
Cello Health plc (AIM: CLL), the global healthcare-focused advisory Group, today publishes the following trading update for the six months ended 30 June 2019.
The Group has had a strong first six months of the year, with good like-for-like growth in overall net revenues and headline profit before tax, as well as improved headline pre-tax profit margins. As a result, the Group has seen strong growth in headline earnings per share.
In light of this performance, and good current income pipelines, the Board is confident of achieving a successful result in 2019 at least in line with current market expectations.
The Cello Health division has had an excellent first half, with strong like-for-like, constant currency net revenue growth. Headline operating profit performance has been strong, in particular from the consulting business in the UK and the US, as well as from the communications business in the US. Operating profit margins are ahead of the same period last year. The Group has also benefited from stronger dollar exchange rates in the first half of the year compared with the prior period.
Cello Health continues to expand organically both in Europe and the US. The office in Berlin is now fully operational and project work is starting to be serviced from there. The level of investment in the Boston area has also increased as a result of significant new clients wins in the region. Both these initiatives are to be treated as start-ups in 2019.
Cello Signal has had a solid start to the year, with a performance similar to that in the first half of 2018. Cello Signal is historically second half weighted in terms of profit performance and the Group expects this trend to continue.
The Group has implemented IFRS 16 Leases (“IFRS 16”) using the simplified transition approach and will not restate comparative figures for the year prior to first adoption. The impact of the adoption of IFRS 16 at the transition date of 1 January 2019 is to increase assets and liabilities by approximately £11m in respect of leases previously accounted for as operating leases, principally in relation to land and buildings. There is minimal impact on profit before tax for the period to 30 June 2019 as a result of this adoption.
The Group’s balance sheet remains strong, with good underlying working capital performance resulting in a net cash position at the end of June (pre IFRS 16 adoption). During the first half, $2.3m of deferred acquisition payments were made as anticipated and, as previously announced, restructuring costs of c.£0.3m were incurred.
The Group continues to assess suitable acquisitions in line with the strategic objective of further growing the Cello Health brand in the US in particular.