Pre Close Trading Statement

Cello Group plc

('Cello' or the 'Group')

Pre Close Trading Statement

Cello Group plc (AIM:CLL), the healthcare and strategic marketing group, today publishes the following update for the six months to 30 June 2017.

The Group has had a good first half of the year, with particularly strong overall and like-for-like growth from Cello Health. With a good forward looking order book across the whole Group, the Board remains confident that the Group will deliver a strong full year result in line with current expectations.

Cello Health

Cello Health's global operation has made good strides in expanding its client reach. Overall, gross profit has grown at in excess of 25% in the period and like-for-like growth in gross profit has been in excess of 9% after adjusting for exchange rates. The increasingly integrated client offering is expanding its reach within existing, long standing pharmaceutical customers, as well as proving successful in its new business drive. Of particular note, Cello Health has continued to increase its presence in the higher growth biotech area, adding a substantial number of new accounts. Following its acquisition in January 2017, Defined Health has performed well and has helped accelerate this trend towards biotech. Cello Health Bioconsulting has now moved into profit after a period of further investment in the first quarter.

The US continues to increase its share of Cello Health's overall business, in line with the stated growth strategy. Cello Health Consumer has made solid progress, particularly in the US, and is now more effectively supporting Cello Health's core offering.

Overall operating profit margins are slightly lower at the half year stage, reflecting the substantial addition of professional resource to enable the business to meet its full year gross profit and profit growth targets as well as its longer term goals.

Yesterday, the Group was pleased to announce the acquisition of the trade and assets of Advantage Healthcare Inc. This acquisition further reinforces Cello Health's positioning in the Biotech area as well as enlarging the presence of Cello Health in the key US market.

In addition, the Board continues to review a number of earnings enhancing acquisitions in the healthcare space.

Cello Signal

Cello Signal has continued to make solid progress against its strategic goals.

Pulsar, Signal's social media software business, has continued its rapid rate of growth. On this basis, the Group is making a larger investment commitment behind supporting its entry into the US market. To fully identify this investment, the Company will account for this as a start-up loss for presentational purposes for 2017.

In line with earlier guidance, the business has seen a slight decline in gross profit in the first half of the financial year, as two large one-off contracts were present in the prior year. Cello Signal has also substantially reduced its headcount on the West Coast of the USA, where staff were engaged primarily in bespoke consumer market research. While this action will incur a one off charge for the full year, it will increase operating margins for Cello Signal going forward.

Good overall gross profit visibility allows the Group to be confident about the full year outcome for Cello Signal. This, along with the cost measures already mentioned, places the business in a good position to continue to raise operating margins, in line with the Group's strategy.

Outlook

The Board expects the gross profit momentum achieved by Cello Health in the first half to continue. Forward bookings at Cello Signal are good and support the current outlook for the business. Overall, the Board remains confident that the Group will deliver a strong full year result in line with current expectations.

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