Pre-Close Trading Statement

17 January 2019

Cello Health plc

('Cello' or the 'Group')

Pre-Close Trading Statement

Cello Health plc (AIM: CLL), the healthcare-led advisory group, today announces the following trading update for the year ended 31 December 2018.

Overall, the Group traded well in 2018, with continued strong like-for-like growth from Cello Health somewhat offset by a slower outcome from Cello Signal. Accordingly, the Group expects to report full year results in line with market expectations.

Operating summary 

Cello Health had an excellent year, with good like-for-like gross profit growth combined with healthy operating margin improvement. Headline operating profit performance has been good from all three core capabilities, namely Consulting, Insight and Communications.

Contributions from the businesses acquired in 2017 continue to be in line with the Board's expectations, extending the reach of Cello Health into the biotech community to complement the pharmaceutical core of the business and increasing the focus on the US market.

Cello Health continues to expand organically both in Europe and the US. A new office has been opened in central Philadelphia and Cello Health plans to continue to expand in Boston in the first half of 2019. A Berlin office will also be opened in the first half, with a focus on building the Group's domestic German client base as well as servicing existing global work from European clients.

As anticipated, Cello Signal had a slower year, reflecting decision making by some UK based clients. Operations in Edinburgh performed well, countered by slower levels of client activity in other operations elsewhere.

There will be a continued focus in 2019 towards developing health-orientated opportunities for the digital and creative capacity of Signal. Signal Health had an encouraging first year of operation, gaining a range of significant client contracts in the pharmaceutical and wider health area, and Pulsar has traded well with Cello Health on a range of large client opportunities.

Non-headline items

The Group continues to invest in new offices and accelerated extensions to the existing business, as a low risk complement to the Group's 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 2018 such start-up losses were attributable to the continued investment in Pulsar in the US, to the investment in growing the health offer of Cello Signal, and to the start-up investment in the new Boston office of Cello Health. The total combined losses attributable to these activities is approximately £1.2m. All ongoing profits or losses attributable to Pulsar US will come into headline results for 2019.

Other non-headline cash items were minimal in 2018. In Signal there will be a restructuring charge of approximately £0.3m in the first half of 2019, reflecting reduction in capacity in Cheltenham to maintain a competitive margin.

Balance sheet

The Group has 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 at the end of the year.

Summary

Overall, the Group has had a strong year and is well placed to continue to execute its growth strategy in 2019 and beyond.

Enquiries:

Cello Health plc 020 7812 8460

Mark Scott, Chief Executive

Mark Bentley, Group Finance Director

Cenkos Securities plc 020 7397 8900

Mark Connelly

Harry Hargreaves

Buchanan 020 7466 5000

Mark Court

Jamie Hooper

Sophie Wills

Notes to Editors

Cello Health plc is a global healthcare-focused advisory Group comprised of a set of leading scientific, commercial advisory and digital delivery capabilities. Cello Health plc currently services 24 of the top 25 pharmaceutical clients globally, as well as a wide range of biotech, diagnostics, devices and other key non-healthcare clients.

Cello Health plc enables clients to commercialise, differentiate their assets, and drive brand success in ever more complex global markets. The business delivers its services through nearly 1,000 highly skilled professionals, utilising latest thinking, technology and digital solutions.

Cello Health plc delivers its services from an office network in the UK, USA, and Asia, with hub offices in New York City, Philadelphia PA, London, Edinburgh, Farnham and Cheltenham.

For further information, please visit: https://cellohealthplc.com