Trading update

CELLO GROUP PLC

("Cello" or "The Group")

Trading update

Cello Group plc (AIM: CLL, "Cello", or "The Group"), the leading insight and strategic marketing group, publishes a trading update for the six months to 30 June 2013.

Summary

Cello has continued to experience robust trading for the first six months to 30 June 2013.

Cello Health has continued to grow revenues, with an ever increasing majority of income coming from outside the UK. Cello Consumer has returned to strong revenue growth and a solid recovery of margins, as expected.

The Board continues to be confident that trading for the first six months will be well ahead of the same period in 2012 and that current full year expectations will be met.

Operating Performance

Cello Health

International revenues have been outpacing UK revenues, and now comprise the majority of Cello Health's activity, the largest market for Cello Health's services being the US. Cello Health has now opened an office in Chicago, to complement its other offices in New York and Philadelphia. Cello Health has also launched a US based early product commercialisation practice with a focus on helping clients address Market Access issues.

Cello Health's Consumer Health offering is expanding rapidly, following the growing importance of consumer issues to the Group's clients. In January, the Group acquired Mash Healthcare to accelerate its push into Consumer Health. Cello Health's central new business team has gained traction, with a number of noteworthy incremental client wins and opportunities. The Group's digital capabilities continue to grow rapidly.

Cello Health continues to add senior members to its team. Whilst the primary focus is continued organic expansion, the Group remains actively engaged in seeking targeted acquisitions to complement its client offer.

Cello Consumer

Cello Consumer has returned to growth as expected, along with an associated recovery in operating margins. The growth in the retained income profile of the business has been particularly pleasing. There have also been several significant project wins which have impacted the first half and which will positively influence the rest of the year. Whilst the business remains more UK centred than Cello Health, its international revenue profile is growing rapidly. Cello Consumer recently opened a new office in Los Angeles to complement its existing offices in San Francisco and New York. It also has taken on enlarged facilities in Singapore and a new office in Hong Kong. As a result, it can now sell global client solutions.

The primary engine of growth of Cello Consumer is the digital core of the business, enabling clients to exploit and deploy digital and social media to optimise their data gathering and communications execution. Cello Consumer recently launched the new version of its social media analytics product suite, Pulsar TRAC, to strong blue-chip client uptake and continued significant interest.

Organic Growth Initiatives

The majority of the start-up investments made in 2012 to promote growth have now turned to profit in 2013. As such, the organic investment model has already proven itself to be a prudent method of securing ongoing growth in value for the Group and its shareholders.

The planned transition to larger client contract sizes and more continuous contracts continues to make steady progress.

Balance Sheet

At the half year stage, net debt is better than management expectations, following continued strong conversion of profit to cash.

Full Year Outlook

The Board is confident that the Group will trade in line with full year expectations. Mark Scott, Cello Chief Executive, commented: "Our focused strategy continues to deliver the objectives we have set ourselves, giving us a compelling value proposition for clients and a motivating setting for our professionals. We will continue to invest in the internationalisation of the core offer in our two divisions, enabling us to win ever larger contracts of a more continuous nature."

The Group will announce its full interim results on September 18th 2013.

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