08:00 Wed 20 Sep 2017
Cello Group plc - Interim Results
For Immediate Release |
|
Interim Results for the six months to
Group Financial Highlights
· Revenue
· Gross profit up 12.9% to
· Like-for-like1 gross profit growth of 5.4% (Constant currency: 2.4%)
· Headline profit before tax2 up 8.0%
· Headline operating margin3 10.0% (2016: 10.3%)
· Headline basic earnings per share 3.43p (2016: 3.60p)
· Statutory profit before tax of
· Statutory basic earnings per share 2.16p (2016: loss of 1.08p)
· Net debt
· Interim dividend up 5.0% to 1.05p (2016: 1.00p)
· Equity placing raised
Divisional Financial Highlights
H1 |
|
Cello Signal |
||||
£'000 |
2017 |
2016 |
% Growth |
2017 |
2016 |
% Growth |
Segmental gross profit |
28,087 |
22,162 |
26.7% |
19,851 |
20,714 |
(4.2)% |
Headline operating profit |
4,876 |
3,906 |
24.8% |
1,197 |
1,694 |
(29.3)% |
Headline operating margin |
17.4% |
17.6% |
|
6.0% |
8.2% |
|
Operating Highlights
· Continued rapid growth of
· Successful acquisition of
· Continued fast growth of Pulsar helped by US launch
· Post period end acquisition of
· Cello Signal on track to achieve expectations
This announcement contains inside information
1 Like-for-like comparisons remove the impact of acquisitions and results from start-ups in 2016 (see note 3)
2 Headline measures are stated before non-headline charges (see note 3)
3 Headline operating margin is defined as headline operating profit as a percentage of segmental gross profit
Enquiries:
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020 7812 8460 |
|
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Cenkos Securities |
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020 7484 4040 |
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Buchanan |
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020 7466 5000 |
Notes to Editors (www.cellogroup.com)
Cello is a healthcare-focused strategic marketing group.
The Group's strategy is to create value for shareholders by building a leading global healthcare advisory business under the Cello Health brand, and a leading digital communications solutions business under the Cello Signal brand.
Cello has annualised revenues in excess of
Chairman's Statement
Overview
The Group has had a productive six months in successfully executing its growth strategy. The acquisition of
Cello Signal has had a solid six months overall against a tough comparator. Pulsar continues to grow strongly and has opened up in the US market. The Group will continue to invest significantly in Pulsar going forward.
Overall, the Group continues to grow strongly, giving the Board confidence to grow the dividend accordingly.
Financial Review
Gross profit for the six months to
The reported tax charge for the period is
Headline basic earnings per share were 3.43p (2016: 3.60p). Statutory earnings per share was 2.16p (2016: loss of 1.08p).
In
The Group's net debt at
The interim dividend rises 5.0% to 1.05p (2016: 1.00p). The interim dividend is payable on
Losses of
Restructuring costs of
The following table summarises the adjustments made to calculate headline operating profit. In addition to those non-headline charges already explained,
|
2017 £m
|
2016 £m |
Headline operating profit |
4.8 |
4.4 |
VAT provision |
0.3 |
(2.1) |
Restructuring costs |
(0.3) |
(0.7) |
Start-up losses |
(0.8) |
(0.5) |
|
- |
(1.1) |
Share option charges |
(0.2) |
(0.1) |
Acquisition related costs |
(0.6) |
(0.5) |
Amortisation |
(0.3) |
(0.1) |
Statutory operating profit/(loss) |
2.9 |
(0.7) |
Net finance costs |
(0.2) |
(0.1) |
Statutory profit/(loss) before tax |
2.7 |
(0.8) |
Operating Review
|
H1 2017 |
H1 2016 |
Full year 2016 |
|
£'000 |
£'000 |
£'000 |
Segmental gross profit |
28,087 |
22,162 |
47,605 |
Headline operating profit |
4,876 |
3,906 |
8,635 |
Headline operating margin |
17.4% |
17.6% |
18.1% |
The four underlying capabilities of
In
As a result of the organic and acquisitive expansion of
Cello Signal
|
H1 2017 |
H1 2016 |
Full year 2016 |
|
£'000 |
£'000 |
£'000 |
Segmental gross profit |
19,851 |
20,714 |
43,613 |
Headline operating profit |
1,197 |
1,694 |
4,490 |
Headline operating margin |
6.0% |
8.2% |
10.3% |
Cello Signal has had a solid six months against a tough comparatorand is on track to achieve expectations. As previously indicated, there is a constant currency like-for-like decline in gross profit of 5.0% in the period reflecting the material impact of a significant one-off contract in the first half of 2016. Operating margin was also impacted by a reduction in operating profits from the research business in the US. Necessary action has been taken here to reduce headcount and property commitments in order to restore operating margin.
Cello Signal has continued to make rapid strides in consolidating its integrated digital solutions proposition to clients behind the Signal brand. A number of significant new contracts have been secured behind this brand proposition, including in the healthcare space. Signal now has strong propositions in the key client verticals of financial services, electronic gaming and devices, charities and utilities. As a consequence, overall visibility of revenues continues to increase, allowing ongoing investment in technical programming capability.
To deliver this proposition efficiently, Signal has consolidated its operations into three core operational office hubs, in
In
The Group is making a concerted effort to leverage Signal's digital skill set into the healthcare arena both within pharmaceuticals and biotech, where demand for digital solutions is rising rapidly. This effort is already bearing fruit, with Signal securing a contract with one of the largest
Full year Trading Outlook
The Group continues to trade well, particularly in
Chairman
Condensed Consolidated Income Statement
For the six months ended
|
Notes |
Unaudited Six months ended £'000 |
Unaudited Six months ended £'000 |
Audited Year ended 31 December 2016 £'000 |
|
|
|
|
|
Continuing operations |
|
|
|
|
Revenue |
4 |
78,653 |
80,734 |
165,266 |
Cost of sales |
|
(29,569) |
(37,259) |
(72,610) |
|
|
|
|
|
Gross profit |
4 |
49,084 |
43,475 |
92,656 |
|
|
|
|
|
Administration expenses |
|
(46,229) |
(44,142) |
(94,049) |
|
|
|
|
|
Operating profit/(loss) |
4 |
2,855 |
(667) |
(1,393) |
|
|
|
|
|
Finance income |
5 |
- |
- |
11 |
Finance costs |
5 |
(157) |
(126) |
(304) |
|
|
|
|
|
Profit/(loss) from continuing operations before taxation |
3 |
2,698 |
(793) |
(1,686) |
|
|
|
|
|
Taxation |
6 |
(513) |
(47) |
(820) |
|
|
|
|
|
Profit/(loss) from continuing operations after taxation |
|
2,185 |
(840) |
(2,506) |
|
|
|
|
|
Loss from discontinued operations |
7 |
- |
(99) |
(321) |
|
|
|
|
|
Profit/(loss) for the period |
|
2,185 |
(939) |
(2,827) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Six months ended 30 June 2017 £'000 |
Unaudited Six months ended 30 June 2016 £'000 |
Audited Year ended 31 December 2016 £'000 |
Basic earnings/(loss) per share |
|
|
|
|
From continued operations |
9 |
2.16p |
(0.97)p |
(2.86)p |
From discontinued operations |
9 |
- |
(0.11)p |
(0.37)p |
Total basic earnings/(loss) per share |
9 |
2.16p |
(1.08)p |
(3.23)p |
|
|
|
|
|
Diluted earnings/(loss) per share |
|
|
|
|
From continued operations |
9 |
2.13p |
(0.97)p |
(2.86)p |
From discontinued operations |
9 |
- |
(0.11)p |
(0.37)p |
Total diluted earnings/(loss) per share |
9 |
2.13p |
(1.08)p |
(3.23)p |
|
|
|
|
|
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2017
|
Unaudited Six months ended 30 June 2017 £'000 |
Unaudited Six months ended 30 June 2016 £'000 |
Audited Year ended 31 December 2016 £'000 |
|
|
|
|
Profit/(loss) for the period |
2,185 |
(939) |
(2,827) |
|
|
|
|
Other comprehensive (expense)/income: |
|
|
|
Exchange differences on translation of foreign operations |
(138) |
38 |
211 |
|
|
|
|
Total comprehensive income/(expense) for the period |
2,047 |
(901) |
(2,616) |
|
|
|
|
|
|
|
|
Total comprehensive income/(expense) for the period arises: |
|||
|
|
|
|
From continuing operations |
2,047 |
(802) |
(2,295) |
From discontinued operations |
- |
(99) |
(321) |
|
|
|
|
|
2,047 |
(901) |
(2,616) |
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheet
As at 30 June 2017
|
Notes |
Unaudited 30 June 2017 £'000 |
Unaudited 30 June 2016 £'000 |
Audited 31 December 2016 £'000 |
Goodwill |
10 |
72,998 |
74,237 |
69,833 |
Intangible assets |
|
813 |
786 |
695 |
Property, plant and equipment |
|
2,753 |
2,347 |
2,705 |
Deferred tax assets |
|
1,239 |
765 |
742 |
|
|
|
|
|
Non-current assets |
|
77,803 |
78,135 |
73,975 |
|
|
|
|
|
|
|
|
|
|
Trade and other receivables |
|
45,284 |
41,193 |
46,862 |
Cash and cash equivalents |
|
2,144 |
3,976 |
7,466 |
|
|
|
|
|
Current assets |
|
47,428 |
45,169 |
54,328 |
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
(32,823) |
(42,141) |
(48,171) |
Current tax liabilities |
|
(1,143) |
(1,296) |
(851) |
Borrowings |
|
(8,906) |
(155) |
(155) |
Obligations under finance leases |
|
(14) |
(21) |
(16) |
|
|
|
|
|
Current liabilities |
|
(42,886) |
(43,613) |
(49,193) |
|
|
|
|
|
Net current assets |
|
4,542 |
1,556 |
5,135 |
|
|
|
|
|
Total assets less current liabilities |
|
82,345 |
79,691 |
79,110 |
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
(486) |
(2,218) |
(126) |
Borrowings |
|
- |
(8,564) |
(12,350) |
Obligations under finance leases |
|
(10) |
(24) |
(17) |
Deferred tax liabilities |
|
(77) |
(105) |
(63) |
|
|
|
|
|
Non-current liabilities |
|
(573) |
(10,911) |
(12,556) |
|
|
|
|
|
Net assets |
|
81,772 |
68,780 |
66,554 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
12 |
10,412 |
8,726 |
8,760 |
Share premium |
|
32,673 |
19,099 |
19,162 |
Merger reserve |
|
25,446 |
28,807 |
25,446 |
Capital redemption reserve |
|
50 |
50 |
50 |
Retained earnings |
|
12,160 |
11,451 |
12,159 |
Share-based payment reserve |
|
952 |
603 |
760 |
Foreign currency reserve |
|
79 |
44 |
217 |
|
|
|
|
|
Total equity |
|
81,772 |
68,780 |
66,554 |
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2017
|
Notes |
Unaudited Six months ended 30 June 2017 £'000 |
Unaudited Six months ended 30 June 2016 £'000 |
Audited Year ended 31 December 2016 £'000 |
Net cash (used in)/generated from operating activities before taxation |
13 |
(8,263) |
3,269 |
6,510 |
|
|
|
|
|
Tax paid |
|
(409) |
(459) |
(1,659) |
|
|
|
|
|
Net cash generated from/(used in) operating activities after taxation |
|
(8,672) |
2,810 |
4,851 |
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
Interest received |
|
- |
- |
11 |
Purchase of property, plant and equipment |
|
(653) |
(957) |
(1,966) |
Sale of property, plant and equipment |
|
13 |
17 |
30 |
Expenditure on intangible assets |
|
(182) |
(62) |
(310) |
Purchase of subsidiary undertakings |
|
(4,127) |
(248) |
(25) |
|
|
|
|
|
Net cash used in investing activities |
|
(4,949) |
(1,250) |
(2,260) |
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
Proceeds from issuance of shares |
|
14,267 |
192 |
289 |
Dividends paid to equity holders |
|
(2,478) |
(1,727) |
(2,596) |
Repayment of borrowings |
|
(3,000) |
(3,681) |
(6,681) |
Repayment of loan notes |
|
(96) |
(77) |
(77) |
Drawdown of borrowings |
|
- |
2,509 |
8,509 |
Capital element of finance lease payments |
|
(9) |
(12) |
(24) |
Interest paid |
|
(157) |
(105) |
(256) |
|
|
|
|
|
Net cash generated from/(used in) financing activities |
|
8,527 |
(2,901) |
(836) |
|
|
|
|
|
Movements in cash and cash equivalents |
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(5,094) |
(1,341) |
1,755 |
|
|
|
|
|
Exchange (losses)/gains on cash and bank overdrafts |
|
(228) |
68 |
462 |
Cash and cash equivalents at the beginning of the period |
|
7,466 |
5,249 |
5,249 |
|
|
|
|
|
Cash and cash equivalents at end of the period |
|
2,144 |
3,976 |
7,466 |
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2017
Statement of changes in equity for the six months ended 30 June 2017:
|
Share Capital £'000 |
Share Premium £'000 |
Merger Reserve £'000 |
Capital Redemption Reserve £'000 |
Retained Earnings £'000 |
Share-based Payment Reserve £'000 |
Foreign Currency Exchange Reserve £'000 |
Total Attributable to Equity Shareholders £'000 |
Non-Controlling Interest £'000 |
Total Equity £'000 |
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2017 |
8,760 |
19,162 |
25,446 |
50 |
12,159 |
760 |
217 |
66,554 |
- |
66,554 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
- |
- |
- |
- |
2,185 |
- |
- |
2,185 |
- |
2,185 |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
Currency translation |
- |
- |
- |
- |
- |
- |
(138) |
(138) |
- |
(138) |
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income in the period |
- |
- |
- |
- |
2,185 |
- |
(138) |
2,047 |
- |
2,047 |
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners: |
|
|
|
|
|
|
|
|
|
|
Shares issued |
1,652 |
13,511 |
- |
- |
- |
- |
- |
15,163 |
- |
15,163 |
Credit for share-based incentives |
- |
- |
- |
- |
- |
229 |
- |
229 |
- |
229 |
Tax on share-based payments recognised directly in equity |
- |
- |
- |
- |
257 |
- |
- |
257 |
- |
257 |
Transfer between reserves in respect of share options |
- |
- |
- |
- |
37 |
(37) |
- |
- |
- |
- |
Dividends paid (note 8) |
- |
- |
- |
- |
(2,478) |
- |
- |
(2,478) |
- |
(2,478) |
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners |
1,652 |
13,511 |
- |
- |
(2,184) |
192 |
- |
13,171 |
- |
13,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2017 |
10,412 |
32,673 |
25,446 |
50 |
12,160 |
952 |
79 |
81,772 |
- |
81,772 |
|
|
|
|
|
|
|
|
|
|
|
Statement of changes in equity for the six months ended 30 June 2016:
|
Share Capital £'000 |
Share Premium £'000 |
Merger Reserve £'000 |
Capital Redemption Reserve £'000 |
Retained Earnings £'000 |
Share-based Payment Reserve £'000 |
Foreign Currency Exchange Reserve £'000 |
Total Attributable to Equity Shareholders £'000 |
Non-Controlling Interest £'000 |
Total Equity £'000 |
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2016 |
8,576 |
18,834 |
28,807 |
50 |
13,860 |
635 |
6 |
70,768 |
50 |
70,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period |
- |
- |
- |
- |
(939) |
- |
- |
(939) |
- |
(939) |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
Currency translation |
- |
- |
- |
- |
- |
- |
38 |
38 |
- |
38 |
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss in the period |
- |
- |
- |
- |
(939) |
- |
38 |
(901) |
- |
(901) |
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners: |
|
|
|
|
|
|
|
|
|
|
Shares issued |
150 |
265 |
- |
- |
- |
- |
- |
415 |
- |
415 |
Acquisition of non-controlling interest |
- |
- |
- |
- |
25 |
- |
- |
25 |
(50) |
(25) |
Credit for share-based incentives |
- |
- |
- |
- |
- |
138 |
- |
138 |
- |
138 |
Tax on share-based payments recognised directly in equity |
- |
- |
- |
- |
62 |
- |
- |
62 |
- |
62 |
Transfer between reserves in respect of share options |
- |
- |
- |
- |
170 |
(170) |
- |
- |
- |
- |
Dividends paid (note 8) |
- |
- |
- |
- |
(1,727) |
- |
- |
(1,727) |
- |
(1,727) |
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners |
150 |
265 |
- |
- |
(1,470) |
(32) |
- |
(1,087) |
(50) |
(1,137) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2016 |
8,726 |
19,099 |
28,807 |
50 |
11,451 |
603 |
44 |
68,780 |
- |
68,780 |
|
|
|
|
|
|
|
|
|
|
|
Statement of changes in equity for the year ended 31 December 2016:
|
Share Capital £'000 |
Share Premium £'000 |
Merger Reserve £'000 |
Capital Redemption Reserve £'000 |
Retained Earnings £'000 |
Share-based Payment Reserve £'000 |
Foreign Currency Exchange Reserve £'000 |
Total Attributable to Equity Shareholders £'000 |
Non-Controlling Interest £'000 |
Total Equity £'000 |
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2016 |
8,576 |
18,834 |
28,807 |
50 |
13,860 |
635 |
6 |
70,768 |
50 |
70,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
(2,827) |
- |
- |
(2,827) |
|
(2,827) |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
Currency translation |
- |
- |
- |
- |
- |
- |
211 |
211 |
- |
211 |
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the period |
- |
- |
- |
- |
(2,827) |
- |
211 |
(2,616) |
- |
(2,616) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners: |
|
|
|
|
|
|
|
|
|
|
Shares issued |
184 |
328 |
- |
- |
- |
- |
- |
512 |
- |
512 |
Acquisition of non-controlling interest |
- |
- |
- |
- |
25 |
- |
- |
25 |
(50) |
(25) |
Credit for share-based incentives |
- |
- |
- |
- |
- |
349 |
- |
349 |
- |
349 |
Tax on share-based payments recognised directly in equity |
- |
- |
- |
- |
112 |
- |
- |
112 |
- |
112 |
Transfer between reserves in respect of share options |
- |
- |
- |
- |
224 |
(224) |
- |
- |
- |
- |
Transfer between reserves in respect of impairment |
- |
- |
(3,361) |
- |
3,361 |
- |
- |
- |
- |
- |
Dividends paid (note 8) |
- |
- |
- |
- |
(2,596) |
- |
- |
(2,596) |
- |
(2,596) |
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners |
184 |
328 |
(3,361) |
- |
1,126 |
125 |
- |
(1,598) |
(50) |
(1,648) |
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2016 |
8,760 |
19,162 |
25,446 |
50 |
12,159 |
760 |
217 |
66,554 |
- |
65,554 |
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Information
For the six months ended 30 June 2017
1. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The condensed consolidated financial information for the six months ended 30 June 2017 has been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union. The condensed consolidated financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2016, which have been prepared in accordance with IFRSs as adopted by the European Union.
The condensed consolidated financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2016 were approved by the Board of directors on 21st March 2017 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.
The condensed consolidated financial information was approved for issue on 19 September 2017 and has not been audited.
The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2016, as described in those annual financial statements.
There are no new IFRSs or IFRICs that are effective for the first time for the interim period that would be expected to have a material impact on the Group.
2. SEASONALITY OF OPERATIONS
The Cello Health division is not materially influenced by seasonal factors. However, there are a number of clients in the Cello Signal division who traditionally commission activity in the second half of the year leading to increased revenues for that period with respect to those clients.
3. NON-GAAP MEASURES
The Group believes that reporting non-GAAP or headline measures provides a useful comparison of business performance and reflects the way the business is controlled. The Group reports two types of non-GAAP measure, headline measures and like-for-like gross profit.
Headline measures
Non-headline gains and losses are items that, in the opinion of the directors, are required to be disclosed separately, by virtue of their size, nature or incidence, to enable a full understanding of the Group's underlying financial performance. Accordingly, headline measures exclude, where applicable, the effect of the following items:
i. Restructuring costs - these costs principally relate to redundancy costs.
ii. Net (credit)/charge for VAT payable and related costs - these costs relate to the VAT payable to HMRC in respect of certain charity clients. This is reported net of recovery from clients
iii. Employment settlement and related costs - these costs relate to the payment made to the prior employer of senior staff hired to establish the Cello Health BioConsulting business, in respect of post-employment restrictions.
iv. Start-up losses - these are defined as the net operating result in the period of the trading activities that relate to new offices, new products, or new organically started businesses. Activities so defined will cease being separately identified where, in the opinion of the directors, the activities show evidence of becoming sustainably profitable or are closed, whichever is earlier. In any event, start-up losses will cease being separately identified after two years from the commencement of the activity.
v. Amortisation of intangible assets - this is in respect of amortisation charged against separately indentifiable intangible assets acquired as part of a business combination.
vi. Acquisition related employee remuneration expense - costs with regards to deferred payments payable to vendors and certain employees of a company in accordance with the purchase agreement of the acquired company or business. In accordance with IFRS 3 Business Combinations, these costs are recognised in the income statement by virtue of employment conditions in the relevant share purchase agreement.
vii. Share option charges - these costs represent the fair value of share options charged to the income statement and are separately identified due to their nature.
Headline measures in this report are not defined terms under IFRS, and may not be comparable with similarly titled measures reported by other companies.
A reconciliation between statutory and headline profit before taxation is presented in below:
|
Unaudited Six Months ended 30 June 2017 £'000 |
Unaudited Six Months ended 30 June 2016 £'000 |
Audited Year ended 31 December 2016 £'000 |
|
|
|
|
Profit/(loss) from continuing operations before taxation |
2,698 |
(793) |
(1,686) |
|
|
|
|
Restructuring costs |
281 |
647 |
1,201 |
Net (credit)/charge for VAT payable and related costs |
(259) |
2,053 |
1,798 |
Post-employment restrictions settlement and related costs |
37 |
1,067 |
1,158 |
Start-up losses |
832 |
518 |
977 |
Acquisition costs |
139 |
- |
- |
Amortisation of intangible assets |
261 |
146 |
294 |
Acquisition related employee remuneration expense |
425 |
525 |
1,176 |
Share option charges |
229 |
138 |
349 |
Impairment of goodwill |
- |
- |
4,937 |
|
|
|
|
Headline profit before taxation |
4,643 |
4,301 |
10,204 |
|
|
|
|
Headline profit before tax is made up as follows: |
|
|
|
Headline operating profit |
4,800 |
4,427 |
10,497 |
Headline finance income |
- |
- |
11 |
Headline finance costs |
(157) |
(126) |
(304) |
|
|
|
|
|
4,643 |
4,301 |
10,204 |
|
|
|
|
In addition, a reconciliation between statutory and headline earnings per share is presented in note 9.
Like-for-like gross profit follows: |
|
|
|
Like-for-like gross profit measures exclude the results from companies or businesses acquired in the period, and they also exclude the results of acquired companies or businesses in the prior period to the extent that those companies or businesses are not in the Group in that prior period. Like-for-like gross profit also appropriately excludes the impact of start-ups. In aggregate, these adjustments are detailed in the table below.
Like-for-like measures are also calculated both with and without the impact of movements in currency. These measures are also disclosed in the table below.
|
|||
|
Growth |
Unaudited Six month ended 30 June 2017 £'000 |
Unaudited Six month ended 30 June 2016 £'000 |
|
|
|
|
Reported gross profit |
12.9 % |
49,084 |
43,475 |
|
|
|
|
Adjustments |
|
(3,809) |
(525) |
|
|
|
|
Like-for-like gross profit |
5.4 % |
45,275 |
42,950 |
|
|
|
|
Currency impact |
|
(1,298) |
- |
|
|
|
|
Currency adjusted like-for-like gross profit |
2.4 % |
43,977 |
42,950 |
|
|
|
|
|
|
|
|
These measures can be allowed to the Group's operating segments (note 4) as follows: |
|||
|
|
|
|
Reported gross profit |
|
|
|
Cello Health |
26.7 % |
28,087 |
22,162 |
Cello Signal |
(4.2)% |
19,851 |
20,714 |
Other |
|
1,146 |
599 |
|
|
|
|
Total |
12.9 % |
49,084 |
43,475 |
|
|
|
|
|
|
|
|
Like-for-like gross profit: |
|
|
|
Cello Health |
14.3 % |
25,424 |
22,236 |
Cello Signal |
(4.2)% |
19,851 |
20,714 |
|
|
|
|
|
5.4 % |
45,275 |
42,950 |
|
|
|
|
|
|
|
|
Currency adjusted like-for-like gross profit: |
|
|
|
Cello Health |
9.3 % |
24,305 |
22,236 |
Cello Signal |
(5.0)% |
19,672 |
20,714 |
|
|
|
|
Total |
2.4 % |
43,977 |
42,950 |
|
|
|
|
|
|
|
|
|
|
|
|
4. SEGMENTAL INFORMATION
For management purposes, the Group is organised into two operating groups; Cello Health and Cello Signal. These groups are the basis on which the Group reports internally to the plc's board of directors, who have been identified as the chief operating decision makers.
Six months ended 30 June 2017 |
|
|
|
|
|
Cello Health £'000 |
Cello Signal £'000 |
Consolidated and Unallocated £'000 |
Group £'000 |
Revenue |
|
|
|
|
External sales |
39,875 |
37,506 |
1,272 |
78,653 |
Intersegment revenue |
- |
25 |
(25) |
- |
|
|
|
|
|
Total revenue |
39,875 |
37,531 |
1,247 |
78,653 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
28,087 |
19,851 |
1,146 |
49,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
Headline operating profit (segment result) |
4,876 |
1,197 |
(1,273) |
4,800 |
|
|
|
|
|
Restructuring costs |
|
|
|
(281) |
Recovery of VAT from clients |
|
|
|
259 |
Post-employment restrictions settlement and related costs |
|
|
|
(37) |
Start-up losses |
|
|
|
(832) |
Acquisition costs |
|
|
|
(139) |
Amortisation of intangible assets |
|
|
|
(261) |
Acquisition related employee remuneration expense |
|
|
|
(425) |
Share option charges |
|
|
|
(229) |
|
|
|
|
|
Operating profit |
|
|
|
2,855 |
|
|
|
|
|
Finance costs |
|
|
|
(157) |
|
|
|
|
|
Profit from continuing operations before taxation |
|
|
|
2,698
|
|
|
|
|
|
Other information |
|
|
|
|
|
|
|
|
|
Capital expenditure |
456 |
196 |
1 |
653 |
|
|
|
|
|
Capitalisation of intangible assets |
- |
182 |
- |
182 |
|
|
|
|
|
Depreciation of property plant and equipment |
303 |
337 |
9 |
649 |
|
|
|
|
|
Six months ended 30 June 2016
|
Cello Health £'000 |
Cello Signal £'000 |
Consolidated and Unallocated £'000 |
Group £'000 |
Revenue |
|
|
|
|
External sales |
32,906 |
47,057 |
771 |
80,734 |
Intersegment revenue |
11 |
16 |
(27) |
- |
|
|
|
|
|
Total revenue |
32,917 |
47,073 |
744 |
80,734 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
22,162 |
20,714 |
599 |
43,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
Headline operating profit (segment result) |
3,906 |
1,694 |
(1,173) |
4,427 |
|
|
|
|
|
Restructuring costs |
|
|
|
(647) |
Charge for VAT payable and related costs |
|
|
|
(2,053) |
Post-employment restrictions settlement and related costs |
|
|
|
(1,067) |
Start-up losses |
|
|
|
(518) |
Amortisation of intangible assets |
|
|
|
(146) |
Acquisition related employee remuneration expense |
|
|
|
(525) |
Share option charges |
|
|
|
(138) |
|
|
|
|
|
Operating loss |
|
|
|
(667) |
|
|
|
|
|
Finance costs |
|
|
|
(126) |
|
|
|
|
|
Loss from continuing operations before taxation |
|
|
|
(793)
|
|
|
|
|
|
Other information |
|
|
|
|
|
|
|
|
|
Capital expenditure |
686 |
271 |
- |
957 |
|
|
|
|
|
Capitalisation of intangible assets |
3 |
59 |
- |
62 |
|
|
|
|
|
Depreciation of property plant and equipment |
218 |
377 |
3 |
598 |
|
|
|
|
|
Year ended 31 December 2016 |
|
|
|
|
|
|
|
|
|
|
Cello Health £'000 |
Cello Signal £'000 |
Consolidation Adjustments and Unallocated £'000 |
Group £'000 |
Revenue |
|
|
|
|
External sales |
70,126 |
93,461 |
1,679 |
165,266 |
Intersegment revenue |
34 |
72 |
(106) |
- |
|
|
|
|
|
Total revenue |
70,160 |
93,533 |
1,573 |
165,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
47,605 |
43,613 |
1,438 |
92,656 |
|
|
|
|
|
Operating profit |
|
|
|
|
Headline operating profit (segment result) |
8,635 |
4,490 |
(2,628) |
10,497 |
|
|
|
|
|
Restructuring costs |
|
|
|
(1,201) |
Net charge for VAT payable and related costs |
|
|
|
(1,798) |
Employment settlement and related costs |
|
|
|
(1,158) |
Start-up losses |
|
|
|
(977) |
Amortisation of intangible assets |
|
|
|
(294) |
Acquisition-related employee remuneration expense |
|
|
|
(1,176) |
Share option charges |
|
|
|
(349) |
Impairment of goodwill |
|
|
|
(4,937) |
|
|
|
|
|
Operating loss |
|
|
|
(1,393) |
|
|
|
|
|
Financing income |
|
|
|
11 |
Finance costs |
|
|
|
(304) |
|
|
|
|
|
Loss before tax on continuing operations |
|
|
|
(1,686) |
|
|
|
|
|
Other information |
|
|
|
|
Capital expenditure |
1,165 |
797 |
4 |
1,966 |
|
|
|
|
|
Capitalisation of intangible assets |
3 |
307 |
- |
310 |
|
|
|
|
|
Depreciation of property, plant and equipment |
521 |
748 |
16 |
1,285 |
|
|
|
|
|
|
|
|
|
|
5. FINANCE INCOME AND COSTS
|
Unaudited Six months ended 30 June 2017 £'000 |
Unaudited Six months ended 30 June 2016 £'000 |
Audited Year ended 31 December 2016 £'000 |
Finance income: |
|
|
|
Interest receivable on bank deposits |
- |
- |
11 |
|
|
|
|
|
|
|
|
Finance costs: |
|
|
|
Interest payable on bank loans and overdrafts |
156 |
124 |
301 |
Interest payable in respect of finance leases |
1 |
2 |
3 |
|
|
|
|
Total finance costs |
157 |
126 |
304 |
|
|
|
|
6. TAXATION ON PROFIT ON ORDINARY ACTIVITIES
The tax charge for the period ended 30 June 2017 is based on management's estimate of weighted average annual tax rate expected for the full financial year. The estimated average annual tax rate used is 25.2% (2016: 27.2%).
7. DISCONTINUED OPERATIONS
There are no discontinued operations in the current period. The loss from discontinued operations in the periods ended 30 June 2016 and 31 December 2016 relates to the Group's operations in Hong Kong which were closed. In accordance with IFRS5 Non-current Assets Held for Sale and Discontinued Operations, the income statement for the period ended 30 June 2016 has been re-presented to include income and expenses of the discontinued operations within loss from discontinued operations.
An analysis of the results from discontinued operations is as follows:
|
|
Unaudited Six months ended 30 June 2017 £'000 |
Unaudited Six months ended 30 June 2016 £'000 |
Audited Year ended 31 December 2016 £'000 |
|
|
|
|
|
Revenue |
|
- |
121 |
339 |
Cost of sales |
|
- |
(61) |
(162) |
|
|
|
|
|
Gross Profit |
|
- |
60 |
177 |
Administrative expenses |
|
- |
(159) |
(498) |
|
|
|
|
|
Loss from discontinued operations before and after taxation |
|
- |
(99) |
(321) |
|
|
|
|
|
Cash flows from discontinued operations are as follows:
|
|
Unaudited Six months ended 30 June 2017 £'000 |
Unaudited Six months ended 30 June 2016 £'000 |
Audited Year ended 31 December 2016 £'000 |
|
|
|
|
|
Operating cash flow |
|
157 |
57 |
(82) |
Investing cash flow |
|
- |
- |
(1) |
Financing cash flow |
|
- |
- |
(13) |
|
|
|
|
|
|
|
157 |
57 |
(96) |
|
|
|
|
|
8. DIVIDEND
|
Date Paid |
Unaudited Six months ended 30 June 2017 £'000 |
Unaudited Six months ended 30 June 2016 £'000 |
Audited Year ended 31 December 2016 £'000 |
|
|
|
|
|
|
|
|
|
|
Final dividend 2015 - 2.02p per share |
27 May 2016 |
- |
1,727 |
1,727 |
Interim dividend 2016 - 1.00p per share |
4 November 2016 |
- |
- |
869 |
Final dividend 2016 - 2.40p per share |
26 May 2017 |
2,478 |
-- |
- |
|
|
|
|
|
|
|
2,478 |
1,727 |
2,596 |
|
|
|
|
|
An interim dividend of 1.05p (2016: 1.00p) per ordinary share is declared and will be paid on 3 November 2017 to all shareholders on the register on 6 October 2017. In accordance with IAS 10 Events after the Balance Sheet Date, this dividend has not been recognised in the accounts at 30 June 2017, but will be recognised in the accounting period ending 31 December 2017.
9. EARNINGS PER SHARE
|
Unaudited Six months ended 30 June 2017 £'000 |
Unaudited Six months ended 30 June 2016 £'000 |
Audited Year ended 31 December 2016 £'000 |
|
|
|
|
Profit/(loss) attributable to owners of the parent |
2,185 |
(939) |
(2,827) |
|
|
|
|
Loss from discontinued operations |
- |
99 |
321 |
|
|
|
|
Profit/(loss) attributable to owners of the parent from continuing operations |
2,185 |
(840) |
(2,506) |
|
|
|
|
Adjustments to earnings: |
|
|
|
Restructuring costs |
281 |
647 |
1,201 |
Net (credit)/charge for VAT and related costs |
(259) |
2,053 |
1,798 |
Post-employment restrictions settlement and related costs |
37 |
1,067 |
1,158 |
Start-up losses |
832 |
518 |
977 |
Acquisition costs |
139 |
- |
- |
Amortisation of intangible assets |
261 |
146 |
294 |
Acquisition related employee remuneration expenses |
425 |
525 |
1,176 |
Share-based payments charge |
229 |
138 |
349 |
Impairment of goodwill |
- |
- |
4,937 |
Tax thereon |
(658) |
(1,125) |
(1,804) |
|
|
|
|
Headline earnings for the period |
3,472 |
3,129 |
7,580 |
|
|
|
|
|
|
|
|
|
30 June 2017 number of shares |
30 June 2016 number of shares |
31 December 2016 number of shares |
Weighted average number of ordinary shares used in basic earnings per share |
101,128,482 |
86,903,491 |
87,565,662 |
|
|
|
|
Dilutive effect of securities: |
|
|
|
Share options |
1,459,014 |
705,469 |
1,257,984 |
Deferred consideration shares |
77,790 |
473,958 |
593,786 |
|
|
|
|
Weighted average number of ordinary shares used in diluted earnings per share |
102,665,286 |
88,082,918 |
89,417,432 |
|
|
|
|
Basic earnings/(loss) per share |
|
|
|
From continuing operations |
2.16 p |
(0.97)p |
(2.86)p |
From discontinued operations |
- |
(0.11)p |
(0.37)p |
Total basic earnings/(loss) per share |
2.16 p |
(1.08)p |
(3.23)p |
|
|
|
|
Diluted earnings/(loss) per share |
|
|
|
From continuing operations |
2.13 p |
(0.97)p |
(2.86)p |
From discontinued operations |
- |
(0.11)p |
(0.37)p |
Total diluted earnings/(loss) per share |
2.13 p |
(1.08)p |
(3.23)p |
In addition to basic and diluted earnings/(loss) per share, headline earnings per share, which is a non-GAAP measure, has also been presented.
Headline earnings per share |
|
|
|
Headline basic earnings per share |
3.43 p |
3.60 p |
8.66 p |
Headline diluted earnings per share |
3.38 p |
3.55 p |
8.48 p |
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year, excluding treasury shares and shares in employee benefit trusts, determined in accordance with the provisions of IAS 33 Earnings per Share.
Diluted earnings/(loss) per share is calculated by dividing profit/(loss) attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year adjusted for the potentially dilutive ordinary shares for which the conditions of issue have substantially been met but not issued at the end of the year.
The Group's potentially dilutive shares are shares expected to be issued as deferred consideration on acquisitions and share options issued.
Headline earnings per share is calculated using headline earnings for the period, which excludes the effect of restructuring costs, start-up losses, amortisation of intangibles, impairments charges, acquisition accounting adjustments, share option charges, fair value gains and losses on derivative financial instruments and the charge for VAT and related costs.
10. GOODWILL
|
Unaudited Six months ended 30 June 2017 £'000 |
Unaudited Six months ended 30 June 2016 £'000 |
Audited Year ended 31 December 2016 £'000 |
Cost |
|
|
|
At the beginning of period |
87,149 |
86,052 |
86,052 |
Additions |
3,626 |
- |
- |
Exchange differences |
(461) |
564 |
1,097 |
|
|
|
|
At the end of the period |
90,314 |
86,616 |
87,149 |
|
|
|
|
Amortisation |
|
|
|
At the beginning and the end of the period |
17,316 |
12,379 |
12,379 |
|
|
|
|
Impairment charge |
- |
- |
4,937 |
|
|
|
|
At the end of the period |
17,316 |
12,379 |
17,316 |
|
|
|
|
Net book value |
|
|
|
At the end of the period |
72,998 |
74,237 |
69,833 |
|
|
|
|
At the beginning of the period |
69,833 |
73,673 |
73,673 |
|
|
|
|
11. ACQUISITIONS
Defined Health
On 1 February 2017, the Group acquired the trade and assets of Defined Health Research Inc. and Cancer Progress LLC (together "Defined Health"), a healthcare consulting business based in New Jersey, USA.
Defined Health has contributed £3.1m to revenue and £0.2m of profit before tax for the period between date of acquisition and the balance sheet date. Had Defined Health been consolidated from 1 January 2017, the consolidated income statement for the period ended 30 June 2017 would show revenue of £79.1m and profit before tax of £2.7m.
The provisional fair value of net assets at acquisition date is as follows:
|
|
|
£'000 |
|
|
|
|
Client relationships |
|
|
417 |
Property, plant and equipment |
|
|
6 |
Trade and other receivables |
|
|
885 |
Cash and cash equivalents |
|
|
806 |
Trade and other payables |
|
|
(432) |
|
|
|
________ |
Net assets acquired |
|
|
1,682 |
|
|
|
|
Goodwill arising on acquisition |
|
|
3,626 |
|
|
|
________ |
|
|
|
|
Net assets acquired |
|
|
5,308 |
|
|
|
|
|
|
|
|
The fair value of trade and other receivables includes trade receivables with a fair value of £674,000. The gross contractual value amount of trade receivables is equal to the fair value.
Goodwill comprises of the value of expected synergies and other opportunities arriving from the acquisition, management knowhow, the skilled workforce employed by Defined Health and other intangible assets that do not qualify for separate recognition.
The fair value of the consolidation paid is as follows:
|
|
|
£'000 |
|
|
|
|
Cash consideration |
|
|
4,164 |
Issue of ordinary shares |
|
|
400 |
Deferred consideration |
|
|
744 |
|
|
|
________ |
Total consideration |
|
|
5,308 |
|
|
|
|
12. SHARE CAPITAL
|
Unaudited At 30 June 2017 £'000 |
Unaudited At 30 June 2016 £'000 |
Audited At 31 December 2016 £'000 |
Allotted, issued and fully paid |
|
|
|
104,122,969 ordinary shares of 10p each |
10,412 |
8,726 |
8,760 |
|
|
|
|
|
|
|
|
Between 1 January 2016 and 30 June 2017 the following shares were issued:
During the six months ended 30 June 2017 259,751 (year ended 31 December 2016: 1,607,523) were issued to certain employees of the Group in relation to the share option schemes at exercise prices of between 10.0p and 50.0p per share.
The Group owned 453,000 of its own shares over the whole period and these shares are held as treasury shares. The company has a right to re-issue these shares at a later date.
On 14 May 2016, 109,529 new ordinary shares of 10p each were issued at 91.3p to vendors of iS Healthcare Dynamics Limited, pursuant to the terms of the share purchase agreement of that company.
On 6 June 2016, 226,642 new ordinary share of 10p each were issued at 98.4p to vendors of Opticomm Media Limited pursuant to the terms of the share purchase agreements of that company.
On 1 February 2017, 5,154,640 new ordinary shares of 10p each were issued at a placing price of 97.0p to new and existing shareholders.
On 1 February 2017, 398,904 new ordinary shares of 10p each were issued at 100.3p to vendors of Defined Health Research Inc and Cancer Progress LLC, pursuant to the terms of the asset purchase agreement with those companies.
On 17 February 2017, 10,309,279 new ordinary shares of 10p each were issued at a placing price of 97.0p to new and existing shareholders.
On 2 May 2017, 403,903 new ordinary shares of 10p each were issued at 123.0p to vendors of iS Healthcare Dynamics Limited and certain employees of the Group, pursuant to the terms of the share purchase agreement of iS Healthcare Dynamics Limited.
13. CASH GENERATED FROM OPERATIONS
|
Unaudited Six months ended 30 June 2017 £'000 |
Unaudited Six months ended 30 June 2016 £'000 |
Audited Year ended 31 December 2016 £'000 |
|
|
|
|
Profit/(loss) on continuing operations before taxation |
2,698 |
(793) |
(1,686) |
|
|
|
|
Loss from discontinued operations |
- |
(99) |
(321) |
Financing income |
- |
- |
(11) |
Finance costs |
157 |
126 |
304 |
Depreciation |
649 |
598 |
1,285 |
Amortisation of intangible assets |
470 |
334 |
680 |
Impairment of goodwill |
- |
- |
4,937 |
Share-based payment expense |
229 |
138 |
349 |
Profit on disposal of property, plant and equipment |
(13) |
(15) |
(26) |
(Decrease)/increase in acquisition related employee remuneration payable |
(1,879) |
525 |
953 |
Decrease in provisions |
- |
(3,209) |
(3,209) |
|
|
|
__________ |
Operating cash flow before movements in working capital |
2,311 |
(2,395) |
3,255 |
|
|
|
|
Decrease/(increase) in trade and other receivables |
2,463 |
2,463 |
(3,233) |
(Decrease)/increase in trade and other payables |
(13,037) |
3,201 |
6,488 |
|
|
|
__________ |
Net cash (used in)/generated from operating activities before taxation |
(8,263) |
3,269 |
6,510 |
|
|
|
|
14. NET DEBT
|
|
|
|
|
Unaudited Six months ended 30 June 2017 £'000 |
Unaudited Six months ended 30 June 2016 £'000 |
Audited Year ended 31 December 2016 £'000 |
Net debt comprises of: |
|
|
|
Bank loans |
8,847 |
8,564 |
12,350 |
Loan notes |
59 |
155 |
155 |
Finance leases |
24 |
45 |
33 |
Cash and cash equivalents |
(2,144) |
(3,976) |
(7,466) |
|
|
|
|
Net debt |
6,786 |
4,788 |
5,072 |
|
|
|
|
|
|
|
|
Movements in net debt can be analysed as follows: |
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
5,094 |
1,341 |
(1,755) |
Repayment bank loans |
(3,000) |
(3,681) |
(6,681) |
Repayment loan notes |
(96) |
(77) |
(77) |
Drawdown of bank loans |
- |
2,509 |
8,509 |
Capital element of finance lease payments |
(9) |
(12) |
(24) |
|
|
|
|
Movements in net debt from cash flows |
1,989 |
80 |
(28) |
|
|
|
|
Other movements: |
|
|
|
Foreign exchange |
(275) |
541 |
933 |
|
|
|
|
Total movement in net debt in the period |
1,714 |
621 |
905 |
|
|
|
|
Net debt at the beginning of the period |
5,072 |
4,167 |
4,167 |
|
|
|
|
Net debt at the end of the period |
6,786 |
4,788 |
5,072 |
|
|
|
|
15. POST BALANCE SHEET EVENTS
On 18 July 2017, the Group acquired the trade and assets of Advantage Healthcare Inc. ("Advantage"), a healthcare research and consulting firm based in New Jersey, USA for an initial consideration of US$1.5m. Further cash consideration will be paid to Advantage to the extent that the acquired net current assets are over US$0.5 million at the date of completion. In addition, up to US$3.0m may be payable, dependent on financial performance over the period from 1 July 2017 to 30 June 2021.
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