Marketing specialist Cello has mitigated the loss of a large contract and public sector spending pressures through the ongoing development of its research and consulting (R&C) business. Chief executive Mark Scott says efforts will remain on expanding the division's international footprint and by maintaining a focus on pharmaceutical work (30 per cent of total income and 45 per cent of R&C activity). He also notes that forward bookings are "very good".
Mr Scott says new contract win momentum in the pharmaceutical and healthcare sector remains strong and highlights that half of the unit's sales are derived overseas. Revenues from the unit slipped 1.3 per cent to £31m in the six-month period, but higher margins drove operating profits up 13.6 per cent to £3.7m and helped offset the loss of the large Tesco deal, which was flagged in an earlier trading update.
Marketing business Tangible had a more difficult period on the back of continued public sector spending cuts. So, despite sales ticking up from £30.1m to £32m, margins slumped from 7.2 per cent to 3.9 per cent, which meant operating profits halved to £0.4m. Helped by new contract wins, trading in the second half is expected to be more robust and margins should also improve after costs were taken out of the business.
Analysts at Altium Securities are expecting full-year adjusted EPS of 6.6p (7.2p for 2010).
CELLO GROUP (CLL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 35p | MARKET VALUE: | £27.4m | |
| TOUCH: | 33-37p | 12-MONTH HIGH: | 62p | LOW: 30.25p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 87p* | NET DEBT: | 16% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net dividend per share (p) |
|---|---|---|---|---|
| 2010 | 61.5 | 2.62 | 3.17 | 0.53 |
| 2011 | 62.9 | 2.19 | 1.96 | 0.55 |
| % change | +2 | -16 | -38 | +5 |
Ex-div: 7 Dec Payment: 6 Jan *Includes intangible assets of £79.4m, or 101p a share | ||||
