Market research and consultancy company Cello's (CLL) consumer business enjoyed a dramatic turnaround during the second half and its more dynamic health division kept growing. Strip out a slew of restructuring costs, impairment charges and start-up losses and pre-tax profit was flat at £7m, but momentum from the final quarter has spilled into 2013 and management's confidence was backed-up by a big dividend hike.
Underlying operating profit at the core health business grew almost 7 per cent to £6.5m, as big drug companies like Johnson and Johnson and Novartis increasingly sought help from Cello's growing pool of medical experts and consultants. Another 25 were employed last year, yet the operating margin held steady at 20.8 per cent and expansion in the US is gathering pace. Winning more high value integrated contracts helps. So do acquisitions, like January's purchase of consultancy Mash Health, and more deals are likely. Work on contracts with British Gas, Heathrow Express and Ben & Jerry's revived the consumer unit and left profits there down just 12 per cent at £3m. There's a big drive here towards social media-led and web-based tools and a higher-margin business should emerge over the next few years.
Broker N+1 Singer expects adjusted pre-tax profit of £7.7m in 2013 and adjusted EPS of 6.6p (from £7m and 5.97p in 2012).
CELLO (CLL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 43.5p | MARKET VALUE: | £35.8m | |
| TOUCH: | 42-45p | 12-MONTH HIGH: | 45.5p | LOW: 32.5p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 272 | |
| NET ASSET VALUE | 80p* | NET DEBT: | 13% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 138 | 4.20 | 7.35 | 1.25 |
| 2009 | 124 | -5.75 | -11.3 | 1.30 |
| 2010 | 125 | 4.93 | 5.88 | 1.43 |
| 2011 | 128 | 1.23 | -0.90 | 1.72 |
| 2012 | 135 | 1.38 | 0.16 | 2.00 |
| % change | +5 | +12 | - | +16 |
Ex-div: 29 May Payment: 5 Jul *Includes intangible assets of £72.8m, or 88p a share | ||||
