By one estimate, global pharmaceutical research and development spend will reach $182bn (£129bn) by 2022, having risen by around 4 per cent each year since 2006. This represents a huge addressable market for Cello (CLL), the healthcare-focused advisory group. Scale is key to competing with UK rivals and larger US corporates, and the group made decent progress on this front in 2017; two acquisitions enhanced its US presence, while facilitating overall gross profit growth of 10.6 per cent to £103m.
The respective acquisitions – Defined Health and Cello Health Advantage – were integrated into Cello’s larger Health subsidiary, helping to lift gross profit there by 26.4 per cent to £60.2m. Moreover, 45.1 per cent of this profit stemmed from the US, against 35 per cent a year earlier. Still, chief executive Mark Scott says the group hasn’t yet done a truly transformational deal – Cello remains “organic plus”.
Trading was weaker for Cello’s digital business, Signal. Gross profit fell 6 per cent to £41m, partly driven by the completion of two major contracts in 2016. While Signal’s clients span various sectors, its health operations are expanding – helping explain Cello’s wider rebranding as Cello Health Group.
Analysts at broker finnCap forecast adjusted pre-tax profit of £12.4m and EPS of 8.6p for the year to December 2018, against £11.4m and 7.8p in 2017.
| CELLO GROUP (CLL) | ||||
| ORD PRICE: | 119p | MARKET VALUE: | £124m | |
| TOUCH: | 117-121p | 12-MONTH HIGH: | 137p | LOW: 116p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 79p* | NET CASH: | £1.6m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 160 | 5.5 | 4.4 | 2.25 |
| 2014 | 170 | 3.8 | 2.7 | 2.60 |
| 2015 | 157 | 5.0 | 3.9 | 2.86 |
| 2016 | 165 | -1.7 | -2.9 | 3.40 |
| 2017 | 169 | 5.8 | 4.1 | 3.50 |
| % change | +3 | - | - | +3 |
| Ex-div: | 3 May | |||
| Payment: | 25 May | |||
| *Includes intangible assets of £74.1m, or 71p a share | ||||
