LONDON (Alliance News) - Cello Group PLC Thursday reported a drop in pretax profit for 2014 due to acquisition costs and provisions related to a tax case, but its profit excluding these items rose driven by the growth of its health business.
The marketing company also said it started 2015 with a good level of secured forward bookings, particularly for the health business, and has seen a good level of business wins this year. It said it is confident that expectations for the year will be met, but didn't say what those expectations are.
Cello posted a pretax profit of GBP3.8 million for 2014, down from GBP5.5 million in 2013, as it booked GBP1.3 million in costs related to acquisitions and set aside a provision of GBP2.1 million to cover an ongoing HM Revenue and Customs' review into some of its activity in the charities sector.
Excluding restructuring costs, impairments and some other non-operating items, pretax profit rose to GBP9.4 million, from GBP8.5 million, as revenue rose to GBP169.9 million from GBP159.7 million driven by both organic growth and acquisitions.
The marketing company proposed a final dividend of 1.80 pence, taking its total dividend to 2.60 pence for 2014, up from 2.25 pence a year before.
HMRC is conducting a review into one of its subsidiaries possibly not charging VAT on some items provided to its charity clients. The company said it has reached an agreement in principle with the tax man on the most material of the items, and believes that this issue is unlikely to result in further material provisions in future years.
The company has brought all of its health companies under a unified Cello Health brand, which it said contributed to it winning several joint projects towards the end of 2014. It acquired Worldwide Promedica Inc in December, which will bring new biotech clients to Cello Health and give it a physical presence on the West Coast of the US.
Cello said that expanding in the US market remains a high priority for the Cello Health business in 2015.
Its Cello Signal business continued to make solid progress, Cello said, acquiring Line Digital Ltd in April to bolster its programming and technological expertise.
The company also announced that Cello Health Chairman Stephen Highley has been appointed Chief Operating Officer for the whole Cello Group with immediate effect.
Gross profit was up 12.2% to GBP40.0 million in the health business in 2014, and rose 4.2% to GBP39.5 million in the Signal business. Headline operating profit rose 12.0% in the health business, but fell 11.5% in Signal as a high-margin contract at the end of 2013 wasn't repeated and as newly started offices in the US also weighed on margins.
"2014 was a critical year in establishing Cello Health as an integrated global player in the pharma space under a single brand and operating structure. We have been very pleased with the positive impact this has had on our ability to compete for and win large integrated contracts on a global scale," Chief Executive Mark Scott in a statement.
Shares in Cello are trading down 4.3% at 89.00 pence Thursday morning.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
Copyright 2015 Alliance News Limited. All Rights Reserved.
