LONDON (Alliance News) - Healthcare marketing company Cello Group PLC on Wednesday said a ramp up of its operations in the US and a provision it booked over its ongoing case with UK tax authorities dragged its profit lower in the first half.
Cello said its pretax profit for the six months to the end of June halved to 1.7 million from GBP3.4 million a year earlier, driven by higher administrative expenses of GBP40.0 million, up from GBP35.8 million, and by a GBP1.1 million provision the company has taken related to an ongoing issue with HMRC over VAT charged to charity sector clients.
Cello is still working to resolve an issue involving one of its subsidiaries charging VAT to charity clients, having already made a GBP2.1 million provision for the issue in 2014. Cello also said HMRC has informally raised other industry-wide issues not in its guidance and said it would "vigorously contest" these should they be upheld by the taxman.
Cello's revenue was marginally lower in the half, down to GBP77.0 million from GBP78.3 million. Cello Health, its healthcare marketing business, and Cello Signal, its technical marketing services arm, both performed in line but both saw their margins squeezed by a ramp up in its US operations, which included the opening of offices across the country.
The group said it would pay an interim dividend of 0.84 pence per share, up from 0.80 pence a year earlier.
"Cello's emergence as a global provider of advisory services to the pharmaceutical and biotech industry is progressing at a rapid pace, with continuing strong growth from our core healthcare business, most notably in the US where our primary investments are being made. Cello Signal's strong digital and social media expertise will prove an invaluable addition to the Group's capabilities in the healthcare space and represents a key source of future organic growth," said Chief Executive Mark Scott.
Shares in Cello were down 8.2% to 85.40 pence on Wednesday.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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