2017 FINAL RESULTS PRESENTATION MARCH 2018 CELLO GROUP PLC

Transcription

1 2017 FINAL RESULTS RESENTATION MARCH 2018 CELLO GROU LC

2 CELLO GROU LC We supply strategic advisory services to blue-chip clients primarily in the pharmaceutical and biotech sector INTRODUCTION Global infrastructure in UK and USA Long-term client relationships with good contracted profile and visibility Low client concentration Underlying technology capability and I Strong balance sheet Strong and growing dividend Expansion programme ongoing Name change to Cello Health Group plc CELLO GROU LC 2

3 CELLO HEALTH GROU LC GROU LC Lead Client Brands Significant Sub Brands CELLO HEALTH ADVANTAGE KUDOS RESEARCH CELLO DEFINED HEALTH THE VALUE ENGINEERS CELLO SIGNAL HEALTH ULSAR 2CV CELLO GROU LC 3

4 CORE CAABILITIES Core Capability Specialism Qualitative data and analysis all types, global coverage Quantitative analysis all types, global coverage Social/consumer digital/online patients, healthcare professionals Strategic marketing Brand and portfolio strategy (pre, post brand launch to loss of patent) Early product commercialisation (managed care, market access) Business science (analytics, decision support software and tools, advisory) Marketing excellence (process, organisation/people development) Strategic communication planning (medical, scientific, consumer) Medical communication gap analysis and evidence assessment Medical and health consumer marketing communications Scientific data dissemination and education ublic affairs and influencer marketing Digital planning and activation Campaign management Market research Social media analytics CELLO GROU LC 4

5 CORE CAABILITIES Core Capability 2017 Gross rofit Contribution Key Hub Locations 23% London - UK, New York - USA 18% Farnham - UK, ennsylvania - USA 19% Farnham - UK, ennsylvania - USA 40% London, Edinburgh and Cheltenham - UK CELLO GROU LC 5

6 CORE CAABILITIES RE CLINICAL HASE 1 HASE 2 HASE 3 AROVAL LAUNCH IN MARKET CELLO HEALTH ADVANTAGE CELLO SIGNAL HEALTH CELLO GROU LC 6

7 SOURCES OF COMETITIVE ADVANTAGE One brand, one team Cello Health brand BD culture Marketing out-reach Events Uniform bonus scheme Global presence Hub offices in New York, ennsylvania, London and Farnham USA 45% of Cello Health 2017 gross profits 24 out of 25 top pharma as clients GROU LC Service innovation Biotech E-Village IQ Cello Health Logic ulsar Health Signal digital capacity Collaborative culture Within Cello Health With Cello Signal Cello Academy Centres of excellence A unique fusion of advisory and delivery capability under one global lead brand across pharmaceuticals, biotech, devices and OTC CELLO GROU LC 7

8 KEY OERATIONAL DEVELOMENTS Increasing US focus 45% of Cello Health 2017 gross profit (US is c. 70% of overall health services market) Balance between pre and post launch work C. 50/50% Increased weighting to biotech and early stage Acquisition of Defined Health Addition of digital market activation capability 14% of Signal 2017 gross profits now health related Increasing and strengthening our range of services Defined Health, Cello Health Advantage, partnerships CELLO GROU LC 8

9 GROWTH DRIVERS Our clients markets are healthy - Global R&D spend growing steadily at c. 2.4% and forecast to reach $182bn* by rescription drug sales are forecast to grow at an annual compound rate of 6.5%, eventually hitting $1.06trn worldwide in 2022* - Clinical trials registrations increasing by 13% ** - 46 new drug approvals in 2017, 24 in 2008 (FDA)*** Ongoing growth of outsourcing trend by clients - ricing pressure - Technology - Data - Regulation - Best practice - Specialist expertise vs. mission critical challenges *Source: Evaluateharma 2017 **Source: Evaluateharma 2016 ***Source: fda.gov 2017 New Drug Therapy approvals CELLO GROU LC 9

10 GROWTH DRIVERS Market revolution from Rx to Cx (consumer health) Strong product pipeline: 20k+ additional pipeline opportunities sourced from repurposing existing assets, data mining existing discovery asset banks, further fueled by innovation and new discoveries Better diagnosis combined with a large level of clinical unmet need and poor compliance drives accelerated short term demand Ageing population and growing population drives long-term demand CELLO GROU LC 10

11 KEY CLIENTS Firm rojected R&D Spend by 2022* $BN Cello Health client *Source: Evaluateharma 2016 CELLO GROU LC 11

12 COMETITION Increased complexity and market growth are driving activity by larger players Major Quoted Companies Market Cap 2017 ($m) Quintile IMS Holdings 17,600 Inc Research Holdings/Inventiv 7,400 ICON lc 5,349 Medidata Solutions, Inc 4,473 AREXEL International Corporation (now acquired) 4,467 Catalent, Inc 4,223 UDG Healthcare lc 2,105 Medical Innovations Holdings, Inc 1,868 Huntsworth lc 300 Highly fragmented growth market for service supply Rapid consolidation amongst larger players Entry barriers increasing rivate equity financing roll-ups of smaller providers CELLO GROU LC 12

13 CELLO HEALTH GROU GROWTH IN 2018/19 Continued addition of professionals, particularly in the US Continued expansion in core hubs New York, Yardley, Farnham and London ush in quantitative research IQ Launch of ulsar Health product by Cello Health Logic Collaboration with Signal Health to deliver digital communication solutions in US and UK Ongoing acquisition programme, with US focus CELLO GROU LC 13

14 SUORTING CELLO HEALTH IN DIGITAL harmaceutical and biotech clients increasingly using digital engagement processes, both to gather data and disseminate data A range of specialist digital competitors emerging (Huntsworth plc) Too expensive for Cello Health to acquire businesses of scale in this space Cello Signal already has active healthcare clients in addition to deep technical capability Major strategic initiative to leverage these skills into Cello Health CELLO GROU LC 14

15 SIGNAL S RIMARY CLIENT FRANCHISES Healthcare Technology and Entertainment Utilities and Financial Services https NF and Charities CELLO GROU LC 15

16 FINANCIAL REVIEW CELLO GROU LC

17 FINANCIAL HIGHLIGHTS Gross profit up 10.6% to 102.5m (2016: 92.7m) Like-for-like gross profit up 2.5% (constant currency: 1.6%) Headline profit before tax up 11.9% to 11.4m (2016: 10.2m) Headline operating margin 11.7% (2016: 11.5%) Headline earnings per share down 8.4% at 7.93p (2016: 8.66p) Successful fund raise in January 2017 raising 14.2m (net) Two successful acquisitions in the US Good underlying cash generation Net cash 1.6m (2016: debt 5.1m) Headline tax rate drops in 2018 by c. 3 percentage points Full year dividend per share up 2.9% to 3.50p (2016: 3.40p) CELLO GROU LC 17

18 SEGMENTAL ANALYSIS Headline Gross rofit m Headline Operating rofit m Margin % Headline Gross rofit m Headline Operating rofit m Margin % Cello Health % % Cello Signal % % Sub total % % Central cost - (2.7) - - (2.6) - Group % % Like-for-like constant currency gross profit growth in Cello Health at 9.2% Like-for-like constant currency gross profit decline in Cello Signal at 6.8% 29.5% of group gross profit earnt in the US (2016: 23.3%) CELLO GROU LC 18

19 CELLO HEALTH % change Headline gross profit 60,150 47, % Headline operating profit 10,639 8, % Margins 17.7% 18.1% - Like-for-like gross profit up 10.7% Constant currency like-for-like gross profit up 9.2% Operating margin remains competitive at 17.7% Overall client base growing, especially in USA US gross profit rises to 45.1% of total (2016: 35.1%) Collaborative wins grow strongly behind the Cello Health brand Defined Health acquisition in January 2017 Cello Health Advantage acquisition in July 2017 Both acquisitions performing well CELLO GROU LC 19

20 CELLO SIGNAL % change Headline gross profit 40,961 43,615 (6.1%) Headline operating profit 3,872 4,490 (13.8%) Margins 9.5% 10.3% - Like-for-like gross profit decline of 6.5% (2016: growth of 5.5%) Constant currency like-for-like gross profit decline of 6.8% Operating margin 9.5% (2016: 10.3%) Tough comparator with large one-off projects in 2016 Trading issues within US research operations now resolved ulsar growth to 346 clients (2016: 257), 0.5m MRR Rapid growth from Signal Health CELLO GROU LC 20

21 INCOME STATEMENT 2017 m 2016 m Headline operating profit Interest (0.4) (0.3) Headline profit before tax Restructuring costs (1.9) (1.2) Credit/(charge) for VAT received/(payable) 0.2 (1.8) Start-up investment/biotech team (1.4) (2.1) Acquisition costs (0.2) - Amortisation of intangibles (0.5) (0.3) Acquisition related remuneration (1.4) (1.2) Share options (0.4) (0.4) Goodwill impairment - (4.9) Statutory profit/(loss) before tax 5.8 (1.7) CELLO GROU LC 21

22 KEY NON-HEADLINE INCOME STATEMENT ITEMS ITEM m COMMENT Restructuring costs 1.9 US Consumer research; Signal property moves VAT received 0.3 Issue now closed Start-up investment 1.4 ulsar US; Cello Health Consulting in US (now in headline) Amortisation 0.5 Slightly higher due to acquisitions Acquisition related remuneration 1.7 Slightly higher due to acquisitions CELLO GROU LC 22

23 CASH FLOW AND NET DEBT 2017 m 2016 m Operating net inflow pre VAT settlement VAT settlement - (5.2) COMMENT Net cash inflow from operating activities See overleaf Interest (0.4) (0.2) Unwinding of prior year working capital surplus, slightly higher LIBOR Tax (2.1) (1.7) Tax rate dropping in 2018 Capex (1.8) (2.2) Office moves in prior year, 0.4m on ulsar Acquisitions (5.3) - 2 acquisitions and deferred settlement Fund raise Cash raise in January 2017 Share option proceeds Dividends (3.6) (2.6) Full year cash impact of new dividend policy Net debt movement Opening net debt (5.1) (4.2) Foreign exchange differences 0.7 (1.0) Closing net cash 1.6 (5.1) Facilities of 20m; renewed until March 2022 CELLO GROU LC 23

24 OERATING CASH CONVERSION 2017 m 2016 m Headline operating profit Depreciation Amortisation Headline EBITDA Cash flow from operations COMMENT Cash impact of non-headline items Start-ups restructuring VAT settlement/receipts (0.3) VAT settlement Deferred remuneration is Health settlement Headline operating cash flow % conversion of headline EBITDA 77% 123% 2017 shows reversal of underlying 2016 surplus Good underlying operating cash characteristics CELLO GROU LC 24

25 BALANCE SHEET 31 December 2017 m 31 December 2016 m Goodwill Intangible assets Fixed assets Deferred tax assets Non-current assets Current non cash assets Cash Creditors <1 year (49.9) (49.2) Net current assets Creditors >1 year (12.8) (12.5) Net assets Total maximum commitment of $6.3m payable over 3 years from , payable largely in cash CELLO GROU LC 25

26 DIVIDEND Full year dividend increased 2.9% to 3.50p (2016: 3.40p) 11 year unbroken full year dividend growth record TAXATION Headline tax rate in 2017 of 28.2% (2016: 25.7%) Dropping in 2018 by c. 3 percentage points (US changes) CELLO GROU LC 26

27 GROU SUMMARY AND OUTLOOK FOR 2018 Strong growth in fee income in Cello Health Rapidly increasing exposure to US market, organically and via acquisitions Leverage of Cello Signal digital capabilities into healthcare Strong balance sheet Dividend continues to grow Good 2018 outlook based on current pipeline Change of name to Cello Health Group plc CELLO GROU LC 27

28 CONTACT US: MARK SCOTT, Chief Executive +44 (0) MARK BENTLEY, Group Finance Director +44 (0) Cello Group plc Charterhouse Buildings London EC1M 7A CELLO GROU LC