Interim Results for the 6 Months to 30 June 2016

Transcription

1 Interim Results Interim Results for the 6 Months to 30 June 2016 September 2016

2 CELLO INTRODUCTION Two businesses Cello Health and Cello Signal We supply marketing advisory services primarily to the pharmaceutical sector Global infrastructure in Europe, USA and Asia c.1000 professionals 86.7m gross profit, 10.4m headline operating profit (2015) Long term client relationships with good contracted profile and visibility Low client concentration Low gearing and low earn out profile Strong and growing dividend 2

3 FINANCIAL HIGHLIGHTS FOR H Gross profit up 4.0% to 43.5m (2015: 41.9m) Like-for-like gross profit up 2.7% Headline profit before tax 4.2m (2015: 4.2m) Headline operating margin 10.2% (2015: 10.5%) Interim dividend per share up 19.0% to 1.00p (2015: 0.84p) 2016 Net debt 4.8m (December 2015: 4.2m; June 2015: 9.8m) 3

4 SEGMENTAL ANALYSIS H H Headline Gross Profit m Headline Operating Profit m Margin % Headline Gross Profit m Headline Operating Profit m Margin % Cello Health % % Cello Signal % % Sub total % % Central cost - (1.1) - - (0.9) - Group % % Reported like-for-like gross profit growth - Health 1.5%; Signal 4.1% 4

5 CELLO HEALTH H % change Gross profit 22,162 21, % Headline operating profit 3,906 4,310 (9.4%) Margins 17.6% 19.9% - Reported like-for-like gross profit up 1.5% (H1 2015: 2.1%; FY 2015: 4.7%) Like-for-like gross profit from Consulting, Insight and Communications up 6.0% Operating margin 17.6% (2015: 19.9%) Operating margin 20.8% (2015: 21.2%) in Consulting, Insight and Communications Decline in Cello Health Consumer unit now stabilised, but unlikely to recover in 2017 Global footprint more robust, with increasing US focus Strong pharmaceutical franchise, and growing biotech client base 5

6 CELLO SIGNAL H % change 000 Gross profit 20,774 19, % Headline operating profit 1, % Margins 7.9% 4.8% - Reported like-for-like gross profit growth of 4.1% (H1 2015: 1.0%; FY 2015: 3.7%) Operating margin of 7.9% (2015: 4.8%) Strong franchise in financial services and global tech clients Increasingly international footprint, with significant investment in staff costs in US and Asia Pulsar growth to over 240 clients operationally profitable 6

7 2016 INCOME STATEMENT H m 2015 m Gross profit Headline operating profit Interest (0.1) (0.2) Headline profit before tax Restructuring costs (0.7) (0.3) VAT charges (2.1) (1.1) Start-up investment* (0.5) (0.2) BioConsulting settlement (1.1) - Acquisition related employee expense (0.5) (0.5) Amortisation (0.2) (0.3) Share Options (0.1) (0.1) Statutory (loss)/profit before tax (0.9) 1.7 *start-up investments principally comprise Cello Health BioConsulting 7

8 ONE-OFF CHARGES Restructuring 0.7m leads to higher margin, tighter management structure VAT - 2.1m Settled dispute recovery process ongoing Start-up - 0.5m start-up investment in Bio Consulting Bio Consulting - 1.1m payment to prior employer (plus costs) 8

9 2016 BALANCE SHEET 30 June June 2015 m m Goodwill Intangible assets Fixed assets Deferred tax asset Trade and receivables Cash Creditors < 1 year (43.6) (35.6) Net current assets Creditors > 1 year (10.9) (11.6) Net assets

10 DIVIDEND Interim dividend increased by 19.0% to 1.00p (2015: 0.84p) 10 year unbroken full year dividend growth record Degearing allows revision of dividend policy Aim is to distribute 40% of headline earnings DEFERRED CONSIDERATION Expected payment in May m (mainly cash) 10

11 H1 CASH FLOW AND NET DEBT 2016 m 2015 Net cash inflow/(outflow) from operating activities 3.3 (0.4) Interest (0.1) (0.1) Tax (0.5) (0.2) Capex (1.0) (0.5) m Comments Acquisitions/loan note issuance (0.3) - Share option proceeds Dividends (1.7) (1.5) Forex Movement (0.5) - Dollar denominated debt Net debt movement (0.6) (2.6) Opening net debt (4.2) (7.2) Closing net debt (4.8) (9.8) Adjusted net debt: ebitda Very strong working capital 11

12 OPERATIONAL REVIEW 12

13 CELLO HEALTH: INTRODUCTION Clinically-led commercial advisory services 22 of the top 25 global pharmaceuticals companies are clients 450 professionals (scientific and/or industry backgrounds) International footprint (US, UK) 45.5m GP, 8.8m HOP (2015) 13

14 CELLO HEALTH AN INTRODUCTION Stephen Highley - Chairman Jane Shirley - CEO, Europe Julia Ralston - CEO, USA Jon Bircher - Chief Commercial Officer Andy Brown - Finance Director CONSUMER Farnham, UK Philadelphia Boston London New York Chicago San Francisco Farnham, UK London Philadelphia London New York 14

15 WHO DO WE WORK FOR? 15

16 Our Capabilities Understanding the customer, the market, the competition and client brand performance Key decision making on strategy/execution and configuring the organisation to deliver From strategy to action; market activation CONSUMER 16

17 WHY DO CLIENTS NEED CELLO HEALTH? Development PHARMACEUTICAL COMMERCIAL LIFECYCLE Marketing 9 11 years US$ (MILLIONS) L A U N C H P A T E N T E X P I R Y TIME SALES INVESTMENT COST PRE-TAX PROFIT CONSUMER 20 year patent life 17

18 WILL THE MARKET GROW? Total WW R&D pipeline size by year ,000 Number of assets 14,000 12,000 10,000 8,000 6,000 5,995 6,198 6,416 6,994 7,360 7,406 7,737 9,217 9,605 9,737 9,713 10,452 10,479 11,307 12,300 13,718 4,000 Sources: 1. Pharmaprojects, January Analysis Group Innovation in the Biopharmaceutical Pipeline: A Multidimensional View, January ,

19 KEY COMPETITORS Company MedComm Marketing Analytical Support Accenture plc Cello Group plc Healthcare Consultancy Group (s/o Omnicom Group) HealthSTAR Communication ICON plc IMS Health inventiv Health, Inc. Medical Knowledge Group Medidata Solutions MediMedia USA, Inc. PAREXEL International Corp. Publicis Group SA UDG Healthcare plc Huntsworth Health Market Research Regulatory & Compliance Source: Brocair Partners 19

20 CELLO HEALTH GROWTH IN 2016/7 Continued addition of professionals, particularly in US Continued US office expansion Chicago, San Francisco, and Boston Investment in Market Access capability in US Investment in Biotech consulting capability in US Investment in digital communications capabilities in US and UK Push into quantitative research showing through already Launch of Pulsar Health product Consolidation of UK operations into Farnham Hub Office 20

21 CELLO SIGNAL INTRODUCTION John Rowley - CEO Minh Huynh - Finance Director Richard Marsham - Managing Partner, Edinburgh Barney Hosey - Managing Partner, Cheltenham Job Muscroft - Managing Partner, London Doug Edmonds - Managing Partner, USA AGENCY INSIGHT SPECIALIST SERVICES London New York Edinburgh London San Francisco Cheltenham Edinburgh Los Angeles London Singapore Hong Kong 21

22 CELLO SIGNAL - OVERVIEW Digital and social media marketing solutions for big corporates 500 professionals Blue chip global client base: Technology, Mobile, FMCG, Retail, Financial Services, Public Sector and Charities Solid revenue stream and visibility Consolidated office structure: Edinburgh, Cheltenham, London, US, Asia Strong technology underpinning and proprietary software licensing model Share of 2015 gross profit Signal Agency 56% Signal Specialist Services 9% Signal Insight 35% 22

23 CELLO SIGNAL INDUSTRY TRENDS Universal migration of customer acquisition and retention online Integration with large scale CRM systems Shift to continuous, big data based customer engagement Shift to social media format for data acquisition and engagement Rapid supplier consolidation Entry of large scale technology players Adobe, Salesforce.com, Microsoft and Google 23

24 CELLO SIGNAL BLUE CHIP CLIENT FRANCHISE Financial Services: Tech: Utilities: Gov & Charities: 24

25 CELLO SIGNAL A CONSOLIDATING SECTOR 25

26 PULSAR KEY NUMBERS The global social media analytics market will grow from USD 1.60 Billion in 2015 to USD 5.40 Billion by MRR growth: (YoY) 45% Monthly Recurring Revenue: (MMR) (June 2016) 252K No of clients: 242 Team: 20 people Average contract length: 11 months (*Market and markets report 2016) 26

27 PULSAR KEY CLIENTS KEY COMPETITORS Name Turnover Ownership Brandwatch 30m PE $60m investment Synthesio N/A PE $22m investment Crimson Hexagon $35m PE $11m investment Sysomos N/A PE Backed Radian 6 N/A Bought by Salesforce.com 27

28 CELLO SIGNAL GROWTH PLANS IN 2016 / 2017 Margin enhancement through efficiency gains Office consolidation Eliminate legacy resources Focus on large, complex contracts Unified offer under one brand Focus on tech client franchise Ongoing investment in tech and product Push into US market, including launch of Pulsar Support Cello Health on digital side 28

29 SUMMARY AND OUTLOOK FOR 2016 Solid growth in fee income in both Cello Health and Cello Signal Long standing client relationships remain strong and growing Rapidly increasing exposure to US market Leverage of aspects of Cello Signal into healthcare Strong balance sheet Significant dividend increase Good 2016 outlook based on current pipeline 29

30 THANK YOU Mark Scott, CEO Mark Bentley, Group Finance Director Cello Group plc Charterhouse Buildings London EC1M 7AP