Cello Group fails to strike a chord despite strong results

19th Mar 2015 11:27

Results from marketing group Cello Group hit a bum note with investors despite pleasing profits growth, a healthy hike in the dividend and a solid start made to 2015.Shares in the AIM-listed company fell despite chief executive Mark Scott hailing the improvement in fortunes as Cello became established as a "global player" in the pharmaceutical space, as it was the first full year of trading under the unified Cello Health brand.Revenue rose 6.4% to £169.9m in 2014, with gross profit up 8.4% to £81m and headline profit before tax up 9.9% to £9.4m.Headline basic earnings per share climbed 12.3% to 8.14p and despite operating cash flow more than halving to £4.8m - reflecting excessive cash conversion the year before - the dividend was lifted 15.6% to 2.6p.Scott said the new unified operating structure had a strong positive impact on the ability to compete for and win large integrated contracts on a global scale, which underpinned Cello's ability to continue its rapid expansion in the core US market."The new year has started well, with good income visibility and solid momentum from the end of 2014," he added.Broker N+1 Singer noted that the HMRC VAT review of the charity clients of Cello Signal, the non-health business, looked to be better than analysts had assumed, with a lower cash cost, and the business was now trading normally after some disruption."The trading outlook is bright and Cello is continuing to progress the development of both units, Health through a planned expansion of consultancy activity and Signal through better solutions."