final results for the year ending 31 december 2012

FINAL RESULTS FOR THE YEAR ENDING 31 DECEMBER 2012

MARCH 2013

INTRODUCTION

CELLO – AN INTRODUCTION

• We supply market research, consulting, and marketing support services to a blue chip client list in the pharmaceutical and other high margin client sectors

• Global infrastructure in Europe, USA and Asia • High quality senior management team across Health and

Consumer divisions • Positioned at the advisory, value added end of the supply

spectrum• Best in class services and digital products (e.g. Pulsar, eVillage)

RESULTS

HIGHLIGHTS

• Gross profit up 5.3% to £65.1m (2011: £61.8m)• Headline profit before tax flat at £7.0m (2011: £7.1m)• Headline operating margin 12.1% (2011: 12.6%)• Gross profit in Cello Health up 7.2% to £31.3m (2011: £29.2m)• Like-for-like gross profit in Cello Health up 2.6%• Headline operating margins in Cello Health 20.8% (2011:

20.9%)• Second half profit recovery in Cello Consumer• Full year dividend per share up 16.3% to 2.00p (2011: 1.72p)• Net debt £8.7m (2011: £7.7m)• Acquisition of Mash in January 2013

SEGMENTAL ANALYSIS

2012 2011Headline

Gross Profit

£m

Headline Operating

Profit£m

Margin %

Headline Gross Profit

£m

Headline Operating

Profit£m

Margin %

Cello Health 31.3 6.5 20.8% 29.2 6.1 20.9%

Cello Consumer 32.8 3.0 9.1% 32.6 3.4 10.4%

Sub total 64.1 9.5 14.8% 61.8 9.5 15.3%

Central cost - (1.8) - - (1.7) -

Group 64.1 7.7 12.1% 61.8 7.8 12.6%

Like-for-like gross profit growth - Health 2.6%; Consumer 0.6%

INCOME STATEMENT2012£m

2011£m

Gross profit 65.1 61.8Headline operating profit 7.7 7.8Interest (0.7) (0.7)Headline profit before tax 7.0 7.1Start-up investment (0.8) (0.2)Restructuring costs (1.3) (0.9)Acquisition costs - (0.2)Amortisation (0.9) (1.2)Employee remuneration (0.2) (0.8)Impairment of goodwill (2.5) (2.5)Facility fees written off - (0.1)Notional interest/fair value adj 0.1 -Reported profit before tax 1.4 1.2

INVESTMENT ITEMS

Cello Health £m

Cello Consumer£m

Total £m

New offices 0.2 0.3 0.5

New products 0.2 - 0.2

New business 0.1 - 0.1

Total 0.5 0.3 0.8

RESTRUCTURING ITEMS

Cello Health £m

Cello Consumer£m

Total £m

Property - 0.6 0.6

People - 0.7 0.7

Total - 1.3 1.3

BALANCE SHEET31 December 2012

£m31 December 2011

£m

Fixed assets GoodwillIntangible assets Fixed

assetsDeferred tax asset

71.0 1.82.30.5

73.82.42.20.6

Current non cash assets 29.9 29.1Cash 4.1 4.2Creditors < 1 year (30.9) (34.5)Net current assets/(liabilities) 3.2 (1.2)Creditors > 1 year (13.1) (11.6)Net assets 65.6 66.1

Acquisition related liabilities (0.4) (3.8)

NET DEBT RECONCILIATION AND CASH FLOW2012£m

2011£m Comment

Net cash inflow from operating activities 6.8 7.0 Strong cash conversion

Interest (0.9) (0.7) Facility fee paid in January 2012Tax (1.8) (1.3) Higher US tax payable

Capex (1.7) (1.0) Capex, office refurbishment and capitalised development costs

Acquisitions/cash/loan note issuance (2.0) (4.7) MedErgy deal in 2011

Share Issuance - 2.5 MedErgy deal in 2011Dividends (1.4) (0.7) Timing movementsNet debt movement (1.0) 1.1

Opening net debt (7.7) (8.8) £29.0m facility until March 2016 175 - 280 bps over LIBORClosing net debt (8.7) (7.7)

7 YEAR RECORD – DEGEARING AND DIVIDEND GROWTH

2006 2007 2008 2009 2010 2011 20120

5

10

15

20

25

30

35

40

1.00

1.20

1.40

1.60

1.80

2.00

Net debt plus earn outs (£m) Div/share (p)

Pence per share£m

OPERATIONAL REVIEW

CELLO HEALTH

• 305 professionals• Nine of top ten global pharmaceutical

companies are clients• Significant international reach (London, New

York, Philadelphia)• Strong habitual spending patterns from

global clients• Acquisition of Mash Health in January 2013

CELLO HEALTH GROWTH

0

10

20

30

40

50

60

0 10 20 30 40 50

2008

2012

2011

2010

2009

% o

f Gro

up R

even

ues f

rom

Cel

lo H

ealth

% of Group revenue outside the UK

CELLO HEALTH CLIENT BASE

• 49% of gross profit, 68% of operating profit• 9 of top 10 pharma• 22 of top 25 pharma• 31 of top 50 pharma• Excellent client continuity

CELLO HEALTH CAPABILITIES

The Value Engineers + Mash in 2013

Insight + RS Consulting

MSI + CBS

MedErgy

Consumer

Market Research: Quantitative and Qualitative

Strategic Consulting and Analytics

Medical Marketing

Full Year 2012 Gross Profits

CELLO HEALTH – DEVELOPMENTS IN 2012

• Formation of Cello Health Board • Establishment of centrally funded new

business team • Significant investment in new geographies and

new offerings

ORGANIC GROWTH INITIATIVES FOR 2012/13IQ Enlarge global

quantitative research capability

MD in place Core team in place

Cello Consumer Health Enlarge global capability to service OTC needs of clients

MD in Place Hiring core team Mash acquisition

Cello Market Access Enlarge global capability to service market access needs

SVP in place Hiring MD

Cello Business Sciences Invest in web-enabled analytical product suite

MD in place Core product programmed

(award winning)

eVillage Extend social media product suite in US

MD in place Team in place

US Health Enlarge US servicing capability

New office opened in NYC in August

CELLO HEALTH PLANNED DEVELOPMENTS IN 2013

• Integrated client facing brand structure • First full year of centralised new business

activity • Continued support of investment initiatives• Additional US expansion• Expansion in Consumer Health with

acquisition of Mash

CONTINUED CONSOLIDATION IN HEALTHCARE MARKETING SERVICES

(backed by Symphony Technology Group)

(backed by TPG Capital)

(backed by Thomas H Lee Partners)

CELLO CONSUMER

• 51% of gross profit; 32% of operating profit• 450 Professionals• Blue chip multinational client base in FMCG, mobile

telephony, gaming, retail, financial services and charities• Largest client = 4% of gross profit• Presence in UK, San Francisco, Los Angeles, New York,

Hong Kong and Singapore • Cutting edge social media tools• Cutting edge web marketing capability

CELLO CONSUMER CAPABILITIES

2CV

Face

Blonde

Bright Group

Leith Group

Market Research

Social Media Strategy and Analysis

Web Strategy and Execution

Direct and Database Marketing, Communications Planning and Execution

Direct Media Planning and Buying

Full Year 2012 Gross Profits

CELLO CONSUMER – DEVELOPMENTS IN 2012

• Formation of integrated board structure• Consolidation of sub-brands into four primary

‘engines’ – Leith Group, Bright Group, Face and 2CV• Ongoing reduction in surplus headcount and excess

space • Investment in digital social media and software

capabilities – Pulsar and Communities tools• Overseas push – USA and Asia

CELLO CONSUMER PLANNED DEVELOPMENTS IN 2013

• Rebranding of Cello Consumer as client facing brand• Focus on digital and social media front end• Continued investment in existing and new overseas

offices• Continued focus on margin improvement

SUMMARY

SUMMARY AND OUTLOOK FOR 2013

Solid growth in fee income

Long standing client relationships remain strong and growing

Increasing international exposure

Strong focus on pharmaceutical sector

Strong digital product offering

Confident outlook for 2013

THANK YOU