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Interim Results
Proactive
One2One Forum
6th October 2016
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
SEGMENTAL ANALYSIS
2015 2014
Headline Gross Profit
£m
Headline Operating
Profit £m
Margin
%
Headline Gross Profit
£m
Headline Operating
Profit £m
Margin
%
Cello Health 44.5 8.8 19.7% 40.0 8.5 21.2%
Cello Signal 41.6 3.9 9.5% 39.5 3.4 8.7%
Sub total 86.1 12.7 14.7% 79.5 11.9 14.7%
Central cost - (2.3) - - (2.1) -
Group 86.1 10.4 12.1% 79.5 9.8 12.3%
3
CELLO HEALTH 2015 2014 % change
£’000
Headline Gross profit 44,496 39,966 11.3% Headline operating profit 8,779 8,464 3.7%
Margins 19.7% 21.2% -
• Like-for-like gross profit up 4.7% (2014: 3.6%) • Like-for-like gross profit up 7.6% (ex consumer) • Operating margin remains competitive • Overall client base growing, especially in USA • Collaborative wins grow strongly behind the Cello Health brand • Biotech client base growing, especially in USA • Start-up office making progress in Boston • Continued client led expansion underway in Chicago and San Francisco • Consumer area tougher, impacting margin slightly
4
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
5
DEFERRED CONSIDERATION
• Expected payment in May 2017 £2.8m (mainly cash)
6
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)
7
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
8
WHO DO WE WORK FOR ?
9
CONSUMER
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
Our Capabilities
WHY DO CLIENTS NEED CELLO?
10
From 10-15k molecules to 1
Cost of $1.4bn – $4bn (approx.)
Only 1 in 3 L
A U
N C
H
P A
T E
N T
E
X P
I R
Y
PHARMACEUTICAL COMMERCIAL LIFECYCLE
US$
(M
ILLI
ON
S)
SALES INVESTMENT COST PRE-TAX PROFIT
TIME
9 – 11 years
Dev’t Marketing
20 year patent life
THIS IS KEY
ESSENTIAL TO GET IT RIGHT EARLY
THIS IS WHERE DEFINED
HEALTH FITS!
11
WILL THE MARKET GROW?
Sources: 1. Pharmaprojects, January 2016 2. Analysis Group Innovation in the Biopharmaceutical Pipeline: A Multidimensional View, January 2013.
5,99
5
6,19
8
6,41
6
6,99
4
7,36
0
7,40
6
7,73
7
9,21
7
9,60
5
9,73
7
9,71
3
10,4
52
10,4
79
11,3
07
12,3
00 13
,718
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Nu
mb
er o
f as
sets
Total WW R&D pipeline size by year 2001–2016
KEY COMPETITORS
Company MedComm Marketing Analytical
Support
Market
Research
Regulatory &
Compliance
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
12 Source: Brocair Partners
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
13
CELLO SIGNAL – INTRODUCTION
14
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
Edinburgh Cheltenham
London
London New York
San Francisco Los Angeles Singapore Hong Kong
London Edinburgh
CELLO SIGNAL – BLUE CHIP CLIENT
FRANCHISE
• Financial Services:
• Tech:
• Utilities:
• Gov & Charities:
15
PULSAR KEY NUMBERS
16
The global social media analytics market will grow from USD 1.60 Billion in 2015 to USD 5.40 Billion by 2020.
No of clients: 242
Average contract length:
11 months
MRR growth: (YoY) 45%
Monthly Recurring Revenue: (MMR)
(June 2016) £252K
Team: 20 people
(*Market and markets report 2016)
PULSAR KEY CLIENTS
17
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
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
18
19
THANK YOU
Mark Scott, CEO
Mark Bentley, Group Finance Director
Cello Group plc
11-13 Charterhouse Buildings
London EC1M 7AP
020 7812 8460
www.cellogroup.com
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