Cello to Cut Public Sector Team Despite Growth

Market research and consulting group Cello has reported good overall growth, but says a slowdown in public sector work for its Research and Consulting division will mean redundancies there.

The group said it would 'reduce its exposure' to the sector 'given the likely long-term nature of this decline' and forecast charges of £0.7m relating to property costs and redundancies in the second half of the year.

However, Cello says new client wins across a range of sectors have compensated for the loss of public sector income. During the period, turnover in the Research and Consulting division - which includes Leapfrog, 2CV, MRUK, RS Consulting, Face, Insight Research Group and MSI - increased by 9% to £32.0m (2009: £29.4m), while operating income rose 7.5% to £18.9m (2009: £17.6m).

Headline operating profit was up 40.1% to £3.4m (2009: £2.4m) and headline operating margins improved to 17.8% (2009: 13.6%).

In the first six months of the year, pharmaceutical and health related activity accounted for 41% of the division's income (2009: 39%), while there was also growth in research spend from clients in the telecoms, retail, food and drink, and media sectors.

Cello reports that its new Manhattan office, opened in the summer, is already profitable, and providing a hub for US activities and a platform for planned further expansion. The group hopes to secure an increased share of client spend, particularly in the pharma area which accounts for 75% of its US income.

'We are now seeing a pick up from our clients in the private sector across a range of industries and we are benefiting from our strong long term relationships and international research capabilities, particularly in the pharmaceutical sector,' states CEO Mark Scott.

Other areas of activity such as competitor data collection and HR related consultancy continue to be profitable, and Cello says it is consolidating field data gathering capacity into shared resource centres, to increase efficiency and reduce costs.

Overall, for the six month period to 30 June 2010, the group reported a pre-tax profit of £2.6m compared with a loss of £3.8m the year before, and revenue increased to £61.5m from £55.4m.

Web site: www.cellogroup.co.uk .