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Cello Upbeat Despite Profit Fall
UK research and consulting group Cello has described 2009 as a 'solid year', despite posting slight declines in headline operating profit (£5.6m, from £6.5m in 2008) and operating income (£36.3m, from £37.9m in 2008).
 Overall, Cello posted a pre-tax loss of £5.8m compared with a profit of £4.2m in 2008.
CEO Mark Scott remains positive that the higher levels of client activity seen in the last quarter of 2009 and in the early months of 2010 will continue. Accordingly, the group has raised its dividend following 'a good start to 2010', which has sent shares up 15%.
Cello's Research and Consulting arm includes Leapfrog , 2CV , MRUK , RS Consulting , Face , Insight Research Group and MSI .
In 2009, the division's revenue fell to £59.8m (2008: £64.9m), while operating margins were 15.4% compared with 17.2% in 2008 as a result of reduced profit in business intelligence and in some of its public sector market research activity.
However, full year like-for-like income was down only 4.1% - much improved on the half year figure of 10.4% thanks to a second half rise of 2.6%. Cello says that the 'general hiatus' in market research activity which occurred in the middle of 2009 has now been replaced by 'more normal' levels of client activity.
Healthcare research showed 'particular resilience', representing c.38% of operating income for the division; up from 36% in 2008. The firm also reports 'continued success' in specialist FMCG research and direct marketing. Within these areas quant research, where the group has larger contract sizes, has continued to 'prove particularly resilient'.
International work now accounts for 46.4% of divisional activity (2008: 42.3%). The group plans to expand its US presence organically in 2010, and has appointed former Optimisa CEO Simon Dannatt to spearhead this push as Managing Director, Cello USA.
Scott said that a combination of very tight cost controls and a better final six months for the Research and Consulting business has given the group the confidence to increase its dividend despite a 'demanding year'. Before discontinued operations, the full year cost base for 2009 was £4.3m lower than 2008 with a substantial decrease in year-end headcount of 760 (2008: 830).
'We are leaner, more focused, with real strength in our core Research and Consulting activities - as demonstrated by the improvement in both the domestic and international positioning of our research business,' stated Scott. 'Long standing client relationships remain robust and gearing has been materially reduced. This puts us in a strong position to expand again.'
Web site: www.cellogroup.co.uk .
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