In recent years, trading on the Alternative Investment Market has been tough for media and marketing agencies but the chief executive of Cello Group (LON:CLL) sees no reason why the exchange can’t continue working well for his company. Mark Scott brought Cello to AIM in November 2004 and has since pulled off a string of buy-and-build deals that have strengthened the group’s position as a major player in market research, particularly in pharmaceuticals. For the former operations director at media giant Wpp Group (LON:WPP), the economic downturn asked some testing questions in terms of strategy and cost control, but with first half figures to June showing a welcome surge in revenues and profits, he is confident that aggressive growth is back on the agenda.

Cello splits is business into two divisions: ‘Research and Consulting’, where it advises blue chip clients around the world, and its marketing arm ‘Tangible:Group’. Work with pharmaceuticals clients accounts for over 25% of total income and 41% of the group's overall research activity, while nine of its top 20 clients are in the pharmaceutical sector. With government austerity measures putting pressure on public sector spending, Scott and his finance director Mark Bentley have dampened down the group’s work on government-funded projects in favour of growth opportunities in the financial services, fast moving consumer goods (FMCG), retail and telecoms sectors. In the first half of this year the group reported an 11% rise in revenues to £61.5m and a 35% rise in pre-tax profits to £2.8m.

Mark Scott and Mark Bentley talked to Stockopedia about the impact of the economic downturn and their plans grow Cello’s market presence in the future.

Given the difficult economic conditions in 2008/2009 how satisfied are you with Cello’s latest figures?

Mark Scott: The first half has been pretty good. Coming out of recession we have seen pretty good organic growth and the revenues are growing organically at a reasonable pace. The Research and Consulting side has actually grown quite strongly – 7 - 8%, which is good. Profits have recovered strongly and a lot of it is because obviously we were very careful last year to hone our machine down and to get it running efficiently.

How much of a challenge has…

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