Porta full-year earnings hit by Brexit fears and Newgate investments

Porta Communications saw revenue rise nine per cent to £37.1m in 2016, although earnings fell, with the firm citing investments at Newgate and a Brexit-related slowdown at PPS.

Porta, which also announced that it was in discussions with potential debt financiers and investors, said underlying earnings (EBITDA) dipped 10 per cent to £2.3m last year.

The decline was "mainly because of the substantial investment made in strengthening the team at Newgate UK" and a "slowdown in activity at PPS after the Brexit referendum decision".

Newgate has announced several appointments since the start of 2016, including Gavin Devine, who combines the Newgate CEO role with COO of Porta; Bell Pottinger’s David Telling, who joined to expand its geopolitical and corporate client portfolio; and Simon Gentry, who joined from MWW as a partner.

Porta, which also owns PR shops Redleaf Communications and Publicasity, saw its pre-tax losses widen from £2.9m to £5.1m in 2016.

Meanwhile, chairman John Foley said 2017 trading performance to date was "substantially ahead of both last year and our internal expectations".

Steffan Williams, CEO, said: "Whilst the business grew organically in 2016, there is still a lot of work to be done. We have hired some excellent people and we now need to give them the very best chance to flourish. We also need to make sure that we act in as joined-up a manner as possible across the group businesses and across geographies.

"2017 has started well, and from this month we have a new management team in place with a new and collaborative culture that is committed to taking Porta to the next level."

Net debt at the end of 2016 was £7.6m, against £6.2m one year earlier. Porta said it is seeking up to £3m in equity funding "to support ongoing growth", and "discussions with strategic investors are underway to enable this to happen".

The group said it would seek authority for a share issue at its forthcoming AGM to make this possible.

In addition, Porta has "reached an advanced stage of discussions with a senior debt provider" to establish a new working capital facility, it said.

Earlier this month Porta announced that executive chairman and former CEO David Wright had retired and stepped down from his role, prompting a reshuffle of senior positions.

Agency performance highlights

Newgate UK

Gross profit at integrated agency Newgate rose 23 per cent in the UK, and EBITDA improved by £1.6m. Porta said it worked on deals worth $20bn globally in 2016, with the London team working on transactions including the $6.3bn acquisition by retained client, Sompo, the Japanese insurance company; and supporting Glencore in its debt reduction strategy.

PPS

However, PPS, which was officially folded into Newgate earlier this year, "suffered badly from the impact of the EU referendum/Brexit". Porta said a number of projects, in particular relating to planning consent, were put on hold over the period.

The merger of Newgate and PPS makes it the second-largest public affairs firm in the UK, according to the new PRWeek UK Top 150 report.

Publicasity

Porta said Publicasity had "another strong financial performance", with EBITDA 26 per cent higher than in the previous year. Fee income "remained consistent". Notable wins included retailer TK Maxx, the premium bed retailer Feather & Black, German stationery giant Staedtler, and Parisian confectioner Pierre Hermé.

Redleaf

Redleaf had "another exceptional year", Porta said. Total sales grew 12 per cent and EBITDA rose 15 per cent. New retainer clients included Western Union, State Street and Allsop. Its financial team worked on such transactions as Nagatanien's purchase of Chaucer Foods and Daisy Group's purchase of Alternative Networks.


Read next: PRWeek UK Top 150: public affairs rankings 2017

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