Porta FY fee income grows 39 per cent but EU referendum brings 'slowdown'

Porta Communications saw fee income rise 39 per cent to £26.9m in 2015 - with growth of 14 per cent on an organic basis - although it experienced a slowdown in some project work this year ahead of the EU referendum.

The company said it planned to recruit "a number of high quality executives" this year following recent high-profile appointments, and planned to grow its share in its Redleaf agency.

Underlying earnings (EBITDA) before exceptional items such as restructuring and legal costs rose 27 per cent to £2.6m in 2015. However, pre-tax profit after adding back exceptional costs dropped by 15 per cent, from £955k to £829k.

The company said the benefits of a restructure at Newgate in late 2014, including the closure of its Brussels and Frankfurt offices, were "now starting to flow through" with new client wins towards the end of 2015. Outside the UK, Newgate had a "strong trading performance" in Australia, Hong Kong and Singapore, Porta said.

Trading at PPS – which was integrated into Newgate in the year but will retain the PPS name for the medium term at least – was "in line with management expectations".

The company said it would be acquiring a further 15 per cent of its Redleaf agency this year – it acquired a majority stake in April 2014 – taking its ownership to 66 per cent. It follows a "record year" for fee income and profits at the financial PR agency.

Among its consumer shops, Publicasity had a "strong year" under its new management team, adding 10 new brands to its roster including electronic cigarette brand Blu and German appliances manufacturer Bosch.

13 Communications increased fee income by over 50 per cent following new business wins but produced a loss on the year, "albeit substantially down on the 2014 figure". "Costs have now been brought in line with fees and the company is now trading profitably."

Meanwhile, Porta said the current year had "started well", running ahead of budget in the first quarter. It said new business at its Newgate agency had been "buoyant", despite some slowdown in project work in the UK ahead of the EU referendum.

Porta CEO David Wright said: "The strong momentum shown in the first half of 2015 continued throughout the year with gross profit (fee income) nearly 40 per cent higher and organic growth at 14 per cent – considerably higher than the sector average of low single figures."

But he added: "Although the current year has started well with growth ahead of budget in the first quarter, a slowdown in project work in the UK ahead of the EU referendum makes it difficult to predict the outcome for the next three or four months."

"Obviously if we stay in it's going to be a more positive effect than if we go out," he told PRWeek.

In March, Porta announced the appointment of MHP CEO Gavin Devine to the new role of chief operating officer. It followed the appointed of Steffan Williams as group MD last year.

Wright said the planned recruitment of "a number of high quality executives" - with two or three to be made in the coming weeks and another batch later in the year - would "inevitably... have some impact on the bottom line in the short term". However, he also expressed confidence that organic fee income growth would remain strong.

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