Porta bemoans EU Referendum impact as H1 fee income dips

Porta Communications has reported a dip in fee income in the first half of 2016, pointing to the negative impact of the EU referendum on its UK business.

'The very good start to 2016 was offset by the impact of the Brexit vote,' said Porta (©Thinkstockphotos)
'The very good start to 2016 was offset by the impact of the Brexit vote,' said Porta (©Thinkstockphotos)

Fee income (also referred to as gross profit) fell one per cent to £13.8m, and its operating loss widened from £549,000 to £632,000. Revenue, however, grew 2.6 per cent to £17.8m for Porta, which owns PR shops including Newgate Communications, PPS Group, Publicasity, Redleaf and Thirteen.

Underlying earnings (EBITDA), excluding factors such as acquisitions and restructuring costs, fell around 30 per cent to £936,000, although Porta said the figure would be virtually unchanged after adding back a £120,000 impairment charge relating to a loan.

"The very good start to 2016 for Porta was offset by the impact of the Brexit vote in the UK," the company stated.

"This undoubtedly had a negative effect on all corporate decision-making in general and on the housing and property market in particular. The number of IPOs diminished significantly and our PPS business - the market leader in property with an emphasis on housing - was adversely affected."

In the UK communications arm, the housing and property sectors accounted for five per cent of gross profit in H1, down from nine per cent in the same period last year. Porta cited the "slowdown" in project work in particular around the Brexit vote on 23 June.

However, business has "picked up noticeably since", citing work on activities including Samsonite’s acquisition of TUMI, Glencore’s sale of a partial stake in its Agri business, Blue Prism’s IPO, and its increased focus on pensions advisory work.

Porta said the pipeline of new client prospects and high-profile hires for both Newgate and PPS has "strengthened significantly" in the last couple of months, while Publicasity had a "solid" six months and corporate and financial shop Redleaf performed "extremely well" in the period.

New clients have included the Rugby Football Union, Marlborough College and Cambridge University (PPS), Bosch and Siemens owner BSH Group (Publicasity), and BDO International, Caxton FX and IG Design Group (Redleaf).

Elsewhere, Porta pointed to "excellent results" in Australia, where it plans to "significantly increase the size of the business". Hong Kong and Singapore "performed really well in some difficult markets".

Porta said the outlook for the future is "undoubtedly strengthening all the time now that the Brexit vote is behind us".

The company also announced this morning that Brian Blasdale is to step down as a non-executive director on 30 November, with John Foley to join as a non exec. Foley has more than 27 years’ experience in listed companies, and currently chairs the AIM-listed niche services provider Premier Technical Services Group, and Servoca, the staffing products and outsourcing provider.

Recent appointments at Porta have included former MHP chief executive Gavin Devine, who joined this year as chief operating officer, and former Finsbury partner Charlie Chichester, who now heads Porta’s financial practice in London.

Other listed marcoms groups have played down the impact of the EU Referendum in their recent results. M&C Saatchi CEO David Kershaw said he didn't expect it to hit the business in the next two to three years, while MSLGroup owner Publicis has said it "should not be heavily impacted" by Brexit.

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