Porta boosts full-year earnings amid senior team reshuffle

Porta Communications saw revenue rise eight per cent to £40.3m in 2017, but has warned takings and profits will be hit in the first half of this year due to consolidation of operating structures.

Porta, which announced the departure of CEO Steffan Williams on Friday (27 April), saw its underlying earnings (EBITDA) increase 20 per cent to £2.8m, up from £2.3m the year before, while gross profit was up 15 per cent to £34.2m.

The strong performance is down to organic growth, said Porta, with no acquisitions over the reporting period.

Meanwhile, Porta saw its pre-tax loss reduce to £3m, down from £5.1m in 2016, while the group’s balance sheet was strengthened by a £3m equity investment from Italian PR firm SEC last summer and the signing of a £3.3m revolving credit facility with Clydesdale Bank.

The results are an improvement on 2016’s full year earnings, which were hit by investments at Newgate and a Brexit-related slowdown at PPS.

PPS has since been rebranded as Newgate Engage, offering property and planning expertise.

John Foley, chairman, said: "The board is confident that the group is now better positioned as a result of actions taken in 2017 which began to address its weakened balance sheet and has identified an appropriate senior management structure at board level.

"The group is now led by experienced and proven leaders who are actively involved with their senior colleagues in the development of an operational strategy to deliver long-term, profitable growth."

Following the departure of Williams, Emma Kane, chief executive of Redleaf Communications, and Brian Tyson, managing partner at Newgate Australia, have been made joint CEOs.

Kane’s first responsibility will be to combine Porta’s two largest London-based comms businesses, Newgate and Redleaf, and lead the enlarged UK agency as its chief executive.

Kane told PRWeek: "I have some very clear views on how profitability can be improved, and it is something that is firmly in my sights."

However, Foley added: "The first half of 2018 will be a period of further consolidation of the cost base and operating structures of the UK businesses and this will adversely affect revenue and profits during that period."

Agency performance highlights:

Newgate UK: Although Newgate Communications worldwide brought in 72 per cent of Porta’s gross profit, Newgate UK's performance was disappointing overall, with total gross profit down 0.2 per cent and operating costs up 11 per cent, primarily down to employment costs. In 2017, Newgate UK won a wide-ranging brief with Hovis, and was appointed by ESB, the publicly owned Irish utility to support its expansion plans in the UK.

Redleaf: During 2017, Redleaf acted for 132 clients on a retained and project basis and saw gross profit up nine per cent, while fee income exceeded £4m for the first time since the agency was set up in 2000.

Publicasity: Tesco joined the Publicasity portfolio, specifically with the brief to raise the profile of its F&F clothing range. Total gross profit was down eight per cent but adjusted EBITDA grew 20 per cent. Other clients included Bosch, Imedeen and Profile Pensions.

2112: Following a business restructure in Q4 2016, 2112 improved its financial results in 2017, with adjusted EBITDA up 354 per cent and a client roster including BNY Mellon, Hermes Investment Management and Legal & General Investment Management.

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