Porta: earnings 'ahead of expectations' amid cost cutting at Newgate London

Porta Communications says its performance in the first half of the year was ahead of management expectations in terms of underlying earnings (EBITDA), amid cost cutting at Newgate in the UK.

In a statement to the stock market this morning, Porta chairman John Foley said that as anticipated in its full year results announcement, "the consolidation of the cost base and operating structures of certain UK companies did impact first half performance".

He said adjusted EBITDA is expected to be "no more than 15 per cent lower" than the same period in 2017.

As a result of the consolidation, the cost base of the UK business was reduced by £1.9m in the full year, and since then "a further £1m of non-performing costs have been removed".

A spokesman for Porta, which owns PR agencies Newgate and Publicasity, told PRWeek that cost cutting has focused on Newgate’s London operations. The spokesman said there haven't been redundancies, but rather some individuals have left and their roles haven't been replaced. There has been no cut back on services, he added.

He said Newgate London, which is being merged with sister consultancy Redleaf, continues to hire.

Foley said the "new management team is making great progress" and "the group now has a much stronger and more appropriate foundation from which to deliver future profitable trading growth."

He stated the firm is also having "positive ongoing discussions" with its lender, Retro Grand Limited, regarding the refinancing of its £5.2m loan that matured on 29 June 2018, and "expects to provide the market with a further update in due course".

Porta saw revenue rise eight per cent to £40.3m in 2017. Underlying earnings increased 20 per cent to £2.8m, while gross profit was up 15 per cent to £34.2m.

One year ago Porta agreed to sell a 19.3 per cent stake to Italian PR firm SEC for £3m.

This article was updated on Thursday to include details of the cost cutting.

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