But the company, led by CEO Lord Chadlington, has seen revenues rise from £8.2m in 2001 to £14.5m, reflecting the acquisitions of EHPR in the UK and New York financial agency Global Consulting Group.
The company said that its core PR business remained strong and it would meet targets this year despite concerns over the war in Iraq.
'On a like-for-like basis, we are more or less where we were the year before,' said group finance director Roger Selman.
With a group margin of 18.5 per cent, profits were up at the operating level from £434,000 in 2001 to £1,263,000 in the year to December 2002.
The headline loss came as a result of exceptional items, including severance payments of almost £500,000 and abortive acquisition costs of £143,000.
Selman said the Group would hold to its target 20 per cent operating margins for the year, but that market conditions were a concern.
'The war and terrorism are issues, as are house prices. There are a lot of things in the mix which will make it difficult,' Selman said.
The group - which also includes Harrison Cowley, Counsel, Stephanie Churchill, and Woodside PR - closed down two unprofitable subsidiaries, HMC and Masterguide, in the final quarter. PR now accounts for almost 80 per cent of the group's revenues.