Porta Communications : Interims results for the six months ended 30 June 2017
29 September 2017
Porta Communications Plc
(“Porta” or the “Company” or the “Group”)
Interim Results for the six months ended 30 June 2017
Porta Communications Plc (AIM: PTCM) is pleased to announce its unaudited interim results for the six months ended 30 June 2017.
Revenue growth of 9% on HY 2016, to £19.44m (HY 2016: £17.80m)
Gross profit increased by 20% to £16.48m (HY 2016: £13.76m)
Adjusted headline EBITDA1up by 24% at £1.16m (HY 2016: £0.94m)
Reported EBITDA2up by 56% at £1.08m (HY 2016: £0.69m)
Loss Per Share30.6p (HY 2016: 0.6p)
Net debt £10.53m (FY 2016: £7.65m)
Adjusted headline EBITDA excludes acquisition and restructuring costs, exceptional legal and professional costs, share based payments, gain on acquisition, security impairment, revaluation of contingent consideration, provision of vendor loan guarantee and non-recurring property costs
Reported EBITDA after all costs
Loss per share on continuing and discontinued operations
Half Year Highlights
Revenue growth is all organic with no acquisitions in the period
Strong trading performances from Newgate Australia, Newgate Singapore, Publicasity and Redleaf Communications, with Asia-Pacific region revenues ahead 55% against HY 2016
Acquired additional 15% of Redleaf in June, taking shareholding to 81%
£3.3m RCF secured with Clydesdale Bank plc
Post Period and Outlook
New Board in place to lead the Company to the next stage of development and profitability
Announcement of strategic partnership with SEC S.p.A in conjunction with £3m equity investment
Acquired additional 4.4% of Newgate Australia in August, taking shareholding to 62%
Current trading performance ahead of 2016
Net debt reduced to £8.03m as at 31 August 2017
Steffan Williams, CEO of Porta Communications Plc, commented:
“Porta is in the next phase of its development. In addition to the solid first half performance and the successful ongoing strengthening of our balance sheet, we have made a number of changes to the board and management team which are having a positive effect on the performance of the business. The Group is trading ahead of last year and we look forward to building on the strong progress made in the first half.”
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The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
Porta Communications Plc Steffan Williams, CEO Rhydian Bankes, CFO www.portacomms.com
+44 (0) 20 7680 6550
Grant Thornton UK LLP (Nominated Adviser)
Philip Secrett Samantha Harrison Daniel Bush
+44 (0) 207 383 5100
N+1 Singer (Broker) James Maxwell Lauren Kettle
+44 (0) 20 7496 3000
Newgate Communications (Media Enquiries)
Bob Huxford Adam Lloyd James Ash
+44 (0) 20 7680 6550
Notes to Editors
Porta is a fully integrated communications and marketing group with specialisms including financial, corporate and consumer public relations, public affairs and research and multi-capability marketing, brand and creative communications.
The group has offices in Abu Dhabi, Beijing, Brisbane, Bristol, Canberra, Cardiff, Edinburgh, Hong Kong, London, Manchester, Melbourne, Perth, Singapore and Sydney.
The brands and companies it owns are Newgate Communications, Redleaf Communications, Publicasity, 2112 Communications and Summit Marketing Services.
Porta Communications’ corporate website is www.portacomms.com
Chairman and CEO Review
The Company has made good progress in the first half of 2017, delivering a continued improvement in its financial performance, with strong organic growth driving increased revenues and profitability ahead of the previous year.
The Board has also successfully executed its strategy, as reported on 11 May 2017 in the Group’s Full Year results, to strengthen the balance sheet and on 8 June 2017 announced the £3.30m revolving credit facility with Clydesdale Bank (“Clydesdale RCF”). Post the period end, the Company announced the £3m strategic equity investment from SEC S.p.A (“SEC”). This investment not only provides additional working capital to support the development and growth of a number of subsidiary companies but also enabled the Board to reduce debt to £8.03m as at 31 August 2017 and refinance its existing debt balance with Retro Grand Limited and Hawk Investment Holdings Limited at a much-reduced annual interest rate of 8%, down from 12%.
Revenue of £19.44m was 9% higher than the previous year (HY 2016: £17.80m). Gross profit increased by 20% to £16.48m (HY 2016: £13.76m). Adjusted headline EBITDA increased by 24% to £1.16m (HY 2016:
£0.94m) and Reported EBITDA increased by 56% to £1.08m (HY 2016: £0.69m). Amortisation and depreciation of £1.16m, as well as finance costs of £1.02m (which includes £0.31m of costs related to the Clydesdale RCF), broadly represent the difference between the positive Adjusted Headline EBITDA and the loss before taxation on continuing operations, which reduced 7% to £1.10m (HY 2016: £1.18m loss). The loss per share on continuing operations was 0.6p (HY 2016: continuing operations 0.5p loss; discontinued operations 0.1p loss).
The large movement in trade and other receivables in the period is in part a result of netting off the confidential invoice discounting facility (“CID”) within trade and other receivables in previous periods. With the inception of the Clydesdale RCF, the outstanding balance on the CID of £1.14m was repaid, causing an immediate uplift of £1.14m in trade and other receivables outstanding to the Company. The bulk of the rest of the movement is mainly as a result of a significant billing month in June for Newgate Australia, which similarly caused a decrease in work in progress, but has since returned to more reflective levels when looking alongside the significant top line growth.
Porta was established with the aim of creating an integrated international communications and marketing group with clear synergies between each business and office. The Group aims to recruit the best available talent in its sectors and to target ever stronger client opportunities.
Since the period end, Porta has entered into a Commercial Agreement with SEC (following their £3m investment) under which we will share business opportunities and platforms and leverage the capabilities of both companies to strengthen their respective positions in the public relations market. The agreement will enable SEC and Porta to approach the market as a global partnership, offering a broader skill-set to clients across a greater geographical reach than either company is currently able to provide on its own. Porta and SEC have established a collaboration team as a central marketing and new business function to facilitate the development of joint new business opportunities, to share best practices and to act as a conduit for future collaborative activities. The work of the collaboration team will be coordinated by the CEO of Porta and by the CEO of SEC.
During 2017 we continue to take meaningful steps towards achieving our aim of realising the synergies and commercial opportunities that our multi stakeholder, cross-border business provides and to continue drawing on the senior firepower of the Company and strengthening our balance sheet. These actions are reflected in the progress that we have made in the first half of 2017. Going forward, working groups have
been established with senior management at Porta, each with the remit of addressing an area of the business which we believe with greater focus, will benefit the overall performance of the Group for all stakeholders.
Our public relations and communications offering, which consists of Newgate Communications, Publicasity and Redleaf Communications, reported significant growth in gross profit which is up 25% compared to the first half of 2016. Most of that growth has come from our Asia-Pacific businesses which achieved a gross profit increase of 58%.
Newgate Australia has been our most successful start-up and continues to perform well. The key to the success of Newgate Australia is the integrated offering of financial and corporate communications, public affairs and research. The business delivered the highest top line growth in the Group of 45% from HY 2016. This is profitable growth as the business continues to report good margins and improve on its profitability which has increased by 142% from the 2016 interims. Newgate Australia has exceeded budget in the first six months and continues to increase headcount to service the gross profit growth.
In addition to recently launching the EngageComm business in Australia, aimed at supporting the infrastructure investment program in New South Wales and Victoria, Newgate Australia has recently opened an office in Perth which will service clients in Western Australia.
In August, we announced that we acquired an additional 4.428% of Newgate Australia, taking our shareholding in this company to 62.29%.
Newgate Singapore also showed robust revenue growth of 23% compared to HY 2016 and continues to win market share. Singapore increased its profitability by 43% and is ahead of budget. The business has been running an ongoing robust recruitment process as it continues to grow.
Newgate Hong Kong
Despite operating in what is currently a difficult market, Newgate Hong Kong continues to perform well. The business is ahead of budget and has increased profitability by 13% compared with the 2016 interims.
We have completed the integration in the UK of Newgate Communications and PPS Group (now the Newgate Engage practice). The combined Newgate UK entity has a unique market positioning in being able to deliver financial PR and IR, corporate PR and media relations, public affairs, local stakeholder engagement and regional PR. We believe this is a compelling proposition for clients and potential clients.
The business was subject to some degree of restructuring in the Newgate Engage practice in reaction to the slowdown it experienced last year in the run up to and in the immediate aftermath of the referendum on Brexit, particularly in terms of project work.
The profile of Newgate UK has grown, in part due to the high-profile hires made. As a result of these, and other steps forward in the business, the pipeline of new client prospects has been significantly strengthened.
Redleaf Communications has performed well and delivered strong margins. The business reported growth in gross profit of 23% and profitability of 89% compared to HY 2016.
In June, we announced that we acquired an additional 15% of Redleaf which increased our shareholding to 81%.
Porta Communications plc published this content on 29 September 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 29 September 2017 08:29:04 UTC.