PTCM.L Regulatory News (PTCM)

PORTA COMMUNICATIONS PLC

(The "Group" or "Porta")

Interim results for the six months ended 30 June 2016

Porta Communications Plc, the international communications and marketing group, is pleased to announce its interim results for the six months ended 30 June 2016.

Solid performance despite impact of Brexit vote

Strategic progress

Financial Highlights

1 Reported EBITDA after all costs.

2 Headline EBITDA excludes acquisitions and restructuring costs, exceptional legal and professional costs, share based payments, gain on acquisition and non-recurring property costs.

3 Headline EBITDA Margin is headline EBITDA as a percentage of Gross Profit.

First half highlights:

· Gross profit down 1% despite the impact of Brexit, offset by organic growth in Asia-Pacific of 11%.

· EBITDA after all costs virtually unchanged after adding back £120k impairment of collateral held on a loan.

· Exceptional costs down 50%.

· Positive operating cash flow of £350k.

· Debt with Hawk Investment Holdings Ltd was restructured to allow roll-up of interest and deferral of redemption to April 2019.

· New clients won including Sompo Japan Nipponkoa, Permira, Legal & General Investment Management and the Rugby Football Union.

· New senior hires in the UK and Australia.

· Quality of our work recognised through awards including Best Advisor - Financial PR Agency of the Year in the UK Stock Market Awards 2016.

Board changes:

· Brian Blasdale will be stepping down from the board with effect from 30 November 2016.

· John Foley has joined the Board as a Non-Executive Director. John is an experienced PLC director with over 27 years of continuous experience on various public company boards as either Chairman, CEO, CFO or Non-Executive Director.

Commenting, David Wright said:

"After the first five months the Group was running ahead of budget. In our May 2016 trading statement, however, we indicated that the uncertainty caused by the referendum and the subsequent Brexit vote had a marked impact on project work in the UK where we are particularly exposed to the housing and property sectors.

"We have continued to attract senior, proven staff to our team due to the quality of our platform. These hires help improve the number, quality and conversion rate of our client opportunities.

"Porta is now moving into a new chapter in its development. We need to re-present the company, its strategy and to deliver greater value by building on the good work that has taken place thus far."

Enquiries

Chief Executive Report

Overview

Having backed a number of start-ups and also having completed a number of acquisitions over the years, the theme of 2016 is very definitely about consolidating what we have already built whilst adding to the senior firepower of the group in the London market - the largest global fee opportunity outside of New York.

The very good start to 2016 for Porta was offset by the impact of the Brexit vote in the UK. 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 rest of the world our businesses did well with Australia the star performer.

As reputation management becomes ever more complex and important, clients are increasingly looking for senior counsel. We are adding to the number of our senior proven staff to create a team that can help us to take Porta to the next level. In the period I was delighted to welcome Gavin Devine and Charlie Chichester in London. Gavin was hired as the COO of Porta and will help us grow the Public Affairs business in the UK and Europe. Charlie joined as Senior Partner and heads-up the financial practice in London. Both have made an immediate impact to the business. I was also very pleased to welcome Fiona Court and Nick Maher to our Australia business. Fiona, who joined us as a Director, is a specialist community relations practitioner who will work on expanding and developing a dedicated practice area in this space. Nick Maher was a former Partner of his colleagues in Australia. He is a highly experienced public affairs and communications advisor who re-joined us as a Senior Adviser. Nick recently served as a Chief of Staff for the Australian Government in infrastructure and regional development in 2013/14. He was also the Head of Government Relations for the Property Council of Australia in 2015/16, based in Canberra working on tax reform. We are increasingly attracting such talent - drawn by our integrated approach which is fit for purpose in the internet age. All of our senior hires thus far have generated fees from day one,

Communications Division

In the UK, we are integrating PPS Group and Newgate Communications to create a major new force in the corporate communications world. The combined entity will be our largest business unit, and 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 UK business was subject to some degree of slowdown in the run up to and immediate aftermath of the referendum on Brexit, particularly in terms of project work where we are relatively exposed to the housing and property sectors. These sectors accounted for approximately 9% of our group gross profit in H1 2015, decreasing to 5% in H1 2016. However, business has picked up noticeably since. Good progress has been made, with the business advising on several transactions, including Samsonite on its acquisition of TUMI, Glencore on the sale of a partial stake in its Agri business and Blue Prism on its IPO. Newgate also advised Third Energy on securing the first planning permission for shale gas exploration in five years. The business has also increased its focus on pensions advisory work over the last 12 months. The team, which includes public policy, media, member communications and training experts, has acted for several FTSE100 schemes.

On the local stakeholder engagement side, the PPS team has added new clients including the Rugby Football Union, Marlborough College and Cambridge University, the International Advanced Manufacturing Park in Sunderland and South Tyneside, and the Defence Infrastructure Organisation.

The profile of Newgate and PPS has grown in recent months, in large part due to the high profile hires we have made. As a result of these and other steps forward in the business the pipeline of new client prospects and high profile hires for both Newgate and PPS has strengthened significantly in the last couple of months.

Publicasity, which focuses on B2C and B2B markets, has been very solid throughout the first six months with an encouraging level of new business coming through towards the end of the first half, such as BSH Group (which includes brands such as Bosch, Siemens and Neff), and also won a large confidential piece of business from a major UK retailer.

Also in the UK, the corporate and financial PR business Redleaf performed extremely well with new client wins including BDO International, Caxton FX and IG Design Group Plc. Redleaf received awards for Best Advisor - Financial PR Agency of the Year in the UK Stock Market Awards 2016 (third year running), PR Agency of the Year Grant Thornton Quoted Company Awards (second year running) and PR Campaign of the Year 2016 at the Insurance PR Marketing Awards for the Insurance Made Simple (AskCindy) campaign with the CII.

Australia once again has turned in excellent results and plans are being implemented to significantly increase the size of the business. Growth has been strong across all parts of their business, in particular research and public affairs, for both state and federal Governments. Sydney Metro continues to be the agency's largest client helping with the stakeholder and community engagement and providing market research to support the development of Sydney's largest infrastructure project. Newgate Australia has been involved with the high-profile administration of electronics retailer Dick Smith, starting in January and still going strong. Australia has also assisted Uber throughout the year and has helped it to successfully become legal in a number of states.

Newgate Research in Australia was awarded the Research Industry Council of Australia (RICA) Employer of the Year Award at the national market research industry conference in Melbourne in September. RICA says the award recognises industry leaders who demonstrate a strong employer brand, a commitment to engaging and retaining talent and overall excellence in people management. Organisations have to fight hard to recruit and retain people and this award recognises those businesses that really put people at the heart of their overall strategy. Winning Employer of the Year Award is not only an acknowledgement of professional success; it is a demonstration of a long term commitment to better business outcomes. Few things can be better for employee morale, investors and most important of all, the bottom line.

Hong Kong and Singapore have performed really well in some difficult markets, reflecting the quality of both their teams and their clients.

In addition to Hong Kong's existing retained client base, a number of new retained and project clients were won during the period including Asiya Investments, BFAM (in connection with the Kaisa debt restructuring), Franklin Templeton, Merril Corporation, Maxnerva and Permira.

Singapore won or renewed a number of retainer contracts (at higher rates and with enlarged scopes of work) for the regional property giant Ascendas-Singbridge, the diversified conglomerate Pan-United Corporation and the high-profile law firm TSMP Law Corporation. Singapore also advised on a number of capital markets transactions, including the successful takeover by Baring Private Equity Asia of locally-listed UE E&C and other confidential briefs.

Marketing & Advertising Division

A detailed management appraisal has been concluded recently at 2112 and further changes have been made which will result in an improvement in both margins and profits. The business however continues to add new clients to its roster. Recent wins include Legal and General Investment Management, Quilter Cheviot (one of the UK's largest discretionary investment management firms), leading wealth management company Charles Stanley, and independent sports dispute service Sports Resolutions.

Summit has traded well and its Management are now exploring further business development opportunities. Meanwhile the business continues to win new clients, including Sage One and the Institution of Civil Engineers.

Outlook

Over the last few years the building blocks have been put in place with the result that we now have scale operations in several markets including the UK and Asia-Pacific. The potential of these operations and the platform we have created need to be driven forward through operational enhancement and further strategic development.

The outlook is undoubtedly strengthening all the time now that the Brexit vote is behind us, but we cannot relax our resolve in growing the business. We can say with confidence that the platform is there to continue driving the business forward.

Interim results by division were as follows:

David Wright

Chief Executive Officer

Condensed Consolidated Statement of Comprehensive Income

The accompanying notes are an integral part of this condensed consolidated interim financial report.

Condensed Consolidated Statement of Financial Position

The accompanying notes are an integral part of this condensed consolidated interim financial report.

Condensed Consolidated Statement of Cash Flows

The accompanying notes are an integral part of this condensed consolidated interim financial report.

The accompanying notes are an integral part of this condensed consolidated interim financial report.

The accompanying notes are an integral part of this condensed consolidated interim financial report.

Notes to the Condensed Consolidated Interim Financial Report

1. Corporate information

The interim condensed consolidated financial statements of Porta Communications Plc and its subsidiaries (collectively, the Group) for the six-month period ended 30 June 2016 were authorised for issue in accordance with a resolution of the Directors on 29 September 2016.

Porta Communications Plc ('the Company') is a public company domiciled in the United Kingdom whose shares are publicly traded on the AIM of the London Stock Exchange. The Group is primarily involved in providing communication, advertising and marketing services.

2. Basis of preparation

 (a) Statement of compliance

The condensed consolidated interim financial report for the six month period ended on 30 June 2016 has been prepared in accordance with IAS 34 Interim Financial Reporting. Selected explanatory notes are included to explain events and transactions that are significant to understand the changes in financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended 31 December 2015. This condensed consolidated interim financial report does not include all of the information required for full annual financial statements prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

The financial information presented herein does not constitute full statutory accounts under section 434 of the Companies Act 2006. This condensed consolidated financial report is unaudited. The financial information in respect of the previous year ended 31 December 2015 has been extracted from the consolidated statutory accounts of the Company for that period and have been delivered to the Registrar of Companies. The Group's Independent Auditor's report on those accounts was unqualified, did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006.

(b) Judgements and estimates

Preparing the condensed consolidated interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing this condensed consolidated interim financial report, significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2015.

(c) Headline measures

The Group believes that reporting non-GAAP or headline adjusted measures provide a useful comparison of business performance and reflects the way the business is managed. Accordingly headline measures of operating profit (EBITDA) and earnings per share exclude, where applicable, restructuring costs, start-up losses, amortisation of intangible assets, impairment charges, acquisition accounting adjustments, share option charges, and other exceptional items. Non-headline gains or losses are items that, in the opinion of the Directors, are required to be disclosed separately, by virtue of their size or incidence, to enable a full understanding of the Group's underlying financial performance.

A reconciliation between statutory and headline operating profit is presented in Note 4. In addition to this, earnings per share is presented in Note 13. Headline measures in this report are not defined terms under IFRS and may not be compared with similarly titled measures reported by other companies.

3. Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2015, as described in those annual financial statements. The adoption of new standards and interpretations effective as of 1 January 2016 had no impact on the comparative figures.

4. Reconciliation of operating profit to EBITDA and to headline adjusted EBITDA

5. Segmental reporting

Business segments

The following tables present revenue and reportable results for the Group's operational segments:

The following table below presents assets and liabilities information for the Group's operating segments as at 30 June 2016, 30 June 2015 and 31 December 2015 respectively:

Geographical segments

The analysis of results and assets by geographic region, based on the location of the operating company, is as follows:

6. Income tax expense

The Group calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings. The major components of income tax expense in the interim Condensed Consolidated Statement of Comprehensive Income are:

7. Discontinued operations

The administration of TTMV Group, discontinued in 2014, is still ongoing. During the reporting period the Group recognised an additional expense of £387,500 in accordance with IFRS 5. This expense represents part of a loan that was issued by Hawk Investments Ltd and was written off as part of discontinued operations in 2014.

8. Property, plant and equipment

During the six months ended 30 June 2016, the Group acquired assets with a cost of £54,056 (six months to 30 June 2015: £71,696). Assets with a net book value of £254 were disposed of during the period (30 June 2015: £nil).

9. Capital and Reserves

On 5 February 2016, we announced the issuance of the remaining 1,760,010 ordinary shares of 10p each due in respect of the initial acquisition of 51% of Redleaf Polhill Limited. Further changes in the share capital since the period end are given in note 15.

The movement in Ordinary shares for the period reconciles as follows:

Allotted, called up and fully paid

10. Share-based payments

For the six months ended 30 June 2016, 8.6m share options issued to Directors and employees have lapsed resulting in an overall credit of £106,873 in the interim Condensed Consolidated Statement of Comprehensive Income (30 June 2015: expense of £192,748).

11. Loans and Borrowings

The related party loans are secured over all current and future assets of all companies within the Group.

Terms and debt repayment schedule

All debt is repayable in Pounds Sterling (GBP) unless otherwise stated.

12. Intangible assets and goodwill