Source - RNS
RNS Number : 1454L
Porta Communications PLC
29 September 2016
 

 

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

Rounded to the nearest thousand

 

Six months ended

30 June 2016

£

Six months ended

30 June 2015

£

Year ended

31 December 2015

£

 

Revenue

17,804,000

17,352,000

34,093,000

Gross Profit

13,758,000

13,906,000

26,949,000

EBITDA 1

692,000

828,000

1,072,000

Headline EBITDA 2

936,000

1,334,000

2,607,000

Headline EBITDA Margin 3

6.8%

9.6%

9.7%

 

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

Porta Communications Plc
David Wright / Gene Golembiewski

+44 (0) 20 7680 6500

Grant Thornton UK LLP (Nominated Adviser)

Philip Secrett / Samantha Harrison / Daniel Bush

 

+44 (0) 20 7383 5100

N+1 Singer (Broker)

James Maxwell / Lauren Kettle

+44 (0) 20 7496 3000

Redleaf Communications - Media Enquiries
Charlie Geller / Sam Modlin

+44 (0) 20 7382 4769





 

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.


Executive Summary







Six months ended


Six months ended


Year ended


30 June 2016


30 June 2015


31 December 2015


£


£


£

Operating loss

(631,775)


(548,975)


(1,646,793)

Add back depreciation and amortisation

1,323,291


1,377,027


2,718,405

EBITDA from continuing operations

691,516


828,052


1,071,612

Acquisition costs


29,948


36,948

Restructuring costs

88,231


116,956


756,240

Non-recurring property costs


66,909


86,207

Legal and professional consultancy costs

142,727


98,994


340,850

Share based payments

(106,873)


192,748


315,002

Impairment of security collateral

120,130



Headline EBITDA

935,731


1,333,607


2,606,859







EPS reported on operating loss for continuing operations

(0.2p)


(0.2p)


(0.6p)

EPS based on headline EBITDA

0.3p


0.5p


1.0p

 

 

Interim results by division were as follows:

Six months ended

30 June  2016

Communications

Marketing & Advertising

TOTAL Operations

Head office

TOTAL


£

£

£

£

£

External revenue

14,744,904

3,058,937

17,803,841

17,803,841

Gross profit (fee income)

12,155,703

1,602,630

13,758,333

13,758,333

Operating results

483,261

(263,515)

219,746

(851,521)

(631,775)

Depreciation & Amortisation

1,099,432

100,689

1,200,121

123,170

1,323,291

Reported EBITDA

1,582,693

(162,826)

1,419,867

(728,351)

691,516

Headline adjustments

108,379

88,231

196,610

47,605

244,215

Headline EBITDA

1,691,072

(74,595)

1,616,477

(680,746)

935,731

Headline EBITDA margin





6.8%

 

Six months ended

30 June  2015

Communications

Marketing & Advertising

TOTAL Operations

Head office

TOTAL


£

£

£

£

£

External revenue

14,319,240

3,032,508

17,351,748

17,351,748

Gross profit (fee income)

12,129,177

1,776,373

13,905,550

13,905,550

Operating results

769,219

(102,631)

666,588

(1,215,563)

(548,975)

Depreciation & Amortisation

1,180,107

105,518

1,285,625

91,402

1,377,027

Reported EBITDA

1,949,326

2,887

1,952,213

(1,124,161)

828,052

Headline adjustments

288,307

13,773

302,080

203,475

505,555

Headline EBITDA

2,237,633

16,660

2,254,293

(920,686)

1,333,607

Headline EBITDA margin





9.6%

 

David Wright

Chief Executive Officer

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2016 (Unaudited)

 


Six months ended
30 June 2016

Six months ended
30 June 2015

Year ended

31 December 2015



£


 £

£

Continuing operations






Revenue

5

17,803,841


17,351,748

34,093,005

Cost of sales


(4,045,508)


(3,446,198)

(7,144,100)

Gross profit


13,758,333


13,905,550

26,948,905

Operating and administrative expenses


(14,390,108)


(14,454,525)

(28,595,698)

Operating loss

4

(631,775)


(548,975)

(1,646,793)

Finance expense


(604,995)


(593,629)

(1,268,314)

Finance income


5,994


11,737

27,267

Share of profit/(loss) in associate


54,902


(25,304)

Profit/(loss) before taxation on continuing operations


(1,175,874)


(1,130,867)

(2,913,144)

Tax charge

6

(39,595)


(284,657)

(187,794)

Loss for the period on continuing operations


(1,215,469)


(1,415,524)

(3,100,938)

Discontinued operations






Loss for the period from discontinued operations

7

(387,500)


(352,577)

Loss for the period


(1,602,969)


(1,415,524)

(3,453,515)

(Loss) / profit for the period attributable to:






     Owners of the Company


(1,913,900)


(1,802,801)

(4,356,112)

     Non-controlling interests


310,931


387,277

902,597



(1,602,969)


(1,415,524)

(3,453,515)

Other comprehensive income






Exchange differences arising on items that may be subsequently reclassified to profit and loss


308,965


(121,953)

(34,610)

Total other comprehensive income, net of tax


308,965


(121,953)

(34,610)







Total comprehensive income for the period


(1,294,004)


(1,537,477)

(3,488,125)

 

Total comprehensive income for the period attributable to:






     Owners of the Company


(1,791,795)


(1,897,563)

(4,363,548)

     Non-controlling interests


497,791


360,086

875,423



(1,294,004)


(1,537,477)

(3,488,125)







Earnings/(loss)per share basic and diluted

13





On continuing operations


(0.4p)


(0.5p)

(1.5p)

On discontinued operations


(0.1p)


(0.1p)

On continuing and discontinued operations


(0.6p)


(0.5p)

(1.6p)

On operating (loss)/profit from continuing operations


(0.2p)


(0.2p)

(0.6p)

On headline EBITDA


0.3p


0.5p

1.0p

 

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

Condensed Consolidated Statement of Financial Position

As at 30 June 2016 (Unaudited)

 


Notes

30 June 2016

30 June 2015

31 December 2015




£


£


£

Non-current assets








Intangible assets

12


16,081,779


17,911,355


17,056,192

Property, plant and equipment

8


1,050,005


1,250,398


1,181,803

Deferred tax asset



1,606,691


119,435


1,601,065

Non-current financial assets



923,775


923,775


923,775

Other investments



8,500


9,500


9,500

Investment in associates



937,421


1,425,154


845,921

Total non-current assets



20,608,171


21,639,617


21,618,256

Current assets








Work in progress



1,154,583


724,998


924,662

Trade and other receivables



6,633,016


8,540,783


7,326,215

Current tax assets



-


120,192


-

Cash and cash equivalents



1,792,513


1,923,873


1,787,184

Total current assets



9,580,112


11,309,846


10,038,061

Current liabilities








Trade and other payables



(8,204,001)


(7,719,375)


(8,116,383)

Current tax liabilities



(363,030)


(754,446)


(448,824)

Loans and borrowings

11


(5,226,527)


(7,426,165)


(4,956,269)

Total current liabilities



(13,793,558)


(15,899,986)


(13,521,476)

Net current (liabilities)/assets



(4,213,446)


(4,590,140)


(3,483,415)

Non-current liabilities








Trade and other payables



(361,746)



(462,487)

Fair value of contingent consideration



(1,236,338)


(956,417)


(1,179,302)

Deferred tax liabilities



(1,620,419)


(2,093,338)


(1,832,413)

Loans and borrowings

11


(3,246,603)


(260,188)


(3,041,803)

Total non-current liabilities



(6,465,106)


(3,309,943)


(6,516,005)

Net assets



9,929,619


13,739,534


11,618,836









Equity








Share capital

9


28,556,792


23,380,791


28,380,791

Share premium



4,788,547


4,788,547


4,788,547

Retained losses



(24,686,265)


(20,490,215)


(22,822,085)

Translation reserve



36,474


(172,958)


(85,631)

Other reserves



(822,442)


(785,326)


(489,848)

Total equity shareholders' funds



7,873,106


11,720,839


9,771,774

Equity non-controlling interests



2,056,513


2,018,695


1,847,062

Total equity



9,929,619


13,739,534


11,618,836

 

 

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

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2016 (Unaudited)

 


Six months ended
30 June 2016

Six months ended
30 June 2015

Year ended

31 December 2015



£


£


£

Cash flow from operating activities







Loss before taxation on continuing activities


(1,175,874)


(1,130,867)


(2,913,144)

Adjusted for:







Loss from discontinued operations before tax


(387,500)



(352,577)

Depreciation and amortisation


1,323,291

           

1,377,027


2,718,405

Equity settled share based payments


(106,873)


192,749


315,002

Share of (profits)/losses in associates


(54,902)



25,304

Finance income


(5,994)


(11,737)


(27,267)

Finance costs


604,995


593,629


1,268,314

Loss on disposal of property, plant and equipment


254



1,713

Impairment of other fixed assets


1,000



Impairment of security receivable


120,130



Capitalised costs


(9,422)



Non cash rents received


(126,000)



(105,000)

Tax paid


(367,950)


(441,475)


(1,019,396)

Change in estimate of goodwill on prior year acquisition




(88,684)

(Increase)/decrease in work in progress


(140,528)


357,246


142, 835

(Increase)/decrease in trade and other receivables


921,075


(828,856)


(76,027)

(Decrease)/increase in trade and other payables


(129,888)


589,509


1,493,184

Unrealised foreign exchange (gain)/loss


(115,494)


23,525


(40,093)

Net cash inflow from operating activities


350,320


720,750


1,342,569








Cash flows from investing activities







Acquisition of intangible assets


(22,427)


(24,346)


(188,141)

Acquisition of property, plant and equipment


(54,056)


(71,696)


(164,441)

Acquisition of subsidiary, net of cash acquired



49,102


49,102

Dividends paid to non-controlling interests


(288,340)


(262,698)


(728,226)

Interest received


5,994


11,737


27,267

Interest paid


(7,523)


(9,856)


(12,583)

Net cash outflow from investing activities


(366,362)


(307,757)


(1,016,982)








Cash flows from financing activities







Proceeds from loans and borrowings


2,881,010



1,711,561

Repayment of loans and borrowings


(2,870,729)


(179,278)


(1,896,861)

Repayment of leases


(70,420)


(77,101)


(134,498)

Net cash absorbed by financing activities


(60,139)


(256,379)


(1,033,340)








Net (decrease)/ increase in cash and cash equivalents


(76,181)


156,614


5,749

Cash and cash equivalents at 1 January


1,787,184


1,791,426


1,791,426

Effect of exchange rate changes


81,510


(24,167)


(9,991)

Cash and cash equivalents at period end


1,792,513


1,923,873


1,787,184

 

 

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

 

 


Condensed Consolidated Statement of Changes in Equity

 

Statement of changes in equity for the six months ended 30 June 2016 (Unaudited)















 

 

 

Share capital

Share
premium

Retained losses

Translation
reserve

Other Reserves

Written Put/Call Options over NCI

Total equity shareholders' funds

Non-controlling interests (NCI)

Total equity


£

£

£

£

£

£

£

£

£

Balance at 1 January 2016

28,380,791

4,788,547

(22,822,085)

(85,631)

1,301,898

(1,791,746)

9,771,774

1,847,062

11,618,836

Total comprehensive income










Loss for the period

(1,913,900)

(1,913,900)

310,931

(1,602,969)

Other comprehensive income

122,105

122,105

186,860

308,965

Total comprehensive income

-

-

(1,913,900)

122,105

(1,791,795)

497,791

(1,294,004)

Transactions with owners of the Company, recognised directly in equity










Contributions by owners:










Issue of ordinary shares in relation to deferred consideration

176,001

-

49,720

-

(225,721)

-

-

-

-

Dividend paid to non-controlling interest

(288,340)

(288,340)

Share based payments

(106,873)

(106,873)

(106,873)

Total transactions recognised directly in equity

(106,873)

(106,873)

(288,340)

(395,213)

Balance at 30 June 2016

28,556,792

4,788,547

(24,686,265)

36,474

969,304

(1,791,746)

7,873,106

2,056,513

9,929,619

 

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


Statement of changes in equity for the year ended 31 December 2015:







Share

capital

Share
premium

Retained

losses

Translation
reserve

Other Reserves

Written Put/ Call Options over NCI

Total equity shareholders' funds

Non-controlling interests

Total equity


£

£

£

£

£

£

£

£

£

Balance at 1 January 2015

27,405,391

4,788,547

(18,108,687)

(78,195)

813,671

(1,791,746)

13,118,981

2,174,768

15,293,749

Total comprehensive income










Loss for the period

(1,802,801)

(1,802,801)

387,277

(1,415,524)

Other comprehensive income

(94,763)

(94,763)

(27,190)

(121,953)

Total comprehensive income

(1,802,801)

(94,763)

(1,897,564)

360,087

(1,537,477)

Contributions by owners:










Issue of ordinary shares in relation to business combinations

975,400

975,400

975,400

Dividend paid to non-controlling interest

(262,698)

(262,698)

Share based payments

192,749

192,749

192,749

Changes in ownership interest of subsidiaries:










Acquisition of subsidiary with non-controlling interest

53,211

53,211

Acquisition of non-controlling interest without a change in control

(668,727)

(668,727)

(306,673)

(975,400)

Total transactions recognised directly in equity

975,400

(668,727)

192,749

499,422

(516,160)

(16,738)

Balance at 30 June 2015

28,380,791

4,788,547

(20,490,215)

(172,958)

1,006,420

(1,791,746)

11,720,839

2,018,695

13,739,534

Total comprehensive income










Loss for the period

(2,553,311)

(2,553,311)

515,320

(2,037,991)

Other comprehensive income

87,327

87,327

16

87,343

Total comprehensive income

(2,553,311)

87,327

(2,465,984)

515,336

(1,950,648)

Contributions by owners:










Dividends paid to non-controlling interest

(465,528)

(465,528)

Share based payments

122,253

122,253

122,253

Equity component of convertible loan issued

173,225

173,225

173,225

Changes in ownership interest of subsidiaries:










Adjustments in respect of prior year disposal of subsidiaries with non-controlling interest

221,441

221,441

(221,441)

Total transactions directly recognised in equity

221,441

295,478

516,919

(686,969)

(170,050)

Balance at 31 December 2015

28,380,791

4,788,547

(22,822,085)

(85,631)

1,301,898

(1,791,746)

9,771,774

1,847,062

11,618,836

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


Notes to the Condensed Consolidated Interim Financial Report

For the six months to 30 June 2016 (Unaudited)

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


Six months ended

30 June 2016

Six months ended

30 June 2015

Year ended

31 December 2015

Continuing operations:

£

£

£

Reported operating loss

(631,775)

(548,975)

(1,646,793)

Add back depreciation and amortisation

1,323,291

1,377,027

2,718,405

EBITDA from continuing operations

691,516

828,052

1,071,612

Add back:




Acquisition costs

29,948

36,948

Restructuring costs

88,231

116,956

756,240

Non-recurring property costs

66,909

88,607

Legal and professional consultancy costs

142,727

98,994

340,850

Share-based payments

(106,873)

192,748

315,002

Impairment of security collateral

120,130

Adjusted headline EBITDA

935,731

1,333,607

2,606,859

EPS reported on operating profit/(loss) from continuing operations

(0.2p)

(0.2p)

(0.6p)

EPS based on adjusted headline EBITDA

0.3p

0.5p

1.0p

5. Segmental reporting

Business segments

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

Six months ended 30 June 2016

 

Communications

Marketing and Advertising

Head office

Other / Consol.

Total


£

£

£

£

£

External revenue

14,744,904

3,058,937

17,803,841

Inter-segment revenue

265,852

56,740

294,088

(616,680)

Reportable segment revenue

15,010,756

3,115,677

294,088

(616,680)

17,803,841

Reportable segment gross profit

12,155,703

1,602,630

13,758,333

Reportable segment results

483,261

(263,515)

(851,521)

(631,775)

Reported segment EBITDA

1,582,693

(162,826)

(728,351)

691,516

Headline segment EBITDA

1,691,072

(74,595)

(680,746)

935,731







Six months ended 30 June 2015

 

Communications

Marketing and Advertising

Head office

Other / Consol.

Total


£

£

£

£

£

Revenue

14,319,240

3,032,508

17,351,748

Inter-segmental revenue

13,204

63,555

892,979

(969,738)

Reportable segment revenue

14,332,444

3,096,063

892,979

(969,738)

17,351,748

Reportable segment gross profit

12,129,177

1,776,373

13,905,550

Reportable segment results

769,219

(102,631)

(1,215,563)

(548,975)

Reported segment EBITDA

1,949,326

2,887

(1,124,161)

828,052

Headline segment EBITDA

2,237,633

16,660

(920,686)

1,333,607

 

Year ended 31 December 2015

Communications

Marketing and Advertising

Head office

Other / Consol.

Total


£

£

£

£

£

Revenue

28,302,039

5,790,966 

34,093,005

Inter-segmental revenue

369,377

35,254

353,795

(758,426)

Reportable segment revenue

28,671,416

5,826,220

353,795

(758,426)

34,094,006

Reportable segment gross profit

23,533,409

3,415,496

26,948,905

Reportable segment results

969,953

(593,949)

(2,022,797)

(1,646,793)

Reported segment EBITDA

3,289,008

(386,636)

(1,830,760)

1,071,612

Headline segment EBITDA

4,221,350

(205,313)

(1,409,178)

2,606,859

 

 

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:







Six months ended 30 June 2016

Communications

Marketing and Advertising

Head office

Other / Consol.

Total


£

£

£

£

£

Reportable segment assets

23,047,306

3,123,102

7,996,411

(3,978,536)

30,188,283

Reportable segment liabilities

(6,221,042)

(5,024,859)

(12,991,299)

3,978,536)

(20,258,664)







Six months ended 30 June 2015

 

Communications

Marketing and Advertising

Head office

Other / Consol.

Total


£

£

£

£

£

Reportable segment assets

26,263,580

1,807,634

11,689,271

(6,811,022)

32,949,463

Reportable segment liabilities 

(9,399,832)

(5,478,004)

(11,143,115)

6,811,022

(19,209,929)







Year ended 31 December 2015

 

Communications

Marketing and Advertising

Head office

Other / Consol.

Total


£

£

£

£

£

Reportable segment assets

26,017,446

3,614,480

10,920,734

(8,896,343)

31,656,317

Reportable segment liabilities 

(9,276,886)

(5,399,403)

(14,257,535)

8,896,343

(20,037,481)

 

Geographical segments

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

Six months ended 30 June 2016

UK

EMEA

Asia-Pacific

Total


£

£

£

£

Revenue

12,257,721

137,069

5,409,051

17,803,841

Gross profit

8,899,833

119,803

4,738,697

13,758,333

(Loss)/profit on continuing operations before tax

(1,784,554)

(117)

608,797

(1,175,874)

Loss on discontinued operations before tax

(387,500)

(387,500)






Six months ended 30 June 2015

UK

EMEA

Asia-Pacific

Total


£

£

£

£

Revenue

12,634,601

195,296

4,521,851

17,351,748

Gross profit

9,476,100

155,790

4,273,660

13,905,550

(Loss)/profit on continuing operations before tax

(2,054,055)

(12,763)

935,951

(1,130,867)

Loss on discontinued operations before tax

-‑







Year ended 31 December 2015

UK

EMEA

Asia-Pacific

Total


£

£

£

£

Revenue

24,140,370

324,674

9,627,961

34,093,005

Gross profit

18,090,899

265,457

8,592,549

26,948,905

(Loss)/profit on continuing operations before tax

(4,744,667)

(94,363)

1,925,886

(2,913,144)

Loss on discontinued operations before tax

(352,577)

(352,577)

 

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:


Six months ended

30 June 2016

Six months ended

30 June 2015

Year ended
31 December 2015

Income taxes

£

£

£

Current income tax charge

256,066

480,110

818,792

Deferred income tax credit

(216,471)

(195,453)

(630,998)

Income tax charge recognised in statement of profit or loss

39,595

284,657

187,794

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:



Number


£ nominal value

At 1 January 2016


277,327,895


27,732,791

New issues during the year


1,760,010


176,001

At 30 June 2016


279,087,905


27,908,792

Allotted, called up and fully paid

30 June 2016


Number


£ nominal value

Ordinary shares of 10p each


279,087,905


27,908,792

Deferred shares of 0.9p each


72,000,000


648,000





28,556,792

 



 

31 December 2015 and 30 June 2015


Number


£ nominal value

Ordinary shares of 10p each


277,327,895


27,732,791

Deferred shares of 0.9p each


72,000,000


648,000





28,380,791

10. Share-based payments

30 June 2016


Weighted average


Number of Options

exercise price, pence

Balance at 1 January 2016

18,437,763

12.96p

Issued during the period

-

-

Forfeited during the period 

(8,628,679)

16.31p

Balance at 30 June 2016

9,809,084

10.01p

 

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).

30 June 2015 and 31 December 2015


Weighted average


Number of Options

exercise price, pence

Balance at 1 January 2015

11,141,096

14.90p

Issued during the period

8,070,000

10.00p

Forfeited during the period 

(250,000)

10.00p

Balance at 30 June 2015

18,961,096

12.87p

Issued during the period

1,500,000

10.00p

Forfeited during the period 

(2,023,333)

10.00p

Balance at 31 December 2015

18,437,763

12.96p

11. Loans and Borrowings



30 June 2016

30 June 2015

31 December 2015




£

£


£

Current liabilities






Loans - related party



2,665,743


Loans notes



5,211,441

1,572,807


100,342

Convertible loans



3,088,690


4,754,863



5,211,441

7,327,240


4,855,205

Obligation under finance lease



15,086

98,925


101,064




5,226,527

7,426,165


4,855,205







Non-current liabilities







Loans - related party



2,980,468


2,812,935

Obligation under finance lease



266,135

260,188


228,868




3,246,603

260,188


3,041,803

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

 

Terms and debt repayment schedule




30 June 2016

30 June 2015

31 December 2015


Nominal Interest Rate

Year of maturity

Face Value

Carrying Amount

Face Value

Carrying Amount

Face Value

Carrying Amount

Discounted bond - related party

12%

2019

4,110,000

2,960,128

2,862,000

2,665,743

2,862,000

2,812,935

Loan notes

6%

2016

100,000

103,427

-

-

100,000

100,342

Loan notes

6%

2015

1,552,000

1,552,807

Convertible loans

12%

2016

4,617,450

5,108,014

4,867,450

4,754,863

Convertible loans

12%

2015

-

3,067,450

3,088,690

Loan notes (AED)

60%

2017

20,340

20,340




8,847,790

8,191,909

7,481,450

7,327,240

7,829,450

7,668,140

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

12. Intangible assets and goodwill


Goodwill

Customer relationships

Brands

Websites, software and licences

Total

Cost

£

£

£

£

£ 

At 1 January 2015

7,516,950

9,380,000

3,187,000

184,087

20,268,037

Acquisition in period - acquired with subsidiary

451,259

451,259

Other additions

-

-

-

24,346

24,346

Exchange differences

(18,969)

-

-

(206)

(19,175)

At 30 June 2015

7,949,240

9,380,000

3,187,000

208,227

20,724,467

Re-estimate of previously acquired goodwill

88,684

88,684

Other additions in the period

163,795

163,795

Translation differences

29,004

-

171

29,175

At 31 December 2015

8,066,928

9,380,000

3,187,000

372,193

21,006,121

Other additions in the period

22,437

22,437

Exchange differences

123,401

1,359

124,760

At 30 June 2016

8,190,329

9,380,000

3,187,000

395,989

21,153,318







 



 

Amortisation

£

£

£

£

£

At 1 January 2015

-

1,333,321

250,714

101,134

1,685,169

Charge for the period

-

944,248

159,350

24,529

1,128,127

Translation differences

-

(184)

(184)

At 30 June 2015

-

2,277,569

410,064

125,479

2,813,412

Charge for the period

-

944,248

159,342

33,066

1,136,656

Translation differences

-

161

161

At 31 December 2015

-

3,221,817

569,406

158,706

3,949,929

Charge for the period

-

912,999

159,317

48,672

1,120,988

Exchange differences

-

-

-

622

622

At 30 June 2016

-

4,134,816

728,723

208,000

5,071,539

 

Net book value

£

£

£

£

£

At 1 January 2015

7,516,950

8,046,679

2,936,286

82,953

15,582,868

At 30 June 2015

7,949,240

7,102,431

2,776,936

82,748

17,911,355

At 31 December 2015

8,066,928

6,158,183

2,617,594

213,487

17,056,192

At 30 June 2015

8,190,329

5,245,184

2,458,277

187,989

16,081,779

 

 

No cash generating units ('CGUs') were tested for impairment because there were no impairment indicators at 30 June 2016 for CGUs to which goodwill has been allocated.

13. Earnings/(loss) per share

The loss per share has been calculated using the weighted average number of shares in issue during the relevant financial year.  The weighted number of equity shares in issue and the loss after tax attributable to ordinary shareholders, used in these calculations, are as follows:


Six months ended

30 June 2016

Six months ended

30 June 2015


Year ended

31 December 2015



Number


Number


Number

Weighted average number of shares (ordinary and dilutive)


278,749,442


268,482,487


273,399,572










£


£


£

Loss on continuing activities after tax


(1,215,469)


(1,415,524)


(4,003,535)

Loss on discontinued activities after tax


(387,500)



(352,577)

Loss on continuing and discontinued activities after tax


(1,602,969)


(1,415,524)


(4,356,112)

No share options outstanding at 30 June 2016, 30 June 2015 or 31 December 2015 were dilutive and all such potential ordinary shares are therefore excluded from the weighted average number of ordinary shares for the purposes of calculating diluted earnings per share. Details of share options outstanding are given in note 10.

14. Related party transactions

Key management personnel

The nature and amounts of related party transactions are consistent with those reported in the Group's consolidated statutory accounts for the year ended 31 December 2015.

Related party loans are shown in note 11 above.

15. Subsequent events

On 5 August 2016 the Company announced that, under the terms of the acquisition of Redleaf Polhill Limited ("Redleaf") in 2014, the first put option has been exercised by the vendors of Redleaf, requiring the Company to acquire a further 15% of the issued share capital of Redleaf. Under the terms of the put and call options, the additional consideration for the 15% of Redleaf is £805,427 which was be satisfied (i) 50% in cash; and (ii) 50% in ordinary shares of the Company at an issue price calculated with reference to the average of the mid-market closing price of Company's ordinary shares for a period prior to the allotment date of those ordinary shares (the "Further Consideration Shares").

Following the issue of the Further Consideration Shares, the Company's interest in the issued share capital of Company has increased to 66%. The remaining 34% of the issued share capital of Redleaf remains subject to two further put and call options which are exercisable after the publication of the audited results for the financial years to 31 December 2016 and 31 December 2017 respectively. 

In order to issue the Further Consideration Shares, the Company undertook a capital reorganisation effective 14 September 2016.  As a result of the capital reorganisation, each of the Company's 279,087,905 Ordinary shares of 10 pence each has been subdivided into and re-designated as, 279,087,905 ordinary shares of 1 pence each ("New Ordinary Shares") and 2,790,879,050 deferred shares of 0.9 pence each.

Following the capital reorganisation, the Company has issued 8,054,280 New Ordinary Shares to the vendors of Redleaf to satisfy the further consideration referred to above.  The Further Consideration Shares are subject to a lock-in agreement which provides for a lock-in period to 20 January 2017 and a further 6-month orderly market period.

Other than the above there have been no material subsequent events to report from 30 June 2016 to the date that these accounts were approved on 29 September 2016.

16. Publication

A copy of this report is available from the Company's website at www.portacomms.com and is available in hard copy on application to the Company's offices.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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