News blog

Porta Communications

• BY: Andrew Hore |
• POSTED: 26/02/2013 |

Marketing services provider Porta Communications is set to treble its revenues this year and that should be enough to move the company into profit.

At 11.88p a share, Porta is valued at £12.2m.  The share price has risen by 30% since house broker N+1 Singer published a note of the company early in February.

Estimated revenues for 2012 are £8m and this is expected to increase to £24.7m in 2013, which should generate a pre-tax profit of £1.14m.

The biggest reasons for the forecast move into profit are the Newgate Communications PR business moving from loss to profit in the second half of 2013 plus a full year contribution from media buyer Twenty20 Media Vision and marketing services provider 21:12.

Newgate Communications was a start up business and it is taking time to build up revenues to cover its cost base. In 2012, the costs were nearly twice revenues. A large jump in revenues is anticipated in the second half of 2013 but this will depend on business flowing though in the expected timescale. The 21:12 business is an even more recent start-up but it should move into profit more quickly than Newgate Communications. This business should benefit from cross-selling opportunities.

Both those businesses are LLPs so all the revenues are recognised by Porta but only the profit after the partner share is included in the Porta profit.

The Twenty20 media buying division was put together via acquisitions and the combination of the two businesses should benefit from cost savings.

Financial PR firm Newgate Threadneedle has been the profitable part of the business but its profit contribution is expected to be flat this year.

The 2013 figures will be the first meaningful results for the company in its present form. These forecasts are based on the current businesses and Porta could add to them through acquisitions.  Longer-term, there are still additional margin improvements achievable in the existing businesses. 

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFFebruary2013_41.pdf