Porta Communications : Final Results for the year ended 31 December 2016 and Notice of AGM

11 May 2017 Porta Communications Plc

("Porta" or "the Company")

Final Results for the year ended 31 December 2016 and Notice of AGM

Porta Communications Plc (AIM: PTCM), the international communications and marketing group, is pleased to announce its final audited results for the year ended 31 December 2016.

The Board is pleased to report on a year of significant change at Porta, during which the Company has seen good organic growth and continued its strategy of creating an integrated international communications business. With no companies acquired during 2016, shareholders can clearly see the underlying trading performance of the Group in a year in which Porta has achieved healthy levels of growth in turnover and gross profit.

The reduction in adjusted EBITDA reflects the significant senior hires made throughout the year and these strategic appointments are now having a positive impact on the business. This is coupled with some important changes to the Board of Directors, marking the beginning of a new chapter in the development of the Group.

Financial Highlights

 Revenues 9% ahead of 2015 at £37.1m (FY 2015: £34.1m)

• Gross profit increased by 10% to £29.7m (FY 2015: £26.9m)

• Headline adjusted EBITDA1£2.3m (FY 2015: £2.6m)

• Headline adjusted Profit Before Tax2£0.7m (FY 2015: £0.8m)

• Loss Before Tax3£5.1m (FY 2015: £2.9m)

• Loss Per Share 2.2p (FY 2015: 1.6p)

   Net debt £7.6m (FY 2015: £6.2m)

• Headline adjusted 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.

• Headline adjusted Profit Before Tax excludes exceptional costs in arriving at Headline adjusted EBITDA as outlined above, amortisation on acquired intangibles and impairment charges against goodwill, brands and customer lists as a result of impairment reviews.

• Includes £2.3m of impairment charges (FY 2015: Nil) and £2.1m of amortisation on the acquired intangibles (FY 2015: £2.2m).

• Full Year Highlights

• Revenue growth all organic with no acquisitions in the period

• Substantial investment in Newgate UK with new senior hires cultivating a growing pipeline

• Strong trading performances from Newgate Australia, Newgate Singapore, Publicasity and Redleaf Communications

• Improving performance from Newgate UK

  Outlook

• New Board in place to lead the Company to the next stage of development and profitability

• Current trading performance substantially ahead of 2016

• Discussions under way with potential debt financiers and strategic investors

John Foley, Chairman, commented:

"2017 has started well with trading performance substantially ahead of both last year and our internal expectations."

Steffan Williams, CEO, commented:

"Whilst the business grew organically in 2016 there is still a lot of work to be done. We have hired some excellent people and we now need to give them the very best chance to flourish. We also need to make sure that we act in as joined up a manner as possible across the Group businesses and across geographies.

"2017 has started well and from this month we have a new management team in place with a new and

collaborative culture that is committed to taking Porta to the next level."

Posting of Annual Report and Notice of Annual General Meeting

The Company's Annual General Meeting will be held at 2pm on 8 June 2017. The Annual Report containing the Notice of the Annual General Meeting will be posted to shareholders by 15 May 2017 and will be available on our website thereafter.

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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.

Enquiries Porta Communications Plc

Steffan Williams, CEO Rhydian Bankes, CFOwww.portacomms.com

[phone]

Grant Thornton UK LLP (Nominated Adviser)

Philip Secrett Samantha Harrison Daniel Bush

[phone]

Nplus1 Singer (Broker)

James Maxwell Lauren Kettle

[phone]

Newgate Communications (Media Enquiries)

Bob Huxford Adam Lloyd James Ash

[phone]

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, Singapore and Sydney.

The brands and companies it owns are: Newgate Communications, PPS Group, Redleaf Communications, Publicasity, 2112 Communications and Summit Marketing Services.

Porta Communications' corporate website is - www.portacomms.com

CHAIRMAN'S STATEMENT INTRODUCTION

Porta achieved healthy levels of turnover, gross profit and adjusted EBITDA in the year ended 31 December 2016. No companies were acquired in the period and so shareholders can now clearly see both the underlying trading performance of the Group and the accounting adjustments that reduce a profitable adjusted EBITDA of

£2.3 million to a loss before taxation on continuing operations of £5.1 million.

FINANCIAL OVERVIEW OF RESULTS

Turnover of £37.1m was 9% higher than for the previous year (2015: £34.1m). Gross profit increased by 10% to

£29.7m (2015: £26.9m). Adjusted headline EBITDA reduced by 10% to £2.3m (2015: £2.6m) mainly because of the substantial investment made in strengthening the team at Newgate UK and because of a slowdown in activity at PPS after the BREXIT referendum decision. The loss before taxation on continuing operations was

£5.1m (2015: £2.9m loss) and the loss per share on continuing and discontinued operations was 2.2p (2015: 1.6p loss).

The Chief Executive's Business Review concentrates on the highlights achieved by individual businesses during 2016 but I would like to note the very good trading performances of Newgate Australia, Newgate Singapore, Publicasity and Redleaf Communications as well as the improving momentum to our Newgate UK operations.

Porta is a Group that was founded in December 2010 and was then rapidly built by both the acquisition of a number of businesses and by the start up of a number of its current businesses. The 2016 results include a

£2.6m amortisation and depreciation charge and £2.1m of that amount relates to the non-cash charges associated with the write down of customer relationships and brands resulting from the creation of intangible assets when acquisitions were made.

The Board has conducted a thorough impairment charge review of all cash generating units within the Group and a further £2.3m charge has been made in the 2016 accounts to reduce the carrying value of intangible assets where necessary; the performance of Summit Marketing Services and PPS required adjustment as a result of current and anticipated trading performance levels. Restructuring and Acquisition costs of £1.4m included a provision of £0.3m in relation to a vendor loan guarantee, £0.3m of contingent payments to two employees of PPS for conditions existing at the date of the acquisition of PPS, £0.2m of contingent consideration revaluation relating to Redleaf Communications and £0.2m of share based payment expense as well as other one off, non- trading items associated with previous acquisitions and company restructurings.

Despite generating £1.2m of net cash from operating activities (2015: £1.3m), year-end net debt was £7.6m (2015: £6.2m). It is clear to the current Board that an equity injection of up to £3m should be sought to support ongoing growth, and discussions with strategic investors are underway to enable this to happen.

To this end, in order to maintain the Group's flexibility to raise further funds for such an equity issue, as well

as being able to issue shares in relation to legal obligations that already exist including contracted follow-on acquisitions, the Board proposes to seek authority at the forthcoming AGM to issue up to 163.1 million new shares (being approximately 50% of Porta's existing issued share capital) with 130.4 million of the authority to issue new shares (approximately 40% of Porta's existing issued share capital) being on a non-pre-emptive basis.

The Board has also reached an advanced stage of discussions with a senior debt provider to establish a new working capital facility. The Group's current main funders are Retro Grand Limited ("Retro Grand") and Hawk Investment Holdings Limited ("Hawk"). Loans advanced by Retro Grand and Hawk carry high interest rates which reflect the fact that these loans were originally anticipated to be equivalent to mezzanine debt. Retro Grand and Hawk have indicated that there will be a substantial reduction in the interest rate charged when appropriate equity investment has been raised.

BOARD CHANGES

Bob Morton retired as Non-Executive Chairman during the year and David Wright became Executive Chairman with Steffan Williams becoming Chief Executive; since the year end David has also left the Board and I was appointed as Non-Executive Chairman. Brian Blasdale also retired as a Non-Executive Director during 2016.

I would like to thank everyone who has now left the Board for the contribution that they made; in particular, there would be no Porta if it had not been for the drive and commitment shown by Bob and David and I thank them for all their hard work over the years.

Also since year end, Gene Golembiewski has changed roles from CFO to a role involving wider commercial responsibilities, and remains as both an Executive Director and as Company Secretary. Rhydian Bankes, previously Porta's Head of Group Finance, has joined the Board as CFO.

It is for a new Board to take Porta to the next stage in its development, to substantially increase profitability and thus realise the potential that was anticipated by Bob and David.

STRATEGY

Porta was established with the aim of creating an integrated international communications and marketing Group with clear synergies across all businesses and offices. The Group wants to recruit the best available talent in its sectors and to target ever stronger client opportunities.

This will be achieved by our Board and senior management team recognising that the following things need to be achieved together:

• that whilst underlying trading is healthy it can substantially improve because we have recruited some excellent hires and made the necessary investment in staff to produce further growth;

• that the investment in our people is an ongoing process that requires an appropriate equity incentive for senior management teams;

• that the Group Board is focused on the practical measures necessary to strengthen the balance sheet and the Group's working capital facilities;

• that a renewed focus on cost and cash control is needed together with an improvement in the Group's support structures to support further profitable growth; and

• that we are all committed to ensuring that the Group is something that should have a value worth more than just the sum of its parts, which can work together with our clients on a multi stakeholder and/or international basis and which is above all else a Group which is both an exciting place to work and which