Porta Communications, the marketing and public relations (PR) firm that is being sued by rival Media Square, saw losses triple in 2011.
The operating loss for the 12 months to the end of December was £1.58m, up from £0.52m in 2010. Porta is a new company so these losses reflect significant start-up costs, including the recruitment of 20 new senior executives to its Newgate Communications division.
The company acknowledged that there is a high cash burn involved in building a global communications and marketing operation virtually from scratch, so Porta is offsetting these costs by acquiring a number of complementary income producing companies in the media sector, such as Threadneedle Communications (now called Newgate Threadneedle), which was acquired in 2011 and which is trading ahead of expectations, helped by a number of key new business wins in its core sectors.
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Cash at the end of 2011 stood at £0.98m, down from £2.22m a year earlier.
Porta is being sued by another PR firm, Media Square, which claims Porta damaged its business during an alleged takeover attempt. Porta, and its Chairman David Wright, say they are confident of mounting a successful defence to this action, so "no provision in respect of this matter has been made in the financial statements."
"The outlook for the remainder of this year looks positive while the prospects for strong profits in 2013 look very exciting," said Wright.
The stock was down 2.2% by 10:08.
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