TIDMSFOR
RNS Number : 9538A
S4 Capital PLC
07 June 2021
7 June 2021
S4 Capital plc
("S (4) Capital" or "the Company")
AGM Statement
Q2 Acceleration, like-for-like 2021 Gross Profit or Net Revenue
Guidance lifted to 35%
S (4) Capital plc (SFOR.L), the tech-led, new age, new era,
digital advertising and marketing services company, announces that
at the Annual General Meeting of the Company to be held today, Sir
Martin Sorrell, Executive Chairman of the Company, will make the
following statement.
"2020 was a very busy third year for S (4) Capital, both
organically and through mergers and the tempo has been maintained,
as growth rates have accelerated in the first quarter and in to Q2
2021. I am pleased to say that generally few of our people and
their families have been infected by covid-19 or developed serious
problems as a result, although, regrettably a small number have
sadly lost family members. Unfortunately, in recent weeks following
new virus waves we have seen increases in cases in Brazil, Holland
and India. Particularly in the case of India, we are trying very
hard to help and, thankfully, there has been a significant recent
improvement. We wish them and their families long life and record
our thanks to all the frontline workers, who have kept us well and
safe.
First, I want to remind everyone, again, of our definitive and
differentiated strategy, based on four core principles. We are
purely digital, because that's where the growth is, even more so in
a covid-19 world. In a 24/7, always-on digital world, our business
model is to focus on first party data, which, in turn, fuels the
creation, production and distribution of digital advertising and
marketing creative content through our data & digital media
planning and buying and programmatic and performance executions.
Our mantra or strap line is "faster, better, cheaper" or "speed,
quality, value", because that's what clients want. Finally, our
organisational structure is unitary, with a single P&L, as
clients want the best people working on their business, not caring
where they come from. We don't do fragmenting earnouts.
Having built out our Content practice in 2018 and 2019 around
MediaMonks and our Data&digital media practice around
MightyHive also in 2018 and 2019, we have added 12 content
companies and 11 data & digital media companies, 12 before last
year's AGM and 11 in the last seven months of 2020 and the first
five months of 2021.
In June 2020, MightyHive announced its combination with Lens10,
a leading Australian digital strategy and analytics consultancy. In
July 2020, MightyHive announced a combination with Orca Pacific, a
market leading full-service Amazon agency and boutique consultancy
firm based in Seattle. In August 2020, MightyHive announced a
combination with London-based Brightblue, an econometric and media
optimisation consultancy. In September 2020, MediaMonks announced
its combination with Dare.Win, expanding its geographical presence
to France. In January 2021, MediaMonks announced its combination
with integrated creative, technology and media agency Decoded
Advertising, Shanghai based creative agency TOMORROW and Stuttgart
based automotive specialist STAUD STUDIOS. MightyHive also
announced its combination with integrated digital performance
marketing agency Metric Theory. In February 2021, MightyHive
acquired the assets of Datalicious Australia, a leading Google
Marketing Platform, Google Cloud and Google Analytics partner in
Asia Pacific. In March 2021, MediaMonks announced it had entered
into a conditional agreement in relation to a combination of
MediaMonks with Toronto-based design and experience agency, Jam3.
Finally, last month MightyHive announced a combination with Raccoon
Group, which significantly expanded its data & digital media
practice in Brazil and Latin America.
On 16 July 2020, S(4) Capital announced the successful placing
of 36,766,642 new ordinary shares at a price of 315p raising
approximately GBP116 million gross proceeds which was earmarked for
further expansion and combination purposes.
The Company is now in the process of raising a term loan of over
$350 million to finance further expansion, as the equity funds
raised have been successfully deployed.
All these mergers have historically been branded under the
MediaMonks and MightyHive banners and, in turn, MediaMonks and
MightyHive have been increasingly and already successfully acting
as one in going to market. The combined firm will, in future, go to
market under one brand or flag.
Since the last AGM in June of 2020, your Company has doubled its
number of people to over 5,500 in 31 countries and almost tripled
its market capitalisation to over GBP3 billion ($4.2 billion). S
(4) Capital achieved GBP and $ "unicorn" status within 18 months of
re-listing and would rank in the FTSE 150 by market capitalisation,
if it had a premium listing.
As the global economy snaps back from the pandemic and opening
up and vaccines kick in, trading for the first four months of 2021
has accelerated strongly, with reportable revenue up almost 90%,
compared to 71% for Q1. Reportable gross profit or net revenue was
up almost 84%, compared to 71% for Q1. Both revenue and gross
profit or net revenue like-for-like growth rates accelerated
markedly in April. We do not have our May figures as yet, but early
indications are that May will be similar to April and that in June,
the pipeline continues to be robust. Tech clients, which constitute
over 50% of our revenues, are still generally outspending CPG/FMCG,
pharma and retail clients, but all verticals exhibit robust
activity. At the beginning of the year, the Company's third
three-year plan, as with the previous two, called for a doubling of
the Company organically between 2021 and 2023. This targeted
organic gross profit or net revenue growth of approximately 25% in
2021. After the end of Q1, in light of Q1 performance, guidance was
raised to 30%. In light of the acceleration in Q2 and the Company's
Q1 Revised Forecast that has just been finalised, guidance has been
raised further to 35%.
As in previous years, the Company continues to invest heavily in
talent or human capital, in order to attract, develop and grow the
human fabric of the Company essential to achieving high organic
growth rates. The S4 Fellowship Programme aimed at recruiting
interns from the historically black universitie s and the S4 Women
Leadership Programme with UC Berkeley are both up and running and
gaining momentum, representing good examples of our diversity,
equity and inclusion initiatives. In addition, the S4 Scholars
Programme, aimed specifically at recruiting High School students is
going live in the second half of the year.
We are confident that we will be able to deliver sector leading,
high double digit like-for-like revenue and gross profit growth for
2021, along with a strong operating earnings before interest,
taxes, depreciation and amortisation margin. We are also confident
that we will achieve our three-year plan for 2021-23 (as well as
the previous two three-year plans), which calls for a doubling of
the Company organically, at both top line and earnings before
interest, taxes, depreciation and amortisation levels.
We always knew that our people, being digital natives, would
adapt effortlessly and productively to working from home and, as a
result, we are further developing a hybrid office model, which
accommodates those of our people who want to work more from home
and who want to commute more flexibly and provides spaces for
working, interacting with colleagues and interacting with clients.
We have terminated a number of office leases, which will enable us
to integrate our operations even faster than we originally
thought.
The Company's cash flow remains strong and your Company will
continue to conclude strategic mergers, enhanced by the proceeds of
the term loan referred to previously.
Having achieved brand awareness and brand trial over the first
three years, our focus remains on broadening and deepening existing
client relationships and conversion at scale. Our five biggest
clients (including our two biggest pitch wins last year, BMW/MINI
and Mondelēz ) will achieve "whopper" status this year (i.e. over
$20 million of revenue), but we still search for bigger and deeper
relationships, and a further three clients, one in technology, one
in telecommunications and one in financial software may also
achieve "whopper" status this year, making a total of eight out of
an objective of twenty. A further seven have been identified as
having "whopper" potential. Notable recent client wins, including
integrated content and programmatic assignments, number Allianz,
Crocs, N26, Instacart, Shopify, Xero and Banorte amongst others. We
are currently actively involved in a number of global and regional
pitches and conversations.
Geographically, we have added offices in Uruguay and Germany
since the last AGM and we do not believe that we will have to add
more than four or five markets to our existing tally of 31
countries. We continue to examine our needs for deeper strategic
insight and adding technology services, along with increasing focus
on the importance of first party data and the walled gardens,
following the death of the cookie, which we are already well
positioned for.
Finally, I am delighted to say that we have added further
non-executive talent to our Board since the last AGM in the form of
Miles Young, former Chairman and Chief Executive of OGILVY and
currently Warden of New College, Oxford. We now have eight
Non-Executive Directors, four women, four men."
As the AGM is a hybrid AGM, shareowners will have received
joining instructions for electronic access via the Lumi AGM app,
including details of voting and Q&A functions. Details are set
out in the Notice of Annual General Meeting.
Guest access to the AGM without voting or a Q&A facility
will be available as a webcast via the following link:
https://webcasting.brrmedia.co.uk/broadcast/60b7c1d9cc74370299db7c8c
Enquiries
S(4) Capital plc Tel: +44 (0)20
3793 0003
Sir Martin Sorrell, Executive
Chairman
Powerscourt (PR adviser to Tel: +44 (0)7970
S(4) Capital plc) 246 725
Elly Williamson
Jane Glover
About S (4) Capital
S(4) Capital plc (SFOR.L) is the tech-led, new age/new era
digital advertising and marketing services company, established by
Sir Martin Sorrell in May 2018.
Its strategy is to build a purely digital advertising and
marketing services business for global, multinational, regional,
local clients and millennial-driven influencer brands. This will be
achieved initially by integrating leading businesses in two
practice areas: Data&digital media and Content, along with an
emphasis on "faster, better, cheaper" executions in an always-on
consumer-led environment, with a unitary structure.
Digital is by far the fastest-growing segment of the advertising
market. S(4) Capital estimates that in 2020 digital accounted for
over 50% (for the first time) or $290 billion of total global
advertising spend of $525 billion (excluding over $500 billion of
trade promotion marketing, the primary target of the Amazon
advertising platform), and projects that by 2022 this share will
grow to approximately 60% and by 2024 to approximately 66%,
accelerated by the impact of covid-19.
S(4) Capital combined with MediaMonks, the leading AdAge
A-listed creative digital content production company led by Victor
Knaap and Wesley ter Haar, in July 2018 and with MightyHive, the
market-leading digital media solutions provider for future thinking
marketers and agencies, led by Peter Kim and Christopher S. Martin,
in December 2018.
In April 2019, MightyHive combined with ProgMedia to expand
operations into Latin America and MediaMonks acquired film studio
Caramel Pictures to expand content studio capabilities. In June
2019, MediaMonks announced a planned combination with
Australia-based BizTech, a leading marketing transformation and
customer experience company. In August 2019, MediaMonks combined
with Amsterdam-based digital influencer marketing agency IMA. In
October 2019, MediaMonks combined with Firewood Marketing, the
largest digital marketing agency based in Silicon Valley, that was
recently ranked, along with MediaMonks and Circus (see below), as
one of the fastest growing agencies by Adweek, and MightyHive
combined with award-winning UK-based digital analytics, biddable
media and data science company ConversionWorks and South
Korea-based data and analytics consultancy MightyHive Korea. In
November 2019, MediaMonks announced its combination with
Delhi-based content creation and production company WhiteBalance
(completed in August 2020 - the delay due to necessary merger
clearance procedures) and then with fully integrated digital agency
Circus Marketing in January 2020 (completed in March 2020).
In May 2020, MightyHive announced a combination with Digodat,
one of the leading Latin American data and analytics consultancies,
and in June 2020, MightyHive announced its combination with Lens10,
a leading Australian digital strategy and analytics consultancy. In
July 2020, MightyHive announced a combination with Orca Pacific, a
market leading full-service Amazon agency and boutique consultancy
firm based in Seattle. In August 2020, MightyHive announced a
combination with London-based Brightblue, an econometric and media
optimisation consultancy. In September 2020, MediaMonks announced
its combination with Dare.Win, expanding its geographical presence
to France. In January 2021, MediaMonks announced its combination
with integrated creative, technology and media agency Decoded
Advertising, Shanghai based creative agency TOMORROW and Stuttgart
based automotive specialist STAUD STUDIOS. MightyHive also
announced its combination with integrated digital performance
marketing agency Metric Theory. In February 2021, MightyHive
acquired the assets of Datalicious Australia, a leading Google
Marketing Platform, Google Cloud and Google Analytics partner in
Asia Pacific. In March 2021, MediaMonks announced it had entered
into a conditional agreement in relation to a combination of
MediaMonks with Toronto-based design and experience agency, Jam3.
In May 2021, MightyHive announced it had entered into a conditional
agreement in relation to a combination of MightyHive with the
leading digital performance agency in Brazil, Raccoon Group.
On 16 July 2020, S(4) Capital announced the successful placing
of 36,766,642 new ordinary shares at a price of 315p raising
approximately GBP116 million gross proceeds which will be used for
further expansion and combination purposes.
Victor Knaap, Wesley ter Haar, Pete Kim, Christopher Martin,
Peter Rademaker and Scott Spirit all joined the S(4) Capital Board
as Directors. The S(4) Capital Board also includes Rupert Faure
Walker, Paul Roy, Daniel Pinto, Sue Prevezer, Elizabeth Buchanan,
Naoko Okumoto, Margaret Ma Connolly and Miles Young.
The Company now has around 5,500 people in 31 countries across
the Americas, Europe, the Middle East and Africa and Asia-Pacific
and a current market capitalisation of approximately GBP3.1 billion
(c.$4.5 billion), and would rank amongst the FTSE 150. It achieved
Unicorn status in a little over one year, unique in the advertising
and marketing services industry.
Sir Martin was CEO of WPP for 33 years, building it from a GBP1
million "shell" company in 1985 into the world's largest
advertising and marketing services company with a market
capitalisation of over GBP16 billion on the day he left. Today its
market capitalisation is GBP12 billion. Prior to that Sir Martin
was Group Financial Director of Saatchi & Saatchi Company Plc
for nine years.
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