TIDMSFOR
RNS Number : 5847F
S4 Capital PLC
19 July 2021
1 9 July 2021
S4 CAPITAL PLC
("S (4) Capital" or the "Company")
Update on debt financing and trading
The Company has engaged Credit Suisse AG, London branch, HSBC
Bank plc and Barclays Bank plc as lead arrangers for a seven year
EUR375 million senior secured term loan and in addition a five year
GBP100 million equivalent multicurrency senior secured revolving
credit facility with Credit Suisse, HSBC, Barclays, JP Morgan and
BNP Paribas to refinance its existing EUR25 million and US$28.9
million term loans and its EUR35 million and EUR43.5 million
multicurrency revolving credit facilities and to provide
approximately GBP200 million for general corporate purposes,
including to fund the cash element of future mergers, which is
typically one-half of overall consideration. The Company will
maintain its policy of maximum net leverage not exceeding 1.5-2x
EBITDA.
Since the Company's last trading update on the first four months
of 2021 at its AGM on June 7, 2021, activity has continued at
unprecedented levels in May and June, driven both by the
post-pandemic rebound in global GDP and the acceleration in digital
marketing transformation. Like-for-like revenue and gross profit
(or net revenue) growth both continued at levels beyond
expectations. The pattern of first-half profitability and margins
remains very similar to the first halves of 2019 and 2020, weighted
to the second half. The Company is in the early stages of planning
to expand its activities into a third practice area around
technology services and to continue to broaden and deepen its
content and data & digital media practices in the Americas and
Asia-Pacific.
Enquiries:
S (4) Capital plc Tel: +44 (0)20 3793 0003
Sir Martin Sorrell (Executive Chairman)
Powerscourt Tel: +44 (0)7970 246 725
(PR Adviser to S (4) Capital plc)
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. The
total investment to date into the Company's mergers is GBP1,053
million.
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 GBP 116 million gross proceeds which has been used
for further expansion and combination purposes.
For the last twelve months ended 30 April 2021, t he Company
generated Pro Forma (1) revenue of GBP518 million (GBP 437m in
2020) , Pro Forma gross profit of GBP444 million (GBP379m in 2020)
and P ro Forma Operational EBITDA (2) of GBP98 million (GBP91 m in
2020) . Both Pro Forma revenue and Pro Forma gross profit grew at a
compound annual growth rate of 25% from 2018 .
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, 5 00 people in 31 countries across
the Americas, Europe, the Middle East and Africa and Asia-Pacific
and a current market capitalisation of approximately GBP3.6 billion
(c.$5 billion), and would rank around 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 GBP 1 million "shell" company in 1985
into the world's largest advertising and marketing services company
with a market capitalisation of over GBP 16 billion on the day he
left. Today its market capitalisation is GBP11.4 billion. Prior to
that Sir Martin was Group Financial Director of Saatchi &
Saatchi Company Plc for nine years.
(1) Pro Forma financial information is calculated on a non -
statutory and non--GAAP basis, as if the Company and its
subsidiaries [ as at the end of the financial period / including
all mergers announced to date ] had existed in full for the whole
of that period and is prepared under comparable GAAP with no
consolidation eliminations .
(2) Operational EBITDA is EBITDA adjusted for non--recurring
items and recurring share--based payments. This is a non - GAAP
measure management uses to assess the underlying business
performance.
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