TIDMSFOR
RNS Number : 2684T
S4 Capital PLC
21 July 2022
21 July 2022
S4 Capital plc
("S(4) Capital" or the "Company")
Trading Update
Following preliminary reviews of the Company's financial results
for June and the results for the first six months of 2022, whilst
like-for-like revenue and gross profit/net revenue growth is in
line with full year run rate expectations of 25%, it is clear the
Company's EBITDA and EBITDA margin will be below its expectations
for the first half of the year.
Whilst revenue and gross profit/net revenue growth remain
robust, even against very strong comparatives for Q2 2021 (prior
year up 66% like-for-like), continued significant investment in
hiring and consequent expansion of the Company's cost base,
particularly in the Content practice, have had a negative impact on
first half EBITDA and EBITDA margin.
With the pattern of profitability already significantly skewed
to the second half of the year, and as previously signalled more
than the usual two-thirds weighting, this means that the
profitability required for the second half of the year to meet
market expectations will be even greater.
As a result, the Board has decided that it would prefer to lower
expectations for its target EBITDA for the full year to
approximately GBP120 million whilst maintaining the target of 25%
like-for-like gross profit / net revenue growth. The Board notes
that analysts currently forecast EBITDA in the range of GBP154-165
million.
The Board expects Data&digital media and Technology services
to deliver healthy EBITDA margins for the full year, but increased
costs at our Content practice will impact the Company's overall
Operational EBITDA margin in 2022.
Net debt at 30 June 2022 was towards the bottom end of previous
guidance of GBP140-190 million, due to an improvement in working
capital. The balance sheet remains strong with sufficient liquidity
and long-dated debt maturities.
Specifically, in the Content practice, hiring and staff costs
have continued to increase ahead of the gross profit/net revenue
growth rate.
Significant cost reduction measures, including a brake on hiring
and discretionary cost controls have been introduced already to
better balance the growth in revenue, gross profit / net revenue
and costs. The significant investment in financial controls, risk
and governance as previously announced and budgeted will not be
impacted in any way by these measures.
Further details will be given when the results for the first
half are released in September.
Enquiries:
S(4) Capital plc Tel: +44 (0)20 3793 0003/+44 (0)20 3793
0007
Sir Martin Sorrell (Executive Chairman)
Powerscourt Tel: +44 (0)778 670 2526
(PR Adviser to S(4) Capital plc)
Robin O'Kelly
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 by integrating leading businesses in three practice areas:
Content, Data&digital media and Technology services, 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 2021 digital accounted for
over 60% or $420-450 billion of total global advertising spend of
$700-750 billion (excluding over $500 billion of trade promotion
marketing, the primary target of the Amazon advertising platform)
and projects that by 2022 total global advertising spend will
expand to $770-850 billion and digital's share will grow to
approximately 65% and by 2024 to approximately 70%, accelerated by
the impact of covid-19.
In 2018, S(4) Capital combined with MediaMonks, the leading
AdAge A-listed creative digital content production company led by
Victor Knaap and Wesley ter Haar, and then with MightyHive, the
market-leading digital media solutions provider for future thinking
marketers and agencies, led by Peter Kim and Christopher S.
Martin.
Since then, MediaMonks and MightyHive have combined with more
than 25 companies across content, data&digital media and
Technology services. For a full list, please see the S(4) Capital
website.
In August 2021, S(4) Capital launched its unitary brand by
merging MediaMonks and MightyHive into Media.Monks, represented by
a dynamic logo mark that features MightyHive's iconic hexagon. As
the operational brand, Media.Monks underpins S(4) Capital's
agility, digital knowledge and efficiency and is the next step in
delivering on its foundational promise to unify content,
data&digital media and technology services.
Victor Knaap, Wesley ter Haar, Christopher Martin, Mary
Basterfield and Scott Spirit all joined the S(4) Capital Board as
Executive Directors. The S(4) Capital Board also includes Rupert
Faure Walker, Paul Roy, Daniel Pinto, Sue Prevezer, Elizabeth
Buchanan, Naoko Okumoto, Margaret Ma Connolly, Miles Young and Mary
Basterfield.
The Company now has over 9,000 people in 32 countries across the
Americas, Europe, the Middle East and Africa and Asia-Pacific.
This announcement includes 'forward-looking statements'. All
statements other than statements of historical facts included in
this announcement, including, without limitation, those regarding
the Company's financial position, business strategy, plans and
objectives of management for future operations (including
development plans and objectives relating to the Company's
services) are forward-looking statements.
Forward-looking statements are subject to risks and
uncertainties and accordingly the Company's actual future financial
results and operational performance may differ materially from the
results and performance expressed in, or implied by, the
statements. These factors include but are not limited to those
described in the Company's prospectus dated 8 October 2019 which is
available on the news section of the Company's website. These
forward- looking statements speak only as at the date of this
announcement. S (4) Capital expressly disclaims any obligation or
undertaking to update or revise any forward-looking statements
contained herein to reflect actual results or any change in the
assumptions, conditions or circumstances on which any such
statements are based unless required to do so.
No statement in this announcement is intended to be a profit
forecast and no statement in this announcement should be
interpreted to mean that earnings per share of the Company for the
current or future years would necessarily match or exceed the
historical published earnings per share of the Company.
Sir Martin Sorrell, Executive Chairman
S4 Capital plc
12 St James's Place
London
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END
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