Following Delay, S4 Capital Releases Financial Results for 2021

Sir Martin Sorrell - Image via S4 Capital
The results showed a pre-tax loss of £55.7mln, versus a profit of £3.1mln in 2020 – this was despite billings almost doubling.

Following an auditing delay, S4 Capital has released its financials which show the company garnering a 44% increase in net revenue compared with 2020-21. The results were pushed back twice by the company, first on March 18, and then again on March 30. Sorrel described the delay as “totally unacceptable and embarrassing.”

Excluding certain ‘adjusting items’, primarily costs related to acquisitions, share-based payments and depreciation, S4 reported an operational profit of £101mln, up 62.4% reported, or like-for-like up 11.9%, pro-forma up 16.8%.

“In our third full financial year we almost doubled in size, approximately half through organic growth and approximately half through combinations and generated over $900 million of revenue in 33 countries,” said Sir Martin Sorrel, Executive Chairman of S4Capital Plc.


“We continued to develop conversion at scale with six well established “whoppers” and a further nineteen clients identified as “whoppertunities” and with approximately half of our revenues from technology clients.”

According to a statement issued with its preliminary financial results, net revenue for the year was £560.2m – a sizeable increase of 89.8% when compared to £295m for the previous 12 months.

Looking ahead Sorrel expressed optimism for the company which has doubled its headcount in the last year expanding to 8,400 staff across 33 countries. The company offered market guidance of 25% like-for-like gross profit growth with steady improvement in EBITDA margins for 2022


“Although global GDP forecasts have slipped… we believe 2022 will generally be a good year economically overall, with consumers temporarily insulated from an inflationary squeeze by Covid savings,” Sorrell said.

“This, despite the significant inflation, higher interest rates, continued Covid lockdowns in China, and the bitter, vicious war in Ukraine – which will raise risk levels for clients in Central and Eastern Europe and to a lesser extent Asia Pacific, whilst lowering them in North and South America.”

2021 saw the addition of four new “whoppers” – Meta, Mondēlez, BMW/MINI and HP – adding to Alphabet and a leading NDA’d telecommunications company – all of which generate more than $20 million of revenue. A further 19 clients have been identified as “whoppertunities” over the three-year period 2022-24.

Financial highlights

  • Billings* £1.3 billion, up 99.4% reported, up 66.8% like-for-like** and pro-forma*** billings £1.4 billion, up 67.1%.
  • Revenue £686.6 million, up 100.4% reported from £342.7 million, like-for-like up 52.4%, pro-forma up 53.8%.
  • Gross profit which is equivalent to net revenue £560.3 million, up 89.8% reported from £295.2 million, like-for-like up 43.7%, pro-forma up 45.7%.
  • Two year simple like-for-like gross profit/net revenue stack up over 63%******* and three year up over 100%.
  • Operational EBITDA £101.0 million, up 62.4% reported, like-for-like up 11.9%, pro-forma up 16.8%.
  • Operational EBITDA margin 18.0%, down 3.0 percentage points on 2020 reported, like-for-like down 5.1 percentage points, pro-forma down 4.6 percentage points driven by investment in major new “whopper” clients, new areas of organic growth and the Group’s management infrastructure. Operational EBITDA margin improved from 14.5% in the first half to 20.6% in the second half.
  • Adjusted basic net result per share 13.0p versus 7.9p in 2020 up 64.6%.
  • 2021 results in the range of market expectations of revenue of £619.0 million to £691.0 million, gross profit/net revenue of 553.6 million to 572.5 million and Operational EBITDA of £99.7 million to £111.6 million (consensus of £650.8 million, £559.1 million and £103.8 million respectively).
  • Operating loss £42.1 million versus an operating profit of £8.1 million in 2020. Operating loss is after charging £136.9 million of Adjusting items relating to acquisitions, amortisation and share based payments (including £72.3 million in contingent combination consideration mainly tied to continued employment). Pro-forma operating loss of £83.5 million versus an pro-forma operating loss of £87.9 million in 2020.
  • Loss before income tax £55.7 million, after charging adjusting items, versus a profit of £3.1 million in 2020.
  • Statutory loss for the period £56.7 million, after charging adjusting items and after taxation, versus £3.9 million (loss) in 2020 and pro-forma loss for the period of £98.1 million.
  • Basic and diluted net loss per share 10.3p, after charging adjusting items and after taxation, versus 0.8p (loss) in 2020.
  • Year-end net debt £18.0 million (2020: net cash £51.6 million), despite making £96.6 million in cash payments for combinations and increasing working capital investment primarily to fund larger accounts, reflecting liquidity from operations and EBITDA conversion to cash flow from operating activities of 54.1% (including £10.0 million relating to contingent consideration tied to employment) versus 99.2% in 2020.
  • January and February gross profit/net revenue ahead of targeted 25% like-for-like growth.
  • Significant increase in financial controls, risk and governance processes and resources being implemented and planned under the guidance of a new Chief Financial Officer, who took over the role on January 3rd, 2022.

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