S4 Capital PLC Trading Update (8812G)
July 24 2023 - 2:00AM
UK Regulatory
TIDMSFOR
RNS Number : 8812G
S4 Capital PLC
24 July 2023
24 July 2023
S4 Capital plc
("S(4) Capital" or the "Company")
Trading Update
The Company is providing a trading update for the first six
months of 2023 and revised targets for the full year following a
preliminary review of the Company's financial results for the
period and the second quarter revised forecast for 2023.
Net revenue in the second quarter was below budget with May and
June in particular, reflecting the challenging macroeconomic
conditions and clients, especially those in the technology sector,
remaining cautious and very focussed on the short term. We continue
to see longer sales cycles, particularly for larger transformation
projects. Some impact has been seen in each of the Practices, but
it is particularly evident in Content. Like-for-like net revenue
growth for the Company is expected to be c.5% in the first
half.
The slower topline growth has resulted in the Company's
Operational EBITDA and Operational EBITDA margin being below
budget, but showing reported progress on the prior year. Based on
the slower market growth in the first half, we now target full year
like-for-like net revenue growth to be in a range of 2-4%, as
opposed to 6-10% previously. We now target Operational EBITDA
margin of 14.5-15.5%, as opposed to 15-16% previously. As in prior
years, 2023 will again be significantly second half weighted
reflecting our seasonality.
Based on our preliminary review of the H1 results, Technology
services continues to perform well, Data&digital has seen
growth slow compared to 2022, but is trading satisfactorily, while
Content has had a more difficult period generating results below
our budget.
Reflecting the market backdrop, the Company continues to
maintain a disciplined approach to cost management, including
headcount and discretionary costs. We expect these actions to
support the outturn in the second half.
Net debt at 30 June 2023 was approximately GBP115 million. The
first half figures do not include expected cash consideration on
prior year combinations, which will see net debt rise by the
year-end, in line with our targeted range of GBP180-220 million.
The balance sheet remains strong with sufficient liquidity and
long-dated debt maturities. There will be no further merger
payments next year and as a result the net debt position is
expected to improve significantly in 2024.
We remain confident our talent, business model, strategy and
scaled client relationships position us well for industry-leading
growth in the medium term and the initial client traction we are
seeing with our Artificial Intelligence initiatives further
reinforces our confidence.
Further details will be given when the results for the first
half are released on the 18 September 2023.
Enquiries:
S(4) Capital Tel: +44 (0)20 3793 0003
Sir Martin Sorrell (Executive
Chairman)
Powerscourt (PR Adviser to Tel: +44 (0) 7970 246 725
S(4) Capital)
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 by integrating leading businesses in three practices:
Content, Data&digital media and Technology Services, along with
an emphasis on 'faster, better, cheaper, more' execution in an
always-on consumer-led environment, with a unitary structure.
Victor Knaap, Wesley ter Haar, Christopher Martin, Scott Spirit
and Mary Basterfield 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 Colin Day.
The Company has approximately 8,600 people in 32 countries with
approximately 70% of revenue across the Americas, 20% across Europe
and the Middle East and 10% across Africa and Asia-Pacific. The
longer term objective is a split of 60%:20%:20%. Content currently
accounts for approximately 60% of revenue, Data&digital 30% and
Technology services 10%. The long-term objective is a split of
50%:25%:25%.
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. Prior to
that Sir Martin was Group Financial Director of Saatchi &
Saatchi Company Plc for nine years.
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