S4 Capital: Revenue down and debt up at Sir Martin Sorrell’s ad giant
Sir Martin Sorrell’s S4 Capital’s post-pandemic struggles have carried through into its latest results, which revealed a sharp decline in revenue and ballooning debt.
The London-listed media holding group, which ad guru Sorrell founded after a sudden exit from WPP in 2018, saw its net revenue reduce by 15.6 per cent from £445.5m to £375.1m in the six months to June 30.
The group’s net debt ballooned from £109.4m in the first half of 2023 to £182.8m, some of which, the firm said, was down to the £2.5m share buy-back programme launched in January; its first ever.
Billings at the ad group, which has mostly grown with a strategy of acquiring small digital marketing firms and folding them into its flagship agency Media Monks (now Monks), were also down, falling 1.8 per cent to £908.9m.
But operational earnings before interest, tax, debt and amortisation (EBITDA) remained broadly steady, after the sweeping cost reduction programme helped keep its outgoings down.
It posted a basic loss per share of 2.0p, compared to 3.5p per share in the first half of 2023.
Sir Martin Sorrell, S4 Capital’s executive chairman, said: “As highlighted previously, trading in the first half reflects the continuing impact of both challenging global macroeconomic conditions and high interest rates.
“This particularly impacted marketing spend by some technology clients and our Technology Services practice was affected by a reduction in one of our larger relationships.”
The results are an extension of several years of difficult trading for the group which was launched to great fanfare in 2018 and which saw its share price rise surge by more than five times between 2020 and 2021 off the back of hyper-low interest rates. Its performance reflects much of the advertising industry.
The results come after Sir Martin warned of the effects that the government’s touted workers’ rights reforms – and specifically changes to the working week – could have on UK plc.
The exec told City A,M.: “What we need is stability and a business environment that fosters investment and drives productivity. Experiments iwth the working week or working hours don’t help.”