Pre-Close Period Trading Update

29 July 2019

S⁴ Capital plc ("S⁴ Capital" or the "Company")

Pre-Close Period Trading Update

S4 Capital plc (SFOR.L), the new age/new era digital advertising and marketing services company, is pleased to report continued trading progress in the first half of 2019, with further strong revenue and gross profit growth.

Like-for-like revenues and gross profit were up around 40%, growing faster than the targeted rate required to double the Company's revenues and gross profit organically over the three years to 2021.*

Both sterling reportable revenues and gross profit have strengthened slightly since our AGM statement in May and were up well over 40%. As also mentioned in the AGM statement, pro-forma reported operating EBITDA margins were lower than last year, reflecting increased human capital investment (a doubling of the like-for-like headcount) and geographical expansion, both at MediaMonks in digital content and MightyHive in programmatic, and the relatively stronger operating EBITDA margins at MediaMonks in the first half of last year.

Reported pro-forma operational EBITDA margins are expected to improve from the first half of the year to the second half, reflecting an even stronger second half at MightyHive in programmatic and an easier second half operating EBITDA margin comparison at MediaMonks in content. Operating cash flow remains strong with net debt approximately halved from the level incurred to part fund the MediaMonks merger. 


Prestigious global digital content assignments at Procter & Gamble's Braun and Nestle's Starbucks have been followed by the award of a major package goods brand in South East Asia and programmatic consultancy assignments at Bayer, Electrolux, Mondelez, Sephora and Renault.

Sir Martin Sorrell, Executive Chairman of S4 Capital plc said:

"The continued top-line revenue and gross profit momentum at twice the digital market's growth rate clearly demonstrates the contemporary relevance to clients, of the purely digital, "faster, better, cheaper", unitary, first party data, content and programmatic model. We are investing in human capital and new geographies at a faster than anticipated rate, to take our "holy trinity" model to the next level and this has flowed through to operational EBITDA margins in the first-half and we expect margin expansion in the second half of the year."

The Company will report results for the six months ending 30 June on 11 September 2019.

Enquiries to:

Notes:

* This is a target, not a forecast. There can be no assurance that the target growth rate required to double the Company's revenues and gross profit will be achieved from time to time or at all and it should not be seen as an indication of the Company's expected or actual results or returns. Accordingly, investors should not place any reliance on the targets in deciding whether to invest in the Company's Ordinary Shares.

About S⁴Capital
S⁴Capital plc (SFOR.L) is a 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, multi-national, regional, local clients and millennial-driven influencer brands. This will be achieved initially by integrating leading businesses in three areas: first-party data, digital content, digital media planning and buying, 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. S⁴Capital estimates that in 2017 digital accounted for approximately 40 per cent. or $200 billion of total global advertising spend of $500 billion (excluding about $400 billion of trade support, the primary target of the Amazon advertising platform), and projects that by 2022 this share will grow to approximately 55 per cent.

S⁴Capital integrated 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 programmatic solutions provider for future thinking marketers and agencies, led by Peter Kim and Christopher S. Martin, in December 2018.

Victor, Wesley, Pete, Christopher and Peter Rademaker (formerly Chief Financial Officer of MediaMonks, now Chief Financial Officer of S⁴Capital), all joined the S⁴Capital Board as Directors. The S⁴Capital Board also includes Scott Spirit, Elizabeth Buchanan, Rupert Faure Walker, Daniel Pinto, Sue Prevezer and Paul Roy.

The company has a market capitalization of approximately £600 million ($750 million) and approximately 1,400 people in 20 countries, across the Americas, Europe, the Middle-East and Africa and Asia-Pacific.

Sir Martin was CEO of WPP for 33 years, building it from a £1 million "shell" company in 1985 into the world's largest advertising and marketing services company with a market capitalization of over £16 billion on the day he left. Prior to that he was Group Financial Director of Saatchi & Saatchi Company plc for 9 years.