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He is a man possessed. HE WILL BE DETERMINED TO SORT IT OUT. HIS EGO IS A GREAT DRIVING FORCE. Confident long term.
He's on the rampage already
https://www.campaignlive.com/article/s4-capital-axes-bonuses-ex-cfo-exits-fallout-audit-woes-continues/1756075
LL
Sorrell may be a smart guy when doing deals but hubris has caught up with him and he will be forced to calm his instincts and build up like-for-like for a while. That’s no bad thing so we can get the visibility of revenues and profits.
He certainly needs to.
RE..fre1..post...i entirely agree...there is not much to drive the sp at mo...this could well sink lower ..especially in view of overall market sentiment and woes...i would like to be more positive...the auditors obviously were right in delaying their report...and the weaknesses encountered will take time to deal with...yes these sub £3 sps look great..but the sp is low for good reason...SMS has worked hard growing the company ..lets hope things come good over time..gla
it will take some time to repair the damage - control weaknesses highlighted by auditors - no wonder there was a delay - how much has this cost including reputational damage plus times article to the company i wonder
SMS is a smart guy - no doubt he'll be focused on resolving such matters in the future based on the current damage done
So all the SMS ducks were not in a row and PwC were correct in delaying the audit
Nothing you can do now but learn the lesson and move on
Thank you Sanlorenzo.
It puts into context the delays and that blaming PwC was a smokescreen. It looks like the auditors have done a proper job, so credit to them for a change. There were always going to be consolidation issues with companies being brought into the SFOR group at such a fast pace. Chumba's post headline yesterday is a good one.
Next up we have the Q1 results which hopefully will give some clarity on progress and the slower pace of acquisitions due to the lower share price could give the governance arrangements time to catch up.
The final part of The S Times report highlights where S4 now stand and in my opinion it will take some time for the Company to rebuild its reputation especially in the present geopolitical and economic climate.
"On this month’s results call, a visibly irritated Sorrell was keen to draw a line under the accounting issues, saying it was time “to rebuild confidence and trust”.
He admitted the share slump would affect his deal spree, given that S4 shares are part of the funding. He also conceded that clients and potential clients might be less inclined to work with the company in the future, given the chaos.
On Saturday, the auditor’s report confirmed serious failings in S4’s accounting. In an unusually lengthy and detailed report, PwC raised concerns about the lack of a group treasury function, explaining that account controls for most acquired companies remain decentralised.
PwC said management reassessed revenue recognition on 26 live contracts which resulted in a “material adjustment” to revenue and adjustments to cost of sales.
Some fear more problems will surface, such is the chaos inside S4 and MediaMonks. One former employee said: “I don’t think S4 will ever be a normal company.”
S4 case reminds me of a proverb: "if you look after the pennies the pounds will look after themselves."
OK...ex serviceman here (and not RAPC), but how the blazes can you trumpet a profit when you have made a loss of £56.7 million? No wonder PWC had problems.
Financial performance
All-in-all, we continued to fire on almost all
cylinders in 2021, with like-for-like revenue and
gross profit/net revenue up 52.4% and 43.7%,
two-year simple stacks for gross profit/net
revenue up 63.1%, the one feature we would
have liked to improve on being the Operational
EBITDA margin, which was impacted by the
significant investment required to bed down
our growth.
• Billings1 were £1.3 billion, up 99.4% on a
reported basis, up 66.8% like-for-like 2 and
up 67.1% pro-forma 3 . Controlled billings, that
is billings we influenced in addition to billings
that flowed through our income statement,
more than doubled to approximately
£5.4 billion (2020: £2.3 billion).
• Revenue was £686.6 million, up 100.4%
from £342.7 million on a reported basis,
up 52.4% like-for-like, and up 53.8% on a
pro-forma basis.
• Gross profit was £560.3 million, up 89.8%
reported, up 43.7% like-for-like, and up
45.7% pro-forma.
• Operational EBITDA 4 was £101.0 million, up
62.4% reported, up 11.9% like-for-like, and
up 16.8% pro-forma.
• Operational EBITDA margin was 18.0%,
down 3.0 margin points versus 21.1% in
2020, down 5.1 margin points like-for-like
and 4.6 margin points pro-forma, reflecting
investment ahead of the revenue curve in
major new ‘whopper’ clients, new areas
of organic growth, such as connected
TV, and financial, risk and management
infrastructure to manage future growth.
• Operating loss was £42.1 million, after
£136.9 million of adjusting items, principally
acquisition and amortisation expense,
versus an operating profit of £8.1 million in
2020. Adjusted basic net result per share
was 13.0p versus 7.9p in 2020, reflecting a
lower effective US tax rate for 2021.
• Statutory loss for the period was
£56.7 million, versus a reported £3.9 million
(loss) in 2020, after charging under IFRS
£72.3 million of combination payments,
which were tied to the continued
employment of key share-owning principals
in combinations. Although such contractual
provisions impact the income statement,
your Board believes this is a better
commercial approach given the professional
service nature of our business.
• Basic and diluted net loss per share were
10.3p, versus 0.8p (loss) in 2020.
• Year-end net debt 5 was £18.0 million
(2020 net cash: £51.6 million), despite
making £96.6 million in cash combination
payments and reflecting cash flow from
operating activities with 54.1% operating
cash flow conversion from EBITDA.
• Operational EBITDA margins improved in
the second half from 14.5% in the first half
to 20.6% in the second half giving 18.0%
for the full year, as the first half increased
investment in our people yielded higher
productivity in the second half.
• Pro-forma billings were £1.4 billion.
Pro-forma revenue was £740.2 million
and pro-forma gross profit was
£609.1 million up 53.8% and 45.7%
respectively on 2020. Pro-forma operational
EBITDA was £113.0 million, up 16.8% on