S4 Cap. Share News (SFOR)

(Sharecast News) - Advertising and marketing services company S4 Capital reported a "very busy" year in 2020 on Monday, both organically and through mergers, with that cadence maintained in the first quarter and into the second quarter of 2021, as its raised its growth guidance to 35% from a previously-increased 30%.
The London-listed firm, which was holding its annual general meeting, said that having built out its content practice in 2018 and 2019 around 'MediaMonks' and its data and digital media practice around 'MightyHive', it had since added 12 content companies and 11 data and digital media companies - 12 of those before last year's AGM, and 11 in the last seven months of 2020 and the first five of 2021.

Executive chairman Sir Martin Sorrell said the company was now in the process of raising a term loan of more than $350m (£247.5m) to finance further expansion, as the equity funds raised had been successfully deployed.

"All these mergers have historically been branded under the MediaMonks and MightyHive banners and, in turn, MediaMonks and MightyHive have been increasingly and already successfully acting as one in going to market," Sorrel said.

"The combined firm will, in future, go to market under one brand or flag."

Since the last AGM in June 2020, S4 Capital had doubled its headcount to more than 5,500 in 31 countries, and almost tripled its market capitalisation to over £3bn.

S4Capital achieved sterling and dollar 'unicorn' status within 18 months of re-listing, with Sorrell noting that it would rank in the FTSE 150 by market capitalisation if it had a premium listing.

"As the global economy snaps back from the pandemic and opening up and vaccines kick in, trading for the first four months of 2021 has accelerated strongly, with reportable revenue up almost 90%, compared to 71% for the first quarter," he told shareholders.

"Reportable gross profit or net revenue was up almost 84%, compared to 71% for the first quarter.

"Both revenue and gross profit or net revenue like-for-like growth rates accelerated markedly in April."

The company did not have May figures as yet, but Sir Martin Sorrell said early indications were that May would be similar to April and that in June, the pipeline continued to be "robust".

"Tech clients, which constitute over 50% of our revenues, are still generally outspending consumer packaged goods (CPG) and fast-moving consumer goods (FMCG), pharma and retail clients, but all verticals exhibit robust activity.

"At the beginning of the year, the company's third three-year plan, as with the previous two, called for a doubling of the company organically between 2021 and 2023.

"This targeted organic gross profit or net revenue growth of approximately 25% in 2021."

After the end of the first quarter, in light of performance, guidance was raised to 30%, and In light of the acceleration in the second quarter and the company's revised first quarter forecast, guidance had now been raised to 35%.

The company said its cash flow remained "strong", with S4 Capital saying it would continue to conclude strategic mergers, enhanced by the proceeds of the term loan.

Geographically, S4 Capital added offices in Uruguay and Germany since the last AGM, with the board saying it did not believe the company would need to add more than four or five markets to its existing tally of 31 countries.

"We continue to examine our needs for deeper strategic insight and adding technology services, along with increasing focus on the importance of first party data and the walled gardens, following the death of the cookie, which we are already well positioned for," Sir Martin Sorrell said.

Sorrel also noted that the company had added further non-executive talent to its board since the last annual meeting in the form of Miles Young, former chairman and chief executive officer of Ogilvy and currently warden of New College, Oxford.

"We now have eight non-executive directors - four women, four men."

At 0950 BST, shares in S4 Capital were up 4.42% at 612.97p.