Member Info for NigeCo

1msn,

Are you still holding your large shareholding of 8.5m in S4?

You said many months ago that you had plans to visit S4 Sir Martin, did you follow through with your plans? And if so are you willing to share? Any insight would be most appreciated by all I'm sure. There must be a very good reason why you continue to invest such a large amount of equity in S4?

Moody’s Ratings has affirmed S4 Capital PLC’s B2 long-term corporate family rating while changing its outlook from stable to negative, the ratings agency announced Thursday.

The action reflects S4 Capital’s downward revision in guidance announced in November following a greater than expected pullback in clients’ marketing spending for the fourth quarter of 2025.

Moody’s also affirmed the B2 rating on the €375 million backed senior secured term loan B issued by S4 Capital LUX Finance S.a r.l. and the £100 million backed senior secured revolving credit facility issued by S4 Capital 2 Ltd.

The negative outlook stems from Moody’s assumption that recent contract wins may not improve performance before the second half of 2026, with limited visibility for client advertising spending in the next 12 months.

Despite the outlook change, Moody’s noted several positive factors including S4 Capital’s position as a digital advertising pure-play, established client relationships with recent wins including General Motors Company, Amazon.com, Inc., and T-Mobile USA, Inc., plus a growing degree of client diversity.

The ratings agency highlighted concerns about S4 Capital’s relatively modest size compared to peers and weakening 2025 revenue trajectory. The company now expects 2025 like-for-like net revenue to decline by just under 10%.

Moody’s projects S4 Capital’s adjusted EBITDA will be around £58 million with debt to EBITDA of approximately 6.0x. The company’s free cash flow is expected to reduce to a high single digit from £36 million in 2024.

The company maintains good liquidity with £175.1 million in cash and cash equivalents as of June 2025, supporting its guidance for reported net debt of £100 million to £140 million for 2025.

Moody’s indicated the ratings could be upgraded if S4 Capital builds a track record of client wins leading to positive growth and maintains adjusted gross debt/EBITDA well below 4.5x with positive free cash flow.

Conversely, the ratings could face downgrade if the company fails to return to positive organic revenue growth from the second half of 2026, cannot preserve its EBITDA margin, or if its adjusted gross debt/EBITDA remains above 5.5x.

I understand shareholders frustrations, I'm as disappointed as anyone. I only considered investing in S4 Capital because of Sir Martin Sorrell, a man who had a good track record at the time, with vast experience of the ad industry. Who attracted new clients, poached from WPP.

Let's concider if SMS was replaced? S4 would run the risk of lossing major clients that he attracted. Also regarding the golden B share, how would you feel if SMS gave up his B share, only for a low-ball takeover attempt offering 25p per share? I say be careful what you wish for. Better the devil you know, than the devil that you don't know. All that we can do as S4 shareholders is trust that SMS can turn things around. I live in hope, but won't hold my breath.

Take note lse2000.....

Https://archive.is/pP5Rj#selection-1675.0-1701.214

The LSE said: “We have been discussing with the Financial Conduct Authority our concerns in respect of the conduct of certain platforms, social media influencers and bulletin board users and have highlighted potential cases that give rise to concerns of market abuse.

“We would encourage companies, market practitioners and bulletin board users who have reasonable cause for concern of this type of behaviour to report matters.

“The FCA has confirmed that posting information which gives, or is likely to give, a false or misleading impression about an issuer — where the person knew or should have known this would be the case — may constitute a breach of UK MAR [market abuse regulation]. This applies to both positive and negative statements.”

Some companies believe the “unacceptable public abuse” from bulletin board users is unlikely to occur in private markets.

“The feedback is that this is a disincentive for companies and individual directors to join Aim,” the exchange said. “We consider it is unacceptable for Aim companies and directors to be exposed to such pressure.”

Lse2000..... "Better to remain silent and be thought a fool than to speak out and remove all doubt"

1pencil & RunS4, thanks for your replies, much appreciated.

Yorek, thanks for posting article.

Two quite large trades reported as buys this afternoon.......... 1X 540K......... 1X 500K......... Volume 4.36m

1pencil..... "SMS put in £53m of his own money to get the ball rolling"

1pencil, if you are correct with your above comment, and I have no reason to doubt you, then SMS breakeven share price would be around 102.85p. Food for thought, you would think that he must be thinking of averaging down at some point, like the rest of us. If only to get his money back.

"they're still generating decent FCF and debt is not an issue"

Good post RunS4, I agree regarding FCF, for now at least, but what makes you think that debt isn't an issue? When net debt is more than the total M/Cap of the company. It's debt in the end that kills companies. For this reason I think S4 should priorities paying down debt before paying out any dividends.

Buy Volume......1,103,351

Sell Volume.........107,815

Unknown Volume......872,915

Following the release of our third quarter trading update in early November, we have received and reviewed both the Company's financial results for October and the third quarter revised forecast for 2025, which show a decrease in net revenue versus the forecast and therefore impacts our fourth quarter performance.

2025 like-for-like net revenue is now expected to be down by just under 10%. Despite the cost actions we have already taken this year, this decline in net revenue will impact our operational EBITDA, which we are now targeting to be approximately £75 million, below the current market consensus of £81.6 million. This is mainly as a result of lower project-based revenue, continued client caution and a slower ramp up of our new business wins than expected.

Despite this, our liquidity continues to improve more than anticipated and our targeted range for the year end net debt remains £100 million to £140 million.

22/3/2024 WSJ...."Sorrell has received several merger offers from Stagwell, an ad firm led by former Clinton adviser Mark Penn, according to people familiar with the matter. Sorrell rebuffed the offers because in his view, they undervalued the company and Stagwell wasn’t a good strategic fit. One proposal, made last fall, was worth nearly $700 million, some of the people said. At least one private-equity firm also expressed some interest in acquiring S4."

https://archive.is/xIgUA

"No plan B"

Why did you have a plan B? Did you expect plan A to fail? Do plan A better.

Wildtiger......"Far too many headwinds in the short term for this to move north. The earliest this could turn around is probably this time next year, so it's 12 months of dead money here."

That was a quick 12 months, more like two days later he's back in. Comedy gold. I'm sure I've read this book before.

1pencil, interesting point about Third Avenue foresight. Let's hope that their foresight regarding S4 investment is as accurate. Do you have any idea regarding what Third Avenues average purchase price currently stands at in S4 Capital? Cheers.

Https://www.youtube.com/watch?v=UX7tv6SOEbk

"Plenty of room for multiple expansion in time, but those Q3 numbers were pretty disappointing IMO."

My fear is Sorrell is 81 next February, how much longer does he have left? If anything happens to him, his golden share is gone. Vultures could take S4 for a pittance and we lose out financially.

Auson,

I agree. Peel Hunt's valuation target price of 25p is a joke.

BT’s latest figures show ‘cracks’ in its core market, says Hargreaves Lansdown.

The Citywire Elite Companies AA-rated telecoms giant reported a 3% fall in revenues in the first half to £9.8bn while Openreach broadband lines dropped 242,000 in the second quarter.

The shares were trading up 2.8%, or 5p, at 185p after the results as investors focused on its satellite broadband deal with Elon Musk’s Starlink.

Analyst Matt Britzman said the group may have ‘signed up for the stars’ but the results have ‘failed to shine’.

‘These numbers were meant to steady nerves, with shares down around 20% from July’s peak, but instead exposed cracks in its core markets,’ he said.

‘Guidance for the year stayed intact, yet the rise in broadband line losses points to a market under real pressure as rivals step up their game.’

The consumer division continues to drag, pulling revenue slower, although the business arm surprised with a rare profit boost.

Britzman said cashflow was the ‘real disappointment’ as it fell ‘well short as spending and some other moving parts weighed more than expected’.

‘Against this backdrop, the new deal with Starlink feels less like bold innovation and more like a tactical move to ease pressure on rural coverage,’ he added.

‘Expectations were low, and early trading suggests markets are taking a glass-half-full approach, but this update still feels softer than hoped.’

S4 Capital shares are cheap but Peel Hunt is still waiting for revenue momentum before making them a ‘buy’.

Analyst Jessica Pok retained her ‘hold’ recommendation and target rice of 25p on the digital advertising agency, which was trading down 8.5%, or 1.8p, at 19p after a like-for-like revenue decline of 4% in the third quarter, with earnings for the full year unchanged from last year.

Pok said despite some revenue issues, ‘disciplined cost management has supported profit progression’, including 400 job cuts, and she expects the cost actions to benefit the second half and also extend into full-year 2026.

‘The shares trade on a muted full-year 2026 price/earnings of 4 times, but we maintain our 25p target price and ‘hold’ recommendation for now given the lack of positive top-line momentum,’ she said.