S4 Capital has finally released its financial results following an ’embarrassing’ audit delay.

The company, which owns Media.Monks, reported a 44% increase in net revenue compared to 2020-21. Although audit delays were an “unacceptable and embarrassing” hurdle, according to S4’s Chairman Martin Sorrell, the company grew “at an industry-leading pace”.

What do the results show?

Net income this year was £560.2 million ($68.53 million), up 89.8% from £295 million in the past 12 months. Organic revenue growth over two years was 63% overall, a 100% ‘stack’ over three years (meaning bracketed growth periods for comparison with pre-Covid results). The company’s bills reached £1.3 billion ($1.6 billion), up 99.4% from last year.

S4’s operating EBITDA margin (earnings before interest, taxes, depreciation and amortization) was 18%, down 3% from 2020. The company’s statement suggests this is due to the impact of a number of acquisitions over the past two years. According to CFO Mary Basterfield, operating expenses increased 110% to reflect the company’s expansion through acquisitions. January and February 2022 achieved a similar organic growth target of 25%, the results report said.

The company doubled its number of employees last year and currently employs 8,400 people in 33 countries.

Sorrell said in a statement: “In our third fiscal year, we almost doubled in size. About half generated more than $900 million in revenues in 33 countries through organic growth and about half through cooperatives. We continued to develop large-scale conversions with 6 well-established ‘whoppers’ and an additional 19 customers identified as ‘whoppertunities’, earning about half of our revenue from our tech customers.”

What is the impact of audit delays?

The results were originally due to be announced on March 3rd. However, S4’s auditor, PricewaterhouseCoopers (PwC), said it could not complete verification work on the number of companies.

According to CFO Basterfield, who joined earlier this year, the main problem with delays was a lack of documentation and a “lack of understanding” within the existing Media.Monks business related to revenue reporting.

The delay has forced S4 to establish tighter financial controls and new risk and governance procedures within the scope of Group CFO Basterfield, which it joined earlier this year.

Sorrell said: “The delay in generating 2021 results is unacceptable and embarrassing, and includes several important additions to the central and content practice finance teams and audits, including financial controls, risk and governance structures and Significant changes to the resource are being implemented and planned. Committee.”

Which sectors and institutions performed the best?

S4 operates as a single P&L across 8,000 employees and does not distinguish agency brands on its balance sheet. However, content (ie advertising and digital creative) made up the bulk of the business, accounting for 68% of net sales. Data and digital media accounted for 29%. Despite S4’s ambition to appear as a technology company rather than a marketing service provider like an advertising holding company, technology services accounted for 1.25% of last year’s revenue.

Much of the S4’s growth last year came from expanding commitments with existing partners including Google, Meta, Amazon, Paypal, HP, Netflix, Procter & Gamble, Mondelez and BMW, but Allianz, Miele and Instacart. Sorrell’s goal of 20 ‘whoppers’, each generating over $20 billion in revenue, could be achieved by 2024, a statement predicts.

Most of S4’s revenue and growth came from the Americas, with 69% of net sales coming from that region. EMEA accounted for around 20% of net sales, but entered the German market last year, although some of the pie is likely to increase as Media.monks strengthens its foothold in Europe.

Sorrell said he expects S4 to double net revenue over the next three years and aims to have five more ‘whopper’ accounts during 2022. inflation.

“While global GDP projections have declined … 2022 is generally going to be a good year for the economy overall,” Sorel said.

“Despite significant inflation, higher interest rates, continued Covid lockdown in China, and a horrific and vicious war in Ukraine, this will increase and lower risk levels for our customers in Central and Eastern Europe and Asia Pacific, while increasing the level of risk in North America and in South America.”


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