S4 Capital reports first half loss as Martin Sorrell plots ‘even greater’ expansion

Martin Sorrell’s S4 Capital reported an operating loss of £8.8m in the six months to June 30 as the company geared up for “even greater expansion” in the second half of 2019.

The former WPP boss told analysts he expected the company to double in size by 2021.

Gross profit hit £70.19m, up 44%, as the former WPP boss heralded the “power and relevance of the faster, better, cheaper, digital-only unitary advertising model”.

The firm’s Asia operations delivered a gross profit of £5.98m profit, an increase of 154%. The region contributed 8% of global gross profit.

The operating loss of £8.8m reflected an investment in staff as its headcount climbed from 855 to 1375.

Operational EBITDA before central costs fell 8.5% to £12.10m, as the company prioritised top-line growth.

“The company has continued to invest heavily in human capital, as it geared up for even greater expansion in the second half
of the year as a result of strong client demand and geographic expansion,” a statement said. “This will support even stronger
anticipated revenues and gross profit growth in the second half of 2019, which have already been signaled in the very strong results for July.”

Total first half billings climbed 44.4% to £ 184.23m with revenue rising 41.6% to just under £88m.

“These results confirm the power and relevance of the faster, better, cheaper, digital-only unitary advertising model, with first party data fuelling content and programmatic,” Sorrell said.

“Now the task is to build significant scale organically, by broadening and deepening existing and new client relationships and adding resources through merger and acquisition. Your company is being increasingly involved in significant industry reviews.”

S4 Capital said the second half of 2019 has started “even more strongly”, with July pro-forma revenue up 67.6% and gross profit up 60.1% against July 2018.


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