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Sorrell’s S4 Capital sails serenely on – Covid or no Covid

Sir Martin Sorrell’s S4 Capital booked a £500,000 loss for the six months to June 2020 but nobody bothers about that much these days (in the same period of 2019 it lost £8.8m) but its top line numbers continue their advance through the coronavirus outbreak.

Billings were up 41.4% on a like-for-like basis to £260.4m in the period, revenue up 60.7% to £141.3m and EBITDA profit (profit before central costs) was £20.5m, down 4.7% like-for-like which is pretty good in the circumstances. S4’s businesses include content agency MediaMonks and digital media operation MightyHive.

Sorrell says: “The tragedy of Covid-19 has only accelerated the speed of digital transformation and disruption at consumer, media and enterprise levels. These results confirm that S4Capital is currently in a growth sweetspot and that its digital only, faster, better, cheaper, unitary, “holy trinity” model, which combines first party data with digital content, data and digital media, is migrating from brand awareness and trial to conversion at scale.

After less than two years as a listed company and with a market capitalisation of around $2.5 billion, which is well in to the top 200 FTSE companies, we are now in a position to build stronger value-adding relationships with tech, healthcare, financial and FMCG clients amongst others and with a strong and liquid balance sheet in a great financial place to expand through further combinations, which will add to our data, content, digital media and technological capabilities.

“We will continue to update the market on progress in reaching our new client conversion target of “202”, that is 20 clients with over $20 million of annual revenues.”

Sorrell can be excused a degree of self-satisfaction. His big bet on digital on leaving WPP, the company he founded, under a cloud has clearly paid off – so far anyway.

Keen Sorrell wqtchers are still awaiting a really big deal: at 75 he’s in a hurry although so far S4 has confined itself to add-ons to MediaMonks and MightyHive, “mergers” as the company calls them. S4 shares have risen steadily over the past three months (it’s now worth around £2bn) and there would be plenty of investors prepared to bankroll a bd for, say, part of WPP or one of the other ad holding companies.

Can he resist it?

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