REG - S4 Capital PLC - Audited 2024 Results
24/03/2025 07:00
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RNS Number : 8336B S4 Capital PLC 24 March 2025
S(4)Capital plc
("S(4)Capital" or "the Company" or "the Group")
Audited 2024 results
Full year results in line with expectations
Net revenue(2) down 13.6% on a reported basis, down 11.0% like-for-like(3 )
Operational EBITDA(5) £87.8 million down 6.3% on a reported basis, down 0.6%
like-for-like
Operational EBITDA margin at 11.6%, up 90bps against prior year, with improved
performance due to cost control
Net debt(7) at £142.9 million, below the lower end of targeted range of £150
million to £190 million, reflecting focus on cashflow
Non-cash impairment charge net of tax of £280 million
The Board proposes a final dividend of 1p per share, signaling confidence in
cash flow
Uncertain macroeconomic conditions and client caution have ratcheted up
recently, however, our prominent positioning in AI is driving new business
opportunities
2025 net revenue and operational EBITDA(9) expected to be broadly similar to
2024
£ millions Year ended Year ended change Reported change change
Like-for-like(3)
Pro-forma(4)
31 Dec 2024 31 Dec 2023
Restated(8)
Billings(1) 1,963.0 1,870.5 4.9% 8.1% 8.1%
Revenue 848.2 1,011.5 (16.1%) (13.6%) (13.6%)
Net revenue(2) 754.6 873.2 (13.6%) (11.0%) (11.0%)
Operational EBITDA(5) 87.8 93.7 (6.3%) (0.6%) (0.6%)
Operational EBITDA margin(5) 11.6% 10.7% 90bps 120bps 120bps
Adjusted operating profit(6) 78.3 82.0 (4.5%)
Adjusting items(6) (381.1) (61.8) (516.7%)
Operating (loss)/profit (302.8) 20.2
Loss for year (306.9) (14.3)
Basic loss per share (pence) (45.7) (2.2) (43.5)
Adjusted basic earnings per share(6) (pence) 5.2 4.4 18.2%
Number of Monks 7,166 7,707 7.0%
Net debt(7) (142.9) (180.8) 21.0%
Financial highlights
¤ Billings £1,963.0 million, up 4.9% on a reported basis and up 8.1%
like-for-like.
¤ Revenue £848.2 million, down 16.1% reported and down 13.6%
like-for-like.
¤ Net revenue £754.6 million, down 13.6% reported and down 11.0%
like-for-like, reflecting lower spending on marketing from technology clients,
who are investing significantly in capital expenditure to build Artificial
Intelligence (AI) capacity, as well as a reduction in one of our larger
relationships in our Technology Services practice and continued challenging
global macroeconomic conditions with high interest rates. There was also some
underperformance, when compared to our markets.
¤ Operational EBITDA was in line with expectations at £87.8 million,
down 6.3% reported and down 0.6% like-for-like. Costs continued to be tightly
controlled and the number of Monks at the year end was down 7.0% versus
December 2023.
¤ Operating loss of £302.8 million, including the non-cash impairment
charge, a reduction of £323.0 million on the reported prior year profit.
¤ The Company has taken a non-cash impairment charge net of tax of
£280.4 million reflecting trading conditions in the second half of 2024 and
the medium-term outlook following the completion of our budget and three year
planning process. This is included in adjusting items after tax.
¤ Adjusted basic earnings per share 5.2p per share excluding adjusting
items after tax, compared to 4.4p per share last year, an increase of 18.2%.
¤ Basic loss per share of 45.7p, compared to 2.2p basic loss per share in
2023.
¤ Subject to shareowner approval, the Board proposes to pay a final
dividend of 1 pence per share, amounting to £6.1 million, on 10 July 2025 to
all shareowners on the register as at 6 June 2025.
¤ Year end net debt was £142.9 million, or 1.6x net debt/pro-forma(4)
operational EBITDA(5) of £87.8 million, now in line with our previous target
range of 1.5 to 2.0x. Net debt was below the lower end of the £150 million to
£190 million guided range, reflecting a strong focus on working capital and
continuing cost control.
¤ The balance sheet has sufficient liquidity and long-dated debt
maturities to facilitate growth, with the maturity of the €375 million term
loan in August 2028 and the currently undrawn £100 million RCF in August
2026. Post year end, £80 million of the RCF facility has been extended to
February 2028, with all four relationship banks extending on the same terms,
with the remaining £20 million terminating in August 2026. The RCF remains
undrawn as at 31 December 2024. We have comfortable headroom against the key
covenant - that net debt will not exceed 4.5x the pro-forma operational
EBITDA(10).
Strategic and operational highlights
¤ Our strategy remains the same. We continue to believe that a purely
digital advertising and marketing services business for
global, multinational, regional, and local clients and millennial-driven
influencer brands resonates with clients. The Company's unitary, purely
digital transformation model, based on first-party data fuelling the creation,
production and distribution of digital advertising content, distributed by
digital media and built on technology platforms to ensure success and
efficiency, also continues to cater to AI driven disruption.
¤ We continue to streamline and integrate our businesses. We are focusing
all our current capabilities into two Practices: Marketing Services and
Technology Services. Our tagline 'faster, better, cheaper and more' or 'speed,
quality, value and more' and a unitary structure should appeal strongly to
clients, even more so in challenging economic times. Client behaviour and
budgets are changing, driven by AI and new ways of working and we believe we
are well positioned to take advantage of the opportunities all this provides
and are encouraged by recent wins that leverage our AI tools and capabilities.
The latter are being actively tested and implemented by a number of clients,
including technology platforms.
¤ All Practices saw some impact in the year from the net revenue
reductions and this was most evident in Technology Services reflecting
anticipated lower transformation revenue from one client and longer sales
cycles. We have recently hired a strong new business leader from a leading BPO
company to drive Technology Services sales, which we believe will be
strengthened by our AI capabilities in developed markets. Profitability by
Practice reflects significant improvements in margins in both Content and
Data&Digital Media, primarily due to the actions taken on costs, whilst
Technology Services' profitability is lower, as expected, due to the revenue
reduction. We continue to maintain a disciplined and active approach to cost
management, including headcount and discretionary costs. These controls have
resulted in the number of Monks at the year end of around 7,150, down 7% from
circa 7,700 at this time last year. The Group continues to take a prudent
approach to costs across all of its businesses in order to better match costs
to revenue and to protect profitability.
¤ New business activity continues at significant levels, particularly
with a focus on AI-driven hyper-personalisation at scale. New business wins
during the year include General Motors, Qiddiya, Marriott, Burger King,
Panasonic, FanDuel, AliExpress, Decathlon, Santander, SC Johnson, ICBC, Asana,
CashApp, Shopify, Coursera and Singapore Sports Hub. The Company continues to
capitalise on its strong AI positioning. We continue to win multiple
exploratory AI assignments, as clients experiment with applications and
develop use cases. These are currently focused on visualisation and
copywriting, hyper-personalisation at scale, media planning and buying,
general client and agency efficiency and democratisation of knowledge.
Momentum has built particularly in the first two areas and in general client
and agency efficiency. Developments around media planning and buying and
democratisation of knowledge continue to build.
¤ Our talented people have responded positively to the challenges the
company faced during the year and we have continued to make progress in the
three areas of our ESG strategy: zero impact workspaces, sustainable work and
diversity, equity and inclusion (DE&I). We continue to enjoy B-Corp
status, recognising our achievements in environmental, social and DE&I,
that we are accountable to all stakeholders, not just shareowners and that we
are transparent in terms of our reporting.
Board and management structure
¤ We announced in January that Mary Basterfield has decided to step
down from her position as Chief Financial Officer (CFO). Mary has been with
the Company for over three years. Mary will continue working in her current
position, participate in the search for her successor which is well advanced
and assist in a smooth and orderly handover. Mary has been instrumental in
improving our finance team, processes and systems, as well as
a valued business partner. The Board wants to take this opportunity to thank
Mary wholeheartedly for her hard work and commitment over the past three years
and for her participation in the transition to a new financial leader. Led by
the Nomination and Remuneration Committee, the Group appointed a leading
executive search firm to develop a long list of candidates, from which a
shortlist were interviewed. The Group is in advanced negotiations and
anticipates announcing a successor in the next few weeks.
Outlook
¤ We expect clients to remain cautious in the near term, as there
are increasing concerns about macro uncertainty and the impact of tariffs.
Technology clients continue to focus spending on AI-related capital
expenditure, rather than operating expenditure, such as marketing. However, in
Technology Services we expect the growth headwind from one key client to
continue in the first half with an improving trajectory in the second half
supported by new business.
¤ For the Company as a whole, we are targeting both net revenue and
operational EBITDA to be broadly similar to 2024. We expect the comparatives
for the first quarter to continue to be difficult, in part due to the residual
effect of the reduction in revenue from one key client in Technology Services.
We expect an improved performance in the second half of the year, aided by the
phasing of revenue from new business.
¤ Our net debt is expected to continue to reduce in 2025 reflecting
positive free cash flow, which in 2024 was £37.8 million. Our targeted range
for the year end is £100 million to £140 million. We now aim for financial
leverage over the medium term of around 1.5 times net debt to operational
EBITDA, which is the lower end of our previous target range. As a measure of
confidence in the future the Board is proposing to pay a dividend of 1p per
share.
¤ Over the longer term we continue to expect our growth to
outperform our markets and operational EBITDA margins to return to historic
levels of around 20%.
Sir Martin Sorrell, Executive Chairman of S(4)Capital plc said:
"Our performance in 2024 reflected the impact of challenging global
macroeconomic conditions, continued high interest rates and some
underperformance, when compared to our addressable markets. Technology clients
prioritised capital expenditure over operating expenditure, such as marketing
and our Technology Services Practice was affected by a reduction in one of our
larger relationships. Despite this, the Company reduced its cost base
significantly, increased its operating margins and reduced its net debt
markedly. Our liquidity and cash flow was much improved and net debt was below
the lower end of our target range due to our focus on working capital and cost
control.
The macroeconomic environment in 2025 will remain challenging given
significant volatility and uncertainty in global economic policy, particularly
tariffs. In geopolitics, US/China relations, Russia/Ukraine and Iran remain
volatile issues and therefore clients are likely to remain cautious. With that
said, we expect to benefit from new business, especially in the second half
and for the full year we expect net revenue and operational EBITDA to be
broadly similar to 2024, with a further reduction in net debt.
We continue to focus on our larger, scaled relationships with leading
enterprise clients and our drive for margin improvement through greater
efficiency, utilisation, billability and pricing. We remain confident in our
strategy, business model and talent, which together with scaled client
relationships position us well for growth in the longer term. We continue to
capitalise on our prominent AI positioning and to see multiple initial
AI-related assignments and significant testing."
Notes:
1. Billings is gross billings to clients including pass through costs.
2. Net revenue is revenue less direct costs.
3. Like-for-like is a non-GAAP measure and relates to 2023 being
restated to show the audited numbers for the previous year of the existing and
acquired businesses consolidated for the same months as in 2024 applying
currency rates as used in 2024.
4. Pro-forma numbers relate to audited non-statutory and non-GAAP
consolidated results in constant currency as if the Group had existed in full
for the year and have been prepared under comparable GAAP with no
consolidation eliminations in the pre-acquisition period.
5. Operational EBITDA is operating profit or loss adjusted for
acquisition related expenses, non-recurring items (primarily acquisition
payments tied to continued employment, amortisation and impairment of business
combination intangible assets and restructuring and other one-off expenses)
and recurring items (share-based payments) and includes right-of-use assets
depreciation. It is a non-GAAP measure management uses to assess the
underlying business performance. Operational EBITDA margin is operational
EBITDA as a percentage of net revenue.
6. Adjusted figures are adjusted for non-recurring and recurring items
as defined above.
7. Net debt excludes lease liabilities.
8. The comparatives for the year ended 31 December 2023 have been
restated to account for the recognition of deferred tax balances related to
certain business combinations in prior years.
9. This is a target and not a profit forecast.
10. Net debt/pro-forma operational EBITDA as defined per the facilities
agreement.
Disclaimer
This announcement includes 'forward-looking statements'. All statements other
than statements of historical facts included in this announcement, including,
without limitation, those regarding the Company's financial position, business
strategy, plans and objectives of management for future operations (including
development plans and objectives relating to the Company's services) are
forward-looking statements.
Forward-looking statements are subject to risks and uncertainties and
accordingly the Company's actual future financial results and operational
performance may differ materially from the results and performance expressed
in, or implied by, the statements. These factors include but are not limited
to those described in the Company's prospectus dated 8 October 2019 which is
available on the news section of the Company's website. These forward-looking
statements speak only as at the date of this announcement. S(4)Capital
expressly disclaims any obligation or undertaking to update or revise any
forward-looking statements contained herein to reflect actual results or any
change in the assumptions, conditions or circumstances on which any such
statements are based unless required to do so.
No statement in this announcement is intended to be a profit forecast and no
statement in this announcement should be interpreted to mean that earnings per
share of the Company for the current or future years would necessarily match
or exceed the historical published earnings per share of the Company.
Neither the content of the Company's website, nor the content on any website
accessible from hyperlinks on its website for any other website, is
incorporated into, or forms part of, this announcement nor, unless previously
published by means of a recognised information service, should any such
content be relied upon in reaching a decision as to whether or not to acquire,
continue to hold, or dispose of, shares in the Company.
Results webcast and conference call
A webcast and conference call covering the results will be held today at 09:00
GMT, followed by another webcast and call at 08:00 EST/ 13:00 GMT. Both
webcasts of the presentation will be available at www.s4capital.com
(https://url.avanan.click/v2/r02/___http:/www.s4capital.com___.YXAxZTpzNGNhcGl0YWw6YTpvOjBhZDFiYzk5OGM4NWEzYTkwOWRlYjM5ZTE2NjVjZGU3Ojc6YmQ4YzpmN2I3NmEzN2Y2NDBiMzkwYzljMmJkOTA4M2MxMmI0MzRlNWNiZTcwNmEzZWRhM2VjODNmYWQ2ZmI4ZGI5M2RmOnA6VDpO)
during the event.
09:00 GMT webcast (watch only) and conference call (for Q&A):
Webcast:
https://brrmedia.news/SFOR_FY24_UK (https://url.avanan.click/v2/r02/___https:/brrmedia.news/SFOR_FY24_UK___.YXAxZTpzNGNhcGl0YWw6YTpvOjQ2MmEwNDk5MjBjYTE1OWY3ZDZjMzIzY2JjY2EwMDM4Ojc6YTBkYjpmMWI4MTdjZWYxNzQ1M2E3NDkzM2EzNDk0ZTllMGVlOGJhNmIyYTQ3YzUxNDY4MmY2OTcyMzA4YWZiNTJmMzUxOnA6VDpO)
Conference call:
UK: +44 (0) 33 0551 0200
US: +1 786 697 3501
08:00 EST / 13:00 GMT webcast (watch only) and conference call (for Q&A):
Webcast:
https://brrmedia.news/SFOR_FY24_US (https://url.avanan.click/v2/r02/___https:/brrmedia.news/SFOR_FY24_US___.YXAxZTpzNGNhcGl0YWw6YTpvOjQ2MmEwNDk5MjBjYTE1OWY3ZDZjMzIzY2JjY2EwMDM4Ojc6NDUzMzo2YzM3MWI3MjhiYWVkNmM1MjNlODI1MTNjODUzZGFiZTBmN2Y3ZGI1MmQ4ZGVkYWE2NDc2NWIyNWEyMzNhMzVlOnA6VDpO)
Conference call:
UK: +44 (0) 33 0551 0200
US: +1 786 697 3501
Enquiries to
S(4)Capital
plc
Sir Martin Sorrell, Executive Chairman
+44 (0)20 3793 0003/+44 (0)20 3793 0007
Mary Basterfield, Chief Financial Officer
Scott Spirit, Chief Growth Officer
Sodali & Co (PR Advisor)
Elly Williamson
+44 (0)7970 246
725
Pete Lambie
Preliminary results statement overview
As previously highlighted, trading in the year reflected both continued
uncertainty around global macroeconomic conditions, high interest rates and
lower marketing spend from technology clients, which account for approximately
half of revenue. In addition, there was a reduction in transformation activity
in one of our larger Technology Services clients. However, trading in the
fourth quarter improved over the first three quarters with stronger
like-for-like net revenues, including an increase in Data&Digital Media.
Reported billings were £1,963.0 million up 4.9% and up 8.1% like-for-like,
reflecting stronger digital media planning and buying activity. Revenue was
down 16.1% on a reported basis to £848.2 million, down 13.6% like-for-like.
Reported net revenue declined 13.6%, or 11.0% like-for-like.
Operational EBITDA in the full year reflects improvement in margins in Content
and Data&Digital Media, due to actions taken on costs, helped by stronger
revenue performance in the fourth quarter, whilst Technology Services'
operational EBITDA reflects the anticipated lower revenue. We continue to
maintain a disciplined and active approach to cost management, including the
number of Monks and discretionary costs. The number of Monks at the end of the
year was around 7,150 down 7.0% from circa 7,700 at this time last year.
Performance by Practice
The Company currently reports in three Practices. We have rebranded to Monks
and are now streamlining all our current capabilities into two Practices:
Marketing Services and Technology Services. We plan to initiate reporting
structures for this new services model during 2025.
2024 net revenue for the Content Practice was down 7.4% like-for-like, with
Data&Digital Media down 3.7% like-for-like and Technology Services down
35.3% like-for-like.
Content's net revenue declined in the year reflecting ongoing caution and
lower activity with some of our larger technology clients. However, the
year-on-year trend improved in the fourth quarter. Content's operational
EBITDA improved to £48.7 million (2023: £38.9 million), up 30.6%
like-for-like and on a reported basis up 25.2% versus 2023, due to the action
taken on costs. Content's operational EBITDA margin improved 290 basis points
like-for-like and reported 280 basis points compared to 7.4% in 2023.
Data&Digital Media performed as expected in the year, managing its costs
well to match activity levels. Net revenue grew in the fourth quarter.
Operational EBITDA improved to £46.0 million (2023: £33.5 million), up 43.3%
like-for-like and up 37.3% versus 2023 on a reported basis. Operational EBITDA
margin of 23.9% improved 780 basis points like-for-like and reported 770 basis
points, compared to 16.2% in 2023, due to strong action on costs.
Technology Services' performance was impacted by the anticipated lower revenue
from one key client, as well as longer sales cycles for new business
reflecting the challenging ongoing macroeconomic conditions and high interest
rates. Reported operational EBITDA was down significantly to £11.5 million
(2023: £43.4 million) and operational EBITDA margin was 13.3%, compared to
31.7% in 2023 due to the lower revenues.
The Company's proportion of revenue from technology clients increased to 45%
in 2024 (43% in 2023).
Performance by geography
On a like-for-like basis, the Americas net revenue was down 11.8%, but with
strong growth in Latin America and now accounts for 78% of the Company's net
revenue. EMEA, accounting for 16%, was down 5.4%, with growth in the UK &
Ireland. Asia Pacific (APAC), accounting for the remaining 6% was down 13.4%,
affected by Australia and Singapore. Reported Americas net revenue was £587.9
million, down 14.6%, EMEA net revenue was £123.4 million, down 7.3% and Asia
Pacific was £43.3 million, down 16.7%.
New business and AI
We are seeing our AI initiatives improve visualisation and copywriting
productivity, deliver considerably more effective and economic
hyper-personalisation (better targeted content at greater scale), delivering
more automated and integrated media planning and buying, improving general
client and agency efficiency and democratisation of knowledge. Monks.Flow is
our AI product solution that automates marketing workflows and we are
continuing to add applications and expand its capabilities. Our end-to-end
suite of Monks.Flow products orchestrates and helps enable our clients to more
easily implement AI solutions, particularly in visualisation and copywriting,
in hyper-personalisation at scale, in real time focus groups and linking media
planning and buying.
We are seeing significant opportunities for new business, particularly driven
by our AI tools and capability. New business wins in the year include General
Motors, as their foundational agency, Qiddiya, Marriott, Burger King,
Panasonic, FanDuel, AliExpress, Decathlon, Santander, SC Johnson, ICBC, Asana,
CashApp, Shopify, Coursera and Singapore Sports Hub. We are also winning
multiple exploratory assignments, as clients experiment and explore AI
applications and develop AI use cases. AI capability is becoming more central
to the agency's way of working and new business efforts. In this regard the
Company's early adoption of AI and proactive approach to staff training on AI
is beginning to pay off.
Our three new Go-To-Market propositions, Orchestration Partner, Real Time
Brands and Glass Box Media are all starting to resonate strongly with clients.
These are built around hyper-personalisation at scale, social media, brand
strategy and transparent media buying and planning.
Balance Sheet
Net debt(7) ended the year at £142.9 million, or 1.6x net debt/pro-forma 12
month operational EBITDA. This compared to £180.8 million at the end of 2023
reflecting an improvement in working capital. At the beginning of the year we
made combination payments of £9.6 million, which are the last significant
combination payments. The 12 month pro-forma EBITDA was £87.8 million. The
balance sheet has sufficient liquidity and long-dated debt maturities to
facilitate growth and our key covenant is net debt not to exceed 4.5x the 12
month pro-forma EBITDA.
ESG
We remain committed to the pillars of our ESG strategy: people fulfilment, our
responsibility to the world and one brand. We continue to focus on improving
our external reporting, our reporting tools and governance to help us move
towards increased transparency and effective reporting and to comply with
future global regulatory requirements.
Across the Company, we support community and charity services through donation
of hours and we've grown our total For Good projects to help create a positive
impact alongside our commercial clients. We remain focused on our people and
their experiences through our robust suite of programmes that enhance
connection and development across the organisation. Cultivating a deeper
understanding of cultural fluency remains a top priority as we continue to
foster an inclusive environment.
We continue to enjoy our B Corp status. This certification recognises our
achievements in governance and accountability, environmental performance,
social impact and DE&I, that we are accountable to all stakeholders, not
just shareowners and that we are transparent in our reporting.
Summary and outlook
For the Company as a whole, given the wider market uncertainty and the
priority shown by technology clients to AI-related capital expenditure rather
than operational expenditure, such as marketing, we target net revenue and
operational EBITDA(9) to be broadly similar to 2024. We will continue to focus
on our cost base and will take further action to support profitability. We
expect the comparatives for the first quarter to continue to be difficult, in
part due to the residual effect of the reduction in revenue from one key
client in Technology Services. We expect an improved performance in the second
half of the year, aided by the phasing of revenue from new business.
Our targeted range for the year end net debt is £100 million to £140
million. We target medium term financial leverage at the lower end of our
previous range of around 1.5 times operational EBITDA. Over the longer term we
continue to expect our growth to outperform our markets and operational EBITDA
margins to return to historic levels of around 20%(9).
The strategy of S(4)Capital remains the same. The Company's unitary, purely
digital transformation model, based on first-party data fuelling the creation,
production and distribution of digital advertising content, distributed by
digital media and built on technology platforms to ensure success and
efficiency, resonates with clients.
We continue to streamline and integrate our businesses, we have rebranded to
Monks and are focusing all our current capabilities into two Practices:
Marketing Services and Technology Services. Our tagline 'faster, better,
cheaper and more' or 'speed, quality, value and more' and a unitary structure
both appeal strongly, even more so in challenging economic times.
Financial review
Summary of results
£ millions Year ended Year ended change Reported change change
Like-for-like(3)
Pro-forma(4)
31 Dec 2024 31 Dec 2023
Restated(8)
Billings(1) 1,963.0 1,870.5 4.9% 8.1% 8.1%
Revenue 848.2 1,011.5 (16.1%) (13.6%) (13.6%)
Net revenue(2) 754.6 873.2 (13.6%) (11.0%) (11.0%)
Operational EBITDA(5) 87.8 93.7 (6.3%) (0.6%) (0.6%)
Operational EBITDA margin(5) 11.6% 10.7% 90bps 120bps 120bps
Adjusted operating profit(6) 78.3 82.0 (4.5%)
Adjusting items(6) (381.1) (61.8) (516.7%)
Adjusted operating profit margin(6) 10.4% 9.4% 100bps
Net finance expenses and loss on net monetary position (28.1) (34.1) 17.6%
Adjusted result before income tax(6) 50.2 48.1 4.4%
Adjusted income tax expenses(6) (15.5) (19.9) 22.1%
Adjusted result for the year(6) 34.7 28.2 23.0%
Adjusted basic earnings per share(6) (pence) 5.2 4.4 18.2%
Dividend per share (pence) 1.0 -
A full list of alternative performance measures and non-IFRS measures together
with reconciliations to IFRS or GAAP measures is set out in the Alternative
Performance Measures.
Financial summary
2024 saw challenges in our net revenue performance, however in addition to the
top line we focused on tight management of costs, aligning headcount more
closely with activity levels and working capital management and cash,
resulting in improved margins and lower net debt. We have continued our
finance transformation and are making good progress with the roll out of our
global finance system, combining legal entities and integrating the finance
team.
Reported billings were £1,963.0 million, up 8.1% like-for-like, reflecting
stronger digital media planning and buying activity.
Reported revenue was £848.2 million, down 16.1% from £1,011.5 million, down
13.6% like-for-like.
Reported net revenue was £754.6 million, down 13.6%, down 11.0%
like-for-like.
Operational EBITDA was £87.8 million compared to £93.7 million in the prior
year, a reported decrease of 6.3% and down 0.6% like-for-like. We have
continued to maintain a disciplined and active approach to cost management,
including headcount and discretionary costs. These controls have resulted in
the number of Monks at the end of the year being around 7,150, down 7.0% from
circa 7,700 at this time last year.
Operational EBITDA margin was 11.6%, up 90 basis points versus 10.7% in 2023
and up 120 basis points like-for-like, with improved profitability in Content
and Data&Digital Media and lower central costs, although these were partly
offset by the anticipated reduction in delivery from Technology Services. Our
ambition remains to return full year margins to historic levels, around
20%(9), over the longer term.
Reported adjusted operating profit was down 4.5% to £78.3 million from £82.0
million, before adjusting items of £381.1 million, including £18.8 million
of restructuring costs, a similar level to 2023. The increase in adjusting
items is largely due to the non-cash impairment charge taken in the year in
Content and Technology Services. Adjusting items also includes amortisation of
business combination intangible assets, restructuring, primarily related to
headcount reductions, contingent consideration, share-based payments and lease
impairment charges relating to property rationalisation.
The reported operating loss was £302.8 million versus a 2023 profit of £20.2
million, primarily reflecting the increase in adjusting items with the
non-cash impairment charge. The loss for the year was £306.9 million (2023:
£14.3 million).
Adjusted basic earnings per share was 5.2p, versus adjusted basic earnings per
share of 4.4p in 2023, up 18.2%.
Practice and Geographic Performance
£ millions Year ended Year ended change Reported change change
Like-for-like(3)
Pro-forma(4)
31 Dec 2024 31 Dec 2023
Content 475.5 528.9 (10.1%) (7.4%) (7.4%)
Data&Digital Media 192.4 207.3 (7.2%) (3.7%) (3.7%)
Technology Services 86.7 137.0 (36.7%) (35.3%) (35.3%)
Net revenue(2) 754.6 873.2 (13.6%) (11.0%) (11.0%)
Americas 587.9 688.1 (14.6%) (11.8%) (11.8%)
EMEA 123.4 133.1 (7.3%) (5.4%) (5.4%)
Asia-Pacific 43.3 52.0 (16.7%) (13.4%) (13.4%)
Net revenue(2) 754.6 873.2 (13.6%) (11.0%) (11.0%)
Content 48.7 38.9 25.2% 30.6% 30.6%
Data&Digital Media 46.0 33.5 37.3% 43.3% 43.3%
Technology Services 11.5 43.4 (73.5%) (71.8%) (71.8%)
S(4) Central (18.4) (22.1) (16.7%) (16.0%) (16.0%)
Operational EBITDA(5) 87.8 93.7 (6.3%) (0.6%) (0.6%)
Content 10.2% 7.4% 280bps 290bps 290bps
Data&Digital Media 23.9% 16.2% 770bps 780bps 780bps
Technology Services 13.3% 31.7% (1,840bps) (1,710bps) (1,710bps)
Operational EBITDA margin(5) 11.6% 10.7% 90bps 120bps 120bps
Practice performance
Content Practice reported operational EBITDA was £48.7 million, up 25.2%
versus 2023, up 30.6% like-for-like. The Content Practice operational EBITDA
margin improved to 10.2%, compared to 7.4% in 2023, despite the lower revenue,
reflecting a reduction in the number of Monks and other cost savings as
compared to 2023. We continue to focus on integration and improving the
operating model for Content.
Data&Digital Media Practice reported operational EBITDA was £46.0
million, up 37.3% from last year, up 43.3% like-for-like. Data&Digital
Media Practice operational EBITDA margin was 23.9%, compared to 16.2%, due to
tight cost management in 2024 and cost reduction actions taken in the latter
months of 2023.
Technology Services Practice reported operational EBITDA of £11.5 million was
down 73.5% from the prior year, down 71.8% like-for-like and delivered an
operational EBITDA margin of 13.3% compared to 31.7% in 2023. This primarily
relates to the anticipated reduction in transformation revenue from one large
client, as well as longer sales cycles for new business. Operational EBITDA
was significantly impacted by the reduction in revenue and, given the scale of
the reduction in revenue, this has impacted margin.
Reported central costs of £18.4 million were down 16.7% due to tight cost
control.
Geographic performance
The Americas reported net revenue was £587.9 million (78% of total), down
14.6% from last year. Like-for-like, the Americas net revenue was down 11.8%,
reflecting lower revenue from one large Technology Services client and
continuing client caution particularly with our technology clients. We saw
strong growth in Latin America , reflecting success with our local business.
EMEA reported net revenue was £123.4 million (16% of total), down 7.3% from
last year. Like-for-like, EMEA net revenue was down 5.4%, strengthened by the
UK's performance, but primarily reflecting slower growth and client caution.
APAC reported net revenue was £43.3 million (6% of total), down 16.7%.
Like-for-like, Asia Pacific net revenue was down 13.4%, affected by Australia
and Singapore, but also reflecting client caution and local market conditions.
Cash flow
£ millions Year ended Year ended
31 Dec 2024 31 Dec 2023
Operational EBITDA 87.8 93.7
Capital expenditure(1) (7.5) (10.2)
Interest and facility fees paid (29.1) (26.7)
Interest received 2.1 -
Income tax paid (9.0) (20.5)
Restructuring and other one-off expenses paid (21.1) (20.8)
Change in working capital(2) 14.6 (1.7)
Free cashflow 37.8 13.8
Mergers & Acquisitions (9.9) (80.8)
Other(3) 10.0 (3.6)
Movement in net debt 37.9 (70.6)
Opening net debt (180.8) (110.2)
Net debt (142.9) (180.8)
The table reflects how the business is managed and this is a non-statutory
cash flow format.
1. Includes purchase of intangible assets, purchase of property, plant
and equipment and security deposits.
2. Working capital primarily includes movement on receivables, payables,
principal elements of lease payments and depreciation of right-of-use assets.
3. Other includes foreign exchange, hyperinflation impacts and share
buy-backs.
Free cashflow for 2024 was £37.8 million, an improvement of £24.0 million
compared to 2023, with a working capital inflow and lower cash tax paid,
partially offset by modestly increased cash interest costs.
Cash paid in relation to combinations (M&A) decreased £70.9 million
versus the prior year to £9.9 million, as we materially completed payments
for prior year combinations early in the year.
Treasury and net debt
2024 2023
Net debt reconciliation
£ millions
Cash and cash equivalents 168.4 145.7
Loans and borrowings (excluding bank overdrafts) (311.3) (326.5)
Net debt (142.9) (180.8)
The year end net debt was £142.9 million (2023: £180.8 million) or 1.6x net
debt/12 month pro-forma operational EBITDA. The balance sheet has sufficient
liquidity and long dated debt maturities. During the year S(4)Capital Group
complied with the covenants set in its loan agreement. The pro-forma 12 month
operational EBITDA for the year was £87.8 million.
S(4)Capital Group's key covenant is that the net debt should not exceed 4.5:1
of the pro-forma earnings before interest, tax, depreciation and amortisation.
This ratio is measured at the end of any relevant period of 12 months ending
each semi-annual date in a financial year, as defined in the facility
agreement. As at 31 December 2024, the net debt/pro-forma EBITDA, as defined
by the facilities agreement, was 1.7x.
The duration of the 2021 facilities agreement is seven years in relation to
the Term Loan B and the termination date is August 2028. The term of the RCF
is five years and the termination date was August 2026. Post year end, £80
million of the RCF facility has been extended to February 2028, with all four
relationship banks extending on the same terms, with the remaining £20
million terminating in August 2026. The RCF remains undrawn as at 31 December
2024.
Interest and tax
Consolidated net finance costs were £26.4 million (2023: £35.4 million), a
decrease of £9.0 million due to favourable exchange rates in the year. The
profit or loss tax credit for the year was £24.0 million (2023: £0.4 million
expense).
Balance sheet
Overall the Group reported net assets of £577.5 million as at 31 December
2024, which is a decrease of £314.4 million compared to 31 December 2023,
driven mainly by the impairment of goodwill and intangible assets.
Acquisitions
No material acquisitions were made in the year ended 31 December 2024.
About S(4)Capital
Our strategy is to build a purely digital advertising and marketing services
business for global, multinational, regional, and local clients, and
millennial-driven influencer brands. This will be achieved by integrating
leading businesses in two synchronised Practices: Marketing services and
Technology services, along with an emphasis on 'faster, better, cheaper, more'
execution in an always-on consumer-led environment, with a unitary structure.
The Company now has approximately 7,150 people in 33 countries with
approximately 80% of net revenue across the Americas, 15% across Europe, the
Middle East and Africa and 5% across Asia-Pacific. The longer-term objective
is a geographic split of 60%:20%:20%. At the Group's last full year results
Content accounted for approximately 60% of net revenue, Data&Digital Media
25% and Technology Services 15%.
Sir Martin was CEO of WPP for 33 years, building it from a £1 million 'shell'
company in 1985 into the world's largest advertising and marketing services
company, with a market capitalisation of over £16 billion on the day he left.
Prior to that Sir Martin was Group Financial Director of Saatchi & Saatchi
Company Plc for nine years.
Consolidated statement of profit or loss
For the year ended 31 December 2024
2024 2023
Restated(1)
£m £m
Note
Revenue 7 848.2 1,011.5
Direct costs (93.6) (138.3)
Net revenue 7 754.6 873.2
Personnel costs (581.5) (670.8)
Other operating expenses (78.7) (92.6)
Acquisition, restructuring and other one-off expenses (23.8) (11.9)
Depreciation, amortisation and impairment (373.5) (77.9)
Share of profit of joint ventures and associates 0.1 0.2
Total operating expenses (1,057.4) (853.0)
Operating (loss)/profit (302.8) 20.2
Adjusted operating profit 78.3 82.0
Adjusting items(2) (381.1) (61.8)
Operating (loss)/profit (302.8) 20.2
Finance income 5.3 2.8
Finance costs (31.7) (38.2)
Net finance costs (26.4) (35.4)
(Loss)/gain on the net monetary position (1.7) 1.3
Loss before income tax (330.9) (13.9)
Income tax credit/(expense)(3) 24.0 (0.4)
Loss for the year (306.9) (14.3)
Attributable to owners of the Company (306.9) (14.3)
Attributable to non-controlling interests - -
(306.9) (14.3)
Loss per share is attributable to the ordinary equity holders of the Company
Basic loss per share (pence)
(45.7) (2.2)
Diluted loss per share (pence) (45.7) (2.2)
Notes:
1. The comparatives for the year ended 31 December 2023 have been
restated to account for the recognition of deferred tax balances related to
certain business combinations in the prior years (see Note 2).
2. Adjusting items comprises amortisation of £44.3 million (2023: £48.6
million), impairment of intangible assets of £301.2 million (2023: £nil),
acquisition expenses of £1.3 million gain (2023: £9.2 million gain),
share-based payments of £6.5 million (2023: £10.1 million) and restructuring
and other one-off expenses of £30.4 million (2023: £12.3 million).
3. Income tax credit includes £20.8 million credit relating to the
deferred tax impact of the impairment charge of £301.2 million, resulting in
a net impairment charge of £280.4 million.
The results for the year are wholly attributable to the continuing operations
of the Group.
Consolidated statement of comprehensive income
For the year ended 31 December 2024
2024 2023
Restated(1)
£m £m
Loss for the year (306.9) (14.3)
Other comprehensive expense
Items that may be reclassified to profit or loss
Foreign operations - foreign currency translation differences (16.8) (54.6)
Other comprehensive expense (16.8) (54.6)
Total comprehensive expense for the year (323.7) (68.9)
Attributable to owners of the Company (323.7) (68.9)
Attributable to non-controlling interests - -
(323.7) (68.9)
Notes:
1. The comparatives for the year ended 31 December 2023 have been
restated to account for the recognition of deferred tax balances related to
certain business combinations in the prior years (see Note 2).
Consolidated balance sheet
As at 31 December 2024
2024 2023 2022
Restated(1) Restated(1)
£m £m £m
Note
Assets
Goodwill 8 391.2 691.3 718.8
Intangible assets 315.2 381.6 445.2
Right-of-use assets 34.7 45.8 55.7
Property, plant and equipment 16.4 21.9 29.7
Interest in joint ventures and associates 0.8 0.2 -
Deferred tax assets 49.0 24.7 14.9
Other receivables 9.2 13.7 12.2
Non-current assets 816.5 1,179.2 1,276.5
Trade and other receivables 450.8 407.5 442.4
Current tax assets 9.6 4.9 -
Cash and cash equivalents 168.4 145.7 223.6
Current assets 628.8 558.1 666.0
Total assets 1,445.3 1,737.3 1,942.5
Liabilities
Deferred tax liabilities (18.6) (24.1) (28.5)
Loans and borrowings (307.2) (320.9) (326.2)
Lease liabilities (29.7) (35.8) (43.1)
Contingent consideration and holdbacks 9 (4.8) (7.3) (11.3)
Provisions (3.5) (2.7) (5.7)
Non-current liabilities (363.8) (390.8) (414.8)
Trade and other payables (482.0) (418.1) (443.2)
Contingent consideration and holdbacks 9 (4.7) (18.2) (177.3)
Loans and borrowings (0.2) (0.2) (0.7)
Lease liabilities (12.8) (13.2) (15.3)
Provisions (0.8) (1.0) -
Current tax liabilities (3.5) (3.9) (6.0)
Current liabilities (504.0) (454.6) (642.5)
Total liabilities (867.8) (845.4) (1,057.3)
Net assets 577.5 891.9 885.2
Equity
Share capital 154.9 145.9 142.0
Share premium 164.9 80.4 5.9
Other reserves(2) 70.7 162.7 175.2
Foreign exchange reserves (22.9) (6.1) 48.5
Retained earnings 209.8 508.9 513.5
Attributable to owners of the Company 577.4 891.8 885.1
Non-controlling interests 0.1 0.1 0.1
Total equity 577.5 891.9 885.2
Notes:
1. The comparatives as at 31 December 2023 and 31 December 2022 have been
restated to account for the recognition of deferred tax balances related to
certain business combinations in prior years (see Note 2).
2. During the year the Group completed a share buy-back scheme and
purchased 6,000,000 shares for £2.5 million.
Consolidated statement of changes in equity
For the year ended 31 December 2024
Share capital(1) Share premium Other reserves(2) Foreign exchange reserves Retained earnings/ (accumulated losses) Attributable to owners of the Company Non-controlling interests Total equity
£m £m £m £m £m £m £m £m
At 1 January 2023(3) 142.0 5.9 175.2 48.5 478.4 850.0 0.1 850.1
Deferred tax restatement - - - - 35.1 35.1 - 35.1
Hyperinflation restatement - - 2.6 - - 2.6 - 2.6
Adjusted 142.0 5.9 177.8 48.5 513.5 887.7 0.1 887.8
opening balance
Comprehensive expense for the year
Loss for the year(3) - - - - (14.3) (14.3) - (14.3)
Other comprehensive expense - - - (54.6) - (54.6) - (54.6)
Total comprehensive expense for the year - - - (54.6) (14.3) (68.9) - (68.9)
Transactions with owners of the Company
Business combinations 3.9 74.5 (15.7) - - 62.7 - 62.7
Share-based payments - - 0.6 - 9.7 10.3 - 10.3
Share buy-backs - - - - - - - -
At 31 December 2023(3) 145.9 80.4 162.7 (6.1) 508.9 891.8 0.1 891.9
Hyperinflation restatement - - 4.5 - - 4.5 - 4.5
Adjusted 145.9 80.4 167.2 (6.1) 508.9 896.3 0.1 896.4
opening balance
Comprehensive expense for the year
Loss for the year - - - - (306.9) (306.9) - (306.9)
Other comprehensive - - - (16.8) - (16.8) - (16.8)
income
Total comprehensive expense for the year - - - (16.8) (306.9) (323.7) - (323.7)
Transactions with owners of the Company
Business combinations 9.0 84.5 (94.9) - 1.8 0.4 - 0.4
Share-based payments - - 0.9 - 6.0 6.9 - 6.9
Share buy-backs - - (2.5) - - (2.5) - (2.5)
At 31 December 2024 154.9 164.9 70.7 (22.9) 209.8 577.4 0.1 577.5
Notes:
1. At the end of the reporting period, the issued and paid up share capital
of S(4)Capital plc consisted of 619,636,656 (2023: 583,064,256) Ordinary
Shares having a nominal value of £0.25 per Ordinary Share.
2. Other reserves primarily includes the deferred equity consideration
arising from business combinations of £61.3 million (2023: £156.2 million),
made up of the following: TheoremOne for £26.4 million, Raccoon for £17.4
million, XX Artists for £17.5 million, the treasury shares issued in the name
of S(4)Capital plc to an employee benefit trust for the amount of £0.3
million (2023: £1.2 million), share buy-backs of £2.5 million (2023: £nil)
and hyperinflation restatement in Argentina of £12.0 million (2023: £7.5
million).
3. The comparatives as at 31 December 2023 and 1 January 2023 have been
restated to account for the recognition of deferred tax balances related to
certain business combinations in the prior years (see Note 2).
Consolidated statement of cashflows
For the year ended 31 December 2024
2024 2023
Note £m £m
Cash flows from operating activities
Loss before income tax (330.9) (13.9)
Net finance costs 26.4 35.4
Depreciation, amortisation and impairment 373.5 77.9
Share-based payments 6.8 10.1
Acquisition, restructuring and other one-off expenses 23.8 11.9
Employment linked contingent consideration paid(1) (2.9) (77.7)
Restructuring and other one-off expenses paid (21.1) (20.8)
Share of profit in joint venture (0.1) (0.2)
Loss/(gain) on the net monetary position 1.7 (1.3)
Other non-cash items 2.0 (9.8)
(Increase)/decrease in trade and other receivables (44.4) 11.3
Increase/(decrease) in trade and other payables 58.3 (13.1)
Cash flows from operations 93.1 9.8
Income taxes paid (9.0) (20.5)
Net cash flows generated from/(used in) operating activities 84.1 (10.7)
Cash flows from investing activities
Purchase of intangible assets (4.2) (2.1)
Purchase of property, plant and equipment (4.0) (5.9)
Proceeds from disposal of property, plant and equipment 0.1 -
Acquisition of subsidiaries, net of cash acquired(1) 6, 9 (7.0) (3.1)
Interest received 2.1 -
Dividends from joint venture 0.2 -
Amounts withdrawn from/(paid into) security deposits 0.5 (2.2)
Cash flows used in investing activities (12.3) (13.3)
Cash flows from financing activities
Proceeds from issuance of shares - 0.2
Share buy-backs (2.5) -
Principal element of lease payments (12.7) (16.3)
Repayments of loans and borrowings (0.2) (0.2)
Interest and facility fees paid (29.1) (26.7)
Cash flows used in financing activities (44.5) (43.0)
Net movement in cash and cash equivalents 27.3 (67.0)
Cash and cash equivalents at the beginning of the year 145.7 223.6
Exchange loss on cash and cash equivalents (4.6) (10.9)
Cash and cash equivalents at the end of the year 168.4 145.7
Notes:
1. Acquisitions of subsidiaries comprises contingent consideration and
holdback payments, net of cash released from escrow accounts of £3.3million
(2023: £2.6 million). Employment linked contingent consideration paid is net
of cash released from escrow accounts of £0.6 million (2023: £nil).
Notes to the consolidated financial statements
For the year ended 31 December 2024
1. General information
S(4)Capital plc ('S(4)Capital' or 'Company') is a public limited company
incorporated on 14 November 2016 in the United Kingdom. The Company has its
registered office at 12 St James's Place, London, SW1A 1NX, United Kingdom.
Its shares are listed on the London Stock Exchange. The new UK Listing Rules,
which came into force on 29 July 2024, have removed the distinction between
standard and premium listing categories, which are now categorised as equity
shares commercial companies (ESCC). As at the date of approval of the audited
consolidated financial statements, S(4)Capital plc is in the equity shares
(transition) category.
The consolidated financial statements represent the audited results of the
Company and its subsidiaries (together referred to as 'S(4)Capital Group' or
the 'Group').
S(4)Capital Group is a tech-led, new age/new era digital advertising and
marketing and technology services company.
2. Basis of preparation
A. Statement of compliance
The financial statements of S(4)Capital plc have been prepared in accordance
with UK-adopted International Accounting Standards and with the requirements
of the Companies Act 2006 as applicable to companies reporting under those
standards.
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2024. The results for the
year have been extracted from the 31 December 2024 audited consolidated
financial statements which have been approved by the Board of Directors. The
statutory accounts for 2024 have been reported on by the Group's auditors
and will be delivered to the Registrar of Companies in due course. The
audited financial information is prepared under the historical cost basis,
unless stated otherwise in the accounting policies.
The Group has undertaken a detailed going concern assessment, reviewing cash
flow projections for the next twelve months,
under both base and a severe yet plausible downside scenario. The primary
assumptions in the base case are in accordance with the Group's Board-approved
2025-27 three-year plan, with these forecasts being in line with those
considered for the goodwill impairment testing. The Directors believe that the
Group's forecasts have been prepared on a prudent basis. Considering the
Group's bank covenant and liquidity headroom and cost mitigation actions which
could be implemented, the Directors have concluded that the Group will be able
to operate within its facilities and comply with its banking covenants for the
foreseeable future and therefore believe it is appropriate to prepare the
financial statements of the Group on a going concern basis and that there are
no material uncertainties which gives rise to a significant going concern
risk. Given its debt maturity profile and available facilities, the Directors
believe the Group has sufficient liquidity to match its requirements for the
foreseeable future.
B. Restatement and re-presentation
Deferred tax related to business combinations
The Group has restated the comparative financial statements to account for the
recognition of deferred tax balances related to certain business combinations
in the prior years. This adjustment represents deferred tax assets recognised
in respect of future tax deductions expected to be allowed for tax goodwill
amortisation related to the payments of employment linked contingent
consideration and acquisition expenses recognised in the post acquisition
period on certain business combinations. We have also recognised deferred tax
liabilities in respect of amortisation of goodwill for tax purposes expected
to be allowed in certain jurisdictions. These restatements result in the
recognition on a net basis of deferred tax assets in each of the restated
years as noted below.
The impact of the above adjustment on total equity as at 1 January 2023 is an
increase of £35.1 million.
The following table details the impact on the consolidated statement of profit
or loss for the year ended 31 December 2023:
31 December 2023
As reported Deferred tax adjustment As restated
£m £m £m
Income tax credit/(expense) 7.9 (8.3) (0.4)
Loss for the year (6.0) (8.3) (14.3)
Attributable to the owners of the Company (6.0) (8.3) (14.3)
Basic loss per share (pence) (0.9) (1.3) (2.2)
Diluted loss per share (pence) (0.9) (1.3) (2.2)
The following table details the impact on the consolidated balance sheet as at
31 December 2023:
31 December 2023
As reported Deferred tax adjustment As restated
£m £m £m
Non-current assets
Deferred tax assets 7.3 17.4 24.7
Non-current liabilities
Deferred tax liabilities (32.7) 8.6 (24.1)
Equity
Currency translation reserves (5.3) (0.8) (6.1)
Retained earnings 482.1 26.8 508.9
The following table details the impact on the consolidated balance sheet as at
31 December 2022:
31 December 2022
As reported Deferred tax adjustment Deferred tax offset As restated
£m £m £m £m
Non-current assets
Deferred tax assets 5.4 39.1 (29.6) 14.9
Non-current liabilities
Deferred tax liabilities (54.1) 4.0 29.6 (28.5)
Equity
Retained earnings 478.4 35.1 - 513.5
C. Functional and presentation currency
The consolidated financial statements are presented in Pound Sterling (GBP or
£), the Company's functional currency. All financial information in Pound
Sterling has been rounded to the nearest million unless otherwise indicated.
D. Principal risks and uncertainties
The principal risks and uncertainties facing the Group as at 31 December 2024
relate to the following:
¤ Macroeconomic headwinds
¤ Operational decision making and internal efficiencies
¤ Talent lifecycle
¤ Governance and compliance
¤ Artificial intelligence
¤ Business transformation
¤ Key customers
¤ Reputation risk
¤ Information security and data privacy
¤ Competitive environment
3. Significant accounting policies
The consolidated financial statements have been prepared on a consistent basis
with the accounting policies of the Group which were set out on pages 154 to
164 of the Annual Report and Accounts 2023, excluding the impact of amended
standards as detailed below.
The following amended standards became applicable for the current reporting
period. These are as follows:
Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants - Amendments to IAS 1
In January 2020 and October 2022, the International Accounting Standards Board
issued amendments to IAS 1 Presentation to Financial Statements to specify the
requirements for classifying liabilities as current or non-current. The Board
decided that if an entity's right to defer settlement of a loan arrangement is
subject to the entity complying with the required covenants only at a date
subsequent to the reporting period ("future covenants"), the entity has a
right to defer settlement of the liability even if it does not comply with
those covenants at the end of the reporting period.
The amendment further clarifies that the classification of a liability is
unaffected by the likelihood that the entity will exercise its right to defer
settlement for at least twelve months after the reporting period.
Disclosure is required when a liability arising from a loan covenant is
classified as non-current and the entity's right to defer settlement is
contingent on compliance with the future covenants within twelve months.
The adoption of this amendment on 1 January 2024 has no material impact on the
Group's consolidated financial statements.
Lease Liability in a Sale and Leaseback - Amendments to IFRS 16
In September 2022, the International Accounting Standards Board issued Lease
Liability in a Sale and Leaseback (Amendments to IFRS 16). The amendment to
IFRS 16 Leases specifies the requirements that a seller-lessee uses in
measuring the lease liability arising in a sale and leaseback transaction, to
ensure the seller-lessee does not recognise any amount of the gain or loss
that relates to the right of use it retains.
The adoption of this amendment on 1 January 2024 has no material impact on the
Group's consolidated financial statements.
Disclosures: Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7
In May 2023, the International Accounting Standards Board issued amendments to
IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures.
The amendments specify disclosure requirements to enhance the current
requirements, which are intended to assist users of financial statements in
understanding the effects of supplier finance arrangements on an entity's
liabilities, cash flows and exposure to liquidity risk
The adoption of this amendment on 1 January 2024 has no material impact on the
Group's consolidated financial statements.
4. Critical accounting judgements and estimates
In preparing these consolidated financial statements, the critical accounting
judgements and estimates made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the Annual Report and Accounts 2023.
5. Statutory information and independent review
The condensed consolidated financial statements for the year ended 31 December
2024 do not constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006. A full copy of the 2024 Annual Report and Accounts
will be available online in April 2025. The statutory accounts for the year
ended 31 December 2023 have been delivered to the Registrar of Companies and
received an unqualified auditors' report, did not include a reference to any
matters to which the auditors drew attention by way of an emphasis of matter
and did not contain a statement under sections 498 (2) or (3) of the Companies
Act 2006.
6. Acquisitions
Current year acquisitions
There were no material acquisitions during the year ended 31 December 2024.
Prior year acquisitions
XX Artists
During the year, the Group settled the remaining holdback of £1.3 million
from escrow as the business had achieved the post acquisition EBITDA targets
for the 12 month period ended 31 December 2022.
TheoremOne
Included within other reserves as at 31 December 2024 is £26.4 million,
comprised of £26.4 million recognised as deferred equity consideration in
2023.
At 31 December 2024, £6.1 million of holdbacks remain relating to amounts
held back due to cover and indemnify the Group against certain acquisition
costs and damages. The Group currently expects to settle the maximum holdback
amount. The amount payable would be dependent on the amount of these
acquisition costs and damages, with the minimum amount payable being £nil.
4Mile
As a result of partially achieving post acquisition EBITDA targets for the 12
month period ended 31 December 2022, £6.7 million and £2.5 million were paid
in cash to the Sellers during the year in relation to performance linked and
employment linked contingent consideration respectively.
During the year, £2.2 million of holdbacks were paid from escrow, with a
£2.3 million gain recognised in the consolidated statement of profit or loss
through contingent considerations as remuneration. The remaining balance of
holdbacks as at 31 December 2024 was therefore £nil.
Zemoga Group (Zemoga)
During the year, £0.4 million of holdbacks were paid from escrow. The
remaining balance of holdbacks as at 31 December 2024 was therefore £nil.
7. Segment information
A. Operating segments
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker (CODM). The CODM has
been identified as the Board of Directors of S(4)Capital Group.
During the year, S(4)Capital Group has three reportable segments as follows:
· Content practice: Creative content, campaigns, and assets at a
global scale for paid, social and earned media - from digital platforms and
apps to brand activations that aim to convert consumers at every possible
touchpoint.
· Data&Digital Media practice: Full-service campaign management
analytics, creative production and ad serving, platform and systems
integration and transition, training and education.
· Technology Services practice: digital transformation services in
delivering advanced digital product design, engineering services and delivery
services.
The customers are primarily businesses across technology, FMCG and media and
entertainment. Any intersegment transactions are based on commercial terms.
The Board of Directors monitor the results of the reportable segments
separately for the purpose of making decisions about resource allocation and
performance assessment prior to charges for tax, depreciation and
amortisation.
The Board of S(4)Capital Group uses net revenue rather than revenue to manage
the Company due to the fluctuating amounts of direct costs, which are
recharged as part of revenue.
The following is an analysis of the Group's net revenue and results by
reportable segments:
Data&Digital Media Technology Services
2024 Content £m £m Total
£m £m
Revenue 566.7 195.0 86.5 848.2
Net revenue 475.5 192.4 86.7 754.6
Segment profit(1,2) 48.7 46.0 11.5 106.2
Overhead costs (18.4)
Adjusted non-recurring and acquisition related expenses(3) (35.6)
Depreciation, amortisation and impairment(4,5) (355.0)
Net finance costs and gain on net monetary position (28.1)
Loss before income tax (330.9)
Data&Digital Media Technology Services
2023 Content £m £m Total
£m £m
Revenue 664.1 210.4 137.0 1,011.5
Net revenue 528.9 207.3 137.0 873.2
Segment profit(1,2) 46.5 35.2 43.4 125.1
Overhead costs (22.1)
Adjusted non-recurring and acquisition related expenses(3) (22.0)
Depreciation and amortisation(4) (60.8)
Net finance costs and loss on net monetary position (34.1)
Loss before income tax (13.9)
Notes:
1. Including £13.2 million (2023: £17.1 million) depreciation and £5.3
million impairment on right-of-use assets.
2. In arriving at segment profit, personnel costs of £368.7 million (2023:
£419.3 million), £128.7 million (2023: £150.6 million) and £68.4 million
(2023: £83.9 million) were deducted from Content, Data&Digital Media and
Technology Services respectively.
3. Comprised of acquisition and restructuring expenses of £21.7 million
(2023: £11.9 million), share-based payment costs of £6.5 million (2023:
£10.1 million), impairment of right-of-use assets of £5.3 million (2023:
£nil) and onerous lease provisions of £2.1 million (2023: £nil).
4. Includes impairment of intangibles of £204.4 million in Content and £96.8
million in Technology Services (2023: £nil).
5. Excluding £13.2 million (2023: £17.1 million) depreciation and £5.3
million impairment on right-of-use assets.
Segment profit represents the profit earned by each segment without allocation
of the share of loss of joint ventures, central administration costs including
Directors' salaries, finance income, non-operating gains and losses, and
income tax expense. This is the measure reported to the Group's Board of
Directors for the purpose of resource allocation and assessment of segment
performance.
B. Information about major customers
One (2023: one) customer accounted for more than 10% of the Group's revenue
during the year, contributing £148.1 million (2023: £177.5 million). The
revenue from this customer was attributable to both the Content and
Data&Digital Media segments.
8. Goodwill
2024 2023
Cost £m £m
At the start of the year 706.5 734.0
Acquired through business combinations - 0.2
Foreign exchange differences (9.2) (27.7)
At the end of the year 697.3 706.5
2024 2023
Accumulated impairment £m £m
At the start of the year (15.2) (15.2)
Impairment charge in year (280.4) -
Foreign exchange differences (10.5) -
At the end of the year (306.1) (15.2)
2024 2023
Net book value £m £m
At the start of the year 691.3 718.8
At the end of the year 391.2 691.3
Goodwill represents the excess of consideration over the fair value of the
Group's share of the net identifiable assets of the acquired subsidiary at the
date of acquisition.
Impairment testing
Goodwill acquired through business combinations is allocated to CGUs for the
purpose of the impairment testing. The Group's three CGUs are Content,
Data&Digital Media and Technology Services. The goodwill balance is
allocated to each of the three CGUs as follows:
2024 2023
£m £m
Content 197.1 413.6
Data&Digital Media 194.1 197.6
Technology Services - 80.1
Total 391.2 691.3
The recoverable amount for each CGU is determined using a value-in-use
calculation. In determining the value-in-use, the Group uses forecast revenue
and profits adjusted for non-cash transactions to generate cash flow
projections. The forecasts are prepared by management based on the
Board-approved three-year business plans for each CGU along with a one-year
management-prepared extrapolation period. The forecasts reflect the expected
financial performance for each CGU, and consider the impact of inflation and
the latest macroeconomic trends and external factors, as well as historic
performance and trends, amongst other factors.
The impairment of goodwill and customer relationships totals £301.2 million,
with a related deferred tax credit of £20.8 million, resulting in a net
charge of £280.4 million (2023: £nil) recognised during the year. This
impairment reflects trading conditions in the second half of 2024 and the
subsequent medium-term outlook following the completion of our budget and
three-year planning process. These trends translated into ongoing client
caution and lower activity in the Content CGU particularly with some of our
larger technology clients in the second half of the year. Further, our outlook
for the Technology Services CGU is
mainly affected by longer sales cycles for new business and a reduction in
some of our larger relationships.
The table below sets out this year's impairment charge for the Content and
Technology Services CGUs, along with their respective recoverable amounts for
the year ended 31 December 2024:
Impairment of goodwill Impairment of customer relationships Deferred tax impact of impairment charge Net Recoverable amount
£m £m £m Impairment charge £m
£m
Content 204.4 - (7.9) 196.5 511.2
Technology Services 76.0 20.8 (12.9) 83.9 94.4
Total 280.4 20.8 (20.8) 280.4 605.6
For Content, with an impairment loss of £196.5 million, the range of net
revenue growth rates across the four-year forecast period is between (0.6%)
and 10.0%, and the range of EBITDA margin across the four-year forecast period
is between 12.6% and 18.5%. A pre-tax discount rate of 15.1% has been used,
with a long-term growth rate of 2.0% applied in perpetuity beyond the
four-year explicit forecast period.
For Technology Services, with an impairment loss of £83.9 million, the range
of net revenue growth rates across the four-year forecast period is between
(4.9%) and 10.2%, and the range of EBITDA margin across the four-year forecast
period is between 15.7% and 17.0%. A pre-tax discount rate of 13.4% has been
used, with a long-term growth rate of 2.0% applied in perpetuity beyond the
four-year explicit forecast period.
Sensitivity analysis has been carried out for the value-in-use calculations of
each CGU.
The following is a sensitivity analysis for impairment losses recognised in
Content CGU and Technology Services CGU, in the case of changes in the key
assumptions. The consequential impacts of the changes in net revenue growth
and EBITDA margins on cash flow assumptions including working capital
movements and tax charges have been incorporated into the sensitivity analyses
set out below, but all other variables are held constant.
EBITDA margin 100bps reduction(2)
Net revenue growth 20% reduction(1) £m
£m
Content 22.7 36.9
Technology Services 4.4 6.5
Notes:
1. A 20% reduction has been applied to net revenue growth rate in each year of
the explicit forecast period, with the long-term growth rate unchanged.
2. A 100 basis point reduction in EBITDA margin has been applied in each year
of the forecast period, including in the terminal period.
For Data&Digital Media, with a headroom of £1.1 million, the range of net
revenue growth rates across the four-year forecast period is between (0.6%)
and 15.2%, and the range of EBITDA margin across the four-year forecast period
is between 16.0% and 19.0%. A pre-tax discount rate of 14.3% has been used,
with a long-term growth rate of 2.0% applied in perpetuity beyond the
four-year explicit forecast period. The recoverable amount would equal the
carrying amount either if net revenue growth range were to be reduced to a
range of (0.6%) to 14.9% (with margins remaining unchanged) or if EBITDA
margin were to be
reduced to a range of 15.9% to 18.9% (with net revenue growth remaining
unchanged).
The following is a sensitivity analysis for Data&Digital Media, in the
case of changes in the key assumptions. The consequential impacts of the
changes in net revenue growth and EBITDA margins on cash flow assumptions
including working capital movements and tax charges have been incorporated
into the sensitivity analyses set out below, but all other variables are held
constant.
EBITDA margin 100bps reduction(2)
Net revenue growth 20% reduction(1) £m
£m
Data&Digital Media 10.8 14.3
Notes:
1. A 20% reduction has been applied to net revenue growth rate in each year of
the explicit forecast period, with the long-term growth rate unchanged.
2. A 100 basis point reduction in EBITDA margin has been applied in each year
of the forecast period, including in the terminal period.
9. Financial instruments
Financial instruments by category
2024 2023
Financial assets £m £m
Financial assets held at amortised cost
Cash and cash equivalents 168.4 145.7
Trade receivables 364.7 346.8
Accrued income 31.1 28.2
Other receivables 48.2 33.1
Total 612.4 553.8
2024 2023
Financial liabilities £m £m
Financial liabilities held at amortised cost
Trade and other payables (412.8) (348.9)
Loans and borrowings (307.4) (321.1)
Lease liabilities (42.5) (49.0)
Financial liabilities held at fair value through profit and loss
Contingent consideration and holdbacks (9.5) (25.5)
Total (772.2) (744.5)
The following table categorises the Group's financial liabilities held at fair
value on the consolidated balance sheet. There have been no transfers between
levels during the year (2023: none).
2024 2024 2023 2023
Fair value Level 3 Fair value Level 3
Financial liabilities £m £m £m £m
Contingent consideration and holdbacks (9.5) (9.5) (25.5) (25.5)
Total (9.5) (9.5) (25.5) (25.5)
The following table shows the movement in contingent consideration and
holdbacks.
Performance Employment
linked linked
contingent contingent
Contingent consideration and holdbacks consideration consideration Holdbacks(1) Total
£m £m £m £m
Balance at 1 January 2023 (10.9) (151.7) (26.0) (188.6)
Acquired through business combinations (0.4) - - (0.4)
Recognised in consolidated statement of profit or loss(2) 1.6 4.1 5.8 11.5
Cash paid - 77.7 5.9 83.6
Equity settlement - 62.3 0.4 62.7
Exchange rate differences 0.7 4.6 0.4 5.7
Balance at 31 December 2023 (9.0) (3.0) (13.5) (25.5)
Acquired through business combinations - - - -
Recognised in consolidated statement of profit or loss(2) - (0.7) 3.0 2.3
Cash paid 6.7 2.9 3.9 13.5
Equity settlement - - 0.2 0.2
Exchange rate differences (0.1) - 0.1 -
Balance at 31 December 2024 (2.4) (0.8) (6.3) (9.5)
Included in current liabilities (8.6) (3.0) (6.6) (18.2)
Included in non-current liabilities (0.4) - (6.9) (7.3)
Balance at 31 December 2023 (9.0) (3.0) (13.5) (25.5)
Included in current liabilities (2.4) (0.8) (1.5) (4.7)
Included in non-current liabilities - - (4.8) (4.8)
Balance at 31 December 2024 (2.4) (0.8) (6.3) (9.5)
Notes:
1. Holdback payments of £3.9 million (2023: £5.9 million) includes £3.9
million (2023: £3.3 million) of cash paid out of escrow accounts.
2. Includes a charge of £0.7 million (2023: £13.2 million) relating to
employment linked contingent consideration and holdback deemed remuneration
and a
credit of £3.0 million relating to a fair value gain (2023: £24.7 million
credit).
Where the contingent consideration conditions have been satisfied,
consideration that is payable as equity is recognised within other reserves as
deferred equity consideration.
The fair value of the performance linked contingent consideration has been
determined based on management's best estimate of achieving future targets to
which the consideration is linked. The most significant unobservable input
used in the fair value measurements is the future forecast performance of the
acquired business. The fair value is assessed and recognised at the
acquisition date, and reassessed at each balance sheet date thereafter, until
fully settled, cancelled or expired. Any change in the range of future
outcomes is recognised in the consolidated statement of profit or loss. During
the year ended 31 December 2024, a fair value gain of £nil (2023: £1.6
million gain) was recognised in the consolidated statement of profit or loss.
The fair value of the employment linked contingent consideration has been
determined based on management's best estimate of achieving future targets to
which the consideration is linked. The most significant unobservable input
used in the fair value measurements is the future forecast performance of the
acquired business. The fair value is assessed at the acquisition date, and
systematically accrued over the respective employment term. Any changes in the
range of future outcomes are recognised in the consolidated statement of
profit or loss. During the year ended 31 December 2024, a £0.7 million charge
(2023: £4.1 million gain) was recognised in the consolidated statement of
profit or loss. The £0.7 million charge (2023: £4.1 million gain) comprised
a charge of £0.7 million (2023: £13.2 million) relating to the systematic
accrual of the employment linked contingent consideration and a fair value
gain of £nil (2023: £17.3 million gain).
Holdbacks relate to amounts held by the Group to cover and indemnify the Group
against certain acquisition costs and damages. The fair value of the holdbacks
has been determined based on management's best estimate of the level of the
costs incurred and damages expected to which the holdback is linked, which is
the most significant unobservable input used in the fair value measurement.
During the year ended 31 December 2024, a £3.0 million gain (2023: £5.8
million gain) has been recognised in the consolidated statement of profit or
loss, which related to holdbacks liabilities linked to employment. No further
amounts are to be charged to the consolidated statement of profit or loss.
10. Net debt reconciliation
The following table shows the reconciliation of net cash flow to movements in
net debt:
Net debt including lease liabilities
Borrowings and overdrafts Cash Net debt Leases £m
£m £m £m £m
Net debt as at 1 January 2023 (333.8) 223.6 (110.2) (58.4) (168.6)
Financing cash flows 0.2 (67.0) (66.8) 16.3 (50.5)
Acquired through business combinations - - - (0.2) (0.2)
Lease additions - - - (14.0) (14.0)
Foreign exchange adjustments 6.8 (10.9) (4.1) 1.1 (3.0)
Interest expense (22.7) - (22.7) (2.3) (25.0)
Interest payment 23.1 - 23.1 2.3 25.4
Other (0.1) - (0.1) 6.2 6.1
Net debt as at 31 December 2023 (326.5) 145.7 (180.8) (49.0) (229.8)
Financing cash flows 0.2 27.3 27.5 12.7 40.2
Acquired through business combinations - - - - -
Lease additions - - - (2.0) (2.0)
Foreign exchange adjustments 15.0 (4.6) 10.4 1.6 12.0
Interest expense (25.5) - (25.5) (2.5) (28.0)
Interest payment 25.5 - 25.5 2.5 28.0
Other - - - (5.8) (5.8)
Net debt as at 31 December 2024 (311.3) 168.4 (142.9) (42.5) (185.4)
11. Related party transactions
During the year the Group invested in Hoorah Digital Proprietary Limited, a
South African, minority-owned, digital media business. Key management
personnel compensation and the interest in S4S Ventures is detailed in the
Annual Report and Accounts 2023. S(4)Capital Group did not have any other
related party transactions during the financial year (2023: nil).
12. Events occurring after the reporting year
The Revolving Credit Facility has been extended to a maturity date of February
2028 for £80 million, with all four relationship banks extending on the same
terms. The RCF remains undrawn as at 31 December 2024. On the 23 March 2025
the Board proposed a final dividend of 1p per share, amounting to £6.1
million, subject to shareowner approval. This will be paid on 10 July 2025 to
all shareowners on the register as at 6 June 2025. There were no other
material post balance sheet events, that require adjustment or disclosure,
occurring between the reporting period and the 23 March 2025.
Appendix- Alternative Performance Measures
The Group has included various alternative performance measures (APMs) in its
audited consolidated financial statements. The Group includes these non-GAAP
measures as it considers these measures to be both useful and necessary to the
readers of these audited consolidated financial statements to help them more
fully understand the performance and position of the Group. The Group's
measures may not be calculated in the same way as similarly titled measures
reported by other companies. The APMs should not be viewed in isolation and
should be considered as additional supplementary information to the IFRS
measures. Full reconciliations have been provided between the APMs and their
closest IFRS measures.
The Group has concluded that these APMs are relevant as they represent how the
Board assesses the performance of the Group and they are also closely aligned
with how shareowners value the business. They provide like-for-like,
year-on-year comparisons and are closely correlated with the cash inflows from
operations and working capital position of the Group. They are used by the
Group for internal performance analysis and the presentation of these measures
facilitates comparison with other industry peers as they adjust for
non-recurring factors which may materially affect IFRS measures. Adjusting
items for the Group include amortisation of acquired intangibles, acquisition
related expenses costs, share-based payments, employment-related acquisition
costs and restructuring costs. Whilst adjusted measures exclude amortisation
of intangibles, acquisition costs and restructuring costs they do include the
revenue from acquisitions and the benefits of the restructuring programmes and
therefore should not be considered a complete picture of the Group's financial
performance, that is provided by the IFRS measures.
The adjusted measures are also used in the calculation of the adjusted
earnings per share and banking covenants as per our agreements with our
lenders.
Closest IFRS measure Adjustments to reconcile to IFRS Measure
APM Reason for use
Consolidated statement of profit or loss
Controlled Billings Revenue Includes media spend contracted directly by clients with media providers and It is an important measure to help understand the scale of the activities that
pass-through costs (see reconciliation A1 below) Group has managed on behalf of its clients, in addition to the activities that
are directly invoiced by the Group.
Billings Revenue Includes pass through costs (see reconciliation A1 below) It is an important measure to understand the activities that are directly
invoiced by the Group to its clients.
Net Revenue Revenue Excludes direct costs (see reconciliation A2 below) This is more closely aligned to the fees the Group earns for its services
provided to the clients. This is a key metric used by the Group when looking
at the Practice performance.
Operational EBITDA Operating profit Excludes acquisition related expenses, non-recurring items (primarily Operational EBITDA is Operating profit or loss before the impact of adjusting
acquisition payments tied to continued employment, amortisation of business items, amortisation of intangible assets and PPE depreciation. The Group
combination intangible assets and restructuring and other one-off expenses) considers this to be an important measure of Group performance and is
and recurring share-based payments, and includes right-of-use assets consistent with how the Group is assessed by the Board and investment
depreciation. (see reconciliation A3 below) community.
Like-for-Like Revenue and operating profit Is the prior year comparative, in this case 2023, restated to include acquired Like-for-like is an important measure used by the Board and investors when
businesses for the same months as 2024, and restated using same FX rates as looking at Group performance. It provides a comparison that reflects the
used in 2024 (see reconciliations A4 below) impact of acquisitions and changes in FX rates during the year.
Closest IFRS measure Adjustments to reconcile to IFRS Measure
APM Reason for use
Pro-forma Revenue and operating profit Is the year consolidated results in constant currency and for acquisitions as Pro-forma figures are used extensively by management and the investment
if the Group had existed in full for the year (see reconciliations A5 below) community. It is a useful measure when looking at how the Group has changed
in light of the number of acquisitions that have been completed and to
understand the performance of the Group.
Adjusted basic earnings per share Basic earnings per share Excludes amortisation of intangible assets, acquisition related expenses, Adjusted basic earnings per share is used by management to understand the
share-based payments and restructuring and other one-off expenses (see earnings per share of the Group after removing non-recurring items and those
reconciliation A6 below) linked to combinations.
Adjusted (loss)/profit for the year (Loss)/Profit for the year Excludes amortisation of intangible assets, acquisition related expenses, Adjusted (loss)/profit for the year is used by management to understand the
share-based payments and restructuring and other one-off expenses (see (loss)/profit for the Group after removing non-recurring items and those
reconciliation A6 below) linked to combinations.
Consolidated balance sheet
Net debt Cash and loans and borrowings Net debt is cash less gross bank loans (excluding transaction costs and lease Net debt is a commonly used metric to identify the debt obligations of the
liabilities). This is a key measure used by management and in calculations for Group after utilising cash in bank.
bank covenants (see reconciliation A7 below)
Consolidated statement of cashflows
Free cash flow Net cash (used in)/from operating activities Net cash flow from operating activities adjusted for investments in Free cash flow is a commonly used metric used to identify the amount of cash
intangibles and property, plant and equipment, lease liabilities, interest and at the disposal of the Group.
facility fees paid, security deposits and employment linked contingent
consideration paid.
2024 2023
Billings and controlled billings (A1) £m £m
Revenue 848.2 1,011.5
Pass-through expenses 1,114.8 859.0
Billings(1) 1,963.0 1,870.5
Third party billings direct to clients 3,254.5 3,152.3
Controlled billings(2) 5,217.6 5,022.8
Notes:
1. Billings is gross billings to clients including pass-through expenses.
2. Controlled billings are billings we influenced.
2024 2023
Net revenue (A2) £m £m
Revenue 848.2 1,011.5
Direct costs (93.6) (138.3)
Net revenue 754.6 873.2
2024 2023
Reconciliation to operational EBITDA (A3) £m £m
Operating (loss)/profit (302.8) 20.2
Amortisation of intangible assets 44.3 48.6
Impairment of intangible assets 301.2 -
Acquisition expenses (1.3) (9.2)
Share-based payments 6.5 10.1
Restructuring and other one-off expenses(1) 30.4 11.8
Depreciation of property, plant and equipment(2) 9.5 12.2
Net Revenue 87.8 93.7
Notes:
1. Restructuring and other one-off expenses relate to restructuring costs of
£18.8 million (2023: £18.2 million), transformation costs of £4.2 million
(2023: £2.9 million), impairment of right-of-use assets of £5.3 million
(2023: £nil), onerous lease provision of £2.1 million (2023: £nil), offset
by £nil (2023: £9.3 million) due to the significant devaluation of the
Argentinian peso.
2. Depreciation of property, plant and equipment is exclusive of depreciation
on right-of-use assets and includes £nil (2023: £0.5 million expense)
relating to the significant devaluation of the Argentinian peso.
Like-for-Like (A4)
Data&Digital Media Technology Services
Like-for-like revenue Content Total
Year ended 31 December 2023 £m £m £m £m
Revenue 664.1 210.4 137.0 1,011.5
Impact of acquisitions - - 1.1 1.1
Impact of foreign exchange (19.5) (7.7) (3.9) (31.1)
Like-for-like revenue(1) 644.6 202.7 134.2 981.5
% like-for-like revenue change (12.1%) (3.8%) (35.5%) (13.6%)
Data&Digital Media Technology Services
Like-for-like net revenue Content Total
Year ended 31 December 2023 £m £m £m £m
Net revenue 528.9 207.3 137.0 873.2
Impact of acquisitions - - 1.1 1.1
Impact of foreign exchange (15.3) (7.6) (4.0) (26.9)
Like-for-like net revenue(1) 513.6 199.7 134.1 847.4
% like-for-like net revenue change (7.4%) (3.7%) (35.3%) (11.0%)
Like-for-like operational EBITDA Total
Year ended 31 December 2023 £m
Operational EBITDA 93.7
Impact of acquisitions (0.2)
Impact of foreign exchange (5.2)
Like-for-like operational EBITDA(1) 88.3
% like-for-like operational EBITDA change (0.6%)
Notes:
1. Like-for-like is a non-GAAP measure and relates to 2023 being restated to
show the audited numbers for the previous year of the existing and acquired
businesses consolidated for the same months as in 2024, applying currency
rates as used in 2024.
Pro-forma (A5)
Data&Digital Media Technology Services
Content £m £m Total
Pro-forma revenue £m £m
FY24 Revenue 566.7 195.0 86.5 848.2
Impact of acquisitions - - - -
FY24 Pro-forma revenue(1) 566.7 195.0 86.5 848.2
FY23 Revenue 664.1 210.4 137.0 1,011.5
Impact of acquisitions - - 1.1 1.1
Impact of foreign exchange (19.5) (7.7) (3.9) (31.1)
FY23 Pro-forma revenue(1) 644.6 202.7 134.2 981.5
% pro-forma revenue change (12.1%) (3.8%) (35.5%) (13.6%)
Data&Digital Media Technology Services
Content £m £m Total
Pro-forma net revenue £m £m
FY24 net revenue 475.5 192.4 86.7 754.6
Impact of acquisitions - - - -
FY24 Pro-forma net revenue(1) 475.5 192.4 86.7 754.6
FY23 net revenue 528.9 207.3 137.0 873.2
Impact of acquisitions - - 1.1 1.1
Impact of foreign exchange (15.3) (7.6) (4.0) (26.9)
FY23 Pro-forma net revenue(1) 513.6 199.7 134.1 847.4
% pro-forma net revenue change (7.4%) (3.7%) (35.3%) (11.0%)
Total
Pro-forma operational EBITDA £m
FY24 operational EBITDA 87.8
Impact of acquisitions -
FY24 Pro-forma operational EBITDA(1) 87.8
FY23 operational EBITDA 93.7
Impact of acquisitions (0.2)
Impact of foreign exchange (5.2)
FY23 Pro-forma operational EBITDA(1) 88.3
% pro-forma operational EBITDA change (0.6%)
Notes:
1. Pro-forma relates to audited non-statutory and non-GAAP consolidated
results in constant currency as if the Group had existed in full for the year
and have been prepared under comparable GAAP with no consolidation
eliminations in the pre-acquisition period.
Adjusted basic earnings per share (A6)
Impairment of intangibles
£m Restructuring
Acquisition expenses(2) Share-based payments and other one-off expenses(3)
£m
£m
£m
Reported Amortisation(1) Adjusted
Year ended 31 December 2024 £m £m £m
Operating (loss)/profit (302.8) 44.3 301.2 (1.3) 6.5 30.4 78.3
Net finance expenses (26.4) - - - - - (26.4)
Loss on net monetary position (1.7) - - - - - (1.7)
(Loss)/profit before income tax (330.9) 44.3 301.2 (1.3) 6.5 30.4 50.2
Income tax credit/(expense) 24.0 (12.0) (20.8) - (0.8) (5.9) (15.5)
(Loss)/profit for the year (306.9) 32.3 280.4 (1.3) 5.7 24.5 34.7
Notes:
1. Amortisation relates to the intangible assets recognised as a result of
the acquisitions.
2. Acquisition expenses relate to acquisition related advisory fees of
£1.0 million, contingent consideration as remuneration of £0.7 million and
remeasurement gain on contingent considerations of £3.0 million.
3. Restructuring and other one-off expenses relate to restructuring costs of
£18.8 million, transformation costs of £4.2 million, impairment of
right-of-use assets of £5.3 million and onerous lease provision of £2.1
million.
Acquisition expenses(2) Share-based payments Restructuring and other one-off expenses(3)
Reported Amortisation and impairment(1)
Adjusted
Year ended 31 December 2023 £m £m £m £m £m £m
Operating profit 20.2 48.6 (9.2) 10.1 12.3 82.0
Net finance expenses (35.4) - - - 1.5 (33.9)
Gain/(loss) on net monetary position 1.3 - - - (1.3) -
(Loss)/profit before income tax (13.9) 48.6 (9.2) 10.1 12.5 48.1
Income tax expense(4) (0.4) (14.7) - (0.7) (4.1) (19.9)
(Loss)/profit for the year(4) (14.3) 33.9 (9.2) 9.4 8.4 28.2
Notes:
1. Amortisation and impairment relates to the intangible assets recognised
as a result of the acquisitions.
2. Acquisition expenses relate to acquisition related advisory fees of
£2.3 million, contingent consideration as remuneration of £12.2 million and
remeasurement gain on contingent considerations of £24.7 million.
3. Restructuring and other one-off expenses relate to restructuring costs
of £18.2 million, transformation costs of £2.9 million, offset by £8.8
million due to the significant devaluation of the Argentinian peso.
4. The comparatives for the year ended 31 December 2023 have been restated
to account for the recognition of deferred tax balances related to certain
business combinations in the prior years (see Note 2).
Adjusted basic result per share 2024 2023(1)
Adjusted profit attributable to owners of the Company (£m) 34.7 28.2
Weighted average number of ordinary shares for the purpose of basic EPS 671,956,509 639,218,703
(shares)
Adjusted basic earnings per share (pence) 5.2 4.4
Notes:
1. The comparatives for the year ended 31 December 2023 have been restated
to account for the recognition of deferred tax balances related to certain
business combinations in the prior years (see Note 2).
Net debt (A7)
2024 2023
£m £m
Cash and bank 168.4 145.7
Loans and borrowings (311.3) (326.5)
Net debt (142.9) (180.8)
Lease liabilities (42.5) (49.0)
Net debt including lease liabilities (185.4) (229.8)
Free cash flow (A8)
2024 2023
£m £m
Net cash inflow/(outflow) from operating activities 83.0 (10.7)
Employment linked contingent consideration paid 2.9 77.7
Interest and facility fees paid (29.1) (26.7)
Interest received 2.1 -
Purchase of intangible assets (4.2) (2.1)
Purchase of property, plant and equipment (4.0) (5.9)
Security deposits 0.5 (2.2)
Principal element of lease payments (12.7) (16.3)
Other non-cash items (0.7) -
Free cash flow 37.8 13.8
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