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S4 Capital reveals ‘unprecedented’ post-pandemic trading activity and new tech ambitions

S4 Capital has boasted about ‘unprecedented’ trading conditions amid the post-pandemic recovery

S4 Capital has reported “unprecedented“ business activity driven by the economic rebound from Covid-19 in a statement released to the London stock market today.

The company, founded by Sir Martin Sorrell following his departure from WPP in 2018, said that both like-for-like revenue and gross profit were growing “at levels beyond expectations“.

What has S4 said?

  • S4 said it has secured a €375m loan from HSBC, Credit Suisse and Barclays, as well as revolving credit facility with Credit Suisse, HSBC, Barclays, JP Morgan and BNP Paribas.

  • The latter will enable the business to refinance existing borrowing worth £109m and inject a further £200m for future cash mergers.

  • According to its statement, trading activity has increased since its last market update “at unprecedented levels in May and June, driven both by the post-pandemic rebound in global GDP and the acceleration in digital marketing transformation“.

  • S4 said that the remaining months of 2021 would likely be a bumper period for the business: “The pattern of first-half profitability and margins remains very similar to the first halves of 2019 and 2020, weighted to the second half.“

  • The statement also revealed that S4 is planning to expand its business into technology services, while deepening its content and data offerings in APAC and the Americas.

What does this mean?

  • S4’s results follow a promising start to the year from the major holding companies. WPP and IPG recorded 1.8% and 1.9% revenue increase in Q1 respectively.

  • Like S4, Publicis Groupe saw strong opportunities in the Americas, recording 5.1% growth in the US and 2.8% overall. Havas, Dentsu and Omnicom each lagged behind their rivals.

  • MSQ, which operates on a similar model to S4, announced an expansion in North America last week. The company recorded a 20% increase in gross profit during March and April.

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