Sir Martin Sorrell’s S4 Capital crashes 36% after PwC refused to sign off its results

Sir Martin Sorrell has today had more than £90 million (A$157 million) wiped off the value of his S4 Capital stake after PwC refused to sign off its Preliminary Results for 2021.

The audit delay caused the share price to significantly decline by almost 36% from £3.10 ($A5.43) to £1.72 ($A3.01).

S4 Capital chair, Sir Martin Sorrell (pictured)

The London-listed digital advertising and marketing-services group said it was informed in the afternoon that its auditors, PricewaterhouseCoopers LLP, “were unable to complete the work necessary for S4 Capital to release the Preliminary Statement tomorrow morning.”

As a result, the company will release its Preliminary Results for 2021 as soon as PwC have completed their work. The company said it “believes that the results for 2021 remain within the range of market expectations and continued to trade strongly in the first two months of 2022.”

Earlier in the month, S4 Capital said in a statement that because of the impact of Covid and Omicron on travel and resource allocation, particularly in the Netherlands, PwC requested a further period to complete its audit work.

The company said it will continue to expect to report results in line with the trading statement issued on 12 January, 2022, which highlighted “continued strong gross profit/net revenue growth and a significant improvement in Operational EBITDA margins in the second half, and in line with market expectations. 2022 has started strongly.”

In its half-year results, S4 reported a “very strong first half” for 2021, with like-for-like gross profit (net revenue) up 49% and accelerating to 66% in second quarter.

Revenue was £547.5 million, up over 110% for reported, and up over 82% like-for-like. While gross profit was £236.7 million, up almost 91% for reported, up over 49% like-for-like.

Operational EBITDA is up 91% reported, 30% like-for-like and 36% pro-forma with EBITDA margin of 14.5% reflecting continued investment.

In January, S4 entered the new year with a merger between 4 Mile Analytics and Media Monks, which significantly expands the capabilities of its data and digital media practice.

S4 was founded in 2018, following Sir Martin Sorrell’s departure from WPP. Sorrell and his former employer are currently engaged in legal proceedings over unpaid payments allegedly owed to Sorrell.

The company now has more than 5000 employees, working across 31 countries.


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