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Sir Martin Sorrell’s S4 Capital sees losses reach £82m as acquisitions and hiring boom weigh on group’s costs
- Sir Martin Sorrell’s company reported a loss of £82.4m for the first half of 2022
- S4 Capital said it had frozen recruitment and controlled discretionary costs
- The prominent posted a net debt of £135.5m
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S4 Capital has seen losses accelerate due to a steady stream of acquisitions and an increase in headcount.
Sir Martin Sorrell’s advertising business reported a loss of £82.4m for the first six months of 2022, compared to a £23m loss last year as staff investment outweighed net revenue growth.
S4 announced it had put in place a hiring freeze and discretionary cost controls, which had the “desired effect” of keeping the total workforce at around 9,100 for the past month.
Titan: Sir Martin Sorrell’s company reported a half-year loss of £82.4m as staff investment outpaced net revenue growth more than expected
That’s still nearly 60 percent more people than were employed by the company at the end of June 2021, when total net cash was £6.6m.
Twelve months later, the group posted a net debt of £135.5 million as a result of the heavy level of mergers and acquisitions it has completed this year, including one involving Los Angeles-based software developer TheoremOne.
These deals continued to drive total revenues up 59.8 per cent to £446.4 million over the past six months and invoices up nearly 40 per cent to £765.6 million.
S4 Capital also benefited from winning new contracts with major corporate clients such as pub chain Brewdog, computer software supplier Adobe and social media platform TikTok.
In addition, it was awarded two so-called ‘whopper’ contracts, each worth at least $20 million per year, which are expected to be fully operational by 2023.
The London-listed company said it has five more clients with deals nearing ‘whopper’ status, while a further 14 have been identified as ‘potential champs’.
Despite an economic environment of rate hikes, rising inflation and slowing growth, Sorrell said the current moment could be a windfall for the advertising industry.
He said: “The prospects for digital advertising and transformation remain relatively bright as traditional media languish, and there is evidence that demand is accelerating during periods of economic uncertainty, as we saw with Covid in 2020 when we performed strongly.”
Sorrell, 77, started S4 Capital four years ago after leaving WPP, the agency he helped build and transform into the world’s largest advertising company.
His new company has seen rapid expansion, buying up 30 media organizations since its inception and winning clients such as tech giants Google and Meta, Cadbury owner Mondelez and German automaker BMW.
S4 Equity Shares had risen 11.1 percent to 159.5 pence by late Wednesday afternoon, though their value has fallen about 60 percent in the past 12 months.