Yahoo Finance Losses treble at Sir Martin Sorrell's S4 Capital
Losses at Sir Martin Sorrell’s advertising company have more than tripled in a year that was marred by accounting issues.
S4 Capital reported an operating loss of £135.3m for 2022, up from £42.1m the previous year.
Losses surged after a series of acquisitions that left the company with a ballooning wage bill and caused accounting issues.
Sir Martin, who founded the online ad group in 2018 following his acrimonious departure from WPP, has bought up dozens of small media firms in a bid to scale up his new advertising business rapidly.
However, the rapid expansion led to accounting issues as S4 Capital’s finance department struggled to keep pace.
S4 Capital was forced to delay its results twice last year after auditors at PwC were unable to complete their work in time.
The company said it had made “major progress” in improving areas such as financial controls, risk and governance.
S4 said it had rolled out a number of recent cost-saving measures in a bid to rein in expenses, including introducing a hiring freeze.
Total headcount has now stabilised at around 9,000 and S4 said it would maintain a “more balanced approach” to staff costs going forward.
Sir Martin said: “The actions taken by our management and the positive response by our people to the first half challenge of balancing growth in net revenue with growth in costs, have delivered a much improved second half performance.”
Accounting issues fuelled a sharp decline in S4’s share price, which is down 45pc in the last year. The group’s market value has fallen from a peak of almost £5bn to below £1bn.
Despite this, S4 said it had continued to win major new clients, increasing its number of so-called “whoppers” – companies with annual revenue of more than £20m – to 10 in 2022.
It also made a further three acquisitions last year, with total initial payments made of almost £90m.
Revenue rose by almost a quarter to cross the £1bn threshold for the first time.
Sir Martin said there was a “very mixed picture” for the economic outlook.
He said: “Obviously, GDP growth has slowed… I think inflation has been checked, but it still seems to be remarkably sticky.”
