Losses triple at Sir Martin Sorrell’s S4 Capital
Sir Martin set up the online advertising group in 2018 after an acrimonious departure from WPP – REUTERS/Eric Gaillard
Sir Martin Sorrell’s advertising company’s losses have more than tripled in a year, hit by accounting issues.
S4 Capital reported an operating loss of £135.3m for 2022, up from £42.1m the previous year.
Losses mounted after a series of acquisitions, which left the company with a ballooning wage bill and caused accounting issues.
Sir Martin, who founded Online Advertising Group following his acrimonious departure from WPP in 2018, has bought dozens of smaller media firms in a bid to rapidly grow his new advertising business.
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 on time.
The company said it has made “major progress” in improving areas such as financial controls, risk and governance.
S4 said it has recently implemented a number of cost-saving measures to rein in expenses, including introducing a hiring freeze.
The total workforce has now stabilized at around 9,000 and S4 said it would maintain a “more balanced approach” to staff costs going forward.
Sir Martin said: “Actions taken by our management and a positive response by our people to the first half’s challenge of balancing net revenue growth with cost increases have delivered an improved performance in the second half.”
The accounting issues fueled a sharp decline in S4’s share price, which is down 45pc in the past year. The group’s market value has fallen from a peak of around £5bn to below £1bn.
Despite this, S4 said it has continued to win major new customers, increasing the number of so-called “whoppers” – companies with annual revenues of more than £20m – to 10 in 2022.
It also made three more acquisitions last year, with total initial payments of around £90m.
Revenue increased by almost a quarter to pass the £1 billion mark for the first time.
Sir Martin said there was a “very mixed picture” for the economic outlook.
He added: “Obviously, GDP growth has slowed down… I think inflation has been checked, but it’s still remarkably stable.”