Sir Martin Sorrell’s advertising and marketing company, S4 Capital, has reported booming business amid what it described as a “post-pandemic rebound” in the global economy, as it prepares for expansion.
S4 said like-for-like gross profits and revenues were both at levels “beyond expectations”, in a statement to the stock market on Monday.
It added that “activity has continued at unprecedented levels in May and June, driven both by the post-pandemic rebound in global GDP and the acceleration in digital marketing transformation”.
Much of the world is still in the grip of the coronavirus pandemic, but spending on advertising is increasing in some places. Restrictions are easing in some markets, including the UK, which dropped all social distancing regulations on Monday, despite the growing presence of the Delta variant that is proving infectious even to many people who have been vaccinated.
Sorrell set up S4 in 2018 after allegations of personal misconduct prompted his resignation from WPP, the FTSE 100 marketing conglomerate he built from the shell of a wire and plastic products manufacturer. Sorrell has denied any wrongdoing.
Since then, Sorrell has undertaken a rapid string of acquisitions to grow a digital-focused rival to his former company. The strategy has benefited from the shift away from print advertising during the pandemic. In May, S4 raised its revenue targets and Sorrell said he was “extremely optimistic” about the economic recovery.
On Monday, S4 said it had secured new loan and debt facilities to refinance existing borrowing as well as to pursue further acquisitions. The company has agreed a seven-year €375m (£321m) loan with Credit Suisse, HSBC and Barclays, plus a five-year revolving credit facility that could allow the company to borrow as much as £100m from Credit Suisse, HSBC, Barclays, JP Morgan and BNP Paribas.
The money will refinance existing borrowing facilities worth £109m and give it another £200m that it intends to use in part to finance further acquisitions. S4 said it was looking at expanding its activity in technology services as well as adding to its content, data and digital media businesses in the Americas and Asia-Pacific.