7 June 2021

S4 Capital plc

("S⁴Capital" or "the Company")

AGM Statement

Q2 Acceleration, like-for-like 2021 Gross Profit or Net Revenue Guidance lifted to 35%

S⁴Capital plc (SFOR.L), the tech-led, new age, new era, digital advertising and marketing services company, announces that at the Annual General Meeting of the Company to be held today, Sir Martin Sorrell, Executive Chairman of the Company, will make the following statement.

"2020 was a very busy third year for S⁴Capital, both organically and through mergers and the tempo has been maintained, as growth rates have accelerated in the first quarter and in to Q2 2021. I am pleased to say that generally few of our people and their families have been infected by covid-19 or developed serious problems as a result, although, regrettably a small number have sadly lost family members. Unfortunately, in recent weeks following new virus waves we have seen increases in cases in Brazil, Holland and India. Particularly in the case of India, we are trying very hard to help and, thankfully, there has been a significant recent improvement. We wish them and their families long life and record our thanks to all the frontline workers, who have kept us well and safe.

First, I want to remind everyone, again, of our definitive and differentiated strategy, based on four core principles. We are purely digital, because that's where the growth is, even more so in a covid-19 world. In a 24/7, always-on digital world, our business model is to focus on first party data, which, in turn, fuels the creation, production and distribution of digital advertising and marketing creative content through our data & digital media planning and buying and programmatic and performance executions. Our mantra or strap line is "faster, better, cheaper" or "speed, quality, value", because that's what clients want. Finally, our organisational structure is unitary, with a single P&L, as clients want the best people working on their business, not caring where they come from. We don't do fragmenting earnouts.

Having built out our Content practice in 2018 and 2019 around MediaMonks and our Data&digital media practice around MightyHive also in 2018 and 2019, we have added 12 content companies and  11 data & digital media companies, 12 before last year's AGM and 11 in the last seven months of 2020 and the first five months of 2021.

In June 2020, MightyHive announced its combination with Lens10, a leading Australian digital strategy and analytics consultancy. In July 2020, MightyHive announced a combination with Orca Pacific, a market leading full-service Amazon agency and boutique consultancy firm based in Seattle. In August 2020, MightyHive announced a combination with London-based Brightblue, an econometric and media optimisation consultancy. In September 2020, MediaMonks announced its combination with Dare.Win, expanding its geographical presence to France. In January 2021, MediaMonks announced its combination with integrated creative, technology and media agency Decoded Advertising, Shanghai based creative agency TOMORROW and Stuttgart based automotive specialist STAUD STUDIOS. MightyHive also announced its combination with integrated digital performance marketing agency Metric Theory. In February 2021, MightyHive acquired the assets of Datalicious Australia, a leading Google Marketing Platform, Google Cloud and Google Analytics partner in Asia Pacific. In March 2021, MediaMonks announced it had entered into a conditional agreement in relation to a combination of MediaMonks with Toronto-based design and experience agency, Jam3.  Finally, last month MightyHive announced a combination with Raccoon Group, which significantly expanded its data & digital media practice in Brazil and Latin America.

On 16 July 2020, S⁴Capital announced the successful placing of 36,766,642 new ordinary shares at a price of 315p raising approximately £116 million gross proceeds which was earmarked for further expansion and combination purposes.

The Company is now in the process of raising a term loan of over $350 million to finance further expansion, as the equity funds raised have been successfully deployed.

All these mergers have historically been branded under the MediaMonks and MightyHive banners and, in turn, MediaMonks and MightyHive have been increasingly and already successfully acting as one in going to market. The combined firm will, in future, go to market under one brand or flag.

Since the last AGM in June of 2020, your Company has doubled its number of people to over 5,500 in 31 countries and almost tripled its market capitalisation to over £3 billion ($4.2 billion). S⁴Capital achieved £ and $ "unicorn" status within 18 months of re-listing and would rank in the FTSE 150 by market capitalisation, if it had a premium listing.

As the global economy snaps back from the pandemic and opening up and vaccines kick in, trading for the first four months of 2021 has accelerated strongly, with reportable revenue up almost 90%, compared to 71% for Q1. Reportable gross profit or net revenue was up almost 84%, compared to 71% for Q1. Both revenue and gross profit or net revenue like-for-like growth rates accelerated markedly in April. We do not have our May figures as yet, but early indications are that May will be similar to April and that in June, the pipeline continues to be robust. Tech clients, which constitute over 50% of our revenues, are still generally outspending CPG/FMCG, pharma and retail clients, but all verticals exhibit robust activity. At the beginning of the year, the Company's third three-year plan, as with the previous two, called for a doubling of the Company organically between 2021 and 2023. This targeted organic gross profit or net revenue growth of approximately 25% in 2021. After the end of Q1, in light of Q1 performance, guidance was raised to 30%. In light of the acceleration in Q2 and the Company's Q1 Revised Forecast that has just been finalised, guidance has been raised further to 35%.

As in previous years, the Company continues to invest heavily in talent or human capital, in order to attract, develop and grow the human fabric of the Company essential to achieving high organic growth rates. The S4 Fellowship Programme aimed at recruiting interns from the historically black universities and the S4 Women Leadership Programme with UC Berkeley are both up and running and gaining momentum, representing good examples of our diversity, equity and inclusion initiatives.  In addition, the S4 Scholars Programme, aimed specifically at recruiting High School students is going live in the second half of the year.

We are confident that we will be able to deliver sector leading, high double digit like-for-like revenue and gross profit growth for 2021, along with a strong operating earnings before interest, taxes, depreciation and amortisation margin. We are also confident that we will achieve our three-year plan for 2021-23 (as well as the previous two three-year plans), which calls for a doubling of the Company organically, at both top line and earnings before interest, taxes, depreciation and amortisation levels.

We always knew that our people, being digital natives, would adapt effortlessly and productively to working from home and, as a result, we are further developing a hybrid office model, which accommodates those of our people who want to work more from home and who want to commute more flexibly and provides spaces for working, interacting with colleagues and interacting with clients. We have terminated a number of office leases, which will enable us to integrate our operations even faster than we originally thought.

The Company's cash flow remains strong and your Company will continue to conclude strategic mergers, enhanced by the proceeds of the term loan referred to previously.

Having achieved brand awareness and brand trial over the first three years, our focus remains on broadening and deepening existing client relationships and conversion at scale. Our five biggest clients (including our two biggest pitch wins last year, BMW/MINI and Mondelēz) will achieve "whopper" status this year (i.e. over $20 million of revenue), but we still search for bigger and deeper relationships, and a further three clients, one in technology, one in telecommunications and one in financial software may also achieve "whopper" status this year, making a total of eight out of an objective of twenty. A further seven have been identified as having "whopper" potential. Notable recent client wins, including integrated content and programmatic assignments, number Allianz, Crocs, N26, Instacart, Shopify, Xero and Banorte amongst others. We are currently actively involved in a number of global and regional pitches and conversations.

Geographically, we have added offices in Uruguay and Germany since the last AGM and we do not believe that we will have to add more than four or five markets to our existing tally of 31 countries. We continue to examine our needs for deeper strategic insight and adding technology services, along with increasing focus on the importance of first party data and the walled gardens, following the death of the cookie, which we are already well positioned for.

Finally, I am delighted to say that we have added further non-executive talent to our Board since the last AGM in the form of Miles Young, former Chairman and Chief Executive of OGILVY and currently Warden of New College, Oxford. We now have eight Non-Executive Directors, four women, four men."

As the AGM is a hybrid AGM, shareowners will have received joining instructions for electronic access via the Lumi AGM app, including details of voting and Q&A functions. Details are set out in the Notice of Annual General Meeting.

Guest access to the AGM without voting or a Q&A facility will be available as a webcast via the following link: https://webcasting.brrmedia.co.uk/broadcast/60b7c1d9cc74370299db7c8c

Enquiries

About S⁴Capital

S⁴Capital plc (SFOR.L) is the tech-led, new age/new era digital advertising and marketing services company, established by Sir Martin Sorrell in May 2018.

Its strategy is to build a purely digital advertising and marketing services business for global, multinational, regional, local clients and millennial-driven influencer brands. This will be achieved initially by integrating leading businesses in two practice areas: Data&digital media and Content, along with an emphasis on "faster, better, cheaper" executions in an always-on consumer-led environment, with a unitary structure.

Digital is by far the fastest-growing segment of the advertising market. S⁴Capital estimates that in 2020 digital accounted for over 50% (for the first time) or $290 billion of total global advertising spend of $525 billion (excluding over $500 billion of trade promotion marketing, the primary target of the Amazon advertising platform), and projects that by 2022 this share will grow to approximately 60% and by 2024 to approximately 66%, accelerated by the impact of covid-19.

S⁴Capital combined with MediaMonks, the leading AdAge A-listed creative digital content production company led by Victor Knaap and Wesley ter Haar, in July 2018 and with MightyHive, the market-leading digital media solutions provider for future thinking marketers and agencies, led by Peter Kim and Christopher S. Martin, in December 2018.

In April 2019, MightyHive combined with ProgMedia to expand operations into Latin America and MediaMonks acquired film studio Caramel Pictures to expand content studio capabilities. In June 2019, MediaMonks announced a planned combination with Australia-based BizTech, a leading marketing transformation and customer experience company. In August 2019, MediaMonks combined with Amsterdam-based digital influencer marketing agency IMA. In October 2019, MediaMonks combined with Firewood Marketing, the largest digital marketing agency based in Silicon Valley, that was recently ranked, along with MediaMonks and Circus (see below), as one of the fastest growing agencies by Adweek, and MightyHive combined with award-winning UK-based digital analytics, biddable media and data science company ConversionWorks and South Korea-based data and analytics consultancy MightyHive Korea. In November 2019, MediaMonks announced its combination with Delhi-based content creation and production company WhiteBalance (completed in August 2020 - the delay due to necessary merger clearance procedures) and then with fully integrated digital agency Circus Marketing in January 2020 (completed in March 2020).

In May 2020, MightyHive announced a combination with Digodat, one of the leading Latin American data and analytics consultancies, and in June 2020, MightyHive announced its combination with Lens10, a leading Australian digital strategy and analytics consultancy. In July 2020, MightyHive announced a combination with Orca Pacific, a market leading full-service Amazon agency and boutique consultancy firm based in Seattle. In August 2020, MightyHive announced a combination with London-based Brightblue, an econometric and media optimisation consultancy. In September 2020, MediaMonks announced its combination with Dare.Win, expanding its geographical presence to France. In January 2021, MediaMonks announced its combination with integrated creative, technology and media agency Decoded Advertising, Shanghai based creative agency TOMORROW and Stuttgart based automotive specialist STAUD STUDIOS. MightyHive also announced its combination with integrated digital performance marketing agency Metric Theory. In February 2021, MightyHive acquired the assets of Datalicious Australia, a leading Google Marketing Platform, Google Cloud and Google Analytics partner in Asia Pacific. In March 2021, MediaMonks announced it had entered into a conditional agreement in relation to a combination of MediaMonks with Toronto-based design and experience agency, Jam3. In May 2021, MightyHive announced it had entered into a conditional agreement in relation to a combination of MightyHive with the leading digital performance agency in Brazil, Raccoon Group.

On 16 July 2020, S⁴Capital announced the successful placing of 36,766,642 new ordinary shares at a price of 315p raising approximately £116 million gross proceeds which will be used for further expansion and combination purposes.

Victor Knaap, Wesley ter Haar, Pete Kim, Christopher Martin, Peter Rademaker and Scott Spirit all joined the S⁴Capital Board as Directors. The S⁴Capital Board also includes Rupert Faure Walker, Paul Roy, Daniel Pinto, Sue Prevezer, Elizabeth Buchanan, Naoko Okumoto, Margaret Ma Connolly and Miles Young.

The Company now has around 5,500 people in 31 countries across the Americas, Europe, the Middle East and Africa and Asia-Pacific and a current market capitalisation of approximately £3.1 billion (c.$4.5 billion), and would rank amongst the FTSE 150. It achieved Unicorn status in a little over one year, unique in the advertising and marketing services industry.

Sir Martin was CEO of WPP for 33 years, building it from a £1 million "shell" company in 1985 into the world's largest advertising and marketing services company with a market capitalisation of over £16 billion on the day he left. Today its market capitalisation is £12 billion. Prior to that Sir Martin was Group Financial Director of Saatchi & Saatchi Company Plc for nine years.