S4 Capital paid Sir Martin Sorrell £140,000 in 2018

Sorrell: set up S4 Capital in May 2018
Sorrell: set up S4 Capital in May 2018

S4 Capital, the advertising business Sir Martin Sorrell launched after leaving WPP last year, has published its first annual report.

S4 Capital, the company launched by Sir Martin Sorrell in May 2018, has issued its first annual report, unveiling that Sorrell was paid £140,000 for just over six months last year.

Between 23 May and 31 December, Sorrell received £61,000 in salary – of an annual salary of £100,000 – as well as £61,000 in bonus and £18,000 in pension contributions. Sorrell earned £13.9m for his last full year in charge at WPP (2017) – down significantly from the £70.4m he took home in 2015.

S4 Capital’s businesses include digital content specialist MediaMonks and programmatic specialist MightyHive. The financial results include six months contribution from MediaMonks and a week from MightyHive. 

MediaMonks founders Victor Knaap and Wesley ter Haar were both paid £14,000 in salary in 2018 (the original figure has been converted into sterling from euros using the average exchange rate for the year). As has been previously announced, Knaap and ter Haar were paid €3m in connection with the merger last year. They are due another €3m in July 2019. 

Pete Kim and Christopher Martin, MightyHive’s founders, were appointed to the board on 24 December 2018 and were paid £3,000 (the figure in dollars has been converted into sterling using the average exchange rate for the year) in 2018.

The report confirms that S4 Capital generated £54.8m in revenue, a gross profit of £37.2m and a loss before income tax of £9.1m on billings of £59.1m in 2018.

New business for the nascent group across the year came through assignments from Procter & Gamble, Nestlé, Avon, Mondelez International, Shiseido, Bayer, Electronic Arts and Electrolux, among others. The report claims "the current [new business] pipeline is approximately twice the level of last year".

The company now comprises 1,200 people across 16 markets, which, in the report, Sorrell said is "pretty much 75% of the geographic spread we need".

In his letter to shareholders, Sorrell describes the results as reflecting "a powerful 2018", adding that January and February 2019 have showed revenue and gross profit like-for-like growth of "well over 30%".

In the report, Sorrell explained: "When we started S4 Capital, I knew we wanted to invent a very different kind of business from the one I’d left; a company whose structure and approach would be designed for an era that’s just beginning.

"It wouldn’t be a company that would try to do everything; instead… we would identify the growth segments in the market and focus our attention there… I picked three, which we have dubbed the holy trinity. These are first-party data, content and production, and programmatic media buying and planning."

Since the company was not operational for the full calendar year, S4 Capital provided pro-forma figures to indicate a 12-month performance, with revenue of £135.9m, gross profit of £105.2m, pre-tax profit of £20.1m and billings of £291.2m.

By geography, on a pro-forma basis, the Americas accounted for 65% of revenue and 72% of gross profit. Europe, the Middle East and Africa represented 29% of revenue and 22% of gross profit, and the Asia-Pacific region was 6% of revenue and 6% of gross profit.

Sorrell said S4 Capital is based around four key principles – "our four gospels, our four noble truths" – that he believes are the prerequisites for success in a lower-overall-growth, data-driven era: "We will be purely digital"; "Focus on data, content, programmatic"; "faster, better, cheaper"; and "a unitary structure".

He added: "We will even put ourselves out of a job to deliver what the client wants. In my previous existence, when we built the Ford agency or the Colgate agency, it was driven by the genuine urge to ask: what can we do for them that would make us indispensable?

"But by the law of unintended consequences, clients started to find that they were suffocated, particularly as they had denuded themselves of resources to satisfy the demands of cost-cutting.

"Now, as they seek to take back control and restore their own marketing capabilities, when clients ask for in-housing, we are happy to oblige. For Avon, we are building an in-house content studio – where they can produce the work themselves or we can do it for them." 

Sorrell concluded: "When we started S4 Capital, I likened it to a peanut. Well, clients and investors, take note. According to The New England Journal of Medicine, peanuts help you live longer." 

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