S4 Capital plc · LSE:SFOR
S4 Capital — FY2018 Earnings Presentation
40 slides from S4 Capital's earnings presentation, March 2019
Slide 1: Inaugural Preliminary Results for the year ended 31 December 2018
Inaugural Preliminary Results for the year ended 31 December 2018
Slide 2: Contents
Contents 1_ 2018 Inaugural Results Peter Rademaker, Chief Financial Officer 2_ Technological and Geographic Trends Sir Martin Sorrell, Executive Chairman 3_ Strategy and Structure Sir Martin Sorrell, Executive Chairman S4Capital 4_ MediaMonks and MightyHive Wesley ter Haar, Executive Director Pete K
Slide 3: Unaudited Pro Forma Highlights (£m)
2018 Inaugural Results Unaudited Pro Forma* Highlights (£m) • Billings of 291.2 • Revenue 135.9, +58% • Gross profit 105.2, +49% Operational EBITDA** 22.4, +99% S4Capital • • Operational EBITDA margin 21.4%, +5.4 pts • Adjusted operating profit 21.0 01 • Adjusted result before income tax 20.1 • Adju
Slide 4: Recent History and Highlights
2018 Inaugural Results Recent History and Highlights • Formation and initial funding of S4Capital plc in May 2018 • Combination with the leading digital content Advertising Age A-Listed production company MediaMonks in July • Injection of the enlarged Company into the quoted “shell” company, Derrist
Slide 5: Unaudited Preliminary Highlights (£m)
2018 Inaugural Results Unaudited Preliminary Highlights (£m) • Billings 59.1 • Revenue 54.8 • Gross profit 37.2 Operational EBITDA* 4.7 (including adjusting items of 12.5) S4Capital • • Operating loss 8.5 • Result before income tax 9.1 (loss) 01 • Result 8.1 (loss) *Operational EBITDA is EBITDA adju
Slide 6: Pro Forma P&L
2018 Inaugural Results Pro Forma P&L For the period ended 31 December 2018 (unaudited) Unaudited Unaudited Unaudited Pro-forma Pro-forma 2018 2018 2017 ₤'000 ₤'000 ₤'000 Revenue 54,845 135,929 86,114 Cost of sales 17,681 30,754 15,571 Gross profit 37,164 105,175 70,543 Net operating expenses (exclud
Slide 7: Unaudited Condensed Consolidated Balance Sheet
2018 Inaugural Results Unaudited Condensed Consolidated Balance Sheet Unaudited Unaudited As at 31 December 2018 2018 As at 31 December 2018 2018 £'000 £'000 ASSETS EQUITY Non-current assets Share capital 90,849 Intangible assets 387,275 Share premium 258,588 Property, plant and equipment 4,007 Othe
Slide 8: Current Trading and Outlook
2018 Inaugural Results Current Trading and Outlook • A powerful 2018, with pro forma revenue and gross profit growth of 58% and 49% and operational EBITDA margin above 20% • This performance is planned to continue into 2019, with budgets and plans targeting strong revenue, gross profit growth and im
Slide 9: Technological and Geographic Trends
Technological and Geographic Trends • The global advertising and marketing industry was worth $1.7tn in 2018 (including $400bn trade budgets – Redburn) • Global internet users = 3.6bn people, or over 50% of the population, in 2018 (Kleiner Perkins) • Digital media use 5.9 hours per day (Kleiner Perk
Slide 10: Technological and Geographic Trends
Technological and Geographic Trends Digital continues to grow significant advertising “market share” Internet and social media global penetration doubles in eight years Social Media ¤270bn - ¤330 ¤450bn - ¤500bn ¤500bn - ¤600bn Radio Internet 10% 3% 5% 2% 3% 60% 5% 12% 9% Out of Home 50% 49% 26% Pri
Slide 11: Technological and Geographic Trends
Technological and Geographic Trends Mobile advertising still represents the biggest opportunity 50% Time Spent Advertising Spending, 2017, USA Ad Spend % of Media Time in Media / 40% 36% 36% 30% ~$7B 29% Opportunity 26% 20% 20% 18% 13% 10% 9% S4Capital 9% 4% 0% Print Radio TV Desktop Mobile Source:
Slide 12: Technological and Geographic Trends
Technological and Geographic Trends USA, China and India are the opportunity Facebook and Google the leading platforms, except in China 40% 2.5B 40% 2.2B 2.0B 2.0B Active Users by Platform, Global 30% China % of Global GDP 26% 25% 1.5B Asia (ex-China) 22% 20% Europe 15% 1.0B 1.0B North America 10% 0
Slide 13: Industry Dynamics
Technological and Geographic Trends Industry Dynamics First party data S4Capital Digital creative Seven Programmatic Traditional creative Sisters In-housing Zero-based budgeting 02 Post-Lehman slower GDP growth Consultancy Custom research Walled gardens ‘growing’ ‘Take Back Control' 13
Slide 14: Four Core Principles
Strategy and Structure Four Core Principles The Holy Trinity • First party data Purely digital • Digital content • Programmatic S4Capital 03 Faster Better Unitary structure Cheaper 14
Slide 15: Strategy and Structure
Strategy and Structure Analyse First party data Create • Assist in the sourcing, analysis and delivery of aggregated and Digital Content high quality relevant datasets Plan & Deliver • Design and development of • Fuel marketing budget ROIs by digital creative content and Programmatic S4Capital filte
Slide 16: Board and Executives
Strategy and Structure S Capital Board and Executives 4 Rupert Faure Walker Daniel Pinto Sue Prevezer QC Paul Roy Non-executive director Non-executive director Non-executive director Non-executive director S4Capital Sir Martin Sorrell Victor Knaap Wesley ter Haar Pete Kim Christopher Martin Peter Ra
Slide 17: Expanding Global Presence
Strategy and Structure Expanding Global Presence Americas Pro forma revenue 65% Pro forma gross profit 72% EMEA 29% 22% APAC 6% 6% Digital content 75% 67% Programmatic 25% 33% MediaMonks 6 production hubs / service offices 14 service offices 2 more offices under consideration 950+ people S4Capital M
Slide 18: People
Strategy and Structure People MediaMonks MightyHive Victor Knaap - CEO Pete Kim - CEO Wesley ter Haar - COO Leah Kim - CMO Frank ter Weeme - CFO Christopher Martin - COO S4Capital Joris Pol - Global Executive Producer Emily Del Greco - President, Americas Louise Martens - Global Executive Producer S
Slide 19: Highly Complementary Businesses
Strategy and Structure Highly Complementary Businesses Create Plan and deliver Design and production of high value and innovative Market leader in programmatic implementation, content, mostly for campaign-driven digital training and consulting services productions S4Capital Purely digital Efficient
Slide 20: MediaMonks - Strategy
MediaMonks and MightyHive MediaMonks - Strategy Global creative production partner Since 2001, MediaMonks has partnered with clients across industries and markets to craft amazing work for leading businesses and brands. Our integrated production capabilities plan the entire creative spectrum, coveri
Slide 21: MediaMonks - Strategy
MediaMonks and MightyHive MediaMonks - Strategy We help brands to strategise and execute across all digital touchpoints S4Capital CAMPAIGNS EXPERIENTIAL CONTENT DYNAMIC PLATFORMS ADAPTATION 04 21
Slide 22: MediaMonks - Strategy
MediaMonks and MightyHive MediaMonks - Strategy INSTAGRAM TVC MediaMonks model - DOOH SNAPCHAT Content for all screens We take a complex network of FACEBOOK PRINT touchpoints and build a creative and data S4Capital strategy that drives a consistent brand look and feel by being smarter with content p
Slide 23: MediaMonks - Strategy
MediaMonks and MightyHive MediaMonks - Strategy To us ideas are BIG, CORE CREATIVE but not a single big idea. A collection of small ideas hyper focused to meet the Always-on (personal & relevant) content across channels and media needs of the audience, established by a strategic S4Capital 70% and cr
Slide 24: MediaMonks - Structure
MediaMonks and MightyHive MediaMonks - Structure SERVICE OFFICES HQ LO ST NY LA SF BA SP MX DB SG SH BANG S4Capital PILLARS CREATIVE CONTENT + PLATFORMS + ASSETS@SCALE INNOVATION ECOMMERCE 04 PRODUCTION HUBS HQ BA SP KIV LA BANG 24
Slide 25: MediaMonks - Clients
MediaMonks and MightyHive MediaMonks - Clients RETAINED & ROSTERED RELATIONSHIPS S4Capital 04 25 MEDIA FAST PLATFORMS & MOVING TECH STRATEGY & CREATIVE
Slide 26: MediaMonks - People
MediaMonks and MightyHive MediaMonks - People Investing in the best talent Notable people moves In 2018, MediaMonks grew their talent pool by a Louise Martens Sander van der Vegte third — from 650+ Monks to over 950 and Executive producer, LA Head of MediaMonks Labs counting. MediaMonks’ team works
Slide 27: MightyHive - Strategy
MediaMonks and MightyHive MightyHive - Strategy P MightyHive continues to attack the opportunity created from w C an underserved and untrusted legacy marketing services market. Consultant Growth Vectors S4Capital • Focus on Enterprise - Scale capability and value proposition for global 1000 brands •
Slide 28: MightyHive - Structure
MediaMonks and MightyHive MightyHive - Structure S4Capital Emily Del Greco Sasha Schmitz Kenny Griffiths President of the Americas Director, EMEA Managing Director, APAC AMERICAS EMEA APAC Sales, Enterprise Consulting, and Media Sales, Enterprise Consulting, and Media Established regional sales, con
Slide 29: MightyHive - Clients
MediaMonks and MightyHive MightyHive - Clients MightyHive provides consulting and media operations services to turn the vision of digital transformation into reality. Sustained New Client Growth S4Capital Among MightyHive’s FY 2018 new business wins are enterprise engagements with over 20 marquee br
Slide 30: MightyHive - People
MediaMonks and MightyHive MightyHive - People Notable Hires Scott Yacko MightyHive was founded by programmatic and Senior Director of Data Science marketing technology experts from Google, Formerly co-founder and Head of Yahoo!, and Salesforce, and continues to build on Data Science for marketing an
Slide 31: MightyHive - Capability
MediaMonks and MightyHive MightyHive - Capability CONSULTING Enterprise data strategy and in-housing strategy Data science, custom analysis & advanced modeling Cloud-based systems integration Ads Data Hub CONSULTING S4Capital MEDIA ACTIVATION Display & Video, Search, Social planning and buying M N T
Slide 32: MediaMonks - Netflix: Narcos
Case Studies MediaMonks - Netflix: Narcos Step 1 - 2.17 sec. Step 2 - 2.17 sec. Step 3 - 2.17 sec. The Cali/Narcos Intro slide - 2 sec. End screen - 3 sec. From our Behavioural Signals Where they are in the ...to dynamic audience’s digital world scalable assets. interests… Audience Signals Who your
Slide 33: MightyHive - Sprint
Case Studies MightyHive - Sprint Sprint, a leading network operator in the United States, provides wireless services to over 50 million customers. The organisation is undergoing a company-wide digital transformation initiative and partnered with MightyHive to create greater transparency into the dig
Slide 34: New Business - Selected highlights
MediaMonks and MightyHive New Business - Selected highlights MediaMonks MightyHive MediaMonks’ 2018 new business wins include consumer brands Among MightyHive’s FY 2018 new business wins are enterprise such as Nestle, Gildan, Mondelez, P&G, Braun, Dyson, GSMA, engagements with over 20 marquee brands
Slide 35: One unified integrated campaign across all consumer touch-points
MediaMonks Case Study BRIEF PRODUCTION SETUP 1 creative concept How can we create one unified 3 shooting days 3 sets integrated campaign across all 4 crews our consumer touch-points and with one single budget? RESULT 120 deliverables across all media platforms and devices 35
Slide 36: Case Study
MediaMonks Case Study APPROACH S4Capital SNAPCHAT PLATFORMS FACEBOOK TV BANNERS APPS INSTAGRAM TWITTER RESULT More content More Channels Lower costs In total we’ve created 120 deliverables In one single shoot we created tailored The efficient way of working led to a out of a 3 day shoot. content for
Slide 37: Global Introduction Starbucks @Home
GLOBAL INTRODUCTION STARBUCKS @HOME 37
Slide 38: Case Study
MediaMonks Case Study S4Capital SNAPCHAT YOUTUBE FACEBOOK TV / OLV BANNERS INSTAGRAM IGTV STORIES RESULT More content More Channels Lower costs By applying a smart production In one single integrated production we The efficient way of working led to a strategy, we’ve created 127 assets In created ta
Slide 39: Summary
2018 Inaugural Results Summary • A powerful 2018, with pro forma revenue and gross profit growth of 58% and 49% and operational EBITDA margin above 20% • This performance is planned to continue into 2019, with budgets and plans targeting strong revenue, gross profit growth and improving operational
Slide 40: Q&A
Q&A 06