Sparks

In its January trading update, S4 Capital had signalled that full year results would come in slightly ahead of market forecasts and that is the case, with net revenue down 11% on a like-for-like basis and an operational EBITDA margin of 11.6%, ahead of earlier forecast of 11.3%, signalling tight control of the cost base. Expectations for the current year are being set for revenue and operational EBITDA to be at broadly similar levels to those achieved in 2024, with a further improvement in the net debt position.

The improved condition of the balance sheet is allowing management to recommend a 1p dividend, which was not previously anticipated by the market.

The group has taken a non-cash write-down of £280m in view of the continuing difficult underlying trading conditions and medium-term outlook. The market for technology services is particularly affected by attention and budgets being dominated by the current focus on AI. This shift in emphasis is part of a wider transition and S4 is itself using AI extensively. Clients are dipping in their toes to deliver use cases that can be further developed, with growing confidence in the use case for copywriting and visualisation. S4’s capabilities here are helping to bring in new business.