Gideon Spanier
Apr 20, 2022

Sorrell: Expect ‘resolution’ to S4 Capital audit delay soon and it is not ‘material’

Company and its auditor would already have been “obligated” to disclose any major issue to investors, he says.

Getty Images
Getty Images

Sir Martin Sorrell has said he anticipates there will soon be a “resolution” to the auditing delays at S4 Capital and maintained it involves nothing “material” because the company and its auditor, PwC, would have been “obligated” to disclose it to investors.

Sorrell, the executive chairman, was making his first public comments about the auditing delays since his company said on 30 March that it was postponing its annual financial results – just hours before they were due to be announced to the stock market at 7am on 31 March.

It was the second time that S4 Capital had delayed results, after initially moving them from 18 March, and the share price plunged by a third on the unexpected news.

Asked about the auditing delays in an interview with Yahoo Finance on 18 April, Sorrell said: “The information we've signalled or sent out – the information in two bulletins [to the stock market] recently – I can't say much more than that, other than PriceWaterhouse[Coopers] continue to do their work. And I anticipate a resolution in fairly short order.”

Sorrell went on to point out that when his company announced the delay in March, “we confirmed that the results would be in line with market expectations – the range of market expectations.

“So I think that's very explicit. If there was anything material to report of significance, we would be obligated, both PwC and ourselves, obligated to report it. So, I would just say, just stand by for further news.”

S4 Capital said it had no further comment for Campaign, following Sorrell’s interview with Yahoo Finance.

When S4 Capital first delayed its results, it said PwC needed more time “because of the impact of Covid and Omicron on travel and resource allocation”.

But the company gave no reason for the second delay, beyond saying that PwC was “unable to complete the work necessary” for S4 Capital to publish its accounts, and gave no new date for the results announcement.

Analysts at Barclays said in a research note at the time that S4 Capital told them that PwC “needed more time to sign off the accounts because they required more checks, sampling, etc”.

Barclays added: “We are not aware of any company postponing results twice because of auditors’ resource allocation issues.”

Analysts at Morgan Stanley said at the time that its conversations with S4 Capital indicated the second delay to the results was “no longer a resource issue”.

Morgan Stanley went on: “The lack of a revised date for the publication of results suggests the aspect of the audit in question is non-trivial and means the auditors are unable to complete their work within a specified timeframe.”

The analysts also noted it was “encouraging” that S4 Capital had said trading since the start of 2022 had been strong.

Sorrell launched S4 Capital in 2018 after leaving WPP, the advertising and communications group he founded and led for three decades.

S4 Capital, a self-styled, new-era digital marketing services company, has made more than two dozen acquisitions, including MediaMonks, Mighty Hive and Firewood.

The share price soared from just over £1 to more than £8 at its peak in autumn 2021 but has fallen back to £3.

Campaign UK

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