S4 Capital shares surge as profit guidance improves

"Shares surged 40.6 per cent to 27.2 pence as the company defied the challenging backdrop for advertising groups, but reported a fall in revenue. The company anticipates full year net revenue of roughly £664m, representing a like for like drop of 8.5 per cent. But operating profit is expected to jump 12 per cent to £75m, beating initial forecast and buoying the share price after it declined 18.5 per cent over the last twelve months after a succession of profit warnings."

"The group also improved its financial position despite the drop in revenue, with net debt expected to come in lower than the current expectations of £133m and beneath the previously predicted range of £100m to £140m. The London listed company credited the drop to a change in Treasury management and a shift in focus towards boosting working capital, which resulted in improved liquidity."

S4 Capital reported that final-quarter activity exceeded revised guidance, sending shares up 40.6% to 27.2p despite an overall revenue fall. The company anticipates full-year net revenue of roughly £664m, a like-for-like decline of 8.5%, while operating profit is expected to rise 12% to £75m, beating earlier forecasts. Net debt is forecast to be lower than current expectations of £133m and below the prior £100m–£140m range, improving the net-debt-to-operational-profit ratio to about 1.1 years from 1.8 years. The Board recommended a 1p final dividend, subject to approvals. Annual results will be released on 26 March.

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