S4 Capital (LSE:SFOR) shares slumped, falling 6.47% to 40.5p after a trading update that reiterated 2026 like-for-like net revenue guidance of £632-663m,
The tech-led digital advertising and marketing services group, also set a target to lift like-for-like operational EBITDA margin by at least 100 basis points and confirmed a 2.2p total dividend.
The update, aligned to today's AGM, told investors that the proportion of operational EBITDA in H1 2026 should rise due to the annualised benefit of 2025 cost actions.
Liquidity has improved materially, it added, with month-end average net debt in the first five months of 2026 down £38 million from £144 million to £106 million, and the company reiterated a 2026 year-end net debt target of £60-90 million.
The board plans to recommend and pay total dividends of 2.2p per share for 2026, split 1.1p interim and 1.1p final, and intends a 50% dividend payout policy out of adjusted basic EPS over the medium term, with current analysts' consensus for 2026 adjusted basic EPS at 5.3p-6.2p.
Capital allocation remains dividends first, debt repurchase second, and buybacks third. It noted that €85.2 million of Term Loan B has been repurchased to date, reducing the outstanding to €289.9 million, and a target to reduce it to €250 million while aiming for medium-term leverage below 1.0x pro-forma 12-month operational EBITDA and to be close to net debt-free next year.
"Effectively, we are half-way through our AI-driven turnaround, with the more significant half to come," said Sir Martin Sorrell.
