Always

Capital plc

Annual Report and Accounts 2023

Capital is a new-age/new-era digital

advertising, marketing and technology

services company, operating in the

fastest-growing segment of the advertising

and marketing services market.

We are a unified, purely digital business,

which disrupts analogue models by

embracing content, data&digital media

and technology services.

We work with global, multinational, regional

and local clients and for millennial-driven

influencer brands in a 24-7 environment.

We are

always on.

www.s4capital.com/annualreport23

www.media.monks.com

Contents

Capital plc Annual Report and Accounts 2023 1

Unification

Our team turns up as one, with a shared culture

and a clear understanding of our roles and goals.

Page 14

Transformation

Artificial intelligence is literally rewriting

the fundamental rules of business.

Page 16

Shifts, rifts and dislocation

A series of powerful forces have thrown the world

into a heightened level of uncertainty.

Page 34

Disruption

The combination of AI, AR and quantum computing

has created an innovation firestorm.

Page 18

Our business

02 Financial highlights

04 Worldwide presence

06 Business model

Strategic Report

09 Letter to shareowners

12 Progress against our strategy

14 Our strategy in action

20 Measuring success: Key Performance Indicators

21 Financial review

28 Principal risks and uncertainties

Pages 69–74 also form part of the Strategic Report

Industry outlook

and ESG reports

34 Shifts, rifts and dislocation by Sir Martin Sorrell

43 ESG: Taking action

44 ESG: Our sustainability commitments

46 Our impact model

47 TCFD Report

54 Materiality impact

55 Our Responsibility to the World

60 Changing the conversation

64 People Fulfilment

68 Personal voices

69 Non-financial and sustainability

information statement

70 Section 172(1) statement

Governance Report

76 Corporate governance statement of compliance

78 Leadership: Board of Directors

86 Leadership: Executive Committee

88 Executive Chairman’s statement

90 The role of the Board

99 Audit and Risk Committee Report

103 Nomination and Remuneration Committee Report

109 Remuneration Report

129 Directors’ Report

Financial statements

134 Independent auditors’ report

145 Consolidated statement of profit or loss

146 Consolidated statement

ofcomprehensive income

147 Consolidated balance sheet

148 Consolidated statement of changes in equity

149 Consolidated statement of cash flows

150 Notes to the consolidated financial statements

196 Company financial statements

202 Appendix: Alternative Performance Measures

208 Shareowner information

2 310 4

Capital plc Annual Report and Accounts 2023 2

Billings

Pro-forma

billings

£1.9bn £1.9bn

-1.1% -1.4%

Like-for-like

-1.4%

Revenue Pro-forma revenue

£1,011.5m £1,012.2m

-5.4% -7.8%

Like-for-like -7.8%

Net revenue Pro-forma net revenue

£873.2m £873.8m

-2.1% -4.5%

Like-for-like -4.5%

Operational EBITDA

4,8

Pro-forma operational EBITDA

£93.7m £93.3m

-24.6% -36.7%

Like-for-like -36.6%

Operational EBITDA margin

Pro-forma operational EBITDA margin

10.7% 10.7%

-320bps -540bps

Like-for-like -550bps

Operating profit Adjusted operating profit

£20.2m £82.0m

2022 £135.3m loss -28.1%

Like-for-like -40.6%

Financial highlights

Our business

Capital plc Annual Report and Accounts 2023 3

Loss before income tax Adjusted result before income tax

-£13.9m £48.1m

2022 -£159.7m -45.6%

Basic loss per share Adjusted basic earnings per share

-0.9p 5.7p

2022 -27.2p 2022 11.4p

Market capitalisation at 25 March 2024 Share price at 25 March 2024

£261m 45.2p

For full reconciliation from statutory to non-GAAP measures, please refer to the Alternative

Performance Measures Appendix on page 202.

Notes:

1. Billings is gross billings to clients including pass-through costs.

2. Like-for-like relates to 2022 being restated to show the unaudited numbers for the previous year of the existing and acquired

businesses consolidated for the same months as in 2023 applying currency rates as used in 2023.

3. Pro-forma numbers relate to unaudited full-year non-statutory and non-GAAP consolidated results in constant currency as if

the S

Capital plc Group (the Group) had existed in full for the year and have been prepared under comparable GAAP with no

consolidation eliminations in the pre-acquisition period.

4. Operational EBITDA is EBITDA adjusted for acquisition related expenses, non-recurring items (primarily acquisition

payments tied to continued employment, amortisation of business combination intangible assets and restructuring and

otherone-off expenses) and recurring items (share-based payments), and includes right-of-use assets depreciation.

It isanon-GAAP measure management uses to assess the underlying business performance.

5. Operational EBITDA margin is operational EBITDA as a percentage of net revenue.

6. Adjusted operating profit is operating profit/loss adjusted for non-recurring and recurring items (as defined above).

7. Adjusted result before income tax is profit/loss before income tax adjusted for non-recurring and recurring items

(as defined above).

8. Operational EBITDA excludes the one-off benefit of £9.3 million due to the significant devaluation of the Argentinian peso

inDecember 2023.

2 310 4

Capital plc Annual Report and Accounts 2023 4

Worldwide presence

We’re

always on

A global communications business

for the new marketing age.

Integrated, agile and responsive.

People

7, 7 0 0

Countries

Offices

Unitary structure

Our business

Capital plc Annual Report and Accounts 2023 5

Company locations

Capital hubs

Net revenue

by region

Americas 79%

EMEA 15%

APAC 6%

Americas APACEMEA

2 310 4

Capital plc Annual Report and Accounts 2023 6

Business model

Capital is built on

four core principles

Underpinned by:

Our smart people

Read more on pages 64–67

Strong financial management

Read more on pages 28–32

One

unitary

structure

We are

purely digital

Faster, better

cheaper and more

(with AI)

Holy trinity of:

First-party data

Digital content

Digital media

A digital first, data-driven, faster, better,

cheaper and more (with AI) unitary model.

Led by S

Capital, the parent company, and delivered through

our single global operating brand, Media.Monks.

Our business

Capital plc Annual Report and Accounts 2023 7

Note:

1. Statista.com, 2024.

Strengths and differentiators How we generate value

Agents of NOW

With change happening rapidly every day, clients

need results, solutions and relevance right NOW.

We shift industries forward by flexing and reshaping

how businesses react with people against the needs

ofaconstantly evolving world.

Worldwide presence

We provide clients with seamless access, local insight

and global coverage through 61 offices across the world.

32 countries

Productive, talented people

Our executive management team combines seasoned

industry experts with successful entrepreneurs who

have significant ownership in the Company to create

a growth-focused culture among our people and

attracting the market’s best and smartest minds across

the business.

7,7 0 0 Monks

We are data-driven

Our data-driven approach, which drives the creation

of content at scale and enables continuous refinements,

coupled with our speed to market and measurement

capabilities, mean clients receive more effective and

reliable results.

And, importantly, data is the fuel that powers AI.

Delivering maximum returns

We aim to deliver optimal ROI through our superior

broad and deep knowledge and capabilities in three

collaborative practices:

• Content

• Data&Digital Media

• Technology Services

Unique go-to-market strengths

We go to market as faster, better, cheaper – capitalising

on more opportunities through AI. Our focus on digital

marketing and technology is a strong value proposition

to CSOs, CMOs, CIOs and CTOs who are looking to get

the best possible return on their investment.

We are purely digital

Digital is by far the fastest-growing segment of the

advertising and marketing services market. Our purely

digital offering, aligned around the Media.Monks

operating brand, means we are swiftly capitalising

onthe arrival and benefits of AI.

>70% of market

share will be

digital by 2025

A focused, profitable client portfolio

We work for global, multinational, regional and

local clients. We focus on large high-growth market

opportunities including the digital marketing, media

and transformation sectors, which are all expanding

multi-billion-dollar markets. Our 12 largest clients

account for over 50% of our revenue.

A single P&L approach

Unlike traditional agency holding company structures,

we have aligned around the Media.Monks brand.

This allows us to provide an integrated service to clients,

a collaborative culture and broader career paths for

ourpeople and a more profitable model for investors.

Responsible stewardship

Our operational structure has been developed to

ensurewe can grow in a healthy, cost controlled and

riskmitigated manner, with an ESG strategy aligned

withour overall business objectives.

2 310 4

Strategic

Report

09 Letter to shareowners

12 Progress against our strategy

14 Our strategy in action

20 Measuring success: Key Performance Indicators

21 Financial review

28 Principal risks and uncertainties

Pages 69–74 also form part of the Strategic Report

8 S

Capital plc Annual Report and Accounts 2023

Dear shareowner

2023 was a difficult year with slower market

growth and continuing macroeconomic

uncertainty. The first half saw a mixed

performance with slower growth and an

expected second half seasonal uplift did not

materialise amidst continuing client caution and

further economic and geopolitical challenges.

Overall, we have seen clients very much

focused on the short term, particularly in

relation to larger transformation projects, which

has resulted in longer sales cycles, along with

lower regional and local opportunities, and we

have found it harder to convert new business

opportunities. Our stated ‘whopper’ strategy

of building broad-scaled relationships with

leading enterprise clients continues to drive

our business, with 10 against our target of 20

such relationships. We remain focused on a

disciplined approach to costs, headcount and

operational cash generation.

In the second half of 2023, as expected,

there was a cash outflow relating to prior year

combination payments, with net debt rising

as a result. Due to significant cost reductions

and £10 million of merger payments being

moved into the following year, we ended with

net debt at the lower end of our guided range

of £180-220 million. We will maintain a liquid

balance sheet and the focus will be on improving

operating performance and deploying free cash

flow to buybacks and dividends.

The Group reports in three well

defined practices:

Content had a challenging year, with like-for-like

net revenue declining, particularly in the second

half, which impacted margins significantly,

although this was tempered by strong cost

discipline. Content practice operational EBITDA

was £38.9 million, down 47.5% on a reported

basis versus 2022 and down 55.7% on a

like-for-like basis. Continued control on hiring

and reorganisation of the practice has reduced

the number of Monks at the year end. We

continue to focus on improving the operating

model, integration and forecasting. We have

made changes to the leadership structure of the

Content practice including, a new co-CEO Bruno

Lambertini, and new leadership in key markets,

including Matt Godfrey in APAC, to reinvigorate

growth in local and regional clients.

Data&Digital Media saw a modest like-for-

like net revenue decline, which impacted

margins. Corrective action on costs was taken.

Data&Digital Media practice operational EBITDA

was £33.5 million, down 16.0% on a reported

basis from the last year and down 21.7% on

a like-for-like basis reflecting the decline in

revenue, people cost and related benefits

increases, and higher travel and selling costs

against a covid impacted comparison.

Our stated ‘whopper’ strategy of

building broad-scaled relationships

with leading enterprise clients

continues to drive our business”

Sir Martin Sorrell

Executive Chairman

Letter to shareowners

2 310 4

Capital plc Annual Report and Accounts 2023 9

Letter to shareowners continued

Technology Services, after a strong first half,

declined slightly in the second half due to

phasing and a reduction in work with some larger

clients and strong comparatives. Overall the

practice delivered operational EBITDA of

£43.4 million and up 20.2% on a reported

basis from the prior year, up 0.7% like-for-like.

Given these trends, Technology Services faces

a challenging outlook for 2024, both at the

revenue and profit level.

The Americas net revenue was £688.1 million

and now represents 79% of our total net

revenue reflecting the growth in Technology

Services. EMEA and APAC had a more

challenging year and now represent 15% and

6% of our total respectively.

Both Data&Digital Media and Technology

Services market growth rates remain above

those of traditional analogue markets.

We are mainly focused on the digital media and

transformation markets and are at the heart of

developing trends around AI, the metaverse,

blockchain and quantum computing.

We are seeing our AI initiatives have impact

in improving visualisation and copywriting

productivity, in delivering hyper-personalisation

at scale, in more automated media planning and

buying, inimproving general client and agency

efficiency and in democratising knowledge.

This includes the launch of Monks.Flow, an AI-

centric professional managed service. The initial

client traction reinforces our confidence in our

offering and approach.

There is ongoing geopolitical uncertainty around

US/China relations, the war in Ukraine and

conflict in the Middle East meaning clients are

likely to remain cautious despite confidence

improving on the prior year, with the expectation

of interest rate reductions to come later in 2024.

Environmental, Social and

Governance(ESG) strategy

2023 was focused around the three areas

of our ESG strategy:

• People Fulfilment

• Our Responsibility to the World

• One Brand

We are adopting new tools to help us move

towards increased transparency and measuring

of CO

emissions. We continue to engage with

leading stakeholders, industry efforts and

global initiatives – like the World Economic

Forum, Shanghai Municipality’s International

Business Leaders’ Advisory Council (IBLAC)

and on Amazon’s Climate Pledge. Our goal

is to reach net zero by 2040, and we have a

clear understanding of the emission reduction

opportunities within the Group. We have

submitted our formal SBTi targets for approval.

Across the Group, we donated 1,449 hours for

community and charity services and increased

our For Good projects from 445 to 502.

We focused on our people and people

experience using our DE&I platform, Diversity

in Action, which touches all aspects of

our business. We ran our third Women in

Leadership programme at Berkeley University

and welcomed three new S

Fellows.

Embedding a greater understanding of

diversity and cultural fluency into the Group

is also a top priority. We are a signatory to the

United Nations (UN) Women’s Empowerment

Principles and continue to focus on closing

the representation gap in our industry by

providing training to underserved and/or

underrepresented talent.

You can read more about our ESG performance

and activities on pages 43-74.

We are seeing our AI initiatives improving productivity in

visualisation and copywriting, delivering more personalisation

at scale, more automated media planning and buying,

improving general client and agency efficiency and

democratising knowledge

”

Strategic Report

Capital plc Annual Report and Accounts 2023 10

Officer and Board Changes

We are delighted to announce Jean-Benoit

Berty, has been appointed Chief Operating

Officer and a member of the Executive

Committee with immediate effect. Prior to

joining the Group, Jean-Benoit was a Senior

Partner at Ernst & Young for approximately

18 years, where he held various leadership

roles, including being the Technology, Media

& Telecommunications Leader, Head of

Industries and part of the original management

team to build the Consulting practice. Jean-

Benoit has also spent the past 12 years

advising boards and management teams in the

advertising and media industry on strategic

and operational initiatives. His experience

spans across strategic growth; commercial,

organisational and operational effectiveness;

margin improvement and enterprise-wide

transformation. His previous roles include

being Vice President at Capgemini Consulting

and Managing Director at CRM consultancies.

Christopher S. Martin will now be able to

focus 100% on leading the Data&Digital

Media Practice.

Following last year’s Board effectiveness

review, the Board decided to develop a more

traditional, streamlined Board structure, where

Directors are primarily non-executive. As a

result, Christopher S. Martin, Victor Knaap,

Wes ter Haar and Scott Spirit have all agreed

to retire from the Board at the conclusion of

the next Annual General Meeting. Each of the

retiring Executive Directors will retain their

current roles within the Company and, as now,

their involvement in the Executive Committee,

where they will be joined by Jean-Benoit

Berty. Finally, Wes ter Haar will become a

Board Observer, as an example of our founder/

management ownership approach and to

support input into our strategy, such as the

focus on AI.

The Directors’ share ownership guidelines

(which require Executive Directors to hold

shares of equivalent value to 200% of their

basic salary) will apply to Jean-Benoit Berty

and continue to apply for a period of two years

after any Executive ceases to be employed by

the Group.

The Directors’ Remuneration Policy (including

the share ownership guidelines which require

Executive Directors to hold shares of equivalent

value to 200% of their basic salary) will

continue to apply to the senior executives

as it applies to Directors and Jean-Benoit

Berty’s compensation arrangements will be

in accordance with such Policy. The share

ownership guidelines continue to apply for a

period of two years after any executive ceases

to be employed by the Group.

Summary and outlook

We expect clients to remain cautious in the

near term, despite the possibility of interest

ratereductions later in 2024.

At a practice level we expect Content

profitability to show an improvement reflecting

the benefit of cost reductions made in 2023,

Data&Digital Media to show a similar top- and

bottom-line performance to the prior year with

some margin improvement, while the outlook

for Technology Services is more challenging

following a reduction in activity withsome

key clients.

For the Group, given the current outlook

for Technology Services and wider market

uncertainty, we are targeting like-for-like net

revenue to be down on the prior year with

a broadly similar overall level of operational

EBITDA as 2023. The comparatives with 2023

will be difficult in the first-half and will be easier

in the second-half. We expect the year to be

heavily second-half weighted with improving

end markets and our normal seasonality.

Our net debt is expected to reduce in 2024 due

to positive free cash flow and significantly lower

combination payments. Our targeted range

for the year end is £150 million to £190 million.

We continue to aim for financial leverage of

around 1.5 times operational EBITDA over the

medium term.

Over the medium to longer term we continue

toexpect our growth to outperform our markets

and operational EBITDA margins to return to

historic levels of around 20%. The strategy

of S

Capital remains the same. The Group’s

purely digital transformation model, based on

first-party data fuelling the creation, production

and distribution of digital advertising content,

distributed by digital media and built on

technology platforms to ensure success and

efficiency, resonates with clients. Our tagline

‘faster, better, cheaper, more’ (to which with the

arrival of AI we have added ‘more’) and a unitary

structure both appeal strongly, even more so in

challenging economic times.

Sir Martin Sorrell

Executive Chairman

2 310 4

Capital plc Annual Report and Accounts 2023 11

Strategic pillar Objective 2023 progress 2024 goals Measurement

Clients

• Build scaled

relationships with clients.

20x20 goal: 20 clients

with $20 million annual

revenues (‘whoppers’)

• Focus on

Technology clients

• Re-categorised clients as Scaled, Portfolio and Local

• Appointed two Chief Client Officers for Scaled and Portfolio categories

• Retained 10 ‘whopper’ clients

• 43% revenue from Technology clients

• Further penetration of Scaled and Portfolio clients

• Develop more ‘whoppers’

• Deliver market-leading AI case studies

• Increase purpose-driven clients

• Number of ‘whoppers’

• Average revenue per client

• % revenue by industry sector

Read more on pages 64–67

Culture

• Build a diverse

culture and increase

diverse representation

• Maintained a 6% representation of Black employees

• Increased BIPOC representation from 37% to 38%

• Experienced a decrease in Women in leadership representation from

40% to 38%

• Ran our 3rd S

Women in Leadership programme at Berkeley University

• Recruited three Fellows due to start in 2024

• Increase representation of Black talent in the US

• Maintain or increase our current BIPOC composition in the US

• Increase women in leadership

• Host 4th cohort of S

Women in Leadership

• Recruit 4th cohort of S

Fellowship

• Annual diversity survey

Read more on pages 64–67

Sustainability

• Net Zero by 2040

(The Climate Pledge)

• Shifted our strategy from being carbon neutral in 2021 and 2022 through

carbon offsetting, to become Net Zero by 2040

• Set SBTi (emission reduction) targets and submitted to SBTi for approval

• ESG software implemented

• ESG reporting improved with CDP score from B- to B

• Implemented ESG policies and enhanced governance and procedures

• Finalise B Corp certification process in 2024

• Progress EcoVadis Score

• Prepare for ESG audits and implement controls in anticipation of CSRD/SECR

• Formalise and execute SBTi transition plan on emission reduction targets to be Net

Zero by 2040

• Good progress on sustainable procurement measures and policies

• Carbon output reduction in line with

our SBTi transition plan

• B Corp accreditation

• Increase Purpose-driven clients and

For Good projects

• Increase in renewable energy

Read more on pages 21–27

Margin

• Improve margin, long-

term target of around

20% operational

EBITDA margin

• Operational EBITDA margin down 550bps on a like-for-like basis

• Achieved revised operational EBITDA margin target

• Reduction in headcount and operational costs

• Achieve operational EBITDA margin target

• Improve utilisation rates

• Balance net revenue growth and hiring

• Operational EBITDA margin

Read more on pages 21–27

The Company’s purely digital model is based on first-party data fuelling

the creation, production and distribution of digital advertising content

and distributed by digital media combined with technology services.

This continues to resonate with our clients.

Progress against our strategy

Strategic Report

Capital plc Annual Report and Accounts 2023 12

Strategic pillar Objective 2023 progress 2024 goals Measurement

Clients

• Build scaled

relationships with clients.

20x20 goal: 20 clients

with $20 million annual

revenues (‘whoppers’)

• Focus on

Technology clients

• Re-categorised clients as Scaled, Portfolio and Local

• Appointed two Chief Client Officers for Scaled and Portfolio categories

• Retained 10 ‘whopper’ clients

• 43% revenue from Technology clients

• Further penetration of Scaled and Portfolio clients

• Develop more ‘whoppers’

• Deliver market-leading AI case studies

• Increase purpose-driven clients

• Number of ‘whoppers’

• Average revenue per client

• % revenue by industry sector

Read more on pages 64–67

Culture

• Build a diverse

culture and increase

diverse representation

• Maintained a 6% representation of Black employees

• Increased BIPOC representation from 37% to 38%

• Experienced a decrease in Women in leadership representation from

40% to 38%

• Ran our 3rd S

Women in Leadership programme at Berkeley University

• Recruited three Fellows due to start in 2024

• Increase representation of Black talent in the US

• Maintain or increase our current BIPOC composition in the US

• Increase women in leadership

• Host 4th cohort of S

Women in Leadership

• Recruit 4th cohort of S

Fellowship

• Annual diversity survey

Read more on pages 64–67

Sustainability

• Net Zero by 2040

(The Climate Pledge)

• Shifted our strategy from being carbon neutral in 2021 and 2022 through

carbon offsetting, to become Net Zero by 2040

• Set SBTi (emission reduction) targets and submitted to SBTi for approval

• ESG software implemented

• ESG reporting improved with CDP score from B- to B

• Implemented ESG policies and enhanced governance and procedures

• Finalise B Corp certification process in 2024

• Progress EcoVadis Score

• Prepare for ESG audits and implement controls in anticipation of CSRD/SECR

• Formalise and execute SBTi transition plan on emission reduction targets to be Net

Zero by 2040

• Good progress on sustainable procurement measures and policies

• Carbon output reduction in line with

our SBTi transition plan

• B Corp accreditation

• Increase Purpose-driven clients and

For Good projects

• Increase in renewable energy

Read more on pages 21–27

Margin

• Improve margin, long-

term target of around

20% operational

EBITDA margin

• Operational EBITDA margin down 550bps on a like-for-like basis

• Achieved revised operational EBITDA margin target

• Reduction in headcount and operational costs

• Achieve operational EBITDA margin target

• Improve utilisation rates

• Balance net revenue growth and hiring

• Operational EBITDA margin

Read more on pages 21–27

2 310 4

Capital plc Annual Report and Accounts 2023 13

Together as one

We are in the services industry and when

clients engage with us on their business needs

or marketing and technology challenges,

they expect us to respond by pulling together

the best and most relevant resources by

capability and/or geography.

Our unitary structure, aligned around the

Media.Monks brand, enables us to provide

an integrated service to clients and gives

our people a sense of common values,

shared goals, broader career paths

and a collaborative spirit.

Unifi

cation

One unified brand makes it easy for our

clients to choose us… our team turns up

as one, with a shared culture and a clear

understanding of our roles and goals

in the industry.

Our strategy in action

Strategic Report

Capital plc Annual Report and Accounts 2023 14

The importance of a unitary structure

One of our key differentiators at S

Capital is our unified approach

and structure, something we have focused on since day one.

Going to market with a single brand and a single P&L approach

allows us to be truly client centric and construct teams which

address client needs without silos, politics or misaligned interests.

It allows us to be unified and always on.

Scott Spirit

Chief Growth Officer

Blended

skills create

breakthrough tool

Longtime Amazon advertiser, Philips Domestic

Appliances, asked Media.Monks to help integrate creative

optimisation with media performance on a large scale.

This kind of operation requires deep expertise in machine

learning, artificial intelligence and creative production.

A tall order, but no sweat for our blended data, media and

content teams. After laying the groundwork, including

enabling access to enriched user data to assess media

performance and a streamlined creative categorisation

and labelling process, we custom-built a machine

learning-powered tool fully tailored and automated

for Philips’ specific business case. This breakthrough

enabled the identification of numerous opportunities

for optimising ad treatments, while eliminating the

need for speculative optimisation and manual data

engineering work.

Star rating in iOS

app store

4.7

See the full story

2 310 4

Capital plc Annual Report and Accounts 2023 15

Trans

ation

We are entering a phase of intense

disruption, but also incredible

opportunity. Artificial intelligence

is literally rewriting the fundamental

rules of business.

A complete reset

Our clients are facing challenges unlike any they

have faced in many years. AI is resetting

the relationship between talent and the enterprise

and the enterprise and the consumer.

The transformational journey that our clients

are embarking on isn’t a straight shot from A to B

— you won’t be able to connect the dots looking

forward. But it will be driven by the same principles that

always drives innovation: speed, creativity and quality.

We are uniquely poised to bring the combination

of Technology consulting strategy, product design

and delivery with the capabilities of Content and

Data&Digital Media to help our clients to navigate

these uncharted waters.

form

Our strategy in action continued

Strategic Report

Capital plc Annual Report and Accounts 2023 16

Revolutionising

study for kids

McGraw Hill has been a household name in

education for over a century but has to stay relevant

and appeal to Gen Z learners. Formula.Monks

added robust functionality and a gamified

learning experience to help the publisher scale

and monetise its Sharpen app, creating a new

stream of revenue and underscoring McGraw Hill

as a leader in EdTech.

Embracing AI

The successful organisations to navigate disruptive

forces are going to be those that embrace AI as a

change agent. Those that use AI as a way to drive

efficiencies at scale, not necessarily by automating

and replacing human ingenuity, but by augmenting

it by using AI to capture upside.

Brady Brim-DeForest

CEO, Formula.Monks

See the full story

2 310 4

Capital plc Annual Report and Accounts 2023 17

Dis

rup

tion

The combination of AI, AR and quantum

computing has created an innovation

firestorm and brought radical change

to the marketing services industry.

New world order

In the right hands, AI and its companions can bring about

innovations that deliver what clients need in these turbulent

and disruptive times. Greater efficiencies. New revenue

streams. Breakthrough campaigns.

As the one player who understands the interaction of media,

data, creative and tech, we are at the centre of this new

world. We help our clients and their brands learn, adapt and

innovate so that they can manoeuvre, control and succeed.

Our strategy in action continued

The big disrupters

Whenever you connect social with AI, AR and quantum computing,

you can create the nirvana of every single marketeer. You can

harness the power of authentic connections and make sure that

social drives and unlocks new revenue streams. This disruption

creates huge opportunities. If you want to capitalise on this

disruption, you have to be first and fast.

Bruno Lambertini

Co-CEO, Content

Strategic Report

Capital plc Annual Report and Accounts 2023 18

Not guilty: exposing bias

When it comes to gender violence, is the phenomenon of victim blaming still

so deep-rooted? Yes, if you believe AI responses. Multinational beauty retailer

Sephora and Media.Monks exposed the pervasive bias that exists around

violence against women through ChatGPT-generated scripts about abuse at

home, in the workplace and in a bar. In all the situations, the scripts had the

female protagonist blaming herself. The resulting ‘mAI colpevoli’ (or ‘Never

Guilty’) campaign, which launched on the International Day for the Elimination

of Violence Against Women, was developed by Media.Monks to challenge

cultural biases that fuel victim blaming and also highlight Sephora’s steadfast

support for women’s freedom and self-expression.

Interactions

12 million

See the full story

2 310 4

Capital plc Annual Report and Accounts 2023 19

Measuring success: Key Performance Indicators

The Group uses a variety of Key Performance Indicators (KPIs) to

monitor both financial and non-financial performance. Where applicable

KPIs are based on alternative performance measures

to give a consistent

year-on-year comparison.

Notes:

1. Further detail on alternative performance measures can be found in the Appendix to the Annual Report and Accounts on page 202.

2. 2022 figures recalculated.

Diversity, Equity & Inclusion

Female

Male

Undeclared

023 2022

We have made strides in our commitment to foster an

environment of diversity, equity, inclusion and belonging

by focusing on gender equality and gender pay gap

equality, among others detailed on page 64-66.

Integration

out of 34 combinations fully

integrated to date

Like-for-like net revenue £m

873.2m

ke-for-like -4.5%

2022

914.2

873.2

2023

Like-for-like operational EBITDA £m

93.7m

ke-for-like -36.6%

2022

147.4

93.7

2023

Like-for-like operational

EBITDA margin

0.7%

ke-for-like -550bps

2022

16.2

10.7

2023

This is more closely aligned to the fees the Group earns

for its services provided to the clients. This is a key

metric used in business when looking at both Group

and practice performance.

Operational EBITDA margin is operating profit before

the impact of adjusting items, amortisation of intangible

assets and property, plant and equipment depreciation,

as a percentage of net revenue.

Financial Non-financial

Operational EBITDA is operating profit before the impact

of adjusting items, amortisation of intangible assets and

property, plant and equipment depreciation. The Group

considers this to be an important measure of Group

performance and is consistent with how the Group is

assessed by the Board and investment community.

Climate change

3.3

tCO

e per FTE

2022:

3.6 tCO

e per FTE

2022

3.6

3.3

2023

Greenhouse gas emissions for Scope 1, 2023 vs 2022,

Media.Monks global. For all three GHG Scopes see

page 57.

For an explanation of the significant difference between

our GHG disclosures in the 2022 ESG Report and the

2022 SBTi Baseline see page 55.

Strategic Report

Capital plc Annual Report and Accounts 2023 20

Financial review

Billings Operational EBITDA margin

£1,870.5m 10.7%

-1.1% -320 basis points

Like-for-like

-1.4% Like-for-like

-550 basispoints

Revenue Adjusted operating profit

£1,011.5m £82.0m

-5.4% -28.1%

Like-for-like

-7.8% Like-for-like

-40.6%

Net revenue Operating profit

£873.2m £20.2m

-2.1% 2022 -£135.3m loss

Like-for-like

-4.5%

Operational EBITDA

£93.7m

-24.6%

Like-for-like

-36.6%

We continued to enhance our

financial processes and controls,

supported by a now well

established finance team”

Mary Basterfield

Group Chief Financial Officer

Note:

1. Like-for-like is a non-GAAP measure and relates to 2022 being restated to show the unaudited numbers for the

previous year of the existing and acquired businesses consolidated for the same months as in 2023 applying currency

rates as used in 2023.

2 310 4

Capital plc Annual Report and Accounts 2023 21

Financial review continued

Introduction

Despite a challenging 2023 with slower

market growth and ongoing macroeconomic

uncertainty, cautious spending from clients,

a difficult year for new business and a lower

seasonal uplift than in previous years we have

continued to enhance our financial processes

and controls. We are supported by a now well

established finance team, with a focus on

operational EBITDA margin, tight cost controls,

forecasting and driving cash generation.

We will continue to focus on all of these

areas throughout 2024,along with ongoing

investments in finance systems and processes

to support the Group in delivering its targets

forthe year.

Alternative performance measures

Management includes non-GAAP measures

in reporting as they consider these measures

to be both useful and necessary. They are

used by management for internal performance

analyses; the presentation of these measures

facilitates comparability with other companies,

although managements’ measures may not be

calculated in the same way as similarly titled

measures reported by other companies; and

these ‘alternative performance measures’ are

useful in connection with discussions with the

investment community.

The Group uses alternative performance

measures as we believe these measures

provide additional useful information on the

underlying trend, performance and position

of the Group. These underlying measures are

used by the Group for internal performance

analyses, and credit facility covenants

calculations. The alternative performance

measures include ‘adjusted operating profit’,

‘adjusting items’, ‘adjusted operational EBITDA’

and ‘EBITDA’ (earnings before interest, tax,

depreciation). The terms ‘adjusted operating

profit’, ‘adjusting items’, ‘adjusted operational

EBITDA’ and EBITDA are not defined terms

under IFRS and may therefore not be

comparable with similarly titled profit measures

reported by other companies. The measures

are not intended to be a substitute for, or

Notes:

1. Billings is gross billings to clients including pass-through costs.

2. Like-for-like is a non-GAAP measure and relates to 2022 being restated to show the unaudited numbers for the previous

year of the existing and acquired businesses consolidated for the same months as in 2023 applying currency rates as used

in 2023.

3. Pro-forma numbers relate to unaudited full year non-statutory and non-GAAP consolidated results in constant currency as if

the Group had existed in full for the year and have been prepared under comparable GAAP with no consolidation eliminations

in the pre-acquisition period.

4. Controlled billings is billings we influenced in addition to billings that flowed through the consolidated statement of profit

or loss.

superior to, GAAP measures. A full list of

alternative performance measures and non-

IFRS measures together with reconciliations

to IFRS measures are set out in the Appendix

to the Annual Report and Accounts on

page 202.

Financial summary

Billings

were £1.9 billion, down 1.1% on a

reported basis and down 1.4% like-for-like

andpro-forma

. Controlled billings

, that is

billings we influenced,were approximately

£5.0 billion (2022: £5.7 billion).

Revenue was £1,011.5 million, down 5.4%

from £1,069.5 million on a reported basis and

down 7.8% like-for-like.

Net revenue was £873.2 million, down 2.1%

reported and down 4.5% like-for-like.

Reported operational earnings before

interest, taxes, depreciation and amortisation

(operational EBITDA) was £93.7 million

compared to £124.2 million in the prior year,

a reported decrease of 24.6% and down

36.6% on a like-for-like basis reflecting the

challenging revenue trajectory. We have

continued to maintain a disciplined approach

to cost management, including headcount

and discretionary costs. These controls have

resulted in the number of Monks at the end of

the year being 7,707, down 13% from around

8,891 at this time last year and down 15% on

the June 2022 figure. In December 2023, the

Argentinian peso significantly devalued by over

50%. Operational EBITDA excludes this one-

off benefit of £9.3 million, which is included in

adjusting items. The outturn was in line with our

revised operational EBITDA targets.

Operational EBITDA margin was 10.7%, down

320 basis points versus 13.9% in 2022 and

down 550 basis points like-for-like reflecting

primarily the lower growth and margins in

the Content practice and lower margins in

Data&Digital Media and Technology Services.

Our ambition remains to return full year margins

to historic levels, around 20%, over the

longer term.

Strategic Report

Capital plc Annual Report and Accounts 2023 22

Adjusted operating profit was down 28.1%

on a reported basis to £82.0 million from

£114.1 million, before adjusting items

of £61.8 million (2022: £249.4 million).

The reduction in adjusting items is largely

due to lower combination payments tied to

continued employment. Adjusting items also

includes share-based payments, restructuring

costs primarily related to headcount,

amortisation of business combination intangible

assets and the benefit to our costs of the

significant devaluation of the Argentinian peso.

The reported operating profit of £20.2 million,

was an improvement of £155.5 million on

2022, reflecting a reduction in acquisition

expenses. Loss for the year was £6.0 million

(2022: £160.5 million).

Adjusted basic earnings per share was 5.7p,

versus adjusted basic earnings per share of

11.4p in 2022. Basic loss per share was 0.9p

(2022: 27.2p).

Billings £m

2022

1,890.5

2021

1,296.9

1,870.5

2023

Net revenue £m

2022

891.7

2021

560.3

873.2

2023

Operational EBITDA margin %

2022

13.9

2021

18.0

10.7

2023

Operational EBITDA £m

2022

124.2

2021

101.0

93.7

2023

Revenue £m

2022

1,069.5

2021

686.6

1,011.5

2023

Adjusted operating profit £m

2022

114.1

2021

94.8

82.0

2023

30%

25%

20%

15%

10%

£150.0

£125.0

£100.0

£75.0

£50.0

£25.0

£0.0

£62.2

21.1%

£93.7

10.7%

FY 2021 FY 2022FY 2020 FY 2023

£101.0

£124.2

Operational EBITDA and margin £m/%

Profit

% margin

18.0%

13.9%

2 310 4

Capital plc Annual Report and Accounts 2023 23

Financial review continued

Practice performance

Content practice operational EBITDA was

£38.9 million, down 47.5% on a reported basis

versus 2022 and down 55.7% on a like-for-

like basis. The Content practice operational

EBITDA margin was 7.4%, compared to 12.7%

in 2022, reflecting lower revenues impacting

profitability. Continued control on hiring and

reorganisation of the practice has reduced the

number of Monks at the year end. We continue

to focus on improving the operating model,

integration and forecasting.

Content 60.6%

DDM 23.7%

TS 15.7%

Net revenue split by practice %

Data&Digital Media practice operational

EBITDA was £33.5 million, down 16.0% on

a reported basis from the last year and down

21.7% on a like-for-like basis. Data&Digital

Media practice operational EBITDA margin

was 16.2%, compared to 18.4%, reflecting the

decline in revenue, people and related benefits

cost inflation and higher travel and selling costs

against a covid impacted comparison.

Technology Services performed strongly in the

year, with operational EBITDA of £43.4 million

and up 20.2% on a reported basis from the

prior year, up 0.7% like-for-like and delivering

an operational EBITDA margin of 31.7%.

The Content practice’s net revenue was down

10.0% like-for-like, and down 9.2% on a

reported basis, with Data&Digital Media down

3.1% like-for-like and down 4.4% on a reported

basis. Technology Services was up 21.6% like-

for-like and up 48.6% on a reported basis.

Net revenue

2023

£m

2022

£m

LfL YoY

Net revenue

873.2 891.7 (4.5%)

Content 528.9 582.7 (10.0%)

Data&Digital Media 207. 3 216.8 (3.1%)

Technology Services 137.0 92.2 21.6%

Operational EBITDA

93.7

124.2

(36.6%)

Content 38.9 74.1 (55.7%)

Data&Digital Media 33.5 39.9 (21.7%)

Technology Services 43.4 36.1 0.7%

Central (22 .1) (25.9) (15.0%)

Operational EBITDA margin

10.7%

13.9%

(550bps)

Content 7.4% 12.7% (750bps)

Data&Digital Media 16.2% 18.4% (380bps)

Technology Services 31.7% 39.2% (650bps)

Strategic Report

Capital plc Annual Report and Accounts 2023 24

We continue to focus on improving the operating

model, integration and forecasting”

Geographic performance

The Americas net revenue was £688.1 million

(79% of total), up 0.6% on a reported basis

from last year. On a like-for-like basis the

Americas net revenue was down 2.8%, with

growth in our ‘whoppers’ offset by slower

market growth and client caution.

EMEA net revenue was £133.1 million (15% of

total), down 10.2% from last year on a reported

basis. On a like-for-like basis EMEA net

revenue was down 10.9% primarily reflecting

macroeconomic conditions leading to slower

market growth and client caution and a difficult

new business environment.

Net revenue growth by region, like-for-like %

EMEAAmericas APAC

-9.2%

-10.9%

-2.8%

2023

2022

APAC net revenue was £52.0 million (6% of

total), down 12.6% on a reported basis. On a

like-for-like basis APAC net revenue was down

9.2% reflecting challenging market conditions,

and lower client demand.

Americas 78.8%

EMEA 15.2%

APAC 6.0%

Net revenue split by region %

2 310 4

Capital plc Annual Report and Accounts 2023 25

Cash flow

Year ending

31 December

2023

£m

Year ending

31 December

2022

£m

Operational EBITDA 93.7 124.2

Capital expenditure

(10.2) (16.1)

Interest and facility fees paid (26.7) (16.3)

Income tax paid (20.5) (19.0)

Restructuring and other one-off expenses paid (20.8) (4.9)

Change in working capital

(1.7) 1.9

Free cash flow 13.8 69.8

Mergers & Acquisitions (80.8) (162.6)

Other (3.6) 0.6

Movement in net debt (70.6) (92.2)

Opening net debt (110.2) (18.0)

Net debt (180.8) (110. 2)

Notes:

1. Includes purchase of intangible assets, purchase of property, plant and equipment and security deposits.

2. Working capital primarily includes movement on receivables, payables, principal elements of lease payments and

depreciation of right-of-use assets.

Free cash flow for 2023 was £13.8 million, a reduction of £56.0 million compared to 2022, with

a lower operational EBITDA, increased cash interest costs reflecting higher interest rates,

restructuring payments and a slight outflow in working capital.

Cash paid in relation to combinations (M&A) decreased £81.8 million versus the prior year to

£80.8 million reflecting lower M&A activity. The majority of the cash payments have now been

made with the majority of the balance of £11.4 million settled in the first quarter of 2024.

Treasury and net debt

The year end net debt was £180.8 million (2022: £110.2 million) or 1.9x net debt/pro-forma

operational EBITDA. During the year S

Capital Group (as defined in its facilities agreement)

complied with the covenants set in that agreement. The pro-forma operational EBITDA for the year

was £93.3 million. S

Capital Group will ensure that the net debt will not exceed 4.5:1 of the pro-

forma earnings before interest, tax, depreciation, and amortisation, measured at the end of any

relevant period of 12 months ending each semi-annual date in a financial year, as defined in the

facility agreement. As at 31 December 2023, the net debt/pro-forma EBITDA, as defined by the

facilities agreement, was 1.9x.

The balance sheet has sufficient liquidity and long dated debt maturities. The duration of the

facilities agreement is seven years in relation to the TLB, therefore the termination date is August

2028, and five years in relation to the RCF, therefore the termination date is August 2026.

Net debt reconciliation

2023

£m

2022

£m

Cash and bank 145.7 223.6

Loans and borrowings (excluding bank overdrafts) (326.5) (333.8)

Net debt (180.8) (110. 2)

Lease liabilities (49.0) (58.4)

Net debt including lease liabilities (229.8) (168.6)

Financial review continued

Strategic Report

Capital plc Annual Report and Accounts 2023 26

Interest and tax

Consolidated statement of profit or loss

net financing costs were £35.4 million

(2022: £25.7 million), an increase of £9.7 million

due to higher interest rates and increased lease

costs. The profit or loss tax credit for the year

was £7.9 million (2022: £0.8 million expense).

Balance sheet

Overall the Group reported net assets of

£865.9 million as at 31 December 2023, which

is an increase of £15.8 million compared to

31 December 2022, driven mainly by the

reduction in contingent consideration balances.

Acquisitions

Technology Services practice

On 31 October 2023, S

Capital plc announced

the business combination of Formula

Consultants Incorporated (‘FCI’) for an

expected total consideration of £1.2 million,

including performance linked consideration of

£0.4 million. The initial cash outlay was funded

through the Group’s own cash resources for

the entire issued share capital of FCI.

The purchase price allocation has been

finalised and net identifiable assets acquired

totalled £1.0 million, including cash and cash

equivalents of £0.3 million. Goodwill arising

on the acquisition was £0.2 million. FCI has

contributed £0.4 million to the Group’s revenue

and £0.3 million to the Group’s operational

EBITDA since the acquisition date.

Outlook/guidance

We expect clients to remain cautious in the

near term, despite the possibility of interest rate

reductions later in 2024.

At a practice level we expect Content

profitability to show a profitability improvement

reflecting the benefit of cost reductions made

in 2023, Data&Digital Media to show a similar

top- and bottom-line performance to the prior

year with some margin improvement, while

the outlook for Technology Services is more

challenging and expected to be lower, following

a reduction in activity with some key clients.

For the Group as a whole, given the current

outlook for Technology Services and wider

market uncertainty, we are targeting like-for-

like net revenue to be down on the prior year

with a broadly similar overall level of operational

EBITDA as 2023, as a result of cost reductions

made in the previous year. The comparatives

with 2023 will tougher in the first-half and will

ease in the second-half. We expect the year to

be heavily second-half weighted with improving

end markets and our normal seasonality.

Our net debt is expected to fall in 2024

reflecting positive free cash flow and

significantly lower combination payments.

Our targeted range for the year end is

£150 million to £190 million. We continue to

aim for financial leverage of around 1.5 times

operational EBITDA over the medium term.

Over the medium to longer term we continue to

expect our growth to outperform our markets

and operational EBITDA margins to return to

historic levels of around 20%.

2 310 4

Capital plc Annual Report and Accounts 2023 27

Principal risks and uncertainties

We strongly believe that effective risk management is crucial to the financial

strength and resilience of the Group and for delivering its business strategy.

As part of the group’s strategy to enhance its resilience

and seek to deliver long-term growth, it has invested

in creating a more robust approach to managing risk.

In February 2023, a new Head of Risks joined the group,

which has resulted in a new Enterprise Risk Management

(ERM) Framework being launched in the group, following

approval by the Audit and Risk Committee and Board.

The new framework has been adopted at a group level

and is in the process of being rolled out and embedded

globally. The aim is to ensure that the Board is made

aware of the key risks, using both a “top down” and

“bottom up” approach to provide a holistic view of the key

operational, financial, commercial, and strategic risks

facing the business.

The Board has ultimate responsibility for the Group’s

approach to risk management and internal control.

On behalf of the Board, the Audit and Risk Committee

oversees risk management for the Group. Both the

Audit and Risk Committee and Board have reviewed and

approved the Group’s principal risks. In addition, each

principal risk has a senior leader owning it, who is also

responsible for documenting the corresponding risk

response plan, which is submitted to the Head of Risks

forreview and monitoring.

Risks

The principal risks and uncertainties that the Board

believes could have a significant impact on the Group

are set out on pages 29 to 30. Other, less material risks

(including emerging risks) are monitored by the Head of

Risks and discussed at the Audit and Risk Committee.

Risk description

1. Macroeconomic headwinds could result in existing

clients reducing spend and potentially limiting new

business opportunities.

2. Limits to market visibility and changing client budgets,

combined with a complex internal budgeting and forecasting

process, may create volatility in forecasts and results, which

with a complicated data landscape, could lead to internal

inefficiencies and slow down operational decision making.

3. Inadequate management of the talent lifecycle, from

succession planning for key roles, through to people

development, or below market salaries, could result in talent

gaps, high employee turnover or loss of key talent.

4. If the Group’s governance, compliance and ESG structure

and processes are not robust, this could impact compliance

with Corporate Governance regulations or best practice, or

not meet client and investor requirements and expectations.

5. AI is a disruptive technology that can impact the standard

commercial models in our industry, as well as scale up and

down the need for specific teams and talent in the business.

AI is also considered to be a business opportunity as well

as a risk, as the Group considers AI to have considerable

upsides to its commercial offering and support processes.

6. Slow integration of acquisitions could result in poor

execution of the desired unified strategy and create

inefficiencies, a fragmented systems environment, value

leakage and potential lost new business opportunities.

7. Concentration of clients and suppliers creates a risk of

material financial disruption if there is a sudden relationship

breakdown, contract loss or reduction in spend from a client.

8. Risk of share price volatility if investors’ expectations are not

met through consistent and clear corporate messaging.

9. Insufficient controls over Information Security or Data

Privacy creates a risk of security breaches, non-compliance

with client contracts, or regulatory breach.

10. Increased competitive offerings and low barriers to entry

in the industry may impede new business opportunities or

erode margins.

Likelihood

Impact

Strategic Report

Capital plc Annual Report and Accounts 2023 28

Risk Description Management actions

Risk

trend

1. Macroeconomic headwinds

Macroeconomic headwinds could

result in existing clients reducing

spend and potentially limiting new

business opportunities.

• Broadening the Group’s client and geographical mix to

increase contribution of diverse regions and sectors

beyondtechnology.

• Restructuring the growth team to enhance delivery

andaccountability.

• Improved planning processes for all ‘whopper’ and

‘whoppertunity’clients.

• Enhancing the in-house procurement function to manage

internal spend and mitigate inflation risk.

2. Operational decision making

Limits to market visibility and

changing client budgets, combined

with a complex internal budgeting and

forecasting process, may create

volatility in forecasts and results,

which with a complicated data

landscape, could lead to internal

inefficiencies and slow down

operational decision making.

• Internal reorganisation during 2023, including appointing

Bruno Lambertini as co-CEO of Content, and new leadership

in key markets including APAC. This will drive process

improvements, a clear focus on commerciality and profitability,

and deliver the strategy in growth markets.

• Continued focus on integration and improvement of the

operating model for Content.

• Enhanced oversight and performance tracking with improved

business partnering and rigour in target setting. Investment in

HR and finance systems and processes, enhanced training,

including on Salesforce globally.

• Dedicated investment in relationship management to drive

engagement with key clients and get early insight of client

trends and drivers.

3. Talent lifecycle

Inadequate management of the talent

lifecycle, from succession planning

for key roles, through to people

development, or below market

salaries, could result in talent gaps,

high employee turnover or loss of key

talent.

• Moving employees onto a single HR platform to better manage

people performance and administration.

• Increased cross-functional and intra-office employee

forumstocreate a more unified culture and better

collaboration acrossteams.

• Salary and benefit benchmarking for key roles.

• Increased DE&I forums and mental health support

for our people.

• Review of job levels and titles to create more consistency

around the Group.

4. Governance and compliance

If the Group’s governance,

compliance and ESG structure

andprocesses are not robust, this

could impact compliance with

Corporate Governance regulations

orbest practice, or not meet

clientand investor requirements

andexpectations.

• Specialist leaders in ESG, Risk Management, Data Privacy

andCompliance have responsibility for creating best

practiceglobally.

• A Governance Framework has been established and is being

rolled out to strengthen the Group in meeting its obligations.

• Enhanced policies are being rolled and embedded in

theCompany.

• Cross-functional working groups have been formalised

toensure compliance with any changes in ESG or other

Corporate Governance requirements.

2 310 4

Capital plc Annual Report and Accounts 2023 29

Principal risks and uncertainties continued

Risk Description Management actions

Risk

trend

5. Artificial intelligence (AI)

AI is a disruptive technology thatcan

impact the standard commercial

models in our industry, as well as

scale up and down the need for

specific teams and talent in the

business. AI is also considered to be a

business opportunity as well as a risk,

as the Group considers AI to have

considerable upsides to its

commercial offering and

supportprocesses.

• Media.Monks is Adweek’s inaugural AI Agency of the Year,

which reflects the Group’s ability to capture the opportunities

of AI and seize the commercial initiative.

• Core teams have had training and enablement programs on

use ofAI.

• The business has forged strong relationships with key

technology companies on utilisation and execution of AI tools.

• A ‘Launch and Learn’ model has been rolled out to measure

impact of AI use and enable continuous improvement.

6. Integration of acquisitions

Slow integration of acquisitions

couldresult in poor execution of

thedesired unified strategy and

create inefficiencies, a fragmented

systems environment, value

leakageand potential lost new

business opportunities.

• Greater centralisation of key corporate and operational teams

to enhance process consistency across the Group.

• Integrated sales teams and pitches to embed the unified

business model.

• Roll out of centralised systems such as ERPs and HR

workflows to unify support teams.

• Creation of new target operating models to consolidate and

simplify execution of strategy.

7. Key customers

Concentration of clients and suppliers

creates a risk of material financial

disruption if there is a sudden

relationship breakdown, contract loss

or reduction in spend from a client.

• ‘Whopper’ strategy of increasing the number of $20m+

revenue clients, to reduce concentration risk.

• Continuing to differentiate the Group’s offering

againstcompetitors.

• In-depth client planning reviews to monitor client health and

reduce relationship breakdown risk.

8. Reputation risk

Risk of share price volatility if

investors’ expectations are not met

through consistent and clear

corporate messaging.

• Regular communication with investors and analysts through

roadshows and conferences.

• Enhanced use of brokers and trusted third parties

to assist with timing and consistency of messaging.

9. Information security and data privacy

Insufficient controls over Information

Security or Data Privacy creates

ariskof security breaches, non-

compliance with client contracts,

orregulatory breach.

• Awareness and training programme rolled out for staff on key

information security (‘Infosec’) and privacy topics.

• Vulnerability management and incident management

programmes deployed.

• Security controls rolled out in the software development lifecycle.

• Enhanced policies and procedure frameworks executed in

theGroup.

• Dedicated Infosec and privacy risk management programmes

deployed, including third-party risk management by the

Infosec team.

• Information Governance Steering Committee established to

ensure consistent approach to security of data across the Group.

10. Competitive environment

Increased competitive offerings and

low barriers to entry in the industry

may impede new business

opportunities or erode margins.

• Evolution of the Group’s service offering, ensuring that it is

leading edge. Current focus is on the metaverse and, most

importantly, AI.

• Three-year strategic planning process to identify opportunities

and risks.

• Strategic acquisitions if and when appropriate.

Strategic Report

Capital plc Annual Report and Accounts 2023 30

Viability Statement

In accordance with Provision 31 of the UK Corporate Governance Code 2018, the Board of Directors of S

Capital

Group (‘the Group’) has assessed the prospects and viability of the Group over a period of three years from 1 January

2024. The three-year period has been chosen as it aligns with the Group’s strategic planning cycle, the rapidly

changing landscape in the marketing and advertising industry, and the time horizon typically employed for the

assessment of industry-specific risks and uncertainties.

The selection of a three-year period also allows the Group to balance short-term responsiveness with long-term

strategic planning, reflecting our focus on agility, adaptability and innovation. This period is deemed appropriate

considering the following factors:

1. Industry dynamics: The marketing and advertising industry is characterised by rapid technological advancements

(including the impact of AI), evolving consumer preferences and the need for constant innovation. A three-year

period allows the Group to monitor and adapt to these changes while maintaining a forward-looking perspective

onfuture opportunities and challenges.

2. Competitive landscape: Given the fast-paced nature of the industry, it is essential for the Group to maintain a

competitive advantage by anticipating and responding to emerging trends and client demands. A three-year

period is suitable for assessing our competitive position and developing strategies to maintain and strengthen our

market share.

3. Environmental risks: The Group recognises the importance of addressing environmental risks, including climate

change and resource scarcity. A three-year period allows the Group to assess and manage the potential impact

ofthese risks on its operations and implement measures to minimise any adverse effects.

4. Financial resilience: A three-year period aligns with the Group’s strategic planning processes, enabling the Board

to evaluate the financial resilience of the business while considering potential risks and uncertainties.

The Board has set the strategy for the Group within the digital marketing and advertising sector, considering key

factors such as market dynamics, competitive landscape, technological developments, regulatory environment and the

Group’s financial resilience. The Board has also reviewed the Group’s risk management framework, which identifies,

evaluates and mitigates significant risks to the business, including both internal and external factors, with particular

attention to environmental risks.

Key assumptions underpinning the viability assessment include the following:

1. Sustainable revenue growth driven by the increasing demand for digital marketing and advertising solutions

and our ability to respond effectively to industry trends.

2. Adherence to a disciplined financial strategy, focusing on maintaining a prudent level of debt and ensuring

accesstoadequate sources of funding.

3. Compliance with relevant laws and regulations, as well as our commitment to upholding the standards

ofcorporate governance.

4. Effective management of key risks, including economic, operational, environmental and reputational risks, through

the implementation of robust mitigation strategies.

The Board of Directors has performed a robust assessment of the principal risks and uncertainties that could threaten

the business model, future performance, solvency or liquidity of the Group. The assessment includes an evaluation of

the Group’s resilience to these threats in severe but plausible scenarios. The principal risks and uncertainties that the

Board believes could have a significant adverse impact on the Group’s business are set out on pages 28 to 30.

In the downside scenario, the Group models a considerable decline in demand during 2024, 2025 and 2026, resulting

in a significant 13% reduction in net revenue along with an 8% reduction in operating costs when compared to the

Board-approved three-year plan forecasts.

2 310 4

Capital plc Annual Report and Accounts 2023 31

The results of our stress test in the downside scenario indicate that the Group maintains adequate liquidity

throughout the evaluation period without breaking any existing debt covenants, demonstrating resilience under these

challenging conditions.

The Board can leverage a variety of potential mitigating actions to control costs and manage cash flow. A combination

of the following mitigating actions (all of which would be fully under the Group’s control) could be leveraged to achieve

over and above the level of operating cost reductions assumed in the downside scenario, if required:

1. Workforce planning: Review the Group’s workforce and implement measures to optimise resource allocation,

including potential hiring freezes, voluntary redundancy programmes or reskilling initiatives.

2. Cost reduction: Identify and implement cost-saving measures across the Group, including potential reductions

in discretionary spending and operational efficiency improvements.

3. Portfolio optimisation: Re-evaluate the Group’s product and service offerings to focus on high-margin, high-demand

areas, while discontinuing underperforming or low-margin products and services.

4. Financial management: Review the Group’s financial position and explore options for restructuring its debt,

such as renegotiating loan terms, refinancing existing debt or securing alternative sources of financing.

In addition to the mitigating actions outlined above, the Group has access to a fully undrawn Revolving Credit Facility

(RCF) of £100 million. This facility serves as an additional financial resource that can be utilised to manage liquidity,

support operational stability, and address any unforeseen challenges or opportunities that may arise during the

assessment period.

Based on the outcome of this comprehensive assessment, the Board has a reasonable expectation that S

Capital plc

will be able to continue in operation and meet its liabilities as they fall due over the three-year period of assessment.

The Board acknowledges that there are inherent uncertainties in any forward-looking analysis and, therefore, it will

continue to monitor and update the Group’s risk management framework and business strategy as needed.

The Strategic Report on pages 8 to 32 was approved by the Board of Directors on 26 March 2024 and signed

on its behalf by:

Sir Martin Sorrell

Executive Chairman

26 March 2024

Mary Basterfield

Group Chief Financial Officer

26 March 2024

Principal risks and uncertainties continued

Strategic Report

Capital plc Annual Report and Accounts 2023 32

33S

Capital plc Annual Report and Accounts 2023

Industry

outlook

& ESG

reports

34 Shifts, rifts and dislocation by Sir Martin Sorrell

43 ESG: Taking action

44 ESG: Our sustainability commitments

46 Our impact model

47 TCFD Report

54 Materiality impact

55 Our Responsibility to the World

60 Changing the conversation

64 People Fulfilment

68 Personal voices

69 Non-financial and sustainability information statement

70 Section 172(1) statement

2 310 4

By Sir Martin Sorrell

rifts and

Shifts,

dislocation

During the last two years the shifting tectonic plates underpinning

economic and political activity around the globe came together

to release a series of powerful disruptive forces that have thrown

the world into a heightened level of uncertainty for the near

to medium future.

The world turns

In the Middle East, a political earthquake was

triggered by the clash of ambition between

regional players in the form of a new conflict

focused on Israel and Gaza; the war in

Ukraine ground on and the standoff between

China and the US showed no signs of easing;

artificial intelligence underwent a step change

in evolution and public consciousness; and

catastrophic climate change moved a step

nearer as 2023 became the hottest year

on record.

The aftershocks of the pandemic continued to

rumble on in the form of new working practices,

unprecedented reliance on technology, and

an epic overhang of debt which combined with

supply chain disruption to sustain damaging

inflation and growth-sapping interest rates

around the world. And as the population of

India overtook that of China for the first time,

emerging powers competed for influence in

the race for leadership within a new multi-

polar world.

So what does all this mean for the year ahead?

Much will hinge on the outcome of major

elections around the world. 2024 is set to be

a milestone year for democracy with almost

half the world’s population choosing new

leaders, including those in India, Indonesia,

Mexico, Pakistan, Russia, the UK and the US.

Whether Donald Trump or Joe Biden returns as

President in the US is a question that will have

a key impact on global politics as well as the

outlook for business.

Otherwise, there are big questions to be asked

about whether the embracing of AI will race

ahead unchecked, what impact that will have

in our industry, how China emerges from its

growing pains and just how quickly interest

rates are brought down by major central banks.

But all the signs are that while economic

uncertainty is reducing, political uncertainty

isgoing to be greater than ever.

Here’s what we know so far.

Industry outlook

Capital plc Annual Report and Accounts 2023 34

We’re in the midst of a poly-crisis

War in Ukraine, the conflict between Israel

and the Palestinians in Gaza, the malevolent

ambitions of Iran, the looming threat to Taiwan’s

independence, question marks over democracy

itself in the US and elsewhere… all these are

evidence of a crisis that has many heads

surfacing around the world and casting a pall

of uncertainty for business leaders wanting to

plan for the months and years ahead.

The poly-crisis extends far beyond the

geopolitical arena: climate change; loss of

biodiversity; pandemic; and widening economic

disparities all add to the sense of emergency on

multiple fronts.

These are overlapping and interconnected

challenges that can’t be solved by any country

in isolation and make a call on international

collaboration that is itself struggling to provide

a coherent response as the traditional level of

consensus breaks down.

We have entered a period of intense

competition between nations, where the

‘easy’ economic gains of the past are no longer

readily available, and it seems so often that

growth can only be clawed at the expense

of other rival countries. That is leading to

assertion of a new multi-polar world order

no longer dominated by the US, in which new

partnerships are being forged and ambitions

pursued while the global outlook that has

prevailed for recent generations is replaced

by increasing fragmentation.

We have entered a period of intense competition between

nations, where the ‘easy’ economic gains of the past are no

longer readily available, and it seems so often that growth

can only be clawed at the expense of other rival countries”

10 things to think about

1. The world is now changing from the 40 years since

Professor Ted Levitt’s ‘Globalization of Markets’

was published in the Harvard Business Review

in May/June 1983.

2. GDP growth will be slower, inflation higher and interest

rates higher than before.

3. US/China relations, Russia’s ambitions in Ukraine and

beyond, Iran’s aspirations in the Middle East, along with

North Korea’s volatility, all mean increased instability.

4. In this new world, two trends are particularly important

for our clients and us. First, pick your geographic markets

more carefully, mainly in the Americas, the Middle East and

Asia Pacific. Second, efficiency becomes more important.

AI, the metaverse, blockchain and quantum computing will

drive this efficiency gain everywhere, but particularly in

lower-growth Europe.

5. In this new world, clients have to focus on three

things: agility; taking back control of their marketing;

and first-party data.

6. Digital will continue to dominate media spend from 65%

now to more than 70% by 2025.

7. The six major platforms – Alphabet, Meta, Amazon,

Alibaba, Tencent and ByteDance – will continue to

dominate digital media.

8. Clients will continue to focus on short-term results,

soactivation, performance and measurement have

become ever more important.

9. Connected TV: retail advertising will become more and

more important as linear TV remains under pressure.

10. AI will drive major changes in visualisation and copywriting,

in hyper-personalisation, in media planning and buying,

in client efficiency and in the democratisation of

knowledge. As a result, companies will have flatter

organisational structures and become more efficient.

2 310 4

Capital plc Annual Report and Accounts 2023 35

Shifts, rifts and dislocation continuedShifts, rifts and dislocation continued

Source: IMF World Economic Outlook Update, January 2024

2023 2024 2025

World

3.1 3.1

3.2

2023 2024 2025

United States

2.5

2.1

1.7

2023 2024 2025

Euro Area

0.5

0.9

1.7

2023 2024 2025

Middle East &

Central Asia

2.0

2.9

4.2

2023 2024 2025

Emerging &

Developing Asia

5.4

5.2

4.8

2023 2024 2025

Latin America &

The Caribbean

2.5

1.9

2.5

2023 2024 2025

Sub-Saharan

Africa

3.3

3.8

4.1

Growth projections by region (% change)

In 2023 China used the BRICS forum directly to

challenge western hegemony as six emerging

market countries – Argentina, Egypt, Ethiopia,

Iran, Saudi Arabia and the United Arab Emirates

– were invited to join the bloc. The E7 group

of seven leading emerging markets – Brazil,

China, India, Indonesia, Mexico, Russia and

Turkey – now has a higher combined GDP than

its established counterpart the G7, composed

of Canada, France, Germany, Italy, Japan,

the UK and the US. Even the E6, excluding

China, would be larger than a G6 excluding the

US. Saudi Arabia exemplifies the new-found

ambition among emerging states. Its leader,

Mohammed bin Salman, is attempting to

position the country as a world political and

economic power as well as masterminding

a transformation of the company’s image.

Alongside well-versed investments in golf,

cricket, football and cultural activities he

hasforged a close relationship with China,

restored relations with Iran and was on the

verge of normalising relations with Israel

beforethe attack on 7 October last year.

With this challenge to the old-world order,

the philosophy of globalisation is in retreat.

Geopolitical tensions exacerbate shortages and

disrupt the supply chain, and the requirement

to facilitate just-in-time manufacturing is

becoming overtaken by the overwhelming need

for security and de-risking.

2023 2024 2025

Global economy

3.1 3.1

3.2

2023 2024 2025

Advanced

economies

1.6

1.5

1.8

2023 2024 2025

Emerging market

& developing

economies

4.1 4.1

4.2

World economic outlook growth projections (%)

Source: IMF World Economic Outlook Update, January 2024

Industry outlook

Capital plc Annual Report and Accounts 2023 36

F: Forecast

Source: IMF World Economic Outlook 2023

GDP based on PPP (% share of market)

The $105 trillion world economy (global GDP 2023F)

USA

$26.9T

CHN

$19.4T

JPN

$4.4T

IND

$3.7T

DEU

$4.3T

FRA

$2.9T

RUS

$2.1T

BRA

$2.1T

ITA

$2.2T

CAN

$2.1T

GBR

$3.2T

KOR

$1.7T

ISR

$539B

ARE

$499B

HKG

$383B

IRL

$594B

NOR

$554B

SWE

$599B

SGP

$516B

NGA

$507B

THA

$574B

ROU

$349B

MYS

$447B

VNM

$449B

BGD

$421B

PHL

$441B

CZE

$331B

DNK

$406B

AUT

$515B

BEL

$624B

IRQ

$268B

KAZ

$246B

PRT

$268B

GRC

$239B

HUN

$189B

COL

$335B

NZL

$252B

DZA

$206B

CHL

$359B

PER

$268B

FIN

$302B

KWT

$165B

IRN

$368B

QAT

OMN

JOR

BHR

YEM

PSE

TTO

JAM

NIC

CYP

LUX

AND

LTU

LVA

XKX

GEO

URY

BOL

BIH

ALB

PRY

SUR

ARM

MNE

LAO

KHM

NPL

MDV

TJK

KGZ

BTN

BRN

TLS

GUY

PNG

ABW

TON

MDA

MKD

EST

ISL

MLT

SMR

SLV

HTI

HND

$220B

SVK

BGR

$101B

$128B

ECU

$121B

DOM

$121B

PRI

$121B

GTM

$102B

UKR

$149B

CRI

$78B

SRB

$74 B

BLR

$74 B

MAC

$36B

MNG

$17B

UZB

$92B

TKM

$83B

MMR

$64B

VEN

$97B

HRV

$79B

AZE

$70B

SVN

$68B

PAN

$77B

ESP

$1.5T

IDN

$1.4T

NLD

$1.1T

POL

$749B

TWN

$791B

ARG

$641B

$1.1T

TUR

$1.0T

AUS

$1.7T

CHE

$870B

MEX

$1.7T

ZAF

$399B

EGY

$387B

ETH

$156B

AGO

$118B

KEN

$118B

MAR

$139B

TZA

$85B

DRC

$70B

CIV

$77B

GHA

$67B

GIN

UGA

CMR

SDN

TUN

LBY

ZWE

BWA

BFA

BEN

MDG

ZMB

MLI

GAB

MOZ

MWI

GNQ

RWA

SEN

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Advanced economies

Emerging market and developing economies

Source: IMF, 2023

2 310 4

Capital plc Annual Report and Accounts 2023 37

Shifts, rifts and dislocation continued

Companies that are over-exposed to supply

from China are urgently looking to diversify

as far afield as southeast Asia or north Africa;

there’s an urgent effort to build semiconductor

manufacturing outside Taiwan; and the US is

looking increasingly to South America to meet

its sourcing needs.

Goldman Sachs reckons that global tensions

will exacerbate supply shortages and lead

to a commodities boom in 2024. But it’s not

just about politics: one major client told me

their biggest problem last year was factories

affected by flooding.

Growth is elusive

World economic growth in 2023 is panning

out to be 3.1%. The IMF forecasts the same

again for 2024. That masks a widespread

variation from country to country and region to

region. India has been a shining star with GDP

growth forecast by the IMF at 6.7% in 2023

and 6.5% in 2024. India is a winner because

of Prime Minister Modi’s success – although

he’s controversial for some – and because it’s

the alternative to China. India’s people are also

really good technologically. For example, it’s

significant that a huge proportion of faculty at

Harvard Business School, including two Deans,

are from India. Indonesia is set to be a top

five economy by 2050, and Vietnam is going

great guns.

China still has good growth at around 5%

in 2023 but many problems – from youth

unemployment to the debt bubble in real estate

to over-indebted State-Owned Industries.

And the uncertainties around China, given the

Taiwan risk, mean that there is an unwillingness

to invest from overseas and assets are around

40% undervalued right now. There’s also a

long-term issue of population, with forecasts

that by the end of this century, the Chinese

population will have reduced from 1.4 billion

to 770 million. President Xi was recently

urging Chinese women to have more babies.

(President Putin has been encouraging Russian

women to do the same.) Every big company

must decide whether they want to be bigger

orsmaller in China. Those with more than

20%of their production concentrated there

willcertainly have to think whether they want to

go further. On the other hand, if you’re Unilever

or Reckitt Benckiser, with only a relatively small

single-digit market share there, you almost

certainly want to get bigger.

The US is doing better than most of the

‘advanced’ countries with 2.5% GDP growth

in 2023, according to the IMF, although the

direction will become clearer after the election.

As someone pointed out to me recently,

10 years ago America was 25% of the world’s

economy – and it’s still 25%. The US is vibrant

and progressive, and technologically advanced

and it still manages to punch above its weight

with $27 trillion out of the $105 trillion global

economy compared to China’s $19 trillion.

Europe is in a deeper hole and is suffering from

a dearth of good leadership. The UK is forecast

by the IMF to grow at 0.6% next year, Germany

at 0.5%. Europe has become a question of

cost efficiency in a world where there’s slower

growth – and that’s why digital transformation

is so important, particularly driven by AI.

Inflation is deflating, but slowly

The speed at which inflation and interest

rates come down in the coming year is going

to be the key determinant of economic

prospects in the year ahead. During 2023,

inflation proved stickier than many people had

expected and that meant central banks had

to keep up interest rates to suppress demand.

Inflation hasproved more resilient in Europe

and the UK than in the US, and although there

was some positive news at the end of 2023,

Europe’s inflation saw a modest increase in

December. Governments in many countries

have to fund big deficits, in some cases well

over 100% of GDP, and to sell bonds they

haveto offer an attractive return. The US is a

case in point, and China is not buying bonds

likeit used to. If you offer a real return of 2%

and inflation is still at 3% that indicates a bond

yield of 5%.

The speed at which inflation and

interest rates come down in the

coming year is going to be the

key determinant of economic

prospects in the year ahead”

Industry outlook

Capital plc Annual Report and Accounts 2023 38

Share of global ad spend by channel ($bn)

2021 2022F 2023F 2024F 2025F

55.8

57.7

58.8

59.9

61.1

23.4

22.5

21.8

7.2

6.7

6.2

5.8

5.5

5.4

5.6 5.6

5.6 5.7

4.9

4.8

4.7

4.6

0.4

Digital

Television

OOH

Audio

Cinema

F: Forecast

Source: Dentsu 2023 Global Ad Spend Forecast

90%

80%

70%

60%

50%

40%

30%

20%

10%

Share of digital in advertising revenue worldwide 2018-2028

48.0

2019

53.8

2020

61.9

2021

65.5

2022

67.2

2023F

68.8

2024F

70.0

2025F

71.1

2027F

73.0

2028F

74.0

2026F

72.2

2018

F: Forecast

Source: Statista.com, 2024

2 310 4

Capital plc Annual Report and Accounts 2023 39

Shifts, rifts and dislocation continued

Note:

1. Statista.com

Our market

7.7 % 0.7%

Digital media spend is projected to grow

at 7.7% in 2024

Digital transformation services is expected

to grow at 0.7% in 2024

$305bn +26%

AI is already a $305 billion market in 2024

Top 25 agency groups had 2022 revenues of

$130 billion, S

Capital Group has 0.92%

market share, up 26%

Clients have already become less cautious:

little more than a year ago they were worried

about interest rates going up; now they are

focused on rates coming down. Lower interest

rates will have a number of implications for

our sector. Obviously, they will help stimulate

investment and improve valuations of growth

stocks; but reduced inflation will curb the ability

to increase consumer prices and to use that to

increase funding for advertising as a share of

net revenue. Incidentally it will also eliminate

opportunities for price gouging. In early 2024,

Carrefour de-listed PepsiCo products in France

because the retailer deemed they were priced

too highly.

The US election will likely have a significant

impact on the economy there. If the contest

comes down to Biden vs Trump, it is the latter

that business generally prefers. President Biden

is seen as a big spender. Many CEOs rank

regulation as their number one issue.

President Trump represents low tax and

low regulation.

Digital marches on

During 2023 the digitalisation of the

media economy continued apace and the

standout trend was the decline of linear TV.

Revenues forlinear TV were down something

like 10% over the year and in some cases even

more. Bob Iger, who’s back at Disney, has had

to do a volte face on selling ABC, although they

are buttressed with live sports through owning

ESPN. Disney now says it will focus on making

ABC work with its streaming services. What’s

happening is a kind of repeat of what we saw

with the decline of local newspapers though it

has taken much longer and is a less dramatic

decline. But it is the death knell of cable and

broadcast TV in America, as linear sank below

50% for the first time according to Nielsen,

and viewers progressively switch to streaming.

And that is a reflection of what is happening,

or has already happened, in other regions.

PepsiCo was recently reported to be dropping

linear TV media in some parts of the world.

Two areas of innovation are connected TV and

retail media. Connected or addressable TV is

traditional media’s attempt to target people

using IP addresses to personalise content

on linear TV with more digitised executions.

Retail media is the attempt by retailers to build

their own ecosystem complete with advertising.

Walmart and Walgreens are both doing this.

The share of advertising spend accounted

for by digital is now around 65% worldwide,

and is set to grow to 71% by 2025. What that

means is that digital – which is where S

Capital

is exclusively focused – continues to be the

only growing segment of the advertising

cake and that legacy advertising is set for

continued decline.

Digital advertising is dominated ever more

by the major platforms

. In 2023, of the

nearly $630 billion digital advertising market

worldwide, Google was 39%, Facebook was

18% and Amazon 7%. So that’s almost

Sources:

1. GroupM, Dentsu, MAGNA, December 2023

2. epan, endava, Thoughtworks, CI&T, Globant, Accenture

3. Statista.com

4. AdAge, 2023

Industry outlook

Capital plc Annual Report and Accounts 2023 40

two-thirds of digital spend in the hands of

three big players. TikTok broke through to 3%;

Microsoft at 2%; and Apple at around 1%.

Snap and X (formerly Twitter) at 0.8%; and

Pinterest around 0.5%.

AI goes mainstream

If 2023 was generative AI’s breakthrough year

– to quote McKinsey – then it would be foolish

to bet on the pace slowing down in 2024.

Key milestones in 2023 included the launches

of ChatGPT-4 by OpenAI, and Bard by Google

– both taking natural language processing to

a new level and bringing these capabilities

within the range of millions of workers and

even students. ChatGPT became the fastest-

growing app ever, while a debate was ignited

about the economic and social impact of AI.

That led to a flurry of investment in AI alongside

growing focus on the ethics and governance –

a topic on which the UK government convened

an international conference. The Beatles

released a single in which AI was used to

recreate the vocals of John Lennon, and

the year ended with OpenAI firing its CEO

Sam Altman – apparently for his eagerness

to commercialise the technology – and then

reinstating him.

What does 2024 have in store? This could be

the year when AI becomes truly monetised,

with ChatGPT launching an app store, and Bard

releasing a paid-for version. If CES in Las Vegas

is anything to go by we will see AI integrated

into every kind of consumer device, from

refrigerators to smart TVs, cars – led by VW’s

range of EVs – and computer keyboards.

The winners from AI are going to be largely

those who are already dominant in other

technologies. These will include the big six

platforms: Alphabet, Meta, Amazon, Alibaba,

Tencent and Bytedance, as well as Nvidia,

Apple, Microsoft, Musk and OpenAI, Adobe,

Oracle and Salesforce. The big, in other words,

are set to get bigger.

Advertising gets smarter

Capital has been at the forefront of

understanding how AI will change our industry

for several years now, and that was recognized

when AdWeek named Media.Monks as its AI

Agency of the Year in November 2023. We’ve

identified five key ways in which AI is set to

transform our industry.

The first is visualisation and copywriting.

Content, in the form of copy, images and video,

can now be produced far faster. Something that

took three weeks can now be done in three

hours. Clients are going to want to share that

benefit, because we are selling time – albeit we

should be selling outputs.

Second is hyper-personalisation. When we

produce a campaign for Rebel Moon for

Narcos on Netflix, for example, we produce

around one and a half million pieces of content.

And the process is automated with the help of

AI. The Netflix model is still the best: you use

the first-party data to create the content: “You

started this movie, why didn’t you finish it?”

Third is media planning and buying. Out of

the total $950 billion advertising expenditure,

around $650 billion can be bought with

algorithms. The great thing about that is

we’ll have better information to make better

decisions. However, there are 200,000-

250,000 people doing semi-automated manual

media planning and buying worldwide whose

future isin question.

Fourth, use of AI is general efficiency. In every

department AI can be harnessed to improve

efficiency and deliver solutions faster and

at lower cost. An example is Media.Monks’

collaboration with AWS, Adobe and Nvidia to

deliver software-defined outside broadcasting

in place of capital- and carbon-intensive

physical infrastructure.

Fifth is democratisation of knowledge.

Knowing what we know, within the organisation,

being able to instantly tap the knowledge of

every individual is a kind of Holy Grail that is

becoming a reality thanks to AI. As an example,

we now have over 800 people globally working

on Google. If we can get everybody in that

team to know what everyone else is doing,

then you flatten the organisation, and you

increase efficiency.

It’s time to own your data

Google started 2024 by announcing that it will

deprecate third-party cookies, initially on 1% of

searches and with the objective of eliminating

them altogether in the second half of the year.

This is a step that was originally planned before

the pandemic and was delayed because of

covid-19. What it means is that, for clients, the

imperative to harvest first-party data in order

to understand your customers and to achieve

personalisation becomes all the more pressing

and is likely to be a key focus this year.

2 310 4

Capital plc Annual Report and Accounts 2023 41

Shifts, rifts and dislocation continued

The second key priority for clients right now is

the need for agility – a key corporate attribute

that is really difficult for companies to attain.

It is a cultural factor; people like to be in

control of their own swim lane and not have

interference, but one consequence of that

is that politics becomes a huge distraction.

Agility means being able to respond quickly

and effectively in world where the future is very

uncertain and the situation is changing rapidly.

The democratisation of knowledge that AI will

facilitate will help to achieve that.

Taking back control is the third key priority for

clients. After the financial crisis, zero-based

budgeting came in and the trend to outsource

went too far. But in a digital world where you

have a vital need for first-party data, maybe

in-housing is better than outsourcing. That may

sound strange coming from an agency, but

we are not trying to do ourselves out of a job.

We have embedded models where we put our

people inside a company, and other models

where we support them to in-house it and then

provide continuing services around technology.

One is the subject of the business school case

study around Sprint and T-Mobile. We won

an award for Manufacturers Life, where we

in-housed their media. We are continuing

services around technology.

Short-termism also continues to be an important

perspective for clients. Advertisers such as

packaged goods companies whose budgets

rose last year because they were set on net

revenue, didn’t put the money into linear TV –

they put it into the platforms, because it is easier

to measure and you can see the impact on sales.

So the focus of spending has been moving down

the funnel from branding towards activation

performance, and that’s largely because of the

short-term focus from investors. Purpose is still

there in the corporate boardroom – especially

because of the threat from climate change –

but because of economic pressures it has

moved down the agenda.

The road ahead

2023 was a period of adjustment and some

retrenchment in our industry, as we evaluated

our own response to this changing and

uncertain world. For the big tech companies

– Apple, Google, Meta, Microsoft to name

a few – it was the year of efficiency and

everyone reduced their headcount significantly.

At S

Capital we grew from 1,000 to 9,000

people very quickly and we have now reduced

to around 7,700 in line with the changing

demand. The tech companies reduced their

spending on advertising, even while their

revenues were going up, and so we are overdue

for that ratio to be revisited.

Our business model remains as valid today

as when S

Capital started in 2018 – ‘digital

only, data driven, and faster, better, cheaper

or more efficient’. We’ve added those last words

because of the impact of AI which means we

are now able to produce so much more within

the same budget.

In terms of our breakdown of revenues by

practice, Content is currently around 60%,

Data&Digital Media 25%, and Technology

Services 15%. I’d like that to evolve towards

50/25/25. And, geographically, we are about

80% in America, 15% in EMEA and 5% APAC.

I’d like it to be 60/20/20 – keeping EMEA at

the same portion but doubling our revenues

from APAC.

We are still working out our new way of working

since the pandemic. Undoubtedly some things

have changed forever. I was watching CNBC

and they had on an interviewee from Phoenix,

Arizona. It’s seven o’clock in the morning, so

in Phoenix, it would be midnight. This guy is

sitting in his office talking about the markets

and it seems pretty obvious that he’s decamped

to Arizona because there’s less state tax.

On average, our people are in the office three

days a week. I’d like it to be more, but there is

academic research which suggests the key

step is to ensure you have social gatherings

– whether that’s once a week or once a month –

that provide the glue in your organisation.

It’s going to be another tough year. CEOs are

bullish, but the CMOs often less so. There is

less caution around the economy looking

forward, but threats, disruptions and

uncertainties, particularly in the political

sphere, are very real. The outlook may improve

after the US election but, for now, the byword in

every boardroom is going to be risk.

There is less caution around

the economy looking forward,

but threats, disruptions and

uncertainties, particularly in the

political sphere, are very real”

Industry outlook

Capital plc Annual Report and Accounts 2023 42

Taking action

We put our ESG vision into practice: harnessing

technology and creativity as forces for good to make

a positive material impact on people, the planet and

society as a whole.

Girls Not Brides:

Juanita & Roberto’s Wedding

Despite laws that prohibit it, more than 300,000

girls in Mexico have been sold into marriage with

older adults. As part of a campaign to expose this

injustice and call for enforcement of the law, we

invited all of Mexico to the wedding of Don Roberto

and Juanita, a minor-age girl, in a video that

went viral.

Awards won

Coach: The Pleasure Pursuit

In partnership with Coach, we created a WebGL platform that tells the

story of artist Tom Wesselmann and explores the themes of life’s three

pleasure principles: love, wonder, and play.

Awards won

See more stories

on pages 60 and 68.

Getty Villa:

Persepolis Reimagined

To complement Getty Villa’s sweeping exhibition

of the ancient superpower of Persia, we created

an immersive WebGL experience that transports

visitors to a historically accurate recreation of its

capital, Persepolis.

Awards won

2 310 4

Capital plc Annual Report and Accounts 2023 43

ESG reports

ESG: Our sustainability commitments

We firmly believe that technology and creativity

can be used as forces for good and are powerful

tools in transitioning towards a more sustainable

society. This belief is the core of our sustainability

vision, strategy and commitments”

Victor Knaap

Executive Director

A year of structure and stabilisation

This year marks our second year of reporting

against the Task Force on Climate-Related

Financial Disclosure (TCFD) requirements.

Globally, there is growing recognition of

the impact of environmental, social and

governance factors on business models, and

increased efforts to steer economic activities

towards sustainability.

In the EU, initiatives like the European Green

Deal, the EU Green Claims Directive, and the

Corporate Sustainability Reporting Directive

(CSRD) are dominating conversations about

sustainability. In the US, California introduced

the Climate Corporate Data Accountability

Act, while the US Securities and Exchange

Commission (SEC) has announced ESG

disclosure regulations mandating public

companies to share greenhouse gas emissions

(GHG) and climate risks. China’s major stock

exchanges issued new sustainability reporting

guidelines for listed firms. Additionally, the

International Sustainability Standards Board

(ISSB) launched its initial standards – IFRS

S1 and IFRS S2 – with over 20 regulators and

standards organisations expressing support

for the ISSB, and more than 50 jurisdictions

displaying interest.

These developments highlight the importance

of transparency and quantifiable outcomes,

eliciting the need for quality data, as well as

both internal and external data gathering.

We have started the implementation of ESG

software to develop our data quality and

analysis and are focused on streamlining

our activities, processes and governance to

bring us closer to our goal of achieving net

zero by 2040 – for example, setting formal

Science-Based Targets (SBTi) and creating our

transition plan. Having been carbon neutral in

2021 and 2022 through carbon offsetting, we

have shifted our strategy to become net zero

by 2040.

In our journey towards B Corp certification,

we are now in the midst of B Lab assessment.

Our continued efforts to report on Scopes 1, 2

and 3 of GHG have resulted in an upgrade of

our CDP score from B- to B.

In 2023, there has been a shift in focus in the

technology sector towards artificial intelligence

(AI). Based on our deep knowledge of the AI

space, we have led the conversation being

named Adweek’s inaugural AI Agency of

the Year and pivoting our solutions through

innovation to serve changing demand by

working in new automated ways.

Although we wholeheartedly embrace

technology moving forward, we acknowledge

the importance of social interaction in fostering

culture and belonging at the office, as well as

the efforts that remain to be made on that front.

With that in mind, we encourage our Monks to

be in the office at least three days a week.

When it comes to our people, creating agile

practices, policies and programmes that both

foster and meet the needs of our diverse

workforce was of paramount importance in

2023. We also continued to focus on closing

the representation gap for talent in our industry

by providing training and fellowships.

Read the full Media.Monks ESG 2023 report at

media.monks.com/esg

ESG reports

Capital plc Annual Report and Accounts 2023 44

Our redefined ESG strategy

In 2023 we redesigned our ESG strategy.

Capital’s Non-Executive Board member

Miles Young – who provides guidance and

structures to improve, support, and benefit

our culture – redefined our strategy with the

creation of an integrated Culture Model.

This model houses our vision, values and

strategic actions that all contribute to

our culture.

Diversity, Equity & Inclusion and our HR

practices are now part of our People Fulfilment

strategic pillar.

People Fulfilment

Our goal:

Create a workforce that is

empowered and enabled.

Our plan:

Build programmes, practices

and policies that provide global

guidance and enable regional

flexibility to support the growth

and development of our Monks.

Read more on page 61

One Brand

Our goal:

Establish visible signs of a

common culture for a unified

brand and company that our

people and clients are proud to

be a part of.

Our plan:

Build our identity through

communication that integrates

and creates rituals into

one culture.

Zero Impact Workspaces and Sustainable

Work are now housed in a single pillar,

Our Responsibility to the World, alongside

Transparency & Governance and Ethical

& Responsible Marketing – areas that are

important to our key stakeholders.

Our third strategic pillar is One Brand,

representing the naming, branding,

communication and positioning of our shared

operations, with the ambition to create a shared

culture amongst all.

Each of our three strategic pillars contributes

to our overarching ESG goal to become a more

sustainable and inclusive global company.

2 310 4

Capital plc Annual Report and Accounts 2023 45

Our impact model

People Fulfilment Our Responsibility to the World One Brand

Our sustainability strategy, our activities and the resources we utilise help us create value in both the near- and

long-term, and we actively work to manage and decrease any negative impact of our business operations. We strive

to support the UN’s Sustainable Development Agenda with our strategy and efforts, and align these efforts with its

Sustainable Development Goals (SDGs).

Input

People

7,707 Monks

48% women

50% men

2% undeclared

Resources

61 offices

32 countries

4,477 MWh

electricity used

Our relationships

Clients

Business partners

Charities

Output

Offered 94 intern and

associate positions

Rolled out the Diverse

Slate approach to hiring

Launched the

Media.Monks Coaching

Certification Program

Accelerate.Monks

fosters leadership

growth and career

advancement through

interactive classes

Motif, gained traction,

andis a plan to take

action on insights

gathered from a

cross-section of

influential employees

20% emission

reduction YoY

3.3 tCO

e per FTE

45% of electricity

is renewable

£1.0 billion revenue

£64,870 (0.01% of

revenue) and 1,449

voluntary hours

donated to charities

8,414 projects

502 projects For Good

101 Purpose-

driven clients

Long-term

value

We empower our

people to be a catalyst

for change, in an

inclusive, diverse and

creative workplace

We create a

climate-neutral and

environmentally-

conscious

business operation

We remain economically

viable and invest in

our innovations to enable

us to contribute to

sustainability challenges

in the long run

We improve the

sustainable impact

of our clients – to

bring about the shift

in attitudes and

behaviour needed

to reach the SDGs

ESG reports

Capital plc Annual Report and Accounts 2023 46

TCFD Report

Capital remains committed to addressing our impact on climate

change and continues to take steps to ensure our resilience

against climate-related physical and transition risks. Accordingly,

in 2023 we took further strides in the management of climate

change, building on the foundation laid in last year’s inaugural

TCFD report. Throughout 2023, the Group has undergone

substantial updates in its climate governance, with a particular

focus on refining risk management processes and improving

the effectiveness of our climate governance.

Governance

Capital’s governance of climate issues

continues to evolve, to ensure we can

proactively manage climate-related risks and

to remain on track for our climate targets.

Having established a management-level ESG

Steering Committee in 2022, in 2023 we have

taken steps to refine its remit and improve

its effectiveness, with a particular focus on

supporting the accurate and timely collection of

sustainability data. Accordingly, the committee

is being reconfigured so that the cross-

functional representatives are each engaged

as data owner for the function under their

remit, with the aim of ensuring accountability,

facilitating progress monitoring on emissions

targets, and ensuring compliance with rigorous

audit and control processes. In addition, climate

management at the executive level has been

reconfigured so that responsibility sits with the

overall Executive Committee, rather than

a separate Executive ESG Committee.

Risk management

In September 2023 the Board formally

approved a new Enterprise Risk Management

Framework (ERMF). This framework will

enable the Group to consistently evaluate the

potential impact and probabilities of climate-

related risks and opportunities materialising,

facilitating analysis of their relative significance.

In line with TCFD recommendations climate-

related risks are considered as part of our

overall Group risk management processes.

Each business within the Group will now be

required to consider ESG risks as part of their

risk management processes.

Strategy

The Board reviewed the identified risks and

opportunities, and associated mitigations.

More work will be conducted in the following

year to better understand and quantify our

exposure to relevant risks and opportunities,

and costs related to mitigating actions. This will

be particularly important as we seek to drive

progress on our recently submitted Science-

Based Targets, as described overleaf.

Operations/Strategy

Risk, progress and metrics

ESG Steering Committee

Executive

Committee

Audit and Risk

Committee

Board

Overall climate

change responsibility

2 310 4

Capital plc Annual Report and Accounts 2023 47

Metrics and targets

Following Executive Committee approval, the

Group formally submitted its Science-Based

Targets for verification, including targets to:

• Reduce absolute Scope 1 & 2 GHG emissions

by 42% by 2030 from a 2022 base year.

• Reduce absolute Scope 3 GHG emissions

25% by 2030 from a 2022 base year.

• Reduce absolute Scope 1, 2 & 3 GHG

emissions by 90% by 2040 from a 2022

base year.

While our operational near-term and long-term

targets are consistent with the 1.5ºC ambition

of the Paris Agreement, our full value chain

target is consistent with a well-below 2ºC

pathway. Progress against these targets will

be material to several of our key climate risks

and opportunities.

Compliance with UK Listing Rules

In line with the ‘Task Force on Climate-related

Financial Disclosures’ (TCFD) recommendations

and Listing Rule LR 14.3.27R, S

Capital has

provided information to stakeholders on its

TCFD Report continued

Recommendation Recommended disclosures Reference CA 414CB

Governance

Disclose the

organisation’s governance

around climate-related

risks andopportunities

a) Describe the Board’s oversight of climate-related risks and

opportunities

Page 47 (a)

b) Describe management’s role in assessing and managing climate-

related risks and opportunities

Page 49 (a)

Strategy

Disclose the actual and

potential impacts of

climate-related risks and

opportunities on the

organisation’s businesses,

strategy, and financial

planning where such

information is material

a) Describe the climate-related risks and opportunities the

organisation hasidentified over the short, medium, and long term

Page 51 (d)

b) Describe the impact of climate-related risks and opportunities

ontheorganisation’s businesses, strategy and financial planning

Page 50 (e)

c) Describe the resilience of the organisation’s strategy, taking

intoconsideration different climate-related scenarios, including

a2°Corlower scenario

Page 50 (f)

Risk management

Disclose how the

organisation identifies,

assesses, and manages

climate-related risks

a) Describe the organisation’s processes for identifying and

assessing climate-related risks

Page 50 (b)

b) Describe the organisation’s processes for managing

climate-related risks

Pages

51-52

(b)

c) Describe how processes for identifying, assessing and managing

climate-related risks are integrated into the organisation’s overall

riskmanagement

Pages

50-52

(c)

Metrics and targets

Disclose the metrics and

targets used to assess

and manage relevant

climate-related risks and

opportunities where such

information is material

a) Disclose the metrics used by the organisation to assess climate-

relatedrisks and opportunities in line with its strategy and risk

management process

Page 53 (h)

b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3

greenhouse gas (GHG) emissions, and the related risks

Page 56 (h)

c) Describe the targets used by the organisation to manage climate-

related risks and opportunities and performance against targets Page 53 (g)

climate-related risks and opportunities and

relevant governance structures, in turn helping

them to make informed decisions. We set out

below our compliance with the climate-related

financial disclosures consistent with all the

TCFD recommendations and recommended

disclosures, as detailed in ‘Recommendations

of the Task Force on Climate-related Financial

Disclosures’, 2017, with consideration of the

additional guidance in ‘Implementing the

Recommendations of the Task Force on Climate-

related Financial Disclosures’, 2021. By this we

mean the four TCFD recommendations and the

11 recommended disclosures and report on all

greenhouse gas Scopes 1, 2, and 3. For Scope

3 we have re-examined all the 15 categories

to determine the material categories that we

include in our reporting, consistent with our

2022 ESG Report. Each year we will reassess all

categories and decide which ones are material

for our organisation to report on. For 2023

we will be reporting on six out of 15 Scope

3 categories: Purchased goods & services,

Capital goods, Fuel- and energy-related

activities (not included in Scope 1, 2), Waste

generated in operations, Business travel and

Employee commuting.

ESG reports

Capital plc Annual Report and Accounts 2023 48

Governance

Board level

The Board has overall responsibility to assess

the basis on which the Group generates and

preserves value over the long term, including

the sustainability of the Group’s business

model and how its governance contributes to

the delivery of its strategy. Accordingly, the

Board has overall responsibility for climate

change management and strategic response,

and is supported and informed on climate-

related issues by various channels, including

the Audit and Risk Committee and Nomination

and Remuneration Committee to ensure

any potential impacts on climate change

are incorporated into the review of Group

strategy, business plans and risk management.

With assistance and information from the

Executive Committee, the Board sets the

Group’s targets in relation to climate change,

and monitors implementation of climate change

mitigation projects and activities. During the

year the Board discussed issues including

optimising emissions/energy data collection

processes, third-party climate frameworks and

certifications, the submission of SBTi targets,

and client requirements regarding the climate.

As the designated Executive Director for

ESG-related matters, Victor Knaap provides

an operational and strategic channel to the

Board on climate change matters and takes

overall responsibility for climate and other

sustainability issues. Additionally, the Board’s

discussions on climate-related issues are led

by Non-Executive Director, Miles Young, who

presents to the board at least twice a year on

climate-related developments. He is supported

in at least one of these meetings by Regina

Romeijn, the Global Head of ESG.

ESG risks, including climate change, are

periodically discussed by the Board alongside

the review of overall principal risks. A full

overview of ESG performance is conducted

bi-annually with the full Executive and Non-

Executive Board. Progress against climate-

related targets and metrics is monitored and

overseen by the Board based on information

provided by the Executive Committee.

The Audit and Risk Committee has

responsibility for maintaining and reviewing the

Group’s register of risks covering all areas of

the business, including sustainability-related

risks and particularly those relating to climate

risk. The Committee meets at least three times

each year to review all risks, referring key

matters to the Board, including climate-related

issues as part of the general risk framework.

Executive Committee

The Executive Committee has responsibility

for ensuring that the Group’s ESG priorities

are aligned with, and integrated into, the

Group’s overall business strategy. This includes

ensuring that progress towards the Group’s

ESG ambitions is appropriately resourced and

included within the Group’s financial planning

processes, which include a three-year strategic

and financial plan and the annual budget,

which is reforecast on a quarterly basis.

The Committee is informed on progress against

ESG targets from the Global Head of ESG, who

reports directly to the Executive Committee at

least twice a year and ad hoc if urgent matters

occur. In addition, Victor Knaap is the senior

executive with primary responsibility for ESG

issues within the Group.

Management-level

In 2022, the Group established the

management-level ESG Steering Committee to

manage climate-related risks and opportunities,

ensure appropriate reporting to the Board,

and oversee gathering of data from across the

Group to measure progress against targets.

Since launching in 2022, further refinements

have been made to the Committee’s operation

and remit. The Committee is being reconfigured

so that the cross-functional representatives are

made to be consolidated data owners for the

function under their remit. Chaired by Regina

Romeijn, Global Head of ESG, the Committee

is a cross-functional team with representation

from finance, HR, operations, business and real

estate. The ESG Steering Committee meets

twice a year, or more frequently if required,

to ratify the data and information that flows

up to the Executive Committee, for instance

emissions and energy consumption, which

takes overall responsibility for setting the

Group’s sustainability strategy. The strategy

will be conveyed to, and agreed by, the ESG

Steering Committee on an annual basis.

Progress and measurement against climate-

related targets is incentivised at the executive

level through metrics applied under the

Directors’ Remuneration Policy.

As part of the refreshed Enterprise Risk

Management Framework (ERMF) launched

in the year, each business within the Group is

required to consider ESG risks as part of their

risk management processes and compliance.

2 310 4

Capital plc Annual Report and Accounts 2023 49

Risk management

Climate-related risks and opportunities relevant

to S

Capital were identified with the help of

external consultants, CEN-ESG, and refined

through consultation with internal stakeholders

and senior management. In September 2023,

the Board approved the Group’s new Enterprise

Risk Management Framework, and senior

leadership including the Global Head of ESG

were trained on its application. In line with best

practice, we assess the magnitude of climate

risks using the same parameters as other risks

in the overall risk management framework.

Potential risks are assessed according to

their occurrence within the short (0-3 years),

medium (3-10 years), or long term (10+ years),

which is sufficient to incorporate our net zero

targets and time for certain climate-related

risks to manifest.

Risks and opportunities were considered in

all physical and transition risk categories,

current and emerging, whether they occur

within the Group’s own operations or upstream

and downstream of the Group, although not

all climate-related risks and opportunities are

relevant to the business. Climate-related risks

have been classified as per S

Capital’s existing

risk management model, and use of this

framework enables comparability of climate-

related risks’ relative significance in relation to

other risks. Risk classification is assessed both

through qualitative measures and quantifiable

indicators, including Key Risk Indicators (KRIs)

such as impact on revenue, sales and profit.

Impact of opportunities is assessed using the

inverse of the scale below.

Insignificant

Low

Moderate

High

Critical

Substantive impacts are those that would have

a significant adverse impact on the Group’s

business, materially affecting its business

model, future performance, solvency, liquidity

or reputation. Any mitigation factors for climate

related risks are also included in the Group

Risk Register. Risks are subject to continual

refinement and quantification over time, which

assists with incorporation of climate-related

risks into the overall strategy, budgeting and

financial statements.

Strategy

Capital recognises that climate change

presents both risks and opportunities to our

business. Overall, we consider our climate

exposure to be low, and in isolation the

impact of most climate-related risks is limited.

Having considered the below risks and

opportunities, we conclude that the Group’s

strategy is resilient to climate change, with

financial impacts classified as moderate at

worst, but likely lower. Mitigating actions are

in place or planned to further reduce and

minimise the impact of these risks. Any impact

will be accommodated into business-as-usual

activity, so no fundamental change to the

business strategy or budgets resulting from

climate change is likely to be required in the

foreseeable future. In addition there are no

effects of climate-related matters reflected

in judgments and estimates applied in the

financial statements.

We have used scenario analysis to improve

our understanding of the behaviour of certain

risks under different climate outcomes, which

helps to assess the resilience of the business to

climate change. Accordingly we have selected

three scenarios, looking forward to 2050:

• Net Zero 2050 (NZE)

a normative scenario

which sets out a narrow but achievable

pathway for the global energy sector to

achieve net zero CO

emissions by 2050.

It does not rely on emissions reductions from

outside the energy sector to achieve its goals.

• Stated Policies (STEPS)

the roll forward

of already announced policy measures.

This scenario outlines a combination of

physical and transitions risk impacts as

temperatures rise by 2.6°C by 2100 from

preindustrial levels, with a 50% probability.

This scenario is included as it represents a

mid-way pathway with a trajectory implied by

today’s policy settings.

• RCP 8.5

where global temperatures rise

between 4.1-4.8°C by 2100. This scenario is

included for its extreme physical climate risks

as the global response to mitigating climate

change is limited.

Notes:

1. IEA (2021), World Energy Outlook 2021, IEA, Paris

https://www.iea.org/reports/world-energy-outlook-2021/

scenario-trajectories-and temperature-outcomes.

2. IPCC, 2014: Climate Change 2014: Synthesis Report.

Contribution of Working Groups I, II and III to the Fifth

Assessment Report of the Intergovernmental Panel on

Climate Change.

TCFD Report continued

ESG reports

Capital plc Annual Report and Accounts 2023 50

Risks

For the relevant risks below, we have

determined quantifiable impacts where the

underlying data is available and where the

current understanding of the risk is robust.

Scenarios have been supplemented with

additional sources that are specific to each

risk to inform any assumptions included in

projections. Having assessed the behaviour

of these risks under different scenarios, we

are satisfied that our risk mitigation strategies

and action plans provide sufficient financial

resilience to climate change.

Three key climate-related risks have been

identified. These risks have been assessed

inisolation and categorised as low impact.

Risk 1. Carbon pricing in ownoperations 2. Reputational risks

3. Regulatory risk and

reportingrequirements

Risk description • Cost of carbon is expected

to rise. Abrupt increases

to carbon prices during a

disorderly transition to net

zero may cause a particularly

significant financial shock,

if unmitigated

• Clients incorporate

sustainability requirements

into their tenders and

require supplier carbon

assessments. Many clients

consider sustainability criteria

including ESG framework

scores in RFI/RFP process.

• Failure to meet net zero/

SBTi targets could cause

reputational damage.

• Sustainability regulations are

consolidating. As a relatively

new company, there is a

risk of failure to keep pace

with regulation if we do

not maintain appropriate

internal controls.

• We note the recent European

anti-greenwashing law,

which bans unsubstantiated

sustainability claims and

misstatements in advertising.

Financial impact • Reduced Scope 1 and2

emissions, andincidental

reducedoperating costs

• Decreased revenues.

• Loss of market share

to competitors.

• Decreased access to capital.

• Increased cost of borrowing.

• Negative impact on

share price.

KPIs • Scope 1 and 2 emissionsand

IEA carbon price forecasts

• External ESG ratings (e.g.

EcoVadis, MSCI).

• Stakeholder feedback.

• Energy consumed, tCO

• % ICE vehicles in fleet.

• Energy costs as % of

total costs.

• External ESG ratings (e.g.

EcoVadis, CDP, MSCI);

stakeholder feedback.

Mitigation

andresponse

• Purchase of renewables

• SBTi submission

andtransition plan

• Net zero target by2040

• Additional sustainability

resources applied.

• Revised ESG steering

committee with individual

data owners.

• New finance ESG software.

• New financial controller with

ESG experience.

• Additional

sustainability resources.

• Revised ESG Steering

Committee with individual

data owners.

• Hiring ESG data accountant.

Time horizon Short Short Short

Impact Low Low Low

Likelihood More likely than not Likely Likely

The Group acknowledges that the cumulative

impact could be greater if more than one of

these risks were to manifest at the same time.

We have assessed all our sites for exposure

to climate-related physical risks, including

hazards such as sea-level rise and flooding,

and conclude that physical risk exposure to our

sites is extremely limited due to the nature of

our business. In particular the ability of the vast

majority of employees to work remotely, our

diversified portfolio of offices with short-term

leases across the world, insurance recovery

in the event of natural disasters, and flexibility

to relocate from potentially hazardous areas

provides strong resilience to physical risks even

under a severe global warming scenario.

2 310 4

Capital plc Annual Report and Accounts 2023 51

Opportunity

1. Efficiencies through

decarbonisation programme

2. Development and/or expansion of

low emission goods and services 3. Access to new markets

Opportunity

description

• Energy use

reduction programmes

• Enhancing environmental

credibility through improved

practices and transparency

of reporting may lead to new

revenue opportunities from

Purpose-driven clients.

• New lines of business related

to sustainability, such as

expanding sustainability

consultancy/advisory work,

represents opportunity to

capitalise on growing climate-

awareness among clients.

• Continue to expand

sustainable production

solutions for clients.

Financial impact • Reduced operating costs • Increased revenues resulting

from increased demand

forsustainable products

andservices.

• Increased revenues resulting

from increased demand

forsustainable products

andservices.

KPIs • % and kWh of electricity

consumption sourced from

green tariffs and/or energy

attribute certificates

• Energy costs as % of

total costs

• Net revenue from Purpose-

driven clients.

• Revenue from sustainable

products and services.

Adaption

andresponse

• All offices to use renewable

energy by 2040

• PPAs for renewable electricity

to be considered.

• Investment in resource and

energy efficiency

• Targeting 100% renewable

fleet by 2030

• Travel policy to promote more

sustainable business travel

• Targeting 10% of revenue

fromPurpose-driven client

projects by 2040.

• B Corp certification currently

under assessment.

• Seek to reduce emissions

from digital products and

shoots wherever possible.

• Integrate sustainability

solutions more systematically

into clientwork.

• Continuous focus

on innovation.

Time horizon Short term Short term Short term

Impact Low Low Low

Likelihood Likely Likely More likely than not

TCFD Report continued

ESG reports

Capital plc Annual Report and Accounts 2023 52

Metrics and targets

The Group has established clear targets

related to climate change, in line with the UK

Government’s commitment to net zero by 2050.

These include the Group’s target to reduce

absolute Scope 1-3 emissions to net zero by

2040. Scope 3 emissions have the largest

contribution to our CO

emissions. We report

on our Scope 1, 2 and 3 emissions, in alignment

with the Greenhouse Gas Protocol, emissions

intensity, and energy consumption. For Scope

3 we have analysed all 15 categories and

identified six out of 15 material categories that

we report on: Purchased goods & services;

Capital goods; Fuel-and energy-related

activities (not included in Scope 1, 2); Waste

generated in operations; Business travel; and

Employee commuting.

As mentioned previously, the Group formally

submitted its Science-Based Targets for

verification, including targets to:

• Reduce absolute Scope 1 & 2 GHG emissions

by 42% by 2030 from a 2022 base year.

• Reduce absolute Scope 3 GHG emissions

25% by 2030 from a 2022 base year.

• Reduce absolute Scope 1, 2 & 3 GHG

emissions by 90% by 2040 from a 2022

base year.

The 2022 GHG emissions data has been

restated to include the impact of acquisitions

and where extrapolations have been refined

with more accurate data.

A range of actions are either underway

orplanned to drive the achievement of these

targets. Scope 1 & 2 targets will require:

implementation of electricity reduction

and efficiency initiatives; engagement with

landlords to switch to renewable electricity and

reduce reliance on gas for heating; engagement

to transition to less polluting refrigerant

systems; and purchase of REGOs/RECs as

aninterim solution. Scope 3 targets will depend

on efforts that are underway to improve the

effectiveness of data collection processes

at a Group level, particularly with theaim of

improving the recording of Purchased goods

& services and more granular Employee

commuting data, in addition to focused

engagement with suppliers. Business travel

and Employee commuting emissions are also

a focus of our transition. Enforcement of our

Group business travel and expenses policy,

which considers the carbon intensity of

transport modes, will aim to reduce Business

travel emissions. Initiatives will be carried out

to incentivise our people to use less carbon-

intensive methods of commuting such as

increasing use of public transport, walking

or cycling and switching personal vehicles

tohybrid or electric.

Whilst recognising the recommendation to

integrate an internal carbon price, this is

currently deemed unnecessary and immaterial

to the business because S

Capital is not a

carbon intensive business. We may consider its

use in the future, for instance in assessing large

capital expenditure and investment activities.

2 310 4

Capital plc Annual Report and Accounts 2023 53

Capital’s materiality matrix 2023

To understand what matters to our key

stakeholders – our people, investors, suppliers and

clients – we surveyed them on material ESG topics

guided by the UN’s Sustainable Development Goals

(SDGs) to determine where we could best make a

positive impact.

With regard to our ESG efforts, 43% of our internal

stakeholders knew that we have an ESG strategy

in place, and 91% of our internal stakeholders

were aware that we have a team dedicated to our

ESG activities and reporting. That leaves room

for improvement in educating them about our

ESG efforts.

In our 2022 Stakeholder survey, Ethics &

Responsible Marketing was considered of

highest impact by all our stakeholders. This year

our external stakeholders find Privacy & Data

protection more important, moving the topic up

to the high impact area. The Group sees Working

Conditions (HR) as most impactful. Diversity, Equity

& Inclusion and Ethical and Responsible Business

practices follow closely for all our stakeholders.

Materiality impact

Community Volunteering & Monetary

Donations move up in the Compliance area of

the Materiality matrix. We still see many of our

people spending extra time outside of their

work hours committing their time and money

to positively impact causes important to them.

Donations from across the Group reached

£64,870 in 2023.

All of these areas are highlighted and prioritised

in our Culture Model and strategic focus –

fulfilling our responsibility to the world by using

creativity, technology and our impact as a force

for good, prioritising our people and operating

in a responsible and sustainable way – aligning

us with the most important issues facing all of

us in this time of macroeconomic uncertainty

and geopolitical pressure.

Zero Impact Workspaces

Sustainable Work

People Fulfilment

Responsibility To The World: Governance

High impact

1 Privacy & Data Protection

2 Diversity, Equity & Inclusion

3 Ethics & Responsible Business Practices

4 Working Conditions (HR)

5 Talent Development & Training

6 Sustainable Workplaces

7 Sustainable Innovation & Technology

8 Impact Work

9 Climate Change

10 Waste & Resource Scarcity

Compliance

11 Sustainable Sourcing

12 Community Volunteering & Monetary Donations

13 Mental Health & Wellbeing

Important for external stakeholders

Important for S

Capital

High impact

Compliance

Low impact

ESG reports

Capital plc Annual Report and Accounts 2023 54

Our Responsibility to the World:

Zero impact workspaces

We reaffirmed our commitment to SBTi’s Corporate Net-Zero

Standard while advancing the quality of our data via a new system

for GHG emissions calculation.

In 2023, our absolute emissions declined 20%,

year over year.

This decrease in absolute emissions is no

accident. In alignment with our commitment

to Science-Based Targets, which aim for a

yearly reduction of 4.2% to help mitigate

global warming and limit the increase in

temperature to 1.5°C, our reduction in

emissions is the culmination of improvements

and achievements we have made in 2023 in

refining our GHG inventory and strengthening

our sustainability practices.

Importantly, we also enhanced and refined our

GHG data recalculation process of our market-

based reporting, substantially improving the

quality of our GHG inventory that now includes

all of S

Capital’s merged companies in our

reporting scope. Not all targets were met; our

renewable energy declined to 45% of our total

energy consumption.

In 2023, we had increased access to our actual

energy consumption data, which reduced

the extrapolation factor for the offices for

which we extrapolated the GHG emissions for.

This impacts the renewable and non renewable

energy results as a percentage of the total.

For Scope 3 we have examined all the 15

categories to determine the material categories

that we include in our reporting. This has

been consistent with our 2022 ESG Report.

Each year we will reassess all categories

and decide which ones are material for our

organisation to report on. When a category

becomes a material category for reporting, this

category will be part of our next year’s annual

reporting. For 2023 we are reporting on six out

of fifteen Scope 3 categories: Purchased goods

& services, Capital goods, Fuel-and energy-

related activities (not included in Scope 1, 2),

Waste generated in operations, Business travel

and Employee commuting.

In keeping with the Science-Based Targets

Initiative (SBTi) baseline guidelines, we

recalculated our 2022 GHG emissions and

have set our 2022 footprint as the new baseline

moving forward.

Meanwhile, the increased data quality and

development of a more mature calculation

method have provided us with valuable insights,

allowing us to set formal emission reduction

targets that we have submitted to the SBTi

forapproval.

2 310 4

Capital plc Annual Report and Accounts 2023 55

Our Responsibility to the World:

Zero impact workplaces continued

Total Scope 1 2,764

Total Scope 2 944

Total Scope 3 21,946

2023 tCO

e per Scope

Total Scope 1 3,611

Total Scope 2 1,084

Total Scope 3 27,520

Fuel- & energy-related activities

567

Waste generated in operations

Business travel (land & air)

5,169

Employee commuting

771

Water

Capital goods

1,359

Electricity – Grey

922

Purchases of goods & services 13,97

District heating & steam

Natural gas

376

Refrigerant leakages

2,343

Company leased cars

2023 tCO

e by category

Fuel- & energy-related activities

1,056

Waste generated in operations

342

Business travel (land & air)

2,747

Employee commuting

3,294

Water

Capital goods

4,200

Electricity – Grey

1,050

Purchases of goods & services

15,852

District heating & steam

Natural gas

1,682

Refrigerant leakages

1,840

Company leased cars

ESG reports

Capital plc Annual Repor

t and Accounts 2023 56

2022 tCO

e by category

2022 tCO

e per Scope

Emissions profile: Global and UK, 2023 vs 2022

General metrics

Total Global

2023

Restated

Total Global

2022

Global

% change

2023/2022

2023

Restated

2022

% change

2023/2022

Employees 7,707 8,891 (13.3%) 312 290 7.6%

Office surface 42,420 m

69,875 m

(39.3%) 4,643 m

4,187 m

10.9%

Total tCO

25,653 32,215 (20.4%) 1,855 2,397 (22.6%)

Carbon intensity tCO

e/FTE 3.3 3.6 (8.3%) 5.9 8.3 (28.9%)

Greenhouse gas emissions breakdown by Scope: Global and UK, 2023 vs 2022

Category

Global

tCO

2023

% of total

2023

tCO

FTE

2023

Restated

tCO

2022

Global

% change

2023/2022

tCO

2023

Restated

tCO

2022

% change

2023/2022

Scope 1

Natural gas –

stationarycombustion 376 1.5% 0.1 1,682 ( 77.6%) 252 919 (72.6%)

Company leased cars –

mobilecombustion 45 0.2% 0.0 89 (49.4%) 0 0 0.0%

Refrigerant leakages –

fugitiveemissions 2,343 9.1% 0.3 1,840 27.3% 449 449 0.0%

Total Scope 1 2,764 10.8% 0.4 3,611 (23.5%) 701 1,368 (48.8%)

Scope 2

Purchased heat & steam 22 0.1% 0.0 34 (35.3%) 0 0 0.0%

Purchased electricity –

GreyMarket-based 922 3.6% 0.1 1,050 (12.2%) 3 3 0.0%

Purchased electricity – Green – as

a percentage of total consumption 45% 57% 97% 99% (2.0%)

Total Scope 2 944 3.7% 0.1 1,084 (12.9%) 3 3 0.0%

Scope 3

Purchased goods & services 13,977 54.5% 1.8 15,852 (11.8%) 566 556 1.8%

Capital goods 1,359 5.3% 0.2 4,200 ( 67.6%) 55 147 (62.6%)

Fuel- and energy related-activities 567 2.2% 0.1 1,056 (46.3%) 43 153 (71.9%)

Waste generated in operations 93 0.4% 0.0 342 (72.8%) 7 2 250.0%

Business travel (land & air) 5,169 20.1% 0.6 2,747 88.2% 453 85 432.9%

Employee commuting 771 3.0% 0.1 3,294 (76.6%) 27 53 (49.1%)

Water 10 0.0% 0.0 29 (65.5%) 1 31 (96.8%)

Total Scope 3 21,946 85.5% 2.8 27,520 (20.3%) 1,152 1,027 12.2%

Total GHG emissions 25,654 100% 3.3 32,215 (20.4%) 1,856 2,398 (22.6%)

The 2022 GHG emissions data has been restated to include the impact of acquisitions and where extrapolations have

been refined with more accurate data.

We follow UK Government – Environmental Reporting Guidelines, including streamlined energy and carbon reporting

guidance, March 2019 (Updated Introduction and Chapters 1 and 2) and will continue to report on our UK energy

usage. The Group reports its Scope 1 and 2 GHG emissions, as well as Scope 3 emissions from Fuel- and energy-

related activities, using a market-based methodology.

Two out of four offices in the UK are gas free and use 100% renewable electricity.

2 310 4

Capital plc Annual Report and Accounts 2023 57

Streamlined energy and carbon reporting for S

Capital’s UK and Global operations, 2023 vs 2022

UK Gas

consumption

2023

Restated

UK Gas

consumption

2022

UK Gas

consumption

% difference

2023/2022

Global Gas

consumption

2023

Restated

Global Gas

consumption

2022

Global Gas

consumption

% difference

2023/2022

kWh 1,359,285 5,017,797 (72.9%) 2,037,888 9,048,496 (77.5%)

kgCO

e 251,887 918,570 (72.6%) 375,720 1,681,700 (77.7%)

kWh/FTE 4,357 17,303 (74.8%) 264 1,018 (74.1%)

KgCO

e/FTE 807 3,167 (74.5%) 49 189 (74.1%)

UK Electricity

consumption

2023

Restated

UK Electricity

consumption

2022

UK Electricity

consumption

% difference

2023/2022

Global Electricity

consumption

2023

Restated

Global Electricity

consumption

2022

Global Electricity

consumption

% difference

2023/2022

kWh 459,108 1,516,204 (69.7%) 4,476,841 6,194,611 (27.7%)

kgCO

e 2,752 2,780 (1.0%) 922,035 1,050,449 (12.2%)

kWh/FTE 1,472 5,228 (71.8%) 581 697 (16.6%)

KgCO

e/FTE 9 10 (10.0%) 120 118 1.7%

Our performance: GHG analysis

Our decrease in absolute emissions reflects

the improved maturity of our data collection and

calculation processes, increased accuracy of

the data, and the culmination of improvements

and achievements made in refining our GHG

inventory and strengthening our sustainability

practices. The 2022 data has been restated to

include the impact of acquisitions and where

extrapolations have been refined with more

accurate data.

A significant achievement for us was the

78% decrease in natural gas emissions.

This aligns with our dedication to diminishing

reliance onfossil fuels and promoting the shift

towardsrenewable energy.

We have also posted a reduction of over 68%

in emissions from Capital goods, Waste and

Employee commuting. The reduction in Capital

goods emissions is linked to a decrease in

spending in this category, which now accounts

for around 5% of our total emissions compared

to the previous year. The availability of actual

data for Waste and Employee commuting

categories has allowed us to minimise the

reliance on extrapolated data, helping improve

the accuracy of emissions reported in these

areas. Our emissions from the Purchases

of goods & services, including direct costs,

have decreased by 12% compared to

2022. This reduction was achieved through

operational cost optimisation, coupled with

a marginally higher revenue compared to the

preceding year. Even with the decrease in

overall energy consumption, we observed a

drop in the proportion of green electricity within

our energy mix. Acknowledging the limited

availability of renewable energy in certain

operational regions, our commitment remains

steadfast towards achieving 100% renewable

energy consumption by 2040, as outlined in our

SBTi targets. This necessitates further efforts in

the upcoming year to enhance this figure from

our baseline.

With the first-time inclusion of data from

offices of combined entities, we saw an

increase in fugitive emissions from refrigerant

leakages. This heightened awareness of our

baseline consumption will help us focus on

reducing refrigerant leakages and phasing

out old cooling equipment in our operations

moving forward.

Business travel has increased by 88%

compared to the previous year. While we

have implemented policies to reduce air travel

for short distances, there is still progress to

be made. We recognise the emergence of

sustainable aviation fuel as a solution for the

aviation industry and actively support its use

for unavoidable air travel.

On average, 64% of our people worldwide

either work from home, or walk or cycle to

work – resulting in negligible emissions –

thanks to hybrid working and the strategic

decision to maintain our locations

in central areas. Our reduction in absolute

emissions in 2023 is encouraging as we

continue to pursue our commitment to the

SBTi, aiming to reduce our emissions by 90%

and achieve net zero by 2040. The availability

of more actual data this year has allowed us to

identify areas of success and areas that require

further improvement.

Our Responsibility to the World:

Zero impact workplaces continued

ESG reports

Capital plc Annual Report and Accounts 2023 58

Improved GHG inventory data quality

and methodology

We initially disclosed our commitment to

establish targets that are verified by the

SBTi in 2022 with a goal of submitting these

targets for approval to the SBTi in 2023.

Because SBTi guidance recommends using

the most recent year as a baseline, 2021 would

therefore have served as our SBTi baseline for

measuring progress.

After we released our 2022 ESG report in early

2023, additional data became available to us,

prompting us to improve our methodology,

particularly in the area of Scope 3 emissions

as we gained a more comprehensive

understanding of the Emissions Per Supplier

category. To ensure consistent and comparable

data for year-over-year comparisons, we are

excluding 2021 and earlier year data to avoid

confusion given the different methodology

used during those periods. Upon reviewing our

baseline, we also discovered that the mergers

omitted from our 2022 calculations represented

over 5% of our revenue. Consequently, we

opted to incorporate them into our recalculated

2022 footprint.

In addition, we have made several adjustments

to activities in the various Scopes to ensure the

accuracy and reliability of the data reported in

relation to GHG emissions:

Scope 1:

• Duplicates for refrigerant leakages were

removed. Some facilities had submitted

double refrigerant leakage data in 2022.

Gas-free offices previously included in the

extrapolation for 2022 have been excluded.

Scope 3:

• Purchases of goods & services: The total

direct costs were divided more accurately

into three major categories: ‘motion

picture and sound recording industries’,

‘photographers’ and ‘independent artists,

writers, and performers’.

• Capital goods: Duplicates listed in both the

Purchases of goods & services and Capital

goods categories have been removed.

• Business travel: One office reported a spike

in Business travel emissions, this turned

out to be incorrect. The data has been

adjusted accordingly.

• Fuel- & energy-related activities: Adjustment

made based on the adjusted natural gas data.

We received and incorporated actual emissions

based on our consumption from some of our

key suppliers for the first time, including hosting

and server emissions as well as Business

travel, thanks to our efforts in implementing

sustainable procurement practices throughout

our supply chain.

We have calculated and included hotel

emissions in this year’s Scope 3, which has

posed challenges for us in the past.

Forest

Each new Monk receives a tree to plant to

create ESG awareness. However, we do not

have the ambition to become carbon neutral by

offsetting, and instead are committed to reach

net zero by 2040.

Total planted

504,512 trees

Total reforested

304 hectares

Total CO

captured

43,599 tonnes

We are steadily progressing and strengthening our ESG operations, making

it real. A solid foundation to stand on within the business, connecting the dots

between financial and non-financial reporting, operational execution, our people

and our mission. This creates room to focus on supporting our clients on their

own paths towards a more sustainable future”

Regina Romeijn

Global Head of ESG

2 310 4

Capital plc Annual Report and Accounts 2023 59

Changing the

conversation

We work with Purpose-driven clients

to amplify their ESG goals and help them

become agents of change by creating

campaigns that resonate and empower.

See more stories on pages 43 and 68

KWF: Kankerbestrijding

(Take Action Against Cancer)

As the largest charity in the Netherlands, KWF

(the Dutch Cancer Society) hosts dozens of events

every year. But KWF is not just against cancer; it is

primarily for everything that makes life worth living.

KWF enlisted the help of Media.Monks to redefine

this brand positioning and bring about a shift in

mindset, affirming that everyone can make

a difference. If you choose to do so, don’t do it solely

because you are against cancer, do it for life.

Irish Refugee Council:

30 Years 30 Voices

In light of recent global conflicts, our team in Ireland

reached out to the Irish Refugee Council to see if

we could support their efforts in any way. The result

is the booklet ‘30 Years 30 Voices: The Power of

Protection’. We provided pro bono design and copy

support to the hugely inspirational IRC team to bring

this project to life for World Refugee Day 2023.

Educar 2050:

Egresados Incompletos

(Incomplete Graduates)

In Argentina, education is facing serious

challenges, with students struggling

to meet minimum standards in maths,

reading comprehension and timely

graduation. To spark vital conversations

during the 2023 elections, we partnered

with NGO Educar 2050, a non-profit

organisation working for Argentine

education, to launch Incomplete

Graduates, a line of graduation hoodies.

Each hoodie represents a specific issue,

creatively reflecting the incompleteness

of education. The message which

gained momentum on social media:

It’s time to prioritise education for

Argentine students!

ESG reports

Capital plc Annual Report and Accounts 2023 60

Our Responsibility to the World:

Sustainable work

1. Facilitate a sustainable culture.

We will continue to engage our people

in our sustainability journey and support

them in their social one. By empowering

people, enabling connectivity, to interact,

interchange skills and inspire. This culture is

the new normal, where people and the planet

are always considered in our process, and

where the impact of technology on our social

behaviour and human interactions is taken

seriously and part of any process (re-)design.

2. Invest in the future of Sustainable Work,

and the future of our planet, through

industry-leading innovation and R&D that

helps us leverage AI to drive creativity and

efficiency, design emission-reducing best

practices and technologies, and offer clients

sustainable solutions.

3. Maximise Purpose-driven impact by

empowering Purpose-driven clients,

promoting For Good projects (with both

environmental and social impact), fostering

community involvement and outreach

through donations and volunteer work, and

promoting inclusive marketing.

AI in focus

With AI now impacting almost every facet of our

business, below are some issues and solutions

we are actively working on.

Ethical considerations: Leveraging AI creates

a whole host of ethical questions, and

conversations about the ethical implications

of AI are happening now. As a Group, we were

early to the game and have ethical standards

and guidelines in place for the work we do

in this space – and we will continue to refine

guidelines and have conversations with

partners and clients on these topics as the

space evolves.

Integrated workflows: Underscoring our

vision of how AI tools come together to move

organisations forward, we are offering solutions

that connect AI, enterprise software and

microservices into more efficient, automated

workflows that thrive on cloud andcompute.

We have also developed software-defined

workflows for broadcast, featuring a secure

distributed infrastructure with robust

redundancy to significantly reduce the risks

incurred by traditional broadcasting workflows.

Sustainability of AI-related solutions: A key

issue is how to harness the powers of AI and

meet sustainability objectives. We are working

with partners like Nvidia, AWS, Google and

many others to address this challenge.

Our work embodies our ESG strategy. We identify the daily

impact of – and in – our work, to better ourselves, our methods

and outcomes. Our aim is to:

2 310 4

Capital plc Annual Report and Accounts 2023 61

Our performance in 2023

2023

Restated

2022

% change

2023-2022 2021

Total number of projects 8,414 10,061 (16.4%) 14,331

Total For Good projects 502 445 12.8% 251

Revenue from For Good projects £42,407,192 £43,448,053 (2.4%) £23,610,000

% revenue from For Good

projects/ revenue 4.2% 4.1% 2.4% 4.2%

Purpose-driven clients 101 75 34.7% 69

For Good projects for

Purpose-driven clients 409 274 49.3% 159

Revenue from Purpose-driven

clients £33,249,745 £31,917,969 4.2% £13,950,000

% revenue from Purpose-driven

clients/ revenue 3.3% 3.0% 10.0% 2.5%

% of revenue from projects for

alcohol and tobacco clients

(tobacco clients: 0)

2.6% of

revenue

1.9% of

revenue 36.8%

0.9% of

revenue

Monetary donations to community

and charity services

£64,870

0.01% of

revenue

£51,503

0.01% of

revenue

26.0%

£87,0 91

0.02% of

revenue

Hours donated to community

andcharity services 1,449 4,090 (64.6%) 1,460

Working for good

2023 saw remarkable growth in For Good

projects done for Purpose-driven clients,

up 49.3% compared to last year. For Good

projects are projects for both commercial and

Purpose-driven clients with the ambition to

create a positive impact for people and/or the

planet. These projects bring a sense of value

and purpose to our people and the world.

We delivered 502 For Good projects in 2023,

409 of them for Purpose-driven clients.

Our increased number of Purpose-driven

clients and projects compensated for a small

decrease in overall revenue coming from For

Good projects, which was down 2.4%. This was

mostly due to non-Purpose-driven clients that

budgeted fewer For Good projects. We view

this as a potential positive, with sustainability

and DE&I now maturing to become part of core

branding instead of separate campaigns.

In 2023, we donated more money to charities,

often matched by S

Capital. This resulted in an

increase of donations by 26.0% year over year.

Our performance

For Good projects

502

4.2% of revenue;

12.8% increase in

For Good projects

Purpose-driven clients

101

3.3% of total revenue

34.7% increase in

Purpose-driven clients

Monetary donations

£64,870

Our Responsibility to the World:

Sustainable work continued

ESG reports

Capital plc

Annual Report and Accounts 2023 62

The Group has been fast and first in the race to make AI

a foundation for creativity and efficiency. We are also leveraging

the technology to create innovations that better serve our clients.

Stand-out innovation

The year was a stand-out in terms of innovation.

The proliferation of AI brought opportunities

for us to pivot and leverage our strengths and

capabilities to do what we do best: innovate.

We created new workflows, developed new

services and adapted new skills. All at high

speed and in great depth, to support our

clients in managing the impact these emerging

technologies had on them. Below are some of

the highlights.

Innovation sprints

With technology rapidly evolving, it is extremely

important and valuable for our teams to

have a safe space to experiment with new

technologies at an early stage. And our

partners agree. In partnership with Amazon

Web Services (AWS), we hosted a challenge

across time zones to create internal AI tools

using Amazon SageMaker. Google gave

us the opportunity to play with Vertex AI and

push the technology to its limits in two

multi-day events focused on experimentation.

Innovation sprints not only strengthen our

partnerships, but also help us solve key industry

challenges and develop use cases that drive

brand results.

Monks.Flow

This is the Group’s AI-centric professional

managed service for marketers, revolutionising

how people and AI work together.

Underscoring our vision of how AI tools come

together to move organisations forward, Monks.

Flow offers solutions for major marketing

activities by connecting AI, enterprise software,

and microservices into efficient, automated

workflows. Monks.Flow connects the tech

that powers today’s AI-first organisations

and moves marketing onto compute, making

marketing workflows more efficient, effective

and experience-driven with synthetic media

that maximises quantity and manages cost.

Software-defined production

We use Amazon Web Services (AWS) to create

a cloud-hybrid workflow which unlocks the

power to produce and broadcast interactive

digital experiences remotely while avoiding

GHG emissions commonly associated with live

broadcast workflows. In addition to avoiding

travel-related emissions, the software-defined

production workstream slashes costs from

traditional broadcast set-ups by an estimated

50% or more and is powered by 95%+

renewable energy.

For this innovation in broadcasting,

the Group was awarded a Sustainability in

Leadership award at the NAB Show, which

isproduced by the US’s National Association

of Broadcasters.

Fan-focused AI highlights

As viewers crave a more moment-based

approach to the media and entertainment

they consume, this revolutionary broadcast

model helps brands expand the value of their

broadcast rights in innovative new ways.

Single-use appliances designed for one task

alone are replaced with NVIDIA GPUs in the

cloud (or a server rack), adding additional

efficiency, flexibility and reduced cost, while

remote teams allow rights holders to hire

the best talent for the job regardless of their

proximity to the event. This has enabled us

to provide engaging, personalised content

instantly – by clipping customised highlights

from live broadcasts – to help brands deliver

personalised, relevant content designed for

today’s audiences with fewer emissions, risks,

costs and personnel.

2 310 4

Capital plc Annual Report and Accounts 2023 63

People Fulfilment

Supporting our people through practices,

policies and programmes is a central focus

as we build opportunities for continued

engagement, growth and community across

the Group.

Our 2023 data represents the integration of

our Technology Services practice, now called

Formula.Monks. This integration, and the

relative consistency of our numbers despite

the addition of a technology-based practice,

demonstrates the power of the programmes

and our commitments to empowering women

in the workforce and leadership.

Our global gender composition remained

relatively unchanged, with the population

of women in management notably growing

9% year over year, reflecting our consistent

commitment to gender balance.

In the US, BIPOC representation increased by

2%, with a 10% growth in the professional

level population and an 8% growth in the

management level population.

Overall Black representation remained

consistent with an increase being demonstrated

at the professional level.

Upholding a genuine appreciation for diversity

in its myriad forms, our aim is to cultivate an

environment where every individual is treated

equitably and with respect – a space conducive

to flourishing. But fostering and sustaining a

culture of belonging demands more than intent.

It requires continuous self-reflection, deliberate

intention, and decisive action.

Our people in 2023

Our people

Tot al

2023

Women

2023

Men

2023

Undeclared

2023

Total

2022

Women

2022

Men

2022

Undeclared

2022

Employees 7,707 48% 50% 2% 8,306 48% 49% 3%

Part time 2% 2%

Full time 98% 97%

Permanent contract 96% 99%

Temporary contract 4% 1%

% of turnover per total employees

bygender 36% 47% 50% 3% 29% 49% 47% 4%

Covered by collective bargain agreement 27% 28%

Absenteeism in the Netherlands 3% 2%

Note:

1. Average employee number for 2022 excluding apprentices and interns.

Capital and our operating brand Media.Monks have made major strides

across the client, integration and employer landscape from 2022 to 2023.

In concert with our Board, executives and senior leadership teams,

we focused on ESG, DE&I and employee development as our cornerstones

– and our people have responded. Thanks to input from our Monks all across

the globe, Media.Monks was named to

Newsweek’

s Top 100 Global Most

Loved Workplaces 2023”

James Kinney

Global Chief People Officer

ESG reports

Capital plc Annual Report and Accounts 2023 64

Our representation

Growth in BIPOC representation is attributed

to the success of our Diverse Slate approach

to hiring, which rolled out in 2023 along with

substantial investment and comprehensive

training for recruiters and hiring managers.

And while our diversity numbers seem to

reflect an uptick in white representation at the

leadership level, this can largely be attributed

to a refinement of the data due to a greater

number of employees opting to disclose

information in 2023 versus 2022. With this

more accurate data in hand, our focus has

shifted towards enhancing diversity at the

leadership level.

The population of women in management

positions grew 9% year to year. Although the

percentage of women in leadership positions

trended down slightly, advancements were

made at the leadership level with Laura Davis

and Deborah Heslip appointed Co-Chief Client

Officers, leading the 2023 cohort of women

in leadership. Melanie Dhawan was promoted

to Chief Finance Officer of the Content

practice, contributing to the senior leadership

team’s efforts to drive that segment of the

business forward.

In addition, acknowledging that the technology

sector has significant ground to cover in

bridging the gender gap both in terms of the

quantity of women participating in tech and

the representation of women in decision-

making roles, Formula.Monks launched its own

Women’s Leadership Program to empower and

nurture the leadership of women in technology.

Developed in collaboration with Laboratoria,

an organisation dedicated to promoting

women’s participation in the tech industry and

strengthening the leadership of women already

thriving within the industry, the programme was

open to all women at Formula.Monks.

Gender balance of workforce by role 2023

Management Other positions Internship

Leadership

Men Women Undeclared

60%

58%

38%

40%

2% 2%

55%

57%

44%

41%

49%

47%

49% 49%

33%

49%

47%

49%

20%

2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022

Men 50

Women 48

Undeclared 2

Gender balance of workforce 2023

2 310 4

Capital plc Annual Report and Accounts 2023 65

Diversity of the individuals on the Company’s Board and in executive management

Indicator

Number of

Board members

Percentage of

the Board

Number of

senior positions

on the Board

(CEO, CFO, SID

and Chair)

Number in

executive

management

Percentage of

executive

management

Reporting on gender identity or sex

Men 10 67% 67% 7 78%

Women 5 33% 33% 2 22%

Other categories – – – – –

Not specified/prefer not to say – – – – –

Reporting on ethnic background

White British or other white

(including minority-whitegroups) 12 80% 67% 6 67%

Mixed/Multiple ethnic groups 1 7% 33% 1 11%

Asian/Asian British 2 13% – – –

Black/African/Caribbean/

Black British – – – 1 11%

Other ethnic group, including Arab – – – 1 11%

Not specified/prefer not to say – – – – –

Native American or First Nations 0.1

Asian 14.8

Black or African American 5.6

Hispanic or Latine 9.5

I do not wish to answer 7.3

Native Hawaiian

or Other Pacific Islander

2.0

Two or more races 6.2

White 54.5%

Overall US ethnicity 2023

BIPOC as % of US employees in 2023

BIPOC (%) of total employeesTotal employees

2,061

1,915

2,153

38%

32%

37%

2023

2022 2021

People Fulfilment continued

ESG reports

Capital plc Annual Report and Accounts 2023 66

As a part of our commitment to People Fulfilment, the People Team

crafts global and local programmes with our Monks’ growth in

mind. In 2023, building upon the success of our legacy programmes

we reimagined operations to expand access and designed new

programmes to train, develop and inspire our global workforce.

Women’s Leadership Program

In our ongoing effort to increase representation

of women at the management and leadership

levels within the Company, the third cohort

of the S

Women’s Leadership Program

gathered in October 2023. Thirty participants

selected from across the Group took part in

the programme which is aligned with Women’s

Empowerment Principles (WEPs) and were

mentored by internal leaders including Founder

Sir Martin Sorrell, Group Chief Financial Officer

Mary Basterfield, Co-Chief Client Officers

Deborah Heslip and Laura Davis, Global Chief

People Officer James Kinney, and EVP of

Global Operations Louise Martens, among

others, including external speakers for

a diverse learning experience.

Fellowship

The Fellowship programme supports our

ongoing commitment to creating a robust

pipeline of Black talent in the industry.

Focused on professional development and

training for underrepresented communities

in the industry, the programme underwent

a significant transformation in 2023, with a

revamped selection process. The third cohort

of the Fellowship garnered a 300% increase

in applications from 20 different HBCUs from

which the top three candidates were selected

to the programme.

Increase in applications

300%

Media.Monks Coaching

Certification Program

Launched in 2023, this cohort-based

programme is a comprehensive journey for

managers designed to enhance and redefine

the coaching culture across the Group.

After our first cohort of trainees graduate,

the programme will be rolled out more broadly

across the Group.

Accelerate.Monks

Led by subject matter experts,

Accelerate.Monks aims to foster leadership

growth and career advancement through

interactive classes for all organisational levels

across the Group. The programme creates a

global learning culture, affording our people

worldwide the opportunity to connect, share

knowledge, and contribute to their personal

and professional development.

Motif

This initiative has a two-fold goal of facilitating

succession-planning thinking and extracting

valuable insights from a handpicked group

of over 400 influential, top team members

and leaders from across the globe. The initial

comprehensive survey resulted in over 5,000

data points that revealed the Company’s core

strengths and weaknesses, key opportunities

for growth and perspectives on our most

significant challenges. Insights have shaped

discussions with our Board which have now

evolved into regular monthly meetings focused

on enhancing leadership, refining governance

and capitalising on our strengths.

Data points

5,000

2 310 4

Capital plc Annual Report and Accounts 2023 67

Personal

voices

We focus on causes and programmes that are

meaningful to our people and make a real impact

on communities around the world.

Pride In Action

The Group’s new tradition, Pride In

Action, supports the global LGBTQIA+

community through both action and

donation and focuses on community

impact where our Monks live and work.

In 2023 we surpassed our goal of

15,000 minutes of volunteer time and

engagement in LGBTQIA+ initiatives

(completed by our people from June

through August). We also supported

local LGBTQ+ initiatives globally

through donations.

Minutes of volunteer time and

engagement in LGBTQIA+ initiatives

15,000+

Black to the Future

The Group partnered with non-profit TEC Leimert for

the Black to the Future Tech Conference in Los Angeles.

This event brings together tech professionals, entrepreneurs

and creatives from a broad spectrum of top Fortune 500

companies for a weekend of insights, learning and networking

stemming from technological innovation. The event

helps to bridge the growing digital divide that threatens

underrepresented Black and Brown talent.

University

of Measure.Monks

Measure.Monks are our data analytics

wizards, helping clients quantify the

impact of content and media into sales

and profit. They are crucial to business

forecasting and use cutting-edge AI tools.

To address a lack of diversity on their

team and a shrinking talent pool from

which to draw the next generation into

their specialty, they created an apprentice

programme to recruit a cohort of pre-

university candidates. Applicants receive

funding for three years’ university tuition,

earning a BSc in data analytics and a

salary while learning, and the Group is

able to recruit from a wider, more diverse

talent pool.

ESG reports

Capital plc Annual Report and Accounts 2023 68

Non-financial and sustainability

information statement

In compliance with the FCA’s Listing Rules, the Group has made disclosures consistent with the TCFD 2021

Recommendations and Recommended Disclosures, including the appropriate annexes and supporting guidance.

Additionally, following amendment of sections 414C, 414CA and 414CB of the Companies Act 2006, the Group

hasindicated in the below table which of the climate-related disclosures, outlined in Section 414CB, are addressed

bythe TCFD recommended disclosures are located.

Reporting

requirement Policies Reference

Climate-related

financial

disclosures

This relates to S

Capital’s compliance with the ‘Task Force on

Climate-related Financial Disclosures’ recommendations,

Listing Rule LR 14.3.27R, and relevant provisions of the

Companies Act 2006

These are included in our

TCFD Report, from page 47

Environmental

matters

Set and submitted SBTi emission reduction targets for

approval; Yearly GHG emission disclosure; TCFD statement

From page 43

Employees Global Code of Conduct; Anti Financial Crime Policy; Speak Up

Policy; Equal Opportunity Employment Statement; Health &

Safety Standards; Employee Empowerment; Acceptable Use

Policy; Bring Your Own Device Policy; Clear Desk Policy;

Information Sensitivity Policy; General Information Security Policy

From page 64.

Speak Up Policy can be found

on S

Capital

and Media.Monks websites

Human rights Modern Slavery and Human Trafficking Statement; Global

Code of Conduct; Anti Financial Crime Policy

Capital and

Media.Monks websites

Social matters Global Code of Conduct; Anti Financial Crime Policy

Share/Securities Dealing Code

Capital and

Media.Monks websites

Anti-corruption

and anti-bribery

Capital has zero tolerance for any form of bribery or

influence peddling. We comply with the anti-bribery and

corruption laws of the countries where we operate, as well as

those that apply across borders

This statement is included in

our Global Code of Conduct

and in the Anti Bribery and

Corruption Policy.

Description of

principal risks

andimpact of

business activity

We have established governance processes and policies to

help usmanage risks and opportunities consistently across the

organisation

This is included in our TCFD

Report, from page 47

Principal risks and

uncertainties from page 28

Description of the

business model

This is reflected in our business model Pages 6-7

Non-financial KPIs Performance KPIs align to our ESG strategy and include arange

of financial and non-financial metrics across three ESG pillars:

OurResponsibility to the World; People Fulfilment; and One Brand

Pages 20, 46, 55-58

Human rights

Respect for human rights is a fundamental principle for

Capital. We take seriously our responsibility to conduct

business in an ethical way. Media.Monks has been a

member of the United Nations Global Compact (UNGC)

since 2012. The UNGC is a strategic policy initiative for

businesses that are committed to aligning their operations

and strategies with 10 universally accepted principles,

including in the areas of human rights and employment.

Anti-slavery and human trafficking

Capital does not tolerate modern slavery. We are

committed to assess and address any modern slavery

risks that may arise in the course of our business. As part

of this commitment, we are implementing a Supplier Code

of Conduct and seeking to regularly educate our people

on the risks and how to mitigate them. This helps us

identify and manage slavery and human trafficking risk in

accordance with the principles and goals promoted by the

Modern Slavery Act 2015 and related guidance.

Anti-bribery

Capital has zero tolerance for any form of bribery

or influence peddling. We aim to comply with the anti-

bribery and corruption laws of the countries where we

operate, as well as those that apply across borders.

We do not offer, pay or accept bribes or kickbacks for any

purpose, either directly or through a third party. We do not

make facilitation payments or permit others to make them

on our behalf.

Whistleblowing policy

Key values of S

Capital are integrity and responsibility

– which link to our core principle of authenticity, integrity

and the highest ethical standards in our business

dealings. These apply in all our dealings within Media.

Monks, and when we work with clients, suppliers and

in our communities. Monks’ concerns are important to

the business and we encourage all of our people to take

advantage of the Speak Up Line.

2 310 4

Capital plc Annual Report and Accounts 2023 69

Section 172(1) statement

Addressing the needs

ofour stakeholders

Section 172(1) of the Companies Act 2006

requires the Directors to act in the way they

consider, in good faith, would most likely

promote the success of the Company for the

benefit of its members as a whole. In doing so,

Section 172(1) requires the Directors to have

regard, amongst other matters, to the:

• likely consequences of any decision

inthelong term;

• interests of the Company’s employees;

• need to foster the Company’s business

relationships with suppliers, clients

and others;

• impact of the Company’s operations

onthecommunity and environment;

• desirability of the Company maintaining

areputation for high standards of business

conduct; and

• need to act fairly as between members

ofthe Company.

In discharging our Section 172(1) duties the

Directors have regard to the above factors and

any other factors which we consider relevant to

the decision being made. We acknowledge that

every decision we make will not always result

in a positive outcome for all our stakeholders.

However, by considering the Company’s

purpose, mission, values and strategic

objectives, and having a process in place for

decision making, we aim to ensure that our

decisions are considered and proportionate.

Further details on how the Board operates

and reflects stakeholder views in its decision

making are set out in the corporate governance

report on pages 76 to 132.

Engagement with stakeholders

Our stakeholders

Building strong, constructive relationships

and engaging regularly are key to ensuring we

understand what matters to our stakeholders.

Our broad range of stakeholders, representing

different and often competing interests,

bring informative and diverse perspectives

to our decision making. Incorporating those

perspectives into our decision making is a vital

part of the execution of our long-term strategy.

Our clients, our people and our shareowners

are our key stakeholder groups, along with

our communities and our suppliers (including

ourlenders).

The Board recognises that engagement with

the Company’s stakeholders is critical to

the success of the business in realising this

mission. The Directors continue to have regard

to the interest of our people and the Company’s

other stakeholders, including the impact of its

activities on the community, the environment

and the Company’s reputation when making

decisions. We recognise that promoting the

long-term sustainability and success of the

Company is intertwined with creating value for,

and engagement with, our stakeholders. It is

rightfully, therefore, at the core of our business.

Information provided by management is shared

with the Board and direct engagement with

stakeholders takes place throughout the year.

Stakeholder considerations are taken into

account as discussions at meetings of the

Board and its committees, as well as informally

in the day-to-day activities of the business.

On page 72 onwards we set out who we

consider to be our principal stakeholders,

including information on our methods of

engagement with them, and the impact of such

engagement on the Company’s decisions and

strategies. The Directors are fully aware of their

responsibilities to promote the success of the

Company in accordance with Section 172(1) of

the Act. Our intention is to behave responsibly

and ensure that management operates the

business in a responsible manner, operating

within the high standards of business conduct

and good governance expected of us.

ESG reports

Capital plc Annual Report and Accounts 2023 70

What are the key

interests of our

stakeholders?

Our clients

We facilitate the provision of first-party

data to fuel creative content and digital

media planning and digital content,

the design and development of digital

creative content and provision of

programmes to allow our clients

to efficiently plan and deliver

audience-focused campaigns.

Our shareowners

Robust financial accounts, sustainable

long-term growth in the Company and

its share price, sound investment and

combination decisions and effective

communication of strategy.

Our suppliers

A productive and fair working

relationship through collaboration,

innovation and shared values.

Our communities

and the environment

Creation of social value, supporting

sustainability initiatives and

community education.

Our people

Creating a positive environment in

which our people can work, physical and

mental health and wellbeing, investment

in personal development and career

progression, support for flexible and agile

working, equal opportunities, inclusion

and diversity, promoting equal pay and

honest communications.

2 310 4

Capital plc Annual Report and Accounts 2023 71

Our clients

• Our mission for S

Capital is driven by

engagement with our clients and our mantra

of ‘Speed, Quality, Value and More, with AI’.

• We have combined best-in-class practices,

promoting alignment, an integrated service

offering and emphasising transparency

to clients.

How we engage

• We work alongside our clients on a day-

by-day, hour-by-hour basis, helping them

communicate with their audiences in a

continuous loop.

• We continuously evolve how we

communicate and deliver our services based

on client feedback.

• We co-locate or embed our people, which

not only facilitates clear communication,

collaboration and teamwork, but also leaves

a light environmental footprint.

• We continuously focus to implement (more)

sustainable solutions throughout our

processes and advise our clients on the next

best solution in our industry.

How the Board engages

• Our Executive Directors provide updates

to the Board regarding key market and

client updates.

• Our Board receives ‘whopper’

and‘whoppertunity’ updates.

Outcomes

• We continue to build our existing and new

client base, with significant assignments from

some of the world’s top companies and at a

local level. Our retention and new business

rates are strong, often boosted by cross-

practice pitches and referrals.

Our people

• Our people are central to our business.

They play a significant role in the delivery

of our strategy and the future growth of

our business.

• We recognise the importance of attracting,

developing and retaining the best talent,

and the need to provide a safe and inclusive

environment where individuals can thrive.

How we engage

• Our unitary structure, with a single P&L, gives

our people a sense of common values, shared

goals and a collaborative spirit.

• We have an active internal communications

programme to keep our people engaged and

informed on Group strategy, progress and

development. This includes regular All-Hands

meetings and team briefings on matters

important to our global talent pool and a

weekly ‘State of our One Nation’ email from

the Executive Chairman to all Monks.

• To assist with the wellbeing and health of

our people, our practices provide wellness

programmes and support for individuals,

all within a strong culture of mutual respect

and understanding.

• We conduct regular employee surveys

and use this feedback to improve our

performance and culture and make the

results part of our materiality analysis.

• Our culture is one of openness and

transparency, where everyone has a voice

and is free to raise questions and issues

of concern.

Our key stakeholders and how we engage with them.

Section 172(1) statement continued

ESG reports

Capital plc Annual Report and Accounts 2023 72

How the Board engages

• Our Non-Executive Directors collectively

share responsibility for employee

engagement andreport to the Board on

their findings.

• In addition, Miles Young has been designated

as the Independent Non-Executive Director

responsible for overseeing culture.

• The Board receives updates from our Global

Chief People Officer on communication

activities with our people.

• The Nomination and Remuneration

Committee reviews diversity initiatives

across the Group and senior leadership

succession plans.

Outcomes

• In 2023, we launched Accelerate.

Monks, a global training and educational

program across all regions and job levels.

We successfully reached over 1,000 Monks,

increasing their business acumen and

industry knowledge. Over six months, our

people learned leadership, presentation

skills, business process modeling, and more.

Monks who participated for the full program

duration received a certification.

• Our Community Groups are set up internally

by Monks to support and learn from one

another, and are actively promoted to

advance the understanding and inclusion

of Monks with common life experiences

including Pride.Monks, Enable.Monks,

Melanin.Monks, Cultura.Monks, Caregiver.

Monks, AAPI.Monks and WoMMen in Tech.

Community Groups address the topics that

really matter to our people, and they are

fully supported by executive leadership.

Further information is available on page 67.

• We continue to run our S

Fellowship

Program aimed at fostering the next

generation of talent by empowering

students from traditionally under-

represented communities.

Our shareowners

• We recognise the importance of providing

all of our shareowners with regular updates

on our operations, financial performance

and ESG activities. Engagement with

shareowners gives us a broad insight into

their priorities, which influences our own

decision making and our strategic direction.

The ongoing support of our shareowners

during 2023 is something that we continue

tovalue greatly.

How we engage

• We maintain regular contact with our

shareowners through a comprehensive

investor relations programme of conferences,

roadshows and meetings, predominantly

led by our Executive Chairman, Group Chief

Financial Officer and Chief Growth Officer.

• After each quarterly results announcement,

we have held extensive roadshows

with investors.

• All our investor presentations, reports

andearnings calls are available on the

Capital website.

How the Board engages

• Our AGM provides the opportunity for our

private shareowners to hear from and engage

directly with the Board.

• During 2023, the Executive Chairman, Group

Chief Financial Officer and Chief Growth

Officer held over 200 meetings, in person

and virtually to engage with institutional

investors and analysts. More information

isavailable on pages 97 and 98 onwards.

2 310 4

Capital plc Annual Report and Accounts 2023 73

Our communities

and the environment

• The Board recognises and supports the

continuing focus on ESG and sustainability,

especially on the environment and climate

change, and aims to operate in a sustainable

and responsible way while delivering value

for shareowners.

How we engage

• Our businesses and people support local

initiatives through donated hours and money,

or physical efforts though charity runs or

cycles. We continue to connect with diverse

talent from middle school to students,

through education and engagement.

• We contribute to society by actively sharing

our talents, digital expertise and thought

leadership and offering it to NGOs, social

initiatives andcharity projects.

How the Board engages

• The Board has oversight of our ESG strategy.

• ESG-related targets are included in the

Group’s annual performance targets,

which are linked to the annual bonus.

• Victor Knaap, an Executive Director, and

Miles Young, Independent Non-Executive

Director, together champion our sustainability

efforts. More information on our sustainability

and ESG activities is available on pages

43-74 and in the Media.Monks annual

ESG Report.

Outcomes

• We continued existing talent programmes

and started a new one.

• We submitted our Science-Based Targets

forofficial approval.

• We made charitable donations totalling

£64,870 in 2023.

• In addition to financial donations, we also

encourage and support employees who

undertake voluntary work in their local

communities and have registered 1,449 hours

of voluntary work.

• The S

Forest, our carbon offsetting and

reforestation initiative, has now planted

a total of 504,512 trees over the last

three years.

Our suppliers

• We rely on suppliers to help deliver our

services to clients and maintain our

productivity, as well as helping to make our

supply chain as sustainable and diverse

as possible.

• Strong relationships with suppliers can bring

innovative approaches and solutions that

create shared value.

How we engage

• We ask our suppliers to commit to upholding

the principles of our Global Code of Conduct,

including fundamental standards on human

rights, modern slavery and the prevention of

financial crime.

• We aim to have a fair and transparent

relationship with our suppliers and partners

through regular dialogue and annual surveys

on performance andESG matters.

• We comply with non-financial or supplier

diversity reporting frameworks like

EcoVadis, CDP and UniTier for transparency

in reporting.

How the Board engages

• The Board approved our Sustainable

Procurement Policy.

Outcomes

• We build and maintain collaborative,

long-term relationships with our suppliers.

Section 172(1) statement continued

ESG reports

Capital plc

Annual Report and Accounts 2023 74

Governance

Report

76 Corporate governance statement of compliance

78 Leadership: Board of Directors

86 Leadership: Executive Committee

88 Executive Chairman’s statement

90 The role of the Board

99 Audit and Risk Committee Report

103 Nomination and Remuneration Committee Report

109 Remuneration Report

129 Directors’ Report

S4Capital plc Annual Report and Accounts 2023 75

2 310 4

Corporate governance statement of compliance

During the year, the Board has voluntarily complied the UK Corporate

Governance Code (the Code) which was issued by the Financial Reporting

Council (FRC) in 2018.

Provision Further information Page

Board leadership and Company purpose

1 Strategic Report

Risks

Sustainability

Governance

8-74

2 Culture

Board activities

Workforce remuneration

126

3 Shareholder engagement

4 Significant votes against

108,

126

5 Stakeholder engagement

Workforce engagement

97-98

6 Whistleblowing

7 Managing conflicts of interest

Division of responsibilities

9 Division of responsibilities

10 Director independence

11 Board composition

12 Senior Independent Director

13 Non-Executive Directors

14 Roles of the Board

Division of responsibilities

15 Director biographies

and external appointments

16 Company Secretary 85

Composition, succession and evaluation

17 Nomination and Remuneration

Committee Report

103

18 Election and re-election

ofDirectors

19 Director biographies

20 Board member recruitment

112

21 and 22 Board evaluation

23 Nomination and Remuneration

Committee Report

103

Provision Further information Page

Audit, Risk and internal control

24 Audit and Risk Committee Report

25 Key responsibilities of the

Auditand Risk Committee

26 Audit and Risk Committee Report

27 Fair, balanced and

understandable assessment

101

28 Principal risk and uncertainties

29 Risk management and

internalcontrol

30 Going concern

150

31 Viability Statement

Remuneration

32 Remuneration Committee:

Composition and report

33 Remuneration Policy

109

34 Non-Executive Director

remuneration

120

35 Advice provided to the

Remuneration Committee

127

36 Shareholding requirements:

Remuneration Policy statement

120

37 and 38 Remuneration Policy

109

39 Executive Directors’

service agreements and

loss of office entitlements

130

40 and 41 Report of the Remuneration

Committee

103

The Board confirms that, for the year under review and to the date of this report, the Company has applied all of the

principles of the Code. However, we did not comply in full with Provisions 9, 36 and 37, as further described on page

77. This report, together with the reports from the Audit and Risk Committee and Nomination and Remuneration

Committee, and the other statutory disclosures, provides details of how the Company has applied the provisions

oftheCode (pages 99 to 128).

The table below outlines how we have structured the governance section of this Annual Report and Accounts around

the Code.

Governance Report

Capital plc

Annual Report and Accounts 2023 76

Non-compliance

Provision Explanation

9. The chair should be independent on appointment

when assessed against the circumstances set out in

Provision10. The roles of chair and chief executive should

not be exercised by the same individual. A chief executive

should not become chair of the same company. If,

exceptionally, this is proposed by the Board, major

shareholders should be consulted ahead of appointment.

The board should set out its reasons to all shareholders at

the time of the appointment and also publish these on the

company website.

The Board recognises that Sir Martin Sorrell’s position as

Executive Chairman which he has held since S

Capital

plc’s IPO, exercising the roles of both Chairman and

Chief Executive Officer, is a departure from the Code.

Sir Martin has been a leading figure in the marketing and

communications services industry for over 40 years and

the Board acknowledges that his expertise, knowledge

and global network of relationships are an unparalleled

advantage to the Group. In light of this, the Board, in

particular through the work of its Nomination Committee,

regularly assess the appropriateness of this arrangement

and will continue to do so and recommend changes, as

appropriate. The Independent Non-Executive Directors

have concluded that the position remained appropriate for

the year under review.

Control enhancements

• Governance structure reviews – The Independent

Non-Executive Directors meet regularly in private

sessions, chaired by the Senior Independent

Director. The meeting includes consideration of the

appropriateness of the governance structure and

safeguards for shareowners.

• The Chairs of the Board Committees, all of whom

are Independent Non-Executive Directors, dedicate

significant amount of time in the oversight of the

functions that report to each respective Committee and

have in-depth relationships with relevant executives.

36. Remuneration schemes should promote long-term

shareholdings by executive directors that support

alignment with long-term shareholder interests.

Share awards granted for this purpose should be released

for sale on a phased basis and be subject to a total

vesting and holding period of five years or more.

The Remuneration Committee should develop a formal

policy for post-employment shareholding requirements

encompassing both unvested and vested shares.

The Board acknowledges that the grant of shares to the

Group Chief Financial Officer total a four-year period.

The use of an overall four-year performance period for

most of the award, structured as successive one-year

periods rather than the standard three-year period,

recognises that, as S

Capital continues to grow and

evolve, each one of the next four years is critical. This

approach was also designed to be competitive in the

context of the international markets in which the

Company operates, where performance and vesting

periods can be shorter than the UK norm.

37. Remuneration schemes and policies should enable

the use of discretion to override formulaic outcomes.

They should also include provisions that would enable

thecompany to recover and/or withhold sums or share

awards and specify the circumstances in which it would

be appropriate to do so.

Whilst the Nomination and Remuneration Committee

cannot override the formulaic outcome of the Incentive

Share Scheme (A1/A2 shares), the Board believes that

thescheme is aligned with the wider shareowner

experience due to the long-term nature of the scheme.

Furthermore, the participants only receive benefits once

shareowners have experienced significant growth in the

value of their investment.

2 310 4

Capital plc Annual Report and Accounts 2023 77

Leadership: Board of Directors

Committee membership:

Audit and

Risk Committee

Executive

Committee

Nomination and

Remuneration Committee

Denotes Chair

of Committee

A clear direction

Sir Martin was Founder and CEO of WPP for 33

years, building it from a £1 million ‘shell’ company

in 1985 into the world’s largest advertising and

marketing services company. When Sir Martin left in

April 2018, WPP had a market capitalisation of over

£16 billion and revenues of over £15 billion.

Sir Martin supports a number of leading business

schools and universities, including his alma

maters, Harvard Business School and Cambridge

University, and a number of charities, including

his family foundation. He has been nominated as

one of the TIME 100: The Most Influential People

and received the Harvard Business School Alumni

Achievement Award.

Key skills

• Corporate governance

• Legal and regulatory

• Corporate transactions

• Finance

• Risk and compliance

• Global media, marketing and advertising

• Strategy and M&A

• Technology

• ESG

• Organisational design and corporate culture

Current external appointments

• None

Scott joined S

Capital from artificial intelligence

company Eureka, where he continues to serve as a

board member and adviser. Previously, Scott spent

almost 15 years at WPP in various roles in London,

Shanghai and Singapore and was ultimately the

Global Chief Strategy and Digital Officer.

In 2006 Scott moved to China and oversaw a

period of rapid growth and multiple acquisitions,

responsible for WPP´s corporate strategy and

growth agenda. Scott was also a director of Nairobi-

listed WPP-Scangroup PLC. Prior to WPP, Scott

worked at Deloitte and Associated Newspapers.

Key skills

• Corporate transactions

• Finance

• Global media, marketing and advertising

• Strategy and M&A

Current external appointments

• Board member, Eureka AI

Sir Martin Sorrell

Executive Chairman

Appointed: 28 September 2018

Nationality: British

Scott Spirit

Chief Growth Officer

Appointed: 18 July 2019

Nationality: British

EC EC

Governance Report

Capital plc

Annual Report and Accounts 2023 78

Prior to joining S

Capital, Mary was Group

FinanceDirector at Just Eat PLC, where she led

theFinance team through the class 1 merger with

Takeaway.com. Her experience spans e-commerce,

media, strategy and financial management of

businesses undergoing rapid growth and change.

Mary’s previous roles include CFO at UKTV

and CFO for Hotels.com at Expedia Group Inc.

She began her career in the music industry and

held senior finance positions at Warner Music and

Sony Music.

Key skills

• Finance

• Strategy and M&A

• Corporate governance

• Corporate transactions

• Risk and compliance

• Technology

• Organisational design and corporate culture

Current external appointments

• None

As Co-Founder and former COO of MightyHive,

Christopher has built a career leading successful

operations teams and client services organisations

in technology industries. Christopher holds

a Bachelor of Science degree in Computer

Engineering and MBA from The Wharton School.

Prior to co-founding MightyHive, Christopher spent

a decade at Yahoo! in multiple leadership positions

within Mergers & Acquisitions, Post Merger

Integration, Global Controllership and the Advanced

Ad Targeting Products business unit.

Key skills

• Corporate transactions

• Finance

• Risk and compliance

• Global media, marketing and advertising

• Strategy and M&A

• Technology

• Information security, cyber security, privacy

• Organisational design and corporate culture

Current external appointments

• None

Mary Basterfield

Group Chief Financial Officer

Appointed: 9 January 2022

Nationality: British

Christopher S. Martin

Executive Director

Appointed: 24 December 2018

Nationality: American

EC EC

2 310 4

Capital plc Annual Report and Accounts 2023 79

Leadership: Board of Directors continued

Victor joined Media.Monks in 2003 and led its

intercontinental expansion to the 1,100-person

powerhouse that merged with S

Capital in 2018.

Today, Victor is responsible for Media.Monks’

integrated Content, Data&Digital Media and

Technology Services practices in EMEA and

leads the development, implementation and

communication to all stakeholders of Media.Monks’

ESG strategy, decision making and transition to

net zero.

Key skills

• Global media, marketing and advertising

• Strategy and M&A

• Technology

• Organisational design and corporate culture

Current external appointments

• None

Wesley is Co-Founder of Media.Monks, and

former Chief Operating Officer of the legacy

MediaMonks brand.

Wesley co-founded MediaMonks in 2001 to focus

on craft and creativity in digital, working tirelessly

to grow that company into a creative production

powerhouse with global reach and recognition that

merged with S

Capital in 2018.

Key skills

• Global media, marketing and advertising

• Strategy and M&A

• Technology

• Organisational design and corporate culture

Current external appointments

• None

Victor Knaap

Executive Director

Appointed: 4 December 2018

Nationality: Dutch

Wesley ter Haar

Executive Director

Appointed: 4 December 2018

Nationality: Dutch

Committee membership:

Audit and

Risk Committee

Executive

Committee

Nomination and

Remuneration Committee

Denotes Chair

of Committee

Governance Report

Capital plc Annual Report and Accounts 2023 80

Elizabeth is Chief Commercial Officer of Rokt, the

leading global ecommerce technology company.

A proven tech and business executive with passion

for transformation, Elizabeth has spent more than

25 years in technology, marketing and advertising.

Key skills

• Finance

• Global media, marketing and advertising

• Strategy and M&A

• Technology

• ESG

• Information security, cyber security, privacy

• Organisational design and corporate culture

Current external appointments

• Board member of NGO Vital Voices

Global Partnership

• Chief Commercial Officer, Rokt

Colin brings significant experience in financial,

management and governance roles including

Non-Executive Chairman of Premier Foods plc,

Chief Executive of Essentra plc and 15 years of

experience as Chief Financial Officer of both Reckitt

Benckiser plc and Aegis plc.

He has served as a Non-Executive Director on the

boards of major UK listed businesses including

Amec Foster Wheeler, WPP, Cadbury, Imperial

Brands, Meggitt, Euromoney Institutional Investor

and easyJet.

Key skills

• Corporate governance

• Legal and regulatory

• Corporate transactions

• Finance

• Risk and compliance

• Strategy and M&A

• ESG

• Information security, cyber security, privacy

• Organisational design and corporate culture

Current external appointments

• Chair of Premier Foods Plc

• Non-Executive Director and Chair of the Audit and

Risk Assurance Committee, DEFRA

• Non-Executive Director, Cranfield University

• Non-Executive Director, FM Global

Elizabeth Buchanan

Non-Executive Director

Appointed: 12 July 2019

Nationality: Australian

Colin Day

Independent Non-Executive Director

Appointed: 3 August 2022

Nationality: British

AR*

2 310 4

Capital plc Annual Report and Accounts 2023 81

Leadership: Board of Directors continued

Rupert Faure Walker

Senior Independent Non-Executive Director

Appointed: 28 September 2018

Nationality: British

Margaret Ma Connolly

Independent Non-Executive Director

Appointed: 10 December 2019

Nationality: American and Chinese

NRAR

Rupert qualified as a Chartered Accountant with

Peat Marwick Mitchell in 1972. He joined Samuel

Montagu in 1977 to pursue a career in corporate

finance. Over a period of 34 years Rupert advised

major corporate clients on mergers, acquisitions,

IPOs and capital raisings, including advising WPP

on its acquisitions of JWT, Ogilvy & Mather and

Cordiant, together with related funding. He was

appointed a director of Samuel Montagu in 1982

and was Head of Corporate Finance between 1993

and 1998.

He was a Managing Director of HSBC Investment

Banking until his retirement in 2011.

Key skills

• Corporate governance

• Legal and regulatory

• Corporate transactions

• Finance

• Risk and compliance

• Strategy and M&A

Current external appointments

• None

Margaret is President and CEO of Asia, Informa

Markets, overseeing its businesses in mainland

China, Japan, India, Korea, Hong Kong and ASEAN,

a portfolio of more than 250 brands, which include

industry-leading exhibitions and digital services

across 13 countries. Margaret joined UBM in 2008,

before its combination with Informa in 2018.

In the last 12 years, she has spearheaded multiple

milestones in key market sectors and successfully

grown the business through organic development

and strategic partnerships. Prior to this, she held

senior positions at TNT and Global Sources.

Margaret is a member of the Common Purpose

Dao Xiang advisory board. She received an MBA

degree from Oxford Brookes Business School

with Corporate Director Certificate from Harvard

Business School.

Key skills

• Corporate governance

• Legal and regulatory

• Finance

• Risk and compliance

• Strategy and M&A

• Technology

• ESG

• Information security, cyber security, privacy

• Organisational design and corporate culture

Current external appointments

• President & CEO of Asia, Informa Markets

Committee membership:

Audit and

Risk Committee

Executive

Committee

Nomination and

Remuneration Committee

Denotes Chair

of Committee

Governance Report

Capital plc Annual Report and Accounts 2023 82

Daniel Pinto is the Founder, Chairman and CEO

of Stanhope Capital, the global investment

management and advisory group overseeing

approximately US$40 billion of client assets. He has

considerable experience in asset management

and merchant banking having advised prominent

families, entrepreneurs, corporations and

governments for over 25 years.

Formerly Senior Banker at UBS Warburg in

London and Paris concentrating on mergers

and acquisitions, he was a member of the firm’s

Executive Committee in France. He was also

Chief Executive of a private equity fund backed

by CVC Capital Partners. Daniel founded the

New City Initiative, a think tank comprised of the

leading independent UK and European investment

management firms. He is the author of Capital

Wars (Bloomsbury 2014), a book which won the

prestigious Prix Turgot (Prix du Jury) and the HEC/

Manpower Foundation prize.

Key skills

• Corporate governance

• Corporate transactions

• Finance

• Strategy and M&A

Current external appointments

• Director of Soparexo (Holding of

Chateau Margaux)

• Director of the Independent Investment

Management Initiative (IIMI) (formerly New

City Initiative)

• Chairman and CEO of Stanhope Capital Group

Sue is a qualified solicitor and barrister at Brick

Court Chambers, where she practices as an

arbitrator and mediator and provides advice to

commercial clients. She has over 30 years of

experience of arguing and managing large complex

commercial cases at every level of the UK judicial

system and in arbitration.

From 2008-2020, Sue was Co-Managing Partner

of law firm Quinn Emanuel Urquhart & Sullivan (UK)

LLP where her clients included major corporates,

funds, investors, trustees, office holders and high

net worth individuals, for whom she managed

complex, high value, domestic and international

litigation. Sue has particular expertise in company,

insolvency related, securitisation and restructuring

litigation. She moved back to the Bar in 2020.

Key skills

• Corporate governance

• Legal and regulatory

• Corporate transactions

• Risk and compliance

• Strategy and M&A

• Organisational design and corporate culture

Current external appointments

• Chair of the Trustees of The Freud Museum

• Director at the Hampstead Theatre

• Non-Executive Director, BLOC Ventures Holding

Daniel Pinto

Independent Non-Executive Director

Appointed: 24 December 2018

Nationality: French and British

Sue Prevezer KC

Independent Non-Executive Director

Appointed: 14 November 2018

Nationality: British

AR NR

2 310 4

Capital plc Annual Report and Accounts 2023 83

Leadership: Board of Directors continued

Naoko is the Managing Partner and Founder of

Niremia Collective, a wellbeing technology fund and

leads the investment strategy along with the global

community building. She is also the CEO of Amber

Bridge Partners, an advisory firm specialising in

cross-border business development, investment

and operations.

Prior to founding Niremia Collective, she drove

US investment and collective impact community

building for Mistletoe, a social impact fund founded

by Mr. Taizo Son, and was an Executive Advisor at

Z Corporation, a Web3 focused fund created by

Softbank. She was also a founding partner at World

Innovation Lab (WiL), a Silicon Valley/Tokyo-based

venture capital company. Naoko was the Vice

President of Strategic Partnership Management

at Yahoo Inc. where she managed Yahoo’s joint

ventures and grew annual revenues from $16 million

to $520 million.

Key skills

• Technology

Current external appointments

• Managing Partner and Founder, Niremia Collective

• CEO, Amber Bridge Partners

• Board advisor at Transformative Technology

(NPO)

Paul has over 40 years’ experience in the banking,

brokerage and asset management industries.

In 2003, he co-founded NewSmith Capital Partners

LLP, an independent investment management

company, which was acquired by Man Group

in 2015.

Prior to that, he was Co-President of Global Markets

and Investment Banking at Merrill Lynch & Co

and had responsibility for worldwide Investment

Banking, Debt and Equity Markets. He was

previously CEO of Smith New Court Plc, a leading

market making and brokerage firm on the London

Stock Exchange. Between 2007 and 2013, Paul

served as Chairman of the British Horseracing

Authority, responsible for governance and

regulation of the sport.

Key skills

• Corporate governance

• Legal and regulatory

• Corporate transactions

• Finance

• Risk and compliance

• Strategy and M&A

• Organisational design and corporate culture

Current external appointments

• Non-Executive Chairman, BLOC Ventures Holding

Naoko Okumoto

Independent Non-Executive Director

Appointed: 10 December 2019

Nationality: Japanese

Paul Roy

Independent Non-Executive Director

Appointed: 28 September 2018

Nationality: British

AR NR*

Committee membership:

Audit and

Risk Committee

Executive

Committee

Nomination and

Remuneration Committee

Denotes Chair

of Committee

Governance Report

Capital plc Annual Report and Accounts 2023 84

Board support

Miles spent almost 35 years at Ogilvy, ultimately as

its global Chairman and CEO. He is currently the

Warden of New College at Oxford University.

Miles joined what was then the ‘advertising’

business from Oxford in 1973, eventually moving to

Ogilvy & Mather. After a period in the Asia-Pacific

region based in Hong Kong, and working especially

in China, he moved to New York in 2008 as Chief

Executive, then Chairman of Ogilvy & Mather

Worldwide. From then until 2016 Miles led a period

of strong client growth and creative success.

In 2016, Miles returned to his Alma Mater of New

College in Oxford, where he is Warden. He is

President of the Oxford Literary Festival and Chair

of the Oxford Bach Soloists, amongst other

voluntary activities.

Miles is actively engaged in ESG efforts, maintaining

oversight of S

Capital’s ESG performance and

instrumental in the development of disruptive and

innovative ESG initiatives.

Key skills

• Corporate governance

• Risk and compliance

• Global media, marketing and advertising

• ESG

• Information security, cyber security, privacy

• Organisational design and corporate culture

Current external appointments

• Warden of New College, Oxford University

Caroline spent over a decade in-house gaining

broad and extensive experience at large, complex

asset managers. She joined S

Capital in June

2022 from the Canada Pension Plan Investment

Board (Toronto and London) where she was a senior

member of the legal and compliance teams.

Caroline was in private practice earlier in her legal

career at Ashurst and Milbank in the City of London.

She obtained her legal degrees and masters in

France and the UK and is qualified to practice law in

England and Wales and Ontario, Canada.

Miles Young

Independent Non-Executive Director

Appointed: 1 July 2020

Nationality: British

Caroline Kowall

General Counsel, Head of Compliance

and Company Secretary

2 310 4

Capital plc Annual Report and Accounts 2023 85

Leadership: Executive Committee

Prior to joining the Group, Jean-Benoit was a Senior

Partner at Ernst & Young for approximately 18 years,

where he held various leadership roles, including

being the Technology, Media & Telecommunications

Leader, Head of Industries and part of the original

management team to build the Consulting practice.

Jean-Benoit has also spent the past 12 years

advising boards and management teams in the

advertising and media industry on strategic and

operational initiatives. His experience spans across

strategic growth; commercial, organisational and

operational effectiveness; margin improvement

and enterprise-wide transformation. His previous

roles include being Vice President at Capgemini

Consulting and Managing Director at a couple of

CRM consultancies. His 30 years in professional

services spans across North America, Europe

and Asia.

Bruno Lambertini is a distinguished entrepreneur

and Co-CEO of Media.Monks Content Practice.

Bruno’s journey commenced in 2005 with the

founding of Circus Marketing in CDMX, a venture

that rapidly expanded into a multinational enterprise

spanning eight countries. By championing social-

first brands, Bruno’s keen discernment of emerging

digital opportunities propelled Circus Marketing to

the vanguard of innovation.

In 2020, Bruno arranged the pivotal merger

between Circus Marketing and Media Monks/

S4, a transformative moment for the company.

His leadership played a pivotal role in enhancing

Media Monks’ Social capabilities and fostering

strategic partnerships with esteemed brands.

With his profound influence on the marketing and

advertising sectors, he is a catalyst for industry

innovation and advancement.

Jean-Benoit Berty

Group Chief Operating Officer

Nationality: French

Bruno Lambertini

Co-CEO, Content

Nationality: Argentinian

Sir Martin Sorrell, Mary Basterfield, Scott Spirit,

Wesley ter Haar and Christopher S. Martin are also

members of the Executive Committee. Their details

appear on the preceding pages.

Governance Report

Capital plc Annual Report and Accounts 2023 86

James Nicholas Kinney is a seasoned Chief

People Officer with a track record of leading two

billion-dollar organisations and overseeing 30,000

employees across 40 countries. He brings deep

cross-functional expertise in people and operations

and is recognised as a people transformation and

culture expert across various business industries.

James is a member of the Forbes Human Resources

Council and he also holds a certification in AI

business strategy from MIT.

Brady joined S4 through the merger of his firm,

TheoremOne, a leading enterprise transformation,

consulting, and digital delivery partner to the

Fortune 1000. He now leads our Technology

Services division, Formula.Monks.

Brady helped pioneer the application of agile

development, lean product design, and autonomous

teams in the enterprise leading clients like AT&T,

American Express, Caterpillar, Cisco, Disney, Fox,

and Nielsen through broad-scale transformation

initiatives. Prior to his current role, Brady served

as CEO of video analytics platform Tubefilter,

and in 2009 created the Streamy Awards – the

premiere award show platform for online video.

He is an elected Life Fellow of the Royal Society of

Arts, and best-selling author of Smaller is Better:

Using Autonomous Teams to Power the Future

of Enterprise.

James Nicholas Kinney

Global Chief People Officer

Nationality: American

Brady Brim-DeForest

CEO, Technology Services (Formula.Monks)

Nationality: American

2 310 4

Capital plc Annual Report and Accounts 2023 87

Dear fellow shareowners

I am pleased to present our Corporate

Governance Report for the year ended

31 December 2023, which sets out how the

Group’s governance framework supports and

promotes its long-term success and provides

an overview of the Board and its Committees.

Governance framework

This has been the first full year of our

compliance with the UK Corporate Governance

Code (the Code), which we voluntarily adopted

with effect from July 2022, and we have

remained in compliance with the majority of

its provisions throughout the year. In relation

to the three areas where we depart from the

Code, two relate to share schemes which

are finite in lifespan, and the last to my

own role as Executive Chairman, which is

subject to additional checks and balances.

More information on our application of the

Code is available on page 76.

During the year we have further strengthened

our risk management and compliance

frameworks by recruiting a dedicated Head

of Risks, refreshing a number of policies and

introducing new unified policies, codifying the

inheritance of our constituent business in the

development of our unitary structure.

Good governance and a strong

corporate culture and tone from

the top underpins successful and

sustainable businesses”

Sir Martin Sorrell

Executive Chairman

Executive Chairman’s statement

By setting the tone for our culture, values

and behaviour, the Board includes the views

of all stakeholders in its decision making.

We remain focused on delivery of the long-term

sustainable success of the Group.

Purpose

Our purpose statement, ‘We shift industries

forward by flexing and re-shaping how

businesses interact with the world, NOW’

explains our raison d’être, and we deliver this

‘NOW’ mission through our strategy (see pages

12-13 for further information) and our people to

our clients and other stakeholders.

Sustainability

I am pleased to report that much progress

has been made over the last year in relation to

the Group’s ESG efforts. Miles Young, is our

Non-Executive ESG and Culture Engagement

Director and has started working closely with

our Global Head of ESG, our General Counsel

and our Global Chief People Officer to ensure

that the Board continues to consider ESG

issues when formulating its business strategy.

More information on our ESG strategy is

available on page 45.

Governance Report

Capital plc

Annual Report and Accounts 2023 88

Board composition and effectiveness

Whilst the composition of the Board did not

change during the year under review, there

were a number of management changes in

each of the practices to strengthen reporting

into the Board. With respect to the Board itself,

through the Nomination and Remuneration

Committee, we continue to review the

balance of skills and experience across the

Board and this year performed a formal skills

matrix exercise, and succession planning.

Further information on the Committee’s

activities can be found on pages 103-108.

As announced in our press release in March,

Christopher S. Martin, Scott Spirit, Victor

Knapp and Wesley ter Haar are stepping down

from the Board and will not be standing for re-

election at the 2024 Annual General Meeting.

Further details are set out on page 129.

Following last year’s successful externally

conducted Board effectiveness review, the

Board conducted an internal performance

evaluation, facilitated by the Company

Secretary. The evaluation confirmed that the

Board and its Committees were considered

to be effective and identified a number of

key priorities and actions, which the Board

welcomed. Further detail on the evaluation and

actions agreed can be found on page 96.

Diversity and inclusion

Greater diversity, in all its forms, and an

inclusive workplace that welcomes that

diversity, leads, in the view of the Board,

to better decision making and therefore better

outcomes for our people, clients and our

business as a whole.

Throughout the year under review and to the

date of this report, the Board has met the

recommendations set out in the Parker Review.

With regard to the more recent gender diversity

targets set out by the FTSE Women Leaders

Review, the Board continues to plan to achieve

them whilst being mindful of overall Board size.

More information on our Board diversity

is available on page 90.

Stakeholder engagement

The Board recognises the importance of

engaging with and considering the interests

of our shareowners in promoting the Group’s

long-term success.

During the year, the Board continued its

focus on workforce engagement. With our

Company’s geographical spread, the Board

is committed to sharing the responsibility of

engaging with our people amongst all our

Non-Executive Directors, rather than a single

designated individual. The Board believes that

this approach is best suited to our organisation

as it provides the Board with the broadest

perspective of employee views, which each

Non-Executive Director shares with the whole

Board. It also allows each Committee Chair

to engage directly in respect of matters their

Committee is responsible for. More information

on our stakeholder engagement is available

on page 70.

The Company’s AGM is a key event at which

the Board and I interact with shareowners,

but we encourage you to share thoughts and

views with us at any time during the year via our

Company Secretary (cosec@s4capital.com).

Conclusion

The Board and I remain committed to the

highest standards of governance and active

dialogue with all our shareowners. As we did

last year, we will again hold a physical AGM,

in early June 2024, with virtual attendance for

those shareowners who are not able to attend

in person.

I would like to thank our shareowners for their

continued loyalty and support, and I look

forward to seeing you at the AGM.

Sir Martin Sorrell

Executive Chairman

26 March 2024

2 310 4

Capital plc Annual Report and Accounts 2023 89

The role of the Board

White

Minority

Ethnic

Board

80%

20%

White

Minority

Ethnic

Senior management

56%

44%

Male 10

Female 5

Board

67%

33%

Male

Female

Senior management

78%

22%

Male

Female

Gender

59%

41%

White

Minority

Ethnic

Ethnicity

63%

37%

Independent

Directors

Executive

Directors

Independence

60%

40%

Senior management direct reports

Board independence balance

Board and senior management diversity

The information included in the below tables has been collected by self-disclosure directly from the individuals

concerned, using a questionnaire requesting the individual to select their gender identity and ethnicity from

alistofoptions of equal prominence. Gender split for all employees can be found on page 20.

Diversity by gender and ethnicity

Governance Report

Capital plc Annual Report and Accounts 2023 90

Board and Committee attendance

The following table shows the Directors’ attendance at scheduled meetings they were eligible

toattend for the year ended 31 December 2023:

Board and Committee meeting attendance

Director Board

Audit and Risk

Committee

Nomination and

Remuneration Committee

Total meetings 7 7 10

Sir Martin Sorrell 7/7 – –

Mary Basterfield 7/7 – –

Elizabeth Buchanan

6/7 – –

Margaret Ma Connolly

4/7 – –

Wesley Ter Haar

6/7 – –

Colin Day 7/7 7/7 –

Victor Knaap

6/7 – –

Christopher S. Martin 7/7 – –

Naoko Okumoto

5/7 – –

Daniel Pinto

4/7 – –

Sue Prevezer

5/7 7/7 8/10

Paul Roy 7/7 7/7 10/10

Scott Spirit

6/7 – –

Rupert Faure Walker 7/7 7/7 10/10

Miles Young

4/7 – –

Notes:

1. There were four scheduled Board meetings during the year and three ad hoc meetings, called at shorter notice.

2. Elizabeth Buchanan, Margaret Ma Connolly, Wesley Ter Haar, Victor Knaap, Naoko Okumoto, Daniel Pinto, Sue Prevezer,

Scott Spirit and Miles Young were unable to attend some ad hoc Board or Committee meetings due to pre-existing

arrangements which could not be changed at the shorter notice with which those ad hoc meetings had been called.

2 310 4

Capital plc Annual Report and Accounts 2023 91

The role of the Board continued

Conflicts of interest

The Board operates a policy that restricts

aDirector from voting on any matter in which

they might have a personal interest, unless

theBoard unanimously decides otherwise.

Prior to all major Board decisions, the Executive

Chairman requires the Directors to confirm

that they do not have a potential personal

conflict with the matter being discussed.

If aconflict does arise, the Director is

excludedfrom discussions.

Internal measures are in place to ensure

that any related party transaction involving

Directors, or their connected parties,

are conducted on an arm’s length basis.

Our Directors have a continuing duty to

updateany changes to these conflicts.

Purpose, values and culture

The Board, supported by its Committees,

monitors the alignment of the Company’s

culture with its purpose, values and strategy.

The Company’s corporate culture is integral

to our success, we have fostered and cultivated

a culture of innovation and this feeds into

how we do business. We work continuously

to enhance and evolve our culture, taking into

account the global nature of our communities.

Key central functions such as Legal, Finance

and People are empowered to promote, embed

and integrate good standards of ethical

behaviours and corporate governance across

the Group. This also involves the establishment,

review, roll out and internal controls of

underpinning policies and our Code of Conduct,

which set the expectations of how the Group

and its people should behave.

The Board monitors the cultural dynamics of

the Group through its workforce engagement

activities, which include site visits, employee

surveys, regular ‘Need to Know’ and ‘Unmuted’

briefing sessions, as well as informal

discussions with senior executives.

In addition, Miles Young is the designated

the Non-Executive Director responsible for

overseeing culture. In this role he supports the

Board in establishing the tone from the top and

fostering connections between the Board and

senior executives in setting the appropriate

culture for the Group globally.

Activities of the Board during the year

Strategy and operations 30%

Practice reviews 14%

Financial performance 31%

Governance and

compliance

25%

Board activities

During the year, the key Board activities were:

Financial performance

• Reviewed and approved the Group full year, interim and

quarterly results, and the Group budget.

• Received regular reports from the Group Chief Financial

Officer, including results and forecasts.

• Considered and approved the Group Tax Strategy statement.

• Received updates on the activities of the Audit and

Risk Committee.

Strategy and operations

• Received updates on the North Star mission, resulting

in the NOW strategy, refreshing the Group’s vision and

purpose, and the articulation and implementation of the

Group’s strategy and regional strategies.

• Approved the Formula Consultants merger to create Formula.

Monks, a strategic merger with our existing world-class

technology agencies: TheoremOne, Zemoga, and Proof.

• Received regular reports from the Global Chief People Officer,

the Chief Operating Officer, and from Investor Relations.

• Received updates on the AI Risk Management,

and the implementation of an Enterprise Risk

Management Framework.

Governance and compliance

• Reviewed and approved recommendations arising from

the Board’s performance evaluation.

• Reviewed feedback from workforce engagement activities

and planned future engagement.

• Reviewed and approved the Board role profiles and skills matrix,

Committee Terms of Reference and other key Group policies.

• Received updates on the Group’s culture and ESG

strategies and activities.

• Received updates from the General Counsel and the Head

of Risks on Legal, Compliance and Risks, and from the Chief

Information Security Officer and the Global VP, Privacy on

Information Security and Privacy risk management.

Practice reviews

• Received updates on the performance of each practice area

(Content, Data&Digital Media, and Technology Services)

or region, including financial performance and forecasts,

clients, strategy, and operations.

Governance Report

Capital plc Annual Report and Accounts 2023 92

Governance framework

The Group’s governance framework consists of the Board of Directors and its Committees. Our Committees

have delegated authority to operate within specified Terms of Reference, which are available on our website,

www.s4capital.com/investors. In addition, certain directors, such as the Senior Independent Director, Rupert

Faure Walker, or Miles Young, designated Non-Executive Director for overseeing culture, have specific individual

responsibilities. This framework enables the Company and its Directors to effectively discharge their duties and to

comply with the UK Corporate Governance Code.

Board of Directors

The Board has responsibility for the overall leadership of the Group, setting the Group’s purpose, values and

strategy and satisfying itself that these align with its culture, taking into consideration the views of shareowners

and other key stakeholders, to promote the long-term sustainable success of the Group. It also has responsibility

for the Group’s performance and governance oversight, including evaluating and managing principal risks

through an effective internal controls environment.

Executive Committee

The Executive Committee is responsible for defining strategic proposals, implementing the Group Strategy,

and reviewing its success, overseeing performance against the strategy, defining the budget for the Company,

promoting cultural development, and establishing and monitoring ESG strategy for the Group.

Audit and Risk Committee

The Audit and Risk Committee ensures the

governance and integrity of financial reporting

and disclosures and reviews the controls in place.

It oversees the internal audit function and the

relationship with the external auditors, including

monitoring independence, and also reviews

the effectiveness of internal controls in the

Group. The Committee also reviews and makes

recommendations to the Board on the Group’s risk

appetite, risk principles and policies so the risks are

reasonable and appropriate for the Group and can

be managed and controlled within the limits of the

Group’s resources and appetite.

For more information see page 99

Nomination and Remuneration Committee

Responsible for reviewing the balance of skills,

knowledge, experience and diversity of the

Board and making recommendations for Board

and Committee appointments and monitoring

succession plans for the Board and senior

management. Responsible for determining the

remuneration and other benefits of Executive

Directors. Reviews and approves the Remuneration

Policy, ensuring that it is clear, simple, and aligned

to culture. Recommends and monitors overall

remuneration for senior management whilst

considering employee remuneration and alignment

of incentives and rewards with culture.

For more information see page 103

2 310 4

Capital plc Annual Report and Accounts 2023 93

The role of the Board continued

Role of the Board

The Board is collectively responsible for

the effective oversight and the long-term

success of the Company. The Board delegates

some of its responsibilities to the Audit and

Risk Committee and the Nomination and

Remuneration Committee, through agreed

Terms of Reference which were updated this

year and will continue to be subject to annual

review. The responsibilities of each Committee

are described in the governance framework on

page 93, in the Committee reports on pages

99-108 and are available on our website.

The Board also receives regular updates on

the performance of the Group’s businesses,

operational matters and legal updates from the

Executive Chairman, the Executive Directors

and General Counsel and this provides

opportunities for Board members to provide

guidance and constructive challenge. All Board

members have full access to the Group’s

advisers for seeking professional advice at the

Company’s expense.

Division of responsibilities

The Board acknowledges that Sir Martin

Sorrell’s position as Chairman and Chief

Executive Officer, a role he has held since

Capital’s founding, is a departure from

the Code. The Independent Non-Executive

Directors met during the year to review the

Board structure including consideration of

the ongoing suitability of the combined role.

Sir Martin has been a leading figure in the

marketing and communication services industry

for over 40 years and the Board continues to be

of the view that his expertise, knowledge and

global network of relationships are a significant

advantage to the Group. In light of this, the

Board believes that combining the roles of

Chairman and Chief Executive continued to

be appropriate during the year under review.

The Board will continue to review this regularly,

including through an in-camera session held

at each Board meeting with only the Non-

Executive Directors participating.

Role Responsibility

Executive Chairman

Sir Martin Sorrell

Chairs the Board meetings, sets the Board

agendas and promotes effective relationships

between the Executive Directors and

Non-Executive Directors.

Senior Independent Director

Rupert Faure Walker

Provides a sounding board for the Executive

Chairman and is available to act as an

intermediary for other Directors when necessary.

Responsible for reviewing the effectiveness of

the Executive Chairman.

Non-Executive Directors Independent of management and assist in

developing and approving the strategy. Provide

independent advice and constructive challenge

to management, bring relevant experience and

knowledge and serve on the Board Committees.

General Counsel, Head of Compliance

and Company Secretary

Caroline Kowall

Advises the Board on matters of corporate

governance and ensures that the correct Board

procedures are followed. All members of the

Board and Committees have access to the

services and support of the Company Secretary.

Further information on our Board roles and responsibilities are available on our website,

www.s4capital.com/investors.

Governance Report

Capital plc Annual Report and Accounts 2023 94

Directors’ performance

During the year, the Executive Chairman

held meetings with individual Directors at

which, among other things, their individual

performance was discussed. Informed by the

Executive Chairman’s continuing observation

of individual Directors during the year,

these discussions form part of the basis for

recommending the election and re-election of

Directors at the Company’s AGM and include

consideration of the Director’s performance and

contribution to the Board and its Committees,

their time commitment and the Board’s

overall composition.

Executive Chairman’s performance

Rupert Faure Walker in his capacity as the

Senior Independent Director, leads the annual

performance review of the Executive Chairman.

This involved meetings during the year with

the Independent Non-Executive Directors,

without the Executive Chairman being present.

The Senior Independent Director provided

feedback to the Executive Chairman.

Election and re-election of Directors

at the 2024 AGM

As announced in our press release in March,

Christopher S.Martin, Scott Spirit, Victor Knaap

and Wesley ter Haar will be stepping down

with effect from the conclusion of the 2024

AGM, whilst all retaining their current roles

as senior executives of the Group. The Board

has confirmed that each Director standing

for re-election continues to be effective

and demonstrates commitment to their role.

On the recommendation of the Nomination

and Remuneration Committee, the Board will

therefore be recommending that shareowners

vote in favour of the resolutions proposing the

election or re-election (as applicable) of the

Directors standing for election or re-election

atthe 2024 AGM.

B Shareowner

As the founder of the Group, Sir Martin Sorrell

has been issued with a B Share which provides

him with enhanced rights.

As the owner of the B Share, Sir Martin has

the right to:

• appoint one Director of the Company from

time to time and remove or replace such

Director from time to time;

• ensure no executives within the Group are

appointed or removed without his consent;

• ensure no shareowner resolutions are

proposed (save as required by law) or passed

without his consent; and

• save as required by law, ensure no acquisition

or disposal by the Company or any of its

subsidiaries of an asset with a market or book

value in excess of £100,000 (or such higher

amount as Sir Martin may agree) may occur

without his consent.

The B Share will lose the B Share Rights

ifitistransferred by Sir Martin and also:

(i) in any event after 14 years from

28 September 2018 (being the date on which

the B Share was issued), or, if earlier, the date

on which Sir Martin retires or dies; or

(ii) if Sir Martin sells any of the Ordinary Shares

that he acquired on 28 September 2018 (other

than in order to pay tax arising in connection

with his holding of such shares).

In order to ensure that Sir Martin’s exercise

of the rights attaching to the B Shares do not

prejudice the Company’s ability to comply with

the Listing Rules, Sir Martin and the Company

have entered into a relationship agreement.

Pursuant to this relationship agreement,

Sir Martin has undertaken to ensure that:

• transactions and arrangements with

Sir Martin (and/or any of his associates) will

be conducted at arm’s length and on normal

commercial terms;

• neither Sir Martin nor any of his associates

will take any action that would have the effect

of preventing the Company from complying

with its obligations under the Listing Rules;

and

• neither Sir Martin nor any of his associates

will propose or procure the proposal of a

shareowner resolution, which is intended or

appears to be intended to circumvent the

proper application of the Listing Rules.

The Group has policies in place to ensure that

the rights attaching to the B Share are not

infringed.

2 310 4

Capital plc Annual Report and Accounts 2023 95

The role of the Board continued

Board evaluation

Following on from last year’s external Board

effectiveness review, an internal review was

conducted during the year. Working with the

Nomination and Remuneration Committee,

the Company Secretary distributed a structured

online questionnaire seeking input on a number

of topics including meeting administration,

Board composition, accountability and

standards of conduct.

The results were then analysed and discussed

at a Board meeting after the year end, and

proposed actions to enhance the effectiveness

of the Board. The meeting also reviewed the

findings of the previous, externally facilitated

evaluation, and the actions undertaken during

the year to address the findings of that review.

The evaluation’s conclusions

The internal evaluation concluded that the

Board provides strong leadership of the

Company’s values, mission and strategic

and business plans, being well governed

with appropriately structured committees

and strongly cognisant of shareowner

value. The Board felt it had good access

to management and was empowered to

ask appropriate questions and challenge

constructively as necessary.

The review concluded that, whilst the Board

was operating effectively, there were further

improvements that could be made and the

following key recommendations were agreed

with the Board.

Topic Recommendation Progress/Plan of action

Meeting

administration,

Board agenda

and focus

To ensure meeting materials and

minutes are distributed in a more

timely manner.

A set of internal deadlines and have

beenagreed with all stakeholders relating

to the drafting, review and publication of

meeting material and minutes, which are

distributed electronically via a secure

software solution.

Agenda to be more focused on

decision making and strategic

oversight, and papers shorter,

more to the point, and with a

clearer ‘ask’ of the Board.

Operational matters discussed and agreed

upon at the preceding meeting of the

re-established Executive Committee,

tofree up the Board to consider more

strategic matters.

Board structure

and composition

To further refine the composition

of the Board in terms of skills and

experience, and consider a smaller

Board with a structure more typical

of UK-listed companies.

Board changes in respect of certain

Executive Directors were announced on

27March 2024, with further consideration

to be given by the Nomination and

Remuneration Committee as part of the

Board’s strategy session (see below) to

beheld in H2 2024.

Board

Committees

To increase visibility of the

activities of each of the Board’s

Committees.

A written summary of the items each

Committee has considered since the

previous Board meeting is included in the

following Board meeting pack, together

with Committee meeting minutes in an

appendix. Each Committee Chair also

provides a verbal summary, highlighting

key matters and updates since the

publication of the Board pack.

To benchmark NED fees for

Committee membership or

Chairmanship to ensure they are

commensurate with the time

commitment required.

A benchmarking exercise will be

conducted in conjunction with the

Company’s remuneration consultants,

Korn Ferry, in H2 2024.

Strategy session

To hold an annual strategy session,

separate from the quarterly cycle

of Board meetings.

The Executive Committee held an off-site

in Q1 for management to develop plans

forBoard review and approval in H2 2024.

Governance Report

Capital plc Annual Report and Accounts 2023 96

How we engage with our people

Our diverse and dedicated people underpin the success of our business. The Board uses a combination of both

informal and formal engagement channels as detailed below:

How we

engage with

our people

Non-Executive

Director engagement

All of our Non-Executive Directors

share the responsibility for workforce

engagement, attendance at Community

Group sessions (described below) or

‘Need to Know’ All-Hands sessions on

specific topics, such as wider workforce

remuneration, which was led by the Chair

of the Nomination and Remuneration

Committee, Paul Roy, or culture, which

was led by Miles Young. Non-Executive

Directors report to the Board following

any engagement with the workforce.

Employee surveys

We conduct regular employee surveys

and use this feedback to improve our

performance and culture.

All-Hands

We host All-Hands sessions, divided

into departmental All-Hands and

geographical All-Hands sessions.

These sessions include a question

and answer segment, providing

two-way communication and

further engagement.

State of our One Nation

The Executive Chairman sends out

a weekly update to all our people to

ensure that they are kept informed of

business activities, key highlights and

Group and/or departmental milestones.

Community Groups

Championed by our Global Chief

People Officer and managed by our

DE&I Team, these groups are voluntary,

employee-led groups that aim to foster

a diverse and inclusive workplace.

Current groups include Pride.Monks,

Enable.Monks, Melanin.Monks,

Cultura.Monks, Caregiver.Monks,

AAPI.Monks and WoMMen in Tech.

These groups operate at a global and

local level fostering cultural recognition

and continuous learning its members

and our organisation as a whole.

Speak Up

Our Speak Up system allows for an

anonymous reporting line for our people

to raise any concerns, in addition to

non-anonymous ways through HR

managers and the General Counsel.

The Board, through the Audit and Risk

Committee, receive regular updates.

2 310 4

Capital plc Annual Report and Accounts 2023 97

The role of the Board continued

Annual Report

and Accounts

Our Annual Report and Accounts is available to all shareowners, and we

aim to make our Annual Report and Accounts as accessible as possible.

Shareowners can opt to receive a hard copy in the post, or PDF copies

via email or from our website. Shareowners can also contact our

Company Secretary to request a copy via cosec@s4capital.com.

Corporate

website

Our website is regularly updated and has a dedicated investor section

which includes all our Annual Report and Accounts, our results

presentations and contact details.

Annual General

Meeting

The AGM provides an opportunity for our shareowners to question the

Directors and the Chairs of each of the Board Committees. Information

on the 2024 AGM is on page 131.

Shareowners

consultation

When considering material changes to our Board, strategy or our

remuneration policies, we will always seek to engage with shareowners.

Senior

Independent

Director

Should shareowners have any concerns, which the normal channels of

communication to the Executive Chairman or Group Chief Financial

Officer have failed to resolve, or for which contact is inappropriate, then

our Senior Independent Director, Rupert Faure Walker, is available to

address them. Rupert can be contacted via the General Counsel and

Company Secretary (cosec@s4capital.com).

Investor

meetings

The Executive Chairman, together with the Group Chief Financial Officer

and Chief Growth Officer meet with the Company’s largest institutional

shareowners to hear their views and discuss any issues or concerns.

During the year the Executive Chairman, Group Chief Financial Officer

and Chief Growth Officer held over 200 investor meetings, in person

andvirtually.

Following the announcement of our results, the Company’s largest

shareowners, together with financial analysts, are invited to a

presentation with a question and answer session by the Executive

Chairman, Group Chief Financial Officer and Chief Growth Officer.

Thewebcasts are made available to all shareowners via the website.

How we engage with our shareowners

Our main engagement methods are listed below:

Governance Report

Capital plc Annual Report and Accounts 2023 98

Audit and Risk Committee Report

Letter from the Chair

Committee Membership

Colin Day: Chair

Sue Prevezer KCS

Rupert Faure Walker

Paul Roy

Dear shareowners

As its Chair, I present my report on the activities

of the Audit and Risk Committee for the year

ended 31 December 2023.

The Committee has been established by the

Board primarily for the purpose of overseeing

the accounting, financial reporting, internal

controls and risk management processes

and the audit of the financial statements

of the Group. The Committee’s role and

responsibilities are set out in the Committee’s

Terms of Reference which are available on our

website, www.s4capital.com/investors and

subject to annual review.

During the year under review, I have continued

to visit key finance locations across the

world, including North and South America,

and Europe, spending time in addition

to Committee and Board meetings days

deepening my knowledge of the Finance and

Compliance teams’ people and processes, as

well as those of the internal and external audit

functions. This has allowed the committee

and I to assist the Board in its oversight of the

quality and integrity of the Group’s external

financial reporting and accounting policies

and practices.

During the year, the Committee maintained its

oversight on the further evolution of the finance

function including processes and systems,

plans for the implementation of new ERP

systems, intercompany netting solutions and

the Enterprise Risk Management Framework

(ERMF). In tandem, it continues to play a key

role in assisting the Board in its oversight

responsibility and monitoring the integrity of

the financial information for the benefit of our

shareowners and other key stakeholders.

The Committee continued to

play a key role in assisting the

Board in its oversight responsibility

and monitoring the integrity of

the financial information”

Colin Day

Chair, Audit and Risk Committee

2 310 4

Capital plc Annual Report and Accounts 2023 99

Audit and Risk Committee Report continued

Significant issues considered by

the Committee during the year

In discharging its duties by reviewing the

financial accounts of the Company and the

auditor’s report, the Committee considered and

discussed the following key financial matters:

• Revenue recognition: During the year, the

Committee oversaw internal audit reports

and management responses into revenue

recognition in all three cash generating units

(‘CGUs’), being the Content, Data&Digital

Media and Technology Services practices.

Due to the size and complexity of contracts in

these segments, management’s judgement

is key, and the Committee was generally

satisfied with the approach taken.

• Taxation: During the year, the Committee

assessed the reasonableness of the Group’s

provisions for uncertain tax positions.

The Committee reviewed the appropriateness

of the disclosures in the Annual Report,

and the Board reviewed and approved the

Group’s tax strategy statement, which

is available on the Company’s website at

www.s4capital.com.

• Impairment review: During the year,

management undertook the annual

impairment review, which was performed at

the three CGUs as well as on the Company’s

investment in subsidiary. The Committee

reviewed management’s approach and

recommendations and concluded that

management’s assessment was appropriate.

Audit and Risk Committee

activities in 2023

The main areas of the Committee activities

during 2023 financial year included:

Financial and narrative reporting

• The material areas in which significant/key

judgements were applied, based on reports

from both the Group’s management and the

external auditor.

• The information, and underlying assumptions

presented in support of the impairment, going

concern and viability assessment.

• The consistency and appropriateness of the

financial control and reporting environment.

Internal control and risk management

• Plans for the global roll out of a new

Enterprise Risk Management Framework

(ERMF), together with its launch and

adoption at Group level.

• Performed a review of the Company’s

principal and emerging risks and

uncertainties, risk appetite statements, risk

owners and risk response plans.

• Further enhancements to internal controls,

and update of the internal control manual and

finance manual.

• Received updates on information security

and data privacy.

Compliance, whistleblowing and fraud

• Reviewed reports arising from the Speak

Up Line.

• Evaluated management’s identification of

fraud risk, its implementation of anti-fraud

measures and the creation of an appropriate

‘tone at the top’.

Internal audit

• Approved the annual internal audit plan.

• Reviewed key themes and findings from

the internal audit reviews.

External auditor

• Reviewed the scope of, and findings

from, the external audit undertaken by

PricewaterhouseCoopers LLP (PwC) as the

external auditor.

• Assessment of the performance, continued

objectivity and independence of PwC.

Key focus for 2024

Alongside the regular cycle of matters that the

Committee schedules for consideration each

year, we are planning over the next 12 months

to focus on the following areas:

• the appointment of a Head of Internal Audit

to further enhance and strengthen our

internal controls environment, insourcing

internal audit;

• continuing finance transformation, including

systems consolidation and process

improvements; and

• the global roll out and embedding of ERMF.

Governance Report

Capital plc Annual Report and Accounts 2023 100

Internal audit

The Committee is responsible for monitoring

and reviewing the operation and effectiveness

of the Group’s Internal Audit function,

including its independence, strategic focus,

activities, plans and resources. Deloitte LLP

(‘Deloitte’) has been appointed as the Group’s

internal audit function with the aim to provide

independent assurance as to the adequacy and

effectiveness of the Group’s internal controls

and risk management systems.

The Group’s internal audit plan is prepared

in accordance with standards promoted by

the Chartered Institute of Internal Auditors.

The Committee meets regularly with Deloitte to

review progress against the plan.

The Committee is satisfied that the Internal

Audit function has the necessary integrity,

objectivity and competency to fulfil its mandate.

It has also satisfied itself that the Internal Audit

function has adequate standing and is free from

management or other restrictions.

External audit

The Committee has primary responsibility

for overseeing the relationship with, and

performance of, the external auditor, PwC.

This includes making recommendations

to the Board concerning the appointment,

reappointment and removal of the external

auditor, as well as assessing its independence

on an ongoing basis.

Following the conclusion of the 2022 audit,

the Committee rotated its key audit partner

as the incumbent, Mark Jordan, had served

the maximum term permitted. The Committee

was pleased to approve his successor, Jason

Burkitt, in January 2023. PwC has served as

external auditor since 2018.

During the year, the Committee reviewed the

external auditor’s performance, the Committee

concluded that the external auditor remains

independent, objective and effective in its role

and therefore should be re-appointed for a

further year. On the recommendation of the

Committee, the Board is putting forward a

resolution at this year’s AGM to re-appoint PwC

as external auditor for a further year.

The Committee’s policy is that the external

auditors should not undertake any work

outside the scope of their annual audit and

the review of the interim financial statements.

The Committee has discretion to grant

exceptions to this policy where it considers

that exceptional circumstances exist and that

independence can be maintained, whilst having

due regard to the FRC’s ethical standards for

auditors. The Committee’s approval is required

to instruct PwC to perform non-audit services.

The Committee confirms that in respect

of The Statutory Audit Services for Large

Companies Market Investigation (Mandatory

Use of Competitive Tender Processes and

Audit Committee Responsibilities) Order 2014,

the Group has complied with the applicable

provisions for the financial year under review.

Fees

The audit related fees for the year ended

31 December 2023 amounted to £4.0 million

(2022: £4.2 million). The non-audit fees

for the year ended 31 December 2023

amounted to £0.4 million (2022: £0.3 million).

Further information is available on page 169.

Fair, balanced and understandable

At the request of the Board, the Committee

considered whether, in its opinion, the

2023 Annual Report, taken as whole, is fair

balanced and understandable. In its review,

the Committee examined the preparation and

review process and considered the continuing

appropriateness of the accounting policies,

important financial reporting judgments and the

adequacy and appropriateness of disclosures.

Board and Committee members received

drafts of the Annual Report for their review and

input which provided an opportunity to discuss

the drafts with both management and the

external auditor.

Following its review and the Committee’s

recommendation, the Board believes that the

2023 Annual Report and financial statements

is representative of the year and, taken as a

whole, is fair, balanced and understandable

and provides the information necessary for

shareowners to assess the Group’s position,

performance, business model and strategy.

Going concern and long-term viability

The Committee considered the going

concern position as detailed on page 150.

Having reviewed and challenged the downside

assumptions, forecasts and mitigation strategy

of management, the Committee believe that the

Group and Company are adequately placed to

manage its business and financing risks.

2 310 4

Capital plc Annual Report and Accounts 2023 101

The Directors have a reasonable expectation

that the Group and Company have adequate

resources to continue in operational existence

for a period longer than 12 months from the

date of signing the financial statements.

Therefore, the Directors continue to adopt the

going concern basis in preparing the financial

statements. The Directors, having considered

the longer-term viability assessment as detailed

on page 31, confirm that they have a reasonable

expectation that the Group and Company will

be able to continue in operation and meet its

liabilities as they fall due and over the viability

period to 2026.

Managing risks and internal controls

The Board has overall responsibility for

setting the Group’s risk appetite and ensuring

that there is an effective risk management

framework in place and has delegated the

responsibility for review of the risk management

methodology and effectiveness of internal

controls to the Audit and Risk Committee.

In February 2023, a new Head of Risks was

appointed, who is responsible for ensuring

that an appropriate ERMF exists in the Group,

as well as embedding the framework globally.

As a result, a review of the Group’s principal

risks has been undertaken, the results of which

are detailed on pages 28 to 30. The Audit and

Risk Committee and Board both reviewed

and approved the new ERMF and principal

risk matrix.

Speak Up

The Committee oversees the Group’s Speak

Up Policy and procedures. Concerns can be

raised by employees with managers, HR or the

General Counsel or can be reported by anyone,

anonymously, if necessary, to a confidential

hotline. The Committee received regular

reports on matters raised. In 2023, a total of 14

cases were reported through the programme.

Over 85% of those cases were HR-related,

with the remainder consisting of suspected

ethics violations.

Each issue was investigated under our standard

investigation procedures and appropriate

steps were taken, although no material issues

were identified.

Membership of the Committee

and attendance at meetings

The Committee is comprised solely of

independent Non-Executive Directors with

awide range of experience. As the Chairman

of the Committee, I am considered by the

Board to have recent and relevant financial

experience. My biographical details and those

of my fellow Committee members can be found

on pages 78-85. Meeting attendance of the

Committee members can be found on page

91. The Board is satisfied that the Committee

has the resources and expertise to fulfil its

responsibilities. By invitation, the Executive

Chairman, Group Chief Financial Officer,

Group Financial Controller, General Counsel

and Company Secretary, Deputy Company

Secretary, and representatives from the internal

auditors (Deloitte) and external auditors (PwC)

attend Committee meetings. The Committee

met seven times during the year. To further

facilitate open dialogue and assurance, the

Committee holds private sessions with the

internal and external auditors without members

of management being present.

Committee effectiveness

An evaluation of the effectiveness of the Board

and its Committees was undertaken just after

the year end, in line with the requirements of the

UK Corporate Governance Code. The results

confirmed that the Committee is operating

effectively. The Committee considered that

during the year it continued to have access to

sufficient resources to enable it to carry out its

duties and has continued to perform effectively.

Further information on the Board effectiveness

review is available on page 96.

As Chair of the Audit and Risk Committee,

I am available to shareowners and stakeholders

should they wish to discuss any matters within

this report or under the Committee’s area of

responsibility generally, whether at the AGM or

by writing to the General Counsel and Company

Secretary at cosec@s4capital.com.

Colin Day

Chair, Audit and Risk Committee

26 March 2024

Audit and Risk Committee Report continued

Governance Report

Capital plc Annual Report and Accounts 2023 102

Nomination and Remuneration Committee Report

Letter from the Chair

Committee Membership

Paul Roy: Chair

Sue Prevezer KC

Rupert Faure Walker

Dear shareowners

As Chair of the Nomination and Remuneration

Committee, I am pleased to present the

Committee’s report for the financial year

ended 31 December 2023. I have chaired

the Committee since it was established in

2018. The other members of the Committee

are Rupert Faure Walker and Sue Prevezer.

All three of us are considered by the Board to

be independent Non-Executive Directors.

Board composition and

succession planning

Although there were no changes to the

Board during 2023, the Committee kept the

composition of the Board under active review.

As part of the Committee’s 2023 priorities,

this included further development and review

of the Board skills matrix and an assessment

of each Director’s particular areas of expertise.

The skills matrix is subject to ongoing review

and is an essential reference point when

considering the future evolution of the Board

and succession planning, including in respect

of the Executive Chairman.

During challenging trading

conditions, the management

team has demonstrated significant

drive and leadership and a

commitment to regaining the

confidence of the market”

Paul Roy

Chair, Nomination and Remuneration Committee

Further consideration was also given during

the year to succession plans for key Board

and Committee positions, and in March,

we announced that Christopher S. Martin,

Scott Spirit, Victor Knapp and Wesley ter

Haar are stepping down from the Board with

effect from the conclusion of the 2024 AGM.

Wesley ter Haar will become a Board observer,

as an example of our founder management

ownership structure and to support input into

strategy, such as our focus on AI.

Board diversity

Board gender diversity remains a priority for

the Committee and the Board as a whole.

There are currently five women on the Board

out of a total of 15 Directors (so 33% female

representation). We are conscious that this is

below the 40% recommended by the FTSE

Women Leaders Review, and therefore this is

being kept under active review. We currently

meet the requirement to have at least one

senior Board position (being the Chair, Chief

Executive Officer, Chief Financial Officer or

Senior Independent Director position) held by

a woman, with Mary Basterfield holding the

position of Group Chief Financial Officer.

During 2023, and as at the date of this report,

the Board met the recommendation to have at

least one Director from an ethnic minority on

the Board. We currently have three Directors

who identify as ethnic minorities.

2 310 4

Capital plc Annual Report and Accounts 2023 103

Nomination and Remuneration Committee Report

continued

Further details of our Board Diversity Policy are

available on our website, www.s4capital.com.

Information on the Company’s Diversity, Equity

and Inclusion (DE&I) policy and the diversity of

the workforce as a whole are set out in the ESG

section of the Strategic Report from page 64.

In addition, on page 90 we include details of the

gender and ethnic balance across the Board

and senior management.

Directors’ remuneration in 2023

The business experienced challenging trading

conditions during 2023 reflecting the global

macroeconomic conditions and clients’

caution and fears of recession, a difficult year

for new business and lower seasonal uplift

than in previous years. We saw longer sales

cycles, particularly for larger transformation

projects, and whilst all practices saw some

impact, this was most evident in Content

with some technology clients, a reduction

in smaller project-based assignments and

local and regional clients. Throughout this

difficult period, the management team has

demonstrated significant drive and leadership

and a commitment to regaining the confidence

of the market. This has formed the context for

the decisions taken by the Committee during

the course of the year. The Committee has also

been very aware of the competitiveness of the

global talent markets from which S

Capital

seeks to recruit senior leaders, and echoes the

sentiments of those market participants calling

for a more flexible approach to rewarding top

executives of UK companies.

At the time of finalising last year’s report, the

Committee had not reached a final decision

on whether any salary increases should

be awarded to the Executive Directors for

2023. It was ultimately agreed that, with one

exception, the Executive Directors would

receive a 4% salary increase, effective from

1 April 2023. This salary increase was aligned

to the level received by the wider workforce.

The one exception was Christopher S. Martin,

for whom the Committee agreed should be paid

a salary more appropriate for the role of Chief

Operating Officer, his position from August

2022. His salary was therefore increased to

$441,258 (previously $207,360) to reflect his

wider Group-wide responsibilities in the COO

role. The new salary was considered more

closely aligned to that of equivalent roles at

similar international businesses.

As also noted in last year’s report, we were

keeping under review the matter of whether

long-term share incentives should be

granted to the Executive Directors in 2023.

After extensive consideration, the Committee

decided that it was appropriate to introduce a

new performance-based long-term incentive

plan targeted at the key executive leadership

of the Group. Its purpose is to enhance

the competitiveness of the compensation

packages of these senior leaders, to retain

their services and to ensure that their interests

are fully aligned with those of shareowners.

Awards were granted in July 2023 to

c.40 senior executives across the business,

including four of the Executive Directors.

The awards were granted under the Group’s

Employee Share Ownership Plan (ESOP) and

are consistent with the terms of the Directors’

Remuneration Policy.

The awards were structured so that each

participant received grants in the form of

conditional shares (for half of the award) and

share options with an exercise price of £2.00

(for the other half), i.e. at a significant premium

to the share price at the time of grant. The use

of premium-priced options was a deliberate

design feature to provide a very clear signal to

participants that to receive value from these

awards there will need to be a significant

increase in the share price.

This message was further reinforced by the

choice of performance conditions for the

awards. In the interests of simplicity and focus

we chose to base the targets on rewarding

share price growth. We accept that share

price is only one way of measuring long-term

performance, but it has the benefits of being

simple, incentivising and aligned with the

interest of shareowners. One half of the awards

will vest in the event the share prices reaches

£2.00, with the other half met for achieving

a share price of £2.70 – a level considerably

above the price at the time of grant and

ahead of the price at the time of writing.

The conditions will be met if the share price

reaches these hurdles during any consecutive

30-day timeframe during the three-year vesting

period from July 2023. For the Executive

Directors, there is then a further two-year

post-vesting holding period, which aligns with

investor expectations and the UK Corporate

Governance Code requirements.

Governance Report

Capital plc Annual Report and Accounts 2023 104

The Executive Directors who received long-

term incentive awards were Wesley ter Haar,

Victor Knaap, Christopher S. Martin and Mary

Basterfield. They each received conditional

share awards with a face value of 125% of

basic salary (60% of basic salary in case of

Mary Basterfield, reflecting the fact that she

also receives separate annual equity awards

as part of the package agreed at the time of

her appointment). They also received a grant

of premium-priced share options over shares

with the same face value, reflecting the value

of the underlying shares at the time of grant.

The Nomination and Remuneration Committee

approved the awards of share options at this

level noting that the fair value of each award

was substantially lower than the face value at

the time of grant, taking into account (among

other things) the premium-priced nature of the

options. The overall value of the total award

was therefore significantly less than if we had

granted conditional share awards only.

Awards were not granted to the other Executive

Directors, Sir Martin Sorrell and Scott Spirit, in

recognition of their ongoing participation in the

separate Incentive Share Scheme which was

established at the time of S

Capital’s creation

in 2018 and which rewards the growth in value

of the invested capital in S

Capital 2 Limited.

As at 31 December 2023, the minimum growth

condition for this scheme had not been met

and therefore awards are not yet capable of

being exercised.

Each Executive Director participated in the

annual cash bonus scheme for 2023, with

payments based on performance against both

financial and non-financial measures. For the

financial measures (70%) we introduced

a third metric, EBITDA to cash conversion,

reflecting the increased internal focus on this

metric. The other two financial metrics were net

revenue growth and EBITDA margin, both of

which are core indicators of the success of the

strategy of the business. For the non-financial

measures (30%), targets were linked to ESG

performance, DE&I and ongoing business

integration. The targets are set out on

page 116.

After the year end, the Committee reviewed

performance against the targets set. While the

financial targets were not met, there was

partial achievement against certain of the

non-financial measures, leading to a total

bonus outcome of 9% of maximum. However,

mindful of the Company’s overall financial

results for the year, the Committee chose to

exercise discretion and override the formulaic

calculation, determining that no bonuses would

be paid to the Directors for the year.

As previously disclosed, Mary Basterfield

participates in certain equity arrangements

agreed at the time of her recruitment in late

2021. During the year under review, she was

granted the second of four separate annual

awards to be made over the first four years of

her employment. The award had a face value

of £500,000, equivalent to 130% of her April

2023 salary, and was granted half as an award

of market-priced share options and the other

as a conditional share award. Prior to the grant

of the award in July 2023, the Committee

determined that the performance targets for

this award should align with the financial and

non-financial targets set for the 2023 annual

bonus scheme. In line with the outcome for the

annual bonus scheme, as set out above, the

formulaic performance assessment was 9%.

After detailed consideration, the Committee

concluded that this was not a suitable reflection

of Mary’s contribution to the business over

the course of 2023 and, in particular, her

focus on improvements to internal financial

processes, the enhancement of the overall

finance function under her leadership and

guidance, and her management of the external

audit process. Mary has been instrumental in

ensuring that S

Capital operates with improved

financial controls and reporting protocols.

Given the importance of these matters to

the business, and the material improvements

shown under Mary’s leadership, the Committee

decided to exercise discretion to increase

the performance outcome from 9% to 50%.

As previously agreed, the award does not vest

until August 2026, this being four years after

the date of the first annual award under these

equity arrangements.

In addition, in late 2023 the Committee met

to consider the vesting of the separate equity

award granted to Mary in December 2021 at

the time she joined the Company (but prior to

her appointment to the Board). As disclosed in

previous Directors’ Remuneration Reports,

this award was subject to targets linked both

to her role and to her personal performance

over the two-year period following grant.

Given Mary’s exceptional performance

since she joined S

Capital, the Committee

concluded that this award should vest in full.

Further details of the performance assessment

can be found on page117.

2 310 4

Capital plc Annual Report and Accounts 2023 105

Nomination and Remuneration Committee Report

continued

All decisions taken during 2023 were consistent

with the Directors’ Remuneration Policy and the

Committee therefore considered that the Policy

operated as intended during the year.

Remuneration plans for 2024

For 2024, all elements of the Executive

Directors’ pay will continue to be in line with the

approved Remuneration Policy.

As at the date of this report, the Committee

has not yet finalised a decision on any salary

increases to apply to the Executive Directors for

2024. Any increases, if agreed, will be effective

no earlier than 1 April 2024 and, among other

things, will take into account Board roles and

responsibilities as well as salary increases for

the wider workforce. Full disclosure of any

changes to Directors’ salaries will be provided

in next year’s Directors’ Remuneration Report

at the latest. Pension and benefits provision

will continue unchanged.

Under the annual bonus scheme, Executive

Directors will continue to have the opportunity

to earn up to 100% of basic salary as a bonus,

subject to the satisfaction of performance

conditions linked to strategically important key

financial and non-financial measures. 70% of

the bonus will again be payable by reference

to performance measured against financial

metrics, including EBITDA to cash conversion,

net revenue growth and EBITDA margin.

These metrics all align with our stated focus

on improving profitability against the backdrop

of ongoing macro challenges. The remaining

30% of the bonus will be payable by reference

to key non-financial objectives. As in previous

years, this includes ESG performance, DE&I

and measures linked to integration. We have

been building our ESG strategy over a number

of years and the ongoing inclusion of these

measures in the bonus reflects the work still

to do. Similarly, maximising the benefits of

operating as a unitary business remains a

strategic imperative. For 2024, this has been

supplemented by a measure which focuses on

the increased usage of AI technology, this being

key to the ongoing success of the business and

central to our long-term growth prospects.

The exact targets for the annual bonus

scheme are currently considered commercially

confidential, but as normal will be disclosed

in full in next year’s Directors’ Remuneration

Report alongside a discussion of the level of

performance achieved.

Mary Basterfield will receive a further award

of shares in 2024 with a face value at grant

of £500,000. This will be the third of the

four annual grants under the terms of her

recruitment agreement, consistent with

previous disclosures, and will again be split

equally between market-priced options and

conditional shares. The award will be subject

to the satisfaction of targets based on key

performance conditions measured over the

financial year ending 31 December 2024.

As for 2023, the precise performance targets

will mirror those for the annual bonus scheme.

The targets are considered commercially

confidential and will be disclosed in next year’s

Directors’ Remuneration Report. To the extent

that the performance targets are satisfied, the

award will vest in August 2026, this being four

years after the grant of the first award under

these arrangements.

At this stage the Committee does not have

any current intentions to make a further

grant of long-term incentive awards to any

of the Executive Directors in 2024. If this

changes, any awards will be consistent with

the terms of the Directors’ Remuneration

Policy, with full details provided in next year’s

Remuneration Report.

The Board (excluding the Non-Executive

Directors) is responsible for determining

Non-Executive Director fees. The Board has

not yet reached a final decision on any fee

increases for 2024. Any changes to fee levels

will be disclosed in next year’s Directors’

Remuneration Report.

Review of Directors’ Remuneration Policy

The Directors’ Remuneration Policy was last

approved by shareowners at the AGM in

2022 and therefore will be subject to renewal

in 2025. During the course of the current

financial year, the Committee will review the

current Policy and determine whether any

changes are necessary. As normal, it is the

Committee’s intention to consult with major

shareowners on the key terms of the new Policy

before it is presented for formal approval at the

2025 AGM.

Governance Report

Capital plc Annual Report and Accounts 2023 106

UK Corporate Governance Code

The Committee supports the UK Corporate

Governance Code and remains confident that

the overall approach to remuneration is aligned

to the Code, and that we continue to comply

with the vast majority of the provisions relating

to Directors’ remuneration.

The overall Directors’ Remuneration Policy

and the way it is implemented is aligned

with the strategy of the business and the

promotion of long-term sustainable success.

As a business, we seek to generate value

by using our technology and data to create

exceptional content, distributed by digital

media. The success of this approach is to

a significant extent measured by financial

performance. A key component of the incentive

schemes is rewarding the achievement

of challenging targets based on financial

measures which include EBITDA to cash

conversion, net revenue growth and EBITDA

margin, indicators of the success of our

strategic objectives and measures which are

closely tracked internally and by S

Capital’s

shareowners and market analysts. This is

supplemented by a focus on non-financial

measures which are critical to the long-term

value of the business and aligned with our ESG

strategy, such as ensuring that the Company

has an appropriately diverse workforce and is

managing its wider responsibilities to society.

The long-term incentive plan initiated in 2023

has a focus on share price performance, this

being critical to the business at a time when the

valuation has been suppressed. The ultimate

value of the separate Incentive Share scheme

to participants is closely correlated with the

long-term success of the business since

its foundation in 2018 and incorporates an

extended vesting period, consistent with the

expectations of the Code.

The Committee has sought to ensure that

the Directors’ Remuneration Policy and its

implementation are consistent with the factors

set out in Provision 40 of the Code:

• Clarity: Remuneration arrangements for the

Executive Directors are set out transparently

in this report, allowing shareowners to

understand the nature of the specific

incentive schemes and payments under

those schemes. We remain committed to

engagement with our major shareowners and

the wider workforce on remuneration matters.

• Simplicity: The structure of the Remuneration

Policy for the Executive Directors is simple

and straightforward. All Executive Directors

participate in the annual bonus scheme, with

the new long-term incentive plan applying to

those who do not participate in the Incentive

Share scheme. All long-term incentives have

a relatively simply structure.

• Risk: The Committee is aware that the

Incentive Share scheme may result in the

issue of shares to participants of a significant

value. However, such awards will be

consistent with the creation of shareowner

value since the foundation of S

Capital and

therefore very clearly tied to the performance

of the business. Any reputational risk

triggered by a perception of excessive

rewards which are divorced from the

underlying performance of the business

is therefore limited.

• Predictability: Rewards available to Executive

Directors under their fixed remuneration

arrangements and the annual bonus

scheme are limited in scope and reasonably

predictable in value. The value of the various

equity incentives will vary in value depending

on the achievement of the performance

conditions and the share price as at the date

of vesting/exercise. The ultimate value of

long-term incentive awards (including those

awarded under the Incentive Share scheme)

is hard to predict exactly, but it will correlate

with growth in shareowner value.

• Proportionality: The annual bonus scheme,

the long-term incentive plan, the Incentive

Share scheme and the equity awards to the

Group Chief Financial Officer tie individual

reward closely to the performance of

the business. The targets for the bonus

scheme and the Group Chief Financial

Officer ’s awards are linked to core financial

priorities and key non-financial objectives.

The Incentive Share scheme and the long-

term incentive plan reward the generation

of value for shareowners. As such, payouts

under these schemes will be reflective of

the success or otherwise of the strategic

direction which has been set for the Group.

• Alignment to culture: S

Capital is continuing

to build a new age/new era, digital, data-

driven, unitary business. Our incentive

schemes for Directors and for employees

across the Group more widely are aligned and

are all designed to ensure that performance

is rewarded which supports overall business

goals and is consistent with the purpose and

culture of the Group.

2 310 4

Capital plc Annual Report and Accounts 2023 107

There are two areas where we do not fully

comply with the remuneration-related elements

of the Code:

• Provision 36: The Group Chief Financial

Officer’s equity awards agreed as part of

her recruitment in 2021 do not have a total

vesting and holding period of five years or

more. The full rationale for the structure of

these awards was set out in the Directors’

Remuneration Report for the year ended

31 December 2021 and remains unchanged.

The Committee believes they are appropriate

for S

Capital in the context of the need to

offer a competitive recruitment package

which is aligned to the interests of the

business. The equity awards granted as part

of the new long-term incentive arrangements

in 2023 have a three-year vesting period

and a separate two-year post-vesting

holding period.

• Provision 37: The Incentive Share scheme

does not include malus or clawback

provisions, nor does the Committee

have the ability to override the formulaic

outcome of the scheme. This is due to the

long-term nature of the plan and the fact

that participants in the scheme can only

receive benefits once shareowners have

experienced significant growth in the value

of their investment. In line with the Code, the

other incentives in place for Directors (the

annual bonus scheme, the equity incentives

for the Group Chief Financial Officer and

the more recent long-term incentive awards)

include malus and clawback provisions and

provisions which give the Committee the

ability to override the formulaic outcome of

the performance tests if deemed appropriate.

Similar arrangements will apply to any new

long-term incentive offered to the Executive

Directors in the future.

The Committee has noted the publication of the

new version of the Code, which will be effective

for the financial year beginning 1 January 2025.

We will review what changes, if any, we will

need to make to ensure ongoing compliance

with the new Code.

Nomination and Remuneration Committee Report

continued

Discretion

The Committee oversees the application of

discretion in accordance with the Remuneration

Policy. The Committee exercised its discretion

during the year to set new performance targets

for the equity award granted to the Group

Chief Financial Officer during the year to align

the award with the measures in place for the

annual bonus scheme. After the year end, and

as explained above, the Committee exercised

its discretion to increase the performance

outcome for this award. The Committee also

exercised discretion to reduce the annual

cash bonus outcome for all of the Executive

Directors to zero, as also explained above.

Committee engagement

The Committee welcomes the engagement of

shareowners and is committed to maintaining

an open dialogue regarding any nomination or

remuneration-related matters. The Committee

continued to reflect on and consider

shareowner views on remuneration when

implementing the Directors’ Remuneration

Policy throughout 2023. We were pleased to

note that last year’s Directors’ Remuneration

Report received a 97.95% vote in favour at the

AGM in June 2023, indicating a good level of

support for our overall approach.

In July 2023 I wrote to major shareowners to

explain the rationale for the introduction of the

new long-term incentive plan and set out the

key terms of the initial award. No substantive

feedback was received in response. I remain

committed to ongoing dialogue with

shareowners and welcome any comments or

questions; should shareowners wish to raise

any matters with me, please do not hesitate to

get in touch via the Company Secretary.

Engagement with the wider workforce on

remuneration matters is taken seriously by the

Committee and during 2023 I held a further

session with a group of employees from across

the business to discuss compensation and,

among other things, the alignment between

executive remuneration and the pay practices

and policies across the wider Group.

Paul Roy

Chair, Nomination and Remuneration Committee

26 March 2024

Governance Report

Capital plc Annual Report and Accounts 2023 108

Remuneration Report

Summary of the Directors’ Remuneration Policy

The Directors’ Remuneration Policy was approved by shareowners at the AGM on 16 June 2022 and will continue

to apply until a new Policy is approved in 2025. Payments to Directors and payments for loss of office can only be

made if they are consistent with the terms of the approved Remuneration Policy. The Committee will be required

to seek shareowner approval for an amendment to the Policy if it wishes to make a payment to a Director which is

not envisaged by the approved Policy. The Committee is not seeking to make any changes to the Policy at the AGM

in 2024.

A summary of the key features of the Policy is included below. The full Policy can be found on pages 71-80 of the 2021

Annual Report and is also available on the Group’s website at www.s4capital.com/investors. If there is any discrepancy

between the summary and the full Policy, the full Policy will prevail.

Policy table for Executive Directors

The table below sets out the core components of the remuneration package for Executive Directors and explains the

purpose of each element and how it furthers the strategy of the Group. The table also summarises the operation of

each element and its performance conditions (where relevant), the maximum reward opportunity and the relevant

performance metrics.

Element

Purpose and link

to strategy Operation Maximum opportunity

Performance

assessment

Base salary

A fixed element of

the Executive

Directors’

remuneration,

intended to provide

a base level of

income.

Salary is reviewed annually

and otherwise by exception.

Takes into account the role

performed by the individual

and information on the rates

of pay for similar jobs in

companies of comparable

size and complexity. Salary is

typically below market rates.

Annual increases will

ordinarily be in line with

awards to other people

within the Group. Consistent

with other roles within the

Group, other specific

adjustments may be made to

take account of any changes

to individual circumstances,

such as an increase in scope

and responsibility, an

individual’s development and

performance in the role and

any realignment following

changes in market levels.

An individual’s

performance is one

of the considerations

in determining the

level of annual

increase in salary.

Benefits

A fixed element of

the Executive

Directors’

remuneration,

intended to attract,

retain and motivate

them, whilst

remaining

competitive.

Benefits such as insurance,

fully-expensed

transportation, private

medical insurance and life

assurance may be paid to the

Executive Directors in line

with market practice.

Benefits are set at a level

which the Nomination and

Remuneration Committee

considers to be

commensurate with the role

and comparable with those

provided in companies of a

similar size and complexity.

n/a

Pension

A fixed and

standard element of

the Executive

Directors’

remuneration to

support retirement.

Takes into account the role

performed by the individual,

the level of pension provided

to the wider workforce, and

the legal requirements in the

country of appointment.

Payment may be made into a

company pension scheme,

private pension plans or paid

cash in lieu.

Until 31 December 2022, for

incumbent Directors only,

maximum 30% of base

salary. For new appointments

and from 1 January 2023 for

incumbent Directors, the

maximum level of pension

contribution has been

aligned with the rate payable

to the majority of the

workforce or the legal

requirements in their country

of appointment.

n/a

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Capital plc Annual Report and Accounts 2023 109

Remuneration Report continued

Element

Purpose and link

to strategy Operation Maximum opportunity

Performance

assessment

Annual

Bonus

Scheme

The annual bonus

scheme is intended

to reward Executive

Directors for their

achievements and

the performance of

the Group in the

financial year.

Following the end of each

financial year, the

Nomination and

Remuneration Committee

reviews actual performance

against the objectives set

under the scheme and

determines awards

accordingly.

Awards are normally paid in

cash but the Nomination and

Remuneration Committee

has discretion to determine if

a proportion of the bonus

should be invested in shares.

At the discretion of the

Committee, for certain

leavers, a pro-rata annual

bonus may become payable

at the normal payment date

for the period of employment

and based on full-year

performance.

Maximum 100% of

basic salary.

The targets against

which annual

performance is

judged are

determined annually

by the Nomination

and Remuneration

Committee. Annual

performance is

assessed against a

combination of

financial, operational

strategic and

personal goals.

Malus and clawback

provisions apply to

payments under the

annual bonus

scheme. For more

details see page 116.

Incentive

Scheme

The Incentive

Shares and Options

are intended to

motivate the

Executive Directors

who are invited to

subscribe for them

to contribute

towards the

long-term

development of the

Group.

The Nomination and

Remuneration Committee

reviews the development of

the Group against the terms

of the scheme.

In aggregate, for all holders

of Incentive Shares and

Options, 15% of the growth

in value of S

Capital 2

Limited, as described on

page 122.

A compound annual

growth rate of 6%

since the

foundational

investment into

Capital 2 Limited,

as described on page

123.

Employee

Ownership

Plan

Motivate and

incentivise

employees and

Executive Directors

to contribute to the

long-term

development of

the Group.

As set out below,

Executive Directors

may become

eligible to

participate in other

long-term incentive

arrangements if

deemed

appropriate.

Awards over shares which,

for Executive Directors, vest

subject to the satisfaction of

performance conditions. The

vesting period will be up to

four years.

Awards can be structured as

options (with or without an

exercise price) or conditional

share awards.

For Executive Directors,

200% of salary per annum.

In relation to awards

made to Executive

Directors,

performance

conditions will be

linked to key

strategic priorities or

other targets

identified at the time

of grant.

Malus and clawback

provisions apply to

these awards.

Governance Report

Capital plc Annual Report and Accounts 2023 110

Element

Purpose and link

to strategy Operation Maximum opportunity

Performance

assessment

Ownership

Guidelines

Requires the

Executive Directors

to hold a minimum

level of shares both

during and after the

period of their

employment.

Executive Directors are

encouraged to build up and

then subsequently hold a

minimum level of

shareholding as soon as

reasonably practicable

following appointment with

the expectation that this will

normally be within five years

of appointment.

Executive Directors are

also required to maintain a

minimum level of

shareholding for a period

of two years following the

cessation of their

employment.

The minimum shareholding

which should be built up by

an Executive Director is a

holding equivalent in value to

200% of their basic salary.

Executive Directors must

also maintain a shareholding

for a minimum period of two

years following the cessation

of their employment of the

lower of (1) the in-

employment shareholding

requirement of 200% of

salary and (2) the individual’s

actual shareholding at the

time of their departure.

n/a

Malus and clawback

The annual bonus scheme includes malus and clawback provisions which may be invoked by the Nomination and

Remuneration Committee at its discretion within the two-year period following the payment of any bonus in the

following circumstances:

• a material misstatement of the financial results of the Company;

• the identification of an error in the calculation of the grant or determination of a performance target;

• action or conduct which amounts to fraud or gross misconduct or other circumstances which would have warranted

summary dismissal;

• a material failure of risk management;

• circumstances which have a significant impact on the reputation of the Group; and/or

• the insolvency of the Group.

The equity incentives granted to certain Executive Directors under the Employee Share Ownership Plan are subject

to similar malus and clawback provisions. Furthermore, the Committee intends that similar provisions will be applied

to any new long-term incentive scheme put in place during the lifetime of the Remuneration Policy.

Due to the long-term nature of the rewards offered by the Incentive Share scheme, which only allows the owners of

the Incentive Shares to receive benefits under the scheme once shareowners have experienced significant growth in

the value of their investment, there are no malus and clawback arrangements in respect of awards under this scheme.

Awards are, however, subject to leaver provisions intended to motivate holders to remain with the Group over the long

term (up to 14 years), subject to extension.

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Remuneration Report continued

Nomination and Remuneration Committee discretion

The Nomination and Remuneration Committee will operate the incentive schemes in accordance with the relevant

scheme rules. Consistent with standard market practice, the Committee has certain discretions regarding the

operation and administration of these schemes, including as to:

• participants;

• timing of grants or awards;

• size of awards;

• determination of how far performance metrics have been met;

• treatment of leavers or arrangements on a change of control; and

• adjustments of targets and/or measures if required following a specific event (e.g. material acquisition or disposal).

Any use of these discretions would be explained in the annual report on remuneration for the relevant year.

In addition, and in accordance with good practice, the Committee has the discretion to adjust the formulaic outcome

of the annual bonus scheme and the equity awards granted to certain Executive Directors to reflect overall business

performance over the vesting period. A similar discretionary override would be put in place for any new long-term

incentive arrangement put in place during the lifetime of the Remuneration Policy.

Additional long-term incentive arrangements

Under this Remuneration Policy, the Committee has the flexibility to agree additional long-term incentive arrangements

for Executive Directors during the lifetime of the Policy. This reflects the fast-moving nature of the business

environment and the potential need to react quickly to changing circumstances without needing formal shareowner

approval for an amendment to the Policy. Any new scheme would be aligned to the Company’s medium and long-term

strategy and would include appropriate performance metrics linked to the financial performance of the Company

(unless the Committee determines that other targets are appropriate).

If any new long-term incentive plan is established, the limit on the size of individual awards would be a grant over shares

worth up to 200% of base salary each year if granted as performance shares (with flexibility to increase to 250% of

basic salary in exceptional circumstances). If other types of award are made, these would have a similar equivalent fair

value. Such awards would vest over a period of up to four years, subject to the satisfaction of performance targets as

noted above.

Recruitment

When hiring a new Executive Director, the Committee will use the Remuneration Policy as the initial basis for

formulating the individual’s package. To facilitate the hiring of candidates of the appropriate calibre to implement the

Group’s strategy, the Committee may include any other remuneration component or award not explicitly referred to in

this Remuneration Policy (or a higher award opportunity than that set out in the Remuneration Policy table) sufficient to

attract the right candidate. Any long-term incentive award granted to a new appointee would be up to a maximum

of 250% of basic salary per annum.

Awards outside the normal policy would only be made (i) if they are considered a necessary part of an acquisition

which involves a new Director joining the Board and/or (ii) to buy out awards being foregone by the incoming Executive

Director, with the value of these buyout awards reflecting the value of the awards foregone. It is the Committee’s

intention that any buyout award would reflect the same delivery vehicle, performance and vesting horizon of the

awards foregone. Where the recruitment requires the individual to relocate, appropriate relocation costs may

be offered.

In determining the appropriate remuneration, the Committee will take into consideration all relevant factors, including

the quantum and nature of the remuneration, to ensure the arrangements are in the best interests of the Company and

its shareowners.

Governance Report

Capital plc Annual Report and Accounts 2023 112

Contracts of service

The Company’s policy is to offer contracts of employment that attract, motivate and retain skilled people who are

incentivised to deliver the Company’s strategy.

The Executive Directors have service agreements with the Company but are remunerated pursuant to agreements

concluded with other entities in the Group. A summary of the agreements pursuant to which the Executive

Directors are remunerated is set out below. The service agreements are available for inspection at the Company’s

registered office.

Director Date of appointment Date of contract

Notice period

(months)

Sir Martin Sorrell 28 September 2018

24 June 2018 12

Victor Knaap 4 December 2018 18 January 2021

Wesley ter Haar 4 December 2018 18 January 2021

Christopher S. Martin 24 December 2018 24 December 2018 At will

Scott Spirit 18 July 2019 2 July 2019 12

Mary Basterfield 3 January 2022

14 November 2021 12

Notes:

1. Sir Martin has acted as a Director of S

Capital 2 Limited since its foundation on 23 May 2018, which is the effective date of the start of his employment

pursuant to his service agreement.

2. New contracts with Victor Knaap and Wesley ter Haar were signed on this date, superseding the contracts dated 9 July 2018.

3. Notice period from Company. Notice period from Executive Director is 6 months based on Dutch legal requirement that it is half of period required

from Company.

4. Date of appointment as a Director. Joined the Company on 13 December 2021.

Policy on payments for loss of office

The service agreements for the Executive Directors allow for lawful termination of employment by making a payment

in lieu of notice, by making phased payments over any remaining unexpired period of notice, or, in relation to contracts

governed by Californian law, by paying 12 months’ base salary. There is no automatic or contractual right to annual

bonus payments. At the discretion of the Committee, for certain leavers, a pro rata annual bonus may become

payable at the normal payment date for the period of employment and based on full year performance. Should the

Committee decide to make a payment in such circumstances, the rationale would be fully disclosed in the annual

Remuneration Report.

The equity incentives awarded to Executive Directors under the Employee Share Ownership Plan include customary

leaver provisions. In certain specific ‘good leaver’ circumstances (death, illness or disability, the business for which the

individual works no longer being part of the Group, or any other reason determined by the Committee), the Committee

may determine that awards which have not vested at the date of cessation shall continue and be available for vesting

on the normal vesting date. The extent of vesting will depend upon the satisfaction of the relevant performance

conditions. The award will also be subject to a pro-rata reduction to reflect the number of completed days in the period

between the grant date and the date of cessation as a proportion of the total number of days in the vesting period.

The Committee has the discretion to disapply this time pro-rating if deemed appropriate. If the Committee deems the

individual to be a ‘bad leaver’, then any unvested award will lapse immediately on the date of cessation.

In the event of a change of control or winding up of the Company, the Committee has the discretion to determine that

the performance conditions will continue to apply, and that the number of shares which vest will be subject to pro-

rating to reflect the number of completed days between the grant date and the date of the corporate event.

The Committee reserves the right to make additional liquidated damages payments outside the terms of the Directors’

service contracts where such payments are made in good faith in order to discharge an existing legal obligation, or

by way of damages for breach of such an obligation, or by way of settlement or compromise of any claim arising in

connection with the termination of a Director’s office or employment.

Statement of consideration of employment conditions elsewhere in the Group

The Group operates in fast-moving sectors across multiple jurisdictions and with employees who have joined the Group

following the acquisitions that have been made since S

Capital was established. Pay levels and structures for people

across the organisation are designed to be competitive and to reflect the dynamics in specific markets.

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Capital plc Annual Report and Accounts 2023 113

Remuneration Report continued

Consideration of shareowner views

The Committee considers it extremely important to maintain open and transparent communication with the Company’s

shareowners. The views of shareowners are received through various avenues, such as at the AGM, during meetings

with investors and through other contact during the year. These views are considered by the Committee and help to

inform the development of the overall Remuneration Policy.

In 2023, the Committee Chair wrote to major shareowners with regard to the structure of the new long-term incentive

plan and to invite questions or comments on the plan.

Policy table for the Non-Executive Directors

Element

Purpose and link to

strategy Operation Maximum opportunity

Performance

assessment

Fees To attract and retain

Non-Executive

Directors with

adequate

experience and

knowledge.

The fees of the Non-Executive Directors

are determined by the Board based upon

comparable market levels and time

commitment. The Non-Executive Directors

do not participate in any performance-

related incentive arrangements, nor do

they have any entitlement to benefits or

pension contributions. Directors may be

paid additional amounts for services such

as acting as the Senior Independent

Director or as a Committee Chair.

The maximum fees

payable are subject to an

aggregate annual limit as

set out in the Articles of

Association which is

currently £500,000.

n/a

Fees

The Board (excluding the Non-Executive Directors) is responsible for determining the fees for the

Non-Executive Directors.

Letters of appointment

The terms of appointment of the Non-Executive Directors are set out in their respective letters of appointment.

Appointment as a Non-Executive Director is subject to a three-month notice period. The Group has no obligation

tomake termination payments if a Non-Executive Director is not re-elected as a Director at an AGM.

The appointments of Rupert Faure Walker and Paul Roy are governed by their appointment letters with S

Limited, which remained in place following the completion of the Company’s acquisition of S

Capital 2 Limited

on28 September 2018.

Director Date of appointment

Date of letter of

appointment

Notice period

(months)

Rupert Faure Walker 28 September 2018 12 March 2021¹ 3

Paul Roy 28 September 2018 24 June 2018 3

Sue Prevezer 14 November 2018 3 November 2018 3

Daniel Pinto 24 December 2018 4 December 2018 3

Elizabeth Buchanan 12 July 2019 11 June 2019 3

Naoko Okumoto 10 December 2019 9 December 2019 3

Margaret Ma Connolly 10 December 2019 6 December 2019 3

Miles Young 1 July 2020 30 June 2020 3

Colin Day 2 August 2022 2 August 2022 3

Note:

1. A new letter of appointment was signed with Rupert Faure Walker on this date, superseding those dated 24 June 2018 and 10 September 2018.

Recruitment of new Non-Executive Directors

Any new Non-Executive Director appointed during the period covered by this Remuneration Policy will have their

remuneration set in line with the provisions of the Policy table above.

Governance Report

Capital plc Annual Report and Accounts 2023 114

Annual Remuneration Report

The information provided in this Annual Remuneration Report is subject to audit where indicated. Details of the

Directors’ interests in the share capital of the Company are set out on page 121. The remuneration of the Executive

Directors for the year to 31 December 2023 is presented below with a comparison for the year to 31 December 2022.

Executive Directors’ remuneration as a single figure (audited)

£000

Salary

All taxable

benefits

Annual

bonus

Incentive

shares Pension Other Total

Total fixed

Remuneration

Tot al

variable

Remuneration

2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022

Sir Martin

Sorrell

258 250 103 84 – 100 – – 10 75 – – 371 509 371 409 – 100

Victor Knaap

188 180 16 15 – 74 – – 8 7 – – 212 276 212 202 – 74

Wesley ter

Haar

188 180 16 15 – 74 – – 7 7 – – 211 276 211 202 – 74

Peter

Rademaker

2, 3

– 20 – – – – – – – 1 – – – 21 – 21 – –

Pete Kim

4, 5

– 77 – – – – – – – 2 – – – 79 – 79 – –

Christopher

S. Martin

308 168 – – – 69 – – 8 5 – – 316 242 316 173 – 69

Scott Spirit

333 319 21 21 – 133 – – 13 32 – – 367 505 367 372 – 133

Mary

Basterfield

381 370 – – – 148 – – 15 15 96 180 492 713 396 385 96 328

Total 1,656 1,564 156 135 – 598 – – 61 144 96 180 1,969 2,621 1,873 1,843 96 778

Notes:

1. Taxable benefits include, and in the case of Sir Martin Sorrell, exclusively comprise amounts relating to health insurance.

2. The remuneration of Victor Knaap, Wesley ter Haar and Peter Rademaker is converted into sterling from euros using the average exchange rate for the

year, consistent with the basis of the presentation of financial performance in the financial statements.

3. Peter Rademaker stepped down as an Executive Director on 3 January 2022. As disclosed in the Directors’ Remuneration Report for the year ended

31 December 2021, he received no payments for loss of office but remained employed by the Company until 31 January 2022, during which time he

received his salary and other fixed pay, as disclosed in the table above. He served on the Board as a Non-Executive Director until 16 June 2022.

4. The remuneration of Pete Kim and Christopher S. Martin is converted into sterling from US dollars using the average exchange rate for the year,

consistent with the basis of the presentation of financial performance in the financial statements.

5. Pete Kim stepped down as an Executive Director on 16 June 2022. He received no payment for loss of office, and remained employed by the Group

until 3 July 2023.

6. The remuneration of Scott Spirit is converted into sterling from Singaporean dollars using the average exchange rate for the year, consistent with the

basis of the presentation of financial performance in the financial statements.

7. For Mary Basterfield, the amount disclosed under ‘Other’ for 2023 includes £59,342 as the value at the end of 2023 of the equity award granted

during the year in connection with her recruitment, for which performance was measured over the 2023 financial year, and reflecting the Nomination

and Remuneration Committee’s decision that performance should be assessed at 50%. £nil of this amount is attributable to share price appreciation.

The shares will vest in August 2026, being three years from the date of grant. The amount disclosed under ‘Other’ for 2023 also includes £36,995

as the value at vesting of the share award granted to Mary in December 2021 prior to her appointment as an Executive Director. £nil of this amount is

attributable to share price appreciation. Further details on these awards can be found later in this report. The amount disclosed under ‘Other’ for 2022

is the value at the end of that year of the equity award granted in 2022 in connection with Mary’s recruitment, for which performance was measured

over the 2022 financial year. Further details on this award can be found in last year’s Directors’ Remuneration Report.

8. Total remuneration for Mary Basterfield is the aggregate remuneration of the highest paid UK director.

Salary (audited)

The salaries of the Executive Directors were reviewed by the Nomination and Remuneration Committee during the

year and increased with effect from 1 April 2023. With the exception of Christopher S. Martin, all Directors received

a salary increase of 4%, in line with the average increase for the wider workforce. Following a review, Christopher S.

Martin’s salary was increased to reflect the wider scope of his responsibilities as Chief Operating Officer, following his

appointment to that role in 2022.

The annual salaries of the Directors with effect from April 2023 were as follows:

Sir Martin Sorrell £260,000

Victor Knaap €218,400

Wesley ter Haar €218,400

Christopher S. Martin $441,258

Scott Spirit SG$561,600

Mary Basterfield £384,800

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Capital plc Annual Report and Accounts 2023 115

Remuneration Report continued

Pension (audited)

For 2023, all Executive Directors’ pensions were aligned with the wider workforce or to the legal requirements in place

in their country of appointment. Pension contributions for Sir Martin Sorrell, Scott Spirit and Mary Basterfield were at

a rate of 4% of basic salary. These contributions were paid into the Company’s pension scheme in the case of Scott

Spirit and Mary Basterfield. Sir Martin Sorrell received a payment of a cash amount in lieu of pension. Victor Knaap and

Wesley ter Haar received Dutch age-related pension contributions. Pension contributions were made to Christopher S.

Martin via a US 401(k) plan.

Annual bonus scheme (audited)

The 2023 bonus scheme was based on the achievement of performance targets linked to the Group’s strategic

priorities. 70% of the bonus was payable by reference to performance against Group financial metrics, and the

remaining 30% was payable by reference to key non-financial objectives.

The specific financial metrics are set out in the table below.

Weighting

(% of total bonus) Targets Result

Gross profit (net revenue) 25% 8.9% to 9.9% growth on like-for-like basis vs FY22 -4.5%

EBITDA margin 25% 16% to 17.8% as percentage of net revenue 10.7%

EBITDA to cash conversion

20% 70% to 80% ratio 68.4%

Note:

1. Defined as EBITDA less capex less change in working capital/EBITDA.

For the 30% of the bonus subject to non-financial objectives, targets were set based on the ongoing integration of the

various businesses within S

Capital, diversity and inclusion and ESG, as summarised below.

Objective Targets

Weighting

(% of total

bonus) Achievements Score

Integration • Unifying business processes

to improve efficiency and

further enhance the ‘one

Capital’ approach.

• Identifying and managing

execution of opportunities

to integrate the S

Capital

Group’s physical presence.

• Working as an integrated

team to identify and execute

opportunities to grow the

top line.

20% • Built MOTIF senior management

communication group.

• Developed culture and

engagement roadmap, held

workforce engagement

presentations and expanded our

global community groups across

our culture to meet DE&I goals.

• Conducted global information

security training across the

workforce, reduced staff and

costs across back office and

corporate teams.

• Opened integrated offices in

Sydney and Singapore.

• Introduced the +1 strategy with

wins across the practices.

33%

Diversity,

Equity

and Inclusion

• Improving the Black

representation in the US

towards the goal of 13%.

• Improving the percentage of

women in leadership towards

the goal of 50%.

5% • Target not met: slight decrease

from 5.8% to 5.6% Black

representation in the US.

• Target not met: no increase in

women in leadership.

ESG • Set the Science-Based

Emission Targets for the next

10 years.

5% • Targets agreed (and submitted to

the SBTi in February 2024).

• Also noted increase in CDP score

from B- to B.

50%

Governance Report

Capital plc Annual Report and Accounts 2023 116

Following the end of the financial year, the Committee considered in detail the achievements against both the financial

and non-financial targets as set out above, which on a formulaic basis would have resulted in a bonus equivalent to

9.17% of the maximum opportunity.

However, mindful of the Company’s overall financial results for the year, the Committee chose to exercise its discretion

and override the formulaic calculation resulting in a determination that no bonus should be paid to the Directors.

Share awards for the Group Chief Financial Officer (audited)

Award granted during 2021 and vesting based on performance measured in 2023

As originally disclosed in the 2021 Directors’ Remuneration Report, Mary Basterfield was granted a nil-cost option

over shares when she joined the Company in December 2021. This award was over 76,913 shares and vested after

two years subject to continued employment and the satisfaction of specific performance conditions linked to her role

and personal performance. These performance conditions were based on: (a) the integration and development of the

finance function across the business, including the development of the organisational structure, an assessment of the

required skills for key roles and the appointment of appropriately qualified and experienced staff for these positions; (b)

a full review of the finance function, its systems and processes; and (c) overall personal performance.

The Committee reviewed Mary’s performance in detail in December 2023. Since joining the business, Mary has led a

series of major changes across the finance function designed to improve internal systems and processes and enhance

the quality of management information provided to the Board. She has reorganised certain roles and responsibilities

within the finance function and recruited additional colleagues who have themselves contributed to a significant step

change in the operation of this critical part of the business. The success of these initiatives have been recognised in

positive feedback from both internal and external stakeholders. Mary’s personal performance has also been excellent

as she has successfully undertaken these initiatives at a time when the business has faced a number of challenges.

As a result of the performance achieved the Committee determined that the award should vest in full. This was

considered to be a fair reflection of Mary’s overall performance since she joined the Company at the end of 2021.

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Remuneration Report continued

The number of shares awarded and the number scheduled to vest following the assessment of the performance

condition is set out in the table below.

Director

Date

of grant

Face value

of award

Number of

options awarded

Exercise

price (£)

Vesting

proportion

No. of

options

to vest

Value as

at vesting

date

Vesting

date

Mary

Basterfield

13 Dec

2021

£500,000 76,913

share options

Nil

100% 76,913 £36,995 13 Dec

2023

Notes:

1. The number of shares awarded and the exercise price for the share options was based on the 30-day volume weighted average price per share,

ascalculated on the date of grant.

2. These awards were granted as nil-cost options and do not have an exercise price.

3. The value of the awards has been calculated based on a share price of 48.1p, being the share price at the date of vesting. Of the total value, £nil is

deemed attributable to share price appreciation since the date of grant.

Award granted during 2023 and vesting based on performance measured in 2023

In accordance with the terms of her appointment, and as described in the audited 2021 Directors’ Remuneration

Report, Mary Basterfield will receive four separate grants of equity over the first four years of her appointment.

Each award has a face value of £500,000, equivalent to 130% of her basic salary from April 2023.

The first award was granted in 2022. Details of the performance conditions for that award and the outcome of the

performance test were set out in last year’s Remuneration Report.

The second award was granted during 2023 as a mix of market-priced options and conditional shares. The use of

market-priced options for half of the grant ensures a focus on share price growth as well as the performance conditions

attached to the award.

The Nomination and Remuneration Committee agreed during the year that the award should incorporate the same

performance conditions as the 2023 annual bonus scheme (as detailed in the bonus section above). In line with the

outcome for the annual bonus scheme, the formulaic performance assessment was 9%. However, the Committee

exercised its discretion to increase the performance outcome to 50%. The rationale for this is set out in the statement

from the Committee Chair on page 105. Accordingly, 50% of the award will lapse. The remaining 50% will vest

in August 2026, being four years after the date of grant of the first share award in 2022. There are no additional

performance conditions which must be met prior to the vesting date. In light of the extended vesting period, the

Committee believes that this award is a genuine long-term incentive. Mary’s entitlement to the award will lapse in the

event of her being deemed a ‘bad leaver’ prior to the vesting date.

The number of shares awarded and the number scheduled to vest following the assessment of the performance

condition is set out in the table below.

Director

Date

of grant

Face value

of award

Number of

shares/ options

awarded

Exercise

price (£)

Vesting

proportion

No. of

shares options

to vest

Value as

at 31 Dec

2023

Vesting

date

Mary

Basterfield

13 July 2023 £250,000 213,078

share options

1.173

50% 106,539 £Nil 2 Aug

2026

13 July 2023 £250,000 213,078

conditional

n/a

50% 106,539 £59,342 2 Aug

2026

Notes:

1. The number of shares awarded and the exercise price for the share options was based on the 30-day volume weighted average price per share, as

calculated on the date of grant.

2. These awards were granted as conditional share awards and do not have an exercise price.

3. The value of these awards has been calculated based on a share price of 55.70p, being the average share price over the final three months of the 2023

financial year. Of the total value, £nil is deemed attributable to share price appreciation since the date of grant.

Governance Report

Capital plc Annual Report and Accounts 2023 118

Long-term incentives granted during the year (audited)

As explained in the Statement from the Chair of the Nomination and Remuneration Committee, during the financial

year under review a number of Executive Directors were granted new long-term incentive awards under the Employee

Share Ownership Plan (ESOP). These awards were granted as a mix of premium-priced share options and conditional

share awards, as set out in the table below.

Director

Date

of grant Basis of award

Face value

of award

Number of shares/

options

awarded

Exercise

price (£)

Vesting

date

Wesley ter Haar

13 July 2023 125% of salary €273,000 200,286

share options

2.00 13 July 2026

13 July 2023 125% of salary €273,000 200,286

conditional shares

n/a

13 July 2026

Victor Knaap

13 July 2023 125% of salary €273,000 200,286

share options

2.00 13 July 2026

13 July 2023 125% of salary €273,000 200,286

conditional shares

n/a

13 July 2026

Christopher S. Martin

13 July 2023 125% of salary $551,573 373,262

share options

2.00 13 July 2026

13 July 2023 125% of salary $551,573 373,262

conditional shares

n/a

13 July 2026

Mary Basterfield

13 July 2023 60% of salary

£231,000 197,4 3 6

share options

2.00 13 July 2026

13 July 2023 60% of salary

£231,000 197,4 3 6

conditional shares

n/a

13 July 2026

Notes:

1. This reflects the value of the underlying shares at the time of grant. The Nomination and Remuneration Committee approved the awards of share

options at this level noting that the fair value of each award was substantially less than the face value at the time of grant, taking into account (among

other things) the premium-priced nature of the options.

2. The number of shares awarded was based on the 30-day volume weighted average price per share of £1.173, as calculated on the date of grant.

3. These awards were granted as conditional share awards and do not have an exercise price.

4. Award size adjusted to reflect separate equity awards received by Mary as part of the arrangements agreed at the time of her recruitment.

The vesting of the awards is subject to performance conditions based on share price growth. The Company’s share

price must reach the following levels in order for the awards to vest.

Share price Level of vesting

£2.70 100%

£2.00 50%

Less than £2.00 nil

The performance conditions are met in the event that the share price meets the £2.00 or £2.70 targets during any

consecutive 30-day period during the three-year vesting period. However, no awards vest until July 2026,

i.e. three years after the date of grant. Awards which vest to the Executive Directors are then subject to a further

two-year post-vesting holding period.

2 310 4

Capital plc Annual Report and Accounts 2023 119

Remuneration Report continued

Non-Executive Directors’ remuneration as a single figure (audited)

£000

Year to

31 December

2023

Year to

31 December

2022

Rupert Faure Walker

48 43

Paul Roy 45 45

Sue Prevezer 38 38

Daniel Pinto 38 38

Elizabeth Buchanan 38 38

Naoko Okumoto 38 38

Margaret Ma Connolly 38 38

Miles Young 38 38

Peter Rademaker

– 19

Colin Day

45 19

Notes:

1. There were no increases to the fees payable to the Non-Executive Directors during 2023.

2. As disclosed last year, Rupert was due to receive fees of £45,000 for services during 2022. However, due to an administrative error he received

£42,500. The outstanding fees were paid in 2023, resulting in a total of £47,500 being received during the year.

3. Appointed as a Non-Executive Director on 3 January 2022 and retired from the Board on 16 June 2022.

4. Appointed to the Board on 2 August 2022.

Payments for loss of office/Payments to past Directors (audited)

No payments for loss of office or payments to past Directors were made during 2023.

Directors’ interests in shares and share options (audited)

The consideration payable by the Group in respect of business combinations has included a substantial proportion of

equity in the Company. As a result, the Executive Directors who previously held equity in MediaMonks or MightyHive

hold a substantial number of the Company’s shares. Further, Sir Martin Sorrell is a substantial shareowner in the

Company as a consequence of his foundational investment into S

Capital 2 Limited.

The Directors’ Remuneration Policy approved at the AGM in 2022 formalised a minimum shareholding requirement

for Executive Directors to build and hold shares equivalent in value to 200% of their basic salary. This holding should

be built up as soon as reasonably practicable following appointment and with the expectation that this will normally

be within five years of appointment. The Policy also includes a requirement for Executive Directors to maintain a

shareholding for a minimum period of two years following the cessation of their employment of the lower of (1) the

in-employment shareholding requirement of 200% of salary and (2) the individual’s actual shareholding at the time of

their departure.

Governance Report

Capital plc Annual Report and Accounts 2023 120

Details of Directors’ interests in Ordinary Shares, unvested and vested share awards, and Incentive Shares as at

31 December 2023 are set out in the table below.

Interest in

Ordinary

Unvested

Share Awards

and Share

Options

Subject to

Performance

Conditions

Unvested

Share Awards

and Share

Options

Subject to No

Performance

Conditions

Vested but

Unexercised

Share Options

Interest

in Incentive

Instruments

Shareholding

Requirement

(% of Basic

Salary)

Shareholding

Requirement

Met?

Executive Directors

Sir Martin Sorrell

54,229,594 – – – 4,000 200% Yes

Victor Knaap

17,546,0 66 400,572

– – – 200% Yes

Wesley ter Haar

17,546,0 67 400,572

– – – 200% Yes

Christopher S. Martin

6,476,522 746,524

– – – 200% Yes

Scott Spirit

307,19 4 – – – 2,000 200% No

Mary Basterfield

20,000 821,028

165,618

76,913

– 200% No

Non-Executive Directors

Rupert Faure Walker 1,008,450 – – – – – –

Paul Roy 1,950,129 – – – – – –

Sue Prevezer 293,512 – – – – – –

Daniel Pinto

13,572,769 – – – – – –

Elizabeth Buchanan 37,777 – – – – – –

Naoko Okumoto 25,396 – – – – – –

Margaret Ma Connolly 19,523 – – – – – –

Miles Young 50,000 – – – – – –

Colin Day 109,695 – – – – – –

Notes:

1. Sir Martin Sorrell holds 4,000 A2 Incentive Shares and also holds the B share.

2. Victor Knaap and Wesley ter Haar hold their interests in Ordinary Shares through (i) Oro en Fools B.V., their joint personal holding vehicle which is

owned (indirectly) 50% by Victor Knaap and 50% by Wesley ter Haar; and (ii) Zen 2 B.V., the ordinary share capital of which is owned 51% by Oro

en Fools B.V. and 49% by funds managed by Bencis Capital Partners B.V. The interests in Ordinary Shares of Victor and Wesley noted above are

the aggregate totals of the ordinary shares held by these entities. Certain of the interests of Christopher S. Martin are held through certain family

trust arrangements.

3. Scott Spirit has options to subscribe for a total of 2,666 A1 Incentive Shares (this includes the 2,000 Incentive Share Options disclosed in the table

above), as explained on page 122.

4. These awards reflect the share options and conditional share awards granted during the year under the long-term incentive plan (as detailed on page

119 and, in the case of Mary Basterfield, also include the separate share award granted in 2023 in connection with the arrangements agreed at the time

of her recruitment as detailed on page 117.

5. Reflects the number of share options (82,809) and conditional share awards (82,809) remaining from the award originally granted to Mary Basterfield

in 2022 in connection with the arrangements agreed at the time of her recruitment. As explained in last year’s Directors’ Remuneration Report, the

performance conditions for this award were measured over the 2022 financial year and will vest at a level of 50% in August 2026. There are no further

performance conditions attached to this award.

6. This award of nil-cost options was granted to Mary Basterfield in December 2021 prior to her appointment as an Executive Director. This award vested

in full in December 2023 following the satisfaction of the relevant performance conditions, as discussed on page 117.

7. Comprises 232,600 shares held personally and 13,340,169 shares acquired by Stanhope Entrepreneur Fund, a growth capital fund managed by

Stanhope Capital, of which Daniel Pinto is Chief Executive.

There were no changes to Directors’ interests during the period from 31 December 2023 to the date of this report.

2 310 4

Capital plc Annual Report and Accounts 2023 121

Remuneration Report continued

The S

Capital 2 Limited Scheme

Arrangements were put in place shortly after the formation of S

Capital 2 Limited (formerly S

Capital Limited) to

create incentives for those certain executives who are expected to make key contributions to the success of the Group.

The Group’s success depends upon the sourcing of attractive investment opportunities and the improvement of the

performance of any businesses that are acquired. Accordingly, an incentive scheme (the S

Capital 2 Limited Scheme,

or the Incentive Share Scheme) was created to reward key contributors for the creation of value through the use of

Incentive Shares.

Sir Martin Sorrell subscribed for A2 Incentive Shares in May 2018 and Scott Spirit was granted an option to subscribe

for A1 Incentive Shares in January 2020. The terms of these awards are set out in the table below.

Number of Incentive Instruments Date of Issue

Sir Martin Sorrell

Scott Spirit

4,000 A2 Incentive Shares

2,000 A1 Incentive Share options

29 May 2018

Option issued 27 January 2020 following

Nomination and Remuneration Committee approval December 2019

Note:

1. Scott Spirit also has an option to subscribe for up to an additional 666 A1 Incentive Shares in the event of the issue of any further Incentive Shares by

the Directors. The purpose of this additional award is to ensure that his interest in the Incentive Shares is maintained at the same level (5%, being 1/3rd

of the total 15%) in the event of the issue of further Incentive Shares.

There were no new Scheme interests awarded under the S

Capital 2 Limited Scheme during the year ended

31 December 2023.

The Directors of S

Capital 2 Limited have the authority to issue a further 2,000 A1 Incentive Share options. The issue

of further Incentive Shares will not increase the aggregate entitlement of the holders of Incentive Shares above 15%

of the growth in value of S

Capital 2 Limited.

The Incentive Shares are subject to a number of conditions, as set out more fully below.

Terms of the S

Capital 2 Limited Scheme

The Incentive Shares entitle the holders, subject to certain performance criteria and leaver provisions, to up to 15% of

the growth in value of S

Capital 2 Limited from the plan’s inception provided that the growth condition (as described

below) has been met. The growth in value of S

Capital 2 Limited is measured against the market capitalisation of the

Company based on an average of the mid-market closing price of the Ordinary Shares over the preceding 30 trading

days, plus any dividends or distributions to the Company’s shareowners prior to the date of calculation and then

deducting the net asset value of the Company on a standalone basis, ignoring the investment in S

Capital 2 Limited

and its subsidiaries, and deducting the aggregate amount invested in the Company whether in cash or by issue of

shares in its acquisitions, mergers and combinations.

Provided that the growth condition has been satisfied, the Incentive Shares entitle the holders to their return upon

a sale or combination of S

Capital 2 Limited, its liquidation, the takeover or combination of the Company or, if none

of those events has occurred prior to 9 July 2023 (being the fifth anniversary of the combination with MediaMonks

by S

Capital 2 Limited), if Sir Martin Sorrell serves notice on the Company requiring it to acquire all of the Incentive

Shares eligible for sale on or before 9 July 2025 (being the seventh anniversary of the combination with MediaMonks)

or such later date as the Company and each of the Incentive Share classes agree. If Sir Martin serves such a notice,

the growth in value of S

Capital 2 Limited is measured against the market capitalisation of the Company based on an

average of the mid-market closing price of the Ordinary Shares over the preceding 30 trading days, plus any dividends

or distributions over time. Once triggered, all of the Incentive Shares eligible for sale receive value at the same time on

a pro rata basis and then automatically reset such that they may receive the same return over a second period of up to

seven years, subject to extension.

The consideration payable if the Incentive Shares are triggered, save on a takeover, liquidation or combination of

Capital 2 Limited, will be satisfied by the issue of Ordinary Shares in S

Capital plc at the average of the mid-market

closing price of the Ordinary Shares over the 30 trading days preceding the triggering of the Incentive Shares.

Governance Report

Capital plc Annual Report and Accounts 2023 122

Growth condition

The growth condition is the compound annual growth rate of the invested capital in S

Capital 2 Limited being equal to

or greater than 6% per annum since the foundational investment into S

Capital 2 Limited on 29 May 2018. The growth

condition takes into account the date and price at which shares in S

Capital 2 Limited have been issued, the date and

price of any subsequent share issues and the date and amount of any dividends paid, or capital returned by S

Capital

2 Limited to the Company. Any cash raised by the Company from time to time has been and will continue to be invested

in S

Capital 2 Limited so that the growth condition will apply to that capital also.

As at 31 December 2023, the growth condition has not been met as there had been no growth in the invested capital

when measured against the Company’s market capitalisation.

Additional conditions

The Incentive Instruments are subject to certain conditions, at least one of which must be (and continue to be) satisfied

in order for Sir Martin Sorrell (as the holder of the majority of the A2 Incentive Shares) to elect for the A1 share options

and A2 Incentive Shares to be sold to the Company. The A1 and A2 Incentive Shares and Options will vest into Ordinary

Shares of S

Capital plc in the following circumstances:

• a sale of all or a material part of the business of S

Capital 2 Limited;

• a sale of all of the issued S

Capital 2 Limited Ordinary Shares by the Company;

• a winding up of S

Capital 2 Limited occurring;

• a sale or change of control of S

Capital 2 Limited or the Company; or

• if later than 9 July 2023 (being the fifth anniversary of the MediaMonks combination).

Compulsory redemption

If the growth condition is not satisfied on or before 9 July 2025 (being the seventh anniversary of the combination

with MediaMonks), or such later date as the Company and each of the Incentive Share classes agree, the Incentive

Shares must be sold to the Company at a price per Incentive Share equal to the subscription price of £25.00 per

Incentive Share.

Leaver provisions

The Incentive Shares are subject to leaver provisions. If a holder of Incentive Shares ceases to be employed by or hold

office with the Group, that holder will become a ‘Leaver’ and, depending on the circumstances of his or her departure,

certain of his or her Incentive Shares may be subject to forfeiture.

2 310 4

Capital plc Annual Report and Accounts 2023 123

Remuneration Report continued

Share price

The chart below illustrates the performance over the period of an investment of £100 in the Company’s shares made on

13 September 2018, shortly before the Company acquired the S

Capital Group and was re-admitted to trading on the

Official List, to 31 December 2023. This has been compared to the performance of the same investment on the same

date in the FTSE 350. This comparator has been chosen as it is a broad equity market index of large and medium-sized

UK-listed companies, many of which have an international dimension.

13 Sep

2018

31 Dec

2018

31 Dec

2020

31 Dec

2019

31 Dec

2022

31 Dec

2021

31 Dec

2023

100

200

700

600

500

400

300

800

Capital plc FTSE 350

The table below sets out the Executive Chairman’s total remuneration as a single figure, together with the percentage

of maximum annual bonus awarded over the same period as the chart above in respect of the Company’s share price.

Year to

31 December

2018

Year to

31 December

2019

Year to

31 December

2020

Year to

31 December

2021

Year to

31 December

2022

Year to

31 December

2023

Executive Chairman single figure of

remuneration (£000) 140 272 218 203 509 371

Annual bonus payout (% of maximum) 100% 85% 75% 0% 40% 0%

Share award vesting (% of maximum) n/a n/a n/a n/a n/a n/a

Governance Report

Capital plc Annual Report and Accounts 2023 124

Percentage change in remuneration of Directors compared to employees

The table below shows the year-on-year percentage change in salary, benefits and bonus for each Director for each

ofthe last four financial years, compared with the average change in employee pay.

The figures for the Directors are based on the disclosures in the single total figure table on page 115 and the

corresponding tables from previous Directors’ Remuneration Reports.

2023 vs 2022 2022 vs 2021 2021 vs 2020 2020 vs 2019

Salary/

Fees Benefits Bonus

Salary/

Fees Benefits Bonus

Salary/

Fees Benefits Bonus

Salary/

Fees Benefits Bonus

Executive Directors

Sir Martin Sorrell 3% 22.6% -100% 150% 14% 100% 33% 62% -100% -25% -21% -12%

Victor Knaap 4.7% 6.7% -100% -1% -0.5% 100% 95% 88% -100% -48% 100% -16%

Wesley ter Haar 4.7% 6.7% -100% -1% -0.5% 100% 95% 88% -100% -48% 100% -16%

Christopher S. Martin 82.7% – -100% 11% -99% 100% 51% 1,500% – -36% -96% –

Scott Spirit

4.6% 0% -100% 9% 9% 100% 28% -5% -100% – – –

Mary Basterfield

3% 0% -100% – – – – – – – – –

Non-Executive Directors

Rupert Faure Walker 11.8% – – -4% – – 32% – – 35% – –

Paul Roy 0% – – 0% – – 32% – – 35% – –

Sue Prevezer 0% – – 0% – – 36% – – 13% – –

Daniel Pinto 0% – – 0% – – 36% – – 13% – –

Elizabeth Buchanan

0% – – 0% – – 36% – – – – –

Naoko Okumoto

0% – – 0% – – 36% – – – – –

Margaret Ma Connolly

0% – – 0% – – 36% – – – – –

Miles Young

0% – – 0% – – – – – – – –

Colin Day

– – – – – – – – – – – –

All UK Group employees

4% 0% 25% 4% 3% -68% -6% -6% -67% 3% -16% 11%

Notes:

1. Percentage change not shown for these Directors in certain periods as they had part-year service for one of the comparative periods.

2. Included to provide a more representative sample of the wider employee base in the UK. The listed entity, S

Capital plc, has no direct employees.

Pay ratio

The table below reports the pay ratio for the year ended 2023 and has been calculated using the method known

as Option A, which involves calculating a single figure for each UK employee based on their actual pay for the year.

This ensures that the most accurate information is used for the purposes of calculating the ratio and is the option most

favoured by investors.

Year Method 25th percentile pay ratio Median pay ratio 75th percentile pay ratio

2023 Option A 8.4 6.0 4.5

Total pay and benefits £000 44 61 83

Salary £000 43 58 80

2022

Option A 12.1 8.5 6.2

2021

Option A 5.0 3.6 2.6

2020

Option A 5.3 3.7 2.8

2019

Option A 6.8 5.8 4.1

Note:

1. The calculations of the pay for the employees at the different levels have been calculated as of 31 December of each relevant year.

2 310 4

Capital plc Annual Report and Accounts 2023 125

Remuneration Report continued

A full-time equivalent calculation has been applied to the pay of part-time employees and those leaving or joining

during each year to ensure an appropriate annualised comparison with the pay of the Executive Chairman.

The Committee believes that the median pay ratio for 2023, as disclosed in the table above, is reflective of the

current pay policies across the UK employee base at this stage, and is consistent with the wider pay, reward and

progression policies affecting UK employees. Employees’ pay packages are designed to be competitive and to ensure

that performance as a whole is rewarded through appropriate incentive schemes. As illustrated in the table above,

the 2023 pay ratio is lower than that for 2022 but higher than for earlier years. This primarily reflects the nil bonus

payment in 2023 compared to the previous year.

Capital is a global business with approximately 7,700 employees in 32 countries. Multiple different compensation

arrangements have been inherited from the various businesses acquired over the period since S

Capital was

established. A key focus of management in recent years has been to ensure a greater level of harmonisation of people

and compensation practices across the whole businesses. Pay policies and practices are intended to be consistent

across the whole Group, and during 2023 there was enhanced focus on ensuring we have the appropriate variable

compensation to be able to reward effectively in what remain very competitive markets for key talent. Equity is

granted to selected key employees either in the form of long-term incentives (mirroring the approach taken for certain

Executive Directors in 2023) or as retention awards with extended vesting periods.

During the year, the Nomination and Remuneration Committee reviewed workforce remuneration and related

policies and the relationship between the Directors’ Remuneration Policy and the arrangements in place for the wider

workforce. The Committee is satisfied that the remuneration for the Executive Directors is appropriate in this context

and that there is close alignment between the pay structures for the Executive Directors and those for the senior

executives operating below Board level.

In addition, in late 2023 the Chair of the Committee held a session with selected employees to discuss the

compensation philosophy across the business and the alignment of the pay of senior S

Capital executives (including

the Executive Directors) with that of the wider workforce.

Relative importance of spend on pay

The table below shows the relative importance of spend on pay for all of the Group’s people in comparison to

distributions to shareowners. Total pay includes wages and salaries, pension costs, social security and share-based

payments. The Company did not make any distributions to shareowners in respect of the financial year.

Year to

31 December 2023

Year to

31 December 2022 % change

Average number of employees 8,374 8,772 -4.5%

Total personnel costs (£000) 670,845 682,072 -1.6%

Total distributions to shareowners (£000) – – –

Statement of voting on remuneration

The table below provides details of the voting results on (1) the Directors’ Remuneration Report resolution presented

for shareowner approval at the AGM in June 2023, and (2) the Directors’ Remuneration Policy resolution presented for

shareowner approval at the AGM in June 2022.

Votes for Votes against Total votes cast Votes withheld

Approve the Directors’ Remuneration Report (2023 AGM) 270,259,424 5,652,099 275,911,523 21,256,825

97.95% 2.05%

Approve the Directors’ Remuneration Policy (2022 AGM) 162,386,097 70,564,359 232,950,456 29,199,926

69.71% 30.29%

The Committee’s response to the outcome of the vote on the Remuneration Policy at the 2022 AGM was described in

last year’s Remuneration Report.

Governance Report

Capital plc Annual Report and Accounts 2023 126

Nomination and Remuneration Committee membership and meetings

The Committee is comprised solely of independent Non-Executive Directors with a wide range of experience.

Biographical details of the Committee Chair and members can be found on pages 78-85. The Committee met 10 times

during the year and the meeting attendance of the Committee members can be found on page 91. Additional attendees

at Committee meetings may include the Executive Chairman, Group Chief Financial Officer, Global Chief People

Officer, Company Secretary and Deputy Company Secretary. No individual participates in decisions regarding his or

her own remuneration.

The Board is satisfied that the Committee has the resources and expertise to fulfil its responsibilities and the

Committee is authorised to seek external legal or independent advice as it sees fit.

The Terms of Reference for the Committee were last reviewed in December 2023. A copy of the Committee’s current

Terms of Reference can be found on the Company’s website.

External advisers

Korn Ferry is the Committee’s remuneration adviser and was appointed by the Committee in 2019 following the

Committee’s decision to seek regular external advice on remuneration matters. Korn Ferry provides independent

commentary and advice, together with updates on legislative requirements, best practice and market practice to

assist with its decision making. The fees paid to Korn Ferry in respect of work carried out for the Committee during

2023 totalled £64,413. Fees are determined on a time and materials basis using standard hourly rates for Korn Ferry

consultants. The Committee undertakes due diligence to ensure that the remuneration advisers remain independent

of the Group and that the advice provided is impartial and objective. Korn Ferry reports directly to the Committee and

is a member of the Remuneration Consultants Group and operates under its code of conduct. No other services were

provided by Korn Ferry to the Company during 2023.

Implementation of Remuneration Policy for 2024

The Directors’ Remuneration Policy approved at the AGM in 2022 will continue to operate for the year ending

31 December 2024. The Nomination and Remuneration Committee intends to implement the Policy as follows.

Basic salary

As at the date of this report, the Committee has not yet finalised a decision on any salary increases to apply to the

Executive Directors for 2024. Any increases, if agreed, will be effective no earlier than 1 April 2024 and, among other

things, will take into account any changes to Board roles and responsibilities as well as salary increases for the wider

workforce. Full disclosure of any changes to Directors’ salaries will be provided in next year’s Directors’ Remuneration

Report at the latest.

Pension and benefits

Executive Directors’ pension provision will continue unchanged. Pension contributions for Sir Martin Sorrell, Scott

Spirit and Mary Basterfield will be at a rate of 4% of basic salary. Wesley ter Haar and Victor Knaap will receive Dutch

age-related pension contributions and Christopher S. Martin will continue to receive pension contributions via a US

401(k) plan.

Benefits provided will be similar to those provided in 2023.

Annual bonus

The Committee has decided that the annual bonus scheme for 2024 will operate in a broadly similar manner to that

in place for 2023. 70% of the bonus will again be payable by reference to performance measured against financial

metrics, including net revenue growth, EBITDA margin and EBITDA to cash conversion. The remaining 30% will be

payable by reference to key non-financial objectives, including ESG and DE&I performance, and measures linked to

the ongoing integration of the various businesses within S

Capital. In addition, a new measure has been agreed which

focuses on the increased usage of AI technology within the business. The specific targets are currently considered

commercially confidential but full details will be disclosed in next year’s Remuneration Report after the end of the

performance period. The maximum bonus opportunity for 2024 will remain at 100% of basic salary for all Executive

Directors, in line with the limit in the Directors’ Remuneration Policy and the practice in previous years.

The bonus scheme includes the discretion to adjust formulaic outcomes as well as recovery and withholding provisions,

as summarised in the Directors’ Remuneration Policy.

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Capital plc Annual Report and Accounts 2023 127

Share incentives

Mary Basterfield will receive a further award of shares in 2024 with a face value at grant of £500,000. This will be

the third of four annual grants under the terms of the agreement reached with Mary at the time of her appointment.

This award will be subject to the satisfaction of targets based on key performance conditions measured over the

financial year ending 31 December 2024. As for 2023, the precise performance targets will mirror those for the annual

bonus scheme. The targets are considered commercially confidential and will be disclosed in next year’s Directors’

Remuneration Report. To the extent that the performance targets are satisfied, the award will vest in August 2026,

this being four years after the grant of the first award under these arrangements. The award will be split equally

between market-priced options and conditional shares.

At this stage the Committee does not have any current intentions to make a further grant of long-term incentive

awards to any Executive Director in 2024. If this changes, any awards will be consistent with the terms of the Directors’

Remuneration Policy, with full details provided in next year’s Remuneration Report.

Non-Executive Directors

The Non-Executive Directors receive a base fee of £37,500, with an additional fee of £7,500 paid to each of the

Senior Independent Director, Chair of the Audit and Risk Committee and Chair of the Nomination and Remuneration

Committee. The Board has not yet reached a final decision on any fee increases for 2024. Any changes to fee levels

will be disclosed in next year’s Directors’ Remuneration Report.

Remuneration Report continued

Governance Report

Capital plc Annual Report and Accounts 2023 128

Directors’ Report

Capital plc is incorporated and domiciled in the UK and is registered in England and Wales with the registered

number 10476913. The correspondence address and registered office of the Company is 12 St James’s Place,

London SW1A 1NX.

This report has been drawn up and presented in accordance with, and in reliance upon, applicable English law and the

liabilities of the Directors in preparing this report shall be subject to the limitations and restrictions provided by such

law. The Director’s Report is designed to inform shareowners and help them assess how the Directors have performed

their duty to promote the success of the Company.

Strategic Report and Corporate Governance

The Strategic Report can be found on pages 8-32 and 69-74 and is included by reference into this Directors’ Report.

The Strategic Report sets out the development and performance of the Group’s business during the financial year, the

position of the Group at the end of the period, a description of the principal risks and uncertainties facing the Group,

details of the Group’s Diversity, Equity & Inclusion policy and reporting of ESG activities. The Strategic Report also

sets out a summary of how the Directors have engaged with our people as well as how the Directors have had regard to

the need to foster the Group’s business relationships with suppliers, clients and others, in line with Section 172 (page

70). The other sections of the Group’s Governance Report are also included by reference into this report. The industry

outlook set out on pages 34-42 outlines an indication of future developments and is included by reference into

this report.

Directors and their interests

Biographies of the Directors who served on the Board during the year ended 31 December 2023 and up to the date of

signing of the financial statements are set out on pages 78-85. As set out in the Notice of Annual General Meeting, all

the Directors will retire at this year’s Annual General Meeting (AGM) and, with the exception of Christopher S. Martin,

Victor Knapp, Wesley ter Haar and Scott Spirit, will submit themselves for election and re-election by shareowners.

All Directors seeking appointment and reappointment were subject to a formal and rigorous performance evaluation,

further details of which can be found on page 96. Details of Directors’ service contracts are set out in the Directors’

Remuneration Report on page 113. The interests of the Directors in the shares of the Company are also shown on page

121 of that report.

Other than the Incentive Shares held by Sir Martin Sorrell and the options over Incentives Shares held by Scott Spirit

as disclosed on page 122, no Directors have beneficial interests in the shares of any subsidiary company.

Dividend

No dividend was declared or paid in respect of the year to 31 December 2023 and the Directors are not recommending

that a final dividend be paid (2022: £nil).

Capital structure

As at 26 March 2024, the Company’s issued share capital comprised of 583,491,444 Ordinary Shares of £0.25 each

and one B Share of £1.00. 6,000,000 Ordinary Shares are currently held in treasury. The Company was authorised at

the 2023 AGM to allot up to 191,442,563 ordinary shares as permitted by the Act. A renewal of a similar authority will

be proposed at the 2024 AGM. The Company’s issued share capital as at 31 December 2023, together with details of

shares issued during the year, is set out in note 21 to the Financial Statements on page 184.

The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one

vote per share at general meetings of the Company. The holder of the B Share has no right to receive dividends and is

entitled to one vote at general meetings of the Company when voting in favour of resolutions, and such number of votes

as may be required to defeat the relevant resolution when voting against.

Any appointment and removal of a Director requires the consent of Sir Martin Sorrell as the holder of the B Share.

The processes for the appointment and replacement of Directors are governed by the Company’s Articles of

Association, the 2018 UK Corporate Governance Code, the Companies Act 2006 and related legislation. The powers

of Directors are described in the Articles, which can be found on our website.

Restrictions on transfer of securities

The Ordinary Shares are freely transferable and there are no restrictions on transfer. Except for Sir Martin Sorrell, who

holds the B Share. No other person holds securities in the Company carrying special rights with regard to control of the

Company. The Company is not aware of any agreements between holders of securities that may result in restrictions on

the transfer of securities or voting rights.

2 310 4

Capital plc Annual Report and Accounts 2023 129

Directors’ Report continued

Articles of Association

The Company’s Articles were adopted at the 2022 Annual General Meeting (AGM) and may only be amended by

a special resolution of the shareowners. The Articles can be found on our website with www.s4capital.com.

Authority to purchase shares

The Company was given authority at its AGM in 2023 to make market purchases of Ordinary Shares up to a

maximum number of 57,432,769 Ordinary Shares. During the year no Ordinary Shares were repurchased, however,

on 26 January 2024 the Company announced it had allocated an initial £2.7m from its available cash reserves to a

buyback programme. As at 26 March 2024 it had repurchased 6,000,000 shares, which are held as treasury shares

in accordance with the provisions of the Companies Act 2006.

The Directors believe that it is desirable to have the general authority to buy back the Company’s Ordinary Shares in

order to provide maximum flexibility in the management of the Group’s capital resources, and accordingly, propose to

renew these authorities at the 2024 AGM for a further year. This authority will only be used if the Board was satisfied

at the time that to do so would be in the best interests of shareowners.

Insurance and indemnities

The Company maintains Directors’ and Officers’ liability insurance in respect of legal action that might be brought

against its Directors and Officers. As permitted by the Company’s Articles of Association (the ‘Articles’), and to the

extent permitted by law, the Company indemnifies each of its Directors and other Officers of the Group against certain

liabilities that may be incurred as a result of their positions with the Group. The indemnities were in force throughout the

tenure of each Director during the last financial year and are currently in force. The Group’s financial risk management

policies and objectives can be found in Note 20 on page 178 of the financial statements.

Substantial shareholders

As at 31 December 2023 and 26 March 2024, the Company has received notification of the following interest in voting

rights pursuant to the Disclosure Guidance and Transparency Rules:

Number of Shares % shareholding

Sir Martin Sorrell

54,229,594 9.442

Oro en Fools B.V. 35,092,132 6.110

Patient Capital Management 29,968,483 5.150

The Capital Group Companies 28,979,522 4.970

Note:

1. In addition, Sir Martin Sorrell has, in aggregate, donated 3,910,000 Ordinary Shares to the UBS Donor Advised Foundation.

Employees

The Board recognises the importance of attracting, developing and retaining the best people. In accordance with

best practice, we have employment policies in place which provide equal opportunities for all employees, irrespective

of age, sex, race, colour, disability, sexual orientation, religious beliefs, socio-economic background education and

professional backgrounds or marital status. The Group also materially complies with all applicable national and

international human and labour rights within the locations in which it operates. Further information on the Board’s

methods for engaging with the workforce is on page 97.

Significant agreements

The Group’s term loan and revolving facility contain customary prepayment, cancellation and default provisions

including, if required by a lender, mandatory prepayment of all utilisations provided by that lender upon the sale of

all or substantially all of the business and assets of the Group or a change of control. The Company does not have

agreements with any Director that would provide compensation for loss of office or employment resulting from a

takeover except for provisions, which may cause awards granted under such arrangements to vest on a takeover.

Political donations

The Group’s policy prohibits any donations being made for or on behalf of the Group for political purposes, accordingly,

the Group did not make any donations or contributions to any political party or other political organisation and did not

incur any political expenditure within the meanings of sections 362 to 379 of the Companies Act 2006.

Governance Report

Capital plc Annual Report and Accounts 2023 130

Independent auditors

PricewaterhouseCoopers LLP has confirmed its willingness to continue as auditors of the Group.

In accordance with section 489 of the Companies Act 2006, separate resolutions for the appointment of

PricewaterhouseCoopers LLP as auditors of the Group and for the Directors to determine its remuneration will be

proposed at the forthcoming AGM of the Company.

The Directors who held office at the date of approval of this Directors’ report confirm that, so far as they are each

aware, there is no relevant audit information of which the Company’s auditor is unaware and that each Director

has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit

information and ensure that the auditor is aware of such information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies

Act 2006.

Post balance sheet events

There were no material post balance sheet events, that require adjustment or disclosure, occurring between

the reporting period and 26 March 2024.

Annual General Meeting

The AGM of the Company will be held at midday on 6 June 2024 at Media.Monks, 15 Bonhill Street, London, EC2A

4DN. For participation details please refer to the Notice of AGM which will be posted to shareholders and available

onour website www.s4capital.com in due course.

Statement of Directors’ responsibilities in respect of the financial statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with

applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the

Directors have prepared the Group financial statements in accordance with UK-adopted international accounting

standards and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting

Practice (United Kingdom Accounting Standards, comprising FRS 101 ‘Reduced Disclosure Framework’, and

applicable law).

Under company law, Directors must not approve the financial statements unless they are satisfied that they give a true

and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period.

In preparing the financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• state whether applicable UK-adopted international accounting standards have been followed for the Group financial

statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the Company

financial statements, subject to any material departures disclosed and explained in the financial statements;

• make judgements and accounting estimates that are reasonable and prudent; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group

and Company will continue in business.

The Directors are responsible for safeguarding the assets of the Group and Company and hence for taking reasonable

steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the

Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the

Group and Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report

comply with the Companies Act 2006.

The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the

United Kingdom governing the preparation and dissemination of financial statements may differ from legislation

in other jurisdictions.

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Capital plc Annual Report and Accounts 2023 131

Directors’ confirmations

Each of the Directors, whose names and functions are listed in the Governance Report confirm that, to the best

oftheir knowledge:

• the Group financial statements, which have been prepared in accordance with UK-adopted international accounting

standards, give a true and fair view of the assets, liabilities, financial position and loss of the Group;

• the Company financial statements, which have been prepared in accordance with United Kingdom Accounting

Standards, comprising FRS 101, give a true and fair view of the assets, liabilities and financial position of the

Company; and

• the Strategic Report includes a fair review of the development and performance of the business and the position

of the Group and Company, together with a description of the principal risks and uncertainties that it faces.

In the case of each Director in office at the date the Directors’ Report is approved:

• so far as the Director is aware, there is no relevant audit information of which the Group’s and Company’s auditors

are unaware; and

• they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any

relevant audit information and to establish that the Group’s and Company’s auditors are aware of that information.

On behalf of the Board:

Sir Martin Sorrell

Executive Chairman

26 March 2024

Mary Basterfield

Group Chief Financial Officer

26 March 2024

Directors’ Report continued

Governance Report

Capital plc Annual Report and Accounts 2023 132

Financial

statements

134 Independent auditors’ report

145 Consolidated statement of profit or loss

146 Consolidated statement

of comprehensive income

147 Consolidated balance sheet

148 Consolidated statement of changes in equity

149 Consolidated statement of cash flows

150 Notes to the consolidated financial statements

196 Company financial statements

202 Appendix: Alternative Performance Measures

208 Shareowner information

2 310 4

Capital plc Annual Report and Accounts 2023 133

Report on the audit of the financial statements

Opinion

In our opinion:

• S

Capital plc’s Group financial statements and company financial statements (the “financial statements”) give a true

and fair view of the state of the Group’s and of the company’s affairs as at 31 December 2023 and of the Group’s loss

and the Group’s cash flows for the year then ended;

• the Group financial statements have been properly prepared in accordance with UK-adopted international

accounting standards as applied in accordance with the provisions of the Companies Act 2006;

• the Company financial statements have been properly prepared in accordance with United Kingdom Generally

Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure

Framework”, and applicable law); and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report and Accounts 2023 (the “Annual

Report”), which comprise: the Consolidated and Company balance sheets as at 31 December 2023; the Consolidated

statement of profit or loss, the Consolidated statement of comprehensive income, the Consolidated and Company

statements of changes in equity and the Consolidated statement of cash flows for the year then ended; and the notes

to the financial statements, comprising material accounting policy information and other explanatory information.

Our opinion is consistent with our reporting to the Audit and Risk Committee.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.

Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial

statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.

Independence

We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of

the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest

entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard

were not provided.

Other than those disclosed in Note 6, we have provided no non-audit services to the company or its controlled

undertakings in the period under audit.

Our audit approach

Context

Capital plc is a United Kingdom-based public company limited by shares. S

Capital Group’s principal activities

are focused on the provision of new age/new era digital advertising and marketing services via three operating

segments: Content, Data&Digital Media (DDM) and Technology Services. Following the acquisition in prior years

of a number of businesses the Group has significant Goodwill and Intangible assets and it is now focussed on

integrating the acquired businesses. There is also a significant investment value held on the company balance sheet

relating to these acquisitions. The Content segment of the group contains material fixed fee contracts which require

judgement in revenue recognition. We have considered these factors in our risk assessment and designed appropriate

audit procedures in response to the related identified risks. Further details regarding our audit procedures over

management’s impairment assessment and revenue recognition on fixed fee contracts within the Content practice are

set out within our Key audit matters.

Independent auditors’ report to

the members of S

Capital plc

Financial statements

Capital plc Annual Report and Accounts 2023 134

Overview

Audit scope

• Our audit included full scope audits of 6 components. Additionally, we also performed audit of specific account

balances or specified procedures for 15 components; and

• Taken together, the components at which audit and specified procedures work was performed accounted for 79%

of the Group’s consolidated revenue.

Key audit matters

• Impairment of goodwill and intangible assets (Group)

• Impairment of investment in subsidiary (parent)

• Accuracy of revenue recognition on fixed fee contracts within the Content practice (Group)

Materiality

• Overall group materiality: £10.0 million (2022: £10.0 million) based on approximately 1% of revenue.

• Overall company materiality: £11.1 million (2022: £10.5 million) based on approximately 1% of total assets.

• Performance materiality: £6.5 million (2022: £5.0 million) (Group) and £7.25 million (2022: £5.25 million) (Company).

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the

financial statements.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the

audit of the financial statements of the current period and include the most significant assessed risks of material

misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on:

the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.

These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of

our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate

opinion on these matters.

This is not a complete list of all risks identified by our audit.

Purchase price allocation and acquisition accounting for significant acquisitions and contingent consideration, which

were key audit matters last year, are no longer included because of both key audit matters being specific to the

preceding period, due to there being no material acquisitions in the year and significantly reduced value of contingent

consideration liabilities as at year end. Otherwise, the key audit matters below are consistent with last year.

2 310 4

Capital plc Annual Report and Accounts 2023 135

Independent auditors’ report to

the members of S

Capital plc continued

Key audit matter How our audit addressed the key audit matter

Impairment of goodwill and intangible assets (group)

At 31 December 2023, the Group had goodwill of £691.3

million (2022: £718.8 million) and intangible assets of

£381.6 million (2022: £445.2 million). Circumstances

indicating that the carrying value of goodwill and

intangible assets may have been impaired were identified

in the first half at the three identified cash generating units

(CGUs): Content, DDM and Technology Services (TS).

Management determined that there was no impairment at

30 June 2023.

The annual goodwill impairment assessment was

performed as at 30 September 2023.

The determination of whether an impairment exists can be

judgemental. Management must determine the

recoverable amount when impairment indicators are

identified or annually where a CGU contains goodwill.

The determination of recoverable amount, being the

higher of value-in-use (“VIU”) and fair value less costs of

disposal (“FVLCD”), requires judgement and estimation on

the part of management in identifying and then

determining the recoverable amounts for the relevant

CGUs. Recoverable amounts are based on management’s

view of key assumptions which include net revenue

growth rates and EBITDA margins. Management

concluded that there was no impairment, however each of

the 3 CGUs were sensitive to the assumptions.

Refer to the accounting policies section within the

financial statements for disclosure of the related

accounting policies, judgements and estimates, Note 10

for detailed goodwill disclosures and Note 11 for detailed

intangible asset disclosures within the consolidated

financial statements.

With respect to goodwill, our audit procedures focused

on challenging and evaluating the discount rates,

short-term forecasts and long-term growth rates used in

the respective discounted cash flow models to determine

the recoverable amount of each CGU and included the

following audit procedures:

• assessed the appropriateness of management’s

identification of the Group’s CGUs;

• verified the integrity of the formulae and the

mathematical accuracy of management’s

valuation models;

• held discussions with each practice in order to evaluate

the Group’s cash flow forecasts, and the process by

which they were prepared. This involved confirming

that they were the forecasts approved by the board

of directors and assessing the reasonableness of the

revenue, costs and margins included in those forecasts

based on our understanding of the Group and its past

performance, including the impact of climate change;

• assessed management’s forecasts against external

market indicators such as wider digital advertising

spending trends and independent analyst reports;

• evaluated management’s ability to accurately forecast

future revenues and growth rates by comparing actual

results to management’s historical forecasts;

• with the assistance of our valuations specialists,

we assessed the discount rates used in the models

and whether the rates fell within a reasonable range

taking into consideration both internal and external

market data;

• performed sensitivity analysis to assess the point

atwhich the model would reach zero headroom;

• assessed whether the assumptions had been

determined and applied on a consistent basis, where

relevant, across the Group; and

• evaluated the Group’s disclosures on goodwill and

intangible assets against the requirements of

UK-adopted international accounting standards.

Based on the procedures performed, we noted no

material issues arising from our work.

Financial statements

Capital plc Annual Report and Accounts 2023 136

Key audit matter How our audit addressed the key audit matter

Impairment of investment in subsidiary (parent)

At 31 December 2023, the Company held investments in

its subsidiary amounting to £1.11 billion (2022: £1.04

billion). The investment in subsidiary is accounted for at

historical cost less accumulated impairment. Judgement

is required to assess if impairment triggers exist and

where triggers are identified, if the investment carrying

value is supported by the recoverable amount. In

assessing impairment triggers, management considers if

the underlying net assets of the investment support the

carrying amount and whether other facts and

circumstances would be indicative of a trigger.

The carrying amount of investments exceeded market

capitalisation as at 31 December 2023. Accordingly,

management performed an impairment test to determine

whether the recoverable amount exceeded the carrying

amount of the investment in the subsidiary.

Based on management’s assessment, they have

concluded that there was no impairment of the carrying

value of the Company’s investment in the subsidiary.

However, it is sensitive to changes in assumptions.

In respect of the Company’s Investment in subsidiary, we

performed the following procedures over management’s

impairment test:

• evaluated management’s impairment assessment

of investment in subsidiary including ensuring that

consideration had been given to the results of the

Group’s goodwill impairment assessment (see

impairment of goodwill and intangible assets Key audit

matter above);

• evaluating the appropriateness of management’s

assessment and judgements to calculate value in

use in conjunction with the goodwill and intangible

impairment test referred to in the above key

audit matter;

• verified the mathematical accuracy of management’s

assessment and that the cash flows used for the value

in use calculation were adjusted for the contractual

cash outflows relating to the outstanding debt; and

• evaluated the disclosures in Note 1 of the Company

financial statements.

Based on the procedures performed, we noted no

material issues arising from our work.

2 310 4

Capital plc Annual Report and Accounts 2023 137

Independent auditors’ report to

the members of S

Capital plc continued

Key audit matter How our audit addressed the key audit matter

Accuracy of revenue recognition on fixed fee contracts

within the Content practice (Group)

Assessing the timing of revenue recognised on fixed fee

contracts in the Content practice at year-end is an area of

complexity and judgement is required in identifying

performance obligations and whether the revenue should

be recognised over time or at a point in time. Further,

estimation is required in assessing the stage of delivery of

performance obligations on open contracts where

revenue is recognised over time.

Given the complexity in estimation and judgement

involved, the timing of revenue recognition and the

accuracy of fixed fee contract revenue recognised in the

financial statements is subject to both risk of error and

fraud as there is an incentive for management to

manipulate the results by allocating revenues attributable

to future periods into 2023 in order to achieve targets.

These factors led us to identify the revenue recognition for

fixed fee contracts open as at 31 December 2023 within

the Content practice as a key audit matter.

Auditing these estimates requires extensive audit effort

and a high degree of judgement given the bespoke nature

of each contract and the variety of evidence needing to be

assessed in order to support the percentage of

completion determined. Refer to the accounting policies

section within the financial statements for disclosure of

the related accounting policies, judgements and estimates

and Note 5 of the consolidated financial statements.

Our audit procedures to address the significant risk in

relation to the accuracy of revenue recognition of fixed

fee contracts included the following:

• We obtained an understanding of and performed

walkthroughs of the controls over revenue recognition

of the Content practice including the revenue

recognition on fixed fee contracts. This included a

walkthrough of controls related to management’s

assessment of IFRS 15 ‘Revenue from contracts with

customers’ compliance;

• We assessed the revenue accounting policy to ensure

it was consistent with the principles of IFRS 15 and

in particular the correct application of IFRS 15 with

regards to recognising revenue over time;

• We evaluated the accuracy of management’s previous

estimates of stage of completion and forecasts of

effort to complete projects by performing retrospective

reviews of such estimates as compared to actual

results for performance obligations that have

been fulfilled;

• We selected a sample of contracts with customers and

performed the following audit procedures;

– assessed contractual terms (e.g acceptance criteria,

delivery and payment terms) to ensure that these

terms were applied correctly within each project;

– evaluated the reasonableness and consistency of

the methods and assumptions used by management

to develop the estimate with respect to the effort

to complete and stage of delivery of the relevant

performance obligations;

– considered whether there was any evidence which

contradicted management’s assumptions regarding

the percentage of completion and the estimated

effort to complete; and

– recalculated revenue recognised based on the

proportion of the service performed in respect of

each performance obligation by obtaining support

for service delivery or schedules of estimated effort

to complete from project managers and challenging

the key supporting evidence to test its completeness

and accuracy.

Based on the procedures performed, we noted no

material issues arising from our work.

Financial statements

Capital plc Annual Report and Accounts 2023 138

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the

financial statements as a whole, taking into account the structure of the Group and the Company, the accounting

processes and controls, and the industry in which they operate.

The Group is organised into three reportable segments - Content, Data&Digtial Media ‘DDM’ and Technology Services.

The Group’s accounting processes for its operations are structured around a local finance function at each component,

which are supported by the practice finance team and the Group’s central functions in the United Kingdom.

Each component reports to the Group through an integrated consolidation system. For the purposes of our scoping,

wehave also considered the levels at which management prepared aggregated financial information.

We scoped in 6 components requiring an audit of their complete financial information, of which 4 were considered

to be financially significant components. Of the 4 financially significant components, three were audited by our

component teams and one by the group engagement team.

In addition, 15 components were scoped in for the audit of significant account balances and transactions to obtain

appropriate coverage of all material balances. Specified procedures were performed for these components by the

group audit team along with PwC component auditors in Argentina, Colombia, France, Mexico and Brazil.

Taken together, the components where we performed our audit and specified procedures work accounted for 79%

ofthe Group’s consolidated revenue.

The Group engagement team were significantly involved at all stages of the component audits by virtue of numerous

communications throughout, including the issuance of detailed audit instructions and review and discussions of the

audit approach and findings, in particular over our areas of focus. This also involved regular component calls through

video conferencing. The Group audit team met with local management and the component audit teams and attended

their interim and completion clearance meetings.

The Group audit team members visited component teams in the US, Brazil, France and Mexico as part of oversight

procedures. In addition, we reviewed the component team reporting results and their supporting working papers,

which together with the additional procedures performed at group level, gave us the evidence required for our opinion

on the financial statements as a whole. We performed centralised audit procedures over consolidation, goodwill and

intangible assets impairment assessment, right of use assets and lease liabilities, cash and cash equivalents (for

components not in scope for full scope audit or specified audit procedures), share-based payments and borrowings.

The financial statements of the Company are prepared using the same accounting processes and controls as the

Group’s central functions and were audited by the Group audit team. This includes the procedures performed in

relation to impairment of investment in subsidiary as explained in the Key audit matters section above.

The impact of climate risk on our audit

As part of our audit, we made enquiries of management to understand their process to assess the extent of the

potential impact of climate change on the Group and its financial statements. The Group explains the impact of climate

change on its business within the ’TCFD Report’ section. Further, the Group also approved a new Enterprise Risk

Management Framework (ERMF) during 2023 to enable consistent evaluation of potential climate-related risks and

related impacts.

As a result of our procedures, we concluded that the key areas in the financial statements which are more likely to be

materially impacted by climate change are those areas that are based on forecast cash flows. As such, we particularly

considered how the commitments made by the Group would impact the assumptions made in the forecasts prepared

by management that are used in the Group’s impairment assessment, for assessing both the recoverability of goodwill

and intangible assets and the Investment held by the Company. We did not identify any matters as part of this work

which were inconsistent with the disclosures in the Annual Report or led to any material adjustments to the accounts.

Our procedures included reading the disclosures in relation to climate change within the Annual Report and

considering its consistency with the financial statements and our knowledge from the audit. We did not identify any

material impact on our key audit matters or the wider audit for the year ended 31 December 2023.

2 310 4

Capital plc Annual Report and Accounts 2023 139

Independent auditors’ report to

the members of S

Capital plc continued

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for

materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the

nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in

evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Financial statements – Group Financial statements – Company

Overall materiality

£10.0 million (2022: £10.0 million). £11.1 million (2022: £10.5 million).

How we determined it

approximately 1% of revenue approximately 1% of total assets

Rationale for

benchmarkapplied

We have consistently used revenue to determine

materiality as opposed to a profit based benchmark

as there is considerable volatility in profit before tax

as a result of business combinations. Revenue

continues to be a key performance metric for the

group and is considered to be more stable than a

profit based metric.

We considered the total assets to

be an appropriate benchmark for

the Company, given that it is the

ultimate holding company and

holds a material investment in

a subsidiary undertaking.

Total assets is also a generally

accepted auditing benchmark.

For each component in the scope of our Group audit, we allocated a materiality that is less than our overall

Group materiality. The range of materiality allocated across components was between £800,000 and £9 million.

Certain components were audited to a local statutory audit materiality that was also less than our overall

Group materiality.

We use performance materiality to reduce to an appropriately low level the probability that the aggregate of

uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality

in determining the scope of our audit and the nature and extent of our testing of account balances, classes of

transactions and disclosures, for example in determining sample sizes. Our performance materiality was 65%

(2022: 50%) of overall materiality, amounting to £6.5 million (2022: £5 million) for the Group financial statements and

£7.25 million (2022: £5.25 million) for the Company financial statements.

In determining the performance materiality, we considered a number of factors - the history of misstatements, risk

assessment and aggregation risk and the effectiveness of controls - and concluded that an amount in the middle of our

normal range was appropriate.

We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit

above £0.5 million (Group audit) (2022: £0.3 million) and £0.5 million (Company audit) (2022: £0.3 million) as well as

misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.

Conclusions relating to going concern

Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going

concern basis of accounting included:

• reading management’s paper to the Audit and Risk Committee in respect of going concern, and agreeing the

forecasts set out in this paper to the underlying base case cash flow model and board approved budgets;

• obtaining and examining management’s base case and severe but plausible downside scenarios;

• evaluating the key assumptions within management’s forecasts and applying our own independent sensitivities

based on our knowledge from the audit and assessment of previous forecasting accuracy;

• considering the historical reliability of management’s forecasting for cash flows and net debt by comparing budgeted

results to actual performance;

• assessing the level of remaining liquidity available to the Group under both the base case and severe but plausible

downside scenario;

• identifying the covenants applicable to the Group’s borrowings and auditing whether management’s

assessment supports ongoing compliance with those covenants under both base case and severe but plausible

downside scenarios;

Financial statements

Capital plc Annual Report and Accounts 2023 140

• evaluating the appropriateness of management’s mitigating actions considered in the severe but plausible downside

scenario; and

• considering the appropriateness of the disclosure given in note 2C to the consolidated financial statements.

Based on the work we have performed, we have not identified any material uncertainties relating to events or

conditions that, individually or collectively, may cast significant doubt on the group’s and the company’s ability to

continue as a going concern for a period of at least twelve months from when the financial statements are authorised

for issue.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting

in the preparation of the financial statements is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the

Group’s and the company’s ability to continue as a going concern.

In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing

material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the

directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant

sections of this report.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and

our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial

statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the

extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing

so, consider whether the other information is materially inconsistent with the financial statements or our knowledge

obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency

or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement

of the financial statements or a material misstatement of the other information. If, based on the work we have

performed, we conclude that there is a material misstatement of this other information, we are required to report that

fact. We have nothing to report based on these responsibilities.

With respect to the Strategic report and Directors’ report, we also considered whether the disclosures required by the

UK Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain

opinions and matters as described below.

Strategic report and Directors’ report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report

and Directors’ report for the year ended 31 December 2023 is consistent with the financial statements and has been

prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the group and company and their environment obtained in the course of

the audit, we did not identify any material misstatements in the Strategic report and Directors’ report.

Directors’ Remuneration

In our opinion, the part of the Remuneration report to be audited has been properly prepared in accordance with the

Companies Act 2006.

2 310 4

Capital plc Annual Report and Accounts 2023 141

Independent auditors’ report to

the members of S

Capital plc continued

Corporate governance statement

ISAs (UK) require us to review the directors’ statements in relation to going concern, longer-term viability and that part

of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate

Governance Code, which the Listing Rules of the Financial Conduct Authority specify for review by auditors of

premium listed companies. Our additional responsibilities with respect to the corporate governance statement as other

information are described in the Reporting on other information section of this report.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

corporate governance statement is materially consistent with the financial statements and our knowledge obtained

during the audit, and we have nothing material to add or draw attention to in relation to:

• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;

• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify

emerging risks and an explanation of how these are being managed or mitigated;

• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going

concern basis of accounting in preparing them, and their identification of any material uncertainties to the group’s

and company’s ability to continue to do so over a period of at least twelve months from the date of approval of the

financial statements;

• The directors’ explanation as to their assessment of the group’s and company’s prospects, the period this

assessment covers and why the period is appropriate; and

• The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue

in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures

drawing attention to any necessary qualifications or assumptions.

Our review of the directors’ statement regarding the longer-term viability of the group and company was substantially

less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting

their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate

Governance Code; and considering whether the statement is consistent with the financial statements and our

knowledge and understanding of the group and company and their environment obtained in the course of the audit.

In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements

of the corporate governance statement is materially consistent with the financial statements and our knowledge

obtained during the audit:

• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and

understandable, and provides the information necessary for the members to assess the group’s and company’s

position, performance, business model and strategy;

• The section of the Annual Report that describes the review of effectiveness of risk management and internal control

systems; and

• The section of the Annual Report describing the work of the Audit and Risk Committee.

We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the

company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code

specified under the Listing Rules for review by the auditors.

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements

As explained more fully in the Statement of Directors’ responsibilities in respect of the financial statements, the

directors are responsible for the preparation of the financial statements in accordance with the applicable framework

and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as

they determine is necessary to enable the preparation of financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s

ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the directors either intend to liquidate the group or the company or to cease

operations, or have no realistic alternative but to do so.

Financial statements

Capital plc Annual Report and Accounts 2023 142

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line

with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with

laws and regulations related to employment, health and safety regulations and data protection regulations (including

the General Data Protection Regulation), and we considered the extent to which non-compliance might have a material

effect on the financial statements. We also considered those laws and regulations that have a direct impact on the

financial statements such as tax legislation and Companies Act, 2006. We evaluated management’s incentives and

opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and

determined that the principal risks were related to posting inappropriate journal entries to increase revenue or profits

and management bias within accounting estimates. The group engagement team shared this risk assessment with the

component auditors so that they could include appropriate audit procedures in response to such risks in their work.

Audit procedures performed by the group engagement team and/or component auditors included:

• Understanding and evaluating the design and implementation of controls designed to prevent and detect

irregularities and fraud;

• Inquiry of management, the Audit and Risk Committee, Internal Audit and the Group’s internal legal counsel

regarding their consideration of known or suspected instances of non-compliance with laws and regulations

and fraud;

• Assessment of the Group’s whistleblowing facility and matters reported through the facility;

• Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations;

• Identifying and testing intercompany balances to ensure they were genuine and were eliminated appropriately within

the consolidated financial statements;

• Scoping in all bank accounts for bank confirmation or alternative procedures where bank confirmations could not be

obtained; and

• Challenging assumptions and judgements made by management in respect of critical accounting judgements and

significant accounting estimates, and assessing these judgements and estimates for management bias.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances

of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the

financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not

detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional

misrepresentations, or through collusion.

Our audit testing might include testing complete populations of certain transactions and balances, possibly using data

auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing

complete populations. We will often seek to target particular items for testing based on their size or risk characteristics.

In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the

sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:

www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the company’s members as a body in

accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these

opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or

into whose hands it may come save where expressly agreed by our prior consent in writing.

2 310 4

Capital plc Annual Report and Accounts 2023 143

Independent auditors’ report to

the members of S

Capital plc continued

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not obtained all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been

received from branches not visited by us; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• the company financial statements and the part of the Remuneration report to be audited are not in agreement with

the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment

Following the recommendation of the Audit and Risk Committee, we were appointed by the members on 28 January

2019 to audit the financial statements for the year ended 31 December 2018 and subsequent financial periods.

The period of total uninterrupted engagement is six years, covering the years ended 31 December 2018 to

31 December 2023.

Other matter

As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial

statements form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the

Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’

report provides no assurance over whether the annual financial report has been prepared using the single electronic

format specified in the ESEF RTS.

Jason Burkitt (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

26 March 2024

Financial statements

Capital plc Annual Report and Accounts 2023 144

Consolidated statement of profit or loss

For the year ended 31 December 2023

Notes

		2023	2022
			Restated
		£m	£m
Revenue	5	1, 011. 5	1, 0 6 9. 5
Direct costs		(13 8 . 3)	(17 7. 8)
Net revenue		873. 2	8 9 1. 7
Personnel costs	6	(670. 8)	(6 8 2 .1)
Other operating expenses	6	(92 .6)	(8 3.3)
Acquisition, restructuring and other one-off expenses	6	(11 . 9)	(15 5 . 9)
Depreciation, amortisation and impairment	6	(7 7. 9)	(10 5 .7)
Share of profit of joint venture	14	0.2	–
Total operating expenses		(8 53.0)	(1 , 0 2 7. 0 )
Operating profit/(loss)		20. 2	(13 5 . 3)
Adjusted operating profit		82 .0	11 4 .1
Adjusting items		(6 1. 8)	(24 9 . 4)
Operating profit/(loss)		20. 2	(1 35.3)
Finance income	7	2 .8	1. 5
Finance costs	7	(3 8. 2)	(2 7. 2)
Net finance costs		(35 .4)	(25. 7)
Gain on the net monetary position		1. 3	1. 3
Loss before income tax		(13 . 9)	(15 9.7)
Income tax credit/(expense)	8	7. 9	(0.8)
Loss for the year		(6.0)	(16 0. 5)
Attributable to owners of the Company		(6.0)	(16 0 . 5)
Attributable to non-controlling interests		–	–
		(6.0)	(16 0. 5)
Loss per share attributable to the ordinary equity holders of the Company
Basic loss per share (pence)	9	(0.9)	(2 7. 2)
Diluted loss per share (pence)	9	(0.9)	(2 7. 2)

Notes:

1. The comparatives for the year ended 31 December 2022 have been restated for the adoption of the amendment to IAS 12 (see Note 2).

2. Adjusting items comprises amortisation and impairment of £4 8 .6 million (2022: £7 8 .9 million), acquisition expenses of £9. 2 million gain

(2022: £151. 0 million expense), share-based payments of £1 0.1 million (2022: £14 .6 million) and restructuring and other one-off expenses

of£12. 3 million (2022: £4. 9 million).

The results for the year are wholly attributable to the continuing operations of the Group.

The accompanying notes on pages 150 to 195 form an integral part of these consolidated financial statements.

145

2 310 4

Capital plc Annual Report and Accounts 2023

Consolidated statement of comprehensiveincome

For the year ended 31 December 2023

	2023	2022
		Restated
	£m	£m
Loss for the year	(6.0)	(16 0. 5)
Other comprehensive (expense)/income
Items that may be reclassified to profit or loss
Foreign operations – foreign currency translation differences	(53.8)	7 0 .7
Other comprehensive (expense)/income	(53.8)	7 0 .7
Total comprehensive expense for the year	(5 9. 8)	(8 9. 8)
Attributable to owners of the Company	(59. 8)	(89. 8)
Attributable to non-controlling interests	–	–
	(59. 8)	(8 9.8)

Note:

1. The comparatives for the year ended 31 December 2022 have been restated for the adoption of the amendment to IAS 12 (see Note 2).

The accompanying notes on pages 150 to 195 form an integral part of these consolidated financial statements.

Financial statements

146 S

Capital plc Annual Report and Accounts 2023

Consolidated balance sheet

At 31 December 2023

		2023	2022
			Restated
	Notes	£m	£m
Assets
Goodwill	10	6 9 1. 3	71 8.8
Intangible assets	11	3 8 1. 6	445. 2
Right-of-use assets	12	45. 8	5 5 .7
Property, plant and equipment	13	2 1. 9	2 9.7
Interest in joint ventures	14	0.2	–
Deferred tax assets	15	7. 3	5.4
Other receivables	16	13 .7	12. 2
Non-current assets		1,161. 8	1, 2 6 7. 0
Trade and other receivables	16	4 0 7. 5	4 42. 4
Current tax assets		4.9	–
Cash and cash equivalents	17	14 5 .7	223.6
Current assets		5 5 8 .1	666. 0
Total assets		1,7 19 . 9	1, 9 3 3 . 0
Liabilities
Deferred tax liabilities	15	(3 2 .7)	(5 4 .1)
Loans and borrowings	19	(32 0.9)	(3 26 . 2)
Lease liabilities	12	(35 .8)	(4 3 .1)
Contingent consideration and holdbacks	20	(7. 3)	(11. 3)
Provisions		(2 .7)	(5 .7)
Non-current liabilities		(39 9.4)	(4 4 0 .4)
Trade and other payables	18	(4 1 8 .1)	(4 4 3 . 2)
Contingent consideration and holdbacks	20	(18 . 2)	(17 7. 3)
Loans and borrowings	19	(0. 2)	(0 .7)
Lease liabilities	12	(13 . 2)	(15 . 3)
Provisions		(1. 0)	–
Current tax liabilities		(3.9)	(6.0)
Current liabilities		(454. 6)	(642 . 5)
Total liabilities		(854.0)	(1, 0 8 2 . 9)
Net assets		865.9	8 5 0 .1
Equity
Share capital		14 5 . 9	14 2 . 0
Share premium		80.4	5.9
Other reserves		162 .7	17 5. 2
Foreign exchange reserves		(5.3)	48.5
Retained earnings		4 8 2 .1	47 8 . 4
Attributable to owners of the Company		8 65.8	85 0.0
Non-controlling interests	21	0 .1	0 .1
Total equity		865.9	8 5 0 .1

Note:

1. The comparatives as at 31 December 2022 have been restated for measurement period adjustments in respect of business combinations, the adoption

of the amendment to IAS 12, the deferred tax offsetting and reclassification between trade and other payables and provisions (see Note 2).

The accompanying notes on pages 150 to 195 form an integral part of these consolidated financial statements.

The consolidated financial statements of S

Capital plc on pages 196 to 201, Company registration number 10476913,

were approved by the Board of Directors on 26 March 2024 and signed on its behalf by:

Sir Martin Sorrell Mary Basterfield

Executive Chairman Group Chief Financial Officer

147

2 310 4

Capital plc Annual Report and Accounts 2023

Consolidated statement of changes in equity

For the year ended 31 December 2023

							Retained
						Foreign	earnings/	Attributable	Non-
		Share	Share	Merger	Other	exchange	(accumulated	to owners of	controlling	Total
		capital	premium	reserves	reserves	reserves	losses)	the Company	interests	equity
Equity	Notes	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January 2022		13 8 . 8	446.9	2 0 5 .7	7 6 .7	(22 . 2)	(44.8)	8 0 1 .1	0 .1	8 0 1. 2
Amendment to IAS 12
restatement		–	–	–	–	–	1. 3	1. 3	–	1. 3
Hyperinflation restatement		–	–	–	3.3	–	–	3.3	–	3.3
Adjusted opening balance		13 8 . 8	446. 9	2 0 5 .7	8 0.0	(2 2 .2)	(43.5)	8 0 5.7	0 .1	805.8
Comprehensive (loss)/income for the year
Loss for the year		–	–	–	–	–	(16 0 . 5)	( 16 0 . 5)	–	(16 0 . 5)
Other comprehensive income		–	–	–	–	70 .7	–	7 0.7	–	70 .7
Total comprehensive income/(loss)
for the year		–	–	–	–	7 0.7	(16 0 . 5)	(8 9.8)	–	(89. 8)
Transactions with owners of the Company
Realised merger reserve	21	–	(4 6 2. 6)	(205.7)	–	–	668.3	–	–	–
Business combinations	21	3.2	2 1. 6	–	94. 8	–	–	11 9 . 6	–	11 9 . 6
Share-based payments	23	–	–	–	0 .4	–	1 4 .1	14 . 5	–	14 . 5
At 31 December 2022		1 42.0	5.9	–	17 5 . 2	48.5	478 . 4	850.0	0 .1	850. 1
At 1 January 2023		1 42.0	5.9	–	17 5 . 2	48.5	478 . 4	850.0	0 .1	850. 1
Hyperinflation restatement		–	–	–	2 .6	–	–	2.6	–	2 .6
Adjusted opening balance		142.0	5.9	–	17 7. 8	48.5	47 8 . 4	8 52 .6	0 .1	8 5 2 .7
Comprehensive loss
for the year
Loss for the year		–	–	–	–	–	(6.0)	(6.0)	–	(6.0)
Other comprehensive
expense		–	–	–	–	(53.8)	–	(53.8)	–	(53.8)
Total comprehensive loss for the year		–	–	–	–	(53.8)	(6.0)	(5 9.8)	–	(5 9.8)
Transactions with owners of the Company
Business combinations	21	3.9	74 . 5	–	(15.7)	–	–	62 .7	–	6 2 .7
Share-based payments	23	–	–	–	0.6	–	9.7	10 . 3	–	10 . 3
At 31 December 2023		14 5 . 9	80.4	–	16 2 .7	(5 .3)	4 8 2 .1	865.8	0 .1	865.9

Notes:

1. Other reserves include the deferred equity consideration of £156 . 2 million (2022: £1 71 .8 million), which comprises TheoremOne for £81 .4 million

(2022: £5 5.0 million), Raccoon for £43 . 6 million (2022: £43 . 0 million), Decoded for £nil (2022: £47.9 million), XX Artists for £25 . 3 million

(2022: £7.8 million), Cashmere for £nil (2022: £6 .9 million), Zemoga for £3 .4 million (2022: £8.7 million), 4 Mile for £2 .3 million (2022: £2. 3 million) and

Destined for £0 . 2 million (2022: £0. 2 million), the treasury shares issued in the name of S

Capital plc to an employee benefit trust for the amount of

£1. 2 million (2022: £1 . 8 million), and the impact of hyperinflation in Argentina of £7.5 million (2022: £4. 9 million).

2. The opening balance as at 1 January 2022 and the comparatives as at 31 December 2022 have been restated for the adoption of the amendment to IAS

12 (see Note 2).

3. During the year ended 31 December 2022, the Group undertook a reduction of capital to effect the cancellation of the C ordinary shares resulting from

the capitalisation of the sum of £205 .7 million standing to the credit of the Company’s merger reserve.

The accompanying notes on pages 150 to 195 form an integral part of these consolidated financial statements.

Financial statements

148 S

Capital plc Annual Report and Accounts 2023

Consolidated statement of cash flows

For the year ended 31 December 2023

Notes

		2023	2022
			Restated
		£m	£m
Cash flows from operating activities
Loss before income tax		(13 . 9)	(15 9.7)
Net finance costs	7	35.4	25 .7
Depreciation, amortisation and impairment	6	7 7. 9	10 5 .7
Share-based payments	23	1 0 .1	14 . 2
Acquisition, restructuring and other one-off expenses	6	11 . 9	15 5 . 9
Employment linked contingent consideration paid	20	(7 7. 7 )	(38.9)
Restructuring and other one-off expenses paid		(20. 8)	(4 .9)
Share of profit in joint venture	14	(0.2)	–
Gain on the net monetary position		(1. 3)	(1. 3)
Other non cash items		(9. 8)	–
Decrease/(increase) in trade and other receivables		11. 3	(4 8 .7)
(Decrease)/increase in trade and other payables 1		(13 .1)	49. 3
Cash flows from operations		9.8	9 7. 3
Income taxes paid		(20. 5)	(19 . 0)
Net cash flows (used in)/from operating activities		(10.7)	78. 3
Cash flows from investing activities
Purchase of intangible assets	11	(2 .1)	(1. 5)
Purchase of property, plant and equipment	13	(5 .9)	( 16 . 4)
Acquisition of subsidiaries, net of cash acquired		(3 .1)	( 12 3 . 7)
Amounts (paid into)/withdrawn from security deposits		(2 . 2)	1. 8
Cash flows used in investing activities		(13 . 3)	(13 9 . 8)
Cash flows from financing activities
Proceeds from issuance of shares		0.2	0. 2
Principal element of lease payments	12	(16 . 3)	(15 . 4)
Repayments of loans and borrowings	19	(0. 2)	(0.9)
Interest and facility fees paid		(2 6 .7)	(16 . 3)
Cash flows used in financing activities		(4 3 . 0)	(32 .4)
Net movement in cash and cash equivalents		(6 7. 0)	(9 3.9)
Cash and cash equivalents beginning of the year	17	223 .6	2 9 9 .1
Exchange (loss)/gain on cash and cash equivalents		(10 . 9)	18 . 4
Cash and cash equivalents at the end of the year	17	14 5 .7	223.6

Notes:

1. The comparatives for the year ended 31 December 2022 have been reclassified (see Note 2).

2. Comprises cash paid into escrow accounts of £nil (2022: £12. 8 million) and contingent consideration and holdback payments, net of cash released

from escrow accounts, of £2. 6 million (2022: £2 1.7 million), cash paid on the current year acquisition of £0. 8 million (2022: £96 . 8 million) less cash

acquired of £0.3 million (2022: £7 .6 million).

The accompanying notes on pages 150 to 195 form an integral part of these consolidated financial statements.

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Notes to the consolidated financial statements

1. General information

Capital plc (‘S

Capital’ or ‘Company’), is a public Company with a standard listing on the London Stock Exchange,

limited by shares, incorporated on 14 November 2016 in England, United Kingdom. The Company has its registered

office at 12 St James’s Place, London, SW1A 1NX, United Kingdom.

The consolidated financial statements represent the results of the Company and all its subsidiaries (together referred

to as ‘S

Capital Group’ or the ‘Group’). An overview of the subsidiaries is included in Note 29. S

Capital Group’s

principal activities are focused on the provision of new age/new era digital advertising and marketing services.

2. Basis of preparation

A. Statement of compliance

The financial statements of S

Capital plc have been prepared in accordance with UK-adopted International

Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting

under those standards and disclosure guidance and transparency rules sourcebook of the United Kingdom’s Financial

Conduct Authority.

The consolidated financial statements were authorised for issue by the Board of Directors on 26 March 2024.

B. Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the

primary economic environment in which the entity operates (the functional currency). The consolidated financial

statements are presented in Pound Sterling (£ or GBP), S

Capital plc’s functional currency. In the 2022 Annual

Report and Accounts all financial information in Pound Sterling was rounded to the nearest thousand. In the 2023

Annual Report and Accounts all financial information in Pound Sterling has been rounded to the nearest million, unless

otherwise indicated, for both current and prior years.

C. Basis of measurement

The consolidated financial statements are prepared on a going concern basis. The consolidated financial statements

are prepared on the historical cost basis, except for the fair value measurement of contingent considerations and

holdbacks. The accounting principles have been consistently applied over the reporting periods.

Going Concern

The Board has examined the Group’s cash flow projections for the period extending until June 30, 2025, under

both base and a severe yet plausible downside scenario. These assessments take into account uncertainties such

as inflation, decreased demand, and the potential impacts of these uncertainties on growth rates, macroeconomic

conditions, and the Group as a whole. The primary assumptions in the base case are in accordance with the Group’s

Board-approved 2024-26 three-year plan, with these forecasts being in line with those considered for the goodwill

impairment testing.

The Group possesses substantial financial resources and has significant liquidity in all scenarios considered. As of

December 31, 2023, the Group’s financial resources amounted to £246 million, comprising cash and bank balances

of £146 million and an undrawn £100 million equivalent multicurrency senior secured revolving credit facility, which

is set to expire in August 2026. These facilities ensure that the Group has access to adequate cash resources and

working capital.

The severe yet plausible downside scenario reflects a 13% reduction in net revenue versus the base case, with a

mitigation of 8% reduction in total operating costs which management believe could reasonably be achieved through

natural cost reductions from lower activity, including reduced bonuses and limited recruitment. In this scenario no

breach of covenants was identified. The Group has also identified additional cost control measures that could be

implemented. These additional cost control measures include reviewing the Group’s work force and implementing

measures to optimise resource allocation, identify and implement cost-saving measures across the Group and re-

evaluate the Group’s product and service offerings to focus on high-margin high-demand areas. Management is

confident that these forecasts have been prudently established and consider potential effects on growth rates and

trading performance.

The Board is confident that the Group and Company can operate within the confines of their current debt and revolving

credit facility, and covenants (see Note 20) while maintaining sufficient liquidity to fulfil its financial obligations as they

become due for at least 12 months from the date of signing these financial statements. Consequently, the Group and

Company will continue to employ the going concern basis in the preparation of their financial statements.

Financial statements

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Capital plc Annual Report and Accounts 2023

D. Critical accounting judgements and estimates

In preparing these consolidated financial statements, S

Capital Group makes certain judgements and estimates.

Judgements and estimates are continually evaluated based on historical experience and other factors, including

the expectations of future events that are believed to be reasonable under the circumstances. In the future, actual

experience may differ from these judgements and estimates.

The judgements and estimates that have a significant risk of causing a material adjustment to the carrying amounts of

assets and liabilities or the consolidated statement of profit or loss within the next financial year are discussed below.

Judgements

Revenue recognition

The Group’s revenue is earned from the provision of data and digital media solutions and technology services.

Under IFRS 15, revenue from contracts with customers is recognised as, or when, the performance obligation

is satisfied.

Specifically for the Content segment, due to the size and complexity of contracts, management is required to form

a number of judgements in the determination of the amount of revenue to be recognised including the identification

of performance obligations within the contract and whether the performance obligation is satisfied over time

or at a point in time. The key judgement is whether revenue should be recognised over time or at point in time.

Where revenue is recognised over time, an estimate must be made regarding the progress towards completion of

the performance obligation.

See Note 3 for a full description of the Group’s revenue accounting policies.

Impairment of goodwill and intangible assets

The Group applies judgement in determining whether the carrying value of goodwill and intangible assets have

any indication of impairment on an annual basis, or more frequently if required. Both external and internal factors

are monitored for indicators of impairment. When performing the impairment review, management’s approach for

determining the recoverable amount of a cash-generating unit is based on the higher of value in use or fair value

less cost to dispose. The value in use is compared with the carrying amount of the cash generating units.

Tax positions

The Group is subject to sales tax in a number of jurisdictions. Judgement is required in determining the provision

for sales taxes due to uncertainty of the amount of tax that may be payable. Provisions in relation to uncertain tax

positions are established on an individual rather than portfolio basis, considering whether, in each circumstance, the

Group considers it is probable that the uncertainty will crystallise.

Use of alternative performance measures

In establishing which items are disclosed separately as adjusting items to enable a better understanding of the

underlying financial performance of the Group, management exercise judgement in assessing the size and nature of

specific items. The Group uses alternative performance measures as we believe these measures provide additional

useful information on the underlying trend, performance, and position of the Group. These underlying measures

are used by the Group for internal performance analyses, and credit facility covenants calculations. The alternative

performance measures include ‘adjusted operating profit’, ‘adjusting items’, ‘EBITDA’ (earnings before interest,

tax, depreciation) and ‘operational EBITDA’. The terms ‘adjusted operating profit’, ‘adjusting items’, ‘EBITDA’ and

‘operational EBITDA’ are not defined terms under IFRS and may therefore not be comparable with similarly titled profit

measures reported by other companies. The measures are not intended to be a substitute for, or superior to, GAAP

measures. A full list of alternative performance measures and non-IFRS measures together with reconciliations to IFRS

measures are set out in the Alternative Performance Measures on pages 202 to 207.

Estimates

Impairment of goodwill and intangible assets

The recoverable amount for each CGU is determined using a value-in-use calculation. In determining the value-in-

use, the Group uses forecast net revenue and EBITDA percentage margins adjusted for non-cash transactions to

generate cash flow projections. The forecasts are prepared by management based on the Board-approved three-year

business plans for each CGU along with a one-year management-prepared extrapolation period. The forecasts reflect

the expected financial performance for each CGU, and consider the impact of inflation and the latest macroeconomic

trends and external factors, as well as historic performance and trends, amongst other factors.

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Notes to the consolidated financial statements

continued

2. Basis of preparation continued

E. Measurement of fair values

A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial

and non-financial assets and liabilities. When measuring the fair value of an asset or a liability, the Group uses market

observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the

inputs used in the valuation techniques as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly

(i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs) as

applicable for contingent consideration.

F. New and amended standards and interpretations adopted by the Group

In the current year, the Group has applied a number of amendments to IFRS Accounting Standards that are

mandatorily effective for an accounting period that begins on or after 1 January 2023. Their adoption has not had any

material impact on the disclosures or on the amounts reported in these financial statements.

Definition of accounting estimates (Amendments to IAS 8)

In February 2021, the IASB issued Definition of accounting estimates (Amendments to IAS 8) to clarify the distinction

between accounting policies and accounting estimates. The amendments are effective for reporting periods beginning

on or after 1 January 2023. The Group adopted this standard as of 1 January 2023. The adoption of this standard had

no material impact on the Group’s consolidated financial statements.

Making Materiality Judgements (Amendments to IAS 1 and IFRS Practice Statement 2)

In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 “Making Materiality

Judgements”, which provide guidance and examples to help entities apply materiality judgements to accounting

policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by

replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose

their material accounting policies and adding guidance on how entities are to apply the concept of materiality in making

decisions about accounting policy disclosures. These amendments are applicable for annual periods beginning on or

after 1 January 2023. These amendments have been adopted as of such date and have had no material impact on the

Group’s consolidated financial statements.

Deferred tax related to assets and liabilities arising from a single transaction (Amendments to IAS 12 Income Taxes)

In May 2021, the IASB issued Deferred tax related to assets and liabilities arising from a single transaction

(Amendments to IAS 12 Income Taxes) to clarify how to account for deferred tax on transactions including leases and

decommissioning obligations. The amendments are effective for reporting periods beginning on or after 1 January

2023. The Group adopted this standard as of 1 January 2023 and retrospectively applied the changes as at 1 January

2022, as detailed in Note H.

IFRS 17 Insurance Contracts

In May 2017, the IASB issued IFRS 17 Insurance Contracts. IFRS 17 replaces IFRS 4 and sets out principles for

the recognition, measurement, presentation and disclosure of insurance contracts within the scope of IFRS 17.

This standard is effective for reporting periods beginning on or after 1 January 2023. The Group adopted this

standard as of 1 January 2023. The adoption of this standard had no material impact on the Group’s consolidated

financial statements.

Pillar 2

The Group is within the scope of the OECD Pillar Two model rules which will come into effect from 1 January 2024.

Since the Pillar Two legislation was not effective at the reporting date, the Group has no related current tax exposure.

The Group applies the exception to recognising and disclosing information about deferred tax assets and liabilities

related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. Under the legislation,

the Group is liable to pay a top-up tax on adjusted jurisdictional profits for the difference between its GloBE effective

tax rate per jurisdiction and the 15% minimum rate.

Financial statements

152 S

Capital plc Annual Report and Accounts 2023

Based on the Pillar Two assessment undertaken by the Group using the relevant information for the year ending

31 December 2023, the Group should be able to benefit from one of the three tests under the transitional CbCr safe

harbour for most of its jurisdictions. The Group considers that the total amount of top up tax arising in respect of its

jurisdictions is expected to be immaterial and as such has not undertaken detailed calculations required under the

legislation. The Group expects to undertake a Pillar 2 assessment in the second quarter of 2024 for the purposes of

interim reporting based on its forecasts for the year ending 31 December 2024.

G. New and amended standards and interpretations not yet adopted

Certain new and amended accounting standards and interpretations have been published that are not mandatory for

31 December 2023 reporting periods and have not been early adopted by the Group. None of these are expected to

have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.

H. Restatement and reclassification

Business combinations

The consolidated balance sheet at 31 December 2022 has been restated for fair value adjustments relating to the

TheoremOne acquisition. See Note 4 for further details.

Deferred tax related to assets and liabilities arising from a single transaction (Amendments to IAS 12 Income Taxes)

An amendment to IAS 12 Income taxes was published in May 2021 and became effective for the Group from 1 January

2023. The amendment narrowed the scope of the deferred tax recognition exemption so that it no longer applies to

transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.

The Group has considered the impact of this amendment, notably in relation to the accounting for deferred taxes

on leases and dilapidation provisions. The impact of transitioning to the revised standard was to increase deferred

tax assets by £0.3 million, decrease deferred tax liabilities by £1.0 million and increase total equity by £1.3 million as

at 1 January 2022. The impact on the consolidated statement of profit or loss was £0.8 million expense for period

ended 31 December 2022. As a result, basic and diluted loss per share has increased by 0.2 pence. The impact of this

retrospective adjustment on the consolidated balance sheet at 31 December 2022 is shown below.

Deferred tax offset

There was a further adjustment to restate the deferred tax assets and deferred tax liabilities where there is a right of

offset for any deferred tax balances within the same tax jurisdiction.

The impact of this retrospective adjustment as at 31 December 2022 was a £9.7m decrease on both deferred tax

assets and deferred tax liabilities, with no impact on net assets. There impact on the consolidated balance sheet at

1 January 2022 was £nil. The impact on the consolidated statement of profit or loss was £nil.

Provisions and other payables

Provisions previously presented as other payables have been reclassified to be shown separately on the consolidated

balance sheet to provide consistency with the presentation of balances for the year ended 31 December 2023.

						31 December 2022
		Business	Amendment	Deferred tax
	As reported	combinations	to IAS 12	offset	Reclassification	As restated
	£m	£m	£m	£m	£m	£m
Goodwill	720.4	(1.6)	–	–	–	718.8
Deferred tax assets	16.8	–	(1.7)	(9.7)	–	5 .4
Total non-current assets	1,280.0	(1.6)	(1.7)	(9.7)	–	1, 2 67.0
Trade and other receivables	440.8	1.6	–	–	–	442.4
Total current assets	664.4	1.6	–	–	–	666.0
Total assets	1,944.4	–	(1.7)	(9.7)	–	1,933.0
Deferred tax liabilities	(66.0)	–	2.2	9.7	–	(54.1)
Provisions	–	–	–	–	(5.7)	(5.7)
Other payables	(5.7)	–	–	–	5.7	–
Total non-current liabilities	(452.3)	–	2.2	9.7	–	(440.4)
Total liabilities	(1,094.8)	–	2.2	9.7	–	(1,082.9)
Net assets	849.6	–	0.5	–	–	850.1

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Notes to the consolidated financial statements

continued

2. Basis of preparation continued

H. Restatement and reclassification continued

Reclassification of statement of cash flows

The restructuring and other one-off expenses paid have been separately presented for the year ended 31 December

2023, and as a result the comparative amount has been reclassified to provide consistency. The interest on lease

liabilities have been reclassified for the year ended 31 December 2023 to be included within interest and facility fees

paid and the comparative amount has been reclassified to provide consistency.

			31 December 2022
	As reported	Reclassification	As restated
	£m	£m	£m
Cash flows from operating activities
Restructuring and other one-off expenses paid	–	(4.9)	(4.9)
Increase in trade and other payables	44.4	4.9	49.3
Cash flows from operations	97.3	–	97.3
Cash flows from financing activities
Principal element of lease payments	17.5	(2.1 )	15.4
Interest and facility fees paid	14.2	2.1	16.3
Cash flows used in financing activities	(43.0)	–	(43.0)

3. Accounting policies

A. Basis of consolidation

Business combinations

The Group accounts for business combinations using the acquisition method when control is transferred to the

Capital Group. The consideration transferred for the acquisition of a subsidiary comprises the:

• fair values of the assets transferred;

• liabilities incurred to the former owners of the acquired business;

• equity interests issued by the group;

• fair value of any asset or liability resulting from a contingent consideration arrangement; and

• fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited

exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling

interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling

interest’s proportionate share of the acquired entity’s net identifiable assets.

Acquisition-related costs are expensed as incurred.

The excess of the:

• consideration transferred,

• amount of any non-controlling interest in the acquired entity, and

• acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair

value of the net identifiable assets of the business acquired, the difference is recognised directly in the consolidated

statement of profit or loss as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted

to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate,

being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms

and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability

are subsequently remeasured to fair value, with changes in fair value recognised as a fair value gain or loss within

acquisition, restructuring and other expenses within the consolidated statement of profit or loss.

Financial statements

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Capital plc Annual Report and Accounts 2023

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an

entity where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the

ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated

from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated.

Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred

asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies

adopted by the Group.

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Those interests

of non-controlling shareholders that entitle their holders to a proportionate share of net assets upon liquidation

may initially be measured at fair value or at the non-controlling interests’ proportionate share of the fair value of the

acquiree’s identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Non-

controlling interests are initially measured at fair value. Subsequent to acquisition, the carrying value of non-controlling

interests is the value of those interests at initial recognition plus the non-controlling interests’ share of subsequent

changes in equity.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of

profit or loss, statement of comprehensive income, statement of changes in equity and balance sheet respectively.

B. Investments in joint ventures

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the

net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement,

which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The results and assets and liabilities of associates or joint ventures are incorporated in these financial statements using

the equity method of accounting.

Under the equity method, an investment is recognised initially in the consolidated balance sheet at cost and adjusted

thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint

venture. When the Group’s share of losses of a joint venture exceeds the Group’s interest in that joint venture (which

includes any long-term interests that, in substance, form part of the Group’s net investment in the joint venture), the

Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the

Group has incurred legal or constructive obligations or made payments on behalf of the joint venture.

C. Revenue recognition

Capital Group produces digital campaigns, films, creative content, platforms and ecommerce for home-grown

and international brands and provides data & digital media solutions for future thinking marketers and agencies and

provides technology services.

Revenue comprises of gross amounts billed, or billable to clients and is stated exclusive of VAT and equivalent

applicable taxes. The difference between revenue and net revenue represents direct costs. Direct costs comprise

fees and expenses paid to external suppliers when they are engaged to perform all or part of a specific project and

are charged directly to the customer, and where the Group retains quality control oversight. Direct costs are expensed

as incurred.

Costs to obtain a contract are typically expensed as incurred as contracts are generally short term in nature.

Capital Group determines all the separate performance obligations within the customers’ contract at contract

inception. In many instances, promised services in a contract are not considered distinct or represent a series of

services that are substantially the same with the same pattern of transfer to the customer and, as such, are accounted

for as a single performance obligation.

Revenue is recognised when a performance obligation is satisfied, in accordance with the terms of the contractual

arrangement. This is assessed on a contract-by-contract basis. Revenue is recognised over time when the customer

consumes the services as it is performed or the Group is entitled to payment for the services performed to date.

Where there is no clear consumption by the customer or limited activities that transfer to the customer, revenue is

recognised at a point in time, generally when the services or created content are delivered to the customer.

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Notes to the consolidated financial statements

continued

3. Accounting policies continued

C. Revenue recognition continued

For each performance obligation that is satisfied over time, revenue is recognised by measuring progress towards

completion of that performance obligation. Revenue recognised over time is based on the proportion of the level

of services performed. Either an input method or an output method, depending on the particular arrangement,

is used to measure progress for each performance obligation. For most fee arrangements, costs incurred are

used as an objective input measure of performance. The primary input of substantially all work performed under

these arrangements is labour and direct costs. There is normally a direct relationship between costs incurred and

the proportion of the contract performed to date. In other circumstances relevant output measures, such as the

achievement of any project milestones stipulated in the contract, are used to assess proportional performance.

Revenue recognised in the current reporting period that related to performance obligations that were satisfied, or

partially satisfied, in a prior reporting period was immaterial.

For our retainer arrangements, we have a stand-ready obligation to perform services on an ongoing basis over

the life of the contract. The scope of these arrangements is broad and generally not reconcilable to another input

or output criteria. In these instances, revenue is recognised using a time-based method resulting in straight-line

revenue recognition.

Where the total project costs exceed the project revenue, the loss is recognised within direct costs and personnel costs

in the consolidated statement of profit or loss. A provision is recognised for such loss. No material onerous contract

provisions have been identified in the year.

Accrued income is a contract asset and is recognised when a performance obligation has been satisfied but has not

yet been billed. Accrued income is transferred to receivables when the right to consideration is unconditional and billed

per the terms of the contractual agreement.

In certain cases, payments are received from customers or amounts are billed with an unconditional right to receive

consideration prior to satisfaction of performance obligations and recognised as deferred income. These balances are

considered contract liabilities and are included in deferred income.

Accrued income and deferred income arising on contracts are included in trade and other receivables and trade and

other payables, as appropriate.

Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain

significant financing components in which case they are recognised at fair value. They are subsequently measured at

amortised cost using the effective interest method, less loss allowance. No element of financing is deemed present as

the sales are made with a general credit term of 30 days; some large multinational customers have credit terms of 45

days to 120 days.

The Group has applied the practical expedients in IFRS 15 not to account for significant financing components where

the timing difference between receiving consideration and transferring control of services or created content to its

customer is one year or less; and to expense the incremental costs of obtaining a contract when the amortisation

period of the asset otherwise recognised would have been one year or less.

The Group has applied the practical expedient permitted by IFRS 15 to not disclose the transaction price allocated to

performance obligations unsatisfied (or partially unsatisfied) as of the end of the reporting period as contracts typically

have an original expected duration of a year or less.

D. Foreign currency

The main foreign currencies for the Group are the US dollar (USD) and Euro (EUR).

Foreign currency transactions and balances

• Foreign currency transactions are translated into the functional currency using the average exchange rates in

the month. Foreign exchange gains and losses resulting from the settlement of such transactions and from the

translation at the reporting period end exchange rates of monetary assets and liabilities denominated in foreign

currencies are recognised in the consolidated statement of profit or loss.

• Share capital, share premium and brought forward earnings are translated using the exchange rates prevailing at the

dates of the transactions.

Financial statements

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Capital plc Annual Report and Accounts 2023

Consolidation of foreign entities

On consolidation, income and expenses of the foreign entities are translated from the local functional currencies

to Pound Sterling, the presentation currency of the S

Capital Group, using average exchange rates during the

period, apart from any foreign entities in hyperinflationary economies (see note 3F). All assets and liabilities of the

Group’s foreign operations are translated from the local functional currencies to Pound Sterling using the exchange

rates prevailing at the reporting date. The exchange differences arising from the translation of the net investment in

foreign entities are recognised in other comprehensive income and accumulated in a separate component of equity.

Exchange differences are recycled to the consolidated statement of profit or loss as a reclassification adjustment upon

disposal of the foreign operation.

E. Employee benefits

Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount

expected to be paid if S

Capital Group has a present legal or constructive obligation to pay this amount as a result of

past service provided by the employee and the obligation can be estimated reliably.

Share-based payments

Capital Group issues equity-settled share-based payments (including share options) to certain employees and

accounts for these awards in accordance with IFRS 2. The share-based payments are measured at fair value at the

grant date.

The fair value determined at the grant date is recognised in the consolidated statement of profit or loss as an expense

on a straight-line basis over the relevant vesting period, based on the Group’s estimate of the number of shares that will

ultimately vest and adjusted for the effect of non-market vesting conditions. A detailed description of the share-based

payment plans is included in Note 23.

Defined contribution plans

Capital Group accounts for retirement benefit costs in accordance with IAS 19 Employee Benefits. For defined

contribution plans, contributions are charged to the consolidated statement of profit or loss as payable in respect of the

accounting period.

F. Hyperinflation

Argentina is designated as a hyperinflationary economy and the financial statements of the Group’s subsidiaries in

Argentina have been adjusted for the effects of inflation.

IAS 29 Financial Reporting in Hyperinflationary Economies requires that the consolidated statement of profit or loss is

adjusted for inflation in the period and translated at the year-end foreign exchange rate and that non-monetary assets

and liabilities on the balance sheet are restated to reflect the change in purchasing power caused by inflation from the

date of initial recognition.

In 2023, this resulted in an increase in property, plant and equipment of £3.5 million (2022: £2.0 million), an increase in

right of use assets of £2.9 million (2022: £2.5 million), an increase in equity of £nil (2022: £nil) and an opening equity

restatement of £2.6 million (2022: £3.3 million). For the year ended 31 December 2023, this resulted in a gain on the

net monetary position of £1.3 million (2022: gain on the net monetary position of £1.3 million) in the consolidated

statement of profit or loss. The impact on other non-monetary assets and liabilities in the year was immaterial.

The FACPCE price index (Federación Argentina de Consejos Profesionales de Ciencias Económicas) of 2,816.1 was

used at 31 December 2023 (2022: 1,132.2). The movement in this index during 2023 was 192% (2022: 94.4%).

In addition to the hyperinflationary economy causing the general devaluation of the Argentinian peso, on 13th

December 2023, the Argentinian peso experienced a significant devaluation of over 50%. This was a one-off single

event towards the end of the Group’s reporting period. The Group considers the impact of hyperinflation as part of its

underlying operations, however, the significant devaluation is considered as a one-off item and therefore the impact

is excluded from the Group’s Alternative Performance Measures. The impact on operational EBITDA is a reduction of

£9.3 million.

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Notes to the consolidated financial statements

continued

3. Accounting policies continued

G. Income tax

Income tax expense comprises current and deferred tax. It is recognised in consolidated statement of profit or

loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other

comprehensive income.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the financial year and

any adjustment to tax payable or receivable in respect of previous years. It is measured using tax rates enacted or

substantively enacted at the reporting date. Current tax assets and liabilities are offset only if certain criteria are met.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax

regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an

uncertain tax treatment. The group measures its tax balances either based on the most likely amount or the expected

value, depending on which method provides a better prediction of the resolution of the uncertainty.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and

liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except when the deferred tax liability

arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination

and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in

joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable

that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences, the carry forward of unused tax credits and

any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be

available against which these items can be utilised.

In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests

in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary

differences will reverse in the foreseeable future and taxable profit will be available against which the temporary

differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no

longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has

become probable that future taxable profits will allow the deferred tax asset to be recovered.

In assessing the recoverability of deferred tax assets, the Group relies on the same forecast assumptions used

elsewhere in the financial statements and in other management reports.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset

is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted

at the reporting date.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that

date, are recognised subsequently if new information about facts and circumstances change. The adjustment is either

treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement

period or recognised in profit or loss.

The Group offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to

set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to

income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which

intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities

simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to

be settled or recovered.

Financial statements

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H. Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired

in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets

are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated

intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in

profit or loss in the period in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever

there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method

for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the

expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are

considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting

estimates. The amortisation expense on intangible assets with finite lives is recognised in the consolidated statement

of profit or loss.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually

or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether

the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a

prospective basis.

An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future

economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset

(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in

the consolidated statement of profit or loss.

Goodwill

The Group accounts for business combinations using the acquisition method when control is transferred to the

Capital Group. The consideration transferred is measured at the fair value of the assets given, equity instruments

issued, and liabilities incurred or assumed at the date of exchange. Costs directly attributable to the acquisition are

expensed in the year. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business

combination are measured initially at their fair values at the acquisition date.

Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the fair value of net identifiable

assets and liabilities acquired. Goodwill is measured at cost less accumulated impairment losses. Where the fair value

of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is

credited in full to the consolidated statement of profit or loss on the acquisition date.

Other intangible assets – arising on the acquisition of business combinations

Brands, customer relationships and order backlog arising on the acquisition of business combinations, are measured at

cost less accumulated amortisation and accumulated impairment losses. The acquired brands are well-known brands

which are registered, have a good track record and have finite useful lives. Customer relationships are measured at the

time of the business combination and have finite useful lives. Order backlog has finite useful lives and represents the

contracted but not yet fulfilled revenues at the time of the business combination.

Other intangible assets – development expenditure and purchased software

Expenditure on research activities is recognised in the consolidated statement of profit or loss as incurred.

Development expenditure is capitalised only if the expenditure can be measured reliably, the product or process

is technically and commercially feasible, future economic benefits are probable and the Group intends to and

has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in the

consolidated statement of profit or loss as incurred. Subsequent to initial recognition, development expenditure is

measured at cost less accumulated amortisation and accumulated impairment losses.

Purchased software packages have finite useful lives and are measured at cost less accumulated amortisation and

accumulated impairment losses.

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Notes to the consolidated financial statements

continued

3. Accounting policies continued

H. Intangible assets continued

Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific

asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is

recognised in profit or loss as incurred.

Impairment of goodwill and intangible assets with indefinite useful lives

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication

exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use.

The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that

are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU

exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax

discount rate that reflects current market assessments of the time value of money and the risks specific to the

asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such

transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by

valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

The Group bases its impairment calculation on the most recent budgets and forecast calculations, which are prepared

separately for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast

calculations generally cover a period of five years. A long-term growth rate is calculated and applied to project future

cash flows after the fifth year.

Impairment losses of continuing operations are recognised in the consolidated statement of profit or loss in expense

categories consistent with the function of the impaired asset, except for assets previously revalued with the revaluation

taken to other comprehensive income (OCI). For such assets, the impairment is recognised in OCI up to the amount of

any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an

indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists,

the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed

only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last

impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its

recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation,

had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the consolidated

statement of profit or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as

a revaluation increase.

Goodwill is tested for impairment annually at year end and when circumstances indicate that the carrying value may

be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU to which the goodwill

relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised.

Impairment losses relating to goodwill cannot be reversed in future periods.

Intangible assets with indefinite useful lives are also tested for impairment annually at year end at the CGU level,

as appropriate, and when circumstances indicate that the carrying value may be impaired.

Amortisation

Amortisation is charged to the consolidated statement of profit or loss to allocate the cost of intangible assets over

their estimated useful economic lives, using the straight-line method. Goodwill is not amortised.

The estimated useful economic lives of intangible assets for current and comparative periods are as follows:

• Brands 3 – 20 years

• Customer relationships 6 – 16.5 years

• Order backlog 0 – 3 years

• Others 3 – 10 years

Amortisation methods and useful lives are reviewed at each reporting date and adjusted if appropriate.

Financial statements

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I. Leases

The Group leases most of its offices in cities where it operates.

At inception of a lease contract, the Group assesses whether the contract conveys the right to control the use of an

identified asset for a certain period of time and whether it obtains substantially all the economic benefits from the use

of that asset, in exchange for consideration.

Each lease is recognised as a right-of-use asset with a corresponding liability at the date at which the lease asset is

available for use by the Group. The right-of-use asset is initially measured based on the initial amount of the lease

liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs

incurred, less any lease incentives received.

The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line

basis. Depreciation is recognised in operating expenses costs and interest expense is recognised under finance

expenses in the consolidated statement of profit or loss. The lease term includes periods covered by an option to

extend if the Group is reasonably certain to exercise that option. Right-of-use assets are reviewed for indicators of

impairment and an impairment test is performed when an impairment indicator exists.

The lease liability is initially measured at the present value of the lease payments that are not paid at the

commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily

determined, the Group’s incremental borrowing rate for the same term as the underlying lease. Lease payments

included in the measurement of lease liabilities comprise fixed payments less any lease incentives receivable and

variable lease payments that depend on an index or a rate as at the commencement date. Lease modifications

result in remeasurement of the lease liability.

Short-term leases and leases of low value assets

The Group has elected to use the practical expedient not to recognise right-of-use assets and lease liabilities for short-

term leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase

option and leases of low value assets which the present value of the assets is below £5,000. The payments associated

with these leases are recognised as operating expenses over the lease term.

J. Property, plant and equipment

Recognition and measurement

Property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment

losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and

condition necessary for it to be capable of operating in the manner intended by management. Any gain or loss on

disposal of an item of property, plant and equipment is recognised in the consolidated statement of profit or loss.

Depreciation

Depreciation is charged to the consolidated statement of profit or loss to allocate the cost of items of property, plant

and equipment less their estimated residual values over their estimated useful lives, using the straight-line method.

The estimated useful lives for current and comparative periods range as follows:

• Leasehold improvements Over life of lease

• Furniture and fixtures 5 years

• Office equipment 3 – 5 years

• Other assets 3 – 5 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

Impairment

PPE assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount

may not be recoverable. Any impairment in carrying value is being charged to the consolidated statement of profit

or loss. PPE assets that have been impaired are reviewed for possible reversal of the impairment loss at the end of

each reporting period. The reversal is limited to the carrying amount net of depreciation, had no impairment loss been

recognised in the prior reporting periods.

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Notes to the consolidated financial statements

continued

3. Accounting policies continued

K. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity

instrument of another entity.

Financial assets – Recognition and initial measurement

On initial recognition, a financial asset is classified as measured at: amortised cost; fair value through other

comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or fair value through profit or loss

(FVTPL).

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow

characteristics and the Group’s business model for managing them. With the exception of trade receivables that do

not contain a significant financing component or for which the Group has applied the practical expedient, the Group

initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or

loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group

has applied the practical expedient are measured at the transaction price.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to

give rise to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows

that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to

generate cash flows. The business model determines whether cash flows will result from collecting contractual cash

flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within

a business model with the objective to hold financial assets in order to collect contractual cash flows while financial

assets classified and measured at fair value through OCI are held within a business model with the objective of both

holding to collect contractual cash flows and selling.

Classification and subsequent measurement – Financial assets

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business

model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the

first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as

at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest

on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling

financial assets; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on

the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present

subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL.

On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to

be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting

mismatch that would otherwise arise.

Financial statements

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Financial assets – Derecognition

The Group derecognises a financial asset when:

• the contractual rights to the cash flows from the financial asset expire; or

• it transfers the rights to receive the contractual cash flows in a transaction in which either:

• substantially all of the risks and rewards of ownership of the financial asset are transferred; or

• the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain

control of the financial asset.

The Group enters into transactions whereby it transfers assets recognised in its consolidated balance sheet but retains

either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are

not derecognised.

Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value

through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with

the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original

effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit

enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit

risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within

the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in

credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the

exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore,

the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at

each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience,

adjusted for forward-looking factors specific to the debtors and the economic environment.

In certain cases, the Group may also consider a financial asset to be in default when internal or external information

indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account

any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation

of recovering the contractual cash flows.

Financial liabilities – Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss,

loans and borrowings or payables as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables,

net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.

Financial liabilities – Subsequent measurement

For the purposes of subsequent measurement, financial liabilities are classified in two categories:

• Financial liabilities at fair value through profit or loss.

• Financial liabilities at amortised cost (loans and borrowings).

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Notes to the consolidated financial statements

continued

3. Accounting policies continued

K. Financial instruments continued

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities

designated upon initial recognition as at fair value through profit or loss.

Any gains or losses on liabilities held are recognised as a fair value gain or loss in the consolidated statement of

profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial

date of recognition, and only if the criteria in IFRS 9 are satisfied.

Financial liabilities at amortised cost (loans and borrowings)

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using

the effective interest rate (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are

derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are

an integral part of the EIR. The EIR amortisation is included as finance costs in the consolidated statement of profit

or loss.

Financial liabilities – Derecognition

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.

The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability

are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the

consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in the consolidated

statement of profit or loss as a fair value gain or loss.

L. Equity

The Group’s ordinary share capital is classified as equity instruments. Incremental costs directly attributable to the

issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. The Group issues financial

instruments which are treated as equity only to the extent that they do not meet the definition of a financial liability.

These equity instruments are based on a fixed number of shares. These equity instruments include both initial deferred

equity consideration and deferred equity consideration following the achievement of contingent consideration criteria.

M. Cash flow statement

The cash flow statement is prepared using the indirect method. The cash and cash equivalents in the cash flow

statement comprise cash and cash equivalents except for deposits with a maturity of longer than three months and

minus current bank loans drawn under overdraft facilities. Cash flows denominated in foreign currencies are converted

based on average exchange rates. Exchange rate differences affecting cash items are shown separately in the cash

flow statement.

Income taxes paid are included in cash flows from operating activities. Interest and facility fees paid is included

in cash flows from financing activities. Purchase consideration for amounts paid for acquiring subsidiaries, net

of cash acquired, is included in cash flows from investing activities, insofar as the acquisition is settled in cash.

Performance linked contingent consideration paid is included within the investing activities. Where the estimate of

contingent consideration is adjusted outside of the measurement period, through the consolidated statement of profit

or loss, then the payment of the difference between the initial estimate and the increased estimate is included within

operating cash flows. Employment linked contingent consideration paid is included in cash flows from operating

activities. Principal elements of lease payments are included in cash flows from financing activities.

Financial statements

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4. Acquisitions

Current year acquisitions

On 31 October 2023, S

Capital plc announced the business combination of Formula Consultants Incorporated

(‘FCI’) for an expected total consideration of £1.2 million, including performance linked consideration of £0.4 million.

The initial cash outlay was funded through the Group’s own cash resources for the entire issued share capital of FCI.

The purchase price allocation has been finalised and net identifiable assets acquired totalled £1.0 million, including

cash and cash equivalents of £0.3 million. Goodwill arising on the acquisition was £0.2 million.

FCI has contributed £0.4 million to the Group’s revenue and £0.3 million to the Group’s operational EBITDA since the

acquisition date. If the acquisition had occurred on 1 January 2023, the Group’s Revenue and operational EBITDA

would have been £1,012.2 million and £93.3 million respectively.

Prior year acquisitions

XX Artists

The initial accounting for the business combination of XX Artists was provisional at the 31 December 2022

and was finalised as at 30 June 2023. There has been no change to the provisional fair value as disclosed at

31 December 2022.

At 31 December 2023, the employment linked contingent consideration was unconditional, on the basis that XX

Artists fully achieved post acquisition EBITDA targets for the 12 month period ended 31 December 2022. As a result,

during the year ended 31 December 2023 £35.8 million of employment linked contingent consideration liability was

derecognised, with £15.3 million being cash settled, £17.5 million being recognised as deferred equity consideration

and a revaluation gain of £0.9 million recognised in the consolidated statement of profit or loss.

At 31 December 2023, the holdback remaining on the balance sheet was £1.3 million. The Group expects to settle the

maximum amounts, as the business had achieved the post acquisition EBITDA targets for the 12 month period ended

31 December 2022.

TheoremOne

The initial accounting for the business combination of TheoremOne was provisional at the 31 December 2022.

As required by IFRS 3, the following fair value adjustments have been made during the measurement period, which had

no impact on the consolidated statement of profit or loss.

	As disclosed at 31		At 31 December
	December 2022		2023
	Provisional fair	Fair value
	value	adjustments	Fair value
	£m	£m	£m
Net identifiable assets	105.0	–	105.0
Goodwill	38.0	(1.5)	36.5
Total	143.0	(1.5)	141.5
Cash	78.0	–	78.0
Deferred consideration	55.0	–	55.0
Holdback obligations	10.0	–	10.0
Adjustment to purchase consideration	–	(1.5)	(1.5)
Total purchase consideration	143.0	(1.5)	141.5

Note:

1. Adjustment to purchase consideration relates to the amount recovered by the Group through the completion accounts process.

During the year ended 31 December 2023, £28.5 million was charged to the consolidated statement of profit or loss

with no further amounts to be accrued which related to the employment linked contingent consideration due to Sellers

who remain employees of the business.

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4. Acquisitions continued

At 31 December 2023, the employment linked contingent consideration was unconditional, on the basis that

TheoremOne fully achieved post acquisition EBITDA targets for the 12 month period ended 31 December 2022. As a

result, £79.0 million of employment linked contingent consideration was derecognised, with £39.5 million being

cash settled, £26.4 million being recognised as deferred equity consideration and a revaluation gain of £13.1 million

recognised in the consolidated statement of profit or loss.

Included within other reserves as at 31 December 2023 is £81.4 million, comprised of £55.0 million of deferred

consideration on initial acquisition and £26.4 million recognised during the period, as explained above.

At 31 December 2023, £6.0 million of holdbacks remain as a liability, relating to amounts held back to cover and

indemnify the Group against certain acquisition costs and damages. The Group currently expects to settle the

maximum holdback amount. The amount payable would be dependent on the amount of these acquisition costs and

damages, with the minimum amount payable being £nil.

4 Mile

At 31 December 2023, the performance linked and employment linked contingent consideration remaining on the

balance sheet is £6.7 million and £2.6 million respectively. As a result of partially achieving post acquisition EBITDA

targets for the 12 month period ended 31 December 2022, this amount was agreed and will be paid in 2024. As a result,

a revaluation gain of £1.5 million recognised in the consolidated statement of profit or loss and a gain of £1.1 million

recognised in the consolidated statement of profit or loss through contingent consideration as remuneration during the

year ended 31 December 2023.

At 31 December 2023, £4.7 million of holdbacks remain relating to amounts held back to cover and indemnify the

Group against certain acquisition costs and any damage. The Group currently expects to settle the maximum holdback

amount. The amount payable would be dependent on the acquisition costs and any damages, with the minimum

amount payable being £nil.

Raccoon Group (Raccoon)

At 31 December 2023, the employment linked contingent consideration was unconditional, on the basis that

Raccoon fully achieved post acquisition EBITDA targets for the 12 month period ended 31 December 2022. As a

result, £55.1 million of employment linked contingent consideration was derecognised, with £20.7 million cash

settled, £17.4 million recognised as deferred equity consideration, a revaluation gain of £3.4 million recognised in the

consolidated statement of profit or loss and a gain of £14.4 million recognised in the consolidated statement or profit or

loss through contingent consideration as remuneration.

Zemoga Group (Zemoga)

At 31 December 2023, £0.9 million of holdbacks remain relating to amounts held back to cover and indemnify the

Group against certain acquisition costs and damages. The Group currently expects to settle the maximum holdback

amount. The amount payable is dependent on the amount of these acquisition costs and damages, with the minimum

amount payable being £nil. During the year the Group settled £2.0 million of holdbacks, with a revaluation gain of

£3.3 million recognised in the consolidated statement of profit or loss.

Cashmere Agency Inc (Cashmere)

At 31 December 2023, £nil of holdbacks remain relating to amounts held back to cover and indemnify the Group

against certain acquisition costs and damages. The Group settled £1.6 million of holdbacks during the year, with a

revaluation gain of £1.2 million recognised in the consolidated statement of profit or loss.

Notes to the consolidated financial statements

continued

Financial statements

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Capital plc Annual Report and Accounts 2023

5. Segment information

A. Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating

decision-maker (CODM). The CODM has been identified as the Board of Directors of S

Capital Group.

During the year, S

Capital Group has three reportable segments as follows:

• Content: Creative content, campaigns, and assets at a global scale for paid, social and earned media – from digital

platforms and apps to brand activations that aim to convert consumers at every possible touchpoint.

• Data&Digital Media: Full-service campaign management analytics, creative production and ad serving, platform and

systems integration, transition, training and education.

• Technology Services: Digital transformation services in delivering advanced digital product design, engineering

services and delivery services.

The customers are primarily businesses across technology, fast moving consumer goods (FMCG) and media and

entertainment. Any intersegment transactions are based on commercial terms.

The Board of Directors monitor the results of the reportable segments separately for the purpose of making decisions

about resource allocation and performance assessment prior to charges for tax, depreciation and amortisation.

The Board of S

Capital Group uses net revenue rather than revenue to manage the Group due to the fluctuating

amounts of direct costs, which form part of revenue.

The following is an analysis of the Group’s net revenue and results by reportable segments:

		Data&Digital	Technology
	Content	Media	Services	Total
2023	£m	£m	£m	£m
Revenue	664.1	210.4	137.0	1,011.5
Net revenue	528.9	207. 3	137.0	873.2
Segment profit	46.5	35.2	43.4	125.1
Overhead costs				(22 .1)
Adjusted non-recurring and acquisition related expenses				(22.0)
Depreciation, amortisation and impairment				(60.8)
Net finance costs and gain on net monetary position				(34.1)
Loss before income tax				(13.9)

Notes:

1. Including £17.1 million related to depreciation and impairment of right-of-use assets.

2. Comprised of acquisition and restructuring expenses (£11.9 million) and share-based payment costs (£10.1 million). See Note 6.

3. Excluding £17.1 million related to depreciation and impairment of right-of-use assets.

		Data&Digital	Technology
	Content	Media	Services	Total
2022	£m	£m	£m	£m
Revenue	755.4	220.5	93.6	1,069.5
Net revenue	582.7	216.8	92.2	891.7
Segment profit	74.1	39.9	36.1	150.1
Overhead costs				(25.9)
Adjusted non-recurring and acquisition related expenses				(170.6)
Depreciation, amortisation and impairment				(88.9)
Net finance costs and gain on net monetary position				(24.4)
Loss before income tax				(159.7)

Notes:

1. Including £16.8 million related to depreciation of right-of-use assets.

2. Comprised of acquisition and restructuring expenses (£155.9 million) and share-based payment costs (£14.6 million). See Note 6.

3. Excluding £16.8 million related to depreciation and impairment of right-of-use assets.

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5. Segment information continued

A. Operating segments continued

Segment profit represents the profit earned by each segment without allocation of the share of profit of joint ventures,

central administration costs including Directors’ salaries, finance income, non-operating gains and losses, and income

tax expense. This is the measure reported to the Group’s Board of Directors for the purpose of resource allocation and

assessment of segment performance.

B. Information about major customers

One customer (2022: one) accounted for more than 10% of the Group’s revenue during the year, contributing

£177.5 million (2022: £187.5 million). The revenue from this customer was attributable to both the Content and

Data&Digital Media segments.

C. Geographical information

The Group’s revenue, net revenue and non-current assets by geographical segment are shown below. Non-current

assets exclude deferred tax assets.

		Europe,
		Middle East
	The Americas	& Africa	Asia Pacific	Total
2023	£m	£m	£m	£m
Revenue	747.5	199.0	65.0	1,011.5
Net revenue	68 8.1	133.1	52.0	873.2
Non-current assets	741.5	370.7	42.3	1,154.5

		Europe,
		Middle East
	The Americas	& Africa	Asia Pacific	Total
2022	£m	£m	£m	£m
Revenue	786.5	203.0	80.0	1,069.5
Net revenue	683.9	148.3	59.5	891.7
Non-current assets	824.3	397.6	41.2	1,263.1

Notes:

1. The prior year geographical split of revenue and net revenue has been re-presented to be consistent with the internal reporting provided to the Group’s

Board of Directors in the current year.

2. The comparatives as at 31 December 2022 have been restated for the adoption of the amendment to IAS 12 (see Note 2).

6. Operating expenses

	2023	2022
Personnel expenses	£m	£m
Wages and salaries	528.9	544.3
Social security costs	88.0	79.2
Other pension costs	16.3	15.7
Share-based payments	10.1	14.2
Other personnel costs	27.5	28.7
Total	670.8	682 .1

Notes:

1. Contingent consideration is disclosed separately from personnel expenses, as part of acquisition expenses below.

2. Social security costs includes £nil (2022: £0.4 million) of social security relating to share-based payments.

The key management personnel comprise the Directors of the Group. Details of compensation for key management

personnel are disclosed on pages 115 to 116.

Monthly average number of employees by segment	2023	2022
Content	5,197	5,707
Data&Digital Media	2,374	2,432
Technology Services	772	597
Central	31	36
Total	8,374	8,772

Notes to the consolidated financial statements

continued

Financial statements

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Monthly average number of employees by geography	2023	2022
The Americas	5,641	5,85 9
Europe, Middle East and Africa	1,862	1,966
Asia Pacific	871	947
Total	8,374	8,772

	2023	2022
Acquisition, restructuring and other one-off expenses	£m	£m
Advisory, legal, due diligence and related costs	2.3	7. 9
Restructuring costs	18.2	4.9
Transformation costs	2.9	–
Acquisition related bonuses	–	0.4
Contingent consideration linked to employee service	13.2	172.4
Contingent consideration fair value gain	(24.7)	( 29.7)
Total	11.9	155.9

Depreciation, amortisation and impairment

2023

£m

2022

£m

Depreciation of property, plant and equipment	12.2	10.1
Depreciation of right-of-use assets	17.1	16.3
Amortisation of intangible assets	48.6	57.0
Impairment of goodwill	–	15.2
Impairment of intangible assets	–	6.7
Impairment of right-of-use assets	–	0.4
Total	77.9	105.7
Other operating expenses

	2023	2022
	£m	£m
IT expenses	30.6	29.9
Consultancy fees	6.7	6.8
Accounting and administrative service fees	9.3	10.8
Lease costs	6.2	6.0
Sales and marketing costs	7.9	6.0
Legal fees	4.3	5.0
Travel and accommodation costs	9.3	8.6
Insurance fees	3.5	2.5
Impairment loss recognised on trade receivables	3.6	0.9
Other general and administrative costs	11. 2	6.8
Total	92.6	83.3

Lease costs mainly relate to short term and low value lease costs under IFRS 16.

Audit fees included in general and administrative costs are as follows:

	2023	2022
Audit fees	£m	£m
Fees payable to the company’s auditors and its associates for the audit of parent company
and consolidated financial statements	3.7	4.2
Fees payable to company auditors and its associates for other services:
Audit of the financial statements of the company’s subsidiaries	0.3	–
Total audit fees for the current year audit	4.0	4.2
Fees payable to the company’s auditors and its associates for the audit of parent company
and consolidated financial statements- prior year	–	1.7
Total audit fees	4.0	5.9
Fees payable to company auditors and its associates for audit-related assurance services	0.4	0.3
Total	4.4	6.2

Audit related assurance services to the Group relates to the fee charged for the half-year review. No other fees were

payable to PricewaterhouseCoopers LLP.

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7. Finance income and expenses

	2023	2022
Finance income	£m	£m
Interest income	2.8	1.5
Total	2.8	1.5

	2023	2022
Finance expenses	£m	£m
Interest on bank loans and overdrafts	(23.3)	(14.3)
Interest on lease liabilities	(2.3)	(2.1)
Discounting of contingent consideration	–	(1.5)
Foreign exchange differences	(8.0)	(3.5)
Other finance costs	(4.6)	(5.8)
Total	(38.2)	(27.2)

8. Income tax

The income tax credit/(expense) comprises the following:

	2023	2022
		Restated
	£m	£m
Current tax for the year	(13.3)	(18.2)
Adjustments for current tax of prior years	(1.3)	0.2
Total current tax	(14.6)	(18.0)
Movement in deferred tax liabilities	6.6	8.0
Movement in deferred tax assets	15.9	9.2
Income tax credit/(expense) in profit or loss	7.9	(0.8)

Note:

1. The comparatives for the year ended 31 December 2022 have been restated for the adoption of the amendment to IAS 12 (see Note 2).

The tax charge for the year can be reconciled to the income tax credit/(expense) in the consolidated statement of

profit or loss as follows:

	2023	2022
		Restated
	£m	£m
Loss before income tax	(13.9)	(159.7)
Tax credit at the UK rate of 23.5% (2022: 19.0%)	3.3	30.3
Tax effect of amounts which are non-deductible	6.6	(29.3)
Difference in overseas tax rates	(2.0)	(1.8)
Income tax credit/(expense) in profit or loss	7.9	(0.8)

Note:

1. The comparatives for the year ended 31 December 2022 have been restated for the adoption of the amendment to IAS 12 (see Note 2).

The UK rate has increased from 19.0% in 2022 to 23.5% in 2023 due to the increase of corporation tax rate in the UK

from 19.0% to 25.0% from April 2023.

The applicable tax rate is based on the proportion of the contribution to the result by the Group entities and the tax

rate applicable in the respective countries. The applicable tax rate in the respective countries ranges from 0% to

35%. The effective tax rate for the year deviates from the applicable tax rate mainly because of non-deductible items,

amortisation, accelerated capital allowances over depreciation on plant, property and equipment and differences in

overseas tax rate.

Notes to the consolidated financial statements

continued

Financial statements

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Capital plc Annual Report and Accounts 2023

9. Loss per share

	2023		2022
			Restated
Loss attributable to shareowners of the Company (£m)	(6.0)		(160.5)
Weighted average number of Ordinary Shares	639,218,703	590,6	67,949
Basic loss per share (pence)	(0.9)		(27.2)

Loss per share is calculated by dividing the loss attributable to the shareowners of the Group by the weighted average

number of Ordinary Shares in issue during the year.

	2023		2022
			Restated
Loss attributable to shareowners of the Company (£m)	(6.0)		(160.5)
Weighted average number of Ordinary Shares	639,218,703	590,6	67,949
Diluted loss per share (pence)	(0.9)		(27.2)

	2023		2022
Adjusted profit attributable to shareowners of the Company (£m)	36.5		67. 5
Weighted average number of Ordinary Shares	639,218,703	590,6	67,949
Adjusted basic earnings per share (pence)	5.7		11.4

Note:

1. The comparatives for the year ended 31 December 2022 have been restated for the adoption of the amendment to IAS 12 (See Note 2).

10. Goodwill

	2023	2022
		Restated
Net book value	£m	£m
At 1 January	718.8	625.0
Acquired through business combinations	0.2	51.8
Impairments	–	(15.2)
Foreign exchange differences	(27.7)	57. 2
At 31 December	691.3	718.8

Note:

1. The comparatives as at 31 December 2022 have been restated for measurement period adjustments in respect of business combinations for the year

ended 31 December 2023 (see Note 2).

During the year an amount of £0.2 million (2022: £51.8 million) has been acquired through business combinations and

has been allocated to the Technology Services CGU. See Note 4.

Goodwill represents the excess of consideration over the fair value of the Group’s share of the net identifiable assets

of the acquired subsidiary at the date of acquisition.

Impairment testing

Goodwill acquired through business combinations is allocated to CGUs for the purpose of the impairment testing.

The Group’s three CGUs are Content, Data&Digital Media and Technology Services. The goodwill balance is allocated

to each of the three CGUs as follows:

	2023	2022
		Restated
	£m	£m
Content	413.6	393.3
Data&Digital Media	197.6	241.0
Technology Services	80.1	84.5
Total	691.3	718.8

Note:

1. The comparatives as at 31 December 2022 have been restated for measurement period adjustments in respect of business combinations for the year

ended 31 December 2023. See Note 2.

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10. Goodwill continued

The recoverable amount for each CGU is determined using a value-in-use calculation. In determining the value-in-use,

the Group uses forecast revenue and profits adjusted for non-cash transactions to generate cash flow projections.

The forecasts are prepared by management based on the Board-approved three-year business plans for each CGU

along with a one-year management-prepared extrapolation period. The forecasts reflect the expected financial

performance for each CGU, and consider the impact of inflation and the latest macroeconomic trends and external

factors, as well as historic performance and trends, amongst other factors.

Sensitivity analysis has been carried out for the value-in-use calculations of each CGU. Based on this sensitivity

analysis, it has been determined that the excess of recoverable amount over the carrying amount of all three CGUs

could, without changing other assumptions, be reduced to nil as a result of reasonably possible changes in the key

assumptions of net revenue growth and EBITDA percentage margin in the cash flow forecasts, which are considered

the two most sensitive assumptions.

For Content, with a headroom of £85.1 million, the range of net revenue growth rates across the four-year forecast

period is between -0.3% and 12.6%, and the range of EBITDA margin across the four-year forecast period is

between 14.1% and 20.0%. A pre-tax discount rate of 13.9% has been used, with a long-term growth rate of 2.0%

applied in perpetuity beyond the four-year explicit forecast period. The recoverable amount would equal the carrying

amount either if net revenue growth range were to be reduced to a range of -0.4% to 7.6% (with margins remaining

unchanged) or if EBITDA margin were to be reduced to a range of 12.7% to 18.6% (with net revenue growth

remaining unchanged).

For Data&Digital Media, with a headroom of £34.4 million, the range of net revenue growth rates across the four-

year forecast period is between -0.2% and 13.3%, and the range of EBITDA margin across the four-year forecast

period is between 15.0% and 20.0%. A pre-tax discount rate of 13.9% has been used, with a long-term growth rate

of 2.0% applied in perpetuity beyond the four-year explicit forecast period. The recoverable amount would equal the

carrying amount either if net revenue growth range were to be reduced to a range of -0.3% to 8.8% (with margins

remaining unchanged) or if EBITDA margin were to be reduced to a range of 13.5% to 18.4% (with net revenue growth

remaining unchanged).

For Technology Services, with a headroom of £61.0 million, the range of net revenue growth rates across the four-

year forecast period is between -13.9% and 50.1%, and the range of EBITDA margin across the four-year forecast

period is between 11.8% and 22.0%. A pre-tax discount rate of 13.4% has been used, with a long-term growth rate

of 2.0% applied in perpetuity beyond the four-year explicit forecast period. The recoverable amount would equal the

carrying amount either if net revenue growth range were to be reduced to a range of -19.5% to 29.5% (with margins

remaining unchanged) or if EBITDA margin were to be reduced to a range of 7.8% to 18.1% (with net revenue growth

remaining unchanged).

The consequential impacts of the changes in net revenue growth/EBITDA margins on cash flow assumptions including

working capital movements and tax charges have been incorporated into the sensitivity analyses referred to above.

11. Intangible assets
	Customer		Order
	relationships	Brands	Backlog	Other	Total
	£m	£m	£m	£m	£m
Cost
At 1 January 2022	389.0	20.9	15.0	15.2	440.1
Acquired through business combinations	104.3	3.2	7.8	0.3	115.6
Additions	–	–	–	1.5	1.5
Disposals	–	–	(22.9)	–	(22.9)
Foreign exchange differences	38.5	2.0	0.6	1.4	42.5
At 31 December 2022	531.8	26.1	0.5	18.4	576.8
Acquired through business combinations	0.6	–	–	–	0.6
Additions	–	–	–	2.1	2 .1
Disposals	–	–	–	–	–
Foreign exchange differences	(21.8)	(1.0)	–	(0.8)	(23.6)
At 31 December 2023	510.6	25.1	0.5	19.7	555.9

Notes to the consolidated financial statements

continued

Financial statements

172 S

Capital plc Annual Report and Accounts 2023

	Customer		Order
	relationships	Brands	Backlog	Other	Total
	£m	£m	£m	£m	£m
Accumulated amortisation and impairment
At 1 January 2022	(58.2)	(6.3)	(13.7)	(5.6)	(83.8)
Charge for the year	(38.5)	(5.6)	(9.2)	(3.7)	(57.0)
Impairment	(6.1)	(0 .3)	–	(0.3)	(6.7)
Disposals	–	–	22.9	–	22.9
Foreign exchange differences	(5.4)	(0.6)	(0.4)	(0.6)	( 7.0 )
At 31 December 2022	(108.2)	(12.8)	(0.4)	(10.2)	(131.6)
Charge for the year	(41.1)	(4.0)	(0.2)	(3.3)	(48.6)
Impairment	–	–	–	–	–
Disposals	–	–	–	–	–
Foreign exchange differences	4.7	0.6	0.1	0.5	5.9
At 31 December 2023	(144.6)	(16.2)	(0.5)	(13.0)	(174.3)
Net book value
At 31 December 2022	423.6	13.3	0.1	8.2	445.2
At 31 December 2023	366.0	8.9	–	6.7	381.6

The impairment of customer relationships, brands and other intangibles in the year ended 31 December 2022 relates to

4 Mile. See Note 10. Other intangibles relates mainly to software.

The average remaining amortisation period of intangible assets as at 31 December 2023 was 5.1 years

(2022: 5.3 years).

12. Leases

	2023	2022
Right-of-use assets	£m	£m
Balance at 1 January	55.7	36.6
Acquired through business combinations	0.2	0.7
Additions	15.1	29.9
Impairments	–	(0.4)
Disposals and modifications	(6.2)	0.7
Depreciation of right-of-use assets	(17.1)	(16.3)
Hyperinflation	2.9	2.5
Exchange rate differences	(4.8)	2.0
Balance at 31 December	45.8	55.7

	2023	2022
Lease liabilities	£m	£m
Balance at 1 January	(58.4)	(42.0)
Acquired through business combinations	(0.2)	(0 .7)
Additions	(14.0)	(26.9)
Disposals and modifications	6.2	(0.7)
Payment of lease liabilities	18.6	17.5
Interest on lease liabilities	(2.3)	(2.1)
Exchange rate differences	1.1	(3.5)
Balance at 31 December	(49.0)	(58.4)
Non-current lease liabilities	(35.8)	(43.1)
Current lease liabilities	(13.2)	(15.3)
Balance at 31 December	(49.0)	(58.4)

The right-of-use assets and lease liabilities primarily relate to offices.

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Notes to the consolidated financial statements

continued

13. Property, plant and equipment

	Leasehold	Furniture and	Office
	improvements	fixtures	equipment	Other assets	Total
	£m	£m	£m	£m	£m
Cost
At 1 January 2022	11.6	3.5	22.0	1.3	38.4
Acquired through business combinations	0.1	0.1	0.8	–	1.0
Additions	5.9	1.1	8.7	0.7	16.4
Hyperinflation	1.2	0.2	2.1	0.2	3.7
Disposals	(0.1)	(0.1)	(0.7)	(0.1)	(1.0)
Foreign exchange differences	(0.5)	0.2	0.3	(0.3)	(0.3)
At 31 December 2022	18.2	5.0	33.2	1.8	58.2
Acquired through business combinations	–	–	0.2	–	0.2
Additions	1.8	0.2	3.4	0.5	5.9
Hyperinflation	2.7	0.5	4.2	0.4	7.8
Disposals	(0.4)	–	(0.9)	(0.2)	(1.5)
Foreign exchange differences	(3.9)	(0.6)	(6.2)	(0.8)	(11.5)
At 31 December 2023	18.4	5.1	33.9	1.7	59.1
Accumulated depreciation and impairment
At 1 January 2022	(3.5)	(1.7)	(11.4)	(0.2)	(16.8)
Charge for the year	(2.4)	(0.7)	(6.7)	(0.3)	(10.1)
Hyperinflation	(0.4)	(0.1)	(1.2)	–	(1.7)
Disposals	0.1	0.1	0.7	0.1	1.0
Foreign exchange differences	(0.1)	(0.2)	(0.6)	–	(0.9)
At 31 December 2022	(6.3)	(2.6)	(19.2)	(0.4)	(28.5)
Charge for the year	(3.9)	(0.8)	(6.9)	(0.6)	(12.2)
Hyperinflation	(1.0)	(0.1)	(3.1)	(0.1)	(4.3)
Disposals	0.4	–	0.9	0.2	1.5
Foreign exchange differences	2.0	0.1	4.0	0.2	6.3
At 31 December 2023	(8.8)	(3.4)	(24.3)	(0.7)	(37.2 )
Net book value
At 31 December 2022	11.9	2.4	14.0	1.4	29.7
At 31 December 2023 9.6 1.7 9.6 1.0 21.9

Financial statements

Capital plc Annual Report and Accounts 2023 174

14. Interest in joint ventures

The Group, through its subsidiary S

Capital 2 Limited a directly owned subsidiary, together with Stanhope Capital LLP

(Stanhope LLP), through its subsidiary Portman Square General Partner S.à r.l. (Stanhope), subscribed for the initial

€6,000 of shares each to incorporate S4S Ventures General Partner S.à r.l. (GP), a Luxembourg company. The GP

also controls S4S Ventures General Partner LLC. The GP has since established two S4S Ventures funds established in

Luxembourg and the US.

The Group has a 50% interest in the GP (2022: 50%), a joint venture whose primary activity is to invest in technology

companies focused on the marketing and advertising industries, to focus on early-stage technology investments with

the ability to transform the sector. S4S aims to invest in companies across five principal areas: Martech, Adtech, Data

Technology, Creative Technology, and Emerging Digital Media/Content. The Group’s interest is accounted for using the

equity method in the consolidated financial statements. Summarised financial information of the joint venture, based

on its IFRS financial statements, and reconciliation with the carrying amount of the investment in the consolidated

financial statements are set out below:

Summarised balance sheet:

	2023	2022
	£m	£m
Non-current assets	–	–
Current assets	0.4	0.3
Current liabilities	(0.1)	(0.4)
Net assets/(liabilities)	0.3	(0.1)
Group’s share of net assets/(liabilities) – 50%	0.2	(0.1)
Less: loss restricted to carrying value of investment	–	0.1
Group’s carrying amount of the investment	0.2 –

Notes:

1. Includes cash and cash equivalents held by the joint venture of £0.1 million (2022: £0.2 million).

2. The Group has not recognised losses totalling £0.1 million in 2022 in relation to its interests in S4S Ventures, because the Group has no obligation

in respect of these losses.

Summarised statement of profit or loss:

	2023	2022
	£m	£m
Revenue	1.1	0.7
Operating expense	(0.6)	(0.8)
Profit/(loss) for the year	0.5	(0.1)
Other comprehensive expense	–	–
Total comprehensive income/(expense)	0.5	(0.1)

Group’s share of joint venture profit:

	2023	2022
	£m	£m
Revenue	0.5	0.4
Operating expense	(0.3)	(0.5)
Profit/(loss) for the year	0.2	(0.1)
Other comprehensive expense	–	–
Total comprehensive income/(expense)	0.2	(0.1)
Less: loss restricted to carrying value of investment	–	0.1
Group’s share of joint venture profit	0.2	–

Note:

1. The Group has not recognised losses totalling £0.1 million in 2022 in relation to its interests in S4S Ventures, because the Group has no obligation in

respect of these losses.

The joint venture had no other contingent liabilities or commitments as at 31 December 2023 (2022: nil).

Capital plc Annual Report and Accounts 2023 175

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15. Deferred tax assets and liabilities

		Leases and
		Property
	Intangible	plant and	Short term			Net deferred
	assets	equipment	differences	Total	Offset	tax assets
Deferred tax assets	£m	£m	£m	£m	£m	£m
At 1 January 2022	–	11.6	6.2	17.8	(11.0)	6.8
Credited to profit or loss	6.7	0.1	2.4	9.2	–	9.2
Foreign exchange differences	0.1	(0.1)	0.7	0.7	–	(10.6)
At 31 December 2022	6.8	11.6	9.3	27.7	(22.3)	5.4
Credited to profit or loss	5.9	5.1	4.9	15.9	–	15.9
Foreign exchange differences	(0.3)	(1.6)	(0.5)	(2.4)	–	(2.4)
At 31 December 2023	12.4	15.1	13.7	41.2	(33.9)	7. 3

			Leases and
			Property
	Intangible	Loans and	plant and			Net deferred
	assets	borrowings	equipment 1	Total	Offset	tax liabilities
Deferred tax liabilities	£m	£m	£m	£m	£m	£m
At 1 January 2022	(67.7)	–	(10.9)	(78.6)	11.0	(67.6)
Reclassification	(0.4)	–	0.4	–	–	–
Credited/(charged) to profit or loss	8.8	–	(0.8)	8.0	–	8.0
Foreign exchange differences	(5.7)	–	(0.1)	(5.8)	–	5.5
At 31 December 2022	(65.0)	–	(11.4)	(76.4)	22.3	(54.1)
Acquired through business combinations	(0.2)	–	–	(0.2)	–	(0.2)
Credited to profit or loss	9.6	–	(3.0)	6.6	–	6.6
Foreign exchange differences	2.4	–	1.0	3.4	–	3.4
At 31 December 2023	(53.2)	–	(13.4)	(66.6)	33.9	(32.7)

Notes:

1. Includes deferred tax assets recognised on lease liabilities and dilapidation provisions of £13.1 million (2022: £10.9 million) and deferred tax liabilities

recognised on right-of-use assets of £11.8 million (2022: £10.5 million).

2. Where there is a right of offset, any deferred tax assets and deferred tax liabilities within the same tax jurisdiction have been offset.

3. The comparatives as at 1 January 2022 and for the year ended 31 December 2022 have been restated for the impact of IAS 12 and the deferred tax

offset (see Note 2).

Recognition of the deferred tax assets is based upon the expected generation of future taxable profits.

Our expectation is based on long-term planning. The deferred tax asset is expected to be recovered in more than one

year’s time and the deferred tax liability will reverse in more than one year’s time as the intangible assets are amortised.

The value of unrecognised deferred tax assets on future losses is £2.0 million (2022: £nil).

16. Trade and other receivables

	2023	2022
		Restated
	£m	£m
Trade receivables	346.8	349.6
Prepayments	13.1	16.4
Accrued income	28.2	44.7
Other receivables	33.1	43.9
Total	421.2	454.6
Included in current assets	4 07.5	442.4
Included in non-current assets	13.7	12.2
Total	421.2	454.6

Notes:

1. The accrued income as at 31 December 2022 has been fully billed in 2023.

2. The comparatives as at 31 December 2022 have been restated for measurement period adjustments in respect of business combinations for the year

ended 31 December 2023. See Note 2.

Notes to the consolidated financial statements

continued

Financial statements

Capital plc Annual Report and Accounts 2023 176

17. Cash and cash equivalents

The cash and cash equivalents in the statement of cash flows is made up as follows:

	2023	2022
	£m	£m
Cash and bank	145.7	223.6
Cash and cash equivalents	145.7	223.6

18. Trade and other payables

	2023	2022
		Restated
	£m	£m
Trade payables	(249.1)	(251.6)
Accruals	(90.9)	(102.8)
Deferred income	(53.6)	(65.6)
Sales taxes	(7.9)	(1.2)
Wage taxes and social security contributions	(7.7)	(10.0)
Other payables	(8.9)	(12.0)
Total	(418.1)	(443.2)
Included in current liabilities	(418.1)	(443.2)
Total	(418.1)	(443.2)

Notes:

1. The comparatives as at 31 December 2022 have been restated for measurement period adjustments in respect of business combinations and

reclassified for consistency with the presentation for the year ended 31 December 2023 (see Note 2).

2. The deferred income as at 31 December 2022 has been fully recognised in the consolidated statement of profit or loss of 2023.

19. Loans and borrowings

				Interest
		Senior		payable on
		secured term	Transaction	Facilities
	Bank loans	loan B (TLB)	costs	Agreement	Total
Loans and borrowings	£m	£m	£m	£m	£m
Balance at 1 January 2022	(3.3)	(315.1)	8.0	(0.6)	(311.0)
Acquired through business combinations	(0.3)	–	–	–	(0.3)
Loans Waived	0.3	–	–	–	0.3
Repayments	2.8	–	–	13.5	16.3
Charged to profit-or-loss	–	–	(1.3)	(13.5)	(14.8)
Exchange rate differences	(0.1)	(17.4)	0.2	(0.1)	(17.4)
Total transactions during the year	2.7	(17.4)	(1.1)	(0.1)	(15.9)
Balance at 31 December 2022	(0.6)	(332.5)	6.9	(0.7)	(326.9)
Acquired through business combinations	–	–	–	–	–
Loans Waived	–	–	–	–	–
Repayments	0.2	–	–	2 3.1	23.3
Charged to profit-or-loss	–	–	(1.4)	(22.7)	(24.1)
Exchange rate differences	–	6.6	(0.1)	0.1	6.6
Total transactions during the year	0.2	6.6	(1.5)	0.5	5.8
Balance at 31 December 2023	(0.4)	(325.9)	5.4	(0.2)	(321.1)
Included in current liabilities	–	–	–	(0.2)	(0.2)
Included in non-current liabilities	(0.4)	(325.9)	5.4	–	(320.9)

Capital plc Annual Report and Accounts 2023 177

2 310 4

19. Loans and borrowings continued

A. Facility agreement

Capital Group has a facility agreement, consisting of a Term Loan B (TLB) of EUR375 million and a multicurrency

Revolving Credit Facility (RCF) of £100 million. During 2023, the RCF remained fully undrawn (2022: fully undrawn).

The interest on TLB is the aggregate of the variable interest rate (EURIBOR) and a 3.75% margin. The interest on the

multicurrency RCF facility is the aggregate of the variable interest rate (EURIBOR or, in relation to any loan in GBP,

SONIA) and a margin range from 2.25% to 3.25% depending on the leverage. The duration of the facility agreement is

seven years in relation to the TLB, therefore the termination date is August 2028, and five years in relation to the RCF,

therefore the termination date is August 2026.

During the reporting period, the average interest rate of the outstanding loans amounted to 7.61% (2022: 4.76%).

The average effective interest rate for the outstanding loans is 6.85% (2022: 4.06%) and during the period interest

expense of £22.7 million was recognised (2022: £13.5 million).

The facility agreement imposes certain covenants on the Group. S

Capital Group will ensure that the net debt will not

exceed 4.5:1 of the pro-forma earnings before interest, tax, depreciation, and amortisation, measured at the end of

any relevant period of 12 months ending each semi-annual date in a financial year, as defined in the facility agreement.

During the year S

Capital Group complied with the covenants set in the loan agreement. Certain subsidiaries of

Capital Group guarantee its principal debt obligation and are obligors under the facility agreement.

20. Financial instruments

The Board of Directors of S

Capital plc has overall responsibility for the determination of the Group’s risk management

objectives and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible

without unduly affecting the Group’s competitiveness and flexibility. S

Capital Group reports in Pound Sterling.

All funding requirements and financial risks are managed based on policies and procedures adopted by the Board.

Capital Group does not issue or use financial instruments of a speculative nature.

Capital Group is exposed to the following financial risks:

• Market risk;

• Credit risk; and

• Liquidity risk.

The Group is exposed to risks that arise from its use of financial instruments. The principal financial instruments used

by the Group, from which financial instrument risk arises, are trade and other receivables, cash and cash equivalents,

accrued income, trade and other payables, loans and borrowings, contingent consideration and lease liabilities.

Fair values of the Group’s financial assets and liabilities are categorised into different levels in a fair value hierarchy

based on inputs used in the valuation techniques.

To the extent financial instruments are not carried at fair value in the consolidated balance sheet, the carrying amount

approximates to fair value as of the financial year end due to being short-term in nature.

Financial instruments by category

	2023	2022
Financial assets	£m	£m
Financial assets held at amortised cost
Cash and cash equivalents	145.7	223.6
Trade receivables	346.8	349.6
Accrued income	28.2	44.7
Other receivables 1	33.1	43.9
Total	553.8	661.8

Note:

1. The comparatives as at 31 December 2022 have been restated for measurement period adjustments in respect of business combinations and

reclassified for consistency with the presentation for the year ended 31 December 2023 (see Note 2).

Notes to the consolidated financial statements

continued

Financial statements

Capital plc Annual Report and Accounts 2023 178

	2023	2022
Financial liabilities	£m	£m
Financial liabilities held at amortised cost
Trade and other payables	(348.9)	(369.2)
Loans and borrowings	(321.1)	(326.9)
Lease liabilities	(49.0)	(58.4)
Financial liabilities held at fair value through profit or loss
Contingent consideration and holdbacks	(25.5)	(188.6)
Total	(744.5)	(943.1)

The following table categorises the Group’s financial liabilities held at fair value on the consolidated balance sheet.

There have been no transfers between levels during the year (2022: none).

	2023	2023	2022	2022
	Fair value	Level 3	Fair value	Level 3
Financial liabilities held at fair value	£m	£m	£m	£m
Contingent consideration and holdbacks	(25.5)	(25.5)	(188.6)	(188.6)
Total	(25.5)	(25.5) (188.6) (188.6)

The following table shows the movement in contingent consideration and holdbacks.

	Performance	Employment
	linked	linked
	contingent	contingent
	consideration	consideration	Holdbacks	Total
Contingent consideration and holdbacks	£m	£m	£m	£m
Balance at 1 January 2022	(42.9)	(58.7)	(16.8)	(118.4)
Acquired through business combinations	(12.5)	–	(14.2)	(26.7)
Recognised in consolidated statement of profit or loss	13.1	(155.6)	(1.6)	(144.1)
Cash paid	17. 0	38.9	9.4	65.3
Equity settlement	19.1	35.4	–	54.5
Exchange rate differences	(4.7)	(11.7)	(2.8)	(19.2)
Balance at 31 December 2022	(10.9)	(151.7)	(26.0)	(188.6)
Acquired through business combinations	(0.4)	–	–	(0.4)
Recognised in consolidated statement of profit or loss	1.6	4.1	5.8	11.5
Cash paid	–	77.7	5.9	83.6
Equity settlement	–	62.3	0.4	62.7
Exchange rate differences	0.7	4.6	0.4	5.7
Balance at 31 December 2023	(9.0)	(3.0)	(13.5)	(25.5)
Included in current liabilities	(10.9)	(151.7)	(14.7)	(177.3)
Included in non-current liabilities	–	–	(11.3)	(11.3)
Balance at 31 December 2022	(10.9)	(151.7)	(26.0)	(188.6)
Included in current liabilities	(8.6)	(3.0)	(6.6)	(18.2)
Included in non-current liabilities	(0.4)	–	(6.9)	(7.3)
Balance at 31 December 2023	(9.0)	(3.0)	(13.5)	(25.5)

Notes:

1. Holdback payments of £5.9 million (2022: £9.4 million) includes £3.3 million (2022: £4.7 million) of cash paid out escrow accounts.

2. Includes a charge of £13.2 million (2022: £172.4 million) relating to employment linked contingent consideration and holdback deemed remuneration,

a credit of £24.7 million relating to a fair value gain (2022: £29.8 million) and a charge of £nil (2022: £1.5 million) relating to the impact of discounting.

Capital plc Annual Report and Accounts 2023 179

2 310 4

20. Financial instruments continued

Where the contingent consideration conditions have been satisfied, consideration that is payable as equity is

recognised within Other Reserves as deferred equity consideration. See Note 21.

The fair value of the performance linked contingent consideration has been determined based on management’s best

estimate of achieving future targets to which the consideration is linked. The most significant unobservable input used

in the fair value measurements is the future forecast performance of the acquired business. The fair value is assessed

and recognised at the acquisition date, and reassessed at each balance sheet date thereafter, until fully settled,

cancelled or expired. Any change in the range of future outcomes is recognised in the consolidated statement of profit

or loss as a fair value gain or loss. The impact of discounting on the performance linked contingent consideration

is £nil for the year (2022: £1.5 million). During the year ended 31 December 2023, a fair value gain of £1.6 million

(2022: £14.6 million) was recognised in the consolidated statement of profit or loss.

The fair value of the employment linked contingent consideration has been determined based on management’s best

estimate of achieving future targets to which the consideration is linked. The most significant unobservable input used

in the fair value measurements is the future forecast performance of the acquired business. The fair value is assessed

at the acquisition date, and systematically accrued over the respective employment term. Any changes in the range of

future outcomes are recognised in the consolidated statement of profit or loss as a fair value gain or loss. During the

year ended 31 December 2023, a £4.1 million credit (2022: £155.6 million charge) was recognised in the consolidated

statement of profit or loss. The £4.1 million (2022: £155.6 million charge) comprised a charge of £13.2 million

(2022: £170.8 million) relating to the systematic accrual of the employment linked contingent consideration and a fair

value gain of £17.3 million (2022: £15.2 million).

Holdbacks relate to amounts held by the Group to cover and indemnify the Group against certain acquisition costs

and any damages. The fair value of the holdbacks has been determined based on management’s best estimate of the

level of the costs incurred and any damages expected to which the holdback is linked, which is the most significant

unobservable input used in the fair value measurement. During the year ended 31 December 2023, a credit of

£5.8 million (2022: £1.6 million charge) has been recognised in the consolidated statement of profit or loss, which

related to holdbacks liabilities linked to employment. No further amounts are to be charged to the consolidated

statement of profit or loss.

A. Market risk

Market risk arises from the Group’s use of interest bearing and foreign currency financial instruments. It is the risk that

the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest

rate risk) or foreign exchange rates (currency risk).

Interest rate risk

Capital Group is exposed to cash flow interest rate risk from bank borrowings at variable rates. S

Capital Group’s

bank loans and other borrowings are disclosed in Note 19. S

Capital Group manages the interest rate risk centrally.

The Group’s treasury function reviews its risk management strategy on a regular basis and will, as appropriate, enter

into derivative financial instruments in order to managing interest rate risk.

The following table demonstrates the sensitivity to a 1% change (lower/higher) to the interest rates of the loans and

borrowings as of year end to the loss in the current year before tax (increase/decrease) and net assets (increase/

decrease) for the year if all other variables are held constant:

	2023	2022
	£m	£m
Bank loans	326.3	333.2
+/- 1% impact	3.3	3.3

The contractual repricing or maturity dates, whichever dates are earlier, and effective interest rates of borrowings are

disclosed in Note 19.

Foreign exchange risk

Foreign exchange risk is the risk that movements in exchange rates affect the profitability of the business.

Management estimate that for a 1 cent change in the exchange rate between USD and GBP, net revenue will change

by approximately £4.7 million, and operational EBITDA will change by approximately £1.5 million. S

Capital Group

manages this risk through natural hedging. The effect of fluctuations in exchange rates on the USD, EUR and other

currencies denominated trade receivables and payables is partially offset.

Notes to the consolidated financial statements

continued

Financial statements

Capital plc Annual Report and Accounts 2023 180

The Group considers the need to hedge its exposure as appropriate and, if needed, will enter into forward foreign

exchange contracts to mitigate any significant risks.

The S

Capital Group’s gross exposure to foreign exchange risk is as follows:

				Other
	GBP	USD	EUR	currencies	Total
At 31 December 2023	£m	£m	£m	£m	£m
Trade receivables	14.8	241.9	36.6	53.5	346.8
Cash and cash equivalents	(23.8)	91.2	15.1	63.2	145.7
Trade payables	(9.5)	(175.1)	(20.3)	(44.2)	(249.1)
Loans and borrowings	–	–	(326.5)	–	(326.5)
Financial assets/(liabilities)	(18.5)	158.0	(295.1)	72.5	(83.1)
+/- 10% impact	–	15.8	(29.5)	7.3	(6.4)

				Other
	GBP	USD	EUR	currencies	Total
At 31 December 2022	£m	£m	£m	£m	£m
Trade receivables	15.7	226.3	41.2	66.4	349.6
Cash and cash equivalents	7.7	140.4	24.3	51.2	223.6
Trade payables	(10.0)	(174.5)	(27.6)	(39.5)	(251.6)
Loans and borrowings	–	–	(333.9)	–	(333.9)
Financial assets / (liabilities)	13.4	192.2	(296.0)	78 .1	(12.3)
+/- 10% impact	–	19.2	(29.6)	7.8	(2.6)

B. Credit risk

Credit risk is the risk of financial loss to S

Capital Group if a customer or counterparty to a financial instrument fails

to meet its contractual obligations. S

Capital Group is exposed to credit risk primarily attributable to its receivable

balance from customers. The Group’s net trade receivables for the reported periods are disclosed in the financial

assets table above.

Capital Group attempts to mitigate credit risk by assessing the credit rating of new customers prior to entering

into contracts and by entering contracts with customers with agreed credit terms. In order to minimise this credit risk,

Capital Group endeavours only to deal with companies which are demonstrably creditworthy and this, together with

the aggregate financial exposure, is continuously monitored. The maximum exposure to credit risk is the value of the

outstanding amount. S

Capital Group evaluates the collectability of its accounts receivable and provides an allowance

for expected credit losses based upon the ageing of receivables.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected

loss allowance for all trade receivables. The loss allowance for other receivables is based on the three stage expected

credit loss model. No other receivables have had material impairment.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk

characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period

of 36 months before the end of the period and the corresponding historical credit losses experienced within this period.

The historical loss rates are adjusted to reflect current- and forward-looking information on macroeconomic factors

affecting the ability of the customers to settle the receivables. On that basis, the loss allowance for trade receivables is

determined as follows:

Capital plc Annual Report and Accounts 2023 181

2 310 4

20. Financial instruments continued

B. Credit risk continued

		Gross trade	Impairment	Net trade
	Expected Credit	receivables	provision	receivables
Trade receivables	Loss Rate	£m	£m	£m
Not passed due	0.20-0.25%	273.6	(0.6)	273.0
Past due 1 day to 30 days	0.40-0.50%	54.1	(0.3)	53.8
Past due 31 days to 60 days	0.60-1.00%	7.3	(0.1)	7. 2
Past due 61 days to 90 days	0.80-2.00%	3.3	(0.1)	3.2
Past due more than 90 days	1.00-7. 50%	10.1	(0.5)	9.6
Specific provisions against individual debtors	up to 100%	7.4	(7.4)	–
Balance at 31 December 2023		355.8	(9.0)	346.8

		Gross trade	Impairment	Net trade
	Expected Credit	receivables	provision	receivables
Trade receivables	Loss Rate	£m	£m	£m
Not passed due	0.20-0.25%	281.7	(0.6)	281.1
Past due 1 day to 30 days	0.40-0.50%	49.0	(0.2)	48.8
Past due 31 days to 60 days	0.60-1.00%	9.6	(0.1)	9.5
Past due 61 days to 90 days	0.80-2.00%	5.7	(0.1)	5.6
Past due more than 90 days	1.0 0 -7. 5 0%	4.9	(0.3)	4.6
Specific provisions against individual debtors	up to 100%	4.5	(4.5)	–
Balance at 31 December 2022		355.4	(5.8)	349.6

Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no

reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with

Capital Group. The changes in the loss allowance for trade receivables is as follows:

	2023	2022
	£m	£m
Balance at the beginning of the year	5.8	5.3
Business combinations	–	2.0
Utilised during the period	(0.4)	(2.4)
Charge for the year	3.6	0.9
Balance at the end of the year	9.0	5.8

Due to the short-term nature of the trade and other receivables, their carrying amount is considered to be the same as

their fair value.

Notes to the consolidated financial statements

continued

Financial statements

Capital plc Annual Report and Accounts 2023 182

Credit risk on cash and cash equivalents is considered to be small as the majority of external counterparties are

substantial banks with high credit ratings assigned by international credit rating agencies and are managed through

regular review. As per the end of the reporting period, credit ratings are summarised in the table below:

	2023	2022
	£m	£m
Aa 1	–	0.9
Aa 2	66.4	112.4
Aa 3	33.6	10.7
A 1	23.8	46.1
A 2	3.9	5.4
A 3	5.1	3.1
Baa1	0.2	1.5
Baa 2	0.7	14.2
Baa 3	–	16.5
Ba 1	2.9	–
Ba 2	–	8.0
B 2	–	–
No credit rating	9.1	4.8
Total cash and cash equivalents	145.7	223.6

The maximum exposure is the amount of the deposit. To date, S

Capital Group has not experienced any losses on its

cash and cash equivalent deposits.

Other receivables primarily comprise escrow account balances held against holdbacks and lease rental deposits.

The credit risk on most of these balances are limited as the balances are held with banks which have high credit

ratings, and the Group has not experienced any losses on the other receivables.

C. Liquidity risk

Liquidity risk arises from the Group’s management of working capital. It is the risk that S

Capital Group will encounter

difficulty in meeting its financial obligations as they fall due. The Group monitors its liquidity risk using a cash flow

projection model which considers the maturity of the Group’s assets and liabilities and the projected cash flows from

operations. The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when

they become due. The table below analyses the Group’s financial liabilities by contractual maturities and all amounts

disclosed in the table are the undiscounted contractual cash flows:

				More than
	Within 1 year	1-2 years	2-5 years	5 years
At 31 December 2023	£m	£m	£m	£m
Trade payables	249.1	–	–	–
Lease liabilities	15.7	13.9	31.0	1.2
Contingent consideration and holdbacks	18.2	7.3	–	–
Loans and borrowings	0.2	0.2	325.9	–
Interest payments	23.0	23.0	59.6	–
Total	306.2	44.4	416.5	1.2

				More than
	Within 1 year	1-2 years	2-5 years	5 years
At 31 December 2022	£m	£m	£m	£m
Trade payables	251.7	–	–	–
Lease liabilities	17. 5	14.5	26.6	5.6
Contingent consideration and holdbacks	17 7. 3	5.5	5.8	–
Loans and borrowings	–	–	0.6	332.6
Interest payments	13.5	13.5	40.6	8.2
Total	460.0	33.5	73.6	346.4

Capital plc Annual Report and Accounts 2023 183

2 310 4

20. Financial instruments continued

D. Capital management

The Group’s objectives when maintaining capital are:

• to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for

shareowners and benefits for other stakeholders; and

• to provide an adequate return to shareowners by pricing products and services commensurately with the level of risk.

The risks to safeguard the ability to continue as a going concern and to provide an adequate return to our shareowners

are reviewed and discussed regularly by the Board in order to meet our objectives.

As per the end of the reporting period, the Group’s net debt position is made up as follows:

	2023	2022
	£m	£m
Loans and borrowings	(326.5)	(333.8)
Cash and bank	145.7	223.6
Total	(180.8)	(110. 2)

Changes in loans and borrowings is disclosed further in Note 19.

The Group’s capital as at the end of the reporting period is disclosed on page 148.

The capital structure of S

Capital Group consists of shareowners’ equity as set out in the consolidated statement

of changes in equity. All working capital requirements are financed from existing cash resources and borrowings.

The Group is not subject to externally imposed regulatory capital requirements.

21. Equity

A. Share capital and share premium

The authorised share capital of S

Capital plc contains an unlimited number of Ordinary Shares having a nominal value

of £0.25 per Ordinary Share. At the end of the reporting period, the issued and paid up share capital of S

Capital plc

consisted of 583,064,256 (2022: 567,832,883) Ordinary Shares having a nominal value of £0.25 per Ordinary Share.

On 28 September 2018 S

Capital issued 1 B share at a price of 100 pence per share to Sir Martin Sorrell. See the

Governance Report on page 95 for details.

The share premium is net of costs directly relating to the issuance of shares. In accordance with Section 612 of the

Companies Act 2006, merger relief has been applied on share for share exchanges. No share issuances in the current

or prior period qualified for merger relief.

Amount subscribed for share capital in excess of nominal value less transaction costs.

During the year ended 31 December 2023, £3.9 million and £74.5 million has been credited to share capital

and share premium in relation to the deferred equity consideration and contingent consideration which have

been issued during the period. The amounts credited to share capital and share premium comprise of Decoded

(£2.3 million and £45.6m respectively), Raccoon (£0.8 million and £16.1 million respectively), Cashmere (£0.3 million

and £6.8 million respectively), Zemoga (£0.3 million and £5.3 million respectively), and Miyagi (£0.2 million and

£0.7 million respectively).

During the year ended 31 December 2022, £3.2 million and £21.6 million has been credited to share capital

and share premium in relation to the deferred equity consideration which have been issued during the period.

The amounts credited to share capital and share premium comprise of Zemoga (£0.9 million and £6.9m respectively),

Staud (£0.8 million and £4.4 million respectively), Dare.Win (£0.4 million and £2.6 million respectively), Miyagi

(£0.3 million and £1.4 million respectively), Jam3 (£0.3 million and £3.0 million respectively), Destined (£0.2 million

and £1.9 million respectively), WhiteBalance (£0.1 million and £0.6 million respectively) and Orca (£0.1 million and

£0.9 million respectively).

Notes to the consolidated financial statements

continued

Financial statements

Capital plc Annual Report and Accounts 2023 184

B. Reserves

The following describes the nature and purpose of each reserve within equity:

Merger reserves by

merger relief

Amount subscribed for share capital in excess of nominal value less transaction costs as

required by merger relief. Further details are in section D below.

Other reserves Other reserves include treasury shares issued in the name of S

Capital plc to an employee

benefit trust, EBT pool C and MightyHive. Included within other reserves is the deferred

equity consideration relating to the initial deferred equity consideration and deferred equity

consideration following the achievement of contingent consideration criteria.

Foreign

exchange reserves

Legal reserve for foreign exchange translation gains and losses on the translation of the

financial statements of a subsidiary from the functional to the presentation currency.

Retained earnings Retained earnings represents the net gain for the year and all other net gains and losses and

transactions with shareowners (example dividends) not recognised elsewhere.

The following table shows the amount of deferred equity consideration, and number of shares, held in other reserves

by acquisition.

	2023		2023	2022			2022
	£m		shares	£m			shares
TheoremOne	81.4	40,	217,125	55.0			19,242,228
Decoded	–		–	47.9			9,311,922
Raccoon	43.6		29,217,838	43.0			13,937,669
XX Artists	25.3		21,384,430	7. 8	3	, 3	97,106
Cashmere	–		–	6.9			827,710
Zemoga	3.4		1,629,599	8.7			2,319,841
4 Mile	2.3		441,623	2.3			427, 20 6
Destined	0.2		66,921	0.2			66,921
Total	156.2		92,957,536	171.8			49,530,603

C. Non-controlling interest

On 24 May 2018, non-controlling interests arose as a result of the issuance of 4,000 A2 incentive shares by S

Capital

2 Limited subscribed at fair value for £0.1 million and paid in full.

The incentive shares provide a financial reward to executives of S

Capital Group for delivering shareowner value,

conditional on achieving a preferred rate of return. The incentive shares entitle the holders, subject to certain

performance conditions and leaver provisions, up to 15%, of the growth in value of S

Capital 2 Limited provided that

certain performance conditions have been met. Further details are within the Remuneration Report on page 122.

D. Share capital and merger reserve realisation

On 13 September 2022, the Group undertook a reduction of capital to effect the cancellation of: (i) the C ordinary

shares resulting from the capitalisation of the sum of £205,717,000 standing to the credit of the Company’s merger

reserve and; (ii) the entire amount standing to the credit of the Company’s share premium account (the Capital

Reduction) at that date, in order to create distributable reserves.

The Capital Reduction was approved by shareowners at the Company’s Annual General Meeting held on 16 June 2022.

As announced on 13 September 2022, the Capital Reduction was approved by the High Court of Justice of England

and Wales on 13 September 2022 and was registered by the Registrar of Companies on 21 September 2022. This will

provide the Group with the flexibility to make future purchases of its own shares and/or to make future ordinary

course dividends. The Board continues to review the advisability of declaring a modest dividend in future. The Group

announced in January 2024 the commencement of a Share BuyBack Programme. £2.7 million from its available cash

reserve has been allocated to the Share BuyBack Programme.

22. Dividends

For both the current and prior year, no dividends were paid or proposed by S

Capital plc to its shareowners.

Capital plc Annual Report and Accounts 2023 185

2 310 4

23. Share-based payments

As at 31 December 2023, a total number of 4,956,597 (31 December 2022: 7,383,204) shares are held by the Equity

Benefit Trust (EBT). The EBT will be used for future option schemes and bonus shares for employees.

	Employee			A1
	Share		All-employee	incentive
	Ownership	Restricted	incentive	share
	Plan	stock units	plan	options	Total
Awards movement during the reporting period	m	m	m	m	m
Outstanding at 1 January 2022	12.5	3.8	0.6	–	16.9
Granted	6.7	–	–	–	6.7
Exercised	(0.7)	(1.8)	–	–	(2.5)
Lapsed	(3.1)	(0.1)	–	–	(3.2)
Outstanding at 31 December 2022	15.4	1.9	0.6	–	17.9
Reinstatement	0.5	–	–	–	0.5
Restated outstanding at 31 December 2022	15.9	1.9	0.6	–	18.4
Granted	16.2	–	–	–	16.2
Exercised	(1.8)	(0.6)	–	–	(2.4)
Lapsed	(4.9)	–	(0.1)	–	(5.0)
Outstanding at 31 December 2023	25.4	1.3	0.5	–	27. 2
Exercisable at 31 December 2023					4.7
Within 1 year					6.0
1-2 years					3.7
2-5 years					12.8
Outstanding at 31 December 2023					27.2

Employee Share Ownership Plan (ESOP) – previously known as Discretionary Share Option Plan (DSOP)

In 2021, the S

Capital Group Board approved employee option schemes for key employees of 3,124,241 options over

Capital plc Ordinary Shares with an exercise price of between £nil and £8.04 and a maximum term of six years.

In 2022 6,741,277 options were approved by the Board with an exercise price in the range between £nil and £5.72

and a maximum term of four years. During 2023 an additional 4,575,606 options have been approved by the Board

with an exercise price in the range between £nil and £5.60 and a maximum term of 3 years. In accordance with IFRS

2, the Group recognises share-based payment charges from the date of granting the option plans until the vesting of

the option plans. Vesting of the options are subject to S

Capital Group achieving year on year business performance

targets and options holders achieving personnel performance targets with continued employment. During 2023,

1,799,929 (2022: 717,870) options were exercised with an average weighted exercise price of 0.21p.

During 2023 a total charge of £4.7 million (2022: £6.8 million) is recognised in relation to the ESOP and DSOP.

Long Term Incentive Plan (LTIP)

In 2023, the S

Capital Group Board approved a long term incentive plan for key employees over S

Capital plc

Ordinary Shares with an exercise price of between £1.17 and £2.00 and a maximum term of three years. During 2023,

11,639,329 options have been approved by the Board. In accordance with IFRS 2, the Group recognises share-based

payment charges from the date of granting the option plans until the vesting of the option plans. Vesting of the options

are subject to S

Capital Group achieving year on year business performance targets and options holders achieving

performance targets with continued employment. During 2023, nil options were exercised.

During 2023 a total charge of £0.8 million (2022: £nil) is recognised in relation to the LTIP.

Restricted Stock Units (RSUs)

In December 2018, the S

Capital Group Board approved an employee option scheme of 8,952,610 RSUs over

Capital plc Ordinary Shares. During 2019 to 2023 no RSUs were approved. In accordance with IFRS 2, the Group

recognises a share-based payment charge from grant date until vesting date in relation to this option plan. Vesting of

the RSUs are subject to continued employment and have a maximum term of 4 years. During the reporting period a

total of 589,387 shares (2022: 1,750,783) were exercised by employees with an average exercise price of nil pence.

During 2023 a total charge of £0.1 million (2022: £0.3 million) is recognised in relation to the RSU plan.

Notes to the consolidated financial statements

continued

Financial statements

Capital plc Annual Report and Accounts 2023 186

A1 incentive share options

In 2019, the S

Capital Group Board approved 2,000 options over A1 incentive shares in S

Capital 2 Limited to

executives. In accordance with IFRS 2, the Group recognises share-based payment charges from the date of

granting the option plans till the moment of vesting of the option plans. During 2023 a total charge of £4.5 million

(2022: £7.1 million) is recognised in relation to the A1 incentive share options. Full disclosure of these options is

contained within the Remuneration Report on page 122. These shares are potentially dilutive for the purposes of

calculating diluted EPS if the Company were to recognise a profit in future years and if the growth target (as detailed on

page 123) is met.

All-employee incentive plan

In 2019, the S

Capital Group Board approved an employee option scheme of 873,500 options, with an average

exercise price of nil pence, over S

Capital Ordinary Shares for all employees employed by the S

Capital Group at

30 November 2018. Based on the number of years service at Media.Monks Group all employees received a set amount

of options over S

Capital Ordinary Shares. In accordance with IFRS 2, the Group recognised a share-based payment

charge from January 2019 until vesting date in relation to this option plan. Vesting of the options are subject to

continued employment and have a maximum term of 6 years. During 2023 £nil (2022 :£nil) was recognised in relation

to the all-employee incentive plan.

A charge of £nil (2022: £0.4 million) has been taken in the year in relation to employer social security costs on

share-based payment schemes.

Valuation methodology

For all of these schemes, the valuation methodology is based upon fair value on grant date, which is determined

by the market price on that date or the application of a Black-Scholes or Monte-Carlo model, depending upon the

characteristics of the scheme concerned. The assumptions underlying the models are detailed below. Market price on

any given day is obtained from external, publicly available sources.

During 2023, 16,214,935 granted options in the ESOP and LTIP plans have an exercise price in the range between £nil

and £5.60. The weighted average fair value of options granted in the year was as follows:

	2023
Weighted average of fair value of options	£0.62
Weighted average assumptions
Risk free rate	3.9%
Expected life (years)	3.4
Expected volatility	50%
Dividend yield	n/a

The weighted average exercise price of options outstanding at the beginning of the financial year was £0.72.

The weighted average exercise price of options forfeited during the year ended 31 December 2023 was £1.14.

Expected life is the weighted average life across all shares granted. Expected volatility is sourced from external market

data and represents the historical volatility of share prices of comparable company datasets over a period equivalent to

the expected option life.

The options were exercised on a regular basis during the period; the average share price in 2023 was £1.24

(2022: £2.75).

Capital plc Annual Report and Accounts 2023 187

2 310 4

23. Share-based payments continued

The range of exercise prices of the share options outstanding as at 31 December 2023 outstanding and the weighted

average remaining contractual life were as follows:

	Number	Exercise	Remaining
	of options	price	contractual life
Share options outstanding	15,635,643	£0.00	2024-2027
Share options outstanding	213,078	£1.17	2026
Share options outstanding	227,000	£1.27	2024-2026
Share options outstanding	821,599	£1.42	2024-2025
Share options outstanding	50,000	£1.49	2024
Share options outstanding	420,670	£1.51	2024-2026
Share options outstanding	510,043	£1.80	2024-2027
Share options outstanding	6,613,409	£2.00	2024-2026
Share options outstanding	2,244,982	£2.37	2024-2026
Share options outstanding	9,977	£3.22	2025
Share options outstanding	39,766	£3.77	2024
Share options outstanding	32,538	£3.98	2025-2026
Share options outstanding	2,939	£4.26	2024
Share options outstanding	52,500	£4.88	2024
Share options outstanding	166,041	£5.02	2024
Share options outstanding	11,000	£5.26	2024
Share options outstanding	46,500	£5.36	2024
Share options outstanding	19,134	£5.54	2024
Share options outstanding	45,349	£5.72	2024
Share options outstanding	54,450	£6.05	2024
Share options outstanding	19,600	£8.04	2024
Total share options outstanding	27,236,218

Notes to the consolidated financial statements

continued

Financial statements

Capital plc Annual Report and Accounts 2023 188

24. Net debt reconciliation

The following table shows the reconciliation of net cash flow to movements in net debt:

					Net debt
					including
	Borrowings				lease
	and overdraft	Cash	Net Debt	Leases	liabilities
	£m	£m	£m	£m	£m
Net debt as at 1 January 2022	(319.0)	301.0	(18.0)	(42.0)	(60.0)
Financing cash flows	0.9	(95.8)	(94.9)	15.4	(79.5)
Acquired through business combinations	(0.3)	–	(0.3)	(0.7)	(1.0)
Lease additions	–	–	–	(26.9)	(26.9)
Foreign exchange adjustments	(17.6 )	18.4	0.8	(3.5)	(2.7)
Interest expense	(13.5)	–	(13.5)	(2.1)	(15.6)
Interest payment	13.5	–	13.5	2.1	15.6
Other	2.2	–	2.2	(0.7)	1.5
Net debt as at 31 December 2022	(333.8)	223.6	(110.2)	(58.4)	(168.6)
Financing cash flows	0.2	(67.0 )	(66.8)	16.3	(50.5)
Acquired through business combinations	–	–	–	(0.2)	(0.2)
Lease additions	–	–	–	(14.0)	(14.0)
Foreign exchange adjustments	6.8	(10.9)	(4.1)	1.1	(3.0)
Interest expense	(22.7)	–	(22.7)	(2.3)	(25.0)
Interest payment	23.1	–	23.1	2.3	25.4
Other	(0.1)	–	(0.1)	6.2	6.1
Net debt as at 31 December 2023	(326.5)	145.7	(180.8)	(49.0)	(229.8)

Note:

1. The comparatives for the year ended 31 December 2022 have been reclassified between financing cash flows and interest payment (see Note 2).

25. Retirement Benefit Schemes

The defined benefit scheme acquired as part of the TheoremOne acquisition was settled during the year, with all

obligations being eliminated. The impact of settlement on the consolidated statement of comprehensive income was

£nil.

26. Related party transactions

Compensation for key management personnel is made up as follows:

	2023	2022
	£m	£m
Short-term employee benefits	2.0	2.6
Share-based payments	6.6	7.4
Total	8.6	10.0

Details of compensation for key management personnel are disclosed on pages 115 to 116.

Interest in S4S Ventures

The Group, through its subsidiary S

Capital 2 Limited a directly owned subsidiary, together with Stanhope Capital LLP

(Stanhope LLP), through its subsidiary Portman Square General Partner S.à r.l. (Stanhope), subscribed for the initial

€6,000 of shares each to incorporate S4S Ventures General Partner S.à r.l. (GP), a Luxembourg company. The GP

also controls S4S Ventures General Partner LLC. The GP has since established two S4S Ventures funds established in

Luxembourg and the US. See Note 14.

Capital Group did not have any other related party transactions during the financial year (2022: £nil).

27. Contingent liabilities

Capital commitments

Capital commitments represents capital expenditure contracted for at the end of the reporting period but not

yet incurred at the period end. At 31 December 2023, S

Capital Group has no capital commitments outstanding

(2022: £nil).

Capital plc Annual Report and Accounts 2023 189

2 310 4

28. Events occurring after the reporting period

There were no material post balance sheet events, that require adjustment or disclosure, occurring between the

reporting period and the 26 March 2024.

29. Interest in other entities

Subsidiaries

The Group’s subsidiaries at the end of the reporting period are set out below. Unless otherwise stated, they have

share capital consisting solely of Ordinary Shares that are held directly by the Group, and the proportion of ownership

interests held equals the voting rights held by the Group. S

Capital 2 Limited has ordinary shares, 4,000 A2 incentive

shares, 2,000 options over A1 incentive shares as disclosed in Note 21. S

Capital plc directly holds effectively 100% of

the ordinary shares in S

Capital 2 Limited. S

Capital plc indirectly holds effectively 100% of the ordinary shares in the

other entities.

					Place of business/
					Country of	Ownership
Name of entity	Address of the registered office				incorporation	interest %	Principal activity
S 4 Capital 2 Limited	3rd Floor, 44 Esplanade				Jersey	100	Holding company
	St Helier, Jersey, JE4 9WG
S 4 Capital	3rd Floor, 44 Esplanade				Jersey	100	Financing company
Acquisitions 1 Ltd	St Helier, Jersey, JE4 9WG
S 4 Capital	3rd Floor, 44 Esplanade				Jersey	100	Holding company
Acquisitions 2 Ltd	St Helier, Jersey, JE4 9WG
S 4 Capital APAC Holdings	3rd Floor, 44 Esplanade				Jersey	100	Holding company
Ltd	St Helier, Jersey, JE4 9WG
S 4 Capital AUD	3rd Floor, 44 Esplanade				Jersey	100	Financing company
Finance Ltd	St Helier, Jersey, JE4 9WG
S 4 Capital Australia	c/- MinterEllison, Level 11,				Australia	100	Holding company
Holdings Pty Ltd (Previously	1 Constitution Avenue
MediaMonks Australia	Canberra, CITY ACT 2601
Holding Pty Ltd)
S 4 Capital BRL	12 St. James’s Place, London,				United Kingdom	100	Financing company
Finance Ltd	SW1A 1NX
S 4 Capital CAD	3rd Floor, 44 Esplanade				Jersey	100	Financing company
Finance Ltd	St Helier, Jersey, JE4 9WG
S 4 Capital	Suite		1700	, Park Place 666,	Canada	100	Holding company
Canada 2 Ltd	Burrard Street, Vancouver, BC, V6C 2X8
S 4 Capital EMEA			Oude Amersfoortseweg 125,		The Netherlands	100	Holding company
Holdings B.V.	1212		AA Hilversum
S 4 Capital EUR	3rd Floor, 44 Esplanade				Jersey	100	Financing company
Finance Ltd	St Helier, Jersey, JE4 9WG
S 4 Capital France	43-47 Avenue de la Grande				France	100	Holding company
Holdings SAS	Armée, 75116		Paris
S 4 Capital Germany	Zielstattstraße 40 c/o BDO AG, 81379,				Germany	100	Holding company
Holdings GmbH	München
S 4 Capital	3rd Floor, 44 Esplanade				Jersey	100	Holding company
Holdings Ltd	St Helier, Jersey, JE4 9WG
S 4 Capital INR	3rd Floor, 44 Esplanade				Jersey	100	Financing company
Finance Ltd	St Helier, Jersey, JE4 9WG
S 4 Capital	69 Neil Road,				Singapore	100	Holding company
Investment Pte Ltd			Singapore 088899
S 4 Capital Italy	Viale Abruzzi 94				Italy	100	Holding company
Holdings Srl	CAP	20131	Milano
S 4 Capital LUX	20, rue Eugène Ruppert,				Luxembourg	100	Financing company
Finance S.à r.l.	L-2453		Luxembourg
S 4 Capital Services Ltd	3rd Floor, 44 Esplanade				Jersey	100	Financing company
	St Helier, Jersey, JE4 9WG
S 4 Capital South	3rd Floor, 44 Esplanade				Jersey	100	Holding company
America Holdings Ltd	St Helier, Jersey, JE4 9WG

Notes to the consolidated financial statements

continued

Financial statements

Capital plc Annual Report and Accounts 2023 190

			Place of business/
			Country of	Ownership
Name of entity	Address of the registered office		incorporation	interest %	Principal activity
S 4 Capital	3rd Floor, 44 Esplanade		Jersey	100	Holding company
UK Holdings Ltd	St Helier, Jersey, JE4 9WG
S 4 Capital	251	Little Falls Drive,	United States of	100	Holding company
US Holdings LLC	Wilmington, DE 19808.		America
S 4 Korea Bidco Ltd	3F, 166, Toegye-ro, Jung-gu, Seoul,		Republic of Korea	100	Holding company
4 Mile Analytics Pty Ltd	Suite 1003,	Level 10,	Australia	100	Data&Digital Media
	28 Margaret St, Sydney NSW, 2000
4 Mile LLC	877	Cedar St., #150,	United States of	100	Data&Digital Media
	Santa Cruz CA 95060		America
Bluetide,	Avenida Lago Alberto 442 Torre A- 404 Suite		Mexico	100	Content
S.A.P.I DE C.V.	558, PO BOX: 11320, Anahuac, II Seccion,
	Miguel Hidalgo, Ciudad de México
Brightblue	Media.Monks, Bonhill Building, Bonhill Street,		United Kingdom	100	Content
Consulting Ltd	London, England, EC2A 4DN
Brightblue	Media.Monks, Bonhill Building, Bonhill Street,		United Kingdom	100	Holding company
Holdings Ltd	London, England, EC2A 4DN
Cashmere	850	New Burton Road,	United States of	100	Content
Agency Inc	Suite 201, City of Dover,		America
	County of Kent, Delaware 19904
Circus BA S.A.	Tucumán 1, 4th. Floor, City of		Argentina	100	Content
	Buenos Aires, C1049AAA
Circus	Carrera 16		Colombia	100	Content
Colombia, S.A.S	No. 97 – 46 P 8, Bogota
Circus LAX LLC	3500	S Dupont HWY, Dover, Kent, Delaware,	United States of	100	Holding company
	19901		America
Circus Marketing DF, S.A.P.I	Calle Lago Alberto		Mexico	100	Content
DE C.V	442	Torre A- 404 Suite 607, PO BOX: 11320,
	Anahuac, I Seccion, Miguel Hidalgo, Ciudad
	de Mexico
Circus Marketing	C/ Garcia Paredes No. 17,		Spain	100	Content
Europa S.L.	Interior Madrid 28010, Madrid
Circus Network	Calle Lago Alberto		Mexico	100	Holding company
Holding, S.A.P.I. DE C.V.	442	Torre A- 404 Suite 608, PO BOX: 11320,
	Anahuac, I Seccion, Miguel Hidalgo,
	Ciudad de Mexico
Circus Network Servicos De	Rua Girassol, 128, 3o andar,		Brazil	100	Content
Marketing Ltda	Vila Madalena, 05433-000, São Paulo, SP.
Citrusbyte, LLC (DBA	21550	Oxnard St, 3rd Floor,	United States of	100	Technology Services
TheoremOne, LLC)	#11 Woodland Hills, CA 91367		America
Conversion	Unit 6 Windsor Business		United Kingdom	100	Data&Digital Media
Works Ltd	Centre, Vansittart Estate,
	Windsor, Berkshire, SL4 1SP
Decoded Advanced	874, Walker Road, Suite C,		United States of	100	Content
Media LLC	Dover County of Kent, DE 19904		America
Decoded	874, Walker Road, Suite C,		United States of	100	Content
Advertising LLC	Dover County of Kent, DE 19904		America
Decoded	Mercer & Hole, 21 Lombard Street, London,		United Kingdom	100	Content
Advertising UK Ltd	EC3V 9AH
Decoded	874, Walker Road, Suite C,		United States of	100	Content
Intelligence LLC	Dover County of Kent, DE 19904		America
Decoded US	850	New Burton Road,	United States of	100	Holding company
Holdco Inc	Suite 201, Dover, Delaware 19904		America
Destined 4 Pty Ltd		Level 8, 32 West Street	Australia	100	Data&Digital Media
		North Sydney NSW 2060

Capital plc Annual Report and Accounts 2023 191

2 310 4

				Place of business/
				Country of	Ownership
Name of entity	Address of the registered office			incorporation	interest %	Principal activity
Destined 5 Pte Ltd	30 Cecil Street, #19-08,			Singapore	100	Data&Digital Media
	Prudential Tower, Singapore (049712)
Digocloud SAS	CR 11 NO. 94 A 25 OF 201 Bogotá			Colombia	100	Data&Digital Media
Digodat SA	Tucumán 1, 4th. Floor, City			Argentina	100	Data&Digital Media
	of Buenos Aires C1049AAA
Digolab SPA	La Capitanía nro 80,			Chile	100	Data&Digital Media
	Bloque Of Dpto 108 Las Condes, Santiago
Digosoft SRL de CV	Goldsmith 40, ofna 9, Colonia Polanco,			Mexico	100	Data&Digital Media
	Delegación Miguel Hidalgo, Ciudad de México,
	CP 11550
Farzul SA	Dr. Scoseria 2671 - Punta Carretas -			Uruguay	100	Content
	Montevideo
Firewood Marketing Mexico	Gustavo Baz 2160, Edificio 3, piso 1, 54060			Mexico	100	Content
S. de R.L.	Tlalnepantla de Baz, Estado de México,
de C.V.	México
Firewood	850	New Burton Road		United States of	100	Content
Marketing Inc	Suite 201, City of Dover, County of Kent,			America
	Delaware 19904
Firewood Marketing Ireland	3rd Floor Ulysses House,			Ireland	100	Content
Ltd	Foley Street, Dublin 1
Firewood Marketing	12 St. James’s Place, London,			United Kingdom	100	Content
UK Ltd	SW1A 1NX
Flying Nimbus SAS	Tucumán 1, 4th. Floor, City			Argentina	100	Data&Digital Media
	of Buenos Aires C1049AAA
Formula Consultants Inc.	2300	East Katella Avenue, Suite 355		United States of	100	Technology Services
	Anaheim CA 92806 United States			America
Formula Partners, LLC	2140	S. Dupont Highway Camden, DE 19934		United States of	100	Technology Services
				America
Hilanders	Room 303, 3/F., Golden Gate Commercial			Hong Kong	100	Content
(Hong Kong) Ltd	Building, 136-138
	Austin Road, Tsim Sha Tsui, Kowloon
IMAgency B.V.	Danzigerbocht 41 C, 1013AM Amsterdam			The Netherlands	100	Content
IMAgency USA Inc	8 The Green, STE B B, Dover			United States of	100	Content
	County of Kent, DE 19901			America
Jam3 EMEA B.V.	Van Diemenstraat 180, 1013CP Amsterdam			The Netherlands	100	Content
Jam3 Holding Inc	Suite	170	0, Park Place 666, Burrard Street,	Canada	100	Holding company
	Vancouver, BC, V6C 2X8
Jam3 of America Inc	850	New Burton Road, Suite		United States of	100	Content
		201, Dover, Delaware 19904		America
Lemma Solutions LLC	2140	S. Dupont Highway Camden,		United States of	100	Technology Services
	DE 19934			America
Lens10 Pty Ltd		Level 5, 66 King Street, Sydney NSW 2000		Australia	100	Data&Digital Media
Made.for.Digital Inc	874	Walker Road, Suite C,		United States of	100	Content
	County of Kent, Dover, Delaware, 19904			America
Mamba Holding S.r.l,	Milano (mi), Viale Papiniano 44, 20123			Italy	100	Content
Maverick Digital Inc	838	Walker Road, Suite 21-2, Dover,		United States of	100	Data&Digital Media
	County of Kent, 19904, Delaware.			America
Maverick Digital	25/30, Third Floor, Babaji Complex, Tilak			India	100	Data&Digital Media
Services Pvt Ltd	Nagar, Delhi 110018
MediaMonks Canada	850	New Burton Road, Suite 201, Dover, DE,		United States of	100	Holding company
Holdings Inc.	199	04, United States		America
Media.Monks DDM	Oude Amersfoortseweg 125, 1212 AA			The Netherlands	100	Data&Digital Media
(Hilversum) B.V.	Hilversum
Media.Monks Paris SAS		17 rue Martel – Paris (75010)		France	100	Content
(previously Darewin SAS)

Notes to the consolidated financial statements

continued

29. Interest in other entities continued

Financial statements

Capital plc Annual Report and Accounts 2023 192

					Place of business/
					Country of	Ownership
Name of entity	Address of the registered office				incorporation	interest %	Principal activity
Media.Monks	Oude Amersfoortseweg 125,				The Netherlands	100	Content
Publishing B.V.	1212		AA Hilversum
Media.Monks	27F., No.9, Songgao Rd.,				Taiwan	100	Data&Digital Media
Taiwan Co. Ltd	Xinyi Dist., Taipei City 110, (R.O.C.)
MediaMonks Arabian	8884		Airport Street,		Kingdom of Saudi	100	Content
Company for Media	13	413, Riyadh			Arabia
Production LLC
MediaMonks	HWL Ebsworth Level 14, Australia Square,				Australia	100	Content
Australia Pty Ltd	264-278 George Street, Sydney Cove NSW
	2000
MediaMonks B.V.	Oude Amersfoortseweg 125,				The Netherlands	100	Content
	1212	AA Hilversum
MediaMonks	Tucumán 1, 4th Floor,				Argentina	100	Content
Buenos Aires SRL		Buenos Aires
MediaMonks	410	The Hills, Buchanan Square,			South Africa	100	Content
Cape Town Pty Ltd	160	Sir Lowry Road, Woodstock 7925, Cape
	Town
MediaMonks FZ-LLC	Dubai Media City Building 9,				United Arab	100	Content
	Third floor, unit 318, Dubai, U.A.E.				Emirates
MediaMonks	Mollenbachstraße 3,				Germany	100	Content
Germany GmbH	71229	Leonberg
MediaMonks	11/F, Unit B, Winbase Centre				Hong Kong	100	Holding company
Hong Kong Ltd	208	Queen’s Road Central Sheung Wang
MediaMonks Inc.	874, Walker Road, Suite C,				United States of	100	Content
	Dover County of Kent, DE 19904				America
MediaMonks	Room 603-A09, East Building 1,				P.R. China	100	Content
Information Technology	No.29 Jiatai Road, China
(Shanghai) Co. Ltd.		(Shanghai) Pilot Free Trade Zone 201206
MediaMonks	Building 6, Premise				Republic of	100	Content
Kazakhstan LLP	1, Saryarka Avenue, Saryarka District, city of				Kazakhstan
	Nur-Sultan, 010000 (Z10H9E3)
MediaMonks	Media.Monks, Bonhill Building, Bonhill Street,				United Kingdom	100	Content
London Ltd	London, England, EC2A 4DN
MediaMonks Malaysia Sdn.	No.	256B		, Jalan Bandar 12,	Malaysia	100	Content
Bhn.	Taman Melawati, Wilayah Persekutuan,
	Kuala Lumpur, 53100
MediaMonks	Amsterdam 271 Int 203,				Mexico	100	Content
Mexico City	Colonia Hipodromo, Delegación Cuauhtemoc,
S. de R.L. de C.V.	CP	CDMX	06100
MediaMonks	Oude Amersfoortseweg 125,				The Netherlands	100	Holding company
Multimedia Holding B.V.	1212		AA Hilversum
MediaMonks Poland Spółka	ul. SZCZYTNICKA, nr 11, lok. miejsc.				Poland	100	Content
Z Ograniczoną	WROCŁAW, kod 50-382, poczta WROCŁAW
Odpowiedzialnością
MediaMonks	125047		, Moscow, VN.TER.G. Municipal		Russian Federation	100	Content
Russia LLC	District of Tverskoy, 4-TH Lesnoy Lane, D. 4,
			Floor 4 Rooms. I, COM. 23 Office 4107.
MediaMonks Sao Paolo Serv. Rua Fidalga, 184, Anexo 198, Pinheiros, CEP:					Brazil	100	Content
De Internet para Publicidade	05432-000,
Ltda.	São Paulo.
MediaMonks	3F, Heungguk BLDG, 166,				Republic of Korea	100	Content
Seoul LLC	Toegye-ro, Jung-gu, Seoul, 04627
MediaMonks Services B.V.	Oude Amersfoortseweg 125,				The Netherlands	100	Content
	1212		AA Hilversum
MediaMonks	9 Raffles Place #26-01				Singapore	100	Content
Singapore Pte. Ltd.	Republic Plaza, 048619

Capital plc Annual Report and Accounts 2023 193

2 310 4

				Place of business/
				Country of	Ownership
Name of entity	Address of the registered office			incorporation	interest %	Principal activity
MediaMonks	Norrlandsgatan 18,			Sweden	100	Content
Stockholm AB	11143		Stockholm
MediaMonks	1-6-5 Jinnan, Shibuya Ku,			Japan	100	Content
Tokyo G.K.			Tokyo 150-0041
MediaMonks	Suite	1700	, Park Place, 666 Burrard Street,	Canada	100	Content
Toronto Ltd	Vancouver, BC V6C 2X8
Metric Theory LLC	850	New Burton Road, Suite		United States of	100	Data&Digital Media
		201, Dover, Delaware 19904		America
MightyHive AB	Norrlandsgatan 18, 111 43 Stockholm			Sweden	100	Data&Digital Media
MightyHive	HWL Ebsworth Level 14,			Australia	100	Data&Digital Media
AU Pty Ltd		Australia Square, 264-278 George Street,
	Sydney Cove NSW 2000
MightyHive Brazil Consulting	Rua Girassol, 106, 1 andar,			Brazil	100	Data&Digital Media
Ltda.	CEP: 05433-000, Vila Madalena, São Paulo
MightyHive	43-47 Avenue de la Grande Armee,			France	100	Data&Digital Media
France SAS	75116		Paris
MightyHive	Brienner StraBe 28,			Germany	100	Data&Digital Media
Germany GmbH	80333		Munchen
MightyHive	333	Seymour Street, 8th Floor, Vancouver BC		Canada	100	Data&Digital Media
Holdings Ltd		V6B 5A7, Canada
MightyHive	47/F Central Plaza,			Hong Kong	100	Data&Digital Media
Hong Kong Ltd		18 Harbour Road, Wanchhai
MightyHive Inc	850	New Burton Road,		United States of	100	Data&Digital Media
	Suite 201, Dover, Delaware 19904			America
MightyHive		Shop No.2, Ram Niwas		India	100	Data&Digital Media
India Pvt Ltd	CHS Ltd., Ranchod Das Road, Dahisar West,
	Mumbai	68, Maharashtra	4000
MightyHive Information	Room 07-130, Floor 08, No. 3, Lane 26, Qixia			P. R. China	100	Data&Digital Media
Technology (Shanghai) Co.		Road, China (Shanghai)
Ltd	Pilot Free Trade Zone (actual floor, 7th floor)
MightyHive K.K.		1 Chome 11-1, Nishiikebukuro, Toshima-ku,		Japan	100	Data&Digital Media
	Tokyo, 171-0021
MightyHive	3F, 166, Toegye-ro,			Republic of Korea	100	Data&Digital Media
Korea Co. Ltd	Jung-gu, Seoul
MightyHive Ltd		The Pinnacle, 160 Midsummer Boulevard,		United Kingdom	100	Data&Digital Media
		Milton Keynes MK 9 1FF
MightyHive NZ Ltd	William Buck (NZ) Ltd, Level 4 Zurich House,			New Zealand	100	Data&Digital Media
	21 Queen Street, Auckland, 1010
MightyHive	61 Robinson Road, Level 16 #12-61,			Singapore	100	Data&Digital Media
SG Ptd Ltd	Singapore, 068893
MightyHive SRL	Milano (MI) ViaLe Abruzzi 94 CAP 20131			Italy	100	Data&Digital Media
Miyagi S.r.l.	Milano (mi),			Italy	100	Content
	Viale Papiniano 44, 20123
M-Monks Digital	Flat No. 402, Paras Pearl,			India	100	Content
Media Pvt. Ltd.		No. 161, Greenglen Layout, Sarjapur Outer
		Ring Rd, Bellandur, Bangalore 0 560037,
	Karnataka
Orca Pacific Manufacturers	1100	Dexter Avenue North,		United States of	100	Data&Digital Media
Representatives LLC		Suite 200, Seattle,		America
	WA 98109-3598
Permundi		Rua Dona Alexandrina,		Brazil	100	Data&Digital Medi a
Agenciamento, Treinamentos e Tecnologia Ltda.		City of São Carlos, State of
		São Paulo, 13.560-290

No. 1346, Vila Monteiro, Gleba I,

Notes to the consolidated financial statements

continued

29. Interest in other entities continued

Financial statements

Capital plc Annual Report and Accounts 2023 194

					Place of business/
					Country of	Ownership
Name of entity	Address of the registered office				incorporation	interest %	Principal activity
Progmedia	Ortiz de Ocampo 3302				Argentina	100	Data&Digital Media
Argentina SAS	Building 1, 1st floor Office No. 7,
	City of Buenos Aires
Proof LLC	21550		Oxnard St, 3rd Floor,		United States of	100	Technology Services
	#11 Woodland Hills, CA 91367				America
PT Media	Equity Tower Building 35-37th floor, JL. JEND. Indonesia					100	Data&Digital Media
Monks Indonesia	SUDIRMAN, KAV 52-53, Desa/Kelurahan
	Senayan, Kec. Kebayoran Baru, Kota Adm.
	Jakarta Selatan, Provinsi DKI Jakarta, Kode
	Pos: 12190
Raccoon	Rua Dona Alexandrina,				Brazil	100	Data&Digital Media
Publicidade Ltda.	No.	134	6, Vila Monteiro,
	Gleba I, City of São Carlos,
	State of São Paulo, 13.560-290
Rewinda SAS		5 Rue Rebeval, Appt 50,			France	100	Content
		75019	Paris
Rocky	Av. Irene da Silva Venâncio, number 199, GP				Brazil	100	Data&Digital Media
Publicidade Ltda.	03A, Bairro Protestantes, CEP: 18111-100
Staud Studios GmbH	Mollenbachstraße 3, 71229				Germany	100	Content
	Leonberg
Superhero	874	Walker Road, Suite C,			United States of	100	Content
Cheesecake Inc.	Dover, County of Kent, DE 19904				America
Tableau,	Calle Lago Alberto				Mexico	100	Content
S. DE R.L. DE C.V.	442	Torre A- 404 Suite 558,
	PO BOX: 11320, Anahuac,
	I Seccion, Miguel Hidalgo,
	Ciudad de Mexico
Technical Performance	21550	Oxnard St, 3rd Floor,			United States of	100	Technology Services
Services LLC	#11 Woodland Hills, CA 91367				America
The Monastery LLC		874, Walker Road, Suite C,			United States of	100	Content
(Previously MediaMonks	Dover County of Kent,				America
Films LLC)	DE 19904
Toga S.r.l.		Milano (mi),			Italy	100	Content
		Viale Papiniano 44, 20123
Tomorrow	Room		23	85, No. 12, Lane 65,	P.R. China	100	Content
(Shanghai) Ltd	Huandong No.1 Road, Fengjing Town,
		Jinshan District, Shanghai
XX Artists LLC	12130		Millennium Dr., Suite 300		United States of	100	Content
			Los Angeles, CA 90045		America
Zemoga Inc	850		New Burton Road, Suite		United States of	100	Technology Services
			201, Dover, Delaware 19904		America
Zemoga SaS			Calle 95 15-09 Bogota		Colombia	100	Technology Services
PT Mightyhive Indonesia	Gedung Revenue Lt. 23 Unit 23-122, Jl.				Indonesia	100	Data&Digital Media
	Jenderal Sudirman Kac. 52-53, Senayan,
	Kebayoran Baru, Kota Adm. Jakarta Selatan,
	DKI Jakarta

Joint Ventures

			Place of business/
			Country of	Ownership
Name of entity	Address of the registered office		incorporation	interest %	Principal activity
S4S Ventures General	412F	, Route d’Esch L-1471, Luxembourg	Luxembourg	50	Holding company
Partner S.à r.l.
S4S Ventures General	251	Little Falls Drive,	United States of	50	Holding company
Partner LLC	Wilmington, DE 19808		America

Capital plc Annual Report and Accounts 2023 195

2 310 4

Company balance sheet

At 31 December 2023

Notes

2023

£m

2022

£m

Assets

Fixed assets

Investment in subsidiary 1 1,112 . 2 1,039.5

1,112 .2 1,039.5

Current assets

Trade and other receivables 2 9.3 6.5

Cash and cash equivalents 3 0.2 –

9.5 6.5

Total assets 1,121.7 1,046.0

Liabilities

Current liabilities

Trade and other payables 4 (17.0) (11.4)

(17.0) (11.4)

Total liabilities (17.0) (11.4)

Net assets 1,104.7 1,034.6

Equity

Share capital 5 145.9 142.0

Reserves 5 958.8 892.6

Total equity 1,10 4.7 1,034.6

The Company reported a net loss for the financial year ended 31 December 2023 of £2.9 million (2022: £8.2 million

loss). The accompanying notes on pages 198 to 201 form an integral part of the financial statements.

The financial statements on pages 196 to 201 were approved by the Board of Directors on 26 March 2024 and signed

on its behalf by

Sir Martin Sorrell Mary Basterfield

Executive Chairman Group Chief Financial Officer

Company’s registered number: 10476913

Financial statements

Capital plc Annual Report and Accounts 2023 196

Company statement of changes in equity

For the year ended 31 December 2023

capital

£m

premium

£m

Merger

reserves

£m

Other

reserves

£m

Retained

earnings

£m

Total

£m

Balance at 1 January 2022 138.8 446.9 205.7 75.0 42.3 908.7

Loss for the year – – – – (8.2) (8.2)

Total comprehensive loss – – – – (8.2) (8.2)

Transactions with owners

of the Company

Business combinations 3.2 21.6 – 94.9 – 119.7

Capital reduction – (462.6) (205.7) – 668.3 –

Employee share schemes – – – 0.4 14.0 14.4

Balance at 31 December 2022 142.0 5.9 – 170.3 716.4 1,034.6

Loss for the year – – – – (2.9) (2.9)

Total comprehensive loss – – – – (2.9) (2.9)

Transactions with owners

of the Company

Business combinations 3.9 74.5 – (15.7) – 62.7

Capital reduction – – – – – –

Employee share schemes – – – 0.6 9.7 10.3

Balance at 31 December 2023 145.9 80.4 – 155.2 723.2 1,104.7

The accompanying notes on pages 198 to 201 form an integral part of the Company financial statements.

Capital plc Annual Report and Accounts 2023 197

2 310 4

Notes to the Company financial statements

A. General

The Company financial statements are part of the 2023 financial statements of S

Capital plc. S

Capital plc is a public

Company, limited by shares, is listed on the London Stock Exchange and has its registered office at 12 St James’s

Place, London, SW1A 1NX, United Kingdom. S

Capital plc (the Company) is a holding company for investments active

in the digital advertising and marketing services space.

B. Basis of preparation

The Parent Company balance sheet and related notes have been prepared under the historical cost convention and in

accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101). The Parent Company

financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and The

Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410).

In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the

following disclosures:

• Statement of Cash Flows and related Notes

• disclosures in respect of transactions with wholly owned subsidiaries

• disclosures in respect of capital management

• the effects of new but not yet effective IFRSs

• disclosures in respect of the compensation of Key Management Personnel.

As the Group consolidated financial statements (presented on pages 145 to 195) include the equivalent disclosures,

the Company has also taken the exemptions under FRS 101 available in respect of the following disclosures:

• IFRS 2 ‘Share-based Payment’ in respect of Group settled share-based payments certain disclosures required by

IFRS 13 ‘Fair Value Measurement’ and the disclosures required by IFRS 7 ‘Financial Instrument Disclosures’.

• No individual profit or loss account is prepared as provided by Section 408 of the Companies Act 2006.

C. UK-adopted international accounting standards

The consolidated financial statements of S

Capital plc have been prepared in accordance with UK-adopted

International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies

reporting under those standards.

D. New and amended standards and interpretations adopted by the Company

In the current year, the Company has applied a number of amendments to IFRS Accounting Standards issued by the

International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins

on or after 1 January 2023. Further detail can be found in the Group accounts on page 152. Their adoption has not had

any material impact on the disclosures or on the amounts reported in these financial statements.

E. New and amended standards and interpretations not yet adopted

Certain new and amended accounting standards and interpretations have been published that are not mandatory for

31 December 2023 reporting periods and have not been early adopted by the Company. None of these are expected to

have a material impact on the Company in the current or future reporting periods.

F. Basis of accounting

The Company financial statements are prepared under the historical cost convention and on a going concern basis,

in accordance with the Companies Act 2006. The following paragraphs describe the main accounting policies, which

have been applied consistently.

The ability of the Company to continue as a going concern is contingent on the ongoing viability of the Group.

The Group meets its day-to-day working capital requirements through its bank facilities. The Group’s forecasts and

projections, taking account of reasonably possible changes in trading performance, show that the Group should

be able to operate within the level of its current facilities. Having assessed the principal risks and the other matters

discussed in connection with the viability statement, the Directors considered it appropriate to adopt the going concern

basis of accounting in preparing its consolidated financial statements.

Financial statements

Capital plc Annual Report and Accounts 2023 198

Estimates and judgements

The preparation of the Financial Statements in conformity with generally accepted accounting principles requires

management to make estimates and judgements that affect the reported amounts of assets and liabilities at the

date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those judgements and estimates. There are no critical judgements or estimates

affecting the parent company.

Impairment of Investment in subsidiary

The carrying value of the Company’s investment in subsidiary have been disclosed in Note 1 and is assessed for

indicators of impairment at each reporting period. Determining whether the carrying value has any indication

of impairment requires judgement. In testing for impairment, estimates are used to determine cash flows and

discount rates.

Foreign currencies

Profit or loss account items in foreign currencies are translated into GBP at average rates for the relevant accounting

periods. Monetary assets and liabilities are translated at exchange rates prevailing at the date of the Company

balance sheet. Exchange gains and losses on loans and on short-term foreign currency borrowings and deposits are

included within net finance cost. Exchange differences on all other foreign currency transactions are recognised in

operating profit.

Taxation

The current tax payable is based on taxable profit for the year. Taxable profit differs from reported profit because

taxable profit excludes items that are either never taxable or tax deductible or items that are taxable or tax deductible

in a different period. The Company’s current tax assets and liabilities are calculated using tax rates that have been

enacted or substantively enacted by the reporting date.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the

carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the

asset can be utilised. This requires judgements to be made in respect of the availability of future taxable income.

No deferred tax asset or liability is recognised in respect of temporary differences associated with investments in

subsidiaries and branches where the Company is able to control the timing of reversal of the temporary differences and

it is probable that the temporary differences will not reverse in the foreseeable future.

The Company’s deferred tax assets and liabilities are calculated using tax rates that are expected to apply in the period

when the liability is settled or the asset realized based on tax rates that have been enacted or substantively enacted by

the reporting date.

Accruals for tax contingencies require management to make judgements of potential exposures in relation to tax

audit issues. Tax benefits are not recognised unless the tax positions will probably be accepted by the authorities.

This is based upon management’s interpretation of applicable laws and regulations and the expectation of how the tax

authority will resolve the matter. Once considered probable of not being accepted, management reviews each material

tax benefit and reflects the effect of the uncertainty in determining the related taxable result.

Accruals for tax contingencies are measured using either the most likely amount or the expected value amount

depending on which method the Company expect to better predict the resolution of the uncertainty.

Investments

Fixed asset investments, including investments in subsidiaries, are stated at cost and reviewed for impairment if there

are indications that the carrying value may not be recoverable.

Share-based payments

The issuance by the Company to employees of its subsidiaries of a grant of awards over the Company’s shares,

represents additional capital contributions by the Company to its subsidiaries. An additional investment in subsidiaries

results in a corresponding increase in shareholders’ equity. The additional capital contribution is based on the fair value

of the grant issued, allocated over the underlying grant’s vesting period, less the market cost of shares charged to

subsidiaries in settlement of such share awards.

Capital plc Annual Report and Accounts 2023 199

2 310 4

F. Basis of accounting continued

Litigation

Through the normal course of business, the Group is involved in legal disputes the settlement of which may involve

cost to the Company. Provision is made where an adverse outcome is probable and associated costs can be estimated

reliably. In other cases, appropriate descriptions are included.

Dividends

Up to the date of approval of these financial statements no dividends were paid by S

Capital plc to its shareowners

(2022: £nil).

Employees

The Company had no employees during either year. Details of Directors’ emoluments, which were paid by other Group

companies, are set out in the Directors’ Remuneration Report on pages 115 to 116.

1. Investment in subsidiary

Investment in subsidiary is stated at cost less, where appropriate, provisions for impairment.

2023

£m

2022

£m

Balance at the beginning of the year 1,039.5 905.0

Capital contributions 62.4 120.3

Share-based payments 10.3 14.2

Balance at the end of the year 1,112 .2 1,039.5

The Company directly holds 100% ownership in S

Capital 2 Limited. The Company indirectly holds effectively 100%

of ordinary shares of the subsidiaries disclosed in Note 29 of the consolidated financial statements. The investment in

subsidiary is assessed to determine if there is any indication that the investment might be impaired.

As at 31 December 2023, in light of the Group’s market capitalisation and revised targets issued during the year

management has performed an impairment test to determine whether recoverable amount exceeded the cost of

investment recognised. The recoverable amount is assessed on a value in use basis. The value in use is calculated

using a discounted cash flow methodology using financial information related to the subsidiaries including projected

cashflows in conjunction with the goodwill impairment analysis performed by the Group, as disclosed in Note 10 of

the consolidated financial statements. The value of the investment in subsidiary of the Company of £1,112.2 million is

higher than the combined carrying amount of the CGU’s tested for impairment in Note 10. The Group’s value in use

calculated for the goodwill impairment has been adjusted downwards for the contractual cashflows relating to debt

to arrive at the investment in subsidiary’s value in use and using the Group’s discount rate. The resultant value in use

exceeds the carrying value of the investment in subsidiary, although with very limited headroom.

Sensitivity analysis has also been carried out for the value in use calculations of the investment in subsidiary in line with

those disclosed in Note 10 of the consolidated financial statements. If no mitigating factors were applied, any changes

to the net revenue growth rates and the EBITDA margin percentage would result in the value in use being lower than

the carrying value of the investment in subsidiary.

2. Trade and other receivables

2023

£m

2022

£m

Value added tax 0.7 –

Corporate tax 4.4 3.0

Amounts owed by subsidiaries 3.0 1.9

Other receivables and prepayments 1.2 1.6

Total 9.3 6.5

The loss allowance for receivables from subsidiaries is based on the three-stage impairment expected credit loss

model. No material impairment arose.

Notes to the Company financial statements

continued

Financial statements

Capital plc Annual Report and Accounts 2023 200

3. Cash and cash equivalents

2023

£m

2022

£m

Cash and cash equivalents 0.2 –

Total 0.2 –

4. Trade and other payables

2023

£m

2022

£m

Trade payables (1.3) (1.4)

Other payables and accruals (3.0) (3.8)

Value added taxes – (0.8)

Amounts owed to subsidiaries (12.7) (5.4)

Total (17.0) (11.4)

5. Equity

A. Share capital

The authorised share capital of S

Capital plc contain an unlimited number of Ordinary Shares having a nominal value

of £0.25 per Ordinary Share. At the end of the reporting period, the issued and paid-up share capital of the Company

consisted of 583,064,256 (2022: 567,832,883) Ordinary Shares having a nominal value of £0.25 per Ordinary Share.

B. Reserves

The following describes the nature and purpose of each reserve within equity:

• Share premium Amount subscribed for share capital in excess of nominal value. The share premium is net of

costs directly relating to the issuance of shares.

• Merger reserves Amount subscribed for share capital in excess of nominal value as required by merger relief.

• Other reserves Shares issued in the name of the Company to an employee benefit trust and shares issued in

the name of S

Capital Group for deferred consideration.

• Retained earnings Retained earnings represents the net profit (loss) for the year and all other net gains and losses

and transactions with shareowners (example dividends) not recognised elsewhere.

6. Related party transactions

Details of compensation for key management personnel are disclosed on page 189. The Company did not have any

other related party transactions during the financial year (2022: £nil).

7. Events occurring after the reporting period

Details of events occurring after the reporting period are disclosed in Note 28 of the consolidated financial statements.

Capital plc Annual Report and Accounts 2023 201

2 310 4

Appendix: Alternative Performance Measures

The Group has included various unaudited alternative performance measures (APMs) in its Annual Report and

Accounts. The Group includes these non-GAAP measures as it considers these measures to be both useful and

necessary to the readers of the Annual Report and Accounts to help them more fully understand the performance

and position of the Group. The Group’s measures may not be calculated in the same way as similarly titled measures

reported by other companies. The APMs should not be viewed in isolation and should be considered as additional

supplementary information to the IFRS measures. Full reconciliations have been provided between the APMs and their

closest IFRS measures.

The Group has concluded that these APMs are relevant as they represent how the Board assesses the performance

of the Group and they are also closely aligned with how shareholders value the business. They provide like-for-like,

year-on-year comparisons and are closely correlated with the cash inflows from operations and working capital

position of the Group. They are used by the Group for internal performance analysis and the presentation of these

measures facilitates comparison with other industry peers as they adjust for non-recurring factors which may materially

affect IFRS measures. Adjusting items for the Group include amortisation of acquired intangibles, acquisition related

expenses costs, share-based payments, employment-related acquisition costs and restructuring costs. Whilst adjusted

measures exclude amortisation of intangibles, acquisition costs and restructuring costs they do include the revenue

from acquisitions and the benefits of the restructuring programmes and therefore should not be considered a complete

picture of the Group’s financial performance, that is provided by the IFRS measures.

The adjusted measures are also used in the calculation of the adjusted earnings per share and banking covenants as

per our agreements with our lenders.

APM

Closest

IFRSmeasure

Adjustments to reconcile

toIFRSMeasure Reason for use

Consolidated statement of profit or loss

Controlled

billings

Revenue Includes media spend

contracted directly by clients

with media providers and

pass-through costs

(see reconciliation A1 on

page 204)

It is an important measure to help understand the

scale of the activities that Group has managed on

behalf of its clients, in addition to the activities

that are directly invoiced by the Group.

Billings Revenue Includes pass through costs

(see reconciliation A1 on

page 204)

It is an important measure to understand the

activities that are directly invoiced by the Group to

its clients.

Net revenue Revenue Excludes direct costs

(see reconciliation A2

onpage 204)

This is more closely aligned to the fees the Group

earns for its services provided to the clients. This

is a key metric used in business when looking at

the Practice performance.

Operational

EBITDA

Operating profit Excludes acquisition related

expenses, non-recurring

items (primarily acquisition

payments tied to continued

employment, amortisation

of business combination

intangible assets and

restructuring and other

one-off expenses) and

recurring share-based

payments, and includes

right-of-use asset

depreciation (see

reconciliation A3

onpage204)

Operational EBITDA is operating profit before

the impact of adjusting items, amortisation of

intangible assets and PPE depreciation.

The Group considers this to be an important

measure of Group performance and is consistent

with how the Group is assessed by the Board

and investment community.

Financial statements

Capital plc Annual Report and Accounts 2023 202

APM

Closest

IFRSmeasure

Adjustments to reconcile

toIFRSMeasure Reason for use

Like-for-like Revenue and

operating profit

Is the prior year comparative,

in this case 2022, restated to

include acquired businesses

for the same months as 2023,

and restated using same FX

rates as used in 2023 (see

reconciliations A4 on page

204 to 205)

Like-for-like is an important measure used by

the Board and investors when looking at Group

performance. It provides a comparison that

reflects the impact of acquisitions and changes

inFX rates during the period.

Pro-forma Revenue and

operating profit

Is full year consolidated results

in constant currency and for

acquisitions as if the Group

had existed in full for the year

(see reconciliations A5 on

page 205)

Pro-forma figures are used extensively by

management and the investment community. It is

a useful measure when looking at how the Group

has changed in light of the number of acquisitions

that have been completed and to understand the

performance of the Group.

Adjusted basic

earnings

Basic earnings

per share

Excludes amortisation of

intangible assets, acquisition

related costs, share-based

payments and restructuring

and other one-off expenses

(see reconciliation A6 on

page206)

Adjusted basic earnings per share is used by

management to understand the earnings per

share of the Group after removing non-recurring

items and those linked to combinations.

Adjusted

profit for

theyear

(Loss)/Profit

for the year

Excludes amortisation of

intangible assets, acquisition

related expenses, share-based

payments and restructuring

and other one-off expenses

(see reconciliation A6 on

page206)

Adjusted profit for the year is used by

management to understand the profit for the

Group after removing non-recurring items and

those linked to combinations.

Consolidated balance sheet

Net debt None Net debt is cash less gross

bank loans (excluding

transaction costs and lease

liabilities). This is a measure

used by management and in

calculations for bank covenants

(see reconciliation A7 on

page207)

Net debt is a commonly used metric to identify the

debt obligations of the Group after utilising cash in

bank.

Consolidated statement of cash flows

Free cash

flow

Net cash inflow/

(outflow) from

operating

activities

Net cash flow from operating

activities adjusted for purchase

of intangibles and property,

plant and equipment, lease

liabilities, interest and facility

fees paid, security deposits and

employment linked contingent

consideration paid (see

reconciliation A8 on page 207)

Free cash flow is a commonly used metric used

to identify the amount of cash at the disposal of

the Group.

Capital plc Annual Report and Accounts 2023 203

2 310 4

Billings and controlled billings (A1)

2023

£m

2022

£m

Revenue 1,011.5 1,069.5

Pass-through expenses 859.0 821.0

Billings

1,870.5 1,890.5

Third party billings direct to clients 3,152.3 3,760.7

Controlled billings

5,022.8 5,651.2

Notes:

1. Billings are gross billings to clients including pass-through expenses.

2. Controlled billings are billings we influenced.

Net revenue (A2)

2023

£m

2022

£m

Revenue 1,011.5 1,069.5

Direct costs (138.3) (17 7.8)

Net revenue 873.2 891.7

Reconciliation to operational EBITDA (A3)

2023

£m

2022

£m

Operating profit/(loss) 20.2 (135.3)

Amortisation and impairment of intangible assets 48.6 78.9

Acquisition expenses (9.2) 151.0

Share-based payments 10.1 14.6

Restructuring and other one-off expenses

11.8 4.9

Depreciation of property, plant and equipment

12.2 10.1

Operational EBITDA 93.7 124.2

Notes:

1. Restructuring and other one-off expenses relate to restructuring costs of £18.2 million (2022: £4.9 million), transformation costs of £2.9 million

(2022: £nil), offset by £9.3 million due to the significant devaluation of the Argentinian Peso (2022: £nil).

2. Depreciation of property, plant and equipment is exclusive of depreciation on right-of-use assets and includes £0.5 million expense (2022: £nil) relating

to the significant devaluation of Argentinian Peso.

Like-for-Like (A4)

Like-for-like revenue

Year ended 31 December 2022

Content

£m

Data&Digital

Media

£m

Technology

Services

£m

Total

£m

Revenue 755.4 2 20.5 93.6 1,069.5

Impact of acquisitions 41.5 8.4 80.3 130.2

Impact of foreign exchange (31.8) (11.3) (59.5) (102.6)

Like-for-like revenue

76 5.1 21 7.6 114.4 1,0 97.1

% like-for-like revenue change (13.2%) (3.3%) 19.8% ( 7.8%)

Note:

1. Like-for-like is a non-GAAP measure and relates to 2022 being restated to show the audited numbers for the previous year of the existing and acquired

businesses consolidated for the same months as in 2023, applying currency rates as used in 2023.

Like-for-like net revenue

Year ended 31 December 2022

Content

£m

Data&Digital

Media

£m

Technology

Services

£m

Total

£m

Net revenue 582.7 216.8 92.2 891.7

Impact of acquisitions 23.9 8.1 79.0 111.0

Impact of foreign exchange (19.0) (11.0) (58.5) (88.5)

Like-for-like net revenue

587.6 213.9 112 .7 914.2

% like-for-like net revenue change (10.0%) (3.1%) 21.6% (4.5%)

Note:

1. Like-for-like is a non-GAAP measure and relates to 2022 being restated to show the audited numbers for the previous year of the existing and acquired

businesses consolidated for the same months as in 2023, applying currency rates as used in 2023.

Alternative Performance Measures continued

Financial statements

Capital plc Annual Report and Accounts 2023 204

Like-for-like operational EBITDA

Year ended 31 December 2022

Total

£m

Operational EBITDA 124.2

Impact of acquisitions 39.9

Impact of foreign exchange (16.4)

Like-for-like operational EBITDA

147.7

% like-for-like operational EBITDA change (36.6%)

Note:

1. Like-for-like is a non-GAAP measure and relates to 2022 being restated to show the audited numbers for the previous year of the existing and acquired

businesses consolidated for the same months as in 2023, applying currency rates as used in 2023.

Pro-forma (A5)

Pro-forma revenue

Content

£m

Data&Digital

Media

£m

Technology

Services

£m

Total

£m

FY23 Revenue 664.1 210.4 137.0 1,011.5

Impact of acquisitions – – 0.7 0.7

FY23 Pro-forma revenue

664.1 210.4 137.7 1,012.2

FY22 Revenue 755.4 220.5 9 3.6 1,069.5

Impact of acquisitions 41.5 8.4 80.9 130.8

Impact of foreign exchange (31.8) (11.3) (59.4) (102.5)

FY22 Pro-forma revenue

76 5.1 21 7.6 115.1 1,0 97.8

% pro-forma revenue change (13.2%) (3.3%) 19.6% ( 7.8%)

Note:

1. Pro-forma relates to audited full year non-statutory and non-GAAP consolidated results in constant currency as if the Group had existed in full for the

year and have been prepared under comparable GAAP with no consolidation eliminations in the pre-acquisition period.

Pro-forma net revenue

Content

£m

Data&Digital

Media

£m

Technology

Services

£m

Total

£m

FY23 net revenue 528.9 2 07.3 137.0 873.2

Impact of acquisitions – – 0.6 0 .6

FY23 Pro-forma net revenue

528.9 2 07.3 137.6 873.8

FY22 net revenue 582.7 216.8 92.2 891. 7

Impact of acquisitions 23.9 8.1 79.7 111.7

Impact of foreign exchange (19.1) (11.0) (58.5) (88.6)

FY22 Pro-forma net revenue

587. 5 213.9 113.4 914.8

% pro-forma net revenue change (10.0%) (3.1%) 2 1.3% (4.5%)

Note:

1. Pro-forma relates to audited full year non-statutory and non-GAAP consolidated results in constant currency as if the Group had existed in full for the

year and have been prepared under comparable GAAP with no consolidation eliminations in the pre-acquisition period.

Pro-forma operational EBITDA

Total

£m

FY23 operational EBITDA 93.7

Impact of acquisitions (0.4)

FY23 Pro-forma operational EBITDA

93.3

FY22 operational EBITDA 124.2

Impact of acquisitions 39.5

Impact of foreign exchange (16.4)

FY22 Pro-forma operational EBITDA

147.3

% pro-forma operational EBITDA change (36.7%)

Note:

1. Pro-forma relates to audited full year non-statutory and non-GAAP consolidated results in constant currency as if the Group had existed in full for the

year and have been prepared under comparable GAAP with no consolidation eliminations in the pre-acquisition period.

Capital plc Annual Report and Accounts 2023 205

2 310 4

Adjusted basic earnings per share (A6)

Year ending 31 December 2023

Reported

£m

Amortisation

and

impairment

£m

Acquisition

expenses

£m

Share-based

payments

£m

Restructuring

and other

one-off

expenses

£m

Adjusted

£m

Operating profit 20.2 48.6 (9.2) 10.1 12.3 82.0

Net finance costs (35.4) – – – 1.5 (33 .9)

Gain on the net monetary position 1.3 – – – (1.3) –

(Loss)/profit before income tax (13.9) 48.6 (9.2) 10.1 12.5 4 8.1

Income tax expense 7.9 (14.7) – (0.7) (4.1) (11.6)

(Loss)/profit for the year (6.0) 33.9 (9.2) 9.4 8.4 36.5

Notes:

1. Amortisation and impairment relates to the intangible assets recognised as a result of the acquisitions (see Note 6).

2. Acquisition expenses relate to acquisition related advisory fees of £2.3 million, contingent consideration as remuneration

of £13.2 million and remeasurement gain on contingent considerations of £24.7 million.

3. Restructuring and other one-off expenses relate to restructuring costs of £18.2 million, transformation costs of £2.9 million, offset by £8.8 million due

to the significant devaluation of the Argentinian Peso.

Year ending 31 December 2022

Reported

£m

Amortisation

and

impairment

£m

Acquisition

expenses

£m

Share-based

payments

£m

Restructuring

and other

one-off

expenses

£m

Adjusted

£m

Operating (loss)/profit (135.3) 78.9 151.0 14.6 4.9 114.1

Net finance costs (25.7) – – – – (25.7)

Gain on the net monetary position 1.3 – – – (1.3) –

(Loss)/profit before income tax (159.7) 78.9 151.0 14.6 3.6 88.4

Income tax expense (0.8) (16.7) (0.1) (2.5) (0.8 ) (20.9)

(Loss)/profit for the year (160.5) 62.2 150.9 12.1 2.8 67.5

Notes:

1. Amortisation and impairment relates to the intangible assets recognised as a result of the acquisitions (see Note 6).

2. Acquisition expenses relate to acquisition related advisory fees of £7.9 million, bonuses of £0.4 million, contingent consideration as remuneration

of £172.4 million and remeasurement gain on contingent considerations of £29.7 million.

3. Restructuring and other one-off expenses relate to restructuring costs of £4.9 million.

Adjusted basic result per share 2023 2022

Adjusted profit attributable to owners of the Company (£m) 36.5 67.5

Weighted average number of Ordinary Shares for the purpose of basic EPS (shares) 639,218,703 59 0,6 67,949

Adjusted basic earnings per share (pence) 5.7 11.4

Alternative Performance Measures continued

Financial statements

Capital plc Annual Report and Accounts 2023 206

Net debt (A7)

Net debt

2023

£m

2022

£m

Cash and bank 145.7 223.6

Loans and borrowings (excluding bank overdrafts) (326.5) (333.8)

Net debt (180.8) (110.2)

Lease liabilities (49.0) (58.4)

Net debt including lease liabilities (229.8) (168.6)

Free cash flow (A8)

Year ending 31 December 2023

2023

£m

2022

£m

Net cash (outflow)/inflow from operating activities (10 .7) 78. 3

Employment linked contingent consideration paid 77.7 38.9

Interest and facility fees paid (26.7) (16.3 )

Purchase of intangible assets (2.1) (1.5)

Purchase of property, plant and equipment (5.9) (16.4)

Security deposits (2.2) 1.8

Principal element of lease payments (16.3) (15.4)

Other – 0.4

Free cash flow 13.8 69.8

Capital plc Annual Report and Accounts 2023 207

2 310 4

Shareowner information

Advisers and registrars

Principal bankers HSBC Bank Plc

Joint brokers Dowgate Capital Limited

Morgan Stanley & Co

Jefferies International Limited

Independent auditors PricewaterhouseCoopers LLP

Solicitor Travers Smith LLP

Communications adviser Powerscourt Limited

Registrars Share Registrars Limited

3 The Millennium Centre

Crosby Way

Farnham

Surrey

GU9 7XX

01252 821390

enquiries@shareregistrars.uk.com

Group Company Secretary Caroline Kowall

ISIN GB00BFZZM640

Ticker SFOR

Registered office 12 St James’s Place

London

SW1A 1NX

Website www.s4capital.com

Financial statements

Capital plc Annual Report and Accounts 2023 208

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