N otes to the consolidated financial statements 3 1. General information S4Capital plc (‘S4Capital’ or ‘Company’), is a public Company, limited by shares, incorporated on 14 November 2016 in the 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 its subsidiaries (together referred to as ‘S4Capital Group’ or the ‘Group’). An overview of the subsidiaries is included in Note 14. S4Capital Group is a new age/new era digital advertising and marketing services company. 2. Basis of preparation A. Statement of compliance On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. S4Capital transitioned to UK-adopted International Accounting Standards in its Company financial statements on 1 January 2021. This change constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change in framework. The financial statements of S4Capital 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. The consolidated financial statements were authorised for issue by the Board of Directors on 14 May 2022. B. Functional and presentation currency The consolidated financial statements are presented in Pound Sterling (£ or GBP), the Company’s functional currency. All financial information in Pound Sterling has been rounded to the nearest thousand unless otherwise indicated. 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. The accounting principle have been consistently applied over the reporting periods. Going concern The directors have considered the ability of the Group and Company to continue as a going concern. To date, the tragedy of covid-19 has only accelerated the speed of digital transformation and disruption at consumer, media and enterprise levels. These results confirm that S4Capital is currently in a growth sweet spot and that its strategy built around its digital only, faster, better, cheaper, unitary, ‘holy trinity’ model, which combines first party data with digital content, data and digital media, is migrating from brand awareness and trial to conversion at scale. As mentioned in its preliminary results announcement, the Group is forecasting significant growth for 2022 and 2023. The directors have considered the Group’s cash flow forecasts for the period up to 31 December 2023 under base and severe but plausible downside scenarios, with consideration given to the uncertainties like inflation and the covid-19 pandemic and the impact of those uncertainties on growth rates, the wider macro-economic environment, and the Group. The key assumptions in the base case are growth rates in line with the Group’s board approved 2022-24 three- year plan, which calls for a like-for-like doubling of top line and EBITDA levels returning to prior levels. Plausible but severe downside scenarios take into consideration the two years of experience of the actual impact of covid-19 on the Group during 2021 and 2020. Management believes these forecasts have been prepared on a prudent basis and have consideration of possible effects on the growth rates, trading performance and a number of available mitigating cost actions. The Group has considerable financial resources available. As at 31 December 2021, the Group has £401 million in financial resources (cash and cash equivalent balances of £301 million, and a five year £100 million equivalent undrawn multicurrency senior secured revolving credit facility). The facilities are intended to cover the financing of the cash portion of any acquisition consideration and associated acquisition costs and have to provide the Group with sufficient working capital. The Board is satisfied that the Group and Company will be able to operate within the level of its current debt and RCF facilities and has sufficient liquidity to meet its financial obligations as they fall due for a period of at least 12 months S4Capital Annual Report and Accounts 2021 113