1 Risk Description Management actions Strategic continued The Group’s strategy If the Group does not grow at the speed Management regularly review the capacity to grow in line envisages that it will proposed in its strategy, or does not with the Group’s strategy and recruit new management continue to grow rapidly. successfully integrate new businesses into team members and employees as required. In addition, The Group may not have the the Group, this may adversely impact on the the Board monitors the infrastructure and governance infrastructure, management Group’s financial position and operations. arrangements to ensure these are fit for purpose as the time and/or governance In addition, failure to successfully integrate Group grows, adapting them as considered necessary. structure to be able to grow new businesses could lead to high The Group does not plan to solely rely on the acquisition at the desired speed and/or employee attrition rates and unnecessary of new businesses for its growth, and management will to fully integrate new combination expenses. seek to carry out organic expansion into new businesses into the Group. geographies or scale existing offices in order to meet the needs of an existing client or clients. The Group has combined Having multiple physical offices usually Integration remains a bonus metric to encourage the with a large number of costs more than single unified spaces and successful integration of combined businesses into the businesses, which are being retaining additional office space in the same Group. In addition, a dedicated post-combination integrated into the Group, jurisdictions, following combinations, could integration team operates to assist in combination and the Group’s strategy have a negative impact on the profitability integration. envisages further of the Group and a negative ESG impact. combinations. The Group’s A lack of integration between teams could performance could be lead to cross selling opportunities or adversely affected if the synergies being missed, impacting on the combined businesses are financial position of the Group. In addition, not successfully integrated if the people from combined businesses are into the Group. not integrated into the Group and trained on the Group’s policies and procedures, they are less likely to be driving for the single P&L and possibly more likely to leave or not comply with the Group’s policies, leading to higher people attrition rates or errors in accounting or legal matters. The Group is dependent Our activities depend in part on services S4Capital has a low appetite for dependency on third on relationships with certain provided by third parties. The Group relies parties in its critical processes. S4Capital strives to third parties with significant upon the good performance of its suppliers minimize outsourcing of activities directly related to its market positions, and subcontractors to meet the obligations core processes or platform to avoid dependency on particularly Google defined under their contracts. Vendors and suppliers. In order to secure supplies of goods and Marketing Platform and supply chain dependencies could negatively services, the contracts signed with third parties include, the rest of the Google impact S4Capital’s operations and security whenever possible, clauses for service, continuity and advertising ecosystem of data, systems, and services. responsibility. and an unnamed Supplier performance is continually monitored and telecommunications assessed so that supplier development programmes can company (subject to a NDA), be launched if performance standards fall below but also Amazon and Meta. expectations. A supplier relation management programme has been developed with a growing number of strategic suppliers. Also business continuity plans are developed by the Group’s different operating entities to ensure the long-term viability of all commercial and operational activities. As part of the Group’s If the Group fails to complete a proposed There is considerable knowledge and expertise within strategy, the Directors combination it may be left with substantial the Group with regard to acquisitions. intend to identify suitable unrecovered transaction costs, which could An experienced acquisition team, together with external combination opportunities. adversely affect subsequent attempts to advisors where appropriate, is involved in all acquisition The Group may not acquire another target business. When a activity and we have a proven track record of successfully identify and substantial business operation is acquired successfully integrating businesses into the wider complete, or, if completed, by the Group there is no certainty that the Group. We perform pre-transaction due diligence and integrate suitable Group will be able to successfully implement closely monitor actual performance to ensure we are combination opportunities in change programmes within a reasonable meeting operational and financial targets. the future. timescale and cost, which may adversely Any divergence from these plans will result in impact the Group’s business and prospects. management action to improve performance and minimise the risk of any impairments. Executive management and the Board receive regular reports on the status of acquisitions and combinations, with a formal review once per year. S4Capital Annual Report and Accounts 2021 35