Strategic Report Principal risks and uncertainties continued Risk Description Management actions Economic environment Adverse developments in the We operate in highly competitive markets, where Given the diversity of our customer base global economy or the local customer behaviour, needs and demands are evolving and the various industries which we serve, economies in the territories due to digitisation, energy efficiency, climate change, it is generally possible to contain the impact where the Group has operations government initiatives and the general economic of these adverse conditions. Each business could impact the level outlook. Failure to react appropriately and rapidly to continually reviews its routes to market, of demand for the Group’s changes in customer behaviour could result in the changes in customer demands and services. erosion of our customer base, leading to reduced expectations and cost base so that it can revenues and associated margins. react appropriately to the impact of the wider economy. Any adverse impact on cash flow could be mitigated in the short term by controls over capital expenditure and other discretionary spend. People and leadership The quality of the services A number of individuals are key to the management, We continue to evolve a clearly defined provided by the Group’s performance and execution of the Group’s overall people strategy based on culture and businesses are fundamentally strategy. The Directors believe that the loss of key engagement, equality and wellbeing, talent derived from the quality of the people could significantly impede the Group’s financial development, training and reward and Group’s people. The Group’s plans, product development, project completion, recognition The Group has established performance could therefore marketing and other plans. training, development, performance be adversely affected if it is not management and reward programmes to able to recruit, train and retain retain, develop and motivate our people. key talent in the Group’s The Group regularly reviews the adequacy businesses and at the and strength of its management teams to Group level. ensure that appropriate experience and training is given such that there is not over reliance on any one individual. Furthermore, the Group has continued to develop succession planning as part of the development programmes for our people. Strategic The Group’s future results of In the short and medium term, the success of the The Board, making appropriate use of operation and financial Group’s strategy will therefore depend on the Group’s expert advisers where necessary, conducts performance are partly ability to identify and merge with suitable targets. strategic planning, due diligence and dependent on the successful There is a risk that the Group will not be able to source integration planning to ensure that potential implementation of the Group’s or complete additional business combinations on business combinations meet the financial strategy. commercially acceptable terms or at all. Material and other criteria set by the Board. The Group’s strategy is to build management time and Group resources may be Management will seek to carry out organic a purely digital multinational allocated to evaluating potential target entities that expansion into new geographies in order advertising and marketing are not ultimately combined with by the Group. to meet the needs of an existing client or services business, initially by Moreover, when the Group completes combinations, clients, thereby reducing uncertainty in the business combinations and there is a risk that the acquired business may not start-up phase of any office. Moreover, the long term through robust perform in line with management expectations, or Group will seek to scale new sales offices organic growth. result in the Group’s assumption of unforeseen in line with increasing client demand. liabilities. As the Group’s strategy is to operate on a unitary basis, there is also a risk that the integration of any combined business does not proceed in accordance with management’s expectations. The implementation of the Group’s strategy is also likely to result in the allocation of Group resources and management time to winning business in new geographies. There is a risk that such new offices fail to perform in line with management expectations. 34 S4Capital Annual Report and Accounts 2021