S4 Capital Aktie

Good morning, everybody. This is the Half 1, the first half of 2026 from S4 Capital. I'm actually in New York, Wes is in Las Vegas at an AI conference, Scott is in London with Radhika, our CFO. So we've got 5 areas to go through. Firstly, the results themselves, which Radhika will just take you through. Secondly, market momentum from Scott. Wes will talk a little bit about artificial intelligence with a demonstration of what we've been doing. And then I'll finally give a brief summary and outlook and we'll go to Q&A.

So with that as background, over to you, Radhika.

Thank you, Martin. Good morning, everybody. I will start with the financial headlines for the first half of 2026. Despite global macroeconomic pressures, technology clients and hyperscalers continuing to further prioritize AI investment and ongoing client caution; disciplined cost management has delivered a very strong first half operational EBITDA with a significantly improved EBITDA margin. Liquidity focus has also lowered our net debt. Net revenue was GBP 308 million, down 6.2% reported and 4.7% like-for-like.

Operational EBITDA was GBP 38 million compared to GBP 20.8 million in the first half of 2025 with a margin of 12.3%, up 600 basis points reported and 710 basis points like-for-like. Adjusted operating profit was GBP 35.2 million and adjusted basic earnings per share was 2.7p versus 0.2p in the first half of 2025. The Board has approved an inaugural interim dividend of 1.35p per share, 50% of the adjusted basic earnings per share. The company generated GBP 10.4 million in free cash flow and net debt reduced to GBP 66.3 million, which is 0.7x pro forma 12-month operational EBITDA, significantly below the GBP 145.9 million on the 30th of June 2025.

The company has now met the reduction of its Term Loan B target, repurchasing a further EUR 40.1 million subject to settlement. This reduces the outstanding Term Loan B to EUR 249.7 million. Moving on to the P&L. Revenue for the period came in at GBP 344 million, which is down 4.6% on a reported basis and 3.2% like-for-like. Net revenue for the period was GBP 308 million, down 6.2% reported and 4.7% like-for-like. This reflects what has been a volatile macroeconomic environment exacerbated by the Middle East conflict in conjunction with technology clients and hyperscalers further prioritizing AI investment.

In response to these conditions, we have continued our disciplined approach to cost management and the first half EBITDA performance reflects the annualized impact of the cost actions taken in the second half of 2025, which primarily focused on nonbillable roles and back office efficiencies. Personnel and operating expenses were reduced by 12.6% on a reported basis. The company's aim is to align personnel cost to net revenue ratios more closely to industry averages. As at the half year, this was 72.2% compared to 79.2% for the first half of 2025. At the end of the first half, the total number of Monks fell to approximately 6,150, which was down 11% compared to this time last year and down 3% compared to December 2025.

Looking across our 2 practices, Marketing Services and Technology Services, my commentary now is all on a like-for-like basis. Marketing Services delivered net revenue of GBP 281.9 million, a 4.4% decline reflecting ongoing caution among technology clients as they continue to further prioritize and increase AI infrastructure over operational marketing budgets. The practice was further impacted by a scope reduction in BMW, which impacted the EMEA region. Technology Services generated GBP 26.1 million in net revenue, down 7.4%, similarly impacted by broader macroeconomic headwinds and extended sales cycles.

From a regional standpoint: the Americas, which represent 80% of our total net revenue, declined 0.8%; EMEA declined 20.3% and represented 14%; and Asia Pacific declined 12.5% representing 5% of our mix. Turning to operational EBITDA by practice. On a like-for-like basis, Marketing Services delivered GBP 44.1 million, an increase of 72.3% compared to the first half of 2025. EBITDA margin strengthened to 15.6%, up 690 basis points reflecting decisive head count actions and continued cost discipline.

Technology Services generated GBP 4.4 million, up 214.3% from the first half last year. EBITDA margin strengthened to 16.9% and improved by over 1,000 basis points underlying the effectiveness of our cost control measures. Moving on to the debt and balance sheet slide. We maintained a strong balance sheet throughout the period with strong liquidity and long-dated maturities. Our M&A obligations are now largely complete. Stronger treasury management and a focus on liquidity reduced period-end net debt to GBP 66.3 million.

Leverage closed at 0.7x net debt over pro forma 12-month operational EBITDA, below our target of 1x and below our key covenant of 4.5x. The company met the targeted reduction of its Term Loan B, repurchasing a further EUR 40.1 million subject to settlement, reducing the outstanding Term Loan B to EUR 249.7 million. Moving to the cash flow. Free cash flow was GBP 10.4 million in the period compared to GBP 16 million in the first half of 2025. The movement was driven by an expected Q1 2026 working capital outflow. This was primarily due to a combination of stronger year-on-year Q4 2025 collections and lower year-on-year Q4 2025 media billings.

As collections normalized and trading strengthened, working capital improved in the second quarter. Capital expenditure in the period was GBP 2.7 million, up just under 30% from the first half of 2025 of GBP 2.1 million due to ongoing investments in AI capabilities. Financing costs reduced meaningfully driven by the reduction in our net debt and the average effective interest rate improving to approximately 5.7%, down from 6.1%. Improved cash management increased interest income to GBP 1.9 million and tax paid in the period was higher at GBP 3.8 million driven by utilization of tax losses in 2025.

Restructuring and transformation costs in the period were GBP 5.7 million, primarily GBP 3.9 million due to restructuring costs and GBP 1.4 million related to our finance transformation program. Moving on to the net debt bridge. Net debt at 31st of December was GBP 86.9 million or GBP 79.6 million at closing June 2026 exchange rates. The company generated GBP 10.4 million of free cash flow during the period. The company repurchased EUR 85.2 million of its Term Loan B at a discount of EUR 4.9 million. These movements resulted in a lower closing net debt position of GBP 66.3 million, again representing 0.7x pro forma 12-month operational EBITDA below the targeted leverage of 1x.

Our capital allocation priorities are maintained from the year-end. We have established a clear capital allocation priority focusing on delivering shareholder value through first, dividends; second, targeted debt repurchases; and third, share buybacks. The Board has implemented a 50% dividend payout policy out of adjusted basic earnings per share over the medium term subject to financial targets being met. We now move on to guidance. 2026 full year like-for-like net revenue is now expected to be down mid-single digits. Operational EBITDA remains at the current analyst consensus level of GBP 85 million with operational EBITDA margin targeted to increase by 140 basis points.

Year-end net debt range has been lowered to GBP 50 million to GBP 80 million. In line with our targeted operational EBITDA, we aim to maintain leverage of under 1x. The company has repurchased a further EUR 40.1 million subject to settlement of the Term Loan B. This reduces the outstanding Term Loan B to EUR 249.7 million. Our forecast net finance expense has been lowered to GBP 19 million to GBP 21 million excluding the one-off gain on the loan repurchase. The effective tax rate is expected to be 28% to 30%. Adjusted basic earnings per share will now be in excess of current analyst consensus.

With that, I will hand over to Scott for the market update.

Thank you very much, Radhika. Good morning and thank you, everyone, for joining the meeting today. I'm going to cover some of the dynamics we're seeing in our wider market and then share some specifics on our client relationships before handing over to Wes for an update and a demo on our artificial intelligence product. As you can see, digital marketing spend continues to increase at significant rates whilst overall advertising spend is growing at around 5% meaning analog spend continues to decline.

The revenues at the top platforms continue to grow in the high teens, significantly outpacing the market growth. One thing to bear in mind here is that 80% plus of their revenues come from small- and medium-sized businesses and they continue to expand their market share there. So their growth is not necessarily being driven by enterprise client spend. The technology services market continues to have lower growth compared to recent historical double-digit performance. 2025 had just over 5% growth and whilst enterprises continue to invest in areas such as cloud and AI, the outlook for '26 continues to be subdued.

The next slide charts the comparison between agency and revenue growth at the main public holding companies and advertising spend and GDP growth. Digital spend now represents around 70% of the total and, as I mentioned on the previous slide, it's growing at high single-digit rates meaning analog is in decline. Agency growth dipped to almost 0% in 2025 and has decoupled from advertising spend and GDP growth. One explanation for this is the continued pressure from clients to maintain their media spend, but to put pressure on what they call nonworking spend, i.e., agency spend. This is particularly the case with technology clients.

And the next slide looks at the relationship between CapEx spend and sales and marketing spend at the major tech companies; Amazon, Meta and Alphabet. As you know, historically, almost half our revenue has come from this sector. Prior to 2022, marketing spend at the top platforms regularly grew at 20% annual rates and has now essentially been flat since then. On the other hand, CapEx spend, particularly on AI and infrastructure, has ballooned in the same period growing over 140%.

And this trend is expected to continue with the hyperscalers already announcing plans to increase their CapEx spend almost 90% in 2026 and some of them committing to similar increases in 2027 already. The tech companies are unsurprisingly leading the charge on adopting AI in their marketing workflows and leveraging it to achieve more for the same or less. We continue to have a very compelling client list with some of the world's leading and most innovative companies; 8 of them are what we call whoppers and that's revenues of $20 million plus, which continues to be a differentiator for a company of our scale.

As you can see, we continue to be skewed towards the tech industry with around 42% of our revenues coming from technology. These are strong relationships that help us attract and retain talent to work on them. Spends per client are slightly down, but essentially stabilizing versus the previous year across our Top 10, 20 and 50 client cohorts and the focus now is very much on returning all of them to growth.

With that, I'll hand you over to Wes for an update on our artificial intelligence coverage. Thanks.

Thank you, Scott, and hi, everyone. AI update. The last update we did was very much focused on the work and I'll start with a little bit of work today as well. We had this up and running in Cannes about 1.5 months ago for Google, one of our clients, Google Beach. Very fun use of their Gemini omni video model, which honestly is pretty amazing for this type of personalization. This is not my actual outfit in Vegas. This is all AI related. What I'm going to do today is talk a little bit about our discussions in Cannes. Cannes is one of the 2 big moments we have every year to put a little bit of a stake in the ground. The other one being CES.

And if we go to the next slide, our focus really was how does the technology help clients win the race to relevance. I think we showed last time when we showed a bunch of work that efficiency is table stakes, efficiency is mostly down to vision and decision-making. I think what is more interesting is how does the technology help clients generate more demand, capture that demand, grow their business, grow their brand. And to do that well, we have to move away from thinking about an ad and more moving towards what we call system thinking.

The system thinking part is something that we've been proving out with clients over the last 6 to 9 months. And if we go to the next slide, we started building it into our go-to-market earlier in the year. I'm not sure if people on the call know AdForum as an organization, global organization that brings pitch consultants together to visit agencies in a specific region. They'll visit 30 to 35 agencies, score those agencies on the relevance; relevance to the market, relevance to their clients, relevance to the RFPs that they see in their pipeline.

We did that in May, Monks ended up being scored the #1 most relevant agency. This was I think quite an interesting takeaway quote, meaningfully ahead of our competitive set. We're of course seeing that play out in some of our pipeline already. These are very connected folks that have quite a meaningful impact on pipeline in general. It's also sometimes a little uncomfortable to be ahead. We do believe in the current landscape, it's important to be close to the edge of what's happening because that edge is moving more and more quickly.

And I think our ability to stay close to that edge helps us understand how the technology evolves, how it dissipates its marketing and what that means for marketing organizations, which are our clients. So that's a little bit of framing. If we go to the next slide. The way we think about growth is through 2 lenses. One, we need to do work that is loved by humans. That's traditionally how we thought about advertising, marketing, creative. I think the way people currently interact and interface with content is very different to 5 years ago, 10 years ago.

People are spending an inordinate amount of time on their phones, I think it's about 13 hours a day, and a lot of that time is spent scrolling. So more and more to be loved by humans, we have to be part of that constrained environment. We have to be part of these micro cycles of attention. And then we need to do work that is preferred by machines. Some of that is about algorithmic media where there's a massive preference for volume variation, variety, velocity; all of the Vs. And of course more and more how do LLMs and agents sort of surface brands within the sort of Agentic ecosystem. So that was our main focus during Cannes.

What I'll do now, and I'll spend about 10 minutes on that, is show the environment that we showed our clients 1.5 months ago from Monks.Flow. I think we should be switching screens now, let me know when it's up. So first, a little bit of positioning. Monks.Flow started as an internal project 2.5 years ago. I think we saw early what most large enterprise organizations are now finding out that pilots don't necessarily contribute to P&L impact. It's very difficult to capture the productivity gains if everybody is piloting. So we moved very fixed processes, which allowed us to double down on best practices.

That process-heavy movement, we were early when it came to jumping on Agentic workflows. Last year at Cannes, Monks.Flow was the first Agentic marketing platform. And the positioning of Monks.Flow currently I think is really quite unique. It's not bicoded. It's not one-off. It's enterprise-grade, safe, secure, scalable, auditable trails when it comes to everything that happens within the platform and environment across your teams. Lots of high productivity per token, really making sure every token counts. But then we operate at a much higher clip than traditional SaaS products who are stuck in 3-, 6-, 12-month cycles.

We launch updates every 2 weeks because our team is fully Agentic enabled and that allows us to do more specific solutions client to client, which I think is quite unique. The way we think about infrastructure from Monks.Flow is 3 levels: intelligence, creation and orchestration; and I'll run through that relatively quickly so you'll get a sense of what we have. It starts with knowledge bases. This is a very easy environment to set up knowledge bases related to clients. In this case, we set this up for one of our clients, Mr Muscle, part of SC Johnson. It has all of the brand information. You can upload anything that you want here, structured, unstructured data.

We can connect it to live data feeds. Agents are able to use those context to do really meaningful relevant work. But we're not just creating that level of context. We're also adding agents that are a representation of the audiences. So that means you have a series of audience agents, in this case, the efficient Monk. This is a representation of third-party data. We bring to the table lots of interesting third-party data partnerships. First-party data if it's available. And it means you have the voice of the customer everywhere in your workflow and I'll show what that looks like in a moment. Let's say hi to the efficient Monk for a moment.

[Presentation]

You get the drift. Insights on this persona. Where does this persona consume their media? What's the typical brand relationship, et cetera, et cetera, et cetera? You can start conversations with these personas, which can be really useful. They're also part of other tools and this is really where we get the creation piece. We can run focus groups with these personas. For instance, how do you decide to purchase? That's a question and then you can select your personas, run that focus group and what's great about Monks.Flow, my question wasn't great.

It wouldn't be good at getting meaningful insights back, but that gets translated to actually meaningful questions that then get run through this Agentic process. All of these personas are now being interviewed. I'll show you what that looks like. This was one done with 4 people. All the interviews are available. But more importantly, it creates additional data sets that we can use in our agentic workflows. I think a huge part of what we're doing here is making sure our agents have lots of context to be high performing. These personas, for instance, which is quite interesting.

Look at an example here, which means we can optimize content in a predictive manner that really outperforms some of the traditional algorithmic methods. Just really useful to have these agents available. So that is the intelligence layer starts leaning into some of the tools that we have for creation. The most important one of those tools is what we call opportunities. So if you think about doing work that people love, a lot of that is down to the insight in channel. Can we capture an insight that is of value and how quickly can we translate that insight to an in-channel asset?

And because of the speed of social, speed of culture, that time is compressed. And historically, that might have taken weeks, sometimes even months, doesn't really make sense anymore. So a lot of our focus has been how can we do that same day. What you're seeing here is opportunities that are being pre-prepped by agents. So we're capturing data feeds from Reddit, from X, trending topics, news within your category. All of that data is being reviewed close real time by agents that do the job of what used to be a social agency, right; social listening, social strategy.

These opportunities are already being vetted by your audiences so you get a sense of who would be interested in what type of messaging. You can get all of the sources. You even get an idea of initial suggested channels and this is ongoing, right? These are continuous. You can turn these into briefs if you want as part of your projects. I'll show how projects work in a moment. Really meaningful, really useful, gives you details on things that need a really fast response, seasonal has a bit more time of course and then behavioral is bigger consumer change, that also helps potentially drive some product development.

These are really interesting. If you want, you can start putting additional research against some of these opportunities, we'll call that IQ. A great example here, for instance, is more information on what it means to be Mr. Muscle in Brazil. That also adds information about your competitive set. Agents are looking at what your competitors are doing, their media spend, their messaging. Again, lots of really useful information that also starts helping you define business opportunities. And then, of course, if we have insights and we want to get it in channel, we need a piece of content.

I'll show you how that works as well with the few minutes we have left. So part of Monks.Flow is also the end-to-end workflow. Why is that useful? It's useful because it allows teams to work together, client and agency, but also agents to be part of that workflow. And what I'll show here for instance is a working environment that we had running during Cannes. And of course we had the World Cup during Cannes. As a Dutch person, not the best World Cup ever. But we spotted a really interesting opportunity or at least the agents spotted a really interesting opportunity.

The Japanese fans went viral because they were cleaning up the stadium before leaving. And then it was actually a little bit of a meme because these were mostly men where the meme was, "Hey, maybe start doing some of that at home as well." So the idea was can we do a little bit of a World Cup sort of cleaning moment. Sorry, we have some sound coming through. So what we'll show here is how we took these briefs and these briefs are auto generated, really best-in-class. You'll get to comment on these briefs again, the sort of collaboration between people and agents is really quite unique.

And then you can make content. I'll show a piece of content here. World Cup drama, quick explanation of what happens here. So the moment you take one of these briefs, you can throw it to a studio. Studio looks at the brief, predefines what a great wheel would be. Wheels are really sort of social currency, really key asset at the moment. It also generates initial concepts for you. You can of course collaborate with agents to change these concepts or you can just accept them. If you accept the concept, it then gets translated to best-in-class script for a real IG, TikTok really as the main platforms.

And then it generates all of the environments and images, but it does it in a way that's very on brand, very in context, but you can also still edit. So it depends a little on power usage versus people that are just going through the workflow. [Technical Difficulty] And then these ads are on brand safety use and really the whole workflow we just went through from opportunity spotting to working on some of the strategy and creative and then getting to an asset can be done anywhere between 15 minutes and an hour, which of course is a massive, massive sort of change to how these things historically happened.

Lots more in here. We were doing these demos in Cannes and took us close to 45 minutes. So really powerful tool. This sort of systemic way of working also means we have more and more interesting solutions that we're launching to clients. I'm sure we'll talk about some of those solutions in our next earnings call.

And with that, I'm going to hand it back to Sir Martin.

Thanks, Wes. So finally, a summary and outlook. First half net revenue was down 6.2% reported and 4.7% like-for-like and that reflected the continuing macroeconomic uncertainty heightened by the Middle East conflict and combined with technology clients and the hyperscalers prioritizing AI investment. I think as we said in our release, the Top 4 hyperscalers are spending about $5 trillion on capital investment which they projected to 2025 and 2030. Reported record operational EBITDA of GBP 38 million, up almost 83% reported and 128% like-for-like with a higher proportion of operational EBITDA in the first half compared to previous years based on the 2026 full year target, but a stronger second half is anticipated from a bottom line point of view.

EBITDA margin in the first half at 12.3%, up 600 basis points reported and 710 basis points like-for-like. Number of Monks down 3% to around just over 6,000 people compared with 6,350 at December 2025 and 6,900 in June of '25 last year. Half year net debt at just over GBP 66 million, which represents a leverage of 0.7x EBITDA, down from GBP 146 million, which was leverage of 2x, which we reported last year at 30th of June. Full year like-for-like net revenue expected to be down mid-single digits and full year EBITDA remains at current analyst consensus level of GBP 85 million with the margin to increase by 140 basis points.

New business wins from LVMH, from Mercado Libre, CapitalOne, Revlon, Square, Seek, Watts and Air India. The targeted net debt range for 2026 has been lowered from GBP 50 million to GBP 80 million -- lowered to GBP 50 million to GBP 80 million from GBP 60 million to GBP 90 million and we aim for leverage to be maintained at under 1x operational EBITDA. The Board's implemented a 50% dividend payout policy out of adjusted basic earnings per share subject to our financial targets being met and will recommend a final dividend for 2026 in line with that policy.

The final dividend for 2025 of 1.1p was paid in July and the Board has approved first time an overall interim dividend for 2026 of 1.35p per share. That represents 50% of the adjusted basic earnings per share of 2.7p. The company has met the targeted EUR 125 million reduction of its Term Loan B and it has therefore, reduced the outstanding balance of that Term Loan B to just under EUR 250 million. We continue to see significant opportunities for new business particularly driven by our AI tools and capability, as Wes has just outlined, particularly in relation to the work for SC Johnson.

And adopting from existing clients is ramping up as clients driven by existential threats in the automotive category and vertical, in financial services and FMCG, fast-moving consumer goods moved from pilots to fully scaled adoption and our proprietary AI solutions that are at the heart of all of our new business efforts. We remain confident in our talent, in our business model, in our strategy and our scaled client relationships, which position us to deliver sustainable long-term growth.

So with that, Laura, as operator, we can turn to Q&A.

[Operator Instructions] We will now take our first question from Andy Renton of Cavendish.

Just a couple from me. First, could you just expand a little on the predicted higher margins now and where those higher margins are going to come from? And then just on the AI side, it would be good to understand what you think AI will be able to do in the future that you didn't think it could do 6 months ago?

Well, so Radhika, do you want to deal with the margin point? And maybe, Wes, you can respond on what AI enables us to do that we couldn't do a few months ago. So Radhika, margins.

So on margins, So the first half, as we said, was driven by really the annualized cost-out impact of what we did at the back end of 2025. So we continue with our cost focus really looking at our cost base in relation to our net revenue. So for the second half as well, that's where we've got that full year impact and that's why we've increased it too by 140 basis points. So it's the full year impact of what we did at the back end of last year and our continued cost management through the year.

Okay. Wes, do you want to talk a little bit about what AI can now do?

I mean we've I think always been quite clear about where we're expecting this to head and I think that's been relatively consistent from our perspective. I think it's probably still surprising to look at the length that agents can now work without supervision, which allows us to do much more real-time work without human supervision because the concept of hallucinations has pretty much gone away and agents are just very good at long-form work and holding context. So the length of unsupervised agentic workflows even though you could sort of predict it based on the line goes up, I think it's still quite surprising to see where that's already at.

I guess do you want to add anything to that, Wes? No. So I would just say a couple of things in relation to that. Firstly is the resistance to using synthetic material, AI-driven material, I think both from clients and from consumers I think will decline. I mean the interesting thing to me about -- or I think for us about AI is that consumer adoption is moving faster than client or enterprise adoption. That's nothing new. I think we saw that with smartphones -- mobile phones and smartphones and with previous technological revolutions. But whilst the industry and our clients indeed agonize over every pixel, I'm not sure that consumers do. And increasingly, I think they will become ambivalent or neutral and maybe even positive about content which is synthetic.

The other thing I would say is that we're going through -- I think this is the seventh quarter of double-digit EPS growth and finished Q2 for the S&P 500. So we're going through despite all the volatility from an earnings growth point of view, we're seeing companies perform extremely well. Even excluding the hyperscalers and tech giants, our EPS growth is very strong. Usually that converts into strong advertising growth. But as Scott said that we've seen a breakdown of the correlation between agency revenue growth and GDP growth and profit growth from companies. And that's we think principally driven by the tech hyperscalers' switch to capital investment versus OpEx.

That change takes place when there are existential threats like autos from Chinese EVs, [ LVs ]; financial services when fintech platforms start to shape traditional banking structures; and with FMCGs when pricing is more difficult to get having increased prices during COVID or post COVID can't do it anymore, consumer resistance to do that; and geopolitical conflicts in Eastern Europe and in the Middle East in particular disrupt supply chains. So companies are becoming more focused on efficiency. I know for example, the PMG CEO yesterday at CMBC was talking about the need to move to content at scale.

So when you see clients under a little bit of pressure and we may start to see that perhaps in the second half of the year as growth maybe slows globally, inflation is a little bit more persistent and interest rates tick up a bit if they do, we may see adoption moving quicker. So I think another thing that's going to happen is that we will see more wholesale adoption to gain the efficiency that we're talking about as maybe economic conditions tighten a bit.

With no further questions from analysts, I would like to hand it back to Sir Martin for closing remarks. Thank you.

Thanks, everybody, for joining us. We'll be back to you -- when is it Radhika? We're going to be a little bit earlier this year on Q3. When will that be?

September.

Okay. Early September we'll be back to you with Q3.

Sorry, October. I was getting ahead of myself.

October. We will be very quick to do in September, but early October. All right. Thank you very much. Thanks for questions. Thank you. Bye-bye.

So good morning, everybody. I'm in Madrid. We're all spread all to the 4 winds. Radhika is in London and Scott, I think, is in Singapore. So welcome to our Q1 update. Radhika is going to take us through the trading update, and then Scott is going to take us through a brief client analysis. And then I'll come back just to do a brief summary and outlook, and then we'll take questions.

So Radhika, over to you.

Thank you, Martin. Good morning. I will start with the financial headlines for the first quarter of 2026. Performance in the period has been impacted by the volatile global macroeconomic conditions and ongoing client caution. Despite these pressures, the annualized impact of the 2025 cost-out actions and the continued strong focus on working capital management has resulted in the Q1 operational EBITDA meeting expectations.

Revenue was GBP 164.8 million, down 7.5% reported and 3.7% like-for-like. Net revenue was GBP 149.2 million, down 8.9% reported and 5% like-for-like. Quarter end net debt was GBP 111.8 million, reduced GBP 33 million from GBP 144.8 million at 31st of March 2025 and GBP 45.6 million like-for-like.

Leverage has improved to 1.4x pro forma 12-month operational EBITDA compared to this time last year at 1.7x. The company repurchased its Term Loan B at a discount with a total of EUR 85.2 million repurchased to date. The outstanding loan now stands at EUR 289.9 million with a target reduction to EUR 250 million.

Our full year guidance is reiterated. We expect like-for-like net revenue to be in line with current analyst consensus slightly below 2025. We target full year operational EBITDA to increase by at least 100 basis points. We target year-end net debt to be in the range of GBP 60 million to GBP 90 million. The Board will approve an interim dividend of 1.1p and recommend a final dividend of 1.1p, subject to shareowner approval if performance and liquidity targets are met.

Moving on to net revenue by practice and geography, where all my comments are on a like-for-like basis. Both our practices have been impacted by the ongoing client caution due to the Middle East conflict and lower activity from some of our larger technology clients.

Marketing Services, our largest practice, delivered net revenue for the quarter of GBP 136.2 million, down 4.5%. Technology Services generated GBP 13 million, down 10.3%. From a regional perspective, the Americas were above first quarter expectations, representing circa 80% of net revenue, down 0.5%. EMEA declined 27.8%, predominantly due to scope reductions on BMW and the Middle East conflict. Asia Pacific declined 4.5%.

Our capital allocation priorities are maintained from the year-end. We have established clear capital allocation priorities focused on delivering shareholder value through dividends -- dividends first, targeted debt repurchase second and share buybacks third. The Board will implement a 50% dividend payout policy out of adjusted basic earnings per share over the medium term, subject to financial targets being met.

With that, I will hand over to Scott for the client update.

Thank you, Radhika, and good morning, everyone. Thanks for joining the call this morning. We continue to have a very compelling client list with some of the world's leading and most innovative companies. Eight of them are what we call whoppers; that's clients that delivered revenues of GBP 20 million plus last year and that's a differentiator for a company of our scale. Most of our direct competitors have a much more fragmented client list with smaller relationships.

As you can see, we continue to be skewed towards the tech industry. And despite the ever-increasing amounts they're committing to CapEx spending and AI spending, we are starting to see budgets stabilize in this sector. We continue to see significant opportunities for new business, particularly driven by our own AI tools and capacity. This is particularly so in the automotive sector where we recently won assignments from major manufacturers in Japan, South Korea, China and India. And as the category establishes itself as an early adopter of AI at scale in reaction to the existential pressure from Chinese EVs and AVs.

We see similar opportunities in Financial Services, where we've seen an uptick in pipeline and wins as financial institutions move beyond pilots and concerns around AI governance to full-scale adoption, again reflecting an existential threat this time from new fintech platforms.

In FMCG, we continue to build on the traction of winning real-time brand and orchestration partner engagements with 2 leading U.S.-based global clients at the end of 2025. One of these client relationships has since expanded internationally, and we're engaged in several scale pitches in this category at the moment. These are strong relationships that help us attract and retain talent to work on them.

Declining spend overall have had a negative effect on the average revenue size of our top 10, 20 and 50 clients. But this is primarily driven by reductions in spend and scope rather than lost business. And again, it is starting to stabilize.

And with that, I'll hand you over to Martin for the summary.

Thanks, Scott. Thanks, Radhika. So just a few observations on the overall picture. Firstly, and probably most importantly, we reiterate our full year guidance. We saw a Q1 net revenue reported decrease of just under 9% and 5% like-for-like, which was a sequential improvement over Q4 of last year and better than, I think, analyst expectations for the first quarter.

But the performance reflected heightened macroeconomic uncertainty caused by the conflict in the Middle East and indeed tight continued client caution, especially amongst the technology clients as they allocate even more spend to building AI infrastructure. I think we're up now to something like GBP 700 billion for the top 4 hyperscalers alone for 2026.

Full year like-for-like net revenue is expected to be in line with current analyst consensus, and that's slightly below 2025. Quarter end net debt was about GBP 112 million. Our leverage EBITDA -- debt-to-EBITDA ratio is -- we're now down to 1.4x. And that compares with GBP 145 million last year when the leverage ratio was 1.7x. And on a like-for-like basis, it compares with GBP 157 million. So you're seeing considerably improved liquidity as we saw at the end of last year and through last year, that continues into this year.

We reiterate our full year target for EBITDA margin, which is targeted to increase by at least 100 basis points, primarily due to the annualized impact of the 2025 cost actions that we took. Number of Monks at the end of March 2026 is around 6,200, down 3% since December 2025 and 11% from the same point last year in March of 2025.

We reiterate our '26 target net debt range of GBP 60 million to GBP 90 million with a medium-term leverage of under 1x operational EBITDA. And I think it's reasonable to assume that over the next 2 years, we'll be debt-free. The company's capital allocation policy is to prioritize dividends first then further debt repurchases and finally share repurchases as net debt falls further.

The Board is also implementing a 50% dividend payout policy out of adjusted basic earnings per share over the medium term, subject to our financial targets being met. And in that context or moving towards that objective, we will approve an interim dividend of 1.1p for this year and recommend a final dividend of 1.1p, so making a total of 2.2p for the year, subject to share approval where necessary, which is on the final dividend. And that will be if performance and liquidity continues as they are currently.

The company repurchased or has repurchased already just over EUR 85 million of its Term Loan B at a discount and that reduces the term loan B from EUR 375 million to EUR 290 million or just under EUR 290 million. And we have a targeted reduction -- further reduction to EUR 250 million, which will be the steady state.

On the AI front, we're seeing significant opportunities for new business, particularly driven by those AI tools and capabilities. And we continue, as Scott said, to win multiple exploratory assignments as clients experiment and explore AI applications and develop use cases.

The AI capability is becoming more central to our agencies' way of working and to our new business efforts. And a number of clients have called out the proprietary AI applications that we have and that we've implemented. And as a result, we won 4 major AI industry awards just in the last 2 years.

And as Scott outlined, we're seeing significant assignments in 3 verticals: one, autos; secondly, financial services and to a lesser degree, we're starting to see take-up at scale in packaged goods. So overall, we remain confident in our talent, in our business model, in our strategy and in our scaled client relationships, which we think position us very well to deliver sustainable long-term growth.

So with that, we'll go to questions.

[Operator Instructions] We'll now take our first question from Laura Metayer of Morgan Stanley.

Two questions from me, please. The first one is on the Tech Services business. I'm curious what do you think is the midterm outlook for this business? Obviously, the growth has been lagging the Marketing Services business. Do you see that business kind of closing the gap with marketing services over time? And what do you think is the impact of AI on this business?

And then the second question is on the Middle East. If you can help us understand what sort of business dynamics you're seeing there and the growth, and how the situation is evolving, that would be really helpful.

Okay. Thanks, Laura. On Tech Services, we are seeing stabilization and a little improvement. Budget for this year, we're budgeting flat revenues for Tech Services. I think when we looked at the budget to Tech Services, our people were a little bit more optimistic than that, but we were a bit more conservative in the forecast. And there are some signs of an improving overall environment there.

It's not just within our tech services, digital transformation business, it's not purely marketing there. There's enterprise tech services as well or enterprise transformation. So I think the prospects are a little bit better. Obviously, it's been a rough time for the practice over the last really 2 years. So that's background on that.

On the Middle East, we did when the -- during the cease fire, which was obviously subsequent to the starting of the conflict there, we did see some stabilization. Hostilities recommenced briefly. We've now gone to another sort of cease fire period. I mean it's very volatile.

But I would say I would characterize what's happening is we had the initial destabilization. We then had a period of the cease fire where some commercial activities were continued. And whereas earlier on, we've seen sort of a stasis in terms of budgets and budget discussion going into 2026, there was a continuation. There was then a sort of came to a shuttering halt very briefly a few days ago, and there are signs and signals that there may be some form of maybe longer cease -- my guess would be longer cease fire agreement whilst some negotiations continue.

So it's a very volatile situation. We have gone -- in Dubai, just in the last 24, 48 hours, we've gone to virtual working again. I think the schools were closed again and kids were told to stay at home. So it's very volatile, Laura, but I would say we saw the initial dislocation, some stabilization and then the monitoring of the Strait of Hormuz for a very brief period of time brought things to a shuttering halt again. But maybe we'll see some constructive action coming out of it now.

So an improvement on where it was, but we just got a question mark hanging over things at the moment.

[Operator Instructions] We'll now move on to our next question from Brian Swenson of Barclays.

So just on the Middle East, again, obviously in EMEA, net revenue down 28%. If you were to try and quantify that, how much of that do you see coming from Middle East impact versus sort of the scope reduction you called out on BMW.

Yes. So...

And then on the -- yes, sorry, go ahead, please.

Yes, well, let's sort it. Radhika, if you want to respond to that.

So I would say 70% of it was BMW scope reduction and the rest of it was the Middle East.

Okay. And then versus underlying sort of business versus EMEA, do you see that roughly flat? Or is it just those 2 factors?

Roughly flat for the year. Is that what you're saying?

Yes, excluding those 2 factors. I mean those were the key factors.

Yes, those were the key factors, yes.

And then just my second question. When you talk about your intended dividend policy and you mentioned medium term, how should we think about the medium term here?

Well, it depends. I mean, I think the market -- what is the market consensus, Scott, for our EPS? Is it about 5.8, 5.9?

You mean -- correct. Yes, correct for this year, yes.

Yes. So if you -- 5.8, 5.9, so you take 2.2 on the 5.8, 5.9 for this year. But if you take 50%, you would be talking about just under 3p a share. So I think medium term, you can interpret as being this year and next year.

With no further questions from the line. I will now hand it back to the management team for closing remarks.

Okay. Well, thank you for joining us. Thanks for the time and we'll be back to you, I think, in August. Is it going to be...

Yes.

Radhika, for the first half.

Yes, on the 11th. Yes.

Yes. We'll be reporting on the first half in August. So we look forward to seeing you there. Thank you once again. Thank you.

Thank you.

Thank you.

So good morning, everybody. I'm joined by Radhika and Scott and Wes, and this is our S4's 2025 call. So we'll kick off with a summary of the results from Radhika, then Scott will talk a little bit about market momentum. Wes will talk about, I guess, the topic du jour if not forever, which is AI. And then I'll come back and do a brief summary on the results, and then we'll go into Q&A.

So Radhika, do you want to kick off, please?

Yes. Good morning. I will start with the financial headlines for 2025. Despite global macroeconomic pressures and ongoing client caution, strong cost and working capital management improved the operational EBITDA margin and reduced year-end net debt below the targeted range. Net revenue was GBP 673 million, down 10.8% reported and 8.4% like-for-like. Operational EBITDA was GBP 81.2 million with a margin of 12.1%, up 70 basis points year-on-year. Adjusted operating profit was GBP 74 million, and adjusted EPS was 5p versus 5.2p in 2024. Free cash flow rose to GBP 86.5 million, up GBP 48.7 million year-on-year, driven by improved treasury management and tighter working capital discipline. Year-end net debt fell to GBP 86.9 million, 1.1x operational EBITDA, below the GBP 100 million to GBP 140 million target range and well below the GBP 142.9 million at the end of 2024. Subject to shareowner approval, the Board proposes to pay a final dividend of 1.1p per share, an increase of 10% compared to the prior year.

Moving to the P&L. Revenue for the year came in at GBP 754.8 million, which is down 11% on a reported basis and 8.7% like-for-like. Net revenue for the year was GBP 673 million, down 10.8% reported and 8.4% like-for-like. This reflects what has been a fragmented and volatile macroeconomic environment and the resulting caution we've seen from clients. In response to these conditions, we took a disciplined approach to cost management. Personnel and operating expenses were reduced by 11.5% on a reported basis. In the second half of the year, we launched a cost restructuring program, primarily focused on non-billable roles and further back-office efficiencies. The aim was to align our personnel cost to net revenue ratio more closely with the industry averages.

We exited 2025 at 74.3% versus 76.3% in 2024. By the year-end, our total number of Monks was approximately 6,350, which is 11.5% lower than December 2024. Since June 2025 alone, headcount was reduced by 7.8%, driven by the restructuring actions. Looking across our 2 practices, Marketing Services and Technology Services. My commentary here is all on a like-for-like basis. Marketing Services, our largest practice, delivered net revenue of GBP 614 million, a 5.6% decline, reflecting an improved fourth quarter versus prior expectations. Technology Services generated GBP 59 million in net revenue, down 29.9%, driven by extended sales cycles and the anticipated reduction in revenue from a major client in the first half. From a regional standpoint, the Americas declined 5.6% and represented 80% of our total net revenue. EMEA declined 19.6% and Asia Pacific declined 13.8%, contributing 15% and 5% of the mix, respectively.

Turning to operational EBITDA by practice. On a like-for-like basis, Marketing Services delivered GBP 92.6 million, an increase of 1.5%. EBITDA margin strengthened to 15.1%, up 110 basis points, reflecting decisive headcount actions and continued cost discipline. Technology Services generated GBP 8.9 million, down 19.8% year-on-year. Despite the revenue pressure, margin improved by 190 basis points to 15.1%, underlining the effectiveness of our cost control measures. Central costs increased 10.3% in 2025, mainly due to the centralization of procurement and IT functions, the annualized impact of 2024 hires and the change in treasury management, investments that position us to drive further efficiencies across the company.

Moving to the next slide. We maintain a strong balance sheet throughout the year with solid liquidity and long-dated maturities. Our M&A obligations are also now largely complete. Stronger treasury management and tighter working capital discipline reduced year-end net debt to GBP 86.9 million. Leverage closed at 1.1x operational EBITDA, both below our target range of 1.5 to 2x and the 1.6x we reported at the end of 2024. Our EUR 375 million term loan, which matures in August 2028, continues to provide substantial covenant headroom against the 4.5x pro forma operational EBITDA threshold. Post year-end, subject to final settlement, the company also repurchased EUR 25.7 million of the EUR 375 million term loan at a discount further strengthening our capital position.

Moving to the cash flow. We delivered a strong cash outcome for the year, underpinned by disciplined execution across the business. Working capital contributed an inflow of GBP 55.5 million, a substantial improvement from GBP 14.6 million in 2024. Capital expenditure was held at GBP 4.9 million, 35% below last year's GBP 7.5 million as our cost mitigation actions continue to take effect. Financing costs reduced meaningfully with the average effective interest rate improving to approximately 6% from 7.5% in 2024. Tax paid was lower, supported by the utilization of tax losses and our 2024 performance. The cash outflows related to restructuring and transformation totaled GBP 20.4 million, comprising GBP 15.7 million of restructuring costs and GBP 4.2 million tied to our finance transformation program. As a result, the group generated GBP 86.5 million of free cash flow in 2025, more than doubling the GBP 37.8 million delivered in the prior year.

Momentum strengthened significantly in the second half, where we generated GBP 70.5 million of free cash flow, supported by sustained cost discipline and continued focus on working capital. Net debt at 31st of December 2024 was GBP 142.9 million or GBP 164.2 million at closing exchange rates. The company generated GBP 86.5 million of free cash flow during the year from which GBP 6.1 million was paid as a final dividend in the second half of 2025. M&A outflows totaled GBP 0.4 million. These movements contributed to a reducing closed net debt position of GBP 86.9 million, representing the 1.1x operational EBITDA. As net debt continues to improve, we have established clear capital allocation priorities, focused on delivering shareholder value through: number one, dividends; number two, targeted debt repurchases; and finally, three, share buybacks.

Moving on to guidance for 2026. 2026 like-for-like net revenue is expected to be in line with current analyst consensus, slightly below 2025. Operational EBITDA margin is targeted to increase by at least 100 basis points. We expect the proportion of operational EBITDA in the first half of 2026 to increase compared to the first half of 2025 due to the annualized impact of the 2025 cost actions. We anticipate year-end net debt in the range of GBP 60 million to GBP 90 million, continuing our disciplined approach to balance sheet strength and target medium-term leverage of under 1x operational EBITDA. Our forecast net finance expense is GBP 20 million to GBP 22 million, supported by tighter cash management and increased interest income. The effective tax rate is expected to be 28% to 30%.

With that, I will hand over to Scott for the market update. Thank you.

Thanks, Radhika. Good morning, everybody. Thank you for joining the presentation today. I'm going to cover some of the dynamics we're seeing in the wider market and then share some specifics on our client relationships before handing over to Wes for an update on our artificial intelligence progress. As you can see, digital marketing spend continues to increase at significant rates, whilst overall advertising spend is growing at around 5%, meaning that Analogue spend continues to decline. The revenues at the top platforms continue to grow in the high teens, significantly outpacing the market growth. One thing to bear in mind here is that over 80% of their revenues come from small- and medium-sized businesses, and they continue to expand their market share there. So their growth is not necessarily being driven by enterprise client spend.

The technology services market continues to have lower growth compared to recent historical double-digit performance. 2025 had just over 5% growth. And whilst enterprises continue to invest in areas such as cloud and AI, the outlook for 2026 is subdued. The next slide charts the comparison between agency net revenue growth at the main public holding companies and advertising spend and GDP growth. Digital spend now represents 70% of the total spend. And as I mentioned on the previous slide, is growing at high single-digit rates, meaning Analogue is in decline. Agency growth dipped to almost 0% in 2025 and is decoupled from advertising spend and GDP growth. And one explanation for this is the continued pressure from clients to maintain their media spend, but to put pressure on what they call nonworking spend, i.e., agency spend. This is particularly the case with technology clients.

On the next slide, we look at the relationship between CapEx spend and sales and marketing spend at the major tech companies. Here, we've covered Amazon, Meta and Alphabet. As you know, historically, almost half our revenues come from this sector. Prior to 2022, marketing spend at the top platforms regularly grew at 20% plus rates and is now essentially being flat since then. On the other hand, CapEx spend, particularly on AI infrastructure, has ballooned in the same period, growing over 133%. And this trend is expected to continue with the hyperscalers already announcing plans to increase their CapEx spend over 70% in 2026. The tech companies are unsurprisingly leading the charge on adopting AI in their marketing workflows and leveraging it to achieve more for the same or less.

Our commercial focus remains on our clients and returning the company to growth. Overall, our scaled client relationships remain strong and resilient. We've seen some spend declines, but we've also seen growth and additional scope at half of our whoppers. Those are clients of over $20 million revenue or more, of which we now have 8. We continue to have strong exposure and partnerships with the technology sector. Despite marketing spend in this sector being under pressure, it's important for us to maintain these relationships as they inform our product and AI strategy and leadership position. 2025 saw some important wins and expanded remits, many of which from existing clients such as Amazon, T-Mobile and others.

We're also seeing early progress from our focus on evolving the business model away from time and materials towards a talent and machine model based on asset-based or subscription-based approaches. In terms of growth, we continue to simplify and evolve our go-to-market messaging, and we're seeing this resonate, particularly in the areas of orchestration, real-time brands and AI. We've also invested in sales operations using AI to drive collaboration on pitches. This has resulted in a stronger new business performance and a stronger pipeline. Our AI solution, Monks.Flow, continues to develop and win awards for its leadership position and more of that from Wes later. It is at the heart of all our major pitches and opportunities. Whilst we continue to focus on the tech sector, we're also making progress with vertical-specific offers in areas such as auto and FMCG.

We have a very compelling client list with some of the world's leading and most innovative companies. 8 of them are what we call whoppers, that's revenues of $20 million plus, which continues to be a differentiator for a company of our scale. Most of our direct competitors have a much more fragmented client list with smaller relationships. As you can see, we continue to be skewed towards the tech industry, albeit a slightly smaller exposure than last year, driven by declining spends in that category and the ramp-up of General Motors, which has seen our auto sector exposure increase. These are strong relationships that help us attract and retain talent to work on them.

Declining spends, particularly in the technology sector have had a negative effect on the average revenue size of our top 10, 20 and 50 clients. This is primarily driven by reductions in spend rather than lost business.

And with that, I'll hand over to Wes for an update on our artificial intelligence approach.

Thanks, Scott. Hi, everyone. I will run us through the Monks AI update. If we go to the next slide, I think key takeaway is that AI transformation isn't experimental work anymore. It's an increasingly mature and defined offering with a clear structure. We assess, we build, we help clients change the way they work. We're seeing ongoing enterprise adoption of our AI transformation services. We have large-scale AI efforts in place for the bulk of our top 10 clients. And for many, we are a key AI transformation partner. Perhaps more importantly, we're seeing this make us a more strategically significant partner in general. I think that plays into us getting the timing right in this space. So Martin just referred to it as the topic du jour, maybe the topic forever, clients know AI matters to marketing.

It's probably the key strategic effort in every global marketing organization, but they don't necessarily have a plan on how to reorganize around that change. They're looking for credible road maps. They're looking for credible partners to help them execute that road map. That's the gap we've been filling. I think in 2026, the focus really is on extending that effort across our broader client portfolio. We focused our initial efforts on our top 10 clients, as you would be expected to do. Now that we're past what I would say is a little bit of an experimental phase, it's more scalable, which we think is quite exciting. And you just got to know from Scott as well, it's quite a key part when it comes to driving the pipeline for us, which is looking strong.

If we go to the next slide, I think our ability to be a credible partner in this space comes from having done it ourselves first, we ran another one of our 25 minutes of AI sessions at South by Southwest last week. It's standing room only. People understand that we've been talking about this very consistently for quite a long time. You've heard us talk about this in the context of our own restructuring and our headcount reductions, something that hasn't been easy, maybe it's not completely done yet, but many companies are only now beginning the restructuring. We started about 18 months ago. So we believe we're further along than most. I think clients can tell the difference between partners who are figuring this out alongside them versus the one that's already been through it.

And then if we go to the next slide, what I think is quite interesting for our team. I think this gets officially announced later today. We picked up an award for our own internal AI transformation. The business intelligence group has given our team an AI excellence award for the human and machine interaction, which brings me to Monks.Flow. Scott mentioned it earlier, core part of our own transformation efforts, the transformation efforts for our clients. We've put real effort and energy into developing Monks.Flow over the last few years. It's where we package both our software and services into a single offering. That's, I think, a trend and a pattern that we're seeing now play out in the broader market. I think it's quite an interesting moment in time because the cost and complexity of building software is collapsing. Code really is nearing zero as a barrier to entry, which means that, I would almost say all distinctions between software and services companies is collapsing as well.

Everything is converging on jobs to be done. I think in that space, there is a case to make that services companies are actually better positioned for those jobs to be done because the experience and expertise is going to be harder to replace than interfaces. The reality is that only holds true if you manage to change your commercial model. So if we go to the next slide, Scott mentioned the launch of our subscription model. It got quite a lot of attention. Really, this is us focusing on outputs and outcomes for our clients, moving away from reverse incentives. Simply put, fixed monthly fees, annual contracts. We combine great talent with our AI workflows, our machines. We don't focus on headcount pricing. And what it means for clients is they see less friction in procurement, less friction in operations, and that subscription gets better as our deployment of AI improves.

So if you have output that wants delivered 50 assets a month as the pipeline improves, as the pipeline gets smarter and it goes to 70; as a client, your costs don't go up, which I think is quite a key part of this is to make sure we have aligned incentives. From an analyst perspective, from an investor perspective, it starts looking a little more like ARR than traditional project work. We believe there's more defensible margins on this type of revenue as well. It sort of goes back to something that we have been talking about for a while as well. If we go to the next slide. How do you start using AI to decouple hours from output. It's a large driver behind our own reorganization and restructuring to make sure we can take full advantage of that opportunity. But really, it's the existential ask, right?

If a task that used to take 8 hours, because of AI gets reduced to 45 minutes. If you're charging hours, it punishes that innovation. And because of that, there's a lot of perverse incentive in the current agency client relationship. We're committing to output and outcomes within a fixed fee, and we're also committing to our clients getting more faster and better as AI models improve. It's an advantage that compounds for our clients with every model release, and it's driving the ability for our clients to operate closer to real time, right, the ability to operate at a scale and speed that really allows them to be hypercompetitive in their categories. And of course, that's our main goal, help our clients win their category.

We have one enterprise client signed up to this model. We have 3 more in discussion. We're planning to steadily change our revenue mix in this direction. The real takeaway is the billable hour has had a great run, of course, but it's not a long-term viable model as you see software and service collapse into one. Let's talk about some work. If we go to the next slide. So we brought a few cases here. I think important to note, this has gone from strength to strength. It's very normalized for us to use AI across pretty much every part of our organization, and there's very few pieces of work where AI has not played a role in the creation of that work. It's helping our clients save money, save time. I think more importantly, it's helping them really push into this real-time space where they can be more competitive and get more value from their media spend.

Our ability to do this at scale was down to our early adoption of agents in our content supply chain, which we started doing at the end of 2024. 2025 has really been about scaling that across more and more of our teams. So we'll show some work here for Mr. Muscle. I think this is a great example, very important piece of brand equity. We use the technology initially to refresh the character in a way that would have been a lot slower and more costly if we would have done it in traditional manners. But the real takeaway if we go to the next slide is we're not just doing that refresh and then putting brand guidelines in place. We're creating playbooks that really act as a knowledge base for agents.

And then if we go to the next slide, that means we then have agents on top of our infrastructure on top of that knowledge base, allowing you to start using that very important brand asset in real time. We go to the next slide, we can see how that plays out for our clients. In this case, we're using the new Mr. Muscle as a real-time content creator on the local version of TikTok, which is a really interesting way to think about how these brand assets are suddenly a lot more valuable, right? The cost of production and the time of production has really collapsed because of these pipelines and these systems that we've set up. And we're going to show how that plays out in practice with a quick video.

[Presentation]

So good example of how we are not just making an ad, we are making system to allow [indiscernible] advertising. We go to the next slide. Another quick example, award-winning piece of work for GMC where we're really using technology to make a very high quality social spot to drive further engagement after a big TV spot aired around the NFL playoffs. But this is a great example of a piece of work that really probably wouldn't have been possible to do within traditional either time lines or budgets, but now was made possible because of the use of AI production.

[Presentation]

We go to the next slide. I won't belabor the details here, but I think important note while the technology is clearly transformational to get to this level of level of craft and quality still takes quite a lot of sort of bespoke talent work. So our ability to have these types of hybrid production pipelines, mixing 3D with generative output is quite a key part also of our category offering for automotive. And then the last piece of work, if we go to [ Picton, ] this is, I think, another fun example where for Picton Investments, we did a rebrand. And then as part of that rebrand, we're building a system that allows us to operate more closely to real time. In this case, if we go to the next slide, we have the Bear. The Bear is the new [ Massport Bear Sport Murphy ] for Picton Investments. And it is, again, a brand asset that is usable because of the AI pipeline and agents that we've built.

We go to the next slide. Those pipelines allow us to be always on, always relevant. Let's go to a quick video to see what that looks like.

[Presentation]

And that is a small example of the work we're doing with AI.

With that, I'm going to hand it back to Martin.

Thanks, Wes. Thanks, Scott and Radhika. Can you put the slides up, guys, please? So just to summarize what Radhika and Scott said, 2025 results were in line with revised guidance, which we gave in November. And that showed improved margin and significant improvement in liquidity and net debt. The second point is net revenue at GBP 673 million was down almost 11% reported and down just over 8% like-for-like due to continued client caution and challenging global macroeconomic conditions, which continue into this year. Operational EBITDA at GBP 81.2 million with margin improved by 70 basis points like-for-like to 12.1%. Number of Monks at the year-end was down 11.5% versus the previous year '24 to around 6,000 -- currently to 6,350. Net debt of GBP 86.9 million, which represents leverage of 1.1x EBITDA was down from GBP 142.9 million. That's leverage of 1.6x previous year at December 2024 and well below the targeted range of GBP 100 million to GBP 140 million due to strong working capital management.

Subject to shareowners' approval, the Board is proposing to pay a final dividend of 1.1p per share, which is 10% up on last year's final dividend. Post year-end, the company repurchased just under EUR 26 million of its EUR 375 million Term Loan B at a discount, and that includes EUR 1 million, which remains to be settled. Post 2026, like-for-like net revenue is expected to be in line with current analyst consensus. That's slightly below 2025. The increasing global macroeconomic volatility and client caution is expected. But our AI capabilities, as Wes has outlined and our strong relationships, as Scott alluded to, both create significant new opportunities. We're targeting this year an increase of at least 100 basis points or 1 percentage point in operational EBITDA margins, and that reflects in part the annualized impact of 2025 cost-out initiatives.

Net revenue is expected to be down in the first quarter, in part due to the ongoing conflict in the Middle East. However, our cost management initiatives will enable us to partially mitigate the full impact of any revenue shortfall. The 2026 net debt target range is GBP 60 million to GBP 90 million with a medium-term leverage target of under 1x operational EBITDA. The company's capital allocation policy is to prioritize dividends first, then further debt repurchases and finally, share repurchases as net debt falls further. We saw momentum in new business wins in 2025 with new or expanded relationships across all of creative, media, technology and AI-driven transformation work and that reflects the group's AI and data-centric positioning as a driver of future growth. And finally, we remain confident in our talent, in our business model, in our strategy and in our scaled client relationships to position us to drive and deliver sustainable long-term growth.

So with that, as a summary, we can move operator to questions.

[Operator Instructions]

Our first question this morning is from Laura Metayer of Morgan Stanley.

Two questions, please. First one is on the revenue model change that you've been talking about. How quickly do you think you can move away from the traditional time and materials model? And in the meantime, how do you protect your revenue and margin until you achieve the majority of subscription and asset-based revenue model? And then second question is on your 2026 revenue guidance. What's the impact on revenue from net new business that you expect in 2026? And also what macro scenario is the guidance based on?

Yes. I think why don't you deal with the second one, Radhika, first. I mean, basically, there's little net new business in there, but do you want to comment just on the makeup?

Yes. So I mean, as you can see, there's little net new business in the '26 guidance. But what we are confident on is the impact of our annualized cost actions from last year to protect our margins this year and drive it by at least 100 basis points, which is what we just shared with you earlier. So I hope that answers that second point.

Yes. I think we'd just add, we tried to be as practical and conservative as possible given previous experience, which is not what we wanted to achieve. So I think we focused really on existing relationships and then the impact of new relationships from last year and their impact on this year. On the model, Scott, do you want to just comment a little bit on how we see -- I mean, on protection, that's -- there's not an easy answer to that other than -- what we do see in personalization at scale or orchestration as we call it, very significant volume opportunities. So whilst it might be true that visualization and copywriting, we're seeing compression, you're seeing the cost of ads and the time taken reduced. And if you charge on time, that's it. That is compressed. On personalization at scale, I would say there's more opportunity. But Scott, do you want to talk about sort of timing and the 2 models?

Sure. I mean I think Wes can fill in probably more on the actual models. But in terms of the timing, I think it never happens as quick as we would want it. We're certainly ready to do this. We're pushing it. As Wes said, we have -- one of the major clients we won last year is fully on this model, and we're certainly pushing it with our other larger clients. One of our large technology clients, we've agreed a different rate card approach, which is asset-based rather than people-based. So we're certainly pushing it and keen for this transition to happen as quickly as possible. I think as most things, when you're trying to change something really significant like this with big enterprise clients with multiple stakeholders, decision-makers, et cetera, procurement who love to compare apple-to-apple and don't like anyone throwing pairs in the mix. I think it takes a little longer than we would like.

And I think it's -- as you pointed out in the question, this is something that's really at the heart of our go-to-market, our product approach, our new business approach. It's something every pitch we're discussing has an element of this built into it, if not fully on this model. It's a little tougher with existing clients because you have existing contracts in place. So that's where it's probably slower. But maybe, Wes, you want to give a bit of an...

I think that's the right way to look at it. It's our de facto offering in new business. New business is looking quite good. If you think about that offering that's driving a lot of pipeline with existing clients, we have opened this conversation with pretty much all of our large clients. I don't think anybody in marketing procurement teams is against a change. Everybody understands that the traditional model really isn't sustainable in any meaningful way. But to Scott's point, doing this at scale in a running business is not the easiest thing to do. So steady does it. But I think this also plays into our consistency. We've been having these conversations for a long time with our clients. So we're, I think, broadly seen as an advisory partner in these types of changes.

Yes. I'd just add one thing, Laura, to it. I mean the market is painting everybody in the sector irrespective of who they are, big or small or medium size, they're painting them with the same brush. They're assuming that they will be -- the agency businesses will be AI losers. I don't think that's necessarily the case. I think in our own case, we do have AI model, which we're implementing or trying to implement at the scale. And the only verticals to date where we've seen significant AI adoption by clients has been autos and financial services. And I would single out autos in particular. Maybe a little bit of packaged goods coming, just go into it in a little bit more detail.

On the first autos and -- or first 2 financial services, there are existential threats to autos from Chinese EVs and AVs. In the case of financial services, there are existential threats from fintech platforms. And as a result of that, the pressures on those 2 verticals to adopt AI at scale for increased efficiency because somebody is coming at you with lower -- with good models, which are lower priced with consumer advantages, which are lower priced are prodigious. So I would say instead of thinking about how fast we can move clients to an output model or a subscription model. The far more important thing is what is going to be the pace of AI adoption because the simple fact is consumers have adopted AI faster than companies. And companies aren't doing it because it's not just about technology or workflow, which Wes went through with Monks.Flow.

It's about change, change management. And companies find it difficult to do that, particularly complex bureaucratic companies. I don't mean that in a negative sense, but in an organizational sense, it's difficult for them to do it. So I think the answer to your question about new model adoption is really dependent upon the speed with which clients adopt. On packaged goods, we are starting to see a little bit of adoption and the existential issue there is pricing that clients during COVID, particularly in packaged goods, drove -- passed on price increases. They haven't done it with tariffs interestingly, at least not yet, but they did do it with commodity price increases during COVID where they were moving prices up by 10%, 15% or 20% per annum whilst their supply chains were under pressure.

So we are starting to see a little bit there, but I would say I would call out autos in particular, probably the order of magnitude is autos first. Autos is quite incredible the pace of change there and the adoption at scale. I would say it's also significant on financial services, but a little bit less so. And then I think packaged goods is starting to start. Just one final point. It may be -- and I don't mean this to draw positives from the conflict in the Middle East or the war in the Middle East, but it may be that, that acts as a catalyst. If global growth slows, inflation rises and interest rates are stickier, which seems to be the scenario already being built in by some of the analysts and the investment banking firms. If that is the case, that might be the engine for increased tech adoption and AI adoption. So anyway, long answer to what you said, but I think it's an important point because the market is certainly painting everybody with the same brush at the minute.

Next question will be from Steve Liechti of Deutsche Numis.

Yes, I've got 2 as well. One, on Marketing Services, say that was down 5% to 6% last year. Can you try and cut out or carve out there how much of that was existing client spend reductions and how much of it was net client losses or wins? And then I guess, question 1B would be, can you give us a kind of pro forma adjustments to think about for 2026 in terms of business wins in '25 that roll into '26? That's the first question. And do you want to do that first?

I don't know how far we're going to get on that. I mean, do you want to try and answer that question for those 1 and 1B there, Radhika? Or is it [indiscernible].

I can do the first bit. I think it's quite difficult, Steve. If you look at our client base, quite a significant amount of our business is project-based business. So it has a defined beginning and end. And so it's quite hard to -- if it ends and it's successful, it's hard -- you shouldn't be considering that a loss, obviously. It was never expected to continue beyond the project stage. So for our large-scale client relationships, it's really the dominant factor in the decline in performance is decline in spend. And you can see that in our annual report, we give detail on our largest client relationship, and that's pretty indicative of what's happened, particularly in the technology sector. You can see it on the slide I presented as well on the sort of average size of clients. So it's really, I think, for large retained ongoing client relationships, the bulk of the decline has been that decline in spend.

On the second part, I'm not sure.

I think I'll have to go.

The second part is on clients. I mean, we've named -- if you look at the release, we talk about the relationships in '25 that grew, the significant ones. We called them out specifically. So I think that names it. But the prints -- it's difficult to give you a precise figure other than to say that will be the major part of what's included in '26. Radhika, anything further you want to add on that?

No, not really. I think I can -- I'll try and do a pro forma, but I haven't got anything at the moment to share that will give you an accurate figure at the moment.

And going back to the sort of the 1A of your question, I think most of -- the project point that Scott made. But in addition to that, I would say most of it tends to be reduction of spend rather than total loss. That's what I would call out in '25. It tends to be more about reductions of spend or increases of spend. And again, I just draw your attention to who we've specifically mentioned in the release, not the new business wins that are referred to, but the enlarged relationships that we referred to. That was one. What else?

Yes. I mean, I guess I'd lump together the sort of let's say, scope of work increases plus new clients together that would just be useful. So almost like a pro forming gross and then even down to a net. But yes, we can see what you can come up with. So that's great. So my second question, on tech services, I'm presuming now your client loss or his sort of stop spending has now washed out the figures.

That's right.

So we've kind of got a clean number now.

Yes.

And the market is growing around 5%, we think.

Well, I think -- Scott, what do you think?

Yes, that's what -- that's based on looking at the projections for some of the quoted companies that specialize in that area. So I think it's on the slide that I have.

So is that a fair number to think about for next year?

I wouldn't say it's unfair. Let me put it like this. All I would do is go back to what we said in answer to a previous question that we've looked -- because of historic forecasting inadequacies, I go as far as that. We've tended to be a little bit more conservative. And I think Radhika underlined there is some new business in our budgets for this year, but we've sort of taken that down. So the to-be found column is less. So you've got to think about that, Steve, in relation to what we're projecting.

Yes. Okay. And can I have sort of 2B on tech services again? Just help me out in terms of thinking about that particular business as a possible AI loser because rightly or wrongly...

No, no, that's not an AI loser. That's an AI win. I mean that...

So help me out then because I'm thinking of it as a sort of nearshore, offshore player historically.

No, that's the wrong way to think about it. Think about it as a full part of the transformation process. I mean the type of projects that they are -- have historically won and are winning are not just cheaper because it's offshore. It's not a sort of TCS, Infosys total model. This is trying to implement transformation. And it's broader -- it's enterprise transformation as well as marketing transformation at scale. So they would be at least in theory, AI winners as well. I mean, Scott, do you want to...

Even the Accenture and people like that are under pressure now from an AI and they're obviously doing...

Yes. If you are a -- it's true. If you're an Infosys or a TCS and stuff was moved offshore to -- because it was cheaper. It is true that manufacturing might go back to America as a result of what's happening, wouldn't create employment, would create employment for robots or bots. I get that. But the sort of work that we're doing is AI transformational work. And I think it's a little bit more fundamental in terms of digital transformation and not tied to marketing transformation or the type of work that you're referring to with Accenture. I mean you say Accenture, if I look at sort of the work that Accenture Interactive or Droga are doing, that's not the case.

[Operator Instructions]

We'll now move to [indiscernible] of Barclays.

You just highlighted predominantly spending cuts rather than client losses. But if I look at your Page 19 in the presentation, your sort of second biggest client category at GBP 5 million to GBP 10 million in revenue has more than halved. Can you maybe just give a little bit more color on what drove this? And then without giving like a specific guidance, but what do you think your cruising altitude can be in terms of net revenue organic without sort of any impact of client losses and if AI CapEx goes back to marketing OpEx? And do you think sort of related to that, do you think you can go back to growing in line with your underlying markets again?

Yes. Just go back to -- just deal with the second one first. I think it's extremely difficult to answer. We are seeing signs of sort of stabilization of marketing spend. But I think it will be -- it's a virtual impossibility to call out now what you referred to as our cruising altitude. I think what we want to do, obviously, to get into positive territory. That's what we are really focused on. And I think that goes back to a previous question. That depends, I think, if you think about the 5 areas that we think about in terms of AI transformation, the first 3 are probably the most meaningful with digitalization and copywriting, personalization and scale of media planning and buying. And it's really a question of how fast that adoption takes place. We're referring to the verticals.

On the first part of the question, Scott, do you want to comment on the segmentation of the client count sizes?

Yes. So as I said before, I think a lot of our business, particularly at the lower end of that chart is project-based business, and there's been less of that. So that explains a lot of the sort of lower numbers of clients. In the higher brackets, what we've seen is that declines in spend have pushed clients down a bracket. So that's really what's happened there again. We haven't had beyond First American and sort of clients in tech services, we haven't had large losses in marketing services. We've had some clients that have had quite large declines in spend, but they remain clients.

As we have no further questions at this time, sir Martin, I'd like to turn the call back over to you for any additional or closing remarks. Thank you.

Okay. All right. Thanks very much for joining us. Anybody has any further questions, so we're all here to answer them. We'll see you shortly, hopefully, to talk about quarter 1. Thank you very much.

Good morning, everybody. Welcome to our Q3 third quarter update. Radhika will give a background on the trading in Q3, and then Scott will talk about market momentum and some client analysis, and I'll come back and give a brief summary and outlook.

Over to you, Radhika.

Good morning, everybody. I will start with the financial headlines for the third quarter and 2025 year-to-date. Performance in the period continued to be impacted by the ongoing volatile global macroeconomic conditions. Client caution has continued given the uncertainty. Revenue in the quarter was GBP 191.7 million, down 1% on a like-for-like basis and 3.4% on a reported basis. Year-to-date revenue was GBP 552.1 million, down 8.4% like-for-like and 11.1% on a reported basis. Net revenue in the quarter was GBP 167 million, down 4.4% on a like-for-like basis and 6.9% on a reported basis. Year-to-date, net revenue was GBP 495.2 million, down 8.2% like-for-like and 10.8% on a reported basis.

We expect stronger profitability in the second half with weighting towards the fourth quarter. This reflects recent new business wins and cost reductions actioned. The number of Monks are circa 6,500, down 5% from circa 6,900 at June 2025 and down 13% from circa 7,500 this time last year. This program primarily focused on a range of nonbillable roles across the business and further back-office efficiencies. We closed the period with a net debt of GBP 151 million, lower than GBP 180 million at 30th of September 2024 or GBP 194 million on a like-for-like basis.

Net debt increased by GBP 5 million compared to GBP 146 million at half year, reflecting the group's inaugural dividend payment, restructuring costs and continuing FX headwinds. Average month-end net debt for the quarter was GBP 154 million compared to GBP 184 million for the same quarter last year or GBP 197 million on a like-for-like basis. Leverage has improved to 1.8x pro forma 12-month operational EBITDA compared to this time last year at 2.2x and against the half year at 2x.

Moving on to the full year guidance. We expect like-for-like net revenue to be down by upper single digits. Full year like-for-like operational EBITDA is targeted to be broadly similar to 2024. We expect net debt to be in the range of GBP 100 million to GBP 140 million.

Moving on now to the net revenue by practice and geography. Marketing Services net revenue for the quarter was GBP 150.8 million, down 2.8% on a like-for-like basis and 5.3% on a reported basis. Year-to-date, Marketing Services net revenue has decreased 5.2% like-for-like or 8.1% reported to GBP 449.8 million. This reflects the slower onboarding of recent client wins, including General Motors, Amazon, T-Mobile and PIF and now 2 unannounced leading U.S.-based global FMCG companies alongside general client caution.

Technology Services was impacted by longer sales cycles for new business and ongoing challenging macroeconomic conditions. Net revenue in the quarter decreased 16.5% like-for-like or 19.4% reported to GBP 16.2 million. Year-to-date, Technology Services net revenue has decreased 29.6% like-for-like or 31.4% reported to GBP 45.4 million.

From a geographical perspective, the Americas, which represent around 80% of net revenue was up 1.6% like-for-like in the third quarter to GBP 136.1 million with stronger growth in Latin America. Year-to-date, net revenue declined by 5.6% like-for-like to GBP 394.3 million. Europe, the Middle East and Africa were down 26.6% like-for-like in the third quarter to GBP 22.6 million. Year-to-date, net revenue was down like-for-like 17.3% to GBP 74.4 million. Asia Pacific net revenue down 16.2% like-for-like in the third quarter to GBP 8.3 million. Year-to-date was down 15.3% like-for-like to GBP 26.5 million.

With that, I hand over to Scott for the market update.

Thanks, Radhika, and good morning, everybody. Thank you for joining the call. As we continue to address the challenges that the business has been facing and rebuild our foundations for growth, we are seeing some progress that makes us more optimistic as we move forward. First, the pace of technology client spend cuts has slowed. Now whilst the investments in CapEx continue to grow at really significant pace, and in the past week, we've seen several of the big tech companies report increased AI investment for both 2025 and 2026, combining this with continued focus on operating expenses and in some cases, significant job cuts, we are starting to see stabilization in their marketing spends as they start to invest in differentiation for their AI products in a highly competitive market and illustrate some ROI on those CapEx investments.

High-profile campaigns from the likes of OpenAI, Anthropic and Perplexity have added to the competitive tension. Secondly, we continue to innovate our product, launching our AI platform, Monks.Flow at CES in January 2024. Over the course of the past 2 years, we've continued to innovate, win awards, bring onboard partners such as Google, OpenAI, NVIDIA, Adobe and Runway and implement at scale with existing clients such as Google, BMW, SC Johnson and Amazon. We've also developed and started to convert a specific AI-focused sales pipeline, which is progressing beyond proof of concepts to more significant scaled transformational assignments, such as the recent 2 FMCG wins.

We are also building traction in AI film production with almost 20 agentic films currently in production, a new revenue stream for us. Thirdly, client wins. The whopper client losses are mostly out of our comparables, and we've had a stronger pipeline and new business performance recently. Starting with GM a year ago, we've had a regular cadence of significant wins, including T-Mobile, Amazon, PIF and more recently, 2 leading U.S.-based FMCGs, one a new client and one an expanded remit with an existing client. Fourthly, on people. Whilst the overall number of Monks has declined, we have continued to hire across country and regional management, capabilities, growth and client leadership, talent who are now driving these new business wins.

We've also made hires with an operational focus on the optimization of pricing, utilization, billability and improving our margins and getting those staff cost ratios in line. Fifth and finally, centralization and cost control. From an integration perspective, the mergers are now fully integrated, and we go to market as a single brand, Monks. We've centralized key functions such as finance, legal, HR and IT, and the company operates on the same platforms such as Slack, Salesforce, Workday and Google Workspace.

Our migration to a single ERP is well underway and will be completed in early 2026. We've simplified the business around Marketing and Technology Services. We have a clearly articulated organizational structure based around geographical leadership and capability expertise. We have and continue to implement cost controls with the goal of getting our staff cost ratios in line with the industry averages. So overall, with positive new business trends and some stabilization in tech company spend, continued progress in our AI product offering and a strong focus on cost, we are seeing an improved performance in H2. We reiterate our EBITDA guidance for 2025 and are starting to set up well for 2026.

I have a couple of the agentic films, which I referenced earlier that we've been working on to share with you. The first one is an ad for Progressive Insurance, which just aired this week. On this one, we were brought in by their creative agency who came up with the concept to produce the film using artificial intelligence, using technology from partners such as Google Veo, Nuke, FLUX, Runway and Stable Diffusion.

[Presentation]

And the second film is some work for General Motors, which is a fully agentic film where we created agents to do everything from research to creating the brief, script writing and ultimately production. In this case, it was all based around our internal technology, Monks.Flow, but using external technology from partners such as again, Google Veo, Nuke and FLUX.

[Presentation]

From a client perspective, we continue to have a really compelling client list where some of the world's leading and most innovative companies. In 2024, 9 of them were what we call whoppers, that's with revenues of $20 million plus, which is a differentiator for a company of our scale. Most of our direct competitors have a much more fragmented client list with smaller relationships. As you can see, we continue to have a significant presence in the technology industry. You can see the GM win has also positively impacted our auto share and other recent wins have been in telco, financial services and FMCG.

These are strong relationships that help us attract and retain talent to work on them. In terms of comparing the scale of our largest clients, just to be clear on the methodology here, we are comparing the top 10, 20 and 50 current clients with the top 10, 20 and 50 client cohorts in the same period in 2024. We are now seeing some stabilization here with a small bit of growth in the average size of our top 10 clients and far smaller declines in our top 20 and 50. If we look at the year-to-date actual growth of our current top 10 clients versus their equivalent position in 2024, we see 7% growth for our top 10, 7% growth for our top 20 clients and 6% for our top 50, illustrating our focus on building scaled relationships with enterprise clients is paying off.

And now I'll pass you back to Martin for the summary.

Thanks, Scott. Thanks, Radhika. So just a brief summary. Q3 net revenue fell by almost 7% reported and 4.4%, which actually is a sequential improvement over Q2 by 4.4%. And that reflected ongoing client caution, as Scott has outlined, and the timing of significant new business wins. Year-to-date, revenue is down 10.8% and 8.2% like-for-like. Full year like-for-like net revenue is expected to be down by upper single digits. And third quarter month-end average like-for-like net debt fell by GBP 43 million from GBP 197 million last year on a constant currency basis to GBP 154 million despite the payment of the inaugural dividend, which cost about GBP 6 million to GBP 7 million.

We maintain our full year guidance for EBITDA, which is expected to be broadly similar to 2024 on a like-for-like basis, with a stronger performance expected in the second half as last year, reflecting new business wins and implemented cost reductions. A program -- a cost reduction program was initiated to mitigate the revenue challenges that we've had. And this saw our number of Monks reduced by 5% to around 6,500 since June 2025 and by 13% from this time last year. This is clearly delivering in-year benefits and contributing to the rightsizing of the business, particularly as we go into 2026.

We maintain our 2025 target net debt range of GBP 100 million to GBP 140 million. Monthly at the moment, we're varying between about GBP 120 million and GBP 150 million. And the Board will consider approving an enhanced final dividend for 2025 if the improved second half performance and liquidity targets are delivered. Those are the targets for 2025.

We are seeing our AI initiatives, as Scott has pointed out, improve visualization and copywriting productivity, deliver considerably more effective and economic hyper-personalization at very significant scale, delivering more automated and integrated media planning and buying, improving general client and agency efficiency and democratizing knowledge and flattening organizations. We remain confident in the strategy, in the business model and in our talent, which together with the scaled client relationships, unusual for a company of our size, they position us very well for growth in the longer term.

So with that as the background, we'll go into Q&A.

[Operator Instructions] We'll take our first question from Laura Metayer from Morgan Stanley.

I have 2, please. The first one is on production. You've mentioned that you produce movies for your clients. I understand this is not something that you were doing much before AI. Does that add a sustainable new revenue streams then? And then the second question is, you now expect a lower revenue base for 2025. What additional cost-saving measures are you taking to be able to maintain your previous EBITDA guidance?

Scott, do you want to take the first? And then Radhika, the second one.

Yes. Laura, so yes, absolutely. I mean it's not that we didn't do any film production before. We did some. But the -- what AI allows us to do is a lot more. And I think what we're seeing now is we're building up quite a pipeline of film work where some of it as a progressive example is where creative agencies are bringing us in as their specialized AI production partner. And that's actually the original traditional Media.Monks business model. So it's sort of reinvigorating that to a certain degree.

But more often than not, we are essentially doing the whole thing using Monks.Flow to do the sort of research and sort of creative brief and script writing, et cetera, and then using external technology to do the actual production. So yes, this is a sustainable new revenue stream for us. It's relatively small at the moment. I think companies are still working out how they price these things. In many cases, they are proof of concepts because they're looking to understand how the technology works and what can actually be achieved. But going forward, I think this will be important for us.

And just to amplify that a little bit. We believe that create costs should be about 10% of media budgets. In many cases, the clients that we either have or talk to are spending as much as 15% or 20% on create costs. And we see a very significant opportunity to improving that ratio and freeing up money from create for media. So -- and Scott mentioned 20 or so projects of this nature going on at the moment. In addition to that, every conversation we have with CMOs, and for example, we've had 3 or 4 in the past couple of days, every conversation we have is punctuated with this issue or this focus on create costs. And inside organizations, it's not so much the CMOs and the CIOs and CTOs that focus on this. It's the CFOs. They are the prime driver of improved efficiency. Radhika, do you want to talk about cost mitigation?

Yes. So to your point, Laura, so as you know, in June, we had 6,900 Monks. We've reduced that to 6,500, and that has been actioned and that is delivering the in-year savings to deliver the EBITDA guidance that we're sticking with. But continually, we are now really forensically looking at our cost base to make sure we are deploying the resources against the revenue, and we're doing that on a constant basis.

Yes. I'd just add to that, that we're very conscious of the fact we're still operating in excess of industry averages for staff costs to net revenue figures. The standard seems to be 65% with fully loaded bonuses, both short and long term. Those bonuses accounting for about 3% of net revenue. So 62% clean of bonuses, 65% with bonuses is where we think we should be. And our operating management accept that. The question in our minds is how long it will take us to get to that 65%. We expect an improvement next year. We're in the planning phase for next year, both our 3-year plans for '26 to '28 and our budget for '26. But that's going to be a significant part of what we look at next year in addition, of course, to focusing on the top line.

We're now taking our next questions from Julien from Barclays.

I had 3 questions and now I have 4. So the first one is upper single digit for '24, which is, I suppose, minus 8% to minus 9%. That would indicate minus 7% to minus 11% in Q4, i.e., worse than Q3, 4.4%. I know comps are 9 points tougher versus '24, but they are actually easier versus '22 and the years before. So why is Q4 slower than Q3? That's my first question. The second one is you're trying to convey a lot of positivity on clients and products, but organic is still poor. So taking into account, account wins, new products and same macro, do you think you will post positive organic next year?

Third question for Radhika. You gave financial pointers for everything, but depreciation, interest and tax rate. So if you could get some pointers on those 3 things. And then the last one is for Martin and your remark saying that create costs are 15% to 20% of media budget but going to 10%. So first of all, I find that very high because if an advertiser spend $500 million on media, are they really going to spend $50 million to $100 million on creative? And then the question is, with the conversation you have, are clients really investing that savings into media or they are also saying we're going to take some on board to have higher margin, i.e., not 100% is reinvested?

Sure. The third question I didn't quite catch. Do you want to repeat the third one, just for the one you said was for Radhika?

Yes. So you're giving us numbers on everything, except 3 numbers, depreciation, interest and tax rate.

So on the first on Q4, do you want to say a little bit about Q4, Radhika?

So Q4 is down year-on-year. But last year, we -- it was reversed. So I think overall, we will be expecting it down year-on-year because of the client cautiousness and the slower buildup of the new business. But I think last year, we had a skewed Q4. But from the EBITDA guidance, we're still tracking online.

I mean organic growth for 2026, we'll see, Julien. We're in the midst, as I said before, of doing our budgets. Given our forecasting abilities, what I would say is we'll take a cautious approach to next year. And we'll also be looking, as I said before, very carefully at the staff cost to revenue ratio. The implied margin for this year is around 12% for the full year. And obviously, we want to improve on that. We still believe that 20% is where we need to get to, but we'll be looking for a significant improvement in margin next year, which, again, operational management is on board for and is looking at it very, very carefully. But I'd rather go into the budgets for next year and indeed the guidance next year cautious and hopefully, we can outperform that. So that's on the basis of a historic experience. Do you want to go through the additional items?

Yes. So the adjusting items in total, we're giving a range of GBP 75 million to GBP 88 million, on amortization GBP 45 million to GBP 50 million. Acquisition, restructuring and other expenses, Julien, GBP 25 million to GBP 30 million and then share-based payments, GBP 5 million to GBP 8 million. So that gives you -- it's pretty consistent to what we said at half year.

No, I know that these are the guidance you've given in the presentation. What I was asking is the numbers you haven't given, which are depreciation, interest and tax rate.

The actual breakdown?

Depreciation, interest and tax rate.

So the effective tax rate is 32.5%.

And depreciation?

Depreciation is...

Let's -- let me just come to your final question, Radhika, will dig out depreciation. But on the create cost, I didn't say, Julien, everybody was doing it, but there are significant cases, including our own client portfolio where 15% at least is the case. I can think of one client without name that spends GBP 2 billion and GBP 300 million on create costs, including the cost of an in-house agency. What the other interesting thing is that AI, one with the after effects of AI is it's forcing our clients to look much more carefully at cost. And often, create costs are buried inside operating P&Ls and are not obvious. But I would say we have been surprised at the extent to which create costs are above what I would normally regard as being 10%.

I mean, going back in time, agencies were paid 15% a long time ago, 10% was allocated to creative and 5% to media. As procurement and efficiency squeeze that, agency fees probably were around 10%. And I can remember allocations of 7.5% to creative and 2.5% to media with media discounts making up the balance of volume discounts, some of which went back to clients and some of which didn't. We run an open book with the exception of Brazil. And we think that's the way the market is going to go with greater transparency. So you'll have greater transparency around create costs and for greater focus. And whether I like it, you like it or not, I think the figure that is in people's minds is 10%.

The most efficient clients are sort of focusing on that. And I said -- as I said before, the vertical that's driving that inside organization is CFOs. In terms of where they're spending the saving, if you look at the presentation that Norm de Greve did at the ANA, I think it was last week. If you haven't got it, we can send it to you. He goes through there, what he did or has been doing at General Motors in order to make it more efficient -- the model more efficient. And as you may remember, he has sort of upper funnel strategic creative agencies, 4 of them for each brand, each of his 4 brands. And we're the foundational agency that drives the creation, production and distribution of that material. So I think that's one -- that's not the only model that clients will pursue. There are the end-to-end all-embracing models too, like we've seen at Coca-Cola, et cetera. But that's broadly, I think, where part of the market is going. Do you want to talk about depreciation?

Yes. So depreciation year-to-date is about GBP 6 million, and we expect it to be about GBP 7 million. I'm just confirming. I'll come back to you on the interest cost for the full year.

Anything else, Julien?

No. Very clear.

[Operator Instructions] we are now taking our next questions from Steve from Deutsche Numis.

Can I just ask Julien's question, maybe pull some of his questions in a different way. One is on -- for next year, if you added up your new business wins that you've announced and you've got sight on, if you kind of did a pro forma gross revenue and then maybe you could do a net revenue of losses as a percentage of net revenue. Can you just give us a feel of the kind of pro forma percentages as we go into '26 that the new business will give you on a gross basis and maybe on a net basis, too?

That's a disguised question to get us to give you the guidance for '26. And I'm sorry, we're not going to do that today. Other than...

Well, I mean, to be fair, you're giving us lots of new revenue, lots of new business wins. And it's a fair question, isn't it?

It's a fair question. All your questions are fair, whether we answer them or not is another question. Look, we haven't gone through -- we're in the midst of going through it. I would just sort of for the second time, say what I said before. When we look at next year, given our record on forecasting particularly the top line, bottom line is a little bit stronger, liquidity is a bit stronger. And we're going to take a cautious view to '26, whatever that number is. But you're right to point out that we've had some significant increases in key relationships, but we still got a lot of work to do. And as I say, we'll take a cautious view.

On the general economic environment next year, I don't expect it to change very much, i.e., it will continue to be volatile. Tariffs are still -- the Chinese tariffs have been postponed, kick the can down the road for another 12 months. So we'll have to see how that pans out. Relations do seem to be improving at least in the short term between the U.S. and China. That will help. Middle East, we have seen, thankfully, some progress, and we hope it continues. Russia, Ukraine continues to be a problem. And as I said before, the tariffs on top of that.

The interesting thing about the tariffs just is that so far, we haven't seen any margin compression despite the fact it seems to be the case that companies are not necessarily passing on the cost of tariffs to the consumer. Now it may be still too early and tariffs were signaled by Trump 2.0 upfront. So it may be that people took precautionary measures on shipping and inventory prior to April 2. But the forecast for margins next year for the S&P 500, the ones that I've seen indicate margins continuing at current levels, which are record levels, and if anything, sort of moving up a bit. So which seems to be -- it loops back to what we said about agentic and AI improvement. So clients have been looking for significant efficiency.

Okay. Kind of steal one of Julien's other questions actually, which I kind of don't think you answered, which was on these AI project savings that we're talking about, with what you see and the evidence to date, I know it's early days. When the CFO gets involved, is the company net-net spending more or less on marketing in total? And i.e., is it redistributing the money to other...

I think they're investing the savings in media. So the 2 verticals where we've seen the greatest AI adoption so far has been autos. Why? Because of Chinese EVs and AVs. And then the other vertical is financial services. Why? Because there are fintech platforms that are extremely agile. So the CMOs of those vertical -- or in those verticals know that the CEO at some point in time is going to come and say, we have to lower our prices or lower our costs in order to be -- combat the AV or the EV or to combat the fintech platform. And in that environment, they are currently taking those savings in our experience and redeploying them into media. So not a reduction in spending.

There is some data out there that says clients have reduced their marketing budgets as a percentage of revenue over the last year. I think there is some Gartner data to that effect. And that's been used as an explanation for the compression on the holding company's net revenue growth. I mean of the holding companies, there's only 2 out of 5 that have shown any growth. The other 3 -- or 4 -- sorry, the other 4 of the Big 6, so-called Big 6, the other 4 have not. So I think what we see is those savings that we've been talking about in the case of AI are being redeployed into media. So the CFO hasn't snaffled the money to improve margins or hold margins as yet.

I would stress also, it's still quite early days, Steve. There are very few clients that have fully changed their model to a pure AI-driven model. So what you see in the very early days is that they continue doing their marketing in the same way they always have. And in addition, they do some proof of concepts with AI. So it's actually additional. But I think, as I said, it's early days. We see a couple of clients that are really moving in this direction. The 2 FMCGs that we mentioned, the project or the assignments we've won with them is to fully AI-enable their marketing supply chain. So I think this is something we'll see over the next couple of years. And certainly, my view, and I think Wes has expressed it pretty bluntly as well is that over time, you'll see a variation in how clients do this. Some will invest -- reinvest in marketing and spend the same and get more for it. But I'm sure there will be CFOs out there that take some back as well.

And I think we are trying -- we haven't touched on this yet in this call. We've done it before. We are trying to move the model from a time-based model to an asset use model because we think that's the best way. That's not easy to do. Sometimes you find the marketing functions willing to do it and the procurement function, it's like Linus' safety blanket. They go back to the original way they did things and want to keep it that way. But we think over time, it's sort of inevitable that the model will move more to an asset use model. The other thing I would say is inevitably, there's going to be more transparency on the media planning and buying, which will be an advantage for us because we're not involved in enterprise, really in big enterprise media, but that's going to come under increasing examination for transparency, not just because of AI, but because of blockchain as well.

Great. Can I ask one last quick one. I hear what you're saying on the dividend or potentially increasing the dividend. I just wonder what's your take in terms of should you be doing share buybacks rather than dividends given where the share price is?

Well, you know, our argument both ways. Some people believe that's the best way. Some people say it just gets absorbed and doesn't have any long-term effect. We have significant management ownership still in the company. And it hasn't been an easy couple of years. So I think we will focus. That doesn't mean we're not going to focus on buybacks, too. We did a little buyback a year or so ago, a similar size to the dividend, but we think we will get greater traction from an increase in the dividend from the 1p last year than the buyback at this stage. But we'll look at it. It depends on our liquidity. If we can get the net debt under GBP 100 million, we will -- which we should do next year with a fair wind. Obviously, that will give us more flexibility.

It appears there are no further questions at this time. I'd like to turn the conference back to Sir Martin Sorrell for any additional or closing remarks. Please go ahead, sir.

Okay. thanks very much, everybody. Thanks for joining us, and we'll come back again next year when we've completed Q4 and focus on that dividend we were just talking about. Okay. Thank you very much.