S4 Capital plc

Good morning, everybody. This is 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. Five areas to go through. First are the results themselves, which Radhika will just take you back, take you through. Secondly, market momentum from Scott, where we'll 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 prioritise 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 308 million, down 6.2% reported and 4.7% like for like. Operational EBITDA was 38 million compared to 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 35.2 million and adjusted basic earnings per share was 2.7 pence versus 0.2 pence in the first half of 2025. The board has approved an inaugural interim dividend of 1.35 pence per share, 50% of the adjusted basic earnings per share. The company generated 10.4 million in free cash flow and net debt reduced to 66.3 million which is 0.7 times pro forma 12-month operational EBITDA, significantly below the 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 40.1 million euros subject to settlement. This reduces the outstanding term loan B to 249.7 million euros. Moving on to the P&L. Revenue for the period came in at £344 million which is down 4.6% on a reported basis and 3.2% like for like. Net revenue for the period was £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 prioritising AI investment. In response to these conditions, we have continued our disciplined approach to cost management and the first half EBITDA performance reflects the annualised impact of the cost actions taken in the second half of 2025, which primarily focused on non-billable 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 two practices, marketing services and technology services, my commentary now is all on a like-for-like basis. Marketing services delivered net revenue of 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 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 light for light basis, marketing services delivered 44.1 million An increase of 72.3% compared to the first half of 2025. EBITDA margins strengthened to 15.6% up 690 basis points reflecting decisive headcount actions and continued cost discipline. Technology services generated 4.4 million up 214.3% from the first half last year. EBITDA margins strengthened to 16.9% and improved by over 1000 basis points underlying the effectiveness of our cost control measures. Moving on to the debt and balance sheet slide. We maintain 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 and net debt to 66.3 million. Leverage closed at 0.7 times net debt over pro forma 12-month operational EBITDA, below our target of 1 times and below our key covenant of 4.5 times. The company met the targeted reduction of its term loan B, repurchasing a further €40.1 million subject to settlement, reducing the outstanding term loan B to €249.7 million. Moving to the cash flow. Free cash flow was 10.4 million in the period compared to 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 normalised and trading strengthened, working capital improved in the second quarter. Capital expenditure in the period was 2.7 million, up just under 30% from the first half of 2025 of 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 1.9 million and tax paid in the period was higher at 3.8 million driven by utilizations of tax losses in 2025. Restructuring and transformation costs in the period were 5.7 million, primarily 3.9 million due to restructuring costs and 1.4 million related to our finance transformation programme. Moving on to the net debt bridge, net debt at 31st December was 86.9 million or 79.6 million at closing June 2026 exchange rates. The company generated 10.4 million of free cash flow during the period The company repurchased 85.2 million euros of its term loan B at a discount of 4.9 million euros. These movements resulted in a lower closing net debt position of 66.3 million, again representing 0.7 pro forma 12-month operational EBITDA below the targeted leverage of one times. Our capital allocation priorities are maintained from the year end. We have established a clear capital allocation priorities, 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. Operationally EBITDA remains at the current analyst consensus level of 85 million with operational EBITDA margin targeted to increase by 140 basis points. Year end net debt range has been lowered to 50 to 80 million. In line with our The company has repurchased a further €40.1 million subject to settlement of the term loan B. This reduces the outstanding term loan B to €249.7 million. Our forecast net finance expense has been lowered to €19-21 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 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 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 analogue 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 non-working 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. Eight 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. And with that, I'll hand you over to Wes for an update on our artificial intelligence approach. Thanks.