M&C Saatchi plc ($SAA)

First of all, welcome, everybody. My name is Dame Heather Rabbatts, and I've recently become the Executive Chair of this fantastic group of businesses. Please make sure your mobile phones are switched off. I want to be like on the beginning of -- hi, do come in. And I know it's also quite warm in here today. Hooray. The sun is out. So please feel free to take jackets off as well. That clip that we've played was just a snapshot of some of the extraordinary work that we produce in this business. It spans sports, entertainment, music and brands, and it really shows the creativity and the expertise we have here. It's all done by amazing people who work around the world. And we, the Board are truly appreciative of all of their hard work, endeavor and creativity. Before we begin, I'd just like to share with you that, once again, we have been awarded this prestigious award for sport and entertainment. It's a testament to the fantastic work we do with our clients, including Coca-Cola, Heineken and Barclays. They really set a pace in the industry. We will be talking more about sport and entertainment in the forthcoming months. And we've just heard we're shortlisted again for the Sport Industry Agency of the Year. But let me now turn to the focus of the first part of this meeting today, which is to present to you M&C Saatchi's full year 2025 results. Welcome to all of you here in the room and everybody who is listening online. It goes without saying that 2025 results were impacted by a number of external factors, principally macro-driven weaknesses across many markets from Q2 onwards, particularly in Australia, whilst the unprecedented 43-day U.S. government shutdown in Q4 affected our high-margin Issues business. Our balance sheet, however, continues to improve, and we ended 2025 with a net cash balance of GBP 13.3 million, which is after 2 M&A transactions, the first transactions we've done in many years as well as some put option payments. Simon is obviously going to take you through in detail these results shortly. We believe that our business is well positioned for growth, supported by a broad range of expertise across industry, geography, connected specialisms and creativity as well as our strength across government and commercial sectors. And today, you will hear more about our government work from [ Marcus]. You will also hear more about cultural power from [ Karen ] shortly. You will have seen from the video, we talk about cultural power. It features significantly in our annual report last year and indeed this year, and we want to give real visibility about what that means to our clients and to markets. We have amazing selection of clients, as you've seen, who we love to work with them and they love to work with us, and we have over a 94% client retention rate. I now want to just give a few literally a couple of contextual strategic points before [ Simon ] goes into the detail. As you all know, Zaid stepped down at the end of March, and I took over as Executive Chair in early April. So it's still very early days for me in this particular seat. I have the pleasure of leading an operating Board who have -- who are incredibly talented executives. And it's through this operating Board, we will continue to ensure continuity, focus on the high potential businesses and get the business back to growth. And you will see 2 of those leaders today. Secondly, the transformation that we've talked about previously, Phase 2 is now virtually complete on top of other cost savings from restructuring, particularly those that took place in Australia. Whilst there is still work to do that we are closer to a simplified structure. But let me just add, I don't think any business, whether in this sector or any other sector talks about transformation being final. One has to be constantly agile, looking at being simpler and ensuring that we always are responding to the challenges as we see them evolve. Finally, we are really clear on focus. We are setting the foundation to unlock the intrinsic value of M&C Saatchi, which we believe is not currently realized. We have a resilient business. We have a unique market offer across government and commercial sectors, and we have deep market insights and consumer insights that empower us to deliver client solutions. We also have significant data stack and AI-enabled processes that we use to empower our growth engines. And we are going to shed some light on our growth engines later on after Simon has presented the results for last year. Thank you, Simon.

Well, thank you, Heather. Good morning, everyone. We appreciate you all joining us for our year-end update, whether in Golden Square or online. Heather and her overview has already outlined that 2025 was a year characterized by macro and geopolitical disruption, and that heavily impacted both us and also our industry and especially across Q2 through to Q4. Against that backdrop, however, and this is important, the business demonstrated financial resilience, maintaining a net cash position, driving cost mitigation and pushing ahead with opportunity areas like our fast-growing and margin-accretive performance media division. So let me step you through some of the detail. Like-for-like net revenue for the year was GBP 204.7 million, down 7.3%. And this, as Heather has already mentioned, was impacted by the macro context and the aftermath of global tariffs, including prolonged challenges in our consumer-weighted Australia business. Within that overall result, once again, non-advertising Specialisms outperformed the lower-margin advertising area. Operating profit reduced by GBP 8.8 million to GBP 24.9 million, driven by a combination of that like-for-like group revenue decline of GBP 16 million and prior year half 2 weighted investment annualization, effects that are also seen in our margin percentage and PBT. The EPS percentage reduction was slightly higher, principally driven by the nondeductibility for tax of some of our transformation and restructuring costs. Net cash was up at GBP 13.3 million with operating working capital and inflow offset by outflows for the prior year bonus, M&A, which Heather has already mentioned, our first 2 pieces of M&A in 7 years and our final dividend, and I'll give a little more on this later. Turning to revenue trends and starting with our non-advertising Specialisms or capabilities. Issues, which, as you know, is our public sector, defense and security communications business, delivered 6.3% growth in the first half despite global tariff disruption, though the Q4 U.S. shutdown did move us to a small full year decline. I'm pleased to say, however, that underlying momentum remains strong, and we expect double-digit growth in 2026, particularly weighted to the second half. Consulting, which includes strategy and brand and passions and PR, our Sports & Entertainment, PR activation and creative business, both saw client spend reductions driven by global uncertainty and also reflecting their higher project weighting. Media focused on the performance and app space, particularly, delivered yet another strong year of growth, up 11.5% to GBP 25.2 million, which was an acceleration from 2024's growth, which was just over 8% like-for-like. Finally, advertising, predominantly digital communications was down 8.9% like-for-like, but was close to flat, excluding Australia. Advertising at GBP 68.5 million represents around 1/3 of group revenue compared to the 2/3, which is the higher-margin, non-advertising services that we provide. We also share revenue split by region. That's another window on our GBP 205 million of group like-for-like net revenue. And the key call out on this slide is Australia, which represents 2/3 of the APAC region and alongside a subdued U.K. environment drove the overall group like-for-like decline. But conversely, the U.S., Europe and the Middle East, together just over 30% of the business, were collectively flat despite a challenging global context. Let me give a couple more call-outs. Looking ahead, the U.K. will benefit from the expected step-up in our Issues segment that I've already noted. And then I should also just comment on the Middle Eastern business, which is our business principally based in the UAE, and that is being impacted by current geopolitical tensions, particularly affecting local events. And it's around about, you can see from the slide, 6% of our revenue. On the next slide, I'd like to talk a little bit about our profit trajectory. And this shows a bridge of like-for-like operating profit, and it reduced from GBP 33.7 million in 2024 to GBP 24.9 million in 2025. But there were substantial cost programs, and that was able to mitigate around half of the revenue reduction. The most significant cost restructuring took place in Australia, where the business was rightsized and reshaped in half 2, 2025. We are targeting, Heather has already mentioned this, we are targeting an increase in group operating profit in 2026 and an increase in group net revenue, and that's captured in the market expectations. And that will be driven for -- driven by that growth in revenue, particularly driven by some of our key Specialisms like Issues and Media alongside the annualization of some of those cost programs I've mentioned. So moving on to a little bit more detail on cash. Cash from trading reduced from GBP 35.1 million in 2024 to GBP 22.5 million in 2025, reflecting the lower profit profile and then those transformation and restructuring costs. But encouragingly, operational or trading working capital was an inflow of GBP 4.9 million, and that reflects increased cash management focus alongside senior incentive alignment around cash. The prior year bonus outflow in cash was GBP 9.1 million. You'll see it on the slide. And that was -- that is materially higher than what is forecast to pay out in 2026, which is around about 1/6 of that size, reflecting the prior year performance. And then beyond this in cash, we saw normal flows for leases, tax and interest, an inflow from a noncore disposal. Just to remind you, that was Saatchinvest, share purchases for the EBT, our group share scheme and then those 2 bolt-on acquisitions that I've already mentioned, June '23, a sports agency and then the Women's Sports Group, a rights and sponsorship business. In 2026, we will not have a final dividend outflow with those funds instead expected to boost our announced share buyback program. And that links us through to our capital allocation framework. Organic investment remains key, particularly in those structurally growing high-margin divisions such as Issues and Media, and we will continue to invest behind that growth. We're well underway with our announced GBP 4.5 million share buyback program. It was launched on the 9th of March. And we've already acquired and canceled just shy of 900,000 shares or about 0.7% of issued share capital, and that will drive earnings growth for shareholders. And so in conclusion, whilst 2025 was a challenging year, the focus for 2026 is to return to like-for-like revenue and profit growth in line with market expectations. Q1 trading, which was over a higher prior year base is exactly in line with expectations and provides a platform for building growth momentum in Q2 and beyond. We will remain agile with our largely variable cost base given that ongoing macro uncertainty. And yet also our particular focus, as Heather has already mentioned, will be growth, focusing on the key drivers of intrinsic value such as our Issues and Media divisions. So I'm now going to hand back to Heather to provide the context and introduce our remaining presenters to bring this to life. Thanks very much for listening. We look forward to your questions later.

Thanks very much, Simon. Right. I hate clickers. I have a -- reaction to me. I'm not going to talk through all of this detail you'll be pleased to know because the point of this part of our presentation is to really give insight to what is in our RNS, where we talk about laying the foundations of unlocking the intrinsic value. Crucially, we want to shine a light on the work that we are doing in terms of data insight and cultural power and the work we do across governments globally. We know increasingly much is said about AI and data in the market. What we want to try and do here is to go from that generality to really getting underneath the skin of that and what we are doing here, which means that how we drive data insight and use AI to the benefit of our clients and to our brands. And that's what we're going to focus on next. We've got 2 speakers. I mentioned at the beginning, the real strength and depth of the leadership across Saatchi. I'm going to introduce Karen Boswell, who's one of our most recent hires, who's going to talk about cultural power. And then Marcus Peffers will talk, who was first day 1 here at when Saatchi was first launched. So let me hand over to Karen first, and she is going to talk us through the work we're doing on cultural power.

I'll try not to have an aversion to clickers. There we go. So for decades, the marketing industry has been obsessed with measuring what we make, impressions, reach, share of voice, return on ad spend. We've all been building extraordinarily sophisticated systems that count things that are very easy to count. But we've been quietly ignoring the fact that the force really moving markets is culture. Not as a metaphor, not as a mood board, but as a mechanism. It became really clear to us through conversations with our clients, a lot of those that you saw in the real upfront, Disney, Nike, Pepsi, that culture isn't the context in which they, brands are operating. It's actually become the operating system itself. And they all express the same challenge to us. They can't define culture in a way that makes sense for them, nor can they work out how to measure the value of influencing it. So we have a very hard-working definition of Cultural Power. It's the force that shapes markets, earned through influence, expressed through behavior and proven through impact. In a world increasingly fragmented, culture is moving faster than ever. Media spend alone no longer guarantees the growth that our clients need, and they are under pressure to prove return, not just activity. Cultural Power is our answer to that. It operates upstream of performance media and downstream of brand strategy, connecting the 2 in a way that the industry has yet to do. That's the gap that we are solving for. In very practical terms, it's how brands become more efficient at growth, how we lower the cost to acquire customers for them and how we increase the ability to retain presence in influencing culture. It's also how we operate and how we organize ourselves because as well as culture moving very fast and being fragmented, our industry is also very fragmented. Consultancies will tend to define strategy. Agencies will tend to create campaigns and media companies will tend to optimize spend. No one actually owns the end-to-end influence system. We do. And Cultural Power is, therefore, our framework for how we integrate our 4 capabilities into one system. The signal step, the first step is led by our consulting division. This is where we seek to identify demand earlier ahead of the market so that our clients can invest just before the price premium of buying media rather than in it or behind it. Then we move into shaping what a clear positioning, a clear presence in culture looks like with and for our clients. And this is led by our consulting and PR & Passions team working together. And this means that marketing works harder and converts more efficiently in the moment, creating persistence within culture. Then we move into the shift phase, which is where our PR & Passions team work with our agency team and looking to drive mass behavioral change at scale, something Marcus will touch on a little bit later as well. This is meaning that the attention in culture is translating into action. Most agency groups would stop there. But because our performance media arm is built from conversion rate optimization upwards, that performance layer, it means that we're able to close the loop and optimize continuously, not just for the campaign moment, but driving to the bottom line as well. And that's critical because we're not just selling the outputs, we're building the systems that improve the value over time, that persistence to be in culture as culture moves. And that is fundamentally a different economical model for our industry. I'll bring that to life with a client case. I'm sure many of you have probably seen and heard about GLP-1s. We've been working with the leading manufacturer of the GLP-1 product since 2020. And the key here is that it was a very strong product in a fast-growing category, but the category in 2020 lacked meaning. Brands were competing on clinical data. Differentiation, therefore, was very narrow and the risk was to become commoditized before we'd even put this product into market. In that scenario, therefore, growth becomes very expensive, it becomes less defensible and increasingly reliant on media spend. It's the antithesis of what we're trying to do within Cultural Power. So the opportunity was not to outmarket the competition. It was to define how the category is understood and adopted. By building an emerging category, this company managed to shape meaning and capture that disproportionate value. It's where Cultural Power operates, not at the level of messaging, but at the level of market perception and behavior. So essentially, taking our cultural power model, the first thing we look to do is look at that signal, identify the real driver of demand. And what we saw was that patients weren't buying a treatment, they were buying proof that change was possible. This helped us reframe the demand around the product and look to move from clinical outcome to personal transformation. And this gave us meaning to create category in a new way. That then meant that we could define the category narrative and position it around progress and momentum over medication. This gave us the emotional and rational alignment, which meant that we could expand appeal beyond just the early adopters. And then that gives us a system to scale the narrative. Every touch point from the health care professional through to the consumer reinforced the same meaning, faster adoption, stronger retention, more efficient scaling. Everything from the small pieces of content to the large Super Bowl partnership and campaign that we did. Cultural Power is not about visibility. It's about shaping those conditions under which demand for our clients grows. So in this case, we didn't just increase awareness. We changed how the category was understood and therefore, how it scaled. Growth did not come from outspending the competitors. It came from shaping demand before it scaled. That is more efficient, it's defensible and it's scalable. So for our clients, Cultural Power allowed them to scale faster than the category, maintain their pricing integrity, become relevant as competition increased and stay relevant and expand into new audiences and formats ahead of the competition. That delivered growth quality, not just growth volume. For us, this is where our model creates the disproportionate value because we're operating upstream of the performance media and downstream from that brand strategy, we're able to capture that conversion in the middle of there. More excitingly, for me at least, this is Cultural Power at its best. And because we've managed to organize ourselves around this operating principle, we're now connecting our Specialisms. It means that we've also been able to connect incredibly rich, varied insights and data into a unique open-loop model. We've been interrogating that data over the last year or so, and we've developed a hypothesis that we could model the return of the value for a brand influencing culture in such a way. We took this hypothesis last summer to Oxford Saïd Business School, who through their Future of Marketing Institute, expressed an interest in creating a first-of-its-kind data partnership to prove it with us. It's worth noting that many of our fellow friends, WPP, Omnicom are also partners. However, Oxford saw something proprietary in our thinking that signal before the noise. The exciting news is the first part of this program is now complete and Oxford have validated that return on cultural power is the industry's first framework for measuring the commercial value a brand generates from its ability to shape and participate in culture. It's not brand tracking with some glitter on top. ROCP connects cultural influence. The beliefs a brand can shift, the behaviors it can change, the communities it can galvanize directly to measurable commercial outcomes. In the most precise sense, the missing link between culture and growth. So whilst we've always known that culture moves markets, we can now prove it and price it. The model will be available this summer, backed by a pilot program, which our clients have already signed up to and is underway, and we'll be looking to provide more information on that at that time. So I've talked about our ability to draw on this incredibly rich varied insight and data derived from our unique positioning to deliver cultural power and how this is central to developing our return model. I'm now going to hand over to Marcus, who's going to talk more about our industry-leading expertise in the work that we do across commercial, government and citizen spaces.

Thank you, Karen. As Heather said earlier, we think of the business in relatively straight terms, the private sector and public sector clients use our expertise to change the attitude and change the behavior of the citizens for public good, in line with the strategic and policy object and it's citizen area that I'm going to focus on now and specific within that, our expertise in government, defense and security. And I think it's fair to say that it's an area that we've been leading the industry in now for over 30 years, using the latest in behavior change techniques to tackle complex societal challenges and take public policy to market at a local and at a regional and at a global level. And I think, as I said, I think it's fair to say that over this time and now in this area, there's no other agency has a comparable breadth of experience or depth of expertise. And building on that positioning, 15 years ago, we launched a stand-alone Issue Specialism, World Services, focused on defense and security. And it's a division that we promote discretely to the right partners and to the right clients. But it is one that is now M&C Saatchi's largest global single practice, has over 400 dedicated experts, and it is the leading communications capability of its kind anywhere in the world. Now this means that at any moment in time, we are helping positively impact the lives of millions of citizens around the world. And who do we do this for? Well, we do it for many of the world's largest and most successful public, private and third sector organizations, national governments and their major departments. We've had significantly recently won contracts in the U.K., the U.S. and Australia and expanded our work with the EU, multilaterals like the United Nations and NATO. And in related global and social issue-related areas, we work with many of the world's biggest foundations and NGOs, the Gates Foundation, Rockefeller and Mercy Corps are all 3 big clients in this area. And then also in the private sector for large multinationals like JPMorgan, Meta, L'Oreal, General Motors and so on, where we help them tackle the social forces and the social challenges that are impacting their customers and their communities and ultimately, their bottom line. And it's worth noting that although our work in this area is implemented globally, more than half of our income is generated in the U.S. and this is a key growth market for this part of the business as it has been for the last 10 years. So what do we do for this broad range of clients? Well, we work across all of our specialisms, work across consultancy, communications, including Advertising and Passions & PR and channel media. Sometimes the activity or the task is just focused on one of these areas, but most often, it's across all of our specialist areas working together, connected end-to-end. And critically, for this government and defense and security sectors, it's always with the latest in data and analytics and AI driving every aspect of the thinking and the process. In terms of the challenges and issue sets we deal with, well, it can be very broad. If you take the U.K. government, for example, this is just a snapshot of the departments we currently work with and the policy challenges we work on in partnership with the U.K. government. And in the U.K., we're delighted to have been retained our place on the highly sought after GBP 1 billion plus 4-year government communications roster, which was announced in January this year. Alternatively, it's less about breadth and breadth of issues. It's more about depth, building focused specialisms in sectors of high potential like defense and security, fast-growing, high margin and increasingly resilient. And it's here that, as I said earlier, we spent the last 15 years building up a specialist Issues practice. We already work with the biggest defense and security clients across this area. And it's worth stating, and I think it's important to note that this dedicated practice is not just best-in-class. It is totally unique. There is no other -- no other marketing or strategic communications company has a capability that can compare. And it's why our business in this area has performed so strongly over the last 8 years, and we expect the growth to continue in the years to come, in part because we have such a significant competitive advantage, in other part, because it's a sector that is growing in value and becoming increasingly resilient as the world unfortunately becomes more volatile and threats to individual corporate and national security increase. And it's worth of note this blip on the trajectory here, just here in 2024. It's because of the pause in funding flows caused by the U.S. shutdown, which is unprecedented, as Heather noted earlier. So our government-related budgets got shuffled back a bit, but I'm glad to say normal service resume straight after. So in conclusion, our expertise and our capabilities across government and defense and security, they are central to our business, success central right now and moving forward. And I think it's for 3 reasons. Firstly, because we have a clear right to win in this area. Secondly, because we have deep Specialisms in sectors that are high margin, high growth and increasingly resilient. And thirdly and finally, because it also, and this is really important, it gives us the right to win at the intersection of private sector and public sector where commercial and citizen meet. And being uniquely strong in both these areas, it's mutually reinforcing, and it's a huge differentiator for us. On one hand, government and public sector clients who want to understand cultural trends and consumer patterns and have access to the leading tools and technologies that use in the private sector, and on the other hand, commercial and private sector clients, who want to understand population and lifestyle changes and access to world-leading behavior change expertise so that they can understand and tackle the emerging social challenges that are directly affecting their reputation, their customers and their communities. And this horizontality is why we have such a strong portfolio of major clients in that sweet spot of where commercial meets citizen or public meets private. And it's an intersection that will continue to be a big focus for us as we look to target other sectors where there is a significant public-private crossover like spa and entertainment, travel and tourism and health and well-being. Thank you.

Okay. Thank you very much to both Marcus and Karen. And I hope that's given you all some more insight to actually the amazing work that we are doing here and in particular, the work that we have with government and commercial sectors, but also how we're driving data and insight to drive growth with our clients. I think it also shows some of the 2 extraordinary leaders we have in this business, and I look forward to introduce some of the other leaders in due course to you all.