WPP plc (WPP) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining WPP 2026 Interim Results Call. My name is Desmond, and I'll be coordinating your call today. [Operator Instructions] I'll now hand over to Thomas Singlehurst to begin. Please go ahead.

Thank you, Desmond. Good morning, and welcome to WPP's 2026 Interim Results. I'm Tom Singlehurst, Head of Investor Relations, and I'm joined today by Cindy Rose, CEO; and Joanne Wilson, CFO. Before we get started, please take a moment to review the important cautionary statement on Slide 2. Let me also quickly take you through our agenda. We'll start with an overview of key messages as well as an update on strategic progress from Cindy. Joanne will then review the H1 numbers in more detail. We will then open up the lines for Q&A. And with that, I'll hand over the call to Cindy.

Good morning, everyone. Thank you so much for joining us today. When we reported our 2025 full year results back in February, I laid out in detail our Elevate28 strategy. I made a commitment that we would be transparent about our progress along the way, forthcoming with lead indicators of our momentum and disciplined in how we measure success. Today, I'll share an update on where we are against the plan, and why I'm encouraged by the steady improvements we're delivering across the company. Then I'll hand over to Joanne, who will take you through the financial detail. Before I start, I'd like to pay a personal tribute to Paul Richardson, who recently passed away. Paul served as WPP's Group Finance Director for 22 years until he retired from the company in 2019. He joined WPP in 1993 as Group Treasurer, and over nearly 3 decades, played a central role in helping to build WPP into the global company it is today. I know many of you will have fond memories of working alongside Paul, and will have also known him personally. Our thoughts are with his family at this time. Coming back to where we are today, the headline is that we're on track with where we said we would be, stabilizing the business and delivering on our ambitions with clear evidence of progress across all leading indicators. As part of Elevate28, we aligned on a new company purpose, to be the trusted growth partner for the world's leading brands. And to fulfill this new purpose, we announced 4 strategic objectives: to deliver superior growth for clients; to become a simpler, more integrated company; to unlock the advantage of WPP Open, our agentic marketing platform; and to create firm financial foundations for the future. We also outlined a detailed execution plan that spans 3 distinct phases. The priority in 2026 has been to stabilize the business, make the structural changes needed and strengthen our execution. The next phase is to build on these foundations, returning the company to growth sometime during 2027. And the third phase will be accelerating our growth so we can win our share of a growing market from 2028 and beyond. The building blocks of the new strategy are now firmly in place. We're moving from a holding company model to a single company model with 4 operating units: creative, media, production and enterprise solutions that operate across 4 regions with common incentives aligned to WPP's overall performance, all underpinned by WPP Open, which enables and connects everything we do. We've made encouraging progress. Today, we are a simpler, more integrated company, but our work is by no means complete, and our focus remains firmly on execution and delivering against the commitments that we've made to our clients, employees and investors. The journey ahead won't be linear and there will undoubtedly be ups and downs along the way, but I'm confident that we are on the right path in setting WPP up for sustainable success well into the future. In May 2025, we launched WPP Media, then WPP Production in January this year. WPP Creative in February. And to complete the reorganization on July 1, we officially launched WPP Enterprise Solutions to the market, a unified technology-powered services offer that helps our clients modernize their marketing operations and unlock new sources of growth. Let's have a quick look at WPP Enterprise Solutions. [Presentation]

As AI reshapes our industry, the winners will be those companies that can effectively embed technology directly into their marketing operations, put data and AI to work to gain a deeper understanding of their consumers, reimagine workflows and skill their workforce. We believe WPP Enterprise Solutions is unique and differentiated because it's not a separate company that sells bolt-on services. It's been built from within and remains deeply integrated with our Creative, Media and Production businesses. Enterprise Solutions brings together commerce, customer experience, CRM, content transformation and leverages our deep technology partnerships to help design, build and operate the growth systems that our clients rely on. The business is now live in the market and already partnering with global brands such as IKEA, Ford, L'Oreal and Nestle to deliver marketing modernization and business transformation. In April of this year, we launched WPP's commerce practice. This is a cross-company connected practice that unifies our capabilities across creative commerce, media, enterprise solutions and high velocity production under dedicated global leadership. Commerce is no longer just a channel. It is the ultimate organizing principle for modern marketing, with global commerce ad spend now surpassing total TV advertising. Our commerce practice will enable us to capture this massive market opportunity without adding complexity or overhead. Our talent remains embedded within their agency homes, while seamlessly connecting across the entire group using WPP Open. It's yet another decisive step in removing internal silos and simplifying how we go to market and ensuring we deliver the connected outcome-driven growth that our clients need and want. In June of this year, WPP once again triumphed at the Cannes Lions Festival of Creativity. That achievement matters, not just because of the recognition, but because of what it says about the strength and breadth of our offer, and the enduring importance of human creativity. For our clients, the value is enormous. They can now access the #1 global network in Ogilvy, the #2 network in VML, the #1 global PR agency in Burson, and the most awarded Media Group in WPP Media. Together, that combination is a significant differentiator for our business and a powerful proof point of the world-class talent and capability that WPP offers. So as I've said, we've made encouraging progress in many areas, and I couldn't be prouder or more grateful to my team for the incredible work that they're doing across the board. We're 6 months into a 3-year plan. Phase 1 is about stabilizing our performance, arresting the decline, building momentum and demonstrating that the changes we've made are translating into tangible results. At our full year results in February, I said organic growth was a lagging indicator and that we expect the first half revenues to be down mid- to high single digits. We've delivered in line with this guidance at minus 4.7% like-for-like net sales for H1. And while this shows the continued impact of historical client losses, it is in line with our expectations. And I'm encouraged by the improving trajectory quarter-over-quarter, with Q1 at minus 6.7% like-for-like net sales growth in Q2, improving to minus 2.8%. I also said that while we would execute cost savings initiatives and deliver around GBP 100 million of in-year savings, we would reinvest this into growth initiatives. I'm pleased that we're making these investments while delivering broadly stable margins in the first half. Joanne will take you through the numbers in detail shortly, but these results underline that the actions we're taking are having a positive impact on our main financial metrics. As we outlined earlier this year, it will take some time for the impact of these changes to fully flow through our numbers. So what I want to focus on with you today are the leading indicators that demonstrate our strategy is working, and also look at the areas where we need to continue evolving to ensure we deliver on our plan. At our Strategy Day, I shared the leading indicators that my team and I hold ourselves accountable for: new business wins, client retention, strategic technology partnerships, cost savings and portfolio discipline. So let me briefly update you on each. In Q4 2025, WPP was #1 in JPMorgan's net new business rankings for the first time since 2020. And I'm pleased to say that the momentum has continued, with WPP topping the rankings as #1 for net new business for H1 2026 and for the 9 months to Q2 2026. That's thanks to some landmark wins, including the Estee Lauder Companies, Jaguar and Land Rover, Henkel, Just Eat, bet365, Fuze Tea, Airbnb, S.C. Johnson, Wendy's, Heineken, Honda and more. But beyond these headlines, what matters to me is how we're winning. These are integrated multidisciplinary mandates awarded to WPP as one team. This is the direct result of the strategic changes we've made to our client proposition. Just a few examples to bring this to life. Wendy's appointed WPP Media as their U.S. media partner, building on a 14-year creative relationship with VML. That's a client choosing to consolidate with us because of the benefits of integration. Natura and Avon consolidated their marketing activities in Latin America for the first time, awarding their business to a combined team of VML, DAVID, Fbizz and WPP Media, creative production media and enterprise solutions, all together, one brief one team. And the Coca-Cola Company awarded us the Diet Coke business across EMEA for a brief span in creative, social and influencer marketing, expanding on our existing media relationship. Again, these wins demonstrate that when we show up as one WPP, media-led data and technology-enabled structurally integrated with creativity at our heart, we are the growth partner of choice for the world's leading brands. But market share growth doesn't come from winning new business alone, right? That's only part of the story. What's also critical is how we retain and grow the partnerships we have with our valued portfolio of existing clients. I'm pleased that we've improved on our client retention rates in the first half of this year, which included Huawei in China, Tesco in the U.K., L'Oreal in Australia, New Zealand, Skechers across multiple markets globally, Reckitt in India, Toyota in Europe and many more. I strongly believe that by bringing more operational discipline to our client engagement model, we can drive even further improvements in this area. This will be a key focus for us in the second half of this year and into next year as we stand up a holistic client success program. This program will be organized around 3 areas: systems, that give us a single view of our client relationships and a data-driven approach to performance tracking; process, that formalizes our approach to governance and client management, including success metrics and joint business planning; and people, to build the critical capabilities, leadership skills and mindset needed to meet and exceed client expectations. This framework will create a more systematic approach to client life cycle management, bringing greater operational discipline and excellence to our service delivery model. I've personally put this kind of program in place before, and I'm confident it will help us improve client retention and expand our most valued partnerships. And we'll do this by freeing up our global client leaders and their teams to spend less of their time on internal process and more of their time doing high-impact work for our clients. Let me give you 3 examples of what I think exceptional client engagement looks like. And I'll start with the KitKat Heist campaign created by VML and Burson in close partnership with the Nestle team. Fast risk assessment and decision-making turned a potential disaster of a lost shipment of KitKats into a global award-winning campaign, dominating the critical Easter sales window, capturing 44% of category conversations on Meta, nearly 3x its nearest competitor, and delivering a 600% spike in search interest, generating over 70 billion impressions in social media, equivalent to 224 million of earned media in only 10 days. This campaign was a testament to the talented teams from both Nestle and WPP, who rewrote the traditional crisis management playbook in real time, but also a great example of how our simplified, more agile WPP is working in deep partnership with our clients as they themselves transform for growth. Just 2 weeks ago, Philipp Navratil in the Nestle earnings call referenced this work specifically as a powerful illustration of the changes already underway in their own organization, including their evolving approach to marketing and their shift to a performance culture. Secondly, during the recent Unilever earnings call, Fernando Fernandez noted the work that we did with Dove in partnership with Reddit during the launch of their new intensive repair hair mask. Let's take a look at that campaign. [Presentation]

What's striking about this campaign is not only its success. I mean, it created 1 billion in earned impressions, more than doubled sales and helped Dove become the #1 hair mask product in the U.S. during the campaign. But in addition to this, the campaign successfully addressed the challenge of making products discoverable by conversational AI, appearing in 56% of all hair mask ChatGPT responses and the top recommendation across major LLMs while remaining true to Dove's real beauty philosophy. The third example and final example is The Coca-Cola Company and the work that we delivered during an incredible FIFA World Cup 2026 campaign. Together, we reached 180 markets, with the Trophy Tour alone making 70 stops across 30 markets and engaging around 700,000 fans. Digital and social activations generated 60 billion impressions with 9 billion views, helping trademark Coca-Cola become the #1 brand by share of voice during the tournament. And importantly, these efforts contributed to quarterly growth of 5% for Coca-Cola and 8% for Powerade. It's an absolute honor to partner with such an iconic brand and company. In February, I also updated you on our progress on our technology strategy, WPP Open and our growing partner ecosystem. As the name suggests, WPP Open is open by design. It works with client and partner solutions and doesn't lock clients into a single closed ecosystem. Having spent a decade at the frontier of enterprise transformation, I know how important it is to build a robust partner ecosystem. In a fast-changing world, no single company can do it alone. Our partners keep us and our clients at the cutting edge of innovation. They help us scale our impact faster and open new routes to market. That's why in the first half of 2026, we continued to deepen our strategic technology partnerships with Google, Adobe, Meta, AWS and Microsoft, giving clients a simpler, more powerful alternative to managing multiple point solutions by bringing the best of the partner ecosystem together in one integrated platform, WPP Open. With Google, we expanded our partnership by launching a new frontier research initiative with Google DeepMind that embeds advanced AI research directly into WPP Open. Together, we've built a predictive cultural intelligence engine that forecasts emerging trends by giving clients the ability to both anticipate and respond to cultural shifts. These solutions are live in WPP Open today across multiple clients, including Duracell, Airbnb and Lexus, redefining the future of the new marketing flywheel and changing how our teams generate work from data to insights, to creative, to production, to media in ways that just weren't possible before. Our expanded partnership with Adobe brings together their industry-leading AI capabilities, content platforms and data orchestration with WPP's strategic insights and creative expertise through a new joint client transformation practice. Adobe Firefly Foundry is now integrated into WPP Open, and Adobe has invested in HEX, our frontier creative technology studio, to deploy AI talent directly with clients. This is a clear example of how we're expanding our go-to-market channel for enterprise solutions and tailoring new AI solutions to meet the needs of our clients. With Meta, WPP became the first advertising partner to pilot their newest creative intelligent solution, also integrated directly into WPP Open, giving our teams the ability to diagnose, generate and scale high-performing creative with AI. Unilever is the inaugural client with broader rollout planned in the coming months. That unique access puts our clients at the forefront of culture and insight, turning real data and media performance directly into stronger creative outcomes. With AWS, our Enterprise Solutions business signed a multiyear strategic collaboration agreement focused on operationalizing agentic AI for enterprise brands and helping clients move from AI experimentation to agentic marketing solutions at scale. And with Microsoft, we're working with [ MAI ], Microsoft's in-house AI research team, to secure early access to their generative media models for integration into WPP Open. We're already an early enterprise partner on MAI Image 2, Microsoft's newest image generation model, bringing the best of Microsoft technology into WPP Open so that our clients gain new productivity and creative capabilities. Together, these partnerships give our clients early access to cutting-edge capabilities, co-innovation investment, direct lives into partner product teams, open important go-to-market channels and new routes to market. All of this converges in one place, WPP Open, strengthening our competitive advantage and most importantly, the value we deliver for clients, and there's much more to come. So moving on to cost savings. As part of the broader Elevate28 program, we committed to GBP 500 million of gross annualized cost savings across the next 3 years, of which GBP 100 million will be delivered in 2026. I'm pleased with our progress in the first half of the year, and I remain confident in our ability to hit these targets. That said, I do want to remind you that my priority, my North Star, is to get WPP back to positive organic growth. And our plan is to reinvest the targeted savings in FY 2026 into key growth areas, including Media and Enterprise Solutions. Finally, we said in February that our portfolio review was complete and we were moving to action. In the first half, we completed more than 15 noncore asset disposals that will generate over GBP 200 million in sales proceeds in 2026. One great example is XTEL, a leading provider of revenue management and trade promotion software that we owned through Kantar Holding. We've agreed a sale of this asset that will generate value for us of more than 100 million. This is just one example, but it's representative of how we're approaching this process more broadly. We've been very vigorous in exploring whether we're the best owners of our assets and also very focused on withdrawing capital from passive or noncore positions. We continue to make progress on asset disposals, and we'll provide updates as appropriate. Proceeds will be used to improve financial flexibility, strengthen our balance sheet and create further capacity to invest in growth. So those are the leading indicators, and they confirm that we are executing against the plan that we set out. But I want to take a couple of minutes just to connect the what to the why. Because the momentum that we're seeing isn't just about better execution, it's about being positioned in the right markets with the right proposition at the right time. September 1 will be my 1 year anniversary in the role, and this is a great opportunity for me to just step back and briefly share some personal reflections on how I see our industry and our company, because the conviction I have in our strategy has only deepened over the last few months. Firstly, we operate in an attractive market. When I set out Elevate28 last February, I said that I believe we're living in the golden age of marketing. I believe more strongly in that today than I did even a few months ago. We're forecasting that global ad spend will grow by 8.9% in 2026. That's up from our previous forecast of 7.1%. And as a share of GDP, advertising revenue is now at its highest level in almost 30 years, a clear sign of the important role that media plays, not just in shaping how consumers discover, evaluate and engage with brands, but in helping businesses generate demand, differentiate and drive long-term value. Media is everywhere. And increasingly, its influence is extending into adjacent and fast-growing markets from social influence to commerce, to high-velocity production and enterprise solutions. Secondly, we operate in an increasingly complex market. It's a really tough time to be a Chief Marketing Officer. The fragmentation and constant change our clients face is pretty relentless across media channels, platforms data environments, the AI and tech landscape and commerce touch points. And all that complexity is driving brands to consolidate around fewer more integrated partners who can simplify things for them and help them grow. Those dynamics play directly into the strengths of the new WPP. Thirdly, I think AI is fundamentally changing how we deliver growth for our clients. Look, for the past 20 years, the marketing industry has built its advantage around identity-based consumer targeting. But marketing in the era of AI has changed and the industry has been slow to adapt. Identity remains a useful starting point. But identity alone cannot tell us how someone's preferences, beliefs or behavior is changing in real time or what they might do next. Marketing has entered the era of intelligence. And that has significant implications for brands. To engage consumers today in a meaningful way, brands need to access a diverse range of live data signals on what people are watching, what are they buying, who are they following, what are they listening to, how are their interest changing in real time? Through WPP Open, clients can connect their own data with signals across WPP and our more than 350 data partners, giving them access to 5 billion consumers in more than 100 markets, drawing on trillions of real-time signals. We use AI to turn those signals into marketing intelligence. That's unique to every brand, enabling them to anticipate consumer behavior, identify untapped growth audiences and deliver higher ROI and engagement than traditional identity-based targeting. And here's the important part, we deliver these results without ever moving underlying client data out of the clients' environment. Traditional identity-based systems require brands to move their data into a centralized third-party system. In doing so, brands risk giving up control of one of their most important and unique competitive advantages, their data and data insights. Our approach to WPP is fundamentally different. InfoSum, which we acquired in 2025, is what makes this possible. InfoSum is now embedded into WPP Open, enabling brands and partners to collaborate, connect real-time signals and generate marketing intelligence without sharing, moving or co-mingling their underlying customer data. This is more than just a technology choice. It reflects a fundamentally different belief about where competitive advantage should sit, and we believe it should sit with our clients. And that brings me to my fourth and final reflection, which is the importance of trust, not just consumer trust and brands, which according to our research, is at an all-time low, but brand's trust in agencies as well. At Cannes Lions last month, I shared our WPP trust principles publicly for the first time. These are 5 foundational commitments to our clients that define how we operate in the era of AI and give us a real point of differentiation in the market. Here are the 5 trust principles which we unpack in detail on our website at wpp.com, but our core commitment and belief is that our clients own and control their data and intelligence, full stop. It is one of the most valuable and distinctive competitive advantage any brand has, and it should remain exclusively theirs. With WPP, underlying client data never moves, it stays exactly where it is in the client's environment and under the clients' control. We believe this is a winning strategy. It now features in every client pitch, and it's one of the key reasons why we have the momentum we do. In an environment where AI is rapidly transforming our industry and trust is scarce, I believe our commitment to client data ownership and control will become increasingly important. Everything we do is in service of one objective: to be the trusted growth partner to the world's leading brands. Our momentum over the last 9 months gives me confidence that we are firmly on the right path. The organizational structure and operating model are in place. Our integrated client proposition is working, the cultural shift towards accountability, client obsession and a hunger to win together as one team is real. We're delivering the stabilization phase of our plan, and the leading indicators demonstrate the progress we're making. WPP will be a fundamentally stronger, simpler and more competitive company. Growth is our North Star, and we are well on our way. So looking ahead at what you can expect from us in the coming months, well, operationally, you will see us laser-focused on delivering for our clients, continuing to embed the changes we've made in service of driving their growth. Strategically, you'll see us continuing to invest to make our return to growth sustainable as we move to the build phase of our plan in 2027. And finally, you'll see the improving trajectory in organic top line growth, margin expansion and improved financial leverage that we anticipate in 2027. While we'll give you a comprehensive update on progress at the full year results early in 2027, I'm really eager for you to see the execution of this strategy along the way in real time. We've already hosted deep dive sessions for you into WPP Media and Creative and we'll host further webinars, specifically exploring next-gen production and enterprise solutions during the second half of 2026. So with that, I'm delighted to hand over to Joanne, and then we'll both come back to answer your questions. Joanne, over to you.

Thank you, Cindy, and good morning, everyone. So let me start by taking you through the main headlines from our first half results, which you can see on Slide 20. Like-for-like revenue less pass-through costs fell 2.8% in the quarter, which leaves the first half organic decline of 4.7%. This is consistent with our guidance of a decline in the mid- to high single digits in the first half and reflects an improved sequential performance, in particular at WPP Media. As well as the benefit of easing comparables. You will recall last year, we identified some one-off factors in Q2 that impacted performance. Adjusting for this, the underlying Q2 like-for-like decline was 3.8%, an improvement quarter-on-quarter. Turning to headline operating profit. This came in at GBP 398 million, which is consistent with the margin of 8.4% and up 20 basis points year-on-year, benefiting from cost saving actions and lower headline severance costs. Our headline diluted EPS is 15.1p, down on the 20p reported last year, mainly due to the normalization of our headline effective tax rate year-on-year and reflecting lower year-on-year profit. Turning to cash flow. Adjusted operating cash flow preworking capital came in at GBP 309 million, which includes GBP 83 million of non-headline cash restructuring costs. The H1 performance brings total adjusted free cash flow, including working capital moves over the last 12 months, to GBP 730 million, which alongside a one-off benefit from IFRS 9 amendments, resulted in a reduction in adjusted net debt of GBP 326 million year-on-year to GBP 2.9 billion. Our average adjusted net debt meanwhile, is down GBP 100 million year-to-date and GBP 79 million year-on-year. Moving on to Slide 21 and performance across our business. As a reminder, we now only report on the basis of one segment, Global Integrated Agencies, which is consistent with our strategic plan for WPP to operate as a single unified business. Global Integrated Agencies saw a like-for-like decline of 2.8% in the second quarter, a sequential improvement from a 6.7% decline in the first quarter. FX contributed to a 0.6% tailwind, with a marginal M&A headwind of 0.1%, leaving a reported decline of 2.3% for the quarter. If we look at the trends by business, we saw a sequential improvement in our largest business units in the second quarter. The most significant move is within WPP Media, which declined 2.8% in Q2 versus a decline of 8.3% in the first quarter. If you look at the drivers of this, easing comps were definitely a factor. And adjusting for the one-off factors I mentioned, underlying WPP Media performance was a decline of around 5%, an improvement quarter-on-quarter. As anticipated, the impact of net new business losses was less significant in Q2 than in Q1, and we saw a lower drag from existing clients. Turning to WPP Creative, although we saw a top line decline of 4.9%, we delivered a sequential quarter-on-quarter improvement, reflecting the growing positive impact of new business as well as, again, the impact of an improving trend with existing clients. The various disciplines captured within WPP Creative brand and design continue to see growth in the low to mid-single digits, while PR is now declining in the very low single digits, with an improving sequential trend and growth in their key region, North America. As discussed in February, we will give more precise detail on net sales performance for Enterprise Solutions from the 1st of January 2027. And finally, WPP Production continues to see positive growth with an improving quarterly trajectory, supported by new business wins. Turning now to performance by region. North America declined by 4.3% in the second quarter, following a decline of 7.8% in Q1, supported by a mild improvement in the impact from net client losses and an improving trend in client spend from existing clients, which is encouraging. In EMEA, too, we saw an improving trend with the first half down 4.3%, and the second quarter down 3%, with particularly strong trends in Southern Europe. The latter benefited from the impact of one-offs we mentioned last year. We note a mild improvement in underlying performance quarter-on-quarter, excluding these and despite the impact of ongoing uncertainty in the Middle East, which was down around 10% in the first half. As part of our new regional disclosure, we are now giving separate disclosure on Latin America and Asia Pacific. In both cases, we saw an improvement in underlying trends. In Latin America, like-for-like in the half declined 1.2%, but was up 0.9% in the second quarter, driven by strong growth in Argentina and Uruguay, albeit with a former tracking inflation. In Asia Pacific, like-for-like was down 3.8% in the first half, but grew 0.3% in the second quarter. Within this, I'm pleased to report a return to growth in China, up 2.6% in the first half and up double digits in the quarter, which reflects some timing benefits. But nevertheless, we are seeing improvement trends in new business and a stabilization of spend across local clients. We are encouraged by the performance in China and expect the business to continue to stabilize in the second half, albeit not at the level of like-for-like in Q2. By contrast, India saw a moderating trend into the second quarter, largely driven by the timing of events. We expect a resumption of growth in the second half. And turning finally to trends by client sector. We continue to see negative trends in CPG, which was down 6% in the second quarter, largely due to the impact of assignment losses, but seeing a sequential improvement quarter-on-quarter helped by easing comparisons. Performance across technology clients is largely unchanged from the first quarter, with the second quarter down 8.9% after a Q1 decline of 9.6%, again, impacted by the effect of assignment losses. As for our commentary at the Q1 results, we continue to see a high degree of polarization across these categories. By contrast, we've seen a material sequential improvement within both health care and auto, which have both returned to growth during the second quarter. While we have seen an improvement in the longer tail of local clients, we are also pleased to note the improvement in the performance of our top 25 clients. This group still saw a decline of 6.3% in the first half, but with the second quarter declining at 3.2%. As a reminder, this includes the impact of assignment losses and excluding this impact, our top 25 clients returned to growth in the quarter. On Slide 22, we show the evolution of our headline operating profit, and Slide 23 bridges our headline operating margin from 8.2% in the first half of 2025 to 8.4% in 2026, a 0.2 percentage point uplift on both a reported and like-for-like basis. If I unpack the moving parts through the first half, starting with the impact of operational gearing and margin during the period, while our net sales is down GBP 281 million, our overall staff cost, excluding headline severance and incentives, is down GBP 245 million, reflecting the benefit of cost actions taken in the second half of 2025 and early in 2026. Adding in savings across other operating costs such as property and personal costs, this added around 90 basis points to margin. Lower headline severance and other associated costs added another percentage point. And completing the bridge to the full move and headline operating profit margin in the first half, investment in our growth drivers, including incentives, went up by 170 basis points, leaving H1 headline operating margin at 8.4%. I want to say at this stage, though, that the movements in the first half are not necessarily reflective of expected margin performance for the full year. Starting with severance, the positive move in the chart is representative of a GBP 51 million reduction in headline severance and other associated costs year-on-year and will not have a significant impact in the second half. On cost savings, the Elevate28 savings will be skewed to the second half, reaching a run rate of GBP 250 million by year-end and achieving GBP 100 million of savings in year. We note though that we start to anniversary the action taken last year at WPP Media in the second half. So these savings are against a tougher comparable. Turning to incentives and investment in growth areas, we continue to expect a significant uplift in the second half of the year. Reflecting this, while we are pleased with the first half margin performance, as expected and in line with our planning, we nevertheless expect second half margins to be down by as much as 200 basis points year-on-year as continued investment in growth drivers and the rebuild of incentives ramps up. Slide 24 shows our headline P&L. Overall, reported revenue less pass-through costs was GBP 4.7 billion, a decrease of 5.6% period-on-period. Moving down the P&L and a reminder that income from associates excludes any contribution from Kantar in accordance with IAS 28 due to [ no ] carrying value on our balance sheet. Net finance costs of GBP 135 million was up slightly year-on-year, reflecting the additional carry cost of debt ahead of maturities later this year and early next. Our effective tax rate at 33.5% is up year-on-year, but note that the rate in 2025 was positively impacted by the benefit of credits from the successful resolution of a tax matter. We continue to expect the full year effective tax rate to be in the range of 33% to 34%. Noncontrolling interest of GBP 18 million were down compared to the prior period, impacted by M&A and lower profit. And as a result of those factors, the headline diluted EPS of 15.1p is down 24.5%. Turning to the dividend. We indicated in February that we anticipated a full year dividend of 15p, and consistent with this, the Board has declared an interim dividend of 7.5p, which is flat year-on-year. Slide 25 looks at our adjusted operating cash flow and bridges the year-on-year movement in adjusted net debt to June 2026. Our 12-month adjusted operating cash flow before working capital to June 2026 was GBP 1.1 billion. In addition to this, we saw an incremental benefit from working capital, which includes GBP 169 million one-off impact from the IFRS 9 amendments. Factoring in GBP 66 million from the net impact of dividends from associates and to minorities and including M&A earn-outs as well as GBP 527 million of net interest and tax, adjusted free cash flow for the last 12 months stands at GBP 738 million. Net M&A and disposals was a GBP 43 million outflow, consisting of direct disposal proceeds of GBP 80 million. But against that, we spent GBP 123 million as we continue to invest in our commerce capabilities. To round off the picture, cash dividends paid in the 12-month period were down significantly on the previous year, given the decision to reduce the dividend in July 2025. Adding in the impact of buybacks and other items which amounted to an outflow of GBP 369 million, overall adjusted net debt was down to GBP 326 million year-on-year. Looking specifically at the first half, adjusted operating cash pre-working capital was GBP 309 million, while free cash flow was a GBP 725 million outflow, consistent with the seasonal buildup in working capital typically seen in the first half. I'm moving now to Slide 26, which shows high net debt has trended since June 2025. As already mentioned, adjusted net debt at the end of June stood at GBP 2.9 billion, down year-on-year but up from year-end, reflecting our typical cash cycle. This also reflects the benefit from the IFRS 9 amendments. Average adjusted net debt better captures the normal pattern of working capital moves across the year, and this is slightly down through the first half and down year-on-year at GBP 3.3 billion. Our average adjusted net debt to headline EBITDA ratio at 30th of June is broadly unchanged since December 2025 despite the downward pressure on headline EBITDA. I want to reemphasize that creating firm financial foundation is a core tenet of the Elevate28 plan. And at the heart of this is a commitment to maintaining an investment-grade balance sheet. As discussed in February, we anticipate our leverage metrics to remain elevated in 2026 before starting to come down in 2027 and beyond. In this context, our balance sheet remains robust. The weighted average maturity of our GBP 5.1 billion of bond debt is 5.7 years, and this has an average coupon rate of 3.7%. Meanwhile, our total available liquidity across the group stood at GBP 4.1 billion at the 30th of June 2026, including a $2.5 billion committed RCF, which matures in February 2031 and remains undrawn. Neither our bond debt nor our RCF of any financial covenants and our credit remains investment grade. And finally, turning to Slide 27, which shows our guidance for the full year. And starting with the outlook for like-for-like revenue less pass-through costs. In February, we indicated that at that point, we anticipated the impact of gross client losses to be in the range of 500 to 600 basis points, while we expected the impact of gross wins to be more positive than last year, with the phasing of wins and losses consistent with an improving trajectory through the year. Based on our new business performance in the second quarter, while we would estimate the impact of incremental losses to be at the top end of the 500 to 600 basis point range, the impact of wins means that as we progress through the second half, we expect the year-on-year drag from net new business to continue to lessen. And as such, we remain confident in an improving trajectory. A key unknown is the trend with existing clients. And while we are encouraged by the Q2 performance, we note the ongoing uncertainty in the Middle East as well as the polarization of span patterns, both between and within sectors. Reflecting this, we take a balanced view of the outlook and having seen H1 like-for-like decline of 4.7%, we expect like-for-like revenue less pass-through costs to decline low to mid-single digits in the second half. We continue to expect a return to growth during 2027. Turning to headline operating margin. While we are encouraged by the H1 margin performance, as we discussed, the first half was helped by the lower headline severance and cost savings. We anticipate investment in our growth drivers as well as the rebuild of incentives to step up significantly in the second half. Reflecting this, we still expect headline operating margin to be in the range of 12% to 13%, consistent with the second half margin decreasing by as much as 200 basis points. As per our original Elevate28 commentary, we continue to anticipate 2026 to be the low point in terms of profitability and expect margins to rebuild from 2027. Looking beyond the net sales and margin guidance, our expectation for cash flow is unchanged, with adjusted operating cash flow preworking capital in the range of GBP 800 million to GBP 900 million. As a reminder, this includes the anticipated restructuring costs associated with the Elevate28 program and historical restructuring programs. Excluding these, we would anticipate adjusted operating cash flow before working capital of GBP 1 billion to GBP 1.1 billion. Looking further down the cash flow, as you know, we don't guide on working capital given the scope for this to show volatility around year-end. However, given progress with asset disposals to date, we expect the overall impact of disposal-related activity, some of which will come via direct disposal proceeds and some via associate dividends to contribute at least GBP 200 million to our cash flow. We continue to make progress with our asset disposal program, under working on a number of future potential asset disposals, and we'll provide updates as appropriate. Finally, we continue to expect the improvement in average adjusted net debt to be sustained across the balance of the year. So that wraps up the formal part of our presentation, and both Cindy and I will now be delighted to take your questions.

[Operator Instructions] But in the meanwhile, operator, Desmond, can you open the lines for questions, please?

[Operator Instructions] Your first question comes from the line of Ciaran Donnelly from Citi.

It's Ciaran Donnelly from Citi. Two for me. One just on quantifying the net new business contribution for 2027. Could you give us that number in basis points? If you don't want to give us the exact number, just talk about how that contribution has evolved since the Q1 update, given the moving parts in terms of client losses and client wins. And then two, just in terms of the pipeline of activity, heading into H2, there's clearly a lot of unknowns. But just could you give us a sense of the balance of pitches versus defense and just in terms of activity overall?

Ciaran, thanks for the questions. Let me take them. I think you mean that new business in 2026, right, not 2027. But let me take you through the numbers on that one. So in terms of net new business, it's really our growth wins less our gross losses. So let me unpack that for you. And before I do, just say that very encouraged by the new business momentum that we saw continue in Q2. Our gross losses for the full year are at the top end of the range that we shared at the start of the year, so around 600 basis points. And we'll see those growth losses fairly steadily through the year, but with a slight easing in the second half of the year. On the growth wins, we said at the start of the year that they were more than fiscal year 2025. And with the business performance in the Q2, we're not comfortably ahead of growth wins in 2025 for this year, which is very encouraging. Now I do expect net new business to be a drag for the full year, and I expect it to be a drag in every quarter of this year. However, with those new business wins, I do expect that drag to ease as we go through each quarter. And indeed, we saw an easing of that from Q1 into Q2. So hopefully, that gives you some color on what we're seeing. And obviously, a big area of focus for us. In terms of the pipeline, the pipeline is, I would describe it as very healthy. Last year, we talked about the lower volume of new business than we typically see. We did expect to see somewhat of a catch-up in 2026, and we're seeing that. So that the pipeline is higher than last year. And there are some defensive and offensive opportunities within that. What I would say is it's much [indiscernible] than what we've seen in the past. So as many of the pictures that we're in, there are some opportunity for winning more revenue on net sales, and there's some revenue net sales that we are defending in those pictures. So very balanced between defensive and offensive. And as you heard from Cindy, very, very focused on continuing that new business momentum, but also focused on our client retention as well.

Okay. I was wondering just in terms of 2027, where we have a -- whether we have a picture now. Obviously, I get that things can change between now and 2027, but just based on what you can see today?

Look, I think it's just a little bit too early to start talking about net new business impacts in 2027. I talked about the pipeline looking to continue to hold on to the momentum that we've seen in the last 3 quarters and on retention to minimize the losses. Yes, I think it's just a little bit too early, Ciaran, to comment in '27.

Next question will come from the line of [ Adam Berlin ] from Goldman Sachs.

A couple of questions as well. You talked a little bit about improving momentum in terms of existing clients having fewer cuts in their spending in Q2 versus Q1. Could you just give us a little bit more color on sectors you saw that in? And what you think was driving that additional investment in marketing than we've seen in previous quarters because that seems to be a quite an important change in the trend that we've seen previously. Secondly, you talked about China, which had this very dramatic improvement in growth in Q2 versus Q1 and you mentioned some timing effects. Can you just give us a little bit more detail about what's happening in China? That would be very helpful. And then thirdly, I've noticed that WPP Media is now like 46%, 47% of your revenue, where it used to be 40%, 41% as you restructured the business. What has gone into WPP Media that wasn't there before?

Okay. Let me take all of this, Adam. Just in terms of the improving momentum in existing clients, you characterized it correctly. We've had a challenging time. Last year, in particular, we saw a significant [ cost ] to spend around about this time. And it's been very encouraging that, that is now stabilizing. And we're seeing a lower drag from those. We talked about the performance of the top 25 clients, so a significant improvement where they were down 9.4% in the first quarter and down 3.4% in the second quarter, obviously, there was some comp impact. But specifically to your question on sectors, in Q2 we saw actually growth in the auto and health care sectors. So those sector is doing very well for us and across CPG and tech, we saw those sectors really impacted by the client losses that we've had across CPG and tech. And in fact as well a little bit of reduced budgets more focused on our hardware tech clients. But encouraged by existing clients that stabilization and continue to focus on that. In terms of China, China has been a challenging market for us for some time where we've seen double-digit declines. We did talk in the Q1 that we expected to see an improving trajectory. And indeed, we did in the Q2, which was up double digits. There are some timing factors within that, and I wouldn't expect that level of like-for-like to continue in the second half, but I would expect China performance to continue to stabilize. And just a little bit more color on that. We have seen important retentions, Huawei and Uber in that market, but also wins we talked about on [ or ] China. And really, we're seeing a good stabilization in that market, particularly in our Media business. And even in Creative, we were down single digits, albeit high single digits, which is an improvement from the trajectory that we have been on. We launched Open in China in May, and so a lot of activity in that market, and it remains an important market for us and our clients and a little bit more balance between global and local clients. In terms of Media, yes, that the share of net sales from Media has gone up from 41% to 46%. So what -- some of the agencies that used to sit within spec agencies, we have moved under Media as part of our new segmental reporting. The most significant agencies are CMI and TMP, which are much more appropriately set under our Media business. So that's really driven that change.

The next question comes from the line of Adrien de Saint Hilaire from Bank of America.

Congratulations on the progress of your turnaround. Cindy, I think in an interview this morning, you mentioned that you expect some deflationary impact on pricing from AI. Could you quantify this for us? And then maybe for Joanne, just conceptually high level, like why would the investments and the restructuring costs around Elevate28 would be second half loaded? I think you spent something like GBP 90 million out of the GBP 250 million restructuring costs. For example, you've talked about the margins going down quite significantly in the second half. I'm just wondering why on those costs perhaps H1 loaded? Why would [ AB ] H2 loaded?

Yes. Should I take the first question? Thanks, Adrien. I think it would be hazardous for me to try to quantify the AI, the deflationary impact of AI. What I said was that I think AI obviously presents both risks and opportunities. And like every technology platform shift in history, I think we are going to see some short-term deflationary impact on pricing as AI tooling drives productivity gains and reduces our cost to serve, our clients are going to expect us to cap those gains on to them. But as we help our clients optimize their marketing investments overall, we can also help them reinvest those savings into innovation and transformation. And that represents an expansive opportunity to grow our footprint and to capture more addressable client spend through service integration and cross-sell. And I think with our new structure and operating model, we're very well positioned to capture that. So on balance, what I said was my view is unequivocally, that AI represents a growth opportunity for us to really innovate our proposition and reimagine growth for our clients. Joanne, do you want to take the second?

Yes. And thanks for the question, Adrien. I'm going to answer it a little bit more broadly, but I will cover investments in restructuring costs. So in terms of the H1, H2 margin, just a reminder that we generated 1/3 of our profit in H1 and 2/3 in the second half of the year. So it's much more skewed to the second half. In the first half of the year, as I shared in my prepared remarks, we had some benefits from the structural cost actions that we took in Media in the H2 last year. So obviously, you get the benefit of those in H1, but those will carry through in H2. And also related to that, we had severance costs last year, which we took through headline profit, and that drove a 1 percentage point benefit in margin in the first half this year. In terms of -- as we go into the second half, we obviously wanted those [ tier ] wins, but we will see the Elevate28 cost in near the 100 million that I referred to in premiums, we are on track to deliver those. And those savings will be largely skewed to the second half of the year. Like in the other mergers, which we have very successfully executed, we've taken our time in the first half to make sure that we have the right operating model design in place, market leads regionally are all appointed, and we are taking those actions mile, and we'll start to see really those restructuring costs ramp up related to those actions and also the savings coming through in the second half. In terms investment. So really, I think of investments in 2 buckets. First of all is incentives. We did start to rebuild our incentives in the first half. But again, they're very much skewed to the second half, and expect those to continue to rebuild in the second half. And in other investments, Cindy and I talked about our key priorities to get back to growth, encouraged by the improving trajectory that we've seen, and we will continue to invest in the business, particularly in the areas of Commerce, Enterprise Solutions, Media and Data and to ensure that we are going to be able to drive that sustained growth. And the guidance for the second half and holding full year margin at 12% to 13% really gives us that flexibility to make sure that we are continuing that investment in the second half. So hopefully, that helps.

It does. And if I can just sneak in one more, perhaps for both of you. I think, Joanne, you talked about the fact that net new business would be less of a drag into the second half versus H1. You talked about the fact that top 25 had returned to growth Q2 versus Q1. I think the comparison base is a bit easier. So just high level, what are we missing to get your low to mid-single-digit decline that perhaps sounds on the conservative side maybe?

Look, I think on that, Adrien, it's important to note that we talked about the one-offs, which we shared this time last year. And if you strip those out, the Q2 like-for-like was a decline of 3.8%. So that's the starting point as we go into the second half. We have an easier comp in Q2 around 3%. The comp in Q3 is similar. So we don't have that comp tailwind. There'll be -- in Q4, we got 1% easier comp. And then as you noted, the net new business will ease. And really, that leaves our clients' existing spend. The macro environment, geopolitical environment remains very uncertain. We're still continuing to see a high degree of polarization within our clients and across sectors in terms of that spend. And so we've reflected that in our guidance at either end of the range, and we wanted to give a balanced guidance, which really does reflect all of those drivers and considerations.

Our next question comes from the line of Jérôme Bodin from ODDO BHF.

It's Jérôme Bodin from ODDO BHF. I have a few questions. So the first one would be on the disposal, so the GBP 200 million at least for 2026. So a few questions. Is it the cash impact or just the announcement? Is it net of tax? And should we expect more in 2027? And just to understand if the review is now fully finished? And maybe just to conclude on that, is there an asset that you have finally decided to keep that was under review? That's my first question. The second one is just to come back on what you said on incentive. So the charge increased quite a lot in H1. So I understand that H2 will still be up. But just -- I know it's difficult because it's linked to budget win, but what should we expect roughly in terms of incentive for this year? Should it be flat versus 2025, up or maybe between [ 24 and 25 ]? That's my second question. And lastly, on just a more general question to get an update on the Enterprise Solution agenda. My understanding is that some capabilities are still spread across the other agencies. So my question is how much of the business has now moved under one leadership and one commercial pipeline? And can you just update on the final organization that you target for that business in terms of independents versus Media and Creative.