FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

12 Months Ended

Dec. 31, 2025

Disclosure of detailed information about financial instruments [abstract]

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

23. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of debt and equity. The capital structure of the Group consists of debt, which includes the cash and cash equivalents disclosed in note 18, borrowings in note 19 and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in the consolidated statement of changes in equity.

	2025	2024
	£m	£m
Cash and cash equivalents (note 18)	2,694	2,638
Current borrowings (note 19)	(822)	(584)
Non-current borrowings (note 19)	(4,114)	(3,744)
Cash and cash equivalents less borrowings	(2,242)	(1,690)
Equity	2,772	3,734
Capital	530	2,044

FINANCIAL RISK MANAGEMENT

Treasury activity is managed centrally from London, New York and Hong Kong, and is principally concerned with the monitoring of working capital, managing external and internal funding requirements and the monitoring and management of financial market risks, in particular interest rate and foreign exchange exposures.

The treasury operation is not a profit centre and its activities are carried out in accordance with policies approved by the Board of Directors and subject to regular review.

The Group manages liquidity risk by ensuring continuity and flexibility of funding even in difficult market conditions. Undrawn committed borrowing facilities are maintained in excess of peak net-borrowing levels and debt maturities are closely monitored. Targets for average debt less cash position are set on an annual basis and, to assist in meeting this, working capital targets are set for all the Group’s major operations.

LIQUIDITY RISK

Liquidity risk is the risk that the Group cannot meet its financial obligations to repay financial liabilities when they fall due. The Group maintains substantial cash and cash equivalents which at 31 December 2025 amounted to £2.7 billion (2024: £2.6 billion) and a five-year Revolving Credit Facility of $2.5 billion (2024: $2.5 billion) which matures in February 2031 following the final one-year extension option that was executed in February 2026. The Revolving Credit Facility has no financial covenants and remained undrawn at 31 December 2025 (2024: undrawn).

The Group’s liquidity risk is concentrated towards bond principal repayments between 2026 and 2046 (2024: 2025 and 2046).

Given its debt maturity profile and available facilities, the Directors believe the Group has sufficient liquidity to match its requirements for the foreseeable future.

The following table is an analysis of future anticipated cash flows, in the form of interest and principal repayments, in relation to the Group’s financial liabilities and derivatives, on an undiscounted basis which, therefore, differs from the fair value and carrying value:

	Bank overdrafts	Bonds1	Lease liabilities	Total borrowings and leases	Trade payables and other financial liabilities2	Total non-derivative financial instruments	Derivative financial instruments receivable	Derivative financial instruments payable	Total derivative financial instruments	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 31 December 2025
Within one year	(168)	(790)	(325)	(1,283)	(11,432)	(12,715)	2,032	(2,040)	(8)	(12,723)
Between one and two years	—	(791)	(294)	(1,085)	(91)	(1,176)	66	(77)	(11)	(1,187)
Between two and three years	—	(601)	(265)	(866)	(71)	(937)	544	(506)	38	(899)
Between three and four years	—	(408)	(241)	(649)	(13)	(662)	650	(633)	17	(645)
Between four and five years	—	(614)	(202)	(816)	(5)	(821)	17	(24)	(7)	(828)
Over five years	—	(2,611)	(1,124)	(3,735)	—	(3,735)	489	(503)	(14)	(3,749)
	(168)	(5,815)	(2,451)	(8,434)	(11,612)	(20,046)	3,798	(3,783)	15	(20,031)
Effect of discounting/financing rates	—	1,047	555	1,602	18	1,620	—	—	60	1,680
Total	(168)	(4,768)	(1,896)	(6,832)	(11,594)	(18,426)	—	—	75	(18,351)

	Bank overdrafts	Bonds1	Lease liabilities	Total borrowings and leases	Trade payables and other financial liabilities2	Total non-derivative financial instruments	Derivative financial instruments receivable	Derivative financial instruments payable	Total derivative financial instruments	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 31 December 2024
Within one year	(171)	(536)	(353)	(1,060)	(12,140)	(13,200)	1,244	(1,296)	(52)	(13,252)
Between one and two years	—	(736)	(307)	(1,043)	(76)	(1,119)	99	(119)	(20)	(1,139)
Between two and three years	—	(723)	(281)	(1,004)	(45)	(1,049)	62	(80)	(18)	(1,067)
Between three and four years	—	(542)	(256)	(798)	(25)	(823)	516	(542)	(26)	(849)
Between four and five years	—	(359)	(235)	(594)	(13)	(607)	632	(656)	(24)	(631)
Over five years	—	(2,265)	(1,260)	(3,525)	(9)	(3,534)	479	(525)	(46)	(3,580)
	(171)	(5,161)	(2,692)	(8,024)	(12,308)	(20,332)	3,032	(3,218)	(186)	(20,518)
Effect of discounting/financing rates	—	1,004	672	1,676	26	1,702	—	—	134	1,836
Total	(171)	(4,157)	(2,020)	(6,348)	(12,282)	(18,630)	—	—	(52)	(18,682)

Notes

1Maturities reflect contractual cash flows applicable except in the event of a change of control or event of default, upon which the noteholder shall have the option to require the issuer to redeem or repay the notes within 45 days of the notice period

2Other financial liabilities principally include deferred income and customer advances, contingent consideration liabilities, deferred consideration liabilities, liabilities in respect of put option agreements with vendors within trade and other payables as disclosed in notes 16 and 17. The prior year table has been revised to include deferred consideration liabilities

FOREIGN CURRENCY RISK

The Group’s results in pounds sterling are subject to fluctuation as a result of exchange rate movements. The Group does not hedge this translation exposure to its earnings but does partially hedge the currency element of its net assets using foreign currency borrowings, cross-currency swaps, forward foreign exchange contracts and non-deliverable forward foreign exchange contracts.

The Group effects these currency net asset hedges by borrowing in the same currencies as the operating (or “functional”) currencies of its main operating units. The majority of the Group’s debt is therefore denominated in US dollars, pound sterling and euros. The Group’s borrowings (including cross currency swaps) at 31 December 2025 were primarily made up of $1,285 million, £1,057 million and €3,101 million (2024: $1,285 million, £1,501 million and €2,101 million). The Group’s average gross debt during the course of 2025 was $1,285 million, £1,152 million and €2,164 million (2024: $1,683 million, £1,900 million and €2,100 million).

The Group’s operations conduct the majority of their activities in their own local currency and consequently the Group has no significant transactional foreign exchange exposures arising from its operations. Any significant cross-border trading exposures are hedged by the use of forward foreign-exchange contracts. No speculative foreign exchange trading is undertaken.

INTEREST RATE RISK

The Group is exposed to interest rate risk on both interest-bearing assets and interest-bearing liabilities. The Group has a policy of actively managing its interest rate risk exposure using underlying debt, interest rate swaps and other banking or finance arrangements to achieve a balanced mix of fixed and floating rate debt. The Group’s interest rate profile and risk is reviewed regularly by the Group's Treasury Committee.

The interest rate profile of the Group's interest bearing borrowings by currency including the effect of interest rate swaps and cross-currency interest rate swaps is set out below:

2025	£m	Fixed/ float rate1	Maturity (months)1
Currency
$ – fixed	955	5.24	79
£ – fixed2	1,057	3.62	110
£ – float2	428	SONIA	91
€ – fixed	2,705	2.60	38

2024	£m	Fixed/ float rate1	Maturity (months)1
Currency
$ – fixed	1,026	5.24	91
£ – fixed2	1,501	3.53	83
£ – float2	428	SONIA	103
€ – fixed	1,736	2.12	36

Note

1Weighted average

2Includes £428m held at a fixed rate until March 2026 (2024: March 2025) and floating rate from March 2026 to September 2033 (2024: March 2025 to September 2033)

SENSITIVITY ANALYSIS

The following sensitivity analysis addresses the effect of currency and interest rate risks on the Group’s financial instruments. The analysis assumes that all hedges are highly effective.

CURRENCY RISK

A 10% strengthening of sterling against the Group’s major currencies would result in the following estimated impacts on the income statement and equity, which would arise on the retranslation of foreign currency-denominated monetary items. A 10% weakening of sterling would have an equal and opposite effect.

	Impact on income statement (Loss)/gain		Impact on equity Gain/(loss)
	2025	20241	2025	2024
	£m	£m	£m	£m
US dollar	—	(3)	87	93

Note

1The prior year comparative has been revised

INTEREST RATE RISK

A one percentage point increase in market interest rates for all currencies in which the Group had cash and borrowings at 31 December 2025 would increase profit before tax by approximately £22 million (2024 revised: increase of £21 million). A one percentage point decrease in market interest rates would have an equal and opposite effect. This has been calculated by applying the interest rate change to the Group’s variable rate cash and borrowings. Note that in practice, the Group has a cyclical cash profile throughout the year.

CREDIT RISK

The Group’s principal financial assets are cash and cash equivalents, trade and other receivables and other investments, the carrying values of which represent the Group’s maximum exposure to credit risk in relation to financial assets.

The Group’s credit risk is primarily attributable to its trade receivables. The majority of the Group’s trade receivables are due from large national or multinational companies where the risk of default is considered low. The amounts presented in the consolidated balance sheet are net of expected credit losses, estimated by the Group’s management based on expected losses, prior experience and their assessment of the current economic environment. A relatively small number of clients make up a significant percentage of the Group’s debtors, but no single client represents more than 5.2% of total trade receivables at 31 December 2025 (2024: 6.5%).

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are high-rated (AAA) funds, banks with high credit ratings assigned by international credit-rating agencies or banks that have been financed by their government.

FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING

An analysis of the Group's financial assets and liabilities by accounting classification is set out below:

	Derivatives in designated hedge relationships £m	Held at fair value through profit or loss £m	Held at fair value through other comprehensive income £m	Amortised cost £m	Carrying value £m
2025
Current and non-current assets
Trade receivables and other financial assets	—	—	504	9,183	9,687
Derivative assets	77	3	—	—	80
Other investments	—	289	45	—	334
Cash and cash equivalents	—	468	—	2,226	2,694
Current and non-current liabilities
Trade payables and other financial liabilities	—	—	—	(10,359)	(10,359)
Deferred income and customer advances	—	—	—	(955)	(955)
Borrowings	—	—	—	(4,936)	(4,936)
Derivative liabilities	(3)	(2)	—	—	(5)
Lease liabilities	—	—	—	(1,896)	(1,896)
Deferred consideration liabilities	—	—	—	(132)	(132)
Contingent consideration liabilities	—	(66)	—	—	(66)
Liabilities in respect of put options	—	—	—	(82)	(82)
	74	692	549	(6,951)	(5,636)

	Derivatives in designated hedge relationships £m	Held at fair value through profit or loss £m	Held at fair value through other comprehensive income £m	Amortised cost £m	Carrying value £m
2024
Current and non-current assets
Trade receivables and other financial assets1	—	—	359	9,838	10,197
Derivative assets	4	1	—	—	5
Other investments	—	306	92	—	398
Cash and cash equivalents	—	655	—	1,983	2,638
Current and non-current liabilities
Trade payables and other financial liabilities	—	—	—	(10,912)	(10,912)
Deferred income and customer advances	—	—	—	(1,160)	(1,160)
Borrowings	—	—	—	(4,328)	(4,328)
Derivative liabilities	(55)	(2)	—	—	(57)
Lease liabilities2	—	—	—	(2,020)	(2,020)
Deferred consideration liabilities2	—	—	—	(10)	(10)
Contingent consideration liabilities	—	(133)	—	—	(133)
Liabilities in respect of put options	—	—	—	(67)	(67)
	(51)	827	451	(6,676)	(5,449)

    

Note

1The prior year table has been revised to include trade receivables measured at fair value through other comprehensive income that are held to collect or sell, which were previously presented within amortised cost

2The prior year table has been revised to include deferred consideration liabilities and lease liabilities

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into levels 1 to 3 based on the degree to which the fair value is observable or not based on observable inputs:

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices);

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Transfers between levels of the fair value hierarchy are recognised at the end of the reporting period in which the change in circumstances or inputs occurred. This policy is applied consistently to transfers into and out of each level.

	Level 1	Level 2	Level 3	Total
	£m	£m	£m	£m
2025
Derivatives in designated hedge relationships
Derivative assets	—	77	—	77
Derivative liabilities	—	(3)	—	(3)
Held at fair value through profit or loss
Money market funds	468	—	—	468
Other investments	96	—	193	289
Derivative assets	—	3	—	3
Derivative liabilities	—	(2)	—	(2)
Contingent consideration liabilities	—	(27)	(39)	(66)
Held at fair value through other comprehensive income
Trade receivables	—	504	—	504
Other investments	3	—	42	45

	Level 1	Level  2	Level  3	Total
	£m	£m	£m	£m
2024
Derivatives in designated hedge relationships
Derivative assets	—	4	—	4
Derivative liabilities	—	(55)	—	(55)
Held at fair value through profit or loss
Money market funds	655	—	—	655
Other investments	73	—	233	306
Derivative assets	—	1	—	1
Derivative liabilities	—	(2)	—	(2)
Contingent consideration liabilities	—	—	(133)	(133)
Held at fair value through other comprehensive income
Trade receivables1	—	359	—	359
Other investments	3	—	89	92

Note

1The prior year table has been revised to include the trade receivables measured at fair value through other comprehensive income

Reconciliation of level 3 fair value measurements:

	Contingent consideration liabilities	Other investments
	£m	£m
1 January 2024	(199)	325
Gains/(losses) recognised in the income statement	1	(29)
Exchange adjustments	1	2
Additions	(33)	24
Settlements	97	—
31 December 2024	(133)	322
Gains/(losses) recognised in the income statement	1	(21)
Losses recognised in other comprehensive income	—	(54)
Exchange adjustments	1	(15)
Transfers	27	(6)
Additions	—	9
Settlements	65	—
31 December 2025	(39)	235

The fair values of financial assets and liabilities are based on quoted market prices where available. Where the market value is not available, the Group has estimated relevant fair values on the basis of available information from outside sources.

CONTINGENT CONSIDERATION LIABILITIES

The fair value of contingent consideration liabilities included in level 3 are dependent on the future financial performance of the entity and it is assumed that future profits are in line with Directors' estimates. The Directors derive their estimates from internal business plans together with financial due diligence performed in connection with the acquisition.

As of 31 December 2025, the potential undiscounted amount of future payments that could be required under the contingent consideration agreements for acquisitions completed in the current year were nil, as no acquisitions containing contingent consideration were entered into during 2025 (2024: nil to £51 million). For all contingent consideration agreements, the potential undiscounted future payments ranged from nil to £414 million (2024: nil to £594 million). The decrease in maximum potential undiscounted amount reflects arrangements that have been completed and paid, or amended. For certain arrangements, the maximum payment under the contingent consideration agreement is not capped.

At 31 December 2025, the weighted average growth rate in estimating future financial performance of contingent consideration liabilities was 10.9% (2024: 21.5%). The weighted average of the risk-adjusted discount rate applied to these obligations at 31 December 2025 was 3.2% (2024: 4.9%). A change to either of these inputs to reflect a reasonably possible alternative assumption would not result in a significant change to the fair value.

OTHER INVESTMENTS

The fair value of other investments included in level 1 is based on quoted market prices. Other investments included in level 3 are unlisted securities, where market value is not readily available. The Group has estimated relevant fair values on the basis of information from outside sources using the most appropriate valuation technique, including external funding rounds and earnings multiples. The sensitivity to changes in unobservable inputs is specific to each individual investment. A change to one or more of these unobservable inputs to reflect a reasonably possible alternative assumption would not result in a significant change to the fair value.

OFFSETTING FINANCIAL ASSETS AND LIABILITIES

Financial assets and liabilities are offset, and the net amount reported in the consolidated balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Derivative financial instruments that do not meet the criteria for offset could be settled net in certain circumstances under ISDA (‘International Swaps and Derivatives Association’) agreements where each party has the option to settle amounts on a net basis in the event of default from the other.

The following table sets out the carrying amount of recognised financial instruments that are subject to the above agreements. The column ‘Net amount’ shows the impact on the Group’s consolidated statement of financial position if offset rights were exercised.

	31 December 2025			31 December 2024
	Gross amounts presented in balance sheet £m	Right of set off with derivative counterparties £m	Net amount £m	Gross amounts presented in balance sheet £m	Right of set off with derivative counterparties £m	Net amount £m
Derivative financial assets	80	(5)	75	5	(5)	—
Derivative financial liabilities	(5)	5	—	(57)	5	(52)
Total	75	—	75	(52)	—	(52)

HEDGE ACCOUNTING

The Group uses foreign currency borrowings, foreign currency forwards and swaps, interest rate swaps and cross-currency interest rate swaps for the purpose of hedging its foreign currency and interest rate risks. The Group may designate certain financial instruments as fair value hedges, cash flow hedges or net investment hedges in accordance with IFRS 9.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. Sources of hedge ineffectiveness will depend on the hedge relationship designation but may include:

•a significant change in the credit risk of either party to the hedging relationship;

•a timing mismatch between the hedging instrument and the hedged item;

•movements in foreign currency basis spread for derivatives in a fair value hedge;

•impairment to the Group’s net investment in US dollars.

The hedge ratio for each designation will be established by comparing the quantity of the hedging instrument and the quantity of the hedged item to determine     their relative weighting; for all of the Group’s existing hedge relationships the hedge ratio has been determined as 1:1. Designated hedges are expected to be effective and therefore the impact of ineffectiveness on profit and loss not expected to be material.

2025 SUMMARY

In March 2025, the Group repaid a €500 million bond and settled the associated cross-currency swaps designated as cash flow hedges with receipts of €500 million and payments of £444 million. As the hedged item had matured, the related cash flow hedge relationships were discontinued.

Also in March 2025, £428 million of interest rate swaps reached their contractual maturity, resulting in the discontinuation of the associated cash flow hedges. The Group entered into £428 million of new interest rate swaps maturing in March 2026. These instruments are designated as cash flow hedges.

There were no new fair value and net investment hedges designated during the year.

At 31 December 2025, the Group had the following financial instruments designated as net investment hedges in respect of the foreign currency translation risk arising on consolidation of the Group’s net investment in its USD foreign operations:

▪$595 million leg of its cross currency swaps due May 2028;

▪$377 million leg of its cross currency swaps due September 2029;

▪$93 million bond due September 2042; and

▪$220 million bond due November 2043.

At 31 December 2025, the Group had the following financial derivative instruments in designated fair value hedging relationships:

▪€500 million leg of its cross currency interest rate swaps due September 2033.

At 31 December 2025, the Group had the following financial derivative instruments in designated cash flow hedging relationships:

▪£428 million interest rate swaps due March 2026;

▪€550 million leg of its cross currency swaps due May 2028;

▪€350 million leg of its cross currency swaps due September 2029; and

▪£43 million of non-deliverable forward foreign exchange contracts due between 2026 and 2028.

The following table represents the Group's continued designated hedge relationships under IFRS 9.

	Cash flow hedges of foreign currency risk1				Cash flow hedges of interest rate risk2				Fair value hedges of foreign currency and interest rate risk		Net investment hedges of foreign currency risk
	2025		2024		2025		2024		2025	2024	2025		2024
Carrying amount of derivative hedging instruments3	£2m		£(56)m		£(1)m		—		£3m	£(15)m	£70m		£20m
Carrying amount of non-derivative hedging instruments (bonds)	—		—		—		—		—	—	£(228)m		£(244)m
Notional amount of hedged items	€900m		€1,400m		£428m		£428m		€500m	€500m	—		—
Notional amount of hedging instruments	€900m		€1,400m		£428m		£428m		€500m	€500m	US$1,285m		US$1,285m
Notional amount of hedged net assets	—		—		—		—		—	—	US$1,285m		US$1,285m
Change in fair value of hedged items (loss)/gain	£(1)m		£2m		—		—		£(12)m	£4m	£(68)m		£3m
Change in fair value of hedging instrument gain/(loss)	£3m		£(5)m		—		—		£13m	£(7)m	£68m		£(3)m
Hedge ineffectiveness gain/(loss)	£3m		£(3)m		—		—		£1m	£(3)m	—		—
Fair value gain/(loss) arising on hedging instruments deferred to OCI	£25m		£(35)m		—		—		—	—	£68m		£(3)m
Fair value amounts reclassified to profit and loss	£(58)m		£58m		—		—		—	—	—		—
Maturity date	2026-29		2025-29		2026		2025		2033	2033	2028-43		2028-43
Weighted average interest rate	5.48	%	4.45	%	4.21	%	4.96	%	SONIA	SONIA	5.24	%	5.24	%
Weighted average foreign exchange rate4	1.14		1.14		—		—		1.17	1.17	1.25		1.24

Notes

1Relates to fix Euro to GBP cross currency swaps designated as cash flow hedges

2Relates to float to fix GBP interest rate swaps

3This amount is presented in trade and other receivables, and trade and other payables. The use of derivatives may entail a derivative transaction qualifying for more than one hedge type designation under IFRS 9. Therefore, the carrying amounts are grossed up by hedge type, whereas they are presented at an instrument level in the balance sheet

4Weighted average foreign exchange rate is GBP against the currency in which the hedged item is presented