Afternoon, ladies and gentlemen, and thank you for standing by. Welcome to WPP Preliminary Financial Results Conference Call and Webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. At which time, if you wish to ask a question, please press star one on your telephone keypad. Today's conference is being recorded. At this time, I would like to hand the conference over to WPP CEO, Mr. Mark Read. Please go ahead, sir. Thank you very much, good morning, everyone, and welcome to the WPP 2022 preliminary results presentation. As you know, we now do this as more of a Q&A session. We should take the presentation as read. It's available online. Rather than take up your time with that, we thought we could get straight into questions. Maybe I'll make a few preliminary remarks. I'm here with John Rogers, our CFO. John and I will take your questions. Look, I think we had a good 2022. We grew 6.9% in the year. A respectable or more respectable Q4, 6.4%, perhaps somewhat better than we'd expected after a somewhat softer Q3, that was in part driven by comparatives. I think, you know, the momentum we had through the year carried into Q4, and I think you'll see some of that momentum carry into next year through our guidance. We had a very broad-based performance. Our integrated agencies was up 6.9% with a 3-year CAGR of 9.5%. Strong performance from GroupM, Ogilvy, AKQA, Hogarth. Our PR businesses were up 8.2% like-for-like, with a strong performance, particularly from Hill & Knowlton. Our specialist agencies up 5.6%. Functionally, we've grew strongly across all our functions. Regionally as well, North America up 6.6%, U.K. up 7.6%. I'd call out a particularly resilient Western Continental Europe at 5.5%. Asia Pacific, rest of the world up 8% last year. A broad-based performance across services and regions. A strong competitive performance from leading at Cannes to a new business number close to $6 billion. We continue to invest in the business, and we talked a lot on the call about the impact of AI on our industry, which I think is going to be fundamental. Our transformation savings are ahead of plan, and we're on track to deliver this GBP 100 million of savings by 2025. Lastly, our guidance. Our guidance for like-for-like revenue is passing cost is 3%-5% and a Headline Operating Margin of around 15%. You know, I think that's based on conversations that we have with clients, what they're telling us about what they, what they intend to spend for the year, really driven by, you know, their continued desire to invest in their business and invest in brands. I think in part also driven by the complexity of the environment and new media opportunities available to them on platforms like Netflix and TikTok and retail media platforms, as well as the transformation in WPP's business and expansion we've made in new areas around data, technology, and e-commerce. In short, I think we had a good year. We're going into this year, I would say, you know, confident in our guidance. It's a little bit, you know, softer than 2022, but I think that's what one would expect, and it's significantly ahead of analysts' expectations, certainly at the end of last year. With that as an introduction, why don't we open it up for questions, and John and I will take those as people have them. Thank you, sir. If you would like to ask a question at this time, please press star one on your telephone. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. If you are also watching the webcast, please make sure to mute the computer's volume to prevent feedback through the phone while asking a question. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Again, please press star one to ask a question. We'll pause for a moment to allow everyone to signal. We will now take our first question from Tim Nollen from Macquarie. Tim, please go ahead. Oh, thanks. Thanks for taking the question. Thanks also for doing this call for us in New York. Saves us getting up at 4 in the morning. I was gonna ask for feedback on that, but I'm pleased you find it valuable, Tim. I used to get up at two in the morning to do all of your London calls, but I certainly appreciate not having to do that if you're doing this 9:00 A.M. New York call. Okay. I did read the transcript from your, from your meeting this morning in London. I noticed a lot of very specific detailed members questions. I'll spare you those this time and ask you instead two much broader big picture questions. Firstly, Mark, you did mention AI and ChatGPT in your opening remarks, and I wanted to follow up on that and ask. I understand the role of, you know, these generative search functions in terms of creating, you know, ad copy and so forth. My question is more, how might the search market change if Bing is to gain share over Google, given these changes in search? How might that affect ad spending in general, given how big search is in terms of total advertising spending? I wonder if we're at the cusp of a sea change in much more than just, you know, who wins the search wars, but how this might change the overall ad market, if that's not too dramatic a statement. Yeah. Let me just go with that, and then I'll ask my second question, if that's okay. Look, I think that it's too early to say, but if we had to hesitate, a view we discussed it a lot internally is. Look, I think people go to search for a number of reasons, don't they? Most of those reasons are to answer direct questions or to find out information or to book a plane ticket or find a holiday destination. There's many reasons people go to search, and you sometimes get a vertical search engine. Amazon have carved off a portion of search around sort of some subsegment of products. Sometimes you might go and search in Twitter to see what's happened in the last, you know, five minutes that wouldn't be on Google in that period of time. I don't think that, certainly what I've seen from some of these generative AI engines is going to, by any means, replace like 100% or match 100% of what Google does, nor is it gonna necessarily lead to a better, a better answer. You know, I asked it to write my bio, and it came out with quite a large number of factual inaccuracies, upgraded my university, et cetera, et cetera. That's not to say that it won't have significant changes over time, but, you know, I don't think there's gonna be a dramatic shift in a very short period of time in what goes on in search. As the engines get better and as they understand what's true and not true, and the question is can they understand what's true and not true, we'll see different impacts. I don't think that there's so many different segmentations of search and questions you get through that search query box. I think it's hard to say that suddenly in every category, one search engine versus another is going to be particularly more impactful. You know, I think all of the major technology comes to investing significantly in AI. I think we just have to sort of wait to see. Now, from our perspective, it sort of really doesn't matter which one, you know, does better or worse. I don't think it impacts WPP directly. If anything, you know, more competition is better for us and better for our clients. That's kind of how I think we've thought about it. Right. I know that last point is what I'm getting at. If it does open up the search market, more participants, more activity for you. Okay. That's interesting. Thanks. My second question is about the ad tech market, we've been reading a lot about the ties that GroupM has been making with the SSPs like PubMatic and Magnite. Magnite spoke last night in their call about expanding those relationships with GroupM as well as some other media buyers. My question is, do you think we are getting toward a more efficient ad tech market, which should in turn be better for advertising clients? Also it seems better for WPP and the agencies, given that your role seems to be more deeply tied into all these technology enhancements. It's, it's quite counter to the concerns of a few years ago that, you know, ad tech was gonna disrupt the agencies, is a concern a lot of people had. Now it almost seems like the role of agencies is even more essential, more embedded into the process. Any comments you could give around that would be great too. Yeah, look, I mean, I've always been, and I think we've always been consistently of the view that much of this technology, if we embrace it properly, will help us grow, not disintermediate us. I would agree there. I think on the ad tech point, look, it looks like, you know, the estimates I've seen of sort of the amount of money lost, the so-called ad tech tax is decreasing, which is what you'd expect as the market gets bigger and more efficient, and what in one year is a new product becomes much more of a commodity. I expect that to continue, and that's good for advertisers. It means that more of the money they invest goes in producing content. I think broadly speaking, it's a positive development. Great. Thanks a lot, Mark. Thanks, Tim. Thank you. As a reminder, to ask a question, please press star followed by one. Our next question comes from Michael Nathanson from MoffettNathanson. Michael, please go ahead. Thanks. Good afternoon. Thanks for doing this call. We appreciate it. Hi, Mike. Yes, my question is a bit more prosaic, so I apologize, dealing with John's work. I'm sure it won't be. I know they are. The question we're struggling with is trying to figure out normalized cash flow, right? You have all these moving pieces, which we understand, working capital, which we've been through the wars on this. How do you think about just a normalized maybe cash conversion when the business gets to a steady state, right? Help us understand kind of where this business should generate cash as a percentage of EBITDA, if possible. Then one of the things we've been really struggling with is kind of the impact of foreign exchange clearly in the US, for the US-based agencies on margin and whether or not it's a help or a hindrance. You know, you have a commentary on margin guidance headline, but FX is kind of neutralized. How do you help us with just the wide volatility in FX and what does it do to your business on a reported basis on margin? Yeah. Tom, why don't you tackle both of those? Hi. Hi, Michael. I told you he's more prosaic than mine. More profound than me. Just on the Forex one. The reality is that actually we're reasonably well, if you like, operationally hedged on margin because obviously most of our cost base is also in the same currency as where we bill. In the main, we are pretty well hedged. Even though there may be swings on the net sales line, visibly in terms of margin, it generally doesn't have a huge impact. Obviously, we're slightly more centered in terms of our cost base in the U.K. because we're more of a sort of U.K.-headquartered business. Generally speaking, I mean, say, for example, in 2023, we would, I think, you know, at the moment, we say it's, you know, margin neutral, even though there's a slight tailwind from sort of currency on the top line. You know, at today's rate, there may be a slight 10 BIP headwind on margin, but it's really miniscule. I mean, it's probably plus or minus 10 BPS is sort of the nature. Unless there's big currency swings, it's really not gonna move the margin that much, frankly. On your first question on normalized cash flow, I mean, look, obviously, 2022 was a challenging year from a cash flow perspective because we had two things. You know, we had the big delta on what we described as being the non-trade working capital, which really was effectively an, you know, accrual made for a bonus payment in 2021, which is a record bonus. So we paid out our highest bonus ever on the back of results in 2021 from an accounting perspective. Of course, those payments weren't made until in cash terms until 2022. So we had a big outflow of cash in 2022, which was accounted for in 2021 profitability, and that's why we had the big move there. We also had an outflow at the year-end on our net working capital position, which I think was, you know, largely we describe as timing, you know, the elements of our actual creative business, which tends to be, you know, working capital consuming, actually grew better than we were expecting. Our media business, which tends to be working capital generative, actually was probably, even though the growth was good, was slightly less than we expected. We had a little bit of an outflow at the year-end. You know, it's worth pointing out that we have unlocked about GBP 1.3 billion of working capital benefit over the last 3 years. You know, all of which is, of course, in theory, should drop to the bottom line, and that's what, at least in part, has funded the buyback program, the GBP 1.5 billion that we've returned to shareholders over the last two years. I think if you were to look at, you know, what's the sort of normalized basis, I mean, I think, you know, if you define your sort of free cash flow, taking accounts of your CapEx, your tax, your interest, your earn-outs, your restructuring costs and closing working capital, then we should be normalizing at around GBP 1 billion, GBP 1 billion plus or so against top line of just over GBP 2 billion. That would be, you know, certainly if I looked at, say, 2023 as an example with, if you like, headline EBITDA at GBP 2.1 billion, you know, we're creating free cash flow of around GBP 800 million. If I looked at sort of 2024 and 2025 and beyond, you know, you'd see that free cash flow number increasing. It does, of course, you know, reflect a number of items which, you know, will move over time. I would say CapEx was relatively lower than expected in 2022. It's gonna be a little bit higher in 2023 at GBP 200 million, but we'll probably normalize around that level going forward. I think restructuring, we saw GBP 220 million in 2022, exactly in line as we guided. We'll see GBP 180 million in 2023, as we've now guided for this year. We'll see that come off over the subsequent years. That will be a help to the overall free cash flow. In terms of net working capital, I think we, you know, we largely expect to be flat going forward. you know, we've delivered, if you like, the big one-off benefits in 2020 and 2021. I think going forward, we'll continue to make small operational improvements, offsetting, you know, the outflow as a result of growing the business. Net-net overall, I would say neutral. I hope that gives you a little bit of a shape in terms of what we anticipate going forward. Does that answer your question? Oh, yeah, it does. Thank you. It's really helpful. Can I just have one more for Mark? You know, I think I'd be remiss not to ask you about China, given your history there, given, you know, the depth of your relationships. What are you hearing on the ground, right? I see the text you put out, but are you seeing real signs of reawakening on spending and activation from the client side? Is that a hopeful sign for 2023? Certainly, when I talk to our people there, they're much more positive and much more optimistic about the outlook for the year and about client spending. In our case, we had a very strong Q1 last year, I think we were up 12%. It's gonna make the comparatives this year a bit tougher for us in Q1. I don't think you'll see it feed through, you know, into our growth until Q2, you know, Q2 onwards. I think, you know, China is 5% of our business, so it's an important part of our business, but it's by no means delivering all of the growth that we expect this year. It's really, you know, it's part of the puzzle, I would say, I would describe it as. I think people are positive, and it's definitely opening up. Okay. Thanks. Thank you both. Thank you. Thank you. Our next question comes from Douglas Arthur from Huber Research. Doug, please go ahead. Thanks a lot. Mark, there was a narrative in the marketplace, say 18 months ago, that retail media was not really incremental spending. It was sort of moving from one pile to the other. That doesn't seem to be the case. I guess what is your outlook there, and what is the specific WPP agency role in facilitating the growth of retail media? I've got a follow-up for John. Yeah, look, I think I think some of it is being displaced from analog, which may not be measured, to digital, which is probably more measurable, right? More reported by the companies. You know, classically, a big, packaged goods company would go to Walmart and would have, you know, listing fees and promotions and advertising, and you would never see that either in Walmart would never disclose that, and you would never see that in the P&L of the packaged goods company either. Now that's maybe reported as advertising revenue, so people are starting to collect it. I wouldn't say it's necessarily being displaced, but I think it's becoming more measurable. Part of it, some part of it is incremental, you know, because you're creating new opportunities for clients to advertise. It's incremental. I would say from the perspective of our business, it is incremental to our business because it's money that probably would not have passed through WPP, but because it's now being spent as pure advertising is being passed through WPP. Our job is to help our clients manage that and integrate it with the rest of their advertising. Quite frankly, the retailers are trying to double dip, which is trying to get the trade dollars out of the manufacturers as well as the retail advertising dollars by persuading them, they're different things, and they're always different things. It's a little bit of an arm wrestle about what it is. I think our job and our role is to help clients, you know, spend it efficiently, understand where it's additive to their overall media mix, and understand where it's incremental or replacing trade spend and make sure that they've got the right balance there between those two activities, I guess. Yeah. It's very helpful. Just a follow-up for John. The transformation program, you know, seems ahead of schedule. Where are you getting incremental savings? Is it more on the real estate side or kind of IT? Could you eventually exceed your, you know, goal through 2024, 2025? Yeah, look, I think it's across the board. I mean, you set out in the presentation in terms of the different buckets of spend across what we describe as efficiencies and the operating model. You know, we're getting better as I think it's fair to say stronger savings on the real estate side, good savings coming through on procurement. Obviously, we're making the organization a lot simpler. You, you've seen in the, in the presentation, bringing together a number of different parts of our overall business, cutting the number of legal entities. I think it comes from a number of different areas. I'd say the one area that we, you know, we're just starting to tap into, and it's probably the smallest of the three buckets, is the rollout of the enterprise ERP, new ERP systems, then economy principally in Asia and in South America in 2023 and Workday in Wunderman Thompson North America. I think those tend to be a little bit slower, you know, given the complexity of the organization, and the challenges associated with that. Probably in the longer term, you know, over time have high potential to unlock more value. I wouldn't wanna call out higher savings than what we're describing at the moment, the GBP 600 million. I think there's good visibility to get to the GBP 600 million. I think let's get to the GBP 600 million first and then see where we can get to thereafter. Great. Thank you. Thank you. Thank you. As a final reminder to ask any further questions, please press star followed by one on your telephone keypads. Okay. There are no further questions at this time. I'll now hand the call over to Mr. Mark Read for further closing remarks. All right. Well, thank you everyone for your questions, and, thank you for listening, and, we'll be in touch and speak to you soon. Thanks very much. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.