Good day, and welcome to the WPP First Quarter Trading Statement Conference Call. At this time, I would like to turn the conference over to Roberto Quarta, Executive Chairman. Please go ahead, sir.

Good morning, everyone. This is Roberto. I have here with me Paul, Mark and Andrew, who will present the trading update; and also Lindsay, who will take some questions about the clients. But first of all, I'd like to -- brief introductory remarks, if I may. I wanted to say a word about succession, and this is just to ensure that everyone is clear that this was very much a part of a long-standing contingency plan that we worked on, certainly since I joined the board, in the event that a sudden CEO departure due to illness, accident or others, and that would kick in. And hence, you saw that when Sir Martin stepped down, the board immediately appointed Mark and Andrew reporting to me as Executive Chairmen. Their appointment as co-COOs, they are fully empowered to run the business and to help in developing and then implementing the strategy that's approved by the board. And also during this period, whilst they are in this role, the company will not be standing still and, if anything, the pace of change will definitely increase. In terms of process for appointment of a CEO is concerned, we're going to be looking both at internal and external candidate. That process has now begun. We will try to conclude it as quickly and efficiently as possible, but I need to stress that it must be done both thoroughly and properly. During the last couple of weeks and since Martin's resignation, I have focused my time on speaking to both investors and clients. The feedback from them is that they are supportive of the steps that we've taken so far. And internally, the conversation has been very positive and everyone is rallying around Mark and Andrew. Also in speaking to clients, what they are telling…

Thank you, Roberto. So if you are following on the slide deck online, I will let you know when I'm turning the page. So we are presenting sort of the revenue trading update for the first quarter of 2018. The safe harbor statement is clear on Page 2. I'll let you read that at your leisure, if you don't mind. And I will then turn to the highlights on Page 3. I have about a 15-page financial presentation, and then we'll hand over to Mark and Andrew. So the reported revenue is down 4% at GBP 3.555 billion, currency headwinds of minus 6% in the quarter. And on a constant currency basis, revenues were up 2%. The reported revenue less pass-through costs were down 5.1% on a reported basis at GBP 2,948,000,000, currency headwinds of minus 6.1% and a constant currency growth of 1%. On a like-for-like basis, revenues were up 0.8%. And on a like-for-like basis, revenues less pass-through costs were down 0.1%, almost flat. United Kingdom, Asia Pacific and Latin America were up strongly, offset by declines in North America and Western Continental Europe. Media investment management, public relations and public affairs and specialist communications, including direct, digital and interactive, performed well. Advertising and data investment management were more difficult in the quarter. Our net debt on a constant currency basis at 31st of March, it was GBP 5.2 billion, up GBP 354 million on the same time in 2017. And on an average basis, net debt of GBP 4.77 billion for the first quarter of '18 was up GBP 357 million compared to the first quarter of 2017 but below the full year average for last year of GBP 5.1 billion. Net new business billing of GBP 1.7 billion in the first quarter compared to just over…

Thank you, Paul. So I think Andrew and I, before we take questions with Lindsay and Roberto and Paul, we'll talk to you about -- a little bit about what we've been doing the last 2 weeks, some initial thoughts on how we see the market and the strategic direction that's -- we'll be taking to the board and [ establishing ]. And to start with, we've got clear roles. As co-COOs, I'm focused on our clients, our companies and our people. And Andrew is focused on the commercial management of the business and optimizing our portfolio, and more on that later. I've really tried to spend as much of my time as possible speaking to our key clients. I've spoken personally to either the CEO or CMO at each of our top 20 clients, around 23% of our revenues. They've been universal in their appreciation of the company that Martin has built, but also I'd say confident in the teams, the operating companies and the leadership of those individual operating companies and their ability to work together to provide the service. And not one has said to me that they'll be moving or reviewing their business as a result of recent events. And then similarly, we have around 52 global client team leads that represent around 1/3 of our business. They've been speaking to their clients with a similar response. And we've had, around the group, a lot of communication and correspondence with clients. And you can -- Lindsay and I can talk to you a bit more about that if people have any questions. We've mostly been talking to our people. Not just the operating company leadership who we're regularly in touch with, but also we're trying to communicate with people across the organization about what's going on…

Thanks, Mark. Hello, everyone. So we've moved on to Slide 20, and then we'll go on to questions. So I guess the first point to stress is Mark and I are very much aligned on how we see the world, the opportunities and challenges we face and the strategic direction that we feel we need to take. As Mark said, I'm going to focus on managing the commercial side of things and looking at how we shape our portfolio of businesses to achieve our objectives in positioning the company for sustainable growth long term. A third point to note, WPP today is running a very financially disciplined way, and we've got an excellent track record of delivering on margins and financial performance. We want to maintain that discipline in the future. We don't intend to sort of turn the model upside down 2 weeks in. We want to -- we just -- what we want to make sure that, that approach doesn't come at the expense of investment in our great businesses to ensure they remain very competitive in the future and can deliver long-term revenue growth for us. So there may be areas where we'll focus more investment in, in people and technology. And we'll look at also the decision-making process to be more agile, more local, more client-focused and, perhaps, to give more empowerment to the people closest to the clients and the businesses. I think we feel we can look at some of the underperforming parts more proactively to allow us to address the -- some issues in those businesses and free up resources to support our growth objectives going forward. The group is extensive. We've got major operating brands with as many companies and units across those 112 countries. And in the past, we've sort of…

Yes. So we're ready for the questions, operator.

[Operator Instructions] We will now take our first question from Dan Salmon of BMO Capital Markets.

I had two questions. One for Mark and one for Roberto and Paul. Mark, in your comments here today and in some of the press interviews, you've given already I sense a little bit more of an aggressive stance towards the consultants and of course, you've been down at Wunderman for the past few years where I'm sure you're seeing them on a little bit more regular basis than the average agency. Can you expand a little bit more on where you see their strengths and weaknesses, your strengths and weaknesses and how that competitive dynamic plays out? And then Roberto, for you, the one notable change here today was to lower the top end of the leverage range. And we'd love to hear a little bit more on the board's decision and how much of your conversation with investors over the past few weeks informed that choice?

Yes. I mean, Dan, so -- I mean, you're right. I have seen them much more regularly at Wunderman where I think I wouldn't say we see them in every pitch, but we probably see them in 1 in 3 or 1 in 3 reviews, maybe 1 in 4 reviews. They're competing more for -- with us in this, the technology-enabled marketing areas, building CRM programs, e-commerce sites, so that area of our business. We think our strength is our understanding of consumers, consumer behavior, what marketers want, our relationship with CMOs, our ability to come up with ideas and programs rooted in consumer insights rather than just rooted in technology, and then I think our ability to design systems that enable marketers to build relationship with clients rather than just integrate things that sometimes leave marketers scratching their heads as to what to do with them. Clearly, consultants have strengths in their relationships with CIOs and this -- in the IT function and that they may be stronger in process than we are. They're trying to build some of the experience and idea basis. And we're not complacent at all about the competition that they have, but I think that there will be times when we win, and we have done; and there'll be times when they win, and they have done. I think the important thing to focus on is that area is growing massively, and what clients need is a combination of ideas and technology. The best example I can come up with is the Ice Bucket Challenge. They got millions of people to pour cold water over their -- ice water over their head. That was an idea enabled by technology, not something that technology on its own could deliver. And I think that's the power of what we can deliver to our clients. And when we win with clients, it's because of our combination of consumer understanding and marketing and technology. One piece of evidence to support that would be our relationship with Adobe. And the Adobe Summit here this week in London, I'm going to meet Shantanu later this afternoon. We have a very strong relationship with Adobe. WPP was the Adobe partner of the year in 2017, and that means not that they liked us the most, but we drove the most business to them measured in terms of revenues. So we drove more business to Adobe than Accenture or Publicis Sapient. So I think -- and they're probably arguably the strongest marketing technology company. So I think we are competitive and we can compete. And that's a big growth area for us. So Roberto or Paul, do you want to take the...

So -- maybe I'll start and then Roberto can chip in. So I think we've kept the board sort of very fully informed as we've gone through the last few years about the targets for the range of debt mostly and the share buybacks and the dividends, et cetera. So -- and I think we were very comfortable with the range we'd set out in the environment then of 1.5 to 2x. It actually is a pretty good indicator of where the ratings bands are also placed at the same time. We've had frequent exercise to access the bond market. So in the last few years as you've seen, working capital from the trading side has been under some pressure. So we've been pretty clear about that. We're doing our level best to try and mitigate that in our own way of dealing with it in terms of advancing the billing, et cetera. But it hasn't particularly eased up nor has it got any worse. And I think having topped out at the top end of the range, we'd come close to the range of the rating scale. And we just think it's more sensible, and I'd say it can sort of wise counsel from the board, who got some very experienced financial heads on their shoulders, looking out over the medium term that in this environment, it's better to be safe rather than sorry and to bring the leverage down. It's around GBP 750 million to bring it back to the middle of the old range, but rather than just say we're going to head towards the middle of 1.5 to 2x, I want to be more definitive and say the top of our range has come down to 1.75x, so there's no mistake or misunderstanding. That's the range we're trying to achieve. And I think it's just the right thing to do in an uncertain environment, given that what we see in the business and wanting to continue to use the cash flow in the way that we previously have in terms of payment of dividends, M&A and share buybacks. That's my perspective. And the board have been -- they're fully informed, giving their advice and basically, we have -- we've taken it together collectively as a decision.

That means the only thing to add is -- I mean, to your specific question about shareholder feedback on the subject, no question. I think of -- it's not -- most if not all shareholders I spoke to on a number of different topics and questions were raised, so I think the debt level was raised. The assurance that I gave is that this was something that, as Paul said, we have been discussing and we're very close to as a board with management in monitoring it, given the market dynamics and the performance. And at that time, I couldn't give specifics, but I said that we would definitely give some specific targets in our Q1 statement, which obviously Paul did today. And the areas of focus obviously will be working capital being one, and then some of the sort of the topics that Andrew spoke about, drove some of the peripheral businesses that we're going to take a look at, which may generate some proceeds and help reducing the debt level. And frankly, I think, they -- most of the shareholders I spoke to seemed reasonably satisfied that: a, they were confident that there's a board. We've been working with management for some time, not just yesterday or today, but -- and that we will moving forward and executing that strategy, which hopefully we'll be able to see some benefit at the half year and then the full year.

We'll take our next question from Brian Weiser of Pivotal Research.

First, I was wondering how much more simplification do you think is likely to occur in the near term. And generally, when you pursue this, like what we saw with the PR agencies, do you expect the goal is more about revenue growth versus margin improvement in any given situation? And then separately, love to hear a little more depth on the impact of GDPR, especially on the Xaxis. We certainly hear questions about that to the extent that anyone who doesn't have a direct-to-consumer relationship is potentially challenged under GDPR if they can't secure consent to do what they want to do with targeting. So just curious if you could talk through current thoughts on the impact of GDPR on Xaxis specifically.

Brian, it's Lindsay. I'll take GDPR to begin with that specific question around Xaxis. I mean, Xaxis evolution, as we talked about, is more of an outcome-based offering, which means it's less reliant on audience data. It's got a great product based -- using AI copilots and algorithm. And that enables us to target using a wider range of inputs. So that's one way we are safeguarding our future by Xaxis. And then within mPLATFORM, we've been building up sort of previously enhancing design since inception. And we have different sets of rules that can apply to different jurisdictions because the mPLATFORM is a global product. And it's been upgraded and it's pretty compliant. Thereafter, the 25th of May, it will target only on the basis of consent. And I think as GroupM, we've engaged with over 10,000 suppliers, including publishers, to agree the appropriate contractual commitments. We're reviewing all of our tools and processes against GDPR. We're actively engaged with the IAB, working on consent and transparency. And we're the only media company, by the way, doing that. And we've educated over 4,000 of our employees with an ongoing training program. So I feel that we are -- I'm touching wood, but I feel we are on top of GDR -- GDPR as we can be. We've had full-time Legal Counsel working with us, a conduit from WPP and in-house at GroupM.

And to take the question on simplification. I think from our perspective, it is more about revenue growth than margin improvement. I think we're going to have perhaps a smaller number of stronger brands. So we're more focused on revenue growth and strengthening the company's positioning than we are looking at it from a cost-reduction perspective. Though there may be savings that result from it, but it's really about strengthening the brands. I think we've done most of what we want to do. I won't say we've done all of what we wanted to do, but I think we've done most of what we wanted to do. We need to look at it in a context of sort of the overall strategy where we're going forward. So I think we need to go through that process, and then we'll look at what further needs to be done.

We'll take our next question from Peter Stabler of Wells Fargo Securities.

Two, if I may. One for Andrew and one for Paul. First, Andrew, question about the global agency networks. When we hear large clients interviewed in the press and they talk about agency relationships and the conversation migrates to areas of concern, there tends to be a fairly consistent refrain, which is sometimes our agencies don't move fast enough, they're not adjusting to the evolving world, we need to move more quickly. Wondering if you have any thoughts on the structure of the agents -- the large agency networks and what could be done to address some of these client concerns about pace of evolution. And then secondly, for Paul, when you look at the outlook for the full year, is it possible to give us a sense of what that outlook embeds in terms of new business wins and losses? Is it neutral? Are you embedding a level of headwind into that outlook? Any color there would be great.

So on the first question. I mean, I think that links with what Mark has just said as we think about the structure. I mean, I would say we have to challenge ourselves to move faster and be more agile. So I think if that's the comment from clients, it's incumbent on us to sort of be responsive and address that. And I think it's across a number of dimensions, linking with what Mark said, but we need to -- being more local is another factor our clients -- our big CPG clients are under pressure from local competitors who are moving a lot quicker, developing brands that scale production, their advantages in production and scale of distribution are being impacted. And they have nimbler competitors attacking their business. They're having to think more locally in how they go to market and be responsive to those competitors. We, likewise, have to follow them and be a little bit more local in how we run our business and sort of being responsive and nimble with those clients, as you say, is something we'll do. Mark, do you want to say anything?

So Peter, on the sort of the full year outlook. I think it isn't quite as easy to be that specific, but I think you've got the sense. So last year, we stood up at the beginning of the year and were expecting plus 2% outlook for 2017. And actually, we're doing okay in quarter 1 where we grew at 0.8%. And then the rest of the year, we've got into a negative territory and ended the year at minus 1%. And I think part of that is the reason for not performing as well as we should have in 2017 is we didn't -- we anticipated too much new business coming in, in the second half of the year, in particular the third quarter. So -- and also we -- our businesses, we have to put in a certain element in new business because many of our businesses are project in nature. So they really have a relatively short pipeline of sort of known commitments to anyone, say, studying their branding business, and especially this is around the 3 months advanced work. The media businesses and the agency AORs have a much better visibility. And again, when we came to budget time, this year, I think we said to you the bottom-up budgets are also looking at 1% to 1.5%, but we are uncomfortable with the expected pickup in revenues and the level of new business within our system. And so we basically felt that it was right to not be caught short and increasing the revenues and costs in our outlook but to sort of pull that one down to more reflect what we see as the outlook today. So the only thought is really is we have a degree of new business in there. When our businesses perform their budget reviews, they do tend to take out those clients that are in review. But it is really a quiet hard thing for us to be very precise, but you've got the broad understanding from our fifth year that we have basically taken some of the new business cushion out in the second half of this year to ensure that we don't overrun our costs depending on the outcome for the year. So hopefully, I've given you a bit of a flavor. It's actually a reasonably difficult thing to be very precise about, unfortunately.

We'll now take our final question from Doug Arthur of Huber Research.

Three questions. First for Roberto, at the risk of making you repeat yourself. If we have this conversation a year from now, what are -- in terms of things you can control, what would sort of be the top 3 boxes to check to assess success in terms of your first full year sort of overseeing this? And then I've got two follow-ups.

Well, I guess I'm thinking as you ask the question. So first of all, I think selecting the right Chief Executive to take this business forward in the sort of the next chapter, that has to be number one. And the second must be returning the company to growth. And I'm thinking about a third and looking at my colleagues.

Yes. I'd say try the portfolio optimization I think is the...

Well, yes, but also I think making sure that we listen to what our clients are telling us, which we are doing so, both -- all of us, Mark and I, Lindsay, all sort of are engaging with clients. And having listened to what they say to be able to ensure that we deliver what they need, they want and do it in a -- with greater fluidity and greater flexibility. And no doubt, we need to be much more agile with our clients. So those are the 3 things that I -- we'd like us to review next year when we have this conversation.

Terrific. That's very helpful. And then Paul, in terms of Slide 23 where you break out sort of growth trends by industry categories, is there anything to call out there? I mean, the strength in retail seems notable given some of what we've heard about that sector. Is there anything to add to that slide in terms of trends?

Yes. It's not a particularly big category for us, actually, retail. So it's not one that would stand out in terms of significance in terms of underlying trends, if I'm honest with you. Yes, the big categories for us -- I'm just sort of looking at exactly how retail ranks to top 6 in terms of -- 6 or 7 in terms of the size in the category for us. It's quite modest. Yes, the big ones have always been the personal care and drugs, the auto category, the food, financial services, they all rank ahead of retail. So in one sense, it's a relatively small category. And it will be more the direct result of account wins. Yes. And particularly, obviously, Walgreen Boots is coming to our portfolio in quite a significant way in the last 12 months. So I think it's more of a function of that than anything of the underlying category improvement overall.

Okay. And then finally in terms of mainland China, obviously, a big market for you guys. Is there anything to call out in terms of the pickup in growth there specifically? I mean, obviously, the comps are easy. Is there anything else you care to comment on there?

Well I know I'm a bit of a broken record last year saying I was disappointed with the overall performance of China. But there were 1 or 2 specific items that were quite material in size within the business that was causing us to drag down the overall performance of the Chinese business. We did have, last year in particular, a very specific issue for one quarter on the media business, which did self-correct. And we knew it's a particular account loss. But we have more than recovered that. And so that has returned to full health. The Insight business in a particular area was struggling for 2 years. We said we were taking full attention on that. And I think we have solved that for this year. So really, we're now allowing the rest of the business to perform as it always has been performing relatively well and have -- don't -- we have corrected the 1 or 2 issues that were holding up the overall performance because they're relatively material in terms of revenues. But underlying, even in the last 2 years, 80% of our businesses in China was doing really pretty well. But we have now addressed those 2 issues and therefore, the whole portfolio. And you never get all 12 cylinders working at the same time, but we are doing relatively well in the Chinese economy.

As there are no further questions, I'd like to turn the conference back to Mark and Roberto for any additional or closing remarks.

No, I think thank you very much. And we look forward to updating everyone in due course.

Thank you.

Thank you.

That concludes today's call. Thank you for your participation. You may now disconnect.