WPP PLC (WPP) 2016 Q2 法說會逐字稿

Please go ahead.

So welcome, everybody. Sorry we are a few minutes late. I'm here in London with Paul Richardson, our CFO, and Adam Smith our media guru, our forecaster for GroupM. In New York, I'm delighted we have Irwin Gottlieb, Chairman of GroupM, and Brian Lesser who runs GroupM in North America, and you may remember the ran Xasis prior to that.

We're going to kick off -- apologies for a fairly lengthy presentation following up on what we did in London a few hours ago. The presentation is on our website, a number of sections. Firstly, the interim results, and Paul will go through those. Then Adam will give the latest forecast for GroupM this year and next year. Then I'll come back on four core strategic priorities, our key objectives, and finally outlook and conclusions. And then we will take questions. So Paul, over to you.

Thank you, Martin. So first, the interim results. With billings of GBP25.3 billion, they were up 9.3% on a reportable basis, 6.3% on the constant currency basis, and 4.2% on a like-for-like basis. Revenue growth was 11.9% reported, 8.9% constant currency, and 4.3% like for like.

Net sales growth was 11% reportable 8.1% constant currency, and 3.8% like for like. Headline PBIT of GBP769 million was up 14.9% reportable because of the benefit of currency and 10.3% in constant currency.

Reported net sales margin of 13.7% was up 0.4 margin points and 0.3 margin points on a constant currency basis, in line with the full-year margin target of 0.3 margin points pre-currency, and it was the same on a like-for-like basis, up 0.3. So therefore the benefit from currency was a 0.1 gain for margin, resulting in 0.4 overall margin point improvement first half.

Reported headline diluted earnings per share of 39.1p was up 16.7% on a reported basis or up 11.5% on a constant currency basis. Dividends per share of 19.55p were up 23%, a payout ratio of 50% versus a payout ratio of 47.5% last year at the interim stage. GBP1.9 billion of net new business was won in the first six months of the year, versus GBP1.3 billion at the same time last year. We had similar performance continue in July, and on the year-to-date basis, like-for-like revenues are up 4.3% and net sales are up 3.5%.

Turning now to our performance versus our targets. So on a full-year target, we're aiming to achieve revenue growth of well over 3%, having achieved 4.3% at the interim stage. On net sales growth, our target is to be 3% plus, having achieved 3.8% at the interim stage. Full-year margin target, 0.3 margin points pre currency, achieved at the half-year stage, and on an EPS basis, our target is 10% to 15% growth, which we achieved 16.7% on a reported basis and 11.5% on a constant currency basis. And our medium-term payout ratio goal of 50% was achieved at the interim, with a payout ratio of 50%. So we're basically on track versus all our targets for the year at the interim stage.

So turning now to the headline results at a glance, we'll give you two figures for the top line, both the revenues are GBP6.5 billion, and with GBP1 billion of direct cost going through the business, net sales of GBP5.6 billion. So focus on the net sales line as a top-line indicator. On a constant currency basis, this is growing at 8.1%. A we mentioned before, the margin on a constant currency basis is up 0.3 margin points, and profits were up 10%.

Diluted earnings per share was up 11.5% on a constant currency basis, albeit 16.7 reported. And the only area which was adversely impacted by currency was the net debt on the balance sheet, which is principally euros and dollar denominated, and so the half-year stage, the average net debt on a constant currency basis would've been higher by 18%, but on a reported basis was up by 27%. This has led the ratio to move towards the higher end of our range at 1.9 times, and by the end of the year, we are hoping to achieve the midpoint in a 1.5 to 2.0 times average-net-debt-to-EBITDA range. So midyear point, a little higher than last year at 1.9 times, but at the end of the year, targeting the middle of the range of 1.5 to 2 times.

On average headcount, very modest changes compared to a year ago, with basically flat at 131,000 and average, 134,000 at closing. And enterprise value, with the share price movements, we've moved up from a 10.7-times enterprise value to EBITDA multiple to closer to a 12.7-times.

So turning now to the growth in revenues. So starting with the last half, June, 2015, GBP5.8 billion in revenues. Organically, has added 4.3%, acquisitions a further 4.6%, and foreign exchange a positive 3%, leading to nearly a 12% growth to revenues of GBP6.5 billion.

The same waterfall chart on a net sales basis takes a GBP5 billion of net sales June, 2015. Organically, growth of 3.8%, acquisitions adding 4.3%, and foreign exchange adding 2.9%. In total, adding 11% the net sales to total GBP5.6 billion at June, 2016.

The impact of foreign exchange, as you know, last year, it was a modest negative for the year, minus 1%. In the first half, as you have seen, it has been positive 3% to the Group, but due to the sudden change of sterling around June 23, the full-year impact now will be positive, a tailwind of between 8% and 9%, with a positive in the second half of around 13% to 15%. So combine that second-half increase of 13% to 15% with the first-half increase of 3%, looks like 8% to 9% for 2016. And if rates remain the same, the follow-on effect in 2017 will be a further plus 3% to plus 4% tailwind, i.e., benefit from foreign exchange in 2017.

So turning now to the headline summary P& L. Most these figures you are familiar with. The things I would point out is really that after the PBIT growth of 10.3% on a constant currency basis, interest costs are a little higher, around GBP6 million, partly through foreign exchange, which will have a probably more important impact in the second half. And in terms of the full-year cost of interest, which was around GBP150 million last year, it is likely to be around GBP170 million in 2016.

Taxes edging up, and has moved up by 1% this year, from 20% last year to 21% at the half-year stage of this year. So overall, with diluted EPS growing on a constant currency basis 11.5%, you had a reported growth of 16.7%, as I mentioned previously.

Turning now to statutory IFRS income statement, there are some adjustments that have gone through that do need explaining below the operating profit line. So last year, you will recall, and you will see on the slide here, a net exceptional gain of GBP211 million. It was both a combination of the gains on disposals and the gains on remeasurement of our step-up in IBOPE, and that was the principal reason for the majority of that GBP211 million, although there were other small disposals that had a gain.

This year, in reverse, we have an exceptional loss, which is an investment write-down, principally of our round GBP83 million of our stake in comScore, which brings our book cost closer to the current market value. In addition to that, there's a GBP24-million loss on the step-off from STW when we took our stake to 61% at the end of the first quarter this year. So those two combined have led to an exceptional loss of GBP114 million, principally non-cash, versus a gain last year of GBP211 million, again, majority which was non-cash.

That does affect the following elements in the P&L, so that PBIT line were down 34% on a reported basis, and the profit before tax were down 45%. This results, therefore, in a reported diluted EPS of around 19p, down compared to 43p the first half 2015.

Turning now to show the effects on currency and how it would look if we had reported in another denomination. So again, taking the net sales line, which you are familiar with, like-for-like growth of 3.8%, acquisitions adding 4.3%, resulting in constant currency net sales growth of 8.1%, and foreign exchange adding 3% to the net sales line gives you 11% reported growth. And the EPS line, again, you had 11.5% constant currency growth and 16.7% currency, adding 5% at the EPS level.

If we were a dollar-reporting company, our EPS growth would've been 9.4%. If we were a euro-reporting company, our EPS growth would've been 7.3%. And if we were a yen-reporting company, our EPS growth actually would've been negative 1.1%.

So turning now to results by discipline on the net sales line. We give you both the revenues and the net sales because there is a meaningful difference between the two, but I'm going to focus on the performance of the net sales and the like-for-like first quarter, second quarter, and the first half for 2016.

So the Advertising and Media Investment Management business, which represents 45% of the Group, so like-for-like net sales growth in the first half of 4.6%, and after the first quarter, a 3.4%, so an acceleration in quarter two to almost 6%. There's a pickup principally in continental Europe in this category and in Asia Pacific and Latin America. We also saw -- a footnote on the page -- solid continuing growth in digital revenues at 7.2% and on net sales in the same category by 7.1%.

In the second discipline, Data Investment Management, which represents 19% of the business, its net sales like-for-like growth is 1% for the first half, which was an improvement from the 0.1 negative in quarter one, to a positive 2% in quarter two. So a nice pickup in the Data Investment Management business in the second quarter, driven by improved performance in the USA and UK and accelerating growth in Asia Pacific in particular.

And Public Relations and Public Affairs, the discipline representing about 7.5% of the business, for this first half, we saw like-for-like that growth of 2.8%, accelerating from the 2.3% in quarter one to 3.2% in quarter two, with better performances in Continental Europe and Asia Pacific and some of our specialist businesses in the US and Germany in particular.

And Branding and Identity, Healthcare, and Specialist Communications businesses, representing 28% group, so a like-for-like net sales growth of 4.4%. The 5.2% growth in quarter one eased a bit into quarter two to 3.7%, and principally, most of the business was very similar to how they performed in the first half, although healthcare was a little weaker in quarter two.

Overall, the Group was at 3.8% for the first half, having grown at 3.2% in quarter one and 4.3% in the second quarter with the acceleration coming through.

When I look at the geographies, on the next slide, we see a similar pattern. North America, which had like-for-like net sales of 4% in the first half, actually had a very similar quarter one at 3.9% and quarter two 4% growth coming through. North America representing around 38% of our business. Had strong growth coming through all our North American businesses, principally in advertising and media, public relations, and the branding identity businesses picking up in particular.

In the UK, it was similar trends overall in quarter one and quarter two of 3.2% growth in like-for-like net sales in quarter one and 3.4% in the second quarter, leading to 3.3% in the half year, perhaps reflecting some pre-Brexit uncertainties, and our media business was a little slow in the second quarter, albeit still double-digit growth in the UK.

In Western Continental Europe, a region representing 20% of the business, we saw a significant pickup in the second quarter of this business, having grown at 2.3% to the first quarter, accelerating to 6.2% growth in quarter two in Western Continental Europe, resulting in 4.3% growth for the half year. Strong growth or good growth coming through from Germany and France. Italy and Holland also picking up, and a large number smaller markets also improving, as you mentioned in the press release.

In Asia Pacific, Latin America, Africa and Middle East, and Central and Eastern Europe, representing just under 29% of the Group this first half, growth overall in the half was 3.5% in like-for-like net sales, accelerating from the 3% growth in quarter one to 3.8% in quarter two, assisted by a very strong second-quarter in Russia and Poland. And in Asia Pacific, India in particular is stellar, having grown at 17% organically in the second quarter. And a number of other Asian markets particularly strong in quarter two included Indonesia, Philippines, Singapore, Thailand, Vietnam, although China still remained disappointing for us.

In terms of how to compare our performance year on year, if you look to the right-hand side of the slide, we've listed out the net sales growth on an organic basis on the first half 2014, second half 2014 where you saw we had a strong first half growing at 4.1%, second half slightly weaker at 2.5%, and so the comparatives are different for each half year to compare to. So one of the ways we found to look at this is to take the two years together and combine them, and you can see that when you do that, the two-year trend in a half yearly growth has been consistently around the 6% for the Group. It's been a bit stronger on the revenues, although the gap is coming closer between the net sales and the revenue line.

When we do the same for our competition -- again, we can't do this on a net sales basis, so we've done it on a revenue basis -- what you really see is that four of the holding companies performing at a fairly similar rate of around 8% to 9% to 11% on a two half-year cumulative basis, and so it's a reasonably accurate measure of how the big five are doing, with four of them fairly closely bunched around the same levels.

In terms of profits for the Group, I suppose the overall summary is that profits were up in all sectors and an all geographies. And I can compare the results of each discipline to the reported profit growth of GBP769 million, which was up 15% to the GBP669 million last half-year. So in Advertising and Media Investment Management, the reported growth in profits was 12%, and the margin improvement was 0.3, from 14.9% to 15.2%.

In Data Investment Management, profits were up strongly at 23% on a reported basis, and even if I was to strip out the effect of currency on that discipline, profits were up 20%. Margin improvement was strong. We had good cost controls in the business, and bearing some of the benefits were the restructuring actions taken in 2014 and 2015, leading to good margin improvement from 11.7% to 13.5% in the first half, obviously assisted by Western Continental Europe, which is one of the major regions for the Data Investment Management business.

In Public Relations and Public Affairs, profits were up 7.5% for the half year. Margins were basically flat, down a tad, from 14.7% to 14.4%. And finally, in the Branding and Identity, Healthcare, and Specialist businesses, profits were up 18% in the half year, and margins improving from 11.4% to 11.6%.

Doing the same by geography, obviously, only three of the regions are affected by currency. So North America, profits were up 14%, and margins, which are strong, moving up from 16.4% to 16.6%. The UK profit growth was 6.5% in the half year, and margins were basically flat, moving down from 12.7% to 12.6%.

In Western Continental Europe, there was a strong performance in the business. On a reported basis, profits were up 34%, and on a constant currency basis, our profits in Western Continental were up 25%. Margin improvement was good also, with the margins moving up from 10.7% to 12.4%. In Asia Pacific, Latin America, Africa and Middle East, and Central and Eastern Europe, both in reported in constant currency, profits grew at 10%, and margins moved up steadily from 11.3% to 11.5%. So overall, profits up 15% on a reported basis and 0.4 on margin points.

So looking geographically at nine subregions, we first cut it on a revenue basis, and you can still see the mature markets are solid and strong and have been growing in the first half, revenues at 4.6%, versus the faster-growth markets, as are so named, at 3.4%. Obviously, weakness in Asia Pacific for us and the Middle East on the revenue basis in the first half.

When I look at the same on the net sales basis, it's a closer pattern, with the mature markets again remaining very solid, with North America growing at 4% in the first half, United Kingdom 3.3%, and Western Continental Europe also picking up significantly in quarter two to a half-year growth of 4.3%, making overall mature market growth of around 3.9%, which is better than the fast-growing markets at 3.5% overall. We've seen very strong performances continue in Latin America despite the difficulties in Brazil.

Asia Pacific, overall up at 2.3%. Again, it's slightly disappointing in China for us. Australia and New Zealand, overall growth, which is 3%, which is two quarters of our business and one quarter of the STW business in addition. And in Central and Eastern Europe, they had a relatively good first-half growth of around 5.6%.

So turning now to our six major markets, which represent around two-thirds of the business, you can see here the full-year performance of 2014 and 2015 and half-year for 2016, both on a revenue and net sales basis. And taking the USA, which grew up 4.3% for 2015 and 4.1% for the first half 2016, a very consistent basis. UK a little bit slower rate of growth, but still consistent, with a 2.9% growing in 2015 to 3.3% in first half 2016. China is a disappointment, having grown at 1.6% last year, is negative in the first half. It is still forecasting a turnaround in the second half and expecting to grow modestly at the end of the year around, 1% to 2%.

Germany I think is very strong, having grown at 3% in 2014, 4% in 2015, and 6% in the first half of this year, is a strong (inaudible) of Europe as we see it today. Australia and New Zealand, our businesses combined since April 1, overall growth in the first half 2016 of 3.1%. And finally, last but not least, France, actually stronger for us -- considerably stronger -- from the minus 0.1% last year to the plus 3% in the first half of this year.

If we do the same on the BRIC markets, which represents around 11% of the business, you see the disappointment there or the -- mention the numbers for China, minus 3% I've talked about before, the very, very strong performance for the third year in a row in India, 10.4% in 2014, 10.5% in 2015, and 14.7% in 2016. A, we have a very strong business, but B, the economy is doing very well.

Brazil, obviously disappointing given the outlook at the beginning of the year, but actually, despite this, our Latin American business is still growing through strong growth in Mexico and Argentina, and Brazil looks to be around down 2% to 3% on a full-year basis as well. Russia is really not a surprise. Down modestly at the first half, probably not expecting to turn around anytime soon, but does follow a deeper cut last year, which was down 10%.

If I look at the businesses by banding, no real surprises. As I mentioned, Argentina and Mexico are strong in Latin America. Turkey, Indonesia, Denmark are particularly strong in these bandings, but a number of other European and other markets do relatively well compared to where they were 12 months ago.

Doing the same by category, again, this is influenced by new business wins and losses. So in the food category, it does reflect, in part, a large new business win earlier on in the year in General Mills and some entertainment new business won acquired from existing clients in the entertainment area. Automotive, a big category in the industry, is doing well, and so are our clients in this category. And then lastly, in the final area, I'll pick out government, retail, and telecommunications, which were very close to the 5% growth banding in their relative sectors.

So turning now to trade estimates of major new business wins and losses. Again, this does tend to emphasize USA and Europe. It does tend to emphasize media and creative wins and is the trade estimates. And you see here, we've shaded those items that have occurred in the second quarter. We've also highlighted in red those accounts that hare transferred from one Group company to another, such as Target, which was previously with one of our associates, Haworth. Has now moved into a GroupM operation.

Likewise, you can see here a number of nice creative wins coming through for Cohn & Wolfe and J. Walter Thompson in the second quarter, but I won't go through them all. On this page and the next, where there does seem to be probably a higher number of transfers between our businesses, particularly in Australia, actually, which is -- there have been one or two changes of accounts, but in the expanded Media Group, with both icon and (inaudible) coming into the business, obviously, there are opportunities to share among the wider GroupM operations.

In terms of trade estimate of new business losses, again we have reported and been very public about the unfortunate loss of our MediaCom and Volkswagen earlier on in the year. Take effect in 2017. We've had some other losses. One switch, as I mentioned before, our client Target. A second loss of LG Electronics in the media area, of otherwise a number of switches and smaller losses shown in the first half.

When we do the same on our own internal estimates of net new business wins, we estimate in total that we've won $2.9 billion of new billings in the first half of this year. This did compare favorably to the first half of last year, where we won $2 billion, or GBP1.3 billion, although last year was back-end waited in terms of the new business that asses. So last year, and it is one of the reasons why our revenue growth is really quite robust, the first half new business wins last year around 2 billion first, the second half around 6.5 billion. And obviously, we had a continued successful run in the first half of this year.

In terms of the results since 1 July in the trade estimates, we've had a nice planning win in China for MediaCom and a significant win as part of the consolidation of GSK, which is principally moved the majority of this particular division to ourselves and have asked to Grey Wunderman, and Geometry in our case, picking up one other major brands and the digital agency of record account as well. Unfortunately, again, we've been currently public in the loss by MEC and Grey of the AT&T business, which will happen later on this year. Likewise, there have been two switches, principally in the UK, of major clients, both BT and Marks & Spencer's between agencies in the UK.

Turning now to cash flow, starting with the operating profit as reported, we've adjusted for four non-cash items, both on the loss and gains on disposals remeasurement and non-cash compensation, depreciation amortization, and amortization, resulting in net cash generation of GBP577 million. The one item of interest is that tax paid is up significantly compared to a year ago of GBP250 million versus GBP165 million. We have settled two long outstanding and fully provided for claims, one in Spain, one in North America. That resulted in the cash generation being a little stronger this year at GBP577 million, versus GBP540 million last year.

And in terms of the use of the cash, capital expenditure has been a little stronger, again, through property co-locations and relocations (inaudible) expenditures there. In terms of acquisition payments, we spent GBP226 million, of which, GBP205 million is on initial payments, consistent with our targets for around GBP300 million to GBP400 million for the half year, and on share buybacks, a little less strong, having bought back 2% in the first half last year, having bought only 1% back in the first half of this year.

However, as a result, the net cash for the first half was a net generation of GBP36 million, compared to a year ago of GBP380 million. And I think we were conscious that last year we did overspend our cash to the tune of GBP560 million that was obviously going to impact net debt. Pleasingly, the seasonal working capital outflow in the first half of this year was over GBP200 million lower or better than the seasonal outflow in the first half of 2015.

So the combination of the currency and the outflow of cash last year has led to increase in the net debt. On a constant currency basis, it would've been up 18%, GBP600 million; however, with the effect of currency, it's actually up 27%. And I show on the next line a movement from June of last year to June of this year where the net debt on average has gone up approximately GBP1 billion. Finance costs, I have mentioned, have gone up marginally compared to a year ago, but still very healthy cover at 9.7 times the interest. And on the average net debt to headline EBITDA, adjusted [under] two times currently, as I said, targeting to get back to around midpoint, 1.5 to 2 times, by the end of the year.

In terms of the net debt as of June, 30 was around GBP3.4 billion. The effect of currency on that June balance sheet, which in many cases, our borrowings are in euros and dollars, is to add GBP565 million to the net debt. The STW acquisition was really not an acquisition to cash. We acquired or sold them our assets, acquired their businesses with the shares, and basically have taken on debt, their debt of GBP144 million. And again, their leverage is now at a much more sustainable level at just over two times.

But those two things combined with other operating items, principally the cash outflow of GBP157 million, have led to the GBP866-million increase in the net debt year on year. As I mentioned before, it has moved up towards the higher end of the range that we have targeted, to 1.9, with the expectation to bring it down towards the end of the year.

So how are we doing in our uses of cash flow versus our targets or goals this year of spendings or acquisitions? The goal or target is around GBP300 million to GBP400 million. We seem to be halfway along at the half-year stage at GBP205 million.

And share buybacks, we are around 1% this year. We probably will be a little lighter than we were last year overall. Dividend increase is very strong, at 23%, and we have basically hit our medium-term target of 50% payout approximately 18 months early at the 50% payout level.

Undrawn facilities, again, remain strong at just over GBP3 billion. And I include the net debt chart here just for information that we do have, of the GBP5.2 billion of debt facilities, only GBP600 million in sterling, of which, one is coming up in early 2017. But the other GBP4.6 billion is in combination of the euros and dollars. Obviously, some have quite long duration. Average duration 9.1 years, and average coupon 3.4%.

Finally from me just, just looking at how we performed in EPS. So last year, the growth from 84.9p to 93.6p was 10% growth in EPS. Obviously, with the benefit of currency, we're getting a 16.7% growth to 39.1p at the half-year stage.

Thank you, Paul. Over to Adam.

I'd just like to run you through where our midyear forecast has brought us. This is our routine 70-country sweep where we look at the perspective growth in total with industry billings for the current year and for 2017.

And this brings us to 4% forecast growth for 2016, which is a 0.5% downgrade from our last forecast in December, which was 4.5%, the difference attributable to a small upward revision in the USA and recovery in Russia and Argentina, more than slightly offset by downward revisions in China and Brazil. And the Russia recovery, too, came with a caveat about -- we're looking for more a little more support of GDP and consumer income for that to be sustained.

China growth, the forecast was reduced from 9.1% to 6.6%, and this is attributed to the slowdown in fixed investments and the shrinkage in profits affecting consumer demand. GroupM China describes the 6.6% as a new normal, and nevertheless, makes a confident prediction of 7% for next year, citing continuing consumer confidence, rising expectations, and continued vigorous urbanization, which is quite different position than we were in a year ago when we were speculating what might happen if there was no growth in China.

The first call for 2017 is 4.3% growth in ad billings, and that would take us to $552 billion in advertising, which would be, in real terms, high, and combined with what we think will be invested in diversified marketing services, take the totality of the industry as we record it to above $1 trillion for the first time.

The market environment is -- continues to be a picture of slow global recovery now in its sixth year. I remember my boss Dom Proctor describing some years ago how the focus remains on price and delivery, and I don't think much has changed. The faster-growth world's advertising intensity is naturally lower. The global average is in the order of 0.73% of GDP and fairly stable.

But the growth in the faster-growth world's share of the totality does tend to dilute this a little bit over time. Its share of today's ad expenditure is 35%, and we now have 39% in the far end of our model forecast in 2021. Both those figures are a couple of points lower now with China's so-called new normal.

Client spending intentions, as far as I've been able to gather, are essentially unchanged by Brexit -- either in the UK or nearer in Europe or further afield -- on our international network. Very few spontaneous mentions of this in our last forecast sweep. Although in the autumn, I should be asking more explicitly for an opinion about this.

One qualification one should attach to simply looking at the billings as I've reported, the economy, it doesn't really reflect the increased value that agencies are acting now with the rise of data and technology being applied to all media decisions. And in fact, the biggest, most recurrent theme in this current sweep of forecasts was the rise of automated or programmatic media buying, which is a big opportunity to raise standards in many fields of marketing activity. And some analysis in the UK as well reminds us that the profile of digital investment, too, is changing. I would characterize that as a reduction in simpler forms of digital advertising static display into particularly social and video.

If we index in real terms just to see where we were since the trough, we reported three months ago that we were confident that the global advertising had recovered its 2007 real peak in 2015. However, the mature, developed economies are still only indexing 92 in real terms compared to that peak. The Eurozone is only indexing 78, and the Eurozone periphery is still only indexing 60. The younger consumer economies have never gone backwards on this index, but their pre-Lehman run rate of around 8% now seems to have settled down to a new normal of more like 4%.

Again, looking at real advertising levels in Europe, I would characterize the UK as being the outlier, and certainly before Brexit and possibly afterwards. By the end of 2015, the European Union, excluding the UK, represented 19% of the global economy. That's down from 25% in 2008. The UK, by contrast, was 4% then and remains 4% today. And in possible -- interesting bit of context for Brexit, the UK is absorbing 8% of Germany's exports.

In terms of the size of the ad economy, the EU ad economy, less the UK, is now 20% smaller in real terms than it was in 2008, whereas the UK's is now -- is 8% larger today. The graph shows a dotted line. That was our UK media forecast published just before the vote, which Incorporated an erroneous assumption that we would vote to remain.

The line beneath is what I think will be the worst-case outcome, and this -- looking back on the year, it's difficult to distinguish what was a little bit of a wobble, particularly in print in the first half, from possible Brexit effects. But the worst-case here would be 4.5% growth in 2016 instead of the 6.3% we published. And essentially what that is, is an assumption that print will have quite a rough year, something between minus 15% to minus 20% in press print ad revenues, flat in the other traditional media, but sustaining growth in digital media of around 15%, which our own first-half digital activity in the UK certainly easily supports. In Western Continental Europe, our forecast, nevertheless, came up [too], from around 2% in December to 2.5% growth this year.

Net global growth in 2016, we're looking for $20.5 billion now, which is a little bit lower than the $22 billion we had in December. These are the principal contributors. The USA now moves to the front as a major contributor, ahead of China this year, and our five-year prediction shows these two contesting that number-one contribution, which was, hitherto, since 2007, China comfortably dominated that. The dependence on this group for growth is now 80%, which is an improvement of the 90% dependence from a year ago.

And we note the absence, now, of Brazil, but the inclusion of the Philippines and Argentina, and of course, India, which is the fastest-growing of the large economies. And India is -- will, we think, become the 10th $10-billion ad market in 2018. Philippines is -- indicates strengthened Southeast Asia. We are picking that up also in Indonesia and Vietnam.

The dependency on growth split between the new and the old worlds. The new world peaked at a 75% contribution a few years ago. But today's tectonics with the USA and Canada is making this much more even, and in fact, 2016 looks like it will be about 50%-50% new-old. A year ago we thought the long-term outlook would be a balance of about 60%-40%. We are now revising that to about 55%-45%.

And looking at digital media versus traditional, and noting the increasing blurring now in definitions between the media, but the way we are still currently categorizing it, digital, not surprisingly, is still providing the vast majority of net growth compared to the package of the traditional media. However, this contribution is beginning to slow now, so the law of large numbers takes over.

We have global digital ad investment growing 18% in 2015. We think it will be 14% in 2016, 12% in 2017, so quite a marked deceleration. Meanwhile, that leaves the so-called traditional media a net positive now, and we don't think traditional media will go negative again unless digital makes further inroads on media other than press. That's the end of the main slides, and I'll just conclude with the table showing our regional forecast.

Thank you very much indeed, Adam. You can just absorb that forecast for 2016 and 2017 there.

I just want to move to our four core strategic priorities and spend probably the most time talking about the macro and micro trends that we see. First of all, global GDP growth projections for 2016 are pretty anemic. They are trending down, actually, to about 3% to 3.5%, but most of the gurus or the so-called experts talk about 2017 been slightly higher, at 3%, 3.5% to 4%.

So 3% to 3.5% for this year. 3.5% to 4% for next year. That's despite the fact that this year, we've had three events.

What turned out to be against the naysayers, Brazil put on a wonderful Olympic Games. As soon as the games started, the criticism tended to evaporate. And I think we can talk a little bit about television audiences. I think television audiences didn't reflect the total picture of what we also see is the growth of new media.

The other events being the US presidential election where Donald Trump is now starting to spend more on media. We think that will clearly help him. Whether he wins or not is another question, but he certainly has tapped into something in the American psyche as he wouldn't be where he is unless he hadn't. And then the third event was, of course, the successful UEFA football championship in France.

Brexit impact is estimated by the IMF at about 0.1% for global growth in 2016 and 0.2% for 2017, but primarily focused on Europe, and of course, on the UK. There are concerns over Greece continuously. It seems to be forgotten, but we still have concerns about that, and about the European banks.

And then there's a key election rush, particularly in Europe, not just the US presidential elections. France, Germany, Netherlands, and indeed, Spain and Italy, with further electoral instability. We have a big referendum coming up in Italy on October, and Prime Minister Renzi has staked his position on that, so considerable uncertainty from that. Overhang from deficit management, eventual end of monetary easing in US, Europe, and not just those two parts of the world, but Japan, too.

Concerns about migration crisis and terrorism all adding to the uncertainty. Middle East and Turkey, and the Ukraine-Crimean-Russian dispute still not resolved and driving very difficult relationships with Russia. In fact, I think the Russian relationship is probably at a post-Cold War low, and we ourselves have suffered from that with the expropriation effectively by act of the Duma of our television measurement business in Russia, which we sold to a state research institute after the half year end.

Traditional media continues under pressure, as new media grows and new interests experiment in the agency space. I'll come onto this a little bit. We don't think -- and it was quite interesting in the calls that we listen to from our competitors. I think one, Omnicom said, there's a tapping on the brakes, and I think we saw that IPG denied, that being the case. And certainly, we've not seen a slowdown, but I'll come onto why we think there may be some question marks over digital growth, and I think Adam has also touched on that in the context of other markets.

But having said all that, with all these headwinds and uncertainties, there are opportunities in Argentina. The Macri government is making big inroads into the problems facing Argentina. We're doing a big conference for them in Buenos Aires, for the government in Buenos Aires in a couple of weeks time. There's continued growth in Colombia and Egypt and Indonesia and Mexico and Nigeria, Peru, Philippines, and Vietnam, as well as, of course, new markets for us in Cuba and through an affiliation in Iran, although, one would have to say that the sanctions have not lifted effectively, and that's why we're just doing it through an affiliation agreement.

For the micro level -- and this is the key point -- the world is an uncertain place as there a lot of gray swans as we've just outline. But basically, GDP growth is tepid. And post-Lehman in 2008 -- so been at it for eight years -- there was a recovery, a sharp V-shaped recovery in 2010, and maybe to a lesser extent 2011. But 2012, 2013, 2014, 2015, 2016, and what we think for 2017 is growth in the bands of, say, 3% to 4%, and with advertising as a proportion of GDP remaining pretty constant, maybe around the same level with growth, as Adam has pointed out, more from the new markets or the fast-growth markets traditionally than the mature markets.

But low growth. Low inflation; in fact, deflation in some markets. No pricing power for our clients as a result, and therefore, there is a focus on cost.

I know that in our industry, we tend to be optimistic. We tend to be half-glass-full people rather than empty people. But having said that, I think we did described in a previous release parallel universes, and there's still to be seems to be a parallel universe, sort of a disconnect between reality and what people say. And there is, whatever people say, we used the phrase in the release today, grinding it out, and it is a grind, and it is a difficult environment, low growth environment with tepid growth.

In addition to that, the spectrum of -- if you are running a legacy business -- is disruptors like Airbnb or Uber or Lyft, one end, and the zero-based budget is that the other. And whether they like it or not, the activist investors are seen as increasingly short-term focused, and this puts pressure on legacy companies in particular.

There's uncertainty pretty much everywhere, and Brexit is just the latest example of that. Reducing investment in the business in favor of buybacks and dividends, and I'll come onto that in a second. And clients, on the more positive side, are focused on opportunities in the faster-growth markets and on following consumers into new media, into new digital media.

From a functional point of view, horizontality, as we call it, integrated communications becoming more and more important. We've seen that in some of the most recent pictures where we've been successful, and indeed, unsuccessful, and I'll come onto that in a second.

And also shopper marketing and the application of technology data and content, again providing the difference between agencies. Traditionally, it's been about people and creative talent. It continues to be that. That has not diminished. But there is equal emphasis on technology data and content, and implementing and integrating those into our offer is [critically] important.

Efficiency and effectiveness, however, is still seen as key with clients. There is still pressure on pricing and payment terms. And again, talking about disconnects or parallel universes, I think it was suggested in one call, in IPG's call, that there was no pressure on payment terms.

Really, that is out of touch with reality. There is pressure on payment terms, and there continues to be. Maybe not as much as there was, that's true, but still a significant pressure. And to deny that is denying reality.

There's pressure also for continuous improvement and pressure from the new entrants to the ad tech and marketing space, and we are seeing that increasingly, too. I guess The Trade Desk is the latest example of that, going out with an S1 and then a [putative] value of about $1 billion, which has, obviously, has implications for our 16% or so investment in that AppNexus, which is bigger than The Trade Desk, and the two compete, not a both sides of the market, but at least on one side.

There's also pressure from a growing Google and Facebook duopoly in digital media, although the Yahoo-AOL merger, or acquisition by AOL, may provide that third force that our clients and our competitors and ourselves are looking for, along with the backing, obviously, of Verizon and maybe even Microsoft.

There's -- having said that, coming back to this question about whether there's a tapping of the brakes on digital, which we have not seen, we think there is some questioning of the digital growth due to issues such as viewability and ad fraud and measurement, and indeed, ad blocking. But we've seen one or two clients, Procter & Gamble, for example, who have said they are not reducing their level of spending on Facebook, but they are redirecting it, and it may be over invested in some aspects of it, but they central the core question, and it comes back to comScore and what they should be doing and are doing to some extent, is there is a need to focus on measurement.

Measurement is the key issue, and our clients and ourselves and others, our competitors, are crying out for better measurement online and off-line, and Google and Facebook can't be the referee and the player. They can't provide the data and the inventory at the same time.

On slide 50, we just look at global GDP growth. We compare it, as normal, to the nominal forecast by Goldman Sachs. That's the solid orange line, with the forecast in the dotted lines.

The WPP GDP is different, and you see the crossover in Q2 and Q3 of 2014. What happen there, or started to happen there, was that the mature markets started to grow faster, and WPP's GDP, although we are balanced -- one-third in the US, approximately one-third in Western Europe, including the UK at 14%, and one-third in Asia, Latin America, Africa and Middle East, and Central and Eastern Europe -- although we have that balance, we are still over indexed effectively on US and Western Europe, and so when those mature markets grow a little bit faster, we benefit in terms of GDP growth.

And the last -- the little blocks at the end are the IMF Real GDP forecast, which, as you can see, our about 2.5% to 3% at the moment, although those usually come down in the course of the year. But basically, the pundits are expecting growth of around 3.5% to 4% next year.

Interesting chart, we think, from the S&P 500. If you think about the S&P 500 as being one company, effectively, it's shrinking. And in four of the last five quarters or so -- five of the last six quarters -- one exception being Q2 of 2015 when it was just 98%, so almost 100% -- effectively they -- S&P has been shrinking as dividends and buybacks exceeded retained earnings.

And if you think that is just a unique American or American-based phenomenon, think again, as slide 52 shows what's been happening to the payout ratios of the FTSE 100, that's the solid red line, and the FTSE 250, which is the solid green line, and you see the payout ratios of the FTSE 100 have gone from probably around 40% to 70%. Yes, about 40% to 70%. The payout ratios of the FTSE 250, the small or mid companies, have gone from around 35% to 45%. And you can see WPP's payout ratio, the solid blue line, which has gone from about 35% to -- well, effectively, it's now up to around 50%, again, 18 months ahead of schedule.

Now, that's been taking place whilst EPS has, on an index basis, has almost halved in the FTSE 100, whilst the FTSE 250, a lot more UK focused, has actually risen from 100% to 120%. So dividends are increasing, whilst EPS, certainly for the FTSE 100, have been falling.

Having said all that, our thesis, as you would expect, on slide 53, is a very different one, and we think there is a need for investment in innovation and a need for investment in branding. So this slide shows that if we all invested in the top 10 brands in our annual strong brand survey, or the brand valuation survey, which we do with the Financial Times, if we would've invested over the last 10 years in those brands, our portfolio would be up by about 120%.

If you had invested in the S&P 500 over that period of time, it would be up by 69%, that portfolio would be. And then the MSCI would be up by 27%. So in other words, you'd do about 400% better than the MSCI and about 75% better than the S&P 500 if you invested in the 10 top brands in our strong brands or leading brand valuation index, the clear indication that investment in branding and innovation works.

Just summarized on 54, key strategic priorities. Horizontality, ensuring our people work together more effectively. This is critically important for our future. We've been very successful, as Paul pointed out, in our new business, particularly in the first half of this year with almost GBP2 billion in new business in the first half versus -- well, GBP1.9 billion versus GBP1.3 billion previous year.

But in order to be successful -- and we've had one or two hiccups or bumps recently, as Paul outlined as well -- one of the key takeaways from that, and if we listen to what we are being told, and I've heard it in at least two cases -- one where we were the incumbent and one where we were the challenger -- that our integration of data and analytics has to be even better. That's not a criticism of our colleagues at Kantar or indeed a criticism of our colleagues at GroupM, but what we have to do is to integrate our offer much more effectively, and not by banging companies together, as one analyst asked this morning. We think that's the wrong strategy.

One of our competitors is doing that, and in our view, is losing, and you can see from our data, has lost significant marketshare over the last two years by just doing that. The ends might be right, but the means are not justified and not right, and we think the process has to be much more gradual. That's the first objective.

The second objective is for faster-growth markets to be 40% to 45% of our business over the next four to five years. They are already around 30%. That objective has been hindered by weak currencies in those fast-growth markets, but we expect that to reverse over the coming years.

New media, already 38% of our business, over 38% of our business, to be 40% to 45% over the next four to five years, growing this year by, as Paul pointed out, by over 7%. And last, but not least, data investment management, which is already together with quantitative disciplines, 1/2 of our business, at 25% of our business is strong, but we need to focus on the application of technology data and content, big data and content, as I've said before, in order to differentiate our offer more effectively.

Just a little bit more detail on that, on the horizontality, the first of our four strategic priorities. We have 48 client teams, representing about a third of our business. So about $7 billion of revenue out of $20 billion of revenue represented by those teams.

At WPP, it's not as messy as this slide might indicate. These are the brand names that we have brought into the Group and grown and developed organically over the years, but the way we run the Group is through 11 verticals with two horizontals. Client leaders, I mentioned before, and Country and Regional Managers. So 11 verticals supplemented by those leaders, and the matrix has two horizontal strands, client- and country-base.

And here are the client teams that we have. As I said, 48 account teams. One-third of our revenues $7 billion or so, with over 38,000 people working on those accounts.

As far as Country Managers are concerned, we have 19 Country and Regional Managers covering about half of the countries in which we work, 52 out of the 113 countries, and we intend to expand that still further. They focus as slide 60 says, on people, clients, and acquisitions, making sure we have the best people, work with the local clients of note who will be the multinational clients of the future, and make sure we have the right acquisitions, and to make sure that we work more closely together.

Recent team wins have exemplified that. It's been good news. Emirates, GSK global consolidation -- where we were the big gainer with, as Paul said, the (inaudible) brand -- Legal & General, Newell Brands -- another big win for us -- Tyson Foods, US Navy, Volvo, and Yildiz Holdings -- a well-known Turkish-based conglomerate in the food and related industries.

And new markets, on slide 61, already 29% of our business, that increase in share hindered by the lack of strength of the faster-growth market currencies, but our objective for them to be 42.5%, or between 40% and 45%, within the next four to five years. And you can see on slide 62 the progression we've made starting to reflect STW, but you can see the gap between us and our competitors in terms of faster-growth market penetration continues to widen.

Our growth in those faster growth markets, although it's slowed and we've had a bumpy time in China in the first half of this year, although we are saying that -- or we are being told by our colleagues that we will improve in the second half, the compound average growth rate in greater China, 15% over 15 years. In Brazil, 11% over 15 years. 15% a year (sic - see slide presentation "15 years") in India, which has been a star performer still, with Modi having done an incredible job in improving the prospects for the economy there. And then 41%, 15 years in Russia.

In terms of new media, we are already at 38%, objected to be 42.5%, and it's interesting just to note what's been happening -- it follows on a bit from what Adam was saying -- to cable growth and broadcast audience delivery latest numbers. So July 16, further degrading of that cable, down 7%, and broadcast down 7%.

And that takes us to the analysis that we use quite a bit, what we call the [merimica] analysis, which we just supplemented the time spent figures -- those are those blue blocks on for print and radio and TV and Internet and mobile -- going back to 2011. So you will see that in 2011, about 25% of time spent was on print, and what we're seeing -- sorry, ad spend. Ad spend is the blue box.

About 25% of ad spend was in print. That's traditional media, newspapers, felling trees and distributing newsprint. That was 25%. It's gone down to 16%, but time spent is still at 4%.

Radio is about even-steven, and if we had outdoor statistics, which we don't, they would be similar. TV, interestingly, this is network television, not over the top television, which is in the Internet and mobile columns. Network television has seen some degradation in terms of ad spend from 42% to 39%, but time spent has also started to fall off. Not as significantly as we've heard from Adam in relation to the UK and traditional print, but has seen some. And some degradation and analysts and investors are focused on that very much. The upfronts were stronger, we have Owen and Brian Lesser. Owen [Gottlieb] and Brian Lesser are with us, and they can talk more to this point. But the upfronts were strong. I don't -- I think our competitors were talking about double-digits, I don't think we saw double digits.

We saw something around -- Owen can go into that, but 8% to 9% growth. But I think one of the primary reasons for that, and again, Owen can expand on it, is that what we saw was a catch-up, if you like, for what happened last year. Many competitors included, many our competitors did not go into the upfront market heavily last year and as a result, suffered in the scattered markets later on. And as a reaction to that went quite heavy in the upfronts this year, and that, I think accounted for some of the price increase. Athough measurement difficulties may have been a part of it as well, where people were acknowledging the expanded online adjustment. Internet pretty much okay in terms of balance, big opportunities mobile, and again, we had questions on that this morning from the analysts here in London, and we can talk a little bit more about that.

Having said that all about time spent versus ad spend, it is important to understand that traditional media does seem to get greater engagement. We just included this slide here, which does clearly indicate -- this is data from Canada, but we could show data from Australia and the UK to exemplify that as well, that traditional TV and traditional newspapers may be oversold, if you like, in terms of activity.

68, we just go into further detail of new media and it's, simply put, that technology, data and content are becoming increasingly important as differentiators. Our partnership with AppNexus is a good example of that to driving Xaxis penetration on programmatic and technology. Our partnership with Rentrak and our partnership with comScore are increasing important. And on comScore, which was a major feature of our first half, with a writedown following the gain from last year from the sale of assets to comScore, we have to say that we are pleased with the recent management reshuffle at comScore because it does demonstrate the action being taken as a result of the inquiry. But we are puzzled, and I would even go stronger, we are amazed by the continued nonresolution, the failure to resolve the accounting measures which we -- matters, which we understand focus around nonfinancial revenue recognition.

But it seems to us, whilst it's not a small matter, is a matter that could have been settled by now, and goodness knows how much it's costing the Company in terms of professional fees. Usually these types of investigations cost a lot, and maybe objectives vary. But it's not just the financial cost, it's the opportunity cost at a time when our clients, ourselves and our competitors are crying out for better measurement of online and offline. And we can't rely on Google and Facebook to provide that data. It's just not right for them to act as the referee and the player in the game, if you can call it a game. And I think this has driven some of the uncertainty about digital spending in its growth, but with digital budgets.

And Adam has referred to the fact in some categories in the UK, it's as much is 50%, but if you said that the worldwide average was around 28% worldwide, that increasingly procurement officers, CFOs are starting to look very carefully at their digital spend. And they need data. They need ROI data to prove it. So this is a critical time for comScore, and we think they have to spend time not on resolving these accounting matters further, but to spend time on developing better measurement effectiveness.

WPP's investment technology also is through 24/7 Real Media and Xaxis, which continues to be extremely successful. Our investments in content such as Vice, Fullscreen, Media Rights Capital Refinery29, et al, and our technology partnerships are valued at about $1.9 billion, GBP1.4 billion, $1.9 billion, based on quoted market values and latest funding rounds. And this is our foundation for our continued leadership in media and data investment management, which is becoming more and more critical. And based on market comparisons, Xaxis on its own would be worth 2 billion to 3 billion, and obviously the Trade Desk valuation, we'll see how that comes out, would reinforce that.

Final strategic priorities data, we are -- we've hit our targets there. Data is 25% of our business, quantitative discipline's 52%, and you can see here the digital and fast growth markets are two key long-term drivers for us. Fast growth markets are 28% of our revenue, digital is 38%. And there is some lap over between the two but -- of 9%, but overall it's 57% of our 2016 half one revenues.

In terms of our key objectives, which we always review with you. Those are improving margins, operating margins, flexibility in the cost base, using free cash flow to enhance shareholder value, developing the role of the parent Company, emphasizing revenue and net sales growth as margins improve, and improving our creative businesses. Those are the six objectives, let me just go through each of them.

Slide 73 just tracks our progress in terms of PBIT, profit before interest and taxes and margins, and you can see we've now hit almost 17% in 2015, up to 13.7 in the first half, traditionally lower first half than the second. Our profitability is about one-third in the first half of the year and two-thirds in the second half. The long-term objective remains 19.7%. And if you say you were at 17% now and it's roughly 300 basis points to go, 100 basis points comes from operating margin improvements, the other 200% will have to come from increasing operating leverage. And our 0.4% reported margin improvement and 0.3% constant currency in like-for-like in the first half, the majority of that came from non-staff costs, from SG&A more than staff costs.

Staff costs were about a 10 basis point improvement, but it fluctuates over time and clearly there's scope for us to do more. And in that connection, we are improving operating margins through the operational effectiveness programs. These are shared service centers, offshoring consolidation of IT infrastructure. And as I said, they are scheduled to deliver at least 100 basis lines from our existing finance and IT cost base, which is about 10% of revenue.

I have to say that we have been investing, as Paul mentioned, in relation to our net sales growth very heavily in IT and infrastructure and technology infrastructure in order to improve our service delivery. And the operational effectiveness and efficiency programs, again, have become more and more significant in 2016 and beyond. And it's critically important, not just from a back office point of view. This is a group that started from virtually zero in 1985 with a GBP1 million capitalization is now up to over GBP22 billion. And what's critical, having grown by acquisition, is to bring the group more closely together, not just in terms of front office integrated offerings, but also back office.

We rarely bring in consultants, but when we do, they comment that we are still a very decentralized organization relative to the other industries they look at and that there are significant improvements that we can make in terms of organizational effectiveness, which is what our clients want. They are improving their organizational effectiveness in exactly the same way. We have to do the same, so a critical part of our strategy will be implementing more effectively our internal integration.

In terms of flexibility and cost base, where we're maintaining our 7%, 7%-plus percentage of net sales, so that gives us insurance against a downturn. We touched on the dividend payout ratio. We've hit the 50% target 18 months or so early. So for the first half, we are declaring a dividend of 50% of earnings. We'll obviously discuss the payout ratio in the future, but I think it is unlikely -- this is a personal view -- obviously, it depends on the Board. It's unlikely that we will go further than 50%, despite what we saw in relation to the FTSE100. We think that an investment strategy is critically important.

You've seen that over the last 10 years, 61% of our retained earnings were paid back to shareholders in dividends and buybacks. We think that is about the right balance that we have, with the target payout ratio being achieved at 50%. And that gives us the flexibility to invest in our business. We believe in our business. We believe in the growth. Adam recounted that we've -- the industry has hit about $1 trillion. With traditional media being about $500 billion, it's a growth industry. In the 31 years we've been in existence, there's only been three years where the revenues or net sales have fallen off -- we were calculating revenues alone at that time -- and so, therefore, we think it's a growth industry, and benefits from investment. And I refer to 61% of our retained earnings over the last 10 years being paid back to shareholders, as GBP5.2 billion, out of a total of GBP9.6 billion which you can see on slide 77.

On 78, we just go through how we're using our free cash flow for acquisitions. There is a significant pipeline of smaller medium-sized acquisitions. We've done 42 this year, a large number, it continues to be a large number, will continue to be. We focus very much on our strategy around new media, about fast growth markets, new media and data. And it will help us accelerate and cover this difficulty that we have, because of the weakness of currencies in the BRIC and the Next 11 markets.

We continue to find good acquisitions. I have to say that valuations have got a bit strained. I'll give you a good example. Merkle is a great company, and we looked at it very closely, and would have very much like to have concluded a deal with Merkle. But we, along with a major private equity groups, found that we really got into nosebleed territory. We think the final transaction with Dentsu, was at around 16 to 17 times EBITDA, which must be close to a record in our industry.

But acquisitions will continue to play a role. About half of our growth in comparison to like-for-like net sales growth in the first half and STW alone adds about 1% to revenue and net sales growth. And on 79, we just summarized our acquisitions in the first half. You can see they focus on fast growth markets and quantitative and digital, in fact a number of them combine both. And you've seen that we've done a number of others in advertising and public relations and branding identity, healthcare and sports marketing. And then, there were a further six acquisitions post July 1, a couple in Turkey, Ecuador, China, France and the USA focused totally on fast growing markets and quantitative and digital.

Now we always give you an update on our acquisitions, since Lehman in 2009 we -- or 2008 and into 2009, we've acquired 209 companies, 33 in fast-growing markets, 72 in quantitative and digital, and 86 in both, and 18 in client creative areas, where we needed to boost our offer or buttress our offer. The total revenues of those companies are $2.2 billion. Total consideration paid is $2.4 billion. And we've just summarized on 82, the returns.

And you can see the organic revenue growth for each of the segments, faster growth, market acquisition, direct and digital. Both creative, creative tends to be in the more mature markets, in the more traditional areas of the business, and the total. And you can see a revenue growth of well over 6%. You can see compound. You can see operating margin contribution approaching 20%, about 17%. And most importantly, you can see return on capital considerably in excess of our weighted average cost of capital.

Our return on capital was affected a little bit in the first half of this year by the devaluation of the sterling which hit June 24, but came off about 60 basis points. But basically our return on capital around 15.3% showing pretty much continuous improvement over the years. So acquisitions have basically worked on the basis of the analysis.

In terms of the creative reputation, John O'Keeffe has done an extremely good job over the last six years. It's the sixth year in a row that we've been voted Holding Company of the Year at the Cannes Lions. This year, we had four networks in the top seven, Ogilvy at one, Y&R at three, Grey at six, and J. Walter Thompson at seven. Ogilvy & Mather was voted again Network of the Year for the fourth year -- actually fifth year in a row.

Four out the top seven networks were ours as we said, and two of the top three agencies, single agencies, INGO in Sweden and Grey in New York were voted two of the top three agencies for the year. Ogilvy & Mather were also voted the most effective EFFIE network for 2016, and WPP was the most effective EFFIE network for -- I think it's five years in a row. And under the WARC evaluation, WARC 100, WPP for the second year in the row was most effective holding company, with Grey having been voted the most successful global agency in 2014.

So to summarize conclusions on slide 85, a strong H1, the first half, with leading like-for-like revenue and net sales growth. And what Paul did -- showed you the analysis for two years, it's really interesting when you look at those two years, and you look at the revenue growth against our competition, very strong revenue growth certainly equal or better to most. And enhanced net sales growth of over 4% in the -- in revenue and net sales from acquisitions in the first half.

Increasing tailwind from foreign exchange 1.4% in Q1, 4.4% in Q2 and 2.9% for H1, and obviously with pound weakening on June 24 by over 10%, going from 1.50 to the dollar to about 1.30 currently, and some commentators saying it will go to 1.20 or 1.25, there's an increasingly favorable tailwind from ForEx, principally between sterling and the dollar. But it also is impacted by the strength, the relative strength of the euro. Margin improvement of 40 basis points on a reported basis, 30 basis points on constant currency, and 30 basis points on like-for-like.

Headcount firmly controlled, up less than 1% on a like-for-like basis since the beginning of the year, versus net sales growth of 3.8%. A lot of that control comes from our IT transformation agreement with IBM. We've transferred about 1,800 people so the -- to IBM. So therefore, the headcount has come -- has been controlled by that IT transformation project.

Constant currency revenue [up] almost 9%, net sales up by over 8%. Reported headline profit before interest and taxes up 15% almost, and reported headline diluted EPS up 17%. Strong cash flow with lower seasonal networking capital outflow than in 2015, against our competition who all reported weaker cash flow this year. And due to pressure on the payment terms, I think primarily, and continued similar performance in July, with cumulative like-for-like revenue growth [up] 4.3%, and net sales up [3.5]%.

The outlook for 2016, the financial model still works. Organic revenue, just to remind you, organic revenue [so] net sales growth [0%] to 5% in line with market growth. Margin improvement of 30 basis points before currency movements, with a long-term sales margin target -- net sales margin target of 19.7%.

We use our substantial cash flow to enhance EPS through acquisitions and share buybacks and debt reduction. With the payout ratio being achieved in the first half of the year at 50%, the emphasis will go more on to the acquisitions and share buybacks, as a proportion of our free cash flow. The incremental share buybacks of targeted of 1% to 2%, or equivalent to an impact of -- on EPS of an incremental 20 basis points or 0.2 margin points. You remember that we, we may remember that we reduced our margin target from 0.5% to 0.3% pre-currency.

But all of this delivers 10% to 15% EPS growth as we achieved in half one. And this shows what's been happening over the last 22 years, from 1993 which was when we did our rights issue -- that's the means of comparison -- of 14% compound average growth rate in EPS over 22 years, despite the dips in 2002/2003, and the Internet bust, and the post-Lehman area.

As far as 2016 is concerned, and to some extent 2017, our forecast, as our Q2 revised forecast, like-for-like revenue growth well over 3% for the year, and net sales growth of over 3%. As Paul said, our Q2 [RF] forecasts tend to be conservative, and they're also against stronger comparatives for last year.

Margin improvement in line with our target of 30 margin -- 30 basis points pre-currency, and acquisitions to add around 4% to revenue and net sales. And current exchange rates, at current exchange rates, the full-year currency impact is 8% and 9%, with a benefit to revenue in net sales. So a strong currency tailwind. And staff costs and headcount remain controlled to deliver the margin target. And the operational effectiveness and efficiency programs remain very important in supporting our future margin goal.

So that's it from us. We are ready to, operator, to open up to Q&A. And just to remind everybody, which is important, that we got Owen and Brian out of bed early this morning, and they were on the London call at about 4:30 in the morning. They weren't in their pajamas like Donald Trump. They were -- or at least the top half seemed to be dressed well. But they made a big effort to be with us. And perhaps you can direct some of your questions, and to Adam too -- didn't have to get up early this morning, or as early. But you can address them to Adam, as well as Paul and myself. So over to you, operator.

(Operator Instructions)

James Dix from Wedbush.

Good day, everyone. Okay, I will follow the advice given. I have three questions.

First, on China and perhaps this is for Martin and Adam, in particular. Adam, you indicate your sweep is indicating a new normal of growth in China in that 7% range, which is lower but still pretty robust. Any changes now at this level in terms of where that growth is coming from by medium? Anything that's change now in the market in this new normal in terms of the mix of growth?

And then I guess maybe more for Martin, you're -- just looking across the countries that's the one, which stands out where WPP's growth seems to be substantially lower than the growth of the overall ad market. I know you're expecting some recovery in the second half but what do you think is accounting for that and when would you expect to be -- there to be some conversion between those two growth rates?

And I had two others for Irwin and Brian after.

Do have a third question, James?

Yes. Well, my second one was for Irwin, just any color on the pace of media reviews this year versus last and any change in what's motivating them or proving decisive to their outcome.

And then I had one for Brian, just on the strength that we've seen in mobile search. I know that's not as big for your -- for larger clients like yours, as maybe for some of the long-tail but it -- Google has called out particular changes they made last year which has really led to an acceleration. Anything you're seeing there in terms of the returns that your clients are getting on those changes? Thanks.

Adam, do you want to start on China and then I will turn it to Irwin and Brian.

Yes, the picture in China is the first thing to look at is always digital and TV balance because of the onerous regulations which have been placed on TV and have driven advertisers to digital. That -- the audience trend now is stabilizing in linear TV but there will be a lag, our local office thinks, of about a year before the ad revenues stabilize, too.

Regulation is also being applied to online TV now, which is essentially and probably a constraint on growth. And then among the smaller media, radio is doing well from the increased -- increase in car ownership and outdoor is improving because of [demand/supply] which is, of course, one of the great themes of China.

Okay, just for me on China, I think we had to admit we are disappointed with the lack of growth, the negative growth, if that's not an oxymoron in the first half of the year. The forecast do show an improvement into the second half of around 3% so net for the year, I think it's about 1.5%. And we are watching that very carefully. But I think the answer is that the market is not growing, whatever is happening to the media market, its GDP is not growing at the rate that is talked about, whether it is 6% or 6.5% or 7%. It's probably growing at about 2%, 3%, 4%, when you look at electricity supply statistics and freight statistics, which I think probably are the more accurate indicator of what's going on.

Having said that, we remain bullish on China. We remain bullish on Russia in the very long-term and Brazil in the medium-term over the next two to three years.

But at China, we think we will recover and recover us and I'd have to say that our business in China is big; it's GBP1.7 billion. It's our third largest business after the US and UK; a lot of our competitors have played catch up there and I'm not quite sure when you look at the data, none of them reveal what their revenues are in China and it would be very interesting to know what they are and how they are distributed over it.

But I think we've seen pressure in China over the last 18 months but we think the pressure is going to ease as the growth in the economy continues.

Irwin, do you want to pick up on media reviews?

Hi, the line dropped for about two minutes so we didn't hear the question.

Okay. The question is what's the pattern, if I can paraphrase it, for James Dix, was the pattern of media reviews, what's been happening to the pattern media review. I guess James is question is particularly in relation to following the ANA inquiry or report by K2 and Ebiquity.

And then the other question was for Brian on mobile search. On mobile search, Brian, what growth trends do you see there? I think James acknowledged that, that tends to be for smaller companies where we tend to deal with the short-tail rather than the long-tail but what have you seeing on mobile search. So Irwin, do you want to talk about media reviews?

I see them here but --

Irwin?

Yes. The line keeps cutting out. Let me start with --

I think we have lost you, Irwin. So maybe I will just comment and maybe you can come back and we can just get the technology right.

So on just James' question is on media reviews. What we've seen is not so much an increase in activity but I think an increase in media audits so if anything, it's good. I see that K2 have started a new division to do media audits.

Ebiquity have made statements in relation to their publicly listed company here in the UK and they've said they will be increasing media auditing. It was a very interesting article by Bob Wootton yesterday here in the UK about the quality of media audits and who should complete those audits and that maybe it should be confined more to the big four with some expert advice. So I think the answer to the question is not so much more media reviews but more media audits.

Brian, are you linked with us or you've got the same problem?

I'm with Irwin. Let me attempt to answer the question. We keep dropping the line and there's a --

Well, we've got a real problem. Well, let me answer on the mobile search and if you both can cut in, if we solve the technology problem, we will come back on the mobile.

So for James, what I see is that mobile search has been quite significant in the growth of our spending, particularly with Google, probably less so with Facebook. Just to remind you our Google spends last year at of about GBP73 billion were GBP4 billion with Google. This year, we are projecting GBP5.5 billion so considerable increase and then Facebook GBP1 billion to GBP1.7 billion.

Just to remind you that --and a lot of that Google spending is driven by mobile search and driven increasingly by our relationship with Google through the Essence Agency. So we already have six agencies, the four main agencies inside GroupM, Plus the Xaxis and Essence and I would say that mobile subject to Brian can say if we can hook him up effectively on mobile search, I would say a lot of it, in particularly, in relation to Google.

Next question, operator, please.

Dan Salmon from BMO Capital Markets.

Good morning, everyone. I will try two, one for Martin and if we do have the gang from GroupM back up, maybe one for them.

So Martin, if I go back, say, 10 years or so, I think everyone agree agencies like Wunderman, maybe the traditional direct and database agencies were very well-positioned going forward as data became more important in the marketing mix. I think they have certainly done well. What we've also seen is, I think you'd agree, that the media agencies have become far more data-driven organizations over that period of time, in part, as sort of centers of excellence around programmatic.

So what my question is for you is, how, at a very high-level, are big major clients looking at their relationship with the media agency versus that traditional director database agency, like a Wunderman, like some of your competitors, like Merkle or Epsilon at the highest level?

And then maybe I'll follow up with the one for Irwin after.

Okay. All right. So on media and database, I think it's a very interesting question, particularly in relation to what we've seen in our reviews and I touched on it in our presentation. It's clearly becoming increasingly important for those two areas of activity. That's media planning and buying and database and data and big data management to be locked together, to use the phrase that we've heard in relation to pictures.

I've had two conversations with clients, one where we were the incumbent and one where we were the challenger. And it was interesting that in evaluating our performance, the client said that the bringing together of media and data was absolutely critical to the decision and neither case were we successful and I think that if we listen carefully to what we're being told by clients and highly pertinent to your question, if we listen carefully enough, we will understand.

And we're unique amongst our direct competitive set in having a first-party data business which is 25% of our total so about GBP5 billion to GBP6 billion of revenue come from first-party data. You referred to Wunderman. Wunderman have the data set of KBM and have done very well by -- in many situations by linking with the GroupM offer or the individual agency offer we have.

But in order to succeed in more situations, which will become more and more important, to the heart of your question, which I think is a really important one, we have to bring those together. Now we've talked those services -- we've talked about the integration of media investment management, which is about GBP5 billion to GBP6 billion of our revenue and data, GBP5 billion to GBP6 billion, so we're talking about half the Company between those two functions and the need to bring media investment management, which was Irwin's original praise for describing what we do in media planning and buying, and data investment management which we modified.

We used to call it market research; we morphed to consumer insight and now we've morphed further to data investment management. Putting those two things together in an increasingly integrated and locked way is absolutely critical and it's not sufficient to rely on two verticals or two silos, bringing them together for team pictures or whatever in an unlocked way. They have to be locked together, not just for presentations or defending business or trying to develop more business with client relationships but also to make sure that on a day-to-day basis, they are locked together more effectively.

So I think the question goes to the heart of the continuing growth and development, not only of our media business -- or not any of our data business but our media business, too.

You've got a follow-up question?

Yes, if Irwin and Brian are there to answer. My question would be on live content; as we've seen this sort of resurgence of linear broadcast TV over the last year-and-a-half, I think live sports and live events play an important part of that, but also within the digital world, you've seen Facebook Live, Periscope, YouTube has a lot more live content, very different type of content usually. So my question would be, how are your clients thinking about that within their mix of both TV and digital budgets over the next near-term?

Okay. Irwin, Brian, are you there? Third time lucky?

Yes. Let's give it a try.

I think we need to comment the challenge here from a video neutral perspective as a first step and secondarily, we need to identify the mix of linear/live vis-a-vis delayed viewing. From an effectiveness standpoint, there are certain aspects of live viewing that are quite important.

We know, of course, that non-linear viewing is growing inexorably and it's a factor we are all going to have to learn to deal with, but I think that what has happened television is going to be mirrored in the digital domain with the examples that you cited, i.e., Facebook Live, et cetera.

And I think the specialness of the live event on TV will be replicated by the live opportunities that will be presented by the digital players and I think advertisers will seek to exploit those opportunities.

Okay. Brian, do you want to add anything to that?

No, I mean the only thing I would add is that we've been engaged with our clients on an exercise of measurement across channels and across platforms. So whether it's live or it's mobile or it's other channels, what we are trying to do is push our clients into one measurement standard or one paradigm of measurement, where they can understand the trade-offs between a linear TV broadcast, whether it's live or recorded, and what goes on, on Facebook, Twitter, Snapchat, et cetera.

And so what we're pushing for is one standard across all of these channels so we can start to understand the difference between a linear television feed and a Facebook newsfeed because from user experience, obviously, there's a lot of difference but we need to show our clients the value they are achieving in terms of reach and frequency and so that's really our focus is just to help our clients understand all of these elements with the one measurement standard.

Okay, whilst we've got you, we've -- third time lucky, can I just go back, Irwin, to the previous question on media reviews anything that you want to add, I tried valiantly to answer it by saying I didn't see more media reviews so much as I saw more media audits.

And then Brian, on mobile search, I indicated that we saw a heavy increase in terms of mobile search particularly on Google but you may have other things to say on that. So media reviews, Irwin, first.

Okay. So I think that in Spring of this year just prior to the ANA/Ebiquity/K2 announcement, a number of very large media reviews were coming to conclusion and I think that a number of clients sort of felt that reviews were incredibly time-consuming, that they were disruptive to their business and I think there was a collective sigh of exhaustion by both the client community and the agency community.

The upfront market this year kicked in. It was not the easiest of upfront markets and clients rarely kick-off major reviews in the midst of upfront. And so I think we have to wait and see until Fall of this year and perhaps late Fall and into the beginning of next year and see whether there is another bunch of reviews that surface at that time.

At the moment, it is on the quiet side. I don't expect it to stay this way but I don't expect a repeat of what happened in 2015 either.

Okay, Brian, do you want to talk (multiple speakers) Brian, do you want to talk about mobile search?

Yes. To follow up on what you said, Martin, it's significant. The growth is significant and we see that mobile search now exceeds desktop search in terms of volume. And we expect that trend to continue so our advice to clients, our strategy around search has more to do with mobile now than it does with desktop.

I would also point out that search with, the technology behind search is evolving in such a way that now, in many cases, we can use audience data to effectively re-target through search on Yahoo. And we'd love to do that with Google as well so search marketing is getting better, I think, as a result of mobile volume increasing over desktop volume. But also because of what we can now do with our data in terms of making search more targetable, not just based on keywords but based on what we know about the audience or the user as they engage with mobile search.

Okay, thank you very much. Next question, please, operator.

Tim Nollen from Macquarie.

Hi, thanks. I have a few things first, perhaps for Paul, if you're still there actually, could you maybe explain the Q2 versus Q1 difference in advertising media management gross versus net revenues. It looks like you slowed in the growth rate in gross but you accelerated in the gross rate in net. And I'm wondering what that may be due to?

And then a couple of unrelated questions for perhaps Adam or perhaps Irwin. On the webcast this morning, in your London meeting, I forgot if you mentioned the TV is basically holding its share of advertising spending when you basically include streaming revenues to the TV networks and then it's -- it makes very good sense to me but I think you also had a little comment and kind of referred to when TV may eventually lose share to -- so I think you said non-digital made gain share from other media, not just print, i.e., perhaps TV. So I just wondered if there's any further comments on TV's market share of ad spending?

And then third question, I think it's probably mostly for Irwin. I understand your -- the frustrations that you see about comScore's accounting hold-ups. But I wonder if you could discuss how you see the measurement landscape evolving with comScore's Cross-Media and also Nielsen's Total Audience measurement. I think you've been, obviously, supportive of comScore but I think also supportive of Nielsen's effort, so just any color you could give on that, please.

Okay. Let's start off Tim with Paul on Q2 versus Q1 on media investment management.

Yes, it's quite -- it's a little complicated because it's a similar pattern to I think what we see it in the market research industry in terms of -- if you recall, it's the data collection is a direct cost of business and really, as we got more efficient in the data collection methodologies and that's really driven by the investments we've made in technology and also having access to our own first-party data, we -- they would be able to be acquiring audiences or profiles in a more efficient manner.

It tends to be, I think, and it turns out there isn't a real pattern to it so I think there's a seasonality to it. There's a mix of media content to it so it kind of depends what the clients at that particular month or quarter are looking to achieve in their audiences and through our various technology and media buying platforms, we have, I suppose a different ability to attract those profiles and consumers, depending on the level of technology we've invested.

As you know, we have the benefit of whatever we do make investments in, to be pretty global in that, so what we see now in some of the newer markets that we've rolled out, Xaxis, too, in particular. But it's across GroupM, not just the Xaxis Platform. It's on all GroupM spine, that ability to tap into technology probably earlier in the cycle and quicker.

Just like the research business, I think there's a seasonality to it. There's a mix factor to it, so for us it's a little bit unpredictable and it kind of really beckons as why we think the net sales number is the most important number to follow because it is after the direct cost of acquisition of research or field work or whatever it is or data, in this case, so hence, it's a meaningful number to follow. The gap between revenue and net sales is going to vary quarter to quarter. It was unusual in terms of it flipped right around in this quarter, and chance we're not expecting it to be like that in quarter three, and in fact, in July, revenues were stronger than net sales in that area. So it is a quite complex thing to explain but it's, in part, the result of the investments we've made over the past years in these areas.

I would just add data collection costs and direct costs have come down. I just want to add before Irwin responds on -- and Adam on TV market share and measurement, I'd just add that it was just interesting in IPG's call, that they made great reference to the fact that I think actually what they were saying is their net sales in Q2 would have been higher than revenues and focused, I think, Omnicom referred to events as well, having an impact on their revenue growth.

These were just comments about two companies that have event businesses; one, I think more significant than the other but there was no mention made of the impact on revenue and net sales of barter or telesales, or food broking operations, or the other things that we know go on to quite an extensive degree and relating to the ANA inquiry as well.

One of the ways, I mean, our industry has been by damaged by the ANA report but one of the things that we can do in a more constructive fashion is, as an industry, issue revenue and net sales figures. We took that on three years ago, two years ago, when we began to buy inventory, online inventory, because we thought it was important to make that and we had explained the opt-in basis and we were very transparent about it.

And I think one of the questions behind the ANA review with K2 and Ebiquity was around that, and until we are in danger shooting ourselves in the foot if we don't, as an industry, come out with those revenue and net sales figures and if those net sales figures make no difference, why is it that our competitors, pretty much all of them actually, are not prepared to release their net sales figures?

It makes no sense. And in the IPG call, it was really interesting because it was the first time that there was a heavy mention of net sales and the importance of it.

Irwin, TV market share. Do you want to talk a little bit about that and then we will go to Adam on that?

Yes, any discussion of TV market share is flawed to a large extent, because, as I mentioned in the earlier call (inaudible) at this morning, it's becoming increasingly difficult to identify what television is in the first place.

Now, your question on where streaming gets counted doesn't have a clear answer. In the instance where you are watching on an alternate device, you are, in fact, streaming and (technical difficulty) but only to the extent that our friends at Nielsen are accurately measuring it and that's one of the biggest measurement issues that we have today and as I've said publicly on a number of occasions, we believe that a significant chunk of the continuing decline in television viewing is a function of our inability to properly measure real-time streaming to alternate devices that should be counted towards viewing.

Now, if it's streaming to a television network or cable caster's website, that gets counted separately. That gets counted as digital. It's going to get increasingly complicated because more and more viewing is going to be non-linear. More and more viewing is going to go alternate devices and at some point, very soon, it's going to be hugely challenging to distinguish between the digital component of television and the traditional linear component.

Okay, Adam? (multiple speakers) Go ahead on TV measurement, TV market share.

Look, on TV market share itself, this upfront seems to have shown an increase. We expect that for the full year, television spend will go up in the US by a low single-digit value. If that's the case, digital growth appears to be happening at the expense, perhaps of print and other secondary media categories, and so television share is likely to hold steady under the loose definition that I just gave you.

(Technical difficulty) core and total audience part of the question. We -- while we transact on a currency that is based on Nielsen, we use comScore and the old Rentrak data extensively for our internal analytics for our program choices for identifying very, very refined SKUs to different programs. And we use that data not only for the selection when we purchase it but for allocating within a client's portfolio between one category of brands and another.

As it relates to Nielsen's Total Audience measurement, yes, we are supportive, but it is still very early days and we continue to have issues with much of that data.

Okay, thanks, Irwin. Just before Adam -- just underlying, Tim, that's why we think the comScore Board should bring to a conclusion their investigation, get on with it and focus on the real business, which is the issue about developing better measurement.

Adam, do you want us add anything on TV market share?

Yes, very briefly. The top-line global figure we get, which is mostly a linear TV figure, it was 43% of measured advertising through 2010, 2014 and since then, it's been losing about 1 point a year, but as Irwin once described, this is a broken yardstick and we're not picking anything like all of it up anymore.

One thing that analysts, I think tend to conflate loss of volume with loss of reach. What we do is we get reach and although the typical TV market might have seen a 10% loss of volume in younger viewers in the last three years, they haven't seen anything like that loss of reach, more like to be in the order of 3 points, which is something we can manage.

And the only third point I would add is, here in the UK, we've been analyzing the actual content of what we've been delivered online, which was ostensibly equivalent to linear TV quality and it isn't quite -- so I think there's a bit of a bridge between what we think is sufficient quality and what the suppliers deem sufficient quality.

Okay. Next question please, operator.

Brian Wieser from Pivotal Research.

Great. Thanks for taking the question. I was curious, following on some of the commentary that we saw on the Trade Desk's filing, it indicated pretty substantial growth in use of their platform and at your agencies, and maybe the bigger picture question, I guess I was hoping to get some color on is, the dynamics between self-service programmatic advertising that you execute versus a fuller service offering through Xaxis. I was just curious if you could talk about current trends in terms of, I mean, maybe put differently, what the underlying growth rate is at Xaxis at the present time?

Separately a couple of -- more mechanical questions. I think just a commentary on the earlier call that I missed or didn't hear completely around expectations or interest rate -- or interest expenses next year and as well the working capital is positive in the first half and -- or rather not as bad as expected -- not as negative is expected, so just curious to hear any thoughts about how you expect that to trend?

On Xaxis, I think if you look at the -- Brian, if you look at the slides that are attached post the 30-year history, you will see the forecast. I think the billings for Xaxis were around GBP935 million. They have forecast about GBP1.1 billion, GBP1.15 billion for this year.

We will come to Brian on Trade Desk and how Xaxis is using it or not. And how the Group has been using it in that, but before that, Paul, do you want to talk about interest cost and working capital?

So I was really focused on this year, Brian, just on interest cost in terms of understanding the FX impact. So you've got two things, obviously, going slightly against this year, which is obviously an increased level of debt and foreign exchange being adverse because the vast majority of our debt is in dollars and euros but in favor of that, we have low interest cost in the bonds that we've refinanced it.

When you pull all that together for 2016, it will relate -- the results in about a GBP20 million additional burden of interest compared to last year. I haven't look forward into 2017; however, obviously, just like the revenues are going to have a flow-through impact of plus 3 plus 4 benefit in 2017, there will be some flow-through to the interest cost in 2017.

However, in addition, we are exiting obviously higher costing bonds and refinancing below costing bonds. And as you saw on the net cash, we're being fairly conservative in what we're doing our cash flow and cash generation so my expectation is at a pretty similar level in 2017 to the overall interest cost to where we end up in 2016 as a first guess today.

And then just to make the point that on debt, we were hit by the devaluation in the Pound on June 24, of 10% going from [GBP1.50 to the GBP1.30] on the debt balance. Did you want to say something about working capital

Working capital has been actually a big area of focus for us and obviously, it has benefited actually back-office integrations that we have done. So two things, obviously. Terribly, very important for a group like ours. We see it in the first half about GBP220 million better performance versus the first half last year although that performance that year wasn't ideal.

I think take a good example would be the new merger in Australia of sort of GBP800 million business combined. One of the highest priorities there is to prove our overall working capital position in those markets and what we have found is that some of the solution of this is in our own hands in terms of faster billing and faster collection.

So whilst it is a problem that it's not perfect everywhere else, there's an upside in terms of the opportunity we bring when we bring these sophisticated back-offices into operations and we've seen that specifically this year in China and the UK.

Brian, do you want to comment on the Trade Desk and Xaxis.

Sure. The Trade Desk is a good partner, as evidenced from their S-1. It skews heavily towards our programmatic line units, not Xaxis. We don't see, as Martin pointed out, we don't see slowdown in the growth of Xaxis but we do see clients taking advantage of our programmatic buying units within the agencies.

I wouldn't call that a difference between self-service and full-service, Brian. I think it's a different kind of service but generally, it's the agencies via a centralized GroupM's function operating vis-a-vis on behalf of our clients. In many cases, our clients are getting much more knowledgeable and much more involved in choosing their DFP platform.

And I think (technical difficulty) vessel in making a case to clients that they have a strong programmatic and obviously, you see that in their filing. What we're not seeing is a trend towards clients bringing programmatic in-house. We see certain clients wanting to get more knowledgeable about the technology they are using and the strategies that we are using in terms of using data and accessing high-quality inventory but we really don't see of acceleration of those clients building programmatic solutions in-house.

Okay. Next question, please.

Peter Stabler from Wells Fargo Securities.

Thanks so much. One for Adam and then maybe a clarifying question for Brian.

First of all, Adam, going back to your commentary on Slide 40, you made a comment about hitting the GBP1 trillion market, total marketing spend level globally first time. I'm wondering if you could offer us any color on what kind of growth rate you're seeing for the marketing services portion of that? It sounds like it's still kind of a 50/50 market between marketing services and advertising.

And any kind of sub-sector commentary you're seeing in marketing services, And then I've got a quick follow-up for Brian after that. Thank you.

Okay. I can't offer you much on this, I'm afraid, except to say that you're right, that the proportion of diversity in market services versus advertising is surprisingly constant. I'm trying to read my own report here. It's in the order of 44% in favor of advertising but within that, I'd have to go off-line with you to discuss elements within it, because it gets a bit complicated.

Okay. Your follow-up for Brian?

For Brian, just based on the commentary you just gave, it sounds like all of the focus on transparency on the ANA report. I mean, ANA report really shifted its focus midstream, it seems, and all the negative commentary on transparency ; it doesn't sound like it's impacting any sort of marketplace appetite for non-disclosed models in the programmatic space; correct?

No, we haven't seen it. The ANA report started out as an investigation into rebates. We were well ahead of that and declared Q2 2015 that we don't seek or accept any rebates of any form in the US so that wasn't used. I think it's been sort of -- went a different direction and started talking about consolidate-based trading models and investment in advertising technology companies, both of which were very transparent about and the fact that we believe that there's tremendous value in our principal-based trading models.

And we believe there are tremendous value in investing in companies like comScore, Rentrak and AppNexus. So there wasn't a lot of news there for us and I think our clients were appreciative of the fact that we were very open, and honest and transparent about all those issues and as a result, we haven't seen any significant pullback in any of our principal trading levels, including Xaxis.

I think, just to add to Brian's comment, I think what's interesting about the ANA report, there seems to be a growing acknowledgment by clients that the pressure that they've put agencies under in terms of fees and negotiations and procurement negotiation may have gone a little too far and put too much pressure on the agencies and I think we will see more of that or hear more of that. One of the analysts this morning pointed out there, Isobar have seen a growth here in the UK of agency fees and I think that, to some extent, reflects that pressure that I referred to.

Any further questions, Peter? Or we move on, operator, to the next one, please.

That's it. Thank you.

Doug Arthur from Huber Research.

Yes, thank you. I just had one question. The rest have been answered and it's a question for Paul on the breakdown in costs. Staff cost, establishment cost, and other operating cost, there's a lot of noise this quarter in the other operating cost. You had a gain last year; you had a re-val of the comScore position this year. So what do you sort of see as the underlying growth trends in other operating cost for the balance of the year? Is it sort of in line with staff and establishment?

Yes. I think it's -- I suppose if we look at it a slightly different way, in the sense that you'll be able to work out fairly clearly the improvement, or the change in the margin, resulting from efficiencies in staff costs, which actually Martin mentioned earlier, was basically 0.1 of the margin improvement came from that. The established costs stayed the same. So the other costs have basically added effective 0.2 to the margin and growing -- basically just under the level of growth in net sales/revenues.

So I think that's really, in some ways, all you need to sort of understand. The -- we've been very clear about what are the other operational items that have hit the P&L, analyzed and broken out. It shouldn't be that complicated. I think currency probably is the more difficult factor to work out because, obviously, that has a bigger impact and that's pretty consistent down the P&L and we've given you the constant currency revenues and profits so it shouldn't -- it should not cause you too much heartache to work through that ;it's fairly straightforward, in my opinion.

Okay, Doug?

Okay, thank you.

Next question please, operator.

David Karnofsky from JPMorgan.

Hi. On the television upfronts, when you look at the pricing gains with the broadcasting cable, how much do you see this strength possibly as a reflection of money moving from digital back to TV versus just money moving from scatter into the upfront? And then as a follow-up, to the extent that some marketers are indeed hitting the brakes and digital, we're certainly not seeing this show up in the results of Google and Facebook, so where in digital? What types of platform or content do you see some sort of pullback, if at all?

Irwin, do you want to comment on that?

Yes. So we believe that the majority of the increase in upfront spend and the pressure there that has come from advertisers who are shifting from the scatter market to the upfront market. And that is as a consequence of the fact that the scatter market was very, very tight during the 2015, 2016 broadcast year.

There has been growth. We are seeing, as I indicated earlier, low single-digit increases in demand for the combined national broadcast marketplace, that's both network TV and cable. So some of that growth is real.

We commented earlier that televisions' stability in terms of share total media spend is not a reflection of the fact that digital is not growing digital is, in fact, growing, as you know, and it's coming from some of the print media et cetera. The strength that you see at a Google or Facebook comes from the fact that within digital media, Google and Facebook are growing their share of the market. It is a path to a duopoly, which we have expressed some concern about and, Martin, in the earlier call mentioned that the combined Yahoo-AOL structure might create a third force which we would welcome but the strength that you see at Google and Facebook is coming from the fact that they are consolidating their positions within the digital ecosystem.

And just to the sort of thing, David, the question that you asked, David, or the (inaudible) question about where the spending is. I mean, we've given the Google numbers, GBP4 billion last year; we think around GBP5.5 billion, GBP5.6 billion this year. Facebook, a GBP1 billion last year; GBP1.7 billion this year.

As I think Yahoo, if I remember rightly, it was about our GBP400 million going to GBP430 million. This is pre-the merger, or the acquisition by AOL and Verizon. Twitter, certainly, I think it's Twitter where we've doubled our spend with them. I think I'm right in saying it's something like GBP180 million to about GBP350 million over the last couple of years.

So what we've seen is sort of varying rates of increase in spend but the principal increases and as Irwin said, and we've said previously, came from the duopoly of Google and Facebook and you see a similar ratio, a 4-to-1 ratio last year, so GBP4 billion to GBP1 billion this year. It's a bit tighter if those figures prove to be correct at GBP5.5 billion, GBP5.6 billion versus GBP1.7 billion for Facebook but it is still strong growth.

Any more questions, operator?

There are no further questions in the queue. I will now turn the call back to the host.

All right. Thank you very much, indeed, operator. Thanks for the help. Thanks everybody for the questions. If you need anymore, a big thank you to Irwin and Brian for not only participating on this call but getting up so early in the morning; to Adam, of course here in London, and to my colleagues, Paul, Chris, Fran, Lisa and everybody else. So thank you very much. Any further questions, please be in touch with us.