WPP PLC (WPP) 2022 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the WPP 2022 Interim Results Conference Call and Webcast. (Operator Instructions) Today's conference is being recorded.

WPP would like to open the presentation with a short film. Thereafter, the management will present their interim results.

(presentation)

All right, and good morning, everybody. And that's some of the fantastic work that contributed to WPP being named creative company of the year at Cannes this year. We're very proud it came from across our agencies, from all disciplines, from film, public relations, to media, to social, to e-commerce and creative business transformation. It's why our clients come to us and why we had such a strong start to the year.

So good morning, everybody. I hope you've had a good start to today. And I'm here at Sea Containers with John Rogers and Peregrine Riviere to take you through the presentation and the Q&A.

Turning to Page 3, we have our cautionary statement. I'll ask you just to take note of that. On Page 4, our agenda for today. So I'll briefly go through the highlights of the first half and John will take you through the financial results in some detail and our guidance and we'll come back quickly to review market trends and strategic progress before we take everybody's questions.

So on Page 5, look, I think we delivered another strong performance in the first half of the year. It was reflected in net sales growth of 8.9%, including 8.3% in the second quarter above market expectations. I'm pleased to say it was broad-based across client categories, business sectors, markets. And our key clients, the large global players that continue to invest while consumers continue to spend, it reflects our attractive industry exposure in technology, health care, consumer packaged goods and the importance of what we do to these clients' businesses at scale.

We've seen strong performance across our integrated agencies, up 8.2%; our public relations firms, up 7.3%; and our specialist agencies, up 10.9% in the second quarter. And our regional performance also strong in the second quarter, with North America up 10.2%; Europe up 6.6%; and the rest of the world growing a healthy 8%. That said, China, as you would expect, was inevitably impacted by the ongoing lockdowns.

Our commitment to creativity was recognized at Cannes Lion in June, where WPP was rated the most creative company. In the media area, the group was once again ranked the world's leading media group by COMvergence and that reflected in our new business with new assignments of around $3.4 billion in the first half of the year, including $1.6 billion in the second quarter.

(inaudible) we continue to enhance our offer to drive growth from building capability in e-commerce, digital, marketing technology, included more organic investments in Choreograph and Everymile, our DTC platform. So on the M&A front, we acquired Bower House Digital in Australia to invest behind Salesforce; and Corebiz, an e-commerce agency in Brazil, to strengthen our e-commerce capability. But we continue to simplify the company through the creation of EssenceMediacom and Design Bridge and Partners.

The transformation program remains on track with good progress and John will talk more about that later. So overall, a solid set of results enabled us to increase our dividend by 20%, buy back GBP 637 million worth of shares in the first half. And overall, we're raising our guidance for revenues less pass-through costs to 6.7% for the year overall.

So I think a good start to the year. And John, why don't you take us through the first half and come back to the guidance for the rest of the year as well?

Thank you, Mark, and good morning, everyone. Let me take you through the financials for the first half of 2022.

So revenue less pass-through costs of just over GBP 5.5 billion, increasing 12.5% on a reported basis half-on-half and 8.9% on a like-for-like basis, reflecting the foreign exchange tailwind of 3.3 percentage points and a net M&A impact of 0.3, which reflects our SVC merger and of course, our Russian divestment. That delivered an operating profit of GBP 639 million, up 8.2%, and an operating profit margin of 11.6%, down 50 bps due to higher personnel costs and a return, of course, to business travel in the first half of this year and in line with the guidance that we gave at both the prelims and the Q1.

Reflecting income from associates, which is down slightly due to lower income from Kantar and net finance costs, which has improved year-on-year as a result of slightly higher investment income, delivered a profit before tax of GBP 562 million, up 12%. Reflecting the tax rate of 25.5% for the half, which is also in line with our guidance for the full year and noncontrolling interest of GBP 43 million, delivers a profit attributable to shareholders of GBP 376 million, up 6.5% half-on-half and a headline diluted EPS of 33p, up 15% half-on-half and of course, supported by our share buyback program.

So moving now to the reconciliation of our headline operating profit to reported operating profit. Headline operating profit of GBP 639 million. And then, of course, we reflect a gain, a GBP 60 million gain, in relation to the step down of Imagina in Spain from an associate to an investment; GBP 75 million of restructuring and transformation costs, GBP 60 million of which are in relation to our IT transformation program. Losses on disposal are net GBP 48 million, reflecting the losses through divestment of our Russian interest of GBP 65 million, offset by some gains on disposal, delivers a total adjustment to headline profit of GBP 100 million compared to GBP 106 million for the same period last year and a reported operating profit of GBP 539 million.

Coming on now to the performance of our global integrated agencies, which demonstrate continued growth in the first half, 8.4% on a like-for-like basis. That's split between our creative agencies that delivered 5.8% in the first half, and we saw good growth across all of our integrated agencies, and GroupM performance, which was up 11.8% in the first half. And if you notice on the chart at the bottom, a little bit slower for GroupM in Q2 compared to Q1, reflecting to the lockdown in China that Mark referred to earlier on. But really good performance on a 3-year basis. So GroupM up 15.8% on the half on a 3-year basis, so really solid performance.

Headline operating profit of GBP 507 million, up 3.9% and headline operating margin of 11.2%, down 0.7 points, again reflecting the higher personnel costs and importantly, the investments that we're making in growth, so Choreograph, Nexus and Everymile, as example.

Coming on now to public relations, really strong demand for strategic communications, consistent message we've seen over the last 1.5 years or so, delivering 10.5% like-for-like growth in the half, driven principally by purpose-related and ESG assignments in our business. We've seen a little bit of a quarter-on-quarter decline, so 14.1% in Q1, 7.3% in Q2. This really reflects a lapping in Q2 of some very, very tough comps in our financial PR side, so slightly weaker performance in Q2 due to those tougher comps. Headline profit of GBP 83 million, up 30.7% half-on-half. So really strong profit performance. And margin of 15.2%, up 0.4 percentage points.

Coming on now to specialist agencies, where we saw continued double-digit growth in the half, so like-for-like up 11.9%. I think standout performances from CMI and Landor & Fitch. Again, if you look at the quarter-on-quarter, 13% in Q1, 10.9% in Q2. But on a 3-year basis, 12.4% in Q1 and 18.6% in Q2. So we saw some really solid momentum coming through on a 3-year basis.

Headline operating profit of GBP 49 million, up 26.9%, so a strong profit performance, and operating margin of 11.4%, up 1.1, principally driven by, of course, by the top line growth and also our investment in DTI, which is a South American acquisition that we completed a year or so ago. And we've also moved to simplify the business further in this sector by merging Design Bridge and Superunion together to form Design Bridge and Partners.

Coming on now to the performance across our major markets, starting with the U.S.A. Actually, 8.9% in the first quarter, 10.4% in the second quarter and also really pleasingly up 10% on a 3-year basis. So it's great to see our U.S. market actually outperforming the average for the business is now becoming a driver for growth. U.K., 8.1% in the first quarter, 6.2% in the second. Slight downturn, but actually, we had tougher comps in the second quarter. We had a very strong second quarter in the U.K. this time last year.

Germany down a little bit in the second quarter, but 16.2% on a 3-year basis. It's down slightly as we start to overlap this government contract that we talked about last year with DKK and we'll see some of that dynamic also flow through into Q3. China, very strong growth in the first quarter, 11.9%, down 6.1% in the second quarter, reflecting the impact of the lockdowns. We would expect to see that come back in Q3 and Q4.

India, really strong performance in both quarters. We actually saw a step up in Q2, 47.6% growth quarter-on-quarter. And on a 3-year basis, India has grown 38.5% in the half. So that's really, really strong performance. I think the second quarter, somewhat helped, of course, by the IPL.

Australia, we've seen consistent growth in Q1 and Q2, 3.5% and 3.2%, respectively. Actually, though, if you look at the performance last year, we were down Q1 last year, up in Q2. So actually that 3.2% in Q2 reflects a strengthening of our position.

Canada is showing consistent growth. France, a little bit disappointing, again, reflecting some client losses that we saw in 2021.

Really strong performance in Brazil, again, consistent across Q1 and Q2 and up 34.3% on a 3-year basis for the half. And Spain also showing increasing momentum Q1 into Q2, 8.2% and 16.5%, respectively. So good growth consistently across our major markets in our business.

Coming on now to the change in our operating margin year-on-year. So first half last year, we delivered 12.1% margin; first half in 2022, 11.6% margin, so down 50 bps, in line with the guidance that we gave, as I said, at the Q1 statement and also the prelims. We've seen staff costs excluding incentives up by 16.7% driven by higher headcount and increasing use of freelancers and salary inflation, particularly in the U.S. and the U.K., driving a reduction in margin by 2.4 percentage points. Personal expenses up 84.6%, again, as expected, due to the increase of travel coming through in half 1 of this year compared to half 1 of last year, which is largely impacted, of course, by lockdown, introducing a drag on margin of 0.7%. Other G&A driven by slightly higher headquarter investment.

Really pleasing performance on establishment costs, actually down 0.8% year-on-year, and we're continuing to see the benefit of the campus roll-out that we're seeing actually a margin upside of 0.6% as a consequence of our campus roll-out program.

IT costs up 11.3%, reflecting investment in products and services and the cost, of course, of our transformation program. We're actually seeing resulting in a small margin improvement. And then, of course, the reversal of what was last year, an incredibly strong bonus pool to a more normalized level for this year, seeing an improvement in margin of 2%. And as I said before, delivering 11.6% for the half, 50 bps down year-on-year, in line with our guidance.

Coming on now to transformation. As Mark said earlier, making really good progress across our transformation program. Campuses I've already talked about. We've opened 3 in the first half. We now total 34 campuses across our business. We're targeting a further 4 more by the end of this year. And of course, ultimately, we aim to have over 80% of our people in our campuses by 2024, 2025.

We've seen a really good progress being made in the roll out of our ERP platform. So the first deployment of Workday in North America in Wunderman Thompson. And also, we now have 18,500 users on Maconomy, which is our second-tier ERP platform, which we'll use to support our overall Workday roll-out.

Good progress on IT transformation. We've established global hubs in Chennai and in Mexico. We're working to transform our procurement function. We had a session with 30 or so of our key suppliers to align incentives and drive incremental savings. And we're also reorganizing our procurement function against a category-led model and looking at new source-to-pay system solutions.

We continue to simplify the business, so merging Essence and Mediacom and GroupM Nexus as examples as well as Superunion and Design Bridge, which I've already mentioned. And we're also streamlining, of course, our operating model, reducing the statutory number of entities by a further 150 in the first half.

So overall, we remain on target to achieve our annual savings of GBP 300 million this year against the 2019 baseline and we remain on track to achieve target savings of GBP 600 million by 2025.

Coming on now to our strong cash generation, which is supporting our investment in growth and of course, shareholder returns. So this time last year, we had net debt position of just over GBP 1.5 billion. We've delivered just under GBP 2 billion of operating cash over the last 12 months. We've seen a slight outflow in trade net working capital. A lot of that is actually driven by the slowdown, the lockdown in China. We've also seen a slight outflow in other working capital provisions, reflecting the release of the bonus accrual from last year, taking account of interest, of course, lease payments, tax paid, share purchases as normal.

CapEx, GBP 272 million over the last 12 months, GBP 315 million of dividends, and then acquisitions and disposals of a net GBP 201 million. A little bit of a slowdown in the first half of this year in terms of acquisitions and disposals. But a huge share buyback program over the last 12 months. So over GBP 1.1 billion returned to shareholders through that share buyback program, netting out at GBP 3.1 billion of net debt as of June 2022.

And when we come on to our leverage metrics on the following slide, you see that the rolling 12-month average net debt on a reportable basis, just over GBP 2 billion. And our rolling 12-month headline EBITDA of just under GBP 1.8 billion, delivering an average net debt to headline EBITDA of 1.2x. That's well below our guided range of 1.5x to 1.75x net debt-to-EBITDA. So we're well below that range. And we would expect that to increase slightly as we move towards the end of the year, but we still expect to outturn, either slightly below or at the bottom end of our guided range of 1.5x to 1.75x.

So coming on now to dividends, share buybacks and the guidance for the remainder of the financial year. So very pleased to report an interim dividend up 20% to 15p per share. With regards to our 2022 guidance, as Mark has already said, like-for-like revenue less pass-through cost growth of 6% to 7%. We were previously at 5.5% to 6.5%. This is the second time we've upgraded that guidance for the year. We now see that the M&A contribution being roughly 0.3%, which reflects, of course, the net divestment of our Russian operations. So previously, the guidance was 0.5% to 1%, a little bit beneath that now as a consequence of those Russian divestments.

We see the FX benefit over the full year of being roughly 4.5%. Previously, that was 2% to 2.5%. CapEx of GBP 350 million to GBP 400 million, consistent with the guidance that we gave at the prelims last year and GBP 100 million on Workday, of course, which now comes into our P&L as a reflection of the changes to the accounting, again, in line with the guidance that we gave at the prelims.

Trade working capital, we expect to recover the slight outflow that we've seen over the last 12 months. So we expect to continue to be flat year-on-year consistent with our guidance we gave at the prelims and GBP 800 million of share buybacks for the full year.

Headline tax rate, again, around 25.5%, which is exactly the same as we outturned in the first half. In terms of our medium-term guidance, we're confident in our ability to deliver annual revenue less pass-through costs growth of 3% to 4% and a headline operating margin of 15.5% to 16% and we'll provide specific guidance for 2023 at our prelim results in February.

So with that, I'll hand back to Mark to update you on our strategic progress.

Thanks very much, John. I'll make a few observations about current market trends and our strategic approach, and of how our (inaudible) creativity, media, data and technology leads us well into those trends and leads us well positioned going into the second half of the year and 2023.

So on Page 19, I think it's clear we see attractive growth opportunities for advertiser spend and for WPP. The first chart shows our GroupM forecast for global ad spend. It remains up 8.4% in 2022, just slightly less than 9.7% they forecast back in 2021, December '21, mainly due to a softer outlook for China amid ongoing lockdowns there.

You can see very strong growth, 8% on top of 24% last year. The other point I'd make is that we're digital now at 67% of ad spend, WPP delivering 8% growth as well, indicating the success we've had in navigating the digital transition. On the second graph, you can see the long-term potential in e-commerce. We see that in our results and in the discussions of investments that clients are making in that area.

And on the third point, the third chart, I think the point to make is that clients' needs are much broader today than perhaps they were 5 years ago. So there's a chart we took from some Citi Research based on a survey of some 250 CMOs across 5 markets just back in May this year. It shows that digital transformation is the top marketing priority, an area where WPP is very well positioned. We've actually won, I think, 3 or 4 Lions in the creative business transformation category at Cannes. And 39% of our sales in our global integrated agencies come from experience commerce and technologies, so we can help our clients there.

Next is performance media, and the EssenceMediacom launch, the Neo Mindshare integration, the investments that GroupM is making in Nexus, are all focused at delivering to clients there, and we also have strong positioning in building direct-to-consumer platforms. The last point I'd make is that in-housing, a cause of some debate over the last, I guess, 5 plus years, remains very low on CMOs' wish lists.

On Page 20, we look at demand from our clients. We've seen good growth in the areas of technology, CPG, health care, they represent about half of our business. Compared to 2019, these sectors are up double digits, underlining their structural growth and their commitment to marketing and investment. And I do think we are seeing a very different and more, I wouldn't say constructive, but more long-term approach from CPG companies to their investments in marketing. Other sectors, travel & leisure did continue to rebound and growing 23% in the first half. Still, I think, 10% down on 2019. So further growth to come there as the world opens up and airports hire a few more people. TMT expanded 13%, though we did see some softness as well in the automotive sector as a result of the ongoing chip shortages.

Overall, half of our top 20 clients grew by double digit. In fact, we're seeing our larger clients drive our net sales in contrary to where we were 4 or 5 years ago, a positive indication of the strength of our offer. Look, I'm sure we'll cover it in more detail in the Q&A, but a little bit more color on the level of client demand. And from our perspective, our clients are continuing to invest. You can see it in the quote from Alan Jope at Unilever, but I also note other comments from clients like Coca-Cola, who are continuing to invest in their brands and in marketing.

Turning to Page 21. You saw the film of some of our work that won at Cannes at the start of the call. As we previously said, we're committed to continuing to deliver excellent creative work to our clients. And there could be no better endorsement of that than WPP being named the most creative company of the year at Cannes in June. I think it's a little bit equivalent to the Oscars of our industry. We had more than 1,000 clients present at Cannes and we absolutely take it very seriously and want to do well, as do our creative people.

My view is that Cannes is a virtuous circle, that doing good work there is recognized, it attracts better people. It attracts clients who want to do good work and cumulatively, it helps to grow our business.

I have to call out Ogilvy, who with 88 Lions, were named the most creative network of the year, but we had actually good performance across all of our integrated agencies. That was also recognized by WARC in terms of creative, media and effectiveness. So I think the quality of the work that we're doing for clients has shown a dramatic improvement. I think the last year we won Cannes on a single year was 2017, so we're in a much better position from that respect.

Turning to Page 22, GroupM, our media business. I only have a few points to make. First, it's a business which has leading global and local scale. GroupM remains COMvergence's #1 ranked media agency, $62 billion bidding, an increase of 15%, now close to a 30% market share. It did improve to joint second place in North America and retained #1 position in APAC and EMEA and WARC named Mindshare the #1 media agency for the third consecutive year.

Second, in terms of performance, the strength of those businesses is reflected in a healthy 10.9% net sales growth in Q2 to 43% on a 2-year basis. You see the strength bounce back in the media business. But it's also clearly a business with strong structural growth opportunities, now 46% digital, maybe slightly less than the market, but that indicates further growth potential ahead as clients, I mean in major companies continue to shift their budgets into digital, probably slightly behind SMEs and also growing client demand for retail and e-commerce. GroupM media actually grew 26% in the first half.

Thirdly, I think importantly, we're not seeing disintegration of digital and analog media, but actually more integration. We saw that in the Unilever review, which covered not just digital and traditional media, but areas like social and e-commerce. Similarly, Google took the position to consolidate their media, both digital and offline, into WPP. And Sky chose to make the same decision with Mediacom. And a number of other clients from Coca-Cola to Mars to Bayer that are adopting a much more integrated approach.

So I think that contrary to what some people would expect, that digital media would fragment either into specialist or in-house, I think that GroupM is proving very effective by giving clients an integrated digital and offline offer.

And finally, as you would expect, we continue to simplify our media business. We formed EssenceMediacom, delivering a much more integrated performance and brand-building offer to our clients. We created GroupM Nexus, a world-leading performance media organization providing scale in data and technology and performance to our clients where it's needed.

Moving to Slide 23 to cover some of our organic and acquisition-based investments. We continue to look to enhance our capability in digital marketing technology, data, in e-commerce to areas that are both growing faster and critical to our clients. We continue to invest in Choreograph, our data company, with a focus on their identity graph that allows brands to build, own, control their identity solution in a privacy compliant way that's ready for future privacy regulations. Choreograph has been instrumental in a number of client wins, particularly including Coca-Cola and WBBA, and were ranked a Strong Performer by Forrester.

I think our data strategy is differentiated by our privacy first approach. We do believe our clients have to have full control of their first-party data and we're supportive and enabling them to do that.

During the first half, we also launched Everymile, our dedicated DTC commerce business. We expect to have our first customers by the end of the year and to roll out to other markets over the course of the next couple of years.

On the M&A front, we announced the purchase of Bower House Digital, a Salesforce Marketing Cloud company in Australia; and Corebiz, a leading e-commerce business in Brazil with a deep specialization in VTEX, which is a very strong locally used commerce platform.

So I think continuing the strategy over the last couple of years of focused acquisitions that differentiate our offer and enable us to deal with the areas that clients need in the future.

On Slide 24, we just talk briefly about our purpose, which is to use the power of creativity to create a better future for our people, planet, clients and communities, and a few areas to call out there. First, we'll be very conscious of our people and helping them navigate through difficult economic times. We are pleased to launch Making Space, an initiative to give people a 2-day break to thank them for their hard work during the pandemic, but also to give them a break in a difficult part of the year to get ready for the second half. We followed that with 3 days of events, development opportunities in our offices that brought a lot of people back into our campuses around the world and reminded them of the value of collaboration, creativity, being together.

Our people survey, we ran again this year. It showed a continued set of solid results and actually a significant improvement in our employee engagement and belonging, I think a result of a number of the programs we've rolled out over the last year, and we continue to have our NextGen Leaders program. We had 2,700 participants over the summer on a remote engagement program. It's really building a much more diverse pipeline for us.

Turning to diversity, we continue to fulfill our commitment to racial equity, in our $30 million commitment. Among other initiatives, we launched the Black Equity Organisation, or supported that launch here in the U.K. and our LGBTQ+ community won Outstanding Employee Network of the Year at the Burberry British Diversity Awards. And we continue to invest in our communities and make a difference there, not just through our support to Ukraine through the UNHCR, but also working with the Ukrainian government on supporting their economic recovery. We launched an initiative at Cannes with IBM to tackle bias in advertising technology and continue to invest significantly in making sure that WPP, its clients and its footprint, make a positive contribution to dealing with the climate crisis.

So turning -- taking that all together, turning to Page 26 and in summary, I'd say that first, we delivered strong broad-based growth across sectors and regions. And our clients continue to invest. We really -- very little sign of a slowdown in Q2 despite much tougher comparisons. Secondly, we continue to invest in future growth. Thirdly, we're raising our guidance for 2022, to some extent as a result of the outperformance in the second quarter, but we remain confident of achieving the net sales that we've outlined of 6% to 7% for the balance of the year.

And clearly, we face an uncertain macro environment, but we're ready to respond as needed as we've demonstrated in the past. And I think going into that, that we are in good shape. Competitively, we're stronger. Compared to where we were 4 years, we've really transformed the business. We have better leadership in our agencies. Our businesses are more integrated and able to deliver the services that clients need. Our creative agencies are stronger and growing, they delivered 6% growth in the second quarter in our creative agencies.

Our U.S. business has turned around, has moved from being a drag on our growth 3 or 4 years ago to actually an accelerant of our growth in the first half of the year. Our client relationships are stronger. Our NPS scores better, our new business performance is better and our balance sheet is in better shape, which gives us opportunities both to return cash to shareholders, but also to take advantage of attractive acquisition opportunities that will strengthen our offer to clients.

I think finally and perhaps most importantly, our clients' view of marketing, of what we do and of its importance to them, is also transformed. I think you -- they recognize the value that we create and you see that in our numbers. So I do think we're well placed for the future to navigate the challenges that will no doubt face us. So I think -- in a good situation. So a good first half. I'm sure that there'll be a lot of debate about the second half and the outlook in 2023 in the questions, so we'll turn to that.

Now before we do that, is just one point to make, which is Peregrine. So I'm sad to say, as many of you know, Peregrine will be leaving us after the call to take a new role outside of WPP. He's really led and transformed our Investor Relations function over the last 3 years. He reinvented our approach to Investor Relations. It's an award-winning approach. I hope that you, as analysts and investors, have got much greater transparency into the way the company is operating, its financial performance or insight into our people, our business. He's led innovations around our Capital Markets Day, our investor webinars and deep dives. So Peregrine, thank you very much. We will miss you, but we wish you all the best. And thanks for everything you've done for us in this regard.

So on that note, we'll turn to the Q&A.

(Operator Instructions) Our first question goes to Lina Ghayor of BNP Paribas Exane.

Congratulations on the results. I have 3 questions for you. The first one is obviously on the macro. While I have not been through as many recessions as some others on this call, but I would be interested to hear from you around the tangible elements that you are seeing or not regarding the slowdown for H2 on an organic basis and a 2-year stack? And I guess my question is, does the pessimism of investors seem reasonable to you based on what you are hearing from clients this year but also next year? The second question is on the U.S. Could you elaborate a bit on your performance in the U.S.? What were the key drivers? And do you expect it to -- do you expect the geography to continue to outperform? And if yes, will we see a tailwind in the operating profit as this geography has higher margins? And lastly, on the simplification that you have done recently in the business, particularly between Essence and Mediacom, and more importantly, how far are you in the merging exercise between some of your networks and should we expect much more in the future?

Okay, John, do you want to -- why don't you tackle the outlook and the U.S., and I'll come back to EssenceMediacom and add anything I can in terms of color from what I'm hearing from clients.

Yes. Look, I think in terms of the outlook for the second half, I mean we're not currently, as we've said repeatedly, seeing any noise from clients which would particularly suggest that the second half will be challenged. That said, clearly, there's a lot of noise out there in the market and we expect uncertain times, but we're certainly not seeing that in the way that the clients are behaving today. And Mark's highlighted in the past the importance of advertising spend in a challenging economic environment. I think many of our clients see the value of trading up, if you like, in spend terms to grow their brands in a more challenging environment.

In terms of U.S. performance, I think what's pleasing about the U.S. is, as I said, on a 3-year basis, we're up 10%. So we're actually growing in the U.S. more than we're growing the organization on average, which I think is very encouraging. And actually, what's more encouraging is that the performance is across the board. So it's principally, there's a lot of good strong growth in GroupM, but also actually in our creative agencies and fairly consistently across our creative agencies, we're seeing good performance in the U.S. And particularly, I think encouraging signs, for example, in Ogilvy, which has had a challenging 2 or 3 years and we're starting to see some green shoots of recovery with regard to that business.

Yes, look, I think just to add to some color on what we're hearing from clients, I think that while consumer spending remains strong, clients continue to invest. I mean I think there's a little bit of a disconnect between sort of the corporate world and financial world. And the financial markets look ahead, but in the corporate world, the world we deal with in the real time is seeing strong continued demand for goods and services, an ability to, to some extent, pass on input prices to, I guess to consumers through inflation, and a desire to invest.

And I'll just read you 3 quotes from statements. Unilever: "We will continue to invest in the health of our brands. Delivering growth remains our first priority." Coca-Cola: "We expect the consumer environment to be more challenging and we're preparing accordingly, stepping up our investments." Or P&G: "Keep investing in marketing and innovation to drive superior value." So I do think clients have learned -- yes, and they know this, they've learned, particularly through the pandemic, the value of continuing to invest in innovation, in brands, of supporting price rises through marketing spend. And I think that does give us some comfort going into the second half of the year and to some extent, into 2023. There's no doubt that the outlook, as we said, in '23 is uncertain.

On the mergers, I think the EssenceMediacom merger is sort of proceeding well. We expect to be sort of fully incorporated by the first quarter of next year. And the same is true Design Bridge and Partners.

Look, I think it's part of an ongoing simplification of WPP's business. Each time that we've done this, we've done it on a number of occasions, I think the resulting companies have come out growing more strongly, with improvement in margin. They're able to take out some of the sort of duplicative back-office costs, in a better position and the business is simpler, easier for our clients to navigate and quite frankly, easier for us to manage. I wouldn't say that there are other things that are being planned. And indeed, to some extent, while we're simplifying, obviously in other aspects, we're launching new businesses like Proto in the transformation area in the U.S. that are -- that they're also creating brands. So I think that we need to be fluid in terms of how we go to market. But I think a simpler WPP is a stronger WPP.

The next question goes to Julien Roch of Barclays.

My first question is on margin. I know you wrote you would give us a '23 guidance at the '22 results. So I'm not asking for a guidance, but maybe just an indication scenario. If organic is flat next year, what do you think happens to margin? And if organic is say, minus 5% next year, same question, what do you think happens to margin? That's my first question. The second one is a question in 2 parts. You said a higher growth area of our offer in experience commerce and technology was 39% of global integrated agencies, excluding GroupM. So a, just to confirm, this is the new disclosure we will get twice a year as opposed to the alternative breakdown you envisage at the 2018 Investor Day of 75% traditional communication, 25% higher growth; and b, what was the organic of higher growth in the first half? And then the third question is, can you remind us how much was China's revenue in either Q2 or full year last year?

John, why don't you tackle that and (inaudible) three more -- three different questions?

In terms of your first question, which is what happens in the different scenarios? And of course, the first point to observe is there are a lot of moving parts in these numbers. And so let's say you take a flat sales scenario, obviously, to some extent, it depends on the inflation and the volume mix in those flat sales as a start. But generally speaking, if we saw flat sales, then we would look to try and hold margin flat. As I said, there's lots of moving parts. You've got sort of headcount, salary inflation; you've got your freelance mix, you've got investments in growth, for example, like Choreograph and Nexus and Everymile. These are all the moving parts and we wouldn't want to stop our investments in growth. We certainly take a long-term view on these things. But I think if sales were flat, all else being equal, we'd certainly try and hold our margin flat.

In relation to your second scenario, which is if we saw sales go back by 5%, I mean I think I'd point you here, of course, it's not that long ago since we've gone through a scenario through COVID, where we saw our sales go back minus 8% and our margin was down 150 bps. So that will give you a guide. So to say if we saw sales go back by 5% or so, we'd see margin decline by 100 bps to 150 bps.

What we do know, and I think we demonstrated this through the COVID period, is that we're very good at responding to a challenging market. We've got very early indicators as to how the market's performing and responding and we're very quick to adjust our cost base accordingly. So we feel very confident in our ability to navigate whatever the business cycle may or may not throw at us.

In relation to your second question, which was the sort of the mix point, the intention is to continue reporting it ex GroupM going forward. And the reason being is that because we've seen such strong growth in GroupM, and GroupM is predominantly a communications business, it was actually distorting the movement or the great progress that our creative agencies are making in growing in the areas of commerce experience and technology. So we've decided going forward to strip out the GroupM performance because in a way, we also provide you with the breakdown between the digital component of GroupM sales and the more traditional. So we give you that break there so you can see the mix of that business. And then we will now give you the breakdown in relation to commerce experience and technology for our creative agencies, which is very pleasingly moving in the right direction.

And in terms of China revenues, I think you were asking what the sort of proportion of our overall net sales is from China and it's roughly 5% or so. Clearly, we've had a challenging second quarter there as a consequence of lockdown. We're now -- everyone's back in the office in China. We're back up to 70% or 80% occupancy levels in China and the business is back up and running. So we would expect to see that bounce back, of course, in the second half, albeit we don't know whether there will be future lockdowns, which we can't predict. Hopefully, that helps.

Yes, John, as usual, very, very clear. There was a second question in my second one, which was what was the organic of higher growth in the first half. If you don't have that, maybe you can give us M&A growth contribution from acquisition, i.e., excluding Russia and SVC.

Yes. I think if you include -- I think if I understand what you're -- I'm not sure what you're asking there. Can you just clarify the question, so I make sure I understand.

I wondered the organic of the 39% of...

I'm not sure -- sorry, I see. I don't have that. Let me just -- leave that one with me and we'll either come back to you later on the call or we'll come back to you separately on the growth of that.

And the next question goes to Omar Sheikh of Morgan Stanley.

Yes, first of all, would very much like to echo Mark's comments on Peregrine, sad to see you go. But just on the questions I had, I had 3, if I could. Maybe if I could start with 2023. Mark, could you just maybe talk about what drove the decision to kind of separate that out from the medium-term guidance, kind of what's changed about how you're thinking about '23. And then maybe you could just quantify, just to kind of clarify for us whether you think '23 will be up or down next year? That's the first question. And secondly, maybe for John. Could you give us an average headcount number for the first half and how much it's growing year-on-year? And then maybe some sense of what the total cost of freelance headcount or staff was, maybe as a proportion of total staff costs or some other metric? That would be helpful. And then finally, just on new business, could you perhaps give us how the -- give us a sense of how the Coke account is scaling, sort of what percentage of that business you expect to come through this year, what impact it might have? And maybe just kind of broader commentary on new business trends.

All right. So look, I think on 2023, we remain confident in meeting our medium-term guidance, as we said. But I think as the clock ticks, our medium-term guidance became next year's guidance. And I think given the economic uncertainty, we decided it was more prudent to some extent, but better to say that we'll come back to you with that at the beginning of the year, because the future is just uncertain. I don't think -- I think it's -- there's a degree of uncertainty. Now on the positive side, I think you've got the strength of our business.

We're a stronger business creatively in media. We are geographically diverse. We work in many different sectors, which may or may not be more or less impacted by economic outlook. We've got the agility of our business model and a well demonstrated ability to navigate the impact of revenue and net sales changes on our margin. And we've got really strong demand from our clients for marketing against a background of recent experience of the pandemic where those companies that continue to invest did better as they came out of it. We've got growing interest in advertising, with businesses like Netflix opening up their advertising business, and continued growth in digital media. And if you look at WPP's performance over the cycle, you take our 3-year growth rate 2019 H1 to 2022 H2, it's close to 3%.

So I think that we're saying, look, 2023 is uncertain, which is a fact and -- but we still believe, are confident that we'll hit that medium-term guidance, but we're not yet in a position to say that we'll do that in 2023. And I think that's sort of where we are, which I think is, to be fair, where all of our peers are. So I think we're in the same position as them, saying we're seeing strong demand for the business. But there's no doubt that our business is impacted by the economy like everybody else.

On Coke, I think we've made good progress onboarding in the first half of the year, but probably like to have, probably a slightly bigger impact in the second half of the year than it is in the first half of the year and actually would have a positive impact going into 2023 as well as the business continues to scale and we continue to onboard. So I think it is a good tailwind for us in the second half and going into next year. And John, on what was it, headcount?

Yes. So on average headcount, we actually ended this half with 114,000, 115,000 people, but the average headcount for the half was 111,000. And if we compare that to the same half last year, which was roughly just over 101,000. So we're actually up roughly 10% on a comparable basis half-on-half in terms of permanent headcount. And then in relation to freelance headcount, we actually ended the half with 11,800 freelancers, with an average of about 11,700 for the half and that compares to about 11,100 for the same half last year. So an uplift of about 6% on freelancers.

What's been really interesting with freelancers is actually we've seen quite high salary inflation on freelancers, so about 15% to 20%, whereas, of course, inflation on permanent is closer to 5%. So the over-indexing to freelancers has really driven costs up as a consequence of that much higher salary inflation.

And then Julien, you'll be pleased to know, I've managed to now find in my range of schedules, the like-for-like growth across the different areas on commerce experience and technology. And I can actually give it to you broken down by sector, specifically. So 0.7% in our global integrated agencies; in our PR agencies, about 1%; and in our spec agencies, about just under 9%. So that gives you the growth you were asking for.

The next question goes to Thomas Singlehurst of Citi.

A couple of questions. Mark, I mean sorry to push you on the 2023 guidance, but the market, I think, is explicitly sort of taking the fact that you're not equating 2023 with medium term as saying that there is no chance that you're going to hit the margin expectation. And the revenue, I think, uncertainty probably is a little bit more sort of understandable because of the variances in the macro. But I suppose, just for clarity's sake, should we interpret the fact that you're not committing to that now as a sign that 15.5% to 16% is just simply not achievable in 2023, or is there still a range of outcomes where that is doable? It's just a question of waiting and seeing what the top line does. So that would be the first question. And then the second question is on leverage and cash flow and cash usage. I sense some disappointment within the investor base around the buyback not being sort of re-upped. Can you just talk about the puts and takes in terms of how you're thinking about cash usage through the end of the year and on what you anticipate the plans being over 2023?

Well, I mean on your first question, I'll just say no and then let John give you some more color and take the second one.

Tom, look, in relation to the sort of the margin, we're really confident in our ability in a steady state to deliver annual net sales growth of 3% to 4% and operating margin of 15.5% to 16%. That's absolutely clear. With regard to 2023, all we're saying is we're going to update you very specifically with our guidance in February at our prelims. We're not saying we will or we won't achieve 15.5% to 16% in '23. We're merely saying that we'll update you with the guidance in February of next year. And I think that's a perfectly reasonable position to adopt given the market uncertainty. I wouldn't read anything into with regards to margin. We're not saying we will or we won't deliver the 15.5% to 16%. We're just merely saying with the current uncertainty out there, we're going to update you with a much more detailed guidance in February of next year, which I think is a very reasonable position to adopt.

With regards to the second question, which is on sort of leverage, cash flow, buybacks, I mean we said very clearly at the beginning of this year that we would do GBP 800 million of share buybacks this year. We've done about roughly, what, GBP 637 million in the first half. We'll do roughly GBP 170 million in the second half, very much clearly in line with our guidance. I suspect we'll do the GBP 170 million or so in the third quarter. And then we'll leave our options open. We've been very clear on our capital allocation policy. We set that out very clear, so I won't repeat that. But we'll leave our options open as we travel through the remainder of the second half. I mean certainly, there's many interesting opportunities from an acquisition perspective. But equally, we've also been very clear that if we outturn our leverage position beneath our guidance of 1.5x to 1.75x, then over time, we will buy back our shares. So I think we'll do the GBP 800 million and then we'll keep our options open going forward.

And our next question goes to Adrien de Saint Hilaire of Bank of America.

I've got a couple of questions that are probably more specifically for John. I think you mentioned the fact that leverage for the full year should be towards 1.5x. Given the fact that the second half tends to be quite cash generative, I'm not quite sure leverage would increase between the first half and the second half. Secondly, regarding trade and non-trade working capital, so you've given us a guidance for trade working capital. I just wanted to confirm, this is the guidance for flat trade working capital for the whole of '22 or is that on a combined '21 and '22 basis? And if you could give us some indication as well for non-trade working capital, which was a big outflow in the first half. And then last question, sorry, again, John, there seems to be quite a contrasted performance in the operating margin by region. I think they're up in the rest of the world but they are down in North America, Europe and U.K. So why is that the case, given that the growth trends seem to be quite similar?

Okay, great. Adrien, so on your point about leverage, obviously, we work out the leverage ratios on a rolling 12-month basis. I think we'll end the year with a net debt position at about, I don't know, GBP 2.2 billion, maybe GBP 2.3 billion or so, which would reflect the normal flow of cash in the second half. That will leave us with an adjusted net debt-to-EBITDA somewhere in the region of maybe 1.3x, 1.4x, maybe a little bit higher, but certainly no worse than at the lower end of our leverage metrics. So again, that's -- I think that's hopefully very, very clear guidance, reflecting a flat, an assumed flat trade working capital position.

In regards to just a clarification on that guidance on the net trade working capital, clear that, that guidance is flat on a 2022 year basis. So we're saying that December to December, we expect to be flat with regards to trade working capital. So hopefully, that guidance is a little bit of recovery from the outflow, effectively an outflow in the first half, which we always see anyway, but we expect to recover that so that we are flat year-on-year in 2022.

And in terms of your point around sort of operating margins by geography, you're right to point out there are some quite big differences. So let me just give you a little bit of flavor as to what's driving those differences. So let's take the U.S. market first and foremost. What we saw in the U.S. market was growth, net sales, of just below 10%. Which was a higher growth, I mean encouragingly, a higher growth than we were anticipating. And as we tried to recruit into that market, given the relatively tight labor conditions, it was quite difficult to recruit permanent heads into that market as quickly as our net sales were growing.

And so we indexed, therefore, into the freelancer market. We actually increased our freelancers roughly 30% or 40% in North America over the first half. And because, as I said earlier on, we're seeing inflation in freelancer pay, particularly in North America, it's around 15% to 20% inflation on freelancer pay, that explains about roughly a 0.8 margin delta between this year and last year. And the rest of the gap actually in North America is principally driven by the investments that we're making to grow our business. Those areas like Choreograph, for example, and Nexus within GroupM, which have a higher concentration of activity in North America and the U.K. for that matter, driving some of that margin delta. So that explains the difference, I think, in North America.

In relation to the U.K., I think there are 3 key drivers to the margin delta year-on-year. The first of which is that the U.K. margin also includes some investments that we're making. So for example, not only in Choreograph and Nexus, which is also centered around the U.K. and the U.S., but in particular, our investment in Everymile is focused in the U.K., and so that's impacting our margin differential year-on-year. GroupM also actually had a very, very good year this time last year and it's having a normal year, if you like, this time this year. It's had very, very tough comps.

That's also explaining some of the margin difference. And actually, Hogarth, our production business, lost a key client. So half on half, that's impacted the margin. So I think that gives you a really clear differential, if you like, between -- in terms of what's happening in the North American market and also what's happening in the U.K. market, if that's helpful to you. Now with regards to the second half, of course, we would expect those positions to reverse. So in North America, as we've got to grips with our balance between freelancers and permanent, we'd expect to see that come back. And the same is true in the U.K. market as well.

Our next question goes to Joe Thomas of HSBC.

Just following on from some of those points. on Slide 13, you talk about the change in operating margin year-on-year. And the staff cost pre-incentives is the one that stands out. You've sort of talked around this topic a little bit. But I just wonder if you can disaggregate that number a little bit better so we can see how much of that is freelancers and how much of it is underlying cost inflation and also headcount, of course. Second thing relating to that, I suppose, is just to understand the extent to which you are getting pricing up. Well, I suppose what the pricing volume mix is within the business and you're able to get that cost inflation back? And then finally -- these questions are all related to some extent. Finally, just as we think into 2023 and the risks that are in 2023, given the increased dependency on freelancers, could we expect the drop-through rate to be substantially lower than it has been historically?

John, did you want to...?

Let me come back to -- let me come back to the first -- sorry, the last 2 and then just remind me your first one, because I was trying to write down busily the questions as you were talking. I think in relation to 2023, I wouldn't draw too much with regards to the trends we're seeing in the first half of 2022. As I said, the freelance mix issue I think will be solved as we navigate through the second half. So I don't think that will be an issue going into 2023. With regards to your point on pricing, how much are we managing to pass through. Clearly, there's a balance here in relation to -- we want to do the right thing, of course, as well by our clients and continue to give them great value to service. But we're probably seeing in the order of 1.5% to 2% price increases coming through. So if growth in the first half is roughly 8.9%, you might see 1.5% to 2% of that being price inflation. And then your first question, just remind me, please, of the first question.

Yes. It was that Slide 13, the 2.4% impact on margin from staff costs pre-incentives. How much of that was -- well, if you could just decompose that a little bit better, I suppose.

Yes, I mean it's primarily driven by -- look, the headcount is going up by roughly 10%. The actual -- I would say the overall freelance shift at the group level is relatively small. It's probably a 0.2 or a 0.3 swing against. But it's principally driven by headcount going up roughly by 10% and our salary inflation going up by roughly sort of 4% to 5%. So those are the key drivers that get to your 15% or so. And I would say relatively small component of that, given the number of freelancers, it doesn't have a huge impact at the group level. It has a more marked impact, as I said, in -- since 0.2 or 0.3 at the overall group level in terms of margin, but it has a more marked impact in North America. So the 0.8 that I referred to earlier on, because of the concentration of freelancers in that particular market. Obviously, that gets somewhat diluted at the group level. Hopefully that's clear.

Yes, and just to finish on that final question. So the drop-through in 2023, we should expect it to be the usual sort of 25% to 30% range.

Yes. I don't see any reason why it wouldn't be. I mean the point to make is that there are [several] moving parts in all these, in terms of -- in relation to margin and drop-through. And we're clearly living in uncertain times, lots of moving parts, both in terms of the top line. So a lot of it will depend on the volume price mix on the top line and clearly on the cost line as well. What we are -- so there's probably a broader range of drop-through going forward given that uncertainty, but typically, 25% to 30% will be the weighted average.

What I can say is I know that we're very good about responding to the market. We're very agile in looking forward into the market and being able to adjust our cost base accordingly. And so we feel confident as we navigate through into 2023 that we can adjust the business accordingly to reflect whatever the business cycle throws at us.

And our next question goes to Richard Eary from UBS.

Three questions from myself. The first one is just as we look into the second half of the year, obviously, guidance implies a slowdown. But I'm sort of keen to understand within that slowdown, how much we are still going to get from positive account win momentum through the back end of the year? You obviously mentioned earlier that Coke was going to have a bigger impact on the second half. So if you think about guidance, which implies maybe 3% to 5% organic growth in the second half, how much of that is actually coming from account wins? So that's the first question. The second thing is that John, Mark, I don't know whether you can give us any color in terms of that guidance around the shape of Q3 and Q4 to understand how you expect the market to slow, if you are. And then just lastly, can we get a little bit of an update on where Kantar is? Because obviously, the associate numbers were probably softer than most people expected in the first half. And so just to try and get an understanding of the performance of Kantar and the next steps for that business.

Yes, I think -- I mean I'll just make some observations and John can sort of build on it. Look, I think second half, probably there's a little bit more help from Coke than there was in the first half of the year. But net-net, I don't think there's more. There are other clients that go the other way. What I would say is that the new business pipeline does remain strong. We have had a pretty good first half of the year. We looked at our pipeline, it's maybe 10% shy of where it was this time last year, so not significantly different, well over $1 billion of net sales in the new business pipeline. I think that supports momentum going into the second half of the year and indeed, supports the business going into next year. And then on the guidance, John, what you would add. I think we view the half as a whole and we're pretty confident, very confident of delivering the guidance that we've given, which is why we've raised the guidance for the year overall. And I think that's really kind of what we'd say.

Yes. I mean I guess maybe to give you just a little bit more color. I mean we're forecasting broadly similar growth levels in Q3 and Q4, which means on a 2-year basis, for example, that means on a 2-year basis, Q3 will be slightly higher than Q4. And on a 3-year basis, Q3 will be slightly higher than Q4. But just year-on-year, broadly similar across both quarters, but hopefully that gives you a little bit of a view on the phasing.

And then in relation to Kantar, just to be clear, I mean Kantar's actually trading very well, particularly on the margin side, a very, very good recovery on costs. The reason why it's softer in terms of the associates number is largely due to interest costs that's been borne about through the acquisition of Numerator and with more debt being placed into the vehicle, higher interest costs and therefore, a lower outturn on associates. It doesn't reflect poorer trading performance from Kantar. It's just the gearing. So actually, Kantar continues to trade pretty positively.

(Operator Instructions) Our next question goes to Stefani Spasenoska of Goldman Sachs.

Actually, it's Lisa Yang from Goldman. Most of my questions have been answered. Just a couple of follow-ups. So firstly, on the margins. Obviously, some of your peers have seen quite a big benefit from FX on the margins and obviously North America should be obviously a higher-margin segment. So I'm wondering if you have seen any benefit in H1. And what should we be expecting for the full year or what you're baking in for the full year? I think that's the first question. I think the second question, again, I know there's a little bit uncertainty and I think it's probably reasonable not to, I would say, give the guidance for 2023 at this point.

But I'm just wondering, have you -- are you doing anything differently in terms of cost or in terms of investment? I mean clearly, you've invested quite a lot in H1, given the most uncertain macro outlook. Have any of your plans changed in terms of hiring, in terms of investments into 2023? So any sort of change we should be aware of? And the third question, I know you don't want to comment on the performance of the other agencies. But I think if we look at the 3-year stack, I mean you're still sort of lagging a little bit [Publicis], Interpublic. I know your guidance initially was to get back to growth which is in line with agency peers. So what would it take for WPP to go from basically being in line to basically best in class? I'm just wondering any structural differences we should be aware of and what you're doing to sort of improve your performance relative to the rest of the agencies.

Okay, let me have a crack at. I'm not sure I quite understood your second one, so I might ask you for clarification there. But on your first question in relation to the ForEx benefit in margin half 1, half 2 and full year, I mean basically, half 1, I'd say it's 0, I mean there's no real ForEx benefit. I'd say for the full year, if we -- if exchange rates remain as they are today, somewhere between 0 and 10 bps. So it's not a lot, to be honest, which I know is different to our peers. But it's again, obviously due to a different cost base and different mix and given where sort of various parts of the business are located. But we're not really expecting to see massive margin tailwind as a result of FX.

In terms of the third question, which I think was looking at the sort of how we compare versus our peers and are there any structural reasons as to why we're different. I mean I guess the obvious one would be, we tend to -- our business is slightly less indexed towards the U.S. We have a slightly broader geographic mix, which we see as being a major strategic advantage in the long run. I guess if we were to -- I mean what it would take to be best-in-class, we'd just have to grow more than we're forecasting. I don't think -- I don't think more complex than that. I think we've delivered very strong performance in North America in the first half of the year, which is pleasing. Historically, America has been slightly weak for us and it's good to see that North America is trading very strongly. But the only structural differences, I think, between us and our peers is that geographic mix.

And then your second question, I wasn't sure whether you were talking about sort of cost investments like Everymile or Choreograph or whether you're referring more specifically to our cost base vis-a-vis salaries or maybe you could just clarify?

Yes, apologies. Yes, I just want to clarify whether you have made any change in terms of your hiring plans or investments, just to take into account the more uncertain macro. Because clearly in H1, we see the greater investment, which probably has, I would say, offset the operating leverage in the business. So just wondering any sort of change in plans regarding the [prospect] for investments?

I guess only what I referred to, which is as we go from half 1 into half 2, we expect to see a lower dependency on freelancers. And so we should see more of an indexing into permanent colleagues, which as we know, the inflation on the permanent side is circa 5% compared to 15% plus on freelancers. And so that will help us deliver the margin upside that we're looking to deliver in, in half 2. So only that particular trend. I mean we're very good at, as I said, at responding to the market going forward.

And because we see relatively high churn rates amongst our people, it's an industry factor, we can actually pivot relatively quickly if we need to adjust our cost base, either up or down to reflect -- to reflect the changes in the market. Typically speaking, if we see the net sales go up more, we have to index into the freelancer market as we did in the first half and that's a more expensive resource, hence, the 2.4 margin drag in the first half. If we see net sales go down, then we can index out of those freelancers, as well as not rehire those that churn from the business. And so we can quite quickly respond by taking costs out. Hopefully, that gives you some clarity.

We currently have no further questions, so I'll hand the call back over to Mark Read for any closing remarks.

All right. Well, look, thanks very much, everybody, for your questions. Thank you, Peregrine, for everything that you've done for us.

I think just a few comments to make at the close. I think that we've had a good start to the year. We're confident of achieving our guidance for this year. And we do go into 2023 with a much stronger business, an agile business model and I think clients who are looking to maintain where they can their investments. The outlook is undoubtedly uncertain. But I think that WPP has performed extremely well over the last year. And if you look back over the last 3 to 4 years, the business has transformed in many respects. It puts us in a good position to go into the second half.

So thanks, everybody, for your questions and we look forward to seeing you on the next call.

Thank you.