WPP plc (WPP) Earnings Call Transcript & Summary

Good afternoon, and welcome to our Capital Markets Day. I'm here, as you can see, in containers in our new studio that we've been using during COVID to pitch for new business. But today, we will talk to you about growth, growth for our clients, growth for our people and growth in our business, measured by revenue and profitability, and most importantly, growth for you, our shareholders. Now 2 years ago, from the same building, we set out a plan to return WPP to a new strategy. And we'll update you on the progress that we've made on that and how it has positioned us over the last year and into next year, extremely well for growth. As importantly, given the impact of COVID on society and the way we work and the way we shop and the way we live, we want to talk you about the trends that we're seeing in our industry, trends that have accelerated the shift to digital media, the importance of purpose and reputation, the explosion of e-commerce. And all of those trends are trends we talked about 2 years ago, some of that, they validated the approach that we've made. So our plan outlines where we will grow, how we will grow and what we will deliver to our shareholders. And before we start, we should look at the following cautionary statement. And let's start with where WPP is today and why we're positive and optimistic about the future. Today, WPP is a creative transformation company. And each of those words is critical. Creativity talks to the importance of ideas of innovation of growth, not just in advertising, but in public relations, in media planning, in every aspect of our business, and it's what makes WPP special. Transformation talks to the way in which we help our clients shift their marketing approaches from how they used to market in the past to how they need to market in the future. And we want to be a company, a company that has many successful brands, but a company that's able to work together and bring together seamless solutions for our clients. And in doing that, we have many strengths. It's most important to start with our clients. And WPP works with many of the world's most successful companies. Amongst our top 20 clients, we have 4 of the world's most valuable companies by market capitalization, Apple, Google, Microsoft, J&J, and a further 2 of the top 20, Nestlé and P&G. So we can see we work with many of the world's most successful corporations. And over the last 9 months a year during COVID, we've seen how those companies continue to invest in marketing, and driven a much more resilient performance than we maybe would have expected. We also have many of the most powerful and respected brands in our industry, brands like AKQA or Ogilvy, VMLY&R or MediaCom, BCW or Landor & Fitch to name a few. And those brands are critical to our people and to our clients, but it's also critical that we can work together seamlessly, we don't have silos between those brands. And that's something that we've been working on very hard for the last 2 years. And those brands and the people give us global reach and scale, not just in the U.S.A., which is around 37% of our sales in North America or Western Europe, a further 1/3, but in the rest of the world, in the big future growth markets of China, Brazil, India, markets that will shape the world for the coming decades. But the other thing we know will shape the world is technology. And we don't need to learn after the last 9 months that technology has really accelerated. We've seen, in some ways, a decade's innovation in 6 months, and WPP has tremendous strengths in that area. You look at some of the statistics on the chart, we have $30 billion of gross merchandise by value of sales, running through e-commerce platforms that WPP has built. We spent more than $10 billion a year with Google, Amazon and Facebook. We're the largest customer, Google, Amazon, Facebook, Alibaba and Tencent, from an advertising perspective. We're a top 3 partner to Adobe and Salesforce, 2 of the fastest-growing technology companies or software companies in the world. We have tremendous strengths already, and we intend to invest and build on those strengths in the future. And we wouldn't be right to talk about ourselves as a company without thinking about our purpose. And 2 years ago, we set out a new purpose to use the power of creativity, what makes us special, to build a better future for our people, for our planet, for our clients and communities. And we're doing a tremendous amount across WPP in each of those areas. In people, we're very focused on inclusion and diversity. Since the killing of George Floyd, we've made a number of commitments to really invest in our people and to build a more inclusive and diverse team, a commitment to $30 million over the next 3 years to invest behind initiatives inside and outside of WPP in that area. In terms of looking after our planet, we've already made significant improvement in improving our carbon footprint. We've reduced our carbon impact by 69% since 2006 and a further commitment to reduce it by 50% from the 2017 benchmark. We have pledged to ensure that all of our campuses are 0 carbon campuses by 2025. But this area is also really important for our clients. You can see here some work that we did for Unilever, at the height of the pandemic early this year, talking about the beauty you can find in healthcare workers. But it's not just communications, but also helping our clients design more accessible products, more accessible technologies, to make sure that people, wherever they are, where they come from, can work with those clients. And we're also really committed to helping our communities. We've been working very closely with the World Health Organization over the last 9 months to get the message out. This is some work we did in sub-Saharan Africa. And we have also been helping in India warning people to wear mask. Because I was just, today, talking to our Foundation in India, where we've been helping 20,000 schoolchildren over the last 9 months continue their education in Mumbai at the height of the pandemic. So we have tremendous strengths as a company. But how will we use them to accelerate our growth. And so today, with John Rogers, our CFO; and Jacqui Canney, our Chief People Officer, we want to talk you through our strategy, how we see the market, where we're going to grow, how we're going to build our culture, how we're going to use people to really differentiate WPP. And what that means financially, how will we save money, where can we invest that money and how we use it to return more capital to our shareholders. But I think to understand the past -- also, the future, you always have to understand the past. You also have to look at where we are and where we've come from. So we take a step back 2 years ago to where we were when we had this presentation 2 years ago. I think it's fair to say that there were some issues that we needed to address. I think we correctly identified those. Our growth had slowed. We had negative growth for 4 quarters, no growth in the U.S.A. since the fourth quarter of 2016. And we have 5 or 6 out of our 6 peers in terms of relative organic growth. We've had issues with our clients. Our single -- our largest client was under review. Our organization has become too complex. We didn't have a strong vision or purpose or clarity of what WPP stood for. We had 9 separate creative or digital networks that made the business very difficult to manage, and probably more than 500 different brands across the company. And our financial model was not sustainable. There was a lack of discipline in how we allocated capital. Our dividend was approaching 60% of earnings, and our debt was approaching GBP 5 billion. And those made the current approaches unsustainable. When we think about what got us into that situation, we need to look at the performance of our businesses. We thought it would be insightful to look at how we performed by sector in the 10 years running up to 2019. So these 2 charts look at the relative organic growth across WPP's businesses for the 5 years from -- up to 2014 and the 5 years to 2019. And you can see in the first 5-year period, we did relatively well across all of our businesses. But in the second 5-year period, we had growth -- strong growth from GroupM and strong growth in our digital businesses, but our creative companies had really struggled. They really struggled, I think, to adapt to this digital future, and you saw that performance in their organic growth, ranging from minus 1.5% to close to minus 5% on a compound annual basis. And it's very hard to run a people business that isn't growing. So this was a key issue that we needed to fix. And if you look at GroupM, our media business, you can see how well GroupM have performed, not only had it delivered 7.5% organic growth, admittedly, including some acquisitions, but it also maintained its margin fairly consistently across a 10-year period where digital spend had gone from 17% of the market up to 52%. And so that managing that through the transition is something that we needed to do across all of WPP's portfolio. So in 2018, we set out the 5 strategic objectives for the business to reset our vision and offer, to reinvest in creativity that's so important to those businesses, to look at how we could develop a stronger data and technology strategy, really a common approach across WPP, to simplify our structure to make it easier for clients to navigate us and easier for us to manage only to build a culture that would attract the best people to WPP. I think we've made significant progress in each of those areas. First, we expanded our offer into the faster-growing markets of experience, commerce and technology and the digital part of the communications business. And this is a sizable market opportunity. What we need to do is really reorientate WPP into the growth areas of our industry, renewed our commitment to creativity, attracting some of the top creative talent in our industry to WPP's creative businesses. And you can see that in the awards that we got Cannes Lions, named us holding company of the decade, won awards in the D&AD. We're the Effi's the most effective holding company 9 years in a row, but not just in advertising. BCW, this week was named the #1 accretive public relations companies by PRovoke. We have been recognized for the quality of our creative work. And I think while we have more to do, we have made significant progress. But we also radically simplified our structure. We've gone from 25 global networks, if you include Kantar, to really 10 global networks today, from 65 specialty businesses to 40, from 500-plus brands to closer to 220. And today, we have 38,000 people working in our campuses, nearly 4x the number from 2 years ago. We've done that through a process of merging and combining offices. We are readily shutting businesses that need to be shut and raising GBP 3.5 billion from disposals, notably of Kantar, where we raised GBP 2.5 billion and kept a 40% stake in Kantar at the end of last year. And that transaction on its own really put us in a very strong position to prosper through the challenges of 2020 and COVID. As a result of those investments in simplifications and integrations, we've actually seen a dramatic improvement in our client satisfaction. And even during COVID, a time where close to 100% of WPP's 100,000 people who are working from home, we've seen our client satisfaction continue to improve. And I think that demonstrates the value that we give to our clients, the respect that they have for us and the importance of the work that we do for them. And you see it not just with our existing clients, but in new business and in client retention. And this year, we've won 40% more in our business than we did last year, and we lead the new business tables. This is the table from R3 with a really strong performance, actually both in creative and in media. While our media performance has gone down and I'll show you that later, our creative performance has been released on roughly 1/3 of our pitches have been integrated across creative and media. You can see some of the fantastic brands like Intel or Uber or Walgreens Boots Alliance that we won or retained this year. So what does that mean in terms of our performance. When taken together, we've really improved our relative performance. I think one way to think about this is when we met 2 years ago, we had 3.1% behind the average of our competitors globally, and 7.3% behind the average of our competitors in the U.S.A. in terms of relative organic growth, probably the most important metric of success and progress in our business. And today, we're 1.4% ahead of the average globally and 1.7% ahead of the average in the United States. And I think we have addressed many of the issues in terms of our relative performance and our performance in the U.S. So -- and we enter 2021, I'd say, having made significant progress, much of it during COVID. We haven't been sitting on our hands over the last 9 months, but we've been taking action. We've seen an improved organic growth performance. Pre-COVID, we had growth in the business outside of China at the beginning part of the year. We've been above our peer group, as I mentioned in the last 2 quarters. And we've gone from 5 or 6 out of 6 to 3 out of the 6, and we really aspire to go beyond that. We've seen a much stronger performance from our clients. 15 of our top 30 clients grew despite COVID in the third quarter of the year, and our new business has been stellar and our existing business at risk has been much lower than it has been historically. We have a much improved financial performance. Our net debt at the end of Q3 was down to GBP 2.3 billion. But we've also, and I think most importantly, taken a lot of action during this period to be ready for 2021. We continue to attract top talent to the company, most recently, Andy Main, who joined us from Deloitte Digital to run Ogilvy. We responded very rapidly on the cost front, and I think our cost performance during 2020 has been much better than external analysts would have expected. And we've really positioned WPP very well for the future, taking tough but necessary decisions to bring AKQA and Grey together under the AKQA Group, to bring Geometry into VMLY&R, and to bring Finsbury, Hering Schuppener and Glover Park together to form Finsbury Glover Hering, a really interesting and powerful communications powerhouse in a fast-growing part of our market. So these are all reasons for us to be positive about the future. But how do we see this market? As I said before, I think that COVID has really accelerated many of the trends that we talked about 2 years ago. There is a growing importance of purpose and reputation, I think we all recognize. There's no doubt that technology is reshaping our market, it's breaking down the old model, the traditional retail model, the classic linear television or mass media model. There's a occlusion of communications, content, commerce, on a mobile device, all powered by data and technology that's driving much consumption at the moment. CMO's responsibility is getting broader. Many are becoming chief growth officers, needing new skills, new talent, and new advice. And there's no doubt as well that the places that they can go are evolving. It's a much broader range of competitors for what we're doing. We need to ensure that we're competitive against those. And if you think about purpose, it really is much more critical than it's ever been before and dominated, I think, the financial press for much of this year, along with the other issues. And we see a 2.5% increase in brands that are perceived to have a high positive impact on society. This is some work, The Choice, that Keith Cartwright and Grey did for P&G, talking about their stand against racism. 85% of consumers believe that brands should be about more than just profit and Pfizer capitalized on this with their campaign, Science Will Win, from Grey, Hill+Knowlton, and Landor, really stating the role that science can play. And there's no doubt with the progress that they've made with their partners in Germany on the vaccine, really endorse that. So consumers expect more from companies today than they ever do. The second trend has been really the explosion of digital media. And the fact that now it's really the dominant media. People talk about the digital transformation, I say to them, well, it's happened. Here in the U.K., where we are in 2021, digital will be 62% of advertising spend, television will be 19%. Digital will be more than 3x spend that our clients spend on traditional television. And so we live in a world that's already dominated by digital and our success in navigating that, I think, is critical. But another area where we've really invested in WPP over the last few years, and I think will stand us in really good stead for the next few years is e-commerce. And we've all seen the growth of e-commerce growing from 20% in the U.K. to 31% in the second to third quarter or 12% to 16% in the U.S. At some point, I think, in May or June, e-commerce was 60% of non-grocery retail sales. Now some of that, no doubt, is forced, but much of it will remain as we come out of this. So we've been helping brands like L'Oréal, this is some work that Wunderman Thompson have been doing with L'Oréal, really helping them sell their product through Amazon and make it available to consumers where consumers want to buy it. But one of the reasons why these experiences that we're building at clients in commerce are so important is the explosion of streaming services and social videos. These are typically environments where the classic advertising model is much less harder to reach out. So forward-thinking clients need to figure out how are they going to reach their consumers in the future in a world where we have 230 million subscribers to Disney+, where people watch 1 billion hours of YouTube, but then you divide that by the world population, it's like 7 or 8 minutes per person, so everyone's life spent on YouTube. In that world, how are clients going to reach their consumers. They need to innovate, they need to build channels. Often, they need to build their own channels and e-commerce can be at the heart of that. And those are all ways in which we're helping our clients to reach -- harder to reach consumers. So as a result, I think what we're seeing is that client spend is holding up, but is shifting. And the issue we faced at WPP is not that our clients weren't spending on marketing, it's that our offer was not yet in the place where they were spending more money. And that, I think, is what we've been working to fix and where we'll continue to invest in the future. You see that 68% consumers expect their marketing technology budget to increase. They're saying they spend more money on marketing technology than they do on traditional agency fees. So we need to continue to invest in those sort of shifting areas of the business, which is what we've been doing. So to conclude on how we see the market, I'd say our opportunity is in digital communications. It's in experience, it's in commerce and it's in technology. Now earlier this year, we held the WPP Extraordinary Awards, a celebration of creativity in each of WPP's disciplines. And so I think to bring that to life, we're going to take a 5-minute coffee break or interlude and give you a chance to look at some of the work that won those awards and give you some more insight into what it means to be in each of these categories and the types of ways in which WPP can help its clients to prosper. [Presentation]

Welcome back, and I hope that gives you some insights into the work that we do in each of those areas of communications, experience, commerce and technology. So let's talk about WPP's strategy for growth. And I think this is how we think about sort of the house in which we're growing. Sort of 3 areas of where to play, if you like, companies, building strong, growing brands, our clients, how we can be the partner to the world's leading companies and in countries, how we can deliver scale in the markets of the future. And that's supported by our scaled capabilities to how we turn size into scale and production, data and technology, culture, how we can become the employer of choice for all and our transformation program to provide an efficient and effective platform to fund investment in the business. And that all leads to capital allocation to provide sustainable returns to our shareholders. So in many ways, our companies are growth platforms. We talked earlier about how we need to make sure that all of our companies have growth strategies. And that's something that through the changes that we've made over the last 2 years, we can really provide. I mean our creative businesses, they have both platforms of digital communications, healthcare, e-commerce and experience, marketing, technology and production. And so you see within, say, Wunderman Thompson, the ability to build Wunderman Thompson Health. One of the talks of commerce to build mobile applications and experiences to connect altogether using technology into work with Hogarth and other capabilities from a production perspective. In media, we had growth platform not just in digital media, but in specialist business models like Xaxis and Finecast. Our public relations businesses have been very resilient during COVID. And is driven by growth in purpose and reputation, sustainability and also by digital and social media. And our specialist businesses also have the ability to grow as a brand experience and identity. So the issue has really been in our creative agencies over the last few years. And I think we can see clearly that integration can drive benefit. And here, we lay out the growth over the last 5 years of VML, the blue line, and Y&R, the green line. And you can see that really the performance of Y&R suffered over the last 4 or 5 years. By bringing those 2 companies together by the end of 2018, we were able to increase their growth from minus 10% up to close to 5% in a pre-COVID world. And even in COVID world, the growth or the VMLY&R business has been much more resilient than other people in WPP, and I suspect other people inside our integration. So we've really seen the benefit of integrating that. We're better able to deliver an integrated solution to our clients. We're better able to offer a broader range of services, and all of that helps us grow. We can show you what that means in each of these areas. Key goal has to be to succeed in digital communications, to have ideas that are in many ways, media neutral, but the work as well in digital channels as they do in the traditional terrestrial media. And this campaign that we highlighted in the previous video that Ogilvy ran for Boots, part of Walgreen Boots Alliance, from last Christmas, the boutique campaign demonstrates the benefits you can have of a broader, integrated approach, but also really delivering mass personalization into an improvement in not just page views on their website but a doubling of the return on ad spend against their traditional benchmark. And it's a digitally led, highly personalized approach. But our strategy also provides these agencies with the ability to expand into e-commerce. And this is some work that Wunderman Thompson have been doing with BAT for the past few months. They actually took it over from a consulting company. They've really been helping BAT to deploy one of the largest global rollouts of Adobe's Magento platform, a platform that Adobe acquired, I guess, about 18 months ago and has been a key partner for us then. And in the future, we've launched 10 commerce sites around the world for their non-tobacco product. So this is really in the non-tobacco area, we've been able to help them build a direct relationship with their consumers. And a key part of what we've been working on, certainly during the pandemic is building new experiences that enable our clients to connect with their customers when physical experiences have not been possible. You think about launching a car in the middle of a pandemic when consumers can't visit a dealer and can't make an order. And that's what we've been working on with Ford, launching both the Bronco and the Mach-E through an online reservation platform, drove significant traffic to that site, we sold out the Bronco in 45 minutes and the Mach-E in the first 8 days and 95% of the Mach-E reservations have been made online despite dealers being much more open. So it shows the permanent shift that you do get in consumer behavior as a result of the pandemic. So we really have strong growth platforms today in our integrated creative agency, they're able to offer expertise in health, in e-commerce, in experience, in marketing technology and data, in production to bring that all together for clients. As we said, our media businesses have been strong. But how can we build on their momentum? One way is to win more clients. And you can see on the left the performance of GroupM, measured by COMvergence, and they've won close to 3x the amount of new business as their next biggest competitor, new assignments from companies like Whirpool or Hasbro, Sainsbury's or Uber, and had a really strong new business performance during 2020. But actually, innovation has really been critical in our media businesses over the last 10 years, providing new services, new technology-driven services and new business models. One of those has been Xaxis. As Xaxis was borne out of the acquisition of 24/7 Real Media, all the way back in 2007. And for those people that say that WPP is not a technology-driven company, to remind them that we brought an ad-serving business 13 years ago, from which we really created, incubated and then created and then developed Xaxis, which is now a significant part of our operation. And this is work that Xaxis did together with Mindshare and Grey for Volvo. Basically, the goal here was to use data to target the creative and optimize the creative much more effectively. We created 2,358 different advertising messages, each one tailored to the end user. And what's important about Xaxis and this shows is that we can do this in a cookie-less world. So much of the optimization is not based on the cookie, but it's based on time of day, the content, the page that people are at or other things that we know about that consumer rather than the cookie. Now we also have growth opportunities beyond the Internet, but we've been investing in a product called Finecast here in the U.K. and it's now rolling out around the world that enables our clients to get access to connected television and connected television inventory. We have a 50% monthly reach here in the U.K. We're the only platform that has access to inventory from all the major broadcasters from Channel 4, ITV, Sky, 5, as well as MTV and Disney channels. We have access to all of that inventory, and we can reach 40 million TV devices across the U.K. We really help our clients target messages not based on cookies, but in a really privacy compliant way. And that's a business that we're now rolling out into further markets by the end of the next year. And I think we'll demonstrate or show good and promising growth in our media business. I'll just touch briefly on public relations. And I mean, in a classic kind of downturn, if that's the right word for what we've experienced in the last 9 months, you probably expect our public relations businesses to be the most impacted of any part of WPP's business. That's certainly been the situation historically. But it's not been a situation during COVID. And I think that's because clients realize the importance of communications and clarity of communications. And BCW, I mentioned one, The Creative Agency of the Year award, have really been helping as part of an integrated WPP team, the U.S. census to get underway during 2020. Or equally importantly, Hill+Knowlton working with the World Health Organization really to clarify the communications messages around the pandemic and help them to get the message out. So each of our companies today has a strong growth strategy. What that really enables us to do is expand our offer with clients and Colgate-Palmolive, I think is a good example. It's a client that was won by Y&R or Young and Rubicam, as it was back in 1995, before it was even part of WPP. We then expanded the relationship across WPP set up, the Red Fuse model. And today, we're expanding it and broadening it and helping the client innovate and invest in new ways. We have AKQA working on innovation projects with Colgate, Wunderman Thompson set up a dedicated Amazon team to help Hills with their pet food business. We're building through Ogilvy and Verticurl, a single view of the customer, and then we're activating that through a Salesforce CRM platform build that VMLY&R are working on. So really, it's the best of WPP coming together to drive growth for our clients. And we're seeing close to high single-digit growth with Colgate during this year, given the strength of their business, but also given the strength of our relationship. So I think there's significant room for us to grow with our major clients and to capture more share in newer areas from those clients. And doing that is a critical part of our strategy. We've really, I think, seen significant improvements in the way in which we've managed our global R clients over the past 2 years. The third element are our countries. And as I said, WPP has probably a unique position, one of the people in our sector, most diversified geographically. We have a fantastic footprint in markets like Brazil, China and India, where we work with many strong local clients. This is some work that Ogilvy in China in the middle have done with Ali Express, and I've mentioned before that GroupM who won the media planning for Alibaba in China. So we're helping some of the world's fastest-growing companies succeed in their home market, and I think in time, help them succeed as they expand beyond the home market. So if that's where we want to grow, how are we going to do it. And a key element of that is our approach to production, technology and data. I mentioned this notion of turning sort of the benefits of size into the benefits of scale. We don't want just to be the biggest. There's no point in being the biggest. What we have to do is turn being large into an advantage, an advantage for our clients, an advantage for our people with the opportunities we can give them, and an advantage for our shareholders in terms of disproportionate returns. And production, technology and data are really critical to that. When we're producing -- so production -- where we're producing content is critical to produce significant volumes of different types of content. This is some work that Hogarth have been working with Ogilvy on for Instagram, really producing content that can live in their channel. So it lives inside Instagram to promote different messages and different usages of Instagram. This is a lot of work you can see been done during the pandemic and [indiscernible] vote before the election. And we're doing similar creatively driven, mass personalized creative work for clients like Dyson or Rolex or WBA. We also need to take advantage of scaled global partnerships. We have really strong relationships, not just with the software companies, but with the digital media businesses, with the cloud and AI providers, with many of the companies that power the way we work in our business. And just to call out one, Adobe, we have $400 million of revenue across WPP, dedicated to implementing Adobe products. And so if an Adobe business growing 10% to 20% a year, we can expect really strong growth in our business with Adobe. We need to have more of those sort of rocket ships to attach, if you like, to WPP, really to help us grow. And at the heart, of those partnerships is really the specialization that we have. Now I think it's going to be hard to read this chart. So I think to sort of help you understand what it shows, if you look at sort of 3 critical areas. So first, digital agencies, and WPP has 4 of the leading digital agencies. And AKQA on the top right is the highest ranked. We also have really strong businesses in customer experience and increasingly clients are looking at customer experience. It's a critical way to differentiate what they do. And again, AKQA is up there, ahead of companies like Accenture or Deloitte or other sort of technological service providers. And the same is true with Adobe where WPP collectively is a really strong, recognized by Forrester in their Wave as a leader in the Adobe implementation services business. So those specializations are areas where we can continue to invest and we continue to service all of our companies without the need to replicate and duplicate multiple delivery centers really around the world. And lastly, we need to touch on data, which I know has been a topic discussed a lot in our industry and different approaches have been taken. And I think we're very comfortable at WPP with the open data approach. So rather than acquiring, say, legacy data management and data business, we've really been focused on making sure that our clients can get the most value from their data through a very open and partnering approach. We've brought this to life in the recent sort of retention and expansion of our relationship with WBA, with Walgreen Boots Alliance, where we really gave them an integrated WPP team across creative, media, data, technology, but also public relations, we built a WBA-owned identity graft that will help them connect their first-party data across all the channels to drive mass personalization. We do this not really through something that we're going to own as WPP, but something that we're going to help WBA build on with their existing strategic partnerships of Microsoft and Adobe. And the recent launch of myWalgreens shows how we can demonstrate the benefits to that. And as WBA seek to compete increasingly with Amazon, they recognize the value of knowing customers of being sort of intimate with their customers, really knowing where they're coming from. And giving them back the benefit, but in a classic loyalty approach with much more personalized messages and much more personalized service. So that talk of data, I guess, naturally, leads on to people. And as Jacqui Canney will tell you, people are really at the heart of WPP, and really our goal should be to build a company and a culture that attracts the best people in our industry. And if we can do that, then we will prosper. We'll give our clients the best advice and will become their trusted partner. So I'd like to ask Jacqui to share with you your thoughts on how we're going to build that culture.

As Mark said, WPP's purpose to build better futures for our people, planet, clients and communities sustains our culture. How we activate that culture and fulfill our purpose starts with our people. When we look at our company today, we have many great strengths, including our 100,000-plus people all around the world. During this tumultuous year, they once again demonstrated their resilience, talent and creativity even as we shifted to remote work. I'm proud of how our people have taken care of each other, our clients and communities. This year, they have volunteered hundreds of thousands of hours in service and pro bono work. In fact, my last trip before the pandemic was to India, where I was so inspired to see our people in classrooms helping children gain confidence through the WPP India Foundation. We've also shown that our people can collaborate to deliver amazing high impact to creative work for our clients despite the unexpected twist and turns this year has taken. At the same time, we know we have opportunities for improvement. Our clients continue to rely on us to solve some of their most difficult and interesting problems, and our people want access to more opportunities for growth. That's why we need to focus on strengthening diversity representation at all levels of our company. So we have teams that -- with diverse perspectives, producing richer work for our clients, greater mobility for our people across the network as well as offering clearer career paths, reducing churn in our workforce and simplifying and integrating multiple systems so we can work more efficiently and effectively. Before I talk about how we're going to take advantage of these opportunities, I want to talk about the foundations of our people strategy. People are the most important asset at many companies. This is especially true in our industry. But at WPP, I think I'd go beyond that and say people are our company. In my experience, as a business transforms, there are a few things that you need to get right. You need to have a clear purpose, a set of values that guide the company and a clear strategy for growth. You heard Mark talk about all 3 of these things, and they really come together in our people because they are WPP's competitive advantage. It's through our people that we will deliver on our strategy. The diverse creative teams that we bring to every project will differentiate us in the market, help us keep and grow existing client relationships and help us win new clients. I'm focused on aligning our people strategy to our business strategy. The simple questions that drive our people team every day are how do we attract, retain and grow the most talented, most creative and most inspired people on the planet who are drawn to our purpose. And how does our people strategy drive our business strategy, which ultimately drives our growth and value as a company. Let me walk you through our people strategy. We've built it through 3 key pillars: being the employer of choice for all, modernization of experiences and growth. As Mark has said, diversity and difference powers creativity. We know that there's empirical evidence backing this up and we know that being the employer of choice for all means being able to attract and retain exceptional diverse talent. The teams we build to deliver the best work for our clients will need to bring new ideas, different perspectives and diverse life experiences to the work. In order to attract, retain and grow this talent, we need to be a place that celebrates and cherishes diversity and difference, so our people can bring their best selves to work every day and feel a sense of deep belonging at WPP. To be the employer of choice for all, we must listen closely to our people. We're starting to do that through a new listening strategy designed to learn and anticipate what our people want and need. We must also demonstrate our purpose every day from the sustainability work we do, to our investment and community partnerships, from our commitments to racial justice, to our focus on gender equality at all levels. In June this year, Mark, along with the CEOs of our operating companies, took a visible stand on the issue of racial equality and supporting black and other minority ethnic talent. We committed to 3 things. The first is taking decisive action on each of the 12 points in the corporate change letter to our industry for more than 1,200 black advertising professionals. The second is using the power of our voice to advance racial equality. And the third is investing $30 million over 3 years to fund inclusion programs and support external organizations. Just as we do quarterly financial reviews, we will be doing quarterly reviews with all our senior leaders. So we keep on track and make progress against our commitments. We have also incorporated progress against these commitments into our senior leaders' bonus compensation schemes for 2021 to ensure accountability. We are approaching this work with our eyes wide open. We know we have to show sustained action over time, but we have made foundational progress on each of our commitments, guided by our new global inclusion council and with the full support of our senior leaders. The second pillar of our strategy is modernizing our people's experiences. Our people team's philosophy is built around being a human-centered design organization. Our people have technology that simplifies all aspects of their lives, and they expect the same at work. That's why we're building up our data capabilities to draw richer, deeper analytics to improve our people's experience. And we are partnering with our new CIO to tech-enable the work experience at WPP by deploying better technology solutions and integrating the myriad systems we use across our network with the people ends first. For our people, our aspirations provide easy mobile access and user-friendly self-service tools. For our leaders, this will mean real-time data and analytics to make better decisions and improve measurement and reporting. And for our clients, this means we will be able to more effectively match skills to client needs and build better teams. Our work on modernization will free up our people's time to create and free up our agencies to focus on what they do best. After the year we've had and the challenges we have all faced, we know that investing in our people and their capabilities will be the key to our growth and value as a company. Our people have insatiable curiosity to discover new ways of working, new ways to learn and new ways to create impact for their clients, that's why our third pillar is focused on growth. In fact, when we ask our people, they care deeply about opportunities to grow, develop as leaders and learn. And they want an endless career path, one that allows them to pursue new experiences across our network. These are the things that will bring the best talent and keep the best talent at WPP. So we are increasing our investment in development programs in 2021 with tailored content for our people, focused on building the skills they need if they're going to match our capabilities to our business strategy. We're opening doors to make new learning opportunities accessible to a diverse group of people across WPP, from agency programs like Mindshare leadership acceleration program with NCI Business School to our virtual HBX classes through Harvard Business School. And in line with our commitment to increase gender equality at senior levels, we're doubling down on successful leadership development programs specifically designed for women, programs like Walk the Talk and best forward partnering with Facebook. We are training our people for the capabilities they will need in the future, including partnering with companies like Adobe, Amazon, Google and Salesforce to accredit more than 20,000 of our people this year alone. This kind of learning is directly aligned to our business strategy to help drive growth. We are launching our new career explorer platform in early 2021. This will aggregate all jobs across the WPP agency network into one searchable place which will give our people more opportunities for mobility and career paths. As we scale carrier explorer across WPP, they will help us attract and retain, drive down our average turnover provide agencies access to new talent and reduce recruiting costs. More and more, our leaders need to work together, leveraging the amazing capabilities we have within our network to build winning teams across agencies and disciplines, all to offer clients the best integrated solutions. We saw a good example of this last month when WPP successfully defended and expanded our business with Walgreens Boots Alliance, all with a handpicked diverse dedicated team of teams with the right skills and capabilities drawn from across our agencies. As you read in our press release this morning, and as John will speak to next, we are investing a significant amount in our people and their capabilities over the next several years. This investment will be focused on our 3 strategic pillars, so we continue to align our people strategy with our business strategy. And we're making sure we have the right talent and the right capabilities to deliver on that strategy. I'd like to end now on how we will measure success. This is one of the hardest challenges for us because we are just beginning our journey towards really rigorous data and analytics capabilities within our people team. The simplification of our structure and the better integration of our various HR and data systems will help. But we are already starting to implement KPIs for our people so that we can measure things like employee Net Promoter Scores, increases in client likelihood to recommend scores and how we are building our people's skills and capabilities. Based on what we know right now, we are on the right track, but we also want to be rigorous to stay on track and meet our goals. So coming full circle, I think if there is anything we've learned from this unexpected year, it's that investing in our people and giving them the platform to grow and create will drive our growth and value as a company. To that end, nothing is more important than fostering an inclusive culture and being a place where the best most creative talent will come to work and stay, all because we offer them an experience of endless discovery at a deep sense of belonging and purpose. We have more work to do as we move from 2020 into 2021. But we are proud of what we have achieved. We're excited to continue building on our culture, fulfilling our purpose and helping all our people grow and thrive. Now before John talks to you about our financial plan, we're going to take a 5-minute break. And show you some highlights from WPP TV, which we launched this spring across 6 continents, and it's a channel for our 100,000-plus colleagues worldwide to share their creativity, expertise and insights with one another. [Presentation]

So welcome back from the break. Mark shared with you earlier on our plans to accelerate the growth of WPP over the next 3 to 5 years. And underpinning that strategy is, of course, our financial plan and there are 4 components to our financial plan. The first of which is accelerating our growth through investments, whether that's organic investment, whether that's M&A or capital expenditure. We plan to recover sales over the next 2 years back to 2019 levels, and thereafter, grow the business by 3% to 4% per annum. Now that growth, of course, needs to be funded through investment, which brings us on to the second component, which is, how do we fund that investment? We plan to fund that investment through a group-wide transformation program that not only funds the investment but also allows us to improve our operating margin over time. And all, of course, sits on the foundation of a clear capital allocation framework. So how do we allocate capital to growing our business, first and foremost? How do we then pay a sustainable and progressive dividend to our shareholders? How do we then fund M&A of GBP 200 million to GBP 400 million per annum? And then, of course, any excess capital, how do we return that to our shareholders? And those 3 components, those first 3 components of our plan, then, of course, deliver what we see as being very attractive financial outcomes for our shareholders. So return to operating margins of 15.5% to 16% for 2023 and double-digit EPS growth over the next 3 years. So I'm just going to break this plan down in a little bit more detail. Firstly, how we plan to accelerate our growth through investment? So we aim to, as I said earlier, grow by 3% to 4% per annum for 2023 onwards, and that's built top of 3 components. The first of which is our core growth. We feel confident we can return the business to core growth of 1% to 2%. And the reason why we have that confidence is, in the first quarter of this year, if you strip out China, which is impacted by COVID-19, we actually returned the business to positive growth. Secondly, we're actually outperforming the market now. We're winning market share versus our competitors for the last 2 quarters. Both of these points combined give us confidence going forwards that we can get the core of our business back to 1% to 2% growth. But then layering on top of that, the investment that we plan to make, investment in the type of work that we do, the sectors in which we participate, the geographies where we want to see growth. We believe that we can build on top of that 1.5% of incremental like-for-like growth. And then the third component, of course, is the benefits of M&A. So GBP 200 million to GBP 400 million per annum providing a further 0.5% to 1% growth. So that's how we get to our 3% to 4% growth from 2023 onwards. Let me just break out that middle tier in a little bit more detail. So as we exist today, WPP has, roughly speaking, 75% of our business in communications. And actually 25% across technology, commerce and experience. But if you look at the breakdown of the market, the addressable market, the split is very different. So 55% of the market is broadly in communications, whereas 45% is in the other areas of technology, e-commerce and experience. And the market is shaped very differently to our own mix. And we know for sure that those different components, the commerce, technology and experience components are all growing at double digit, roughly 10% each, whereas the communications segment is actually growing at about 1% or so. So our plan is to pivot our business away from that communications over the next 2, 3, 4, 5 years, such that we move from a mix of 75% to 25% today, to one of 60%, 40% by 2025. And in so doing, as you can see from this chart, we will actually deliver an incremental 1.5% growth. The second component of our growth levers is really the sector mix. You can see from this chart that actually, whilst CPG has been quite a tough sector over the last couple of years, we've seen really good recovery over the last 9 months, so much so that the percentage of our business relating to CPG is the same in the last 9 months as it was back in 2016. So really encouraging growth in CPG. Equally, one of our big growth platforms is our tech clients. We've seen significant growth since 2016 and the amount of our business we spent serving our tech clients, and we would expect to continue to see that growth going forwards. There are also opportunities. I would look at our pharma and our health care business, 2 sectors that have been growing quite quickly. We haven't grown our proportionate share of those sectors. So we see an opportunity to invest more in these areas in order to grow that part of our business. And then you've got sectors like financial services where we typically underindex the market, where we equally see an important opportunity to invest and drive growth going forward. So through investing in these particular sectors, some providing existing strong foundation, others providing an opportunity to growth, we expect to be able to accelerate our growth going forwards. The third component of our growth levers, and Mark talked about this earlier on, was really some really strong growth platforms within our Group M business. So we talked about Xaxis, programmatic, and Finecast. Xaxis is growing double digits. We would expect to continue to see that growth going forwards, particularly as we start -- as we really grow into new markets, Europe and Lat Am and also with new clients. So double-digit growth through the Xaxis business. And Finecast, as Mark said about addressable TV, we see a tremendous opportunity to grow this business. We saw plus 27% like-for-likes in the first half of this year. We'd expect to see that accelerate in the second half of this year as we start to have a rapid expansion of that business internationally, 11 markets by 2021. So 2 very strong foundational growth platforms within our media business. And the fourth component of our growth levers is really our international coverage. 30% of our business is outside North America and the U.K. and Western Europe. And here's a good example of 3 geographies: Brazil, China and India that make up about 10% of our business today, all of which we anticipate growing at double digits over the next 5 years. So hopefully, you can see through a combination of the type of work that we're doing, the sectors in which we participate, some of our growth engines within media and our international reach, how we expect to be able to deliver that 1.5% incremental growth above our base, 1% to 2%. But as I said earlier on, that doesn't come for free. We need to be able to invest in order to drive that growth, and this is the way that we see that shape of investment. And we'll talk a little bit later on about how we plan to fund this investment. But we plan to invest upwards of GBP 400 million a year as we get towards 2025 in the areas of, for example, our incentive schemes, so over GBP 100 million into our incentive schemes. We know that drives behavior in our organization to top-up our incentive schemes back towards historical levels. We know that technology is a big driver in our business, so we plan to invest GBP 150 million in increasing our investment in technology and enterprise IT, as an example, particularly when it comes to industrializing what we create innovatively in products in our agencies, how do we scale those products, how do we make those products robust so that we can use those with other clients as a particular focus of our investment technology over the next 3 to 5 years. And then the last component, Jacqui talked about this at length, of course, the importance of people to our organization and our need to invest in talents. And we see this as being extremely important for our growth. So whether it's talent in the areas of expertise like commerce, experience that we want to continue to build on in our organization or training on AI and machine learning, we see a big investment in our people over the next 5 years. But it's not just all about organic growth. There's also M&A., and we anticipate that we'll spend between GBP 200 million and GBP 400 million a year in M&A, a little bit of a step-up where we've been historically. But the nature of this M&A will be very targeted, targeted at organizations where we think we can really scale these businesses by bringing them into the infrastructure of WPP, integrating them into our organization, leveraging our existing client base and assets in order to grow these businesses. So we see huge opportunity in these areas, particularly, of course, in those areas where we want to build capabilities or continue to build capabilities like e-commerce or data analytics, et cetera. So now coming on to how do we fund the investment? Well, I've been in WPP now for 9 months, and I can assure you, it's a relatively complex business. And through simplifying and standardizing a lot of what we do, I believe that there are savings, annualized savings, by 2025 of GBP 600 million. And the plan is to take those savings to reinvest GBP 400 million back into the business to drive the growth that I've just been talking to and then to allow GBP 200 million to drop to the bottom line to improve our operating margin steadily over time. So what are the different components of these savings, the GBP 600 million that we plan to deliver. First and foremost, GBP 250 million through finance, HR and IT-shared services, simplifying, standardizing what we do; GBP 200 million of what we've described as being efficiency savings, buying better across our organization, using our property more efficiently; and lastly, GBP 150 million in how we operate as a business. So GBP 600 million in total. I'll take you through some of that in a bit more detail. So coming on to what we call functional effectiveness in shared services. And if we look at the business today, we are dispersed, siloed, unbalanced functions, frankly, across finance, HR, IT and legal. We have 8,000 people in the finance function alone, as an example, 3,000 business units, 100 different countries, 300 separate financial systems. We have very nonstandardized ways of working. We want to move that model much more towards a single-federated approach to global business, end-to-end process simplification, standardization, automation where we can, shared services where we can't automate a much more streamlined approach. And we believe that by doing so, we can save significant cost. So if you look, for example, at finance as a best practice, we currently spend about 4% of our net sales in our finance costs. Good practice would be 2% to 2.5%, best practice might be even low 1% to 1.5%. So you can see the opportunity to simplify what we do. But it's not just about taking cost down. It's really important to highlight this: it's also about how effective we are as a function. One of the things I'm very keen to do, particularly within finance is to move the business away from not just looking at retrospective measures like net sales and costs and profits and so forth but also start to have the business looking for much more leading indicators as well as the lagging indicators. So things, for example, like our pipeline, how quickly are we growing our pipeline, how are we converting that into work with our clients, how are we scoping that work, how are we resourcing that work, what are our levels of operational efficiency in terms of that resource, how are we looking at client satisfaction and client profitability. So really to shift the lens of the organization from looking at lagging indicators to looking at leading indicators and by shining a light on that, really driving operational performance through the business. And I think there's as much opportunity in that area as I do in terms of how we save costs across our organization. So coming on now to, as I described, the efficiency pot. This is procurement and property. Property, obviously, I see a big opportunity here. We think that over time, we can actually reduce the amount of property that we use by about 15% to 20%. We've made really good progress over the last couple of years in our campus program. It's about 1/3 of our people today are located in 20 campuses across the globe. By 2025, we anticipate that being about 85% of our people being located in 60 campuses across the globe. So a real opportunity to both reduce the amount of space that we use by 15% to 20%, but also change the way that we use that space, a much more meeting space, collaboration space, much less people sitting behind desks responding to e-mails. And we believe there's an opportunity to save at least GBP 100 million through that reduction in space. And the second part of this is procurement, how we buy. At the moment, our buying is very dispersed, very disaggregated across our group, across all the individual different agencies. We're spending to an excess of GBP 2 billion every year, largely with the same suppliers, often plus or minus 25% in relation to price. And so bringing a little bit more discipline to how we buy, we believe we can deliver savings of 5% of that addressable spend, so another GBP 100 million or so of savings to give the GBP 200 million in total in this area. And then the last component is our operating model. I think today, we are complex. We've got over 10 different approaches to how we operate at the country level. We've got a long tail of small agencies in unprofitable countries for example. We've got far too many management layers, duplication of effort across technology and production assets and so forth. And of course, significant, historically, at least in 2019, significant travel and personnel costs. Moving forwards, we want to simplify what we do 3 clearly defined operating models by country: significant consolidation of local agencies; simplified organizational structures, standard platforms leveraging our scale; and of course, continuing to implement some of the changes that we've seen to our ways of working over the last 9 months through COVID, so less travel in our organization, lower hotel fees, lower travel fees, et cetera. And by doing all of these things, we think we can deliver another GBP 150 million or so of savings. However, again, these don't come for free. We do have to invest capital. In order to deliver these segments, particularly, of course, in finance, HR and IT-shared services. So our plan is to, over the next 2 years, spend GBP 450 million to GBP 500 million in capital spend, largely in IT and property to really accelerate the savings that we just described. And then actually probably to return to more normalized levels of about GBP 300 million or so per annum thereafter. But we definitely see this capital as basically allowing us to have the right ERP systems, the right simplification of our processes and also the right property portfolio through our campus program to deliver the efficiencies that we just described. And there's an element of catch-up in 2021's capital as well as we -- obviously, we will manage capital and cash more broadly, very tightly through this COVID period. But the benefits of that capital, I think, are clear. We think we can buy 2025, deliver GBP 600 million of annualized savings. And you can see on this slide how they build up over time. And if you look at the components of that buildup, you'll see that the blue component or the bottom here, the operating model, that largely gets delivered quite early. That's mainly the savings that we've delivered through changing ways of working through COVID-19 and we that increase slightly over time. That's the bulk of the GBP 200 million that I made reference to when we last spoke at the Q3 and the interim trading call. The second layer is really our efficiency. And you can really see the savings ramp-up in '22 and '23 here through procurement and through property as we exit leases, as we really step up our ability to buy more centrally and then deliver savings back to the business. And then the third component is the shared services, that's where there's a heavy investment in IT and systems and that takes longer. So the capital investment upfront in 2021 and 2022 really starts to pay dividends in 2023 and beyond. So you see how these savings are built up over time. So hopefully I'll go at how we're planning to grow the business, how we're planning to fund that growth. Of course, it's really important that we have a solid capital allocation framework to drive the business. So let me take through the components there. So as I said, we need to invest in our growth, so our capital spend in our estate, technology and capabilities to drive organic growth in the business. We then secondly need to pay a sustainable dividend, growing every year, progressively growing every year at roughly a 40% payout ratio. The third priority is then to fund our targeted acquisitions, GBP 200 million to GBP 400 million per annum. And then our fourth priority, of course, is to take any excess capital as long as we maintain our balance sheet strength and return that capital through to shareholders. And we're announcing today that the Kantar share buyback that we suspended at the start of COVID-19, we will recommence that buyback in 2021. And of course, all 3 of those first components of our financial plan, deliver ultimately attractive financial outcomes for our business. So like-for-like revenue less pass-through costs to grow, mid-single digits at 4% to 5%, 2021, 2022. Accelerated growth thereafter, 3% to 4%, reflecting the investments that we're putting back into our business, all of which delivers also improved profitability to our bottom line, so a 15.5% to 16% margin by 2023. But just focusing on the more immediate shorter-term, 2020 and 2021. So in 2020, we've had a very strong October, November period. So overall, like-for-like revenue less pass-through costs down 6.7%, that means that year-to-date, we're down 8.4%. And we would expect, given December performance that the full year outturn to be in line with the year-to-date performance, around 8.5% -- 8.4% down for the year. Which whilst doesn't sound great being down 8.4% for the year, clearly is a lot better than we were expecting, and indeed, the market was expecting. So had a slight technical issue. So I'm going to go back a couple of slides as to make sure that you have heard everything I've said. Apologies if I repeat myself, but hopefully, you'll get the gist. So talking about strong financial outcomes for the year. Like-for-like revenue less pass-through costs, grow mid-single digits, so 4% to 5% in 2021 and 2022. And we would expect accelerated growth after that 3% to 4% per annum from 2023 onwards as I outlined earlier on. All of which, of course, delivers improved profitability, so we would expect our operating margin to be at 15.5% to 16% by 2023. So some real strong financial outcomes driven by our plan. But just turning towards the shorter term, expected outturn for 2020. We had a strong performance in October and November. So like-for-like revenue less pass-through costs is down 6.7%, a little bit better than September, which means that year-to-date, we are down 8.4%. And we would expect the full year outcome to be broadly in line with the year-to-date performance, so minus 8.4%, minus 8.5%, which basically doesn't sound great being down 8.5% but it's a lot better than we were expecting even 9 months ago. We've also done a fantastic job of managing our cost base through the crisis. The individual businesses have done a great job of really making sure we've got tight control over our costs. So much so, we think we're going to exit the year with an operating margin between 12.5% and 13%, which is an increase on the current market consensus. So positive performance there in relation to how we've managed our costs. And then from a cash perspective, we've done an excellent job, particularly in the last couple of months of managing our cash position. So at the half, we guided to a net debt outturn between GBP 2 billion and GBP 2.2 billion. We've done such a good job over the last couple of months, in particular, of managing our working capital within the organization, but actually we think we'll outturn the year. It's always difficult to predict because we're dealing with quite large quantums of cash, but around GBP 1.6 billion, it may even be slightly better than that. So a very solid performance on both our net sales, managing our costs to deliver profit, and also ultimately, our cash position and our net debt position. In terms of outlook for your models for 2021, we're going to expect mid-single-digit growth next year, again, 4% to 5%, part of the recovery plan through 2022 to get back to 2019 sales levels. Return -- actually, we will see the growth coming through in Q2, so obviously, Q1, which was less COVID impacted this year. We'd expect to be negative into the first quarter in 2021, but we'd expect to see growth from Q2, Q3 and Q4 onwards, delivering an operating margin of between 13.5% and 14%. Net finance costs similar year-on-year. Tax rate is slightly higher at 24% and rising roughly 0.5% annually, which is what we've guided to historically. And as I've already covered the CapEx of GBP 450 million to GBP 500 million. So this is the financial plan on a page. You'll be relieved here. I'm not going to take you through all of this again. But if you want to say, it's summarized on 1 page, it's here for your reference. So very importantly, how we're planning to deliver this program? And it's really important. It's quite a significant changed program across our organization. It's not a trivial exercise in a business that's as complex as WPP. So it's really important that we've got engagement across the business to deliver this plan. And the steering committee for this program will be our ExCo, which is obviously myself, Mark and other senior WPP leaders as well as the CEOs from all of our agencies, so absolutely a part of the steering group to really drive this change through our organization. And we've got the different pillars of that change program through simplified and stronger brands and countries through functional effectiveness, through better incentives and performance management and how do we look at how the business is operating and performing, particularly the KPIs that we want to look at and how do we accelerate our capability building across the organization. We've got a very clear integrated plan that underpins all of this. We've got a transformation office in place that will monitor delivery against that plan. There are very clear work streams with accountabilities, responsibilities, deliverables, time frames, dependencies, you name it. And it's very important that we have such a detailed plan in order to execute against this because it's going to be challenging exercise to make sure we've got the discipline to deliver this plan in the next 3 years. And how are we going to give you the confidence? You are investors, you are the analysts. How are we going to give you the confidence that we're executing against our plan? Or are we going to provide you with additional disclosures, additional analysis that would inform you as to where we are vis-à-vis some of our targets? So we are aiming to provide you with the split of the business by the 4 pillars, both, of the full year and half year in terms of communications, experience, commerce and technology. We will start doing that from the first half of 2021. We're also going to give you additional insight on GroupM in terms of revenue and revenue less pass-through costs and billing is right down between our digital and the traditional side of our media. Thirdly, we're going to give you ongoing updates against the delivery plans of our transformation program. So where do we sit in terms of our costs, how are we delivering against those targets and that trajectory that I showed you earlier on in our slides, and of course, ongoing updates in relation to our people, strategy and some of the KPIs that Jacqui talked about earlier on. So hopefully, the combination of these additional pieces of analysis and disclosure will give you some confidence and comfort that we're able to execute our plan in the way that we are saying. Right, and with that, I'm going to hand back to Mark to summarize.

Great. And thank you very much, John. So I think just in summary, before we take questions, I think what we tried to show today is how our plan will deliver growth, profitability and returns driven by demand from clients for our services in this sort of post-COVID world. I think we see a strong 2021 not only in terms of demand for our clients as they look to recover and renew but also with a strong economic bounce back, certainly from the second quarter of next year. Second is that we have to turn our size into scale with benefits in terms of data, media and technology where scale can really bring us advantages. Jacqui talked about the importance of our people and culture with ESG at the heart of our strategy. And as John just covered, we have to reduce inefficiency and invest in the faster-growing parts of our business, giving you more transparency and insights into the underlying business performance and a clear investable capital allocation. So that's really the plan on what we intend to deliver over the next few years. I think we've got some time now to take questions. And so the plan is, I think we're going to show you some work, some of the best work from 2020 at WPP. In that time, people that have registered the questions should go to the live team site and Peregrine Riviere, our Investor Relations Director, will moderate the questions that John and I and Jacqui will take care. So if we run the work and people please stay on the webcast, or if you're going to ask questions, go after the team site to ask questions. So thank you. [Presentation]

All right. So welcome back, and I think we joined that fast. Watching that Netflix commercial was a bit like sort of reliving the first lockdown all over again, Ozark, Tiger King, The Crown, I think those are the images we'll remember from 2020. So I think -- Peregrine, you're going to moderate the Q&A. I'm here with John in London, Jacqui is in New York, and we'll try to take as many questions as we can.

So the first question is from Richard Eary at UBS.

Mark, I'm not sure, hopefully, that's working. Is that?

Yes, I see you there, Richard. Hello. This is like the Downing Street press conference, anyway.

Just 3 questions from myself. Just the first one is that if you look at the growth targets that you put out there, you've said core growth 1% to 2%, and then there's an additional 1.5% coming from this P&L investment. Can you just talk through, in practical terms, how that you're actually going to achieve that so we get some comfort around that extension in terms of growth, in terms of what you're actually going to do to achieve that? So a bit more color on that. The second side is that I think it was helpful in some of the earlier slides that you put up about GroupM's historical performance, 7.5% growth in the last 5 years. I presume that you're baking in quite a strong recovery over the next 3 years, driven by Xaxis, cyclical recovery and also Finecast. Can you just outline what sort of rate of growth you are expecting? And maybe some sort of puts and takes in terms of why you'll be able to deliver that? And then thirdly is that as you've sort of articulated the strategy, as you sit back as a management team, what are the sort of major risks that you look at when you go through that strategy in terms of achieving that goal for 2023?

All right. So why don't I sort of tackle the first 2 questions kind of conceptually and then maybe John can give some color to the -- sort of financially, and then we'll talk a little bit about -- I'll talk about the risks a little bit after that. Look, I think that if you look at the way we broke down the business, you see a strong sort of GroupM performance. And then you see sort of net-net, a much weaker performance in the digital and the creative areas. And we have to say is, we can maintain the strength of the group and performance. We're not going to give you a number for that, but we'll give you more disclosure, you can see how that has been trending. And then you have to look at the other businesses and see as they shift from communications into the faster-growing areas. We can get them above 0, 1%, 2% to 3% through that investment and then the net result gets closer to 3%. I mean, John, do you want to sort of add on?

Yes. I think for me the biggest lever is the investments in technology, the investments in our people, particularly in terms of attracting new talent into the organization. There will be a real focus on bringing people in to expand, enhance our capability in areas like e-commerce and data and predictive analytics and so and so forth. So we can feel confident we've got the right people in place to grow those parts of our business. Likewise, I talked about the platforms of sector growth in pharma and health. Again, it's about getting the right people into the organization in order to provide and enhance our existing capabilities. So I think it's a combination of investing in our people, a combination of investing in the right technology that we need to drive the growth. And then, of course, the third piece was the incentive pool, and we know for sure that incentive pools within our organization do drive the right level of behavior. So we've got to invest in our incentive pool as well.

Yes. I mean, I think another way to think about it, Richard, is I think a lot of the headwinds -- I mean, you want to be in a business with tailwinds not headwinds, don't you. And I think a lot of the headwinds we've faced over the last 5 years have been that sort of headwind of shift and spend from traditional to digital media. And to some extent, that is diminishing as the traditional parts of our business get smaller and the digital parts of our business get bigger and growing. If you take the U.K., I said the U.K. is now 62%, digital, 18% traditional. Our business is largely -- I mean, it's hard to disentangle what's digital and what's sort of so-called analogue any longer. And so I think that you see those headwinds going away and the businesses benefiting from the tailwinds. Look, I think in terms of the risk, I mean, there's execution risk that we have, like any company. Can we win and retain clients? Can we attract the best people to our business? Can we deliver on the shared services and the efficiencies that John is talking about? And in each of those areas, the risks are there. I would say that, in the last 2 years, our ability to win and retain clients has vastly improved. I mean, if you think back 2 years ago, this time, 2 years ago, you had a torrid 3 months. We'd lost creative business at Ford and a number of other major pieces of business. We could have been out for review since the beginning of the year, come to the end of the cycle. That's not the situation where we are now. So I think we have the ability to win and retain clients. Similarly, people. Can we attract the best people in our industry. And I think if you look at the people we've hired in the last year or 2 years, Andy Main from Deloitte, Kirk McDonald from GroupM in North America. And we can attract and retain -- John and Jacqui, we can attract and retain the best people. So our industry is attractive to the best people. And we need to have that consistently around the world. And then I think it's fair to say that if there's one area, if I look back 2 years ago, in terms of what we laid out, one area where we've fallen short of what we wanted to do, it is the area of shared services. And I think part of that is because it did take us time to recruit a new CFO and build a team that can deliver that. And I think that we are -- yes, are conscious that we do need to deliver those savings. And maybe John could talk about how we're going to manage and mitigate those risks as he executes the plan.

I think just to build on what Mark just said. I mean, I'd also say that we've actually -- in terms of your question around the growth, I think we've got a strong foundation for growth because if you think about our business mix today, 100,000 people in the organization. We've got 25,000 people today, roughly, already serving our clients in the areas of commerce, experience and technology. So for example, say, for our top 100 clients with -- for 75 of those top 100, we are doing major e-commerce work with those clients. And so we've got a very strong foundation. It's just really a question of making sure that going forwards we invest in building that capability and growing those sides of the business. And I think it's that, that gives us confidence that we've got the ability to grow by that 1.5%, whether it's the geographic investment in countries that we know are going to grow, whether it's the investment and the type of work that we're doing and the building of capabilities, whether it's the sector split or whether it's strong platforms like Xaxis or Finecast. There's lots of components that we believe will contribute to that 1.5%. I think in terms of the risk on the execution of the group-wide transformation program, I think there are always risks in any large-scale transformation of this nature. And it's fair to say that WPP historically has not got a great track record of executing change. But I think this time around, we're going to do things differently. We've got really, really strong buying across the business, not just within WPP and its leaders but also the CEOs of all the agencies, absolutely bought in and part of the process, part of the steering committee to drive this change through the organization. So we've got really major buying. We're also bringing a real discipline as to how we execute the change. So really strong business cases, really strong sets of accountabilities, holding people to account in terms of delivery, dates and so forth. Different work streams underway, each with a project management support. So we're taking a very disciplined approach to delivering this change. It's not going to be easy and it's not going to be without risk. But I do feel confident we're bringing in people with experience to help deliver that change. So recent hire, for example, Rachel Higham, as our new CIO, has delivered change of this nature in her previous roles. We are also in the market to recruit a Global Business Services Director to really lead our procurement, property and shared service functions going forward. And we're also just forming a transformation office and the team of people there to really support delivery of the program. So we are getting the right people in with the right experience to derisk as much as we can to change program of this nature. Just on GroupM, I think maybe into -- I think your question was simply on GroupM. I do think GroupM is a real jewel in the crown of our business. And we saw growth back in 2019 of about 2.5%, 2.4%, I think it was in 2019. We did see a decline this year. I think it will be around minus 7.8%, minus 8%. But actually, next year, we're assuming we pretty much bounce, fully bounce back. So with GroupM, it is one part of our business. We see, on average, our business taking 2 years to fully recover to 2019 net sales level. So I think actually, GroupM will almost get there with a fair wind behind it. We'll almost get that recovery in full next year.

Okay. Next question is from Julien Roch at Barclays.

Can you hear me?

Julien, yes.

Greetings from my West Hampton barn.

From the central route, Julien?

No, this is the inside of the house. I like Joyce. The usual 3 question, even if I'm slightly cheating by kind of hiding your force in the 3, but they are the old numbers questions. So can we have the breakdown of the 75% of revenue in 2019 between media, creative and others? That's my first question. My second and third are to answer EPS growth because you said double-digit over the next 3 years, but the next 3 years include 2021, which is an abnormal growth year. So I'm searching for normative EPS growth. So once you reach 15.5% to 16% margin in 2023, what's the normal operational gearing on 3%, 4% revenue growth? Is it 10 basis point a year or 20 basis point a year? Some color on kind of normal margin improvement post the '23 guidance? And then the last one is, your free cash over '18 and '19 was GBP 1 billion to GBP 1.1 billion. You've talked about GBP 200 million to GBP 400 million of M&A; a 40% payout ratio, which in the coming years, is GBP 250 million to GBP 350 million; you're having net debt-to-EBITDA flat, so you're using all your free cash. So that leaves GBP 250 million to GBP 650 million for buyback. Do you agree with that math? And can we have more color on your buyback policy because you said you would return the excess cash to shareholders? But can we expect a regular 1%, 2%, 3% buyback a year or not? So I guess they're mostly for John because lots of numbers questions.

I'll let John do them. My only observation would be on the margin question that some people are never satisfied, Julien, but anyway.

Right. I'm going to start in reverse order because, in a way, the -- my answer to the last question informs my answer to some of the earlier questions. So starting off with the share buyback question. Look, I think, Julien, you're absolutely right. I mean, the math is very clear. Obviously, we very clearly stated that we will recommend the Kantar share buyback in 2021, and that's obviously GBP 600 million, that may well fall over a year or 2. But once we get to 2023 and beyond, if you follow through in your modeling, the net debt does start to come down a little bit. And you're absolutely right, we could probably afford to perform some share buybacks in the range, probably not quite as high as GBP 650 million, as you made reference to, but certainly GBP 300 million to GBP 400 million would be a possibility based on the modeling. Now of course, there's lots of assumptions built into that around what we do on M&A and performance and so forth, but from a modeling perspective, absolutely, there is that profitability. And you asked, well, what's the strategy that defines that? Well, it's very clear, it's the mass that you yourself have used, which is, we want to maintain the balance sheet strength, net debt-to-EBITDA of 1.5 to 1.75. Anything, obviously, lower than that range gives us an opportunity to pay back the cash to shareholders and that's what we will do. So hopefully, that's really clear. I think your third question was, if we deliver 3% to 4% growth, what would be the expected sort of normative drop-through on margin? Obviously, a very difficult question to answer. I mean, I think the first thing I would say is that we are very much about growth. This is a strategy for growth, not about margin accretion per se, although it happens to deliver margin accretion. And I think we will certainly always be prioritizing the growth in our business when it comes to that trade-off. That said, I think once we get to a 15.5% to 16% margin level, I would expect a 3% to 4% growth to see a 20 to 30 bp drop-through on the margin, as you described. But I think -- we are talking about sort of 2024, '25 and beyond, and I think at that stage, the business will be in a very different shape. And in terms of our growth opportunities, well, in and of themselves, inform whether we decide to prioritize the growth of the business or drop [ any ] things through to margin. But from a modeling perspective, 20 to 30 bps, I think, would be sensible. And your second question was in relation to EPS and what would be a normalized growth for EPS, given that 2021, obviously, clearly, is a very strong recovery. And I think if you look at the outer years of our plan, when we've got that steady -- slightly more steady state, 23, 24 and beyond, you would expect to see, all else being equal, sort of EPS growth of at least 5%, I would say, and obviously, that could be accelerated or catalyzed by a share buyback program. So if we do the share buybacks, as you've envisaged, then we'd expect to see that EPS clearly creep up, but I think that will give you some guidance towards the outer years. And in terms of your first question, which is the breakdown of the 75% between media, creative and others, I don't know I'm sort of going to guess a little bit, but we've always said it's roughly 1/3 or so, a little bit more on the media side and the rest being, and then I would say probably sort of maybe 1/5 of that would be others, and then the rest will be creative as a broad split.

Okay. Next up, we have Matthew Walker from Crédit Suisse. Matthew, can you please open your camera and come off mute for us. Matthew?

I don't have a good bookcase or whatever behind me anyway, so apologies. So the first question is, why are you expecting a bounce back over 5 [Technical Difficulty]

Picking up to me. I'm sorry, I can't hear. I can't hear. Could you just repeat the first question?

And how did that [ 20 ] [Technical Difficulty]

Matthew. Sorry, your line is really poor. I've got all your questions here. So if it's all right, I'll read them out. So the first question is why do you expect a 2-year bounce back from COVID of 5% in each of '21 and '22 rather than just a bounce back in full in 2021? Secondly, which parts of WPP are in the 25% scope of experience, technology and commerce and how did this 25% grow organically in 2019 and 2020 year-to-date and how did you come up with the breakdown? Thirdly, how big are each of Finecast and Xaxis, either in percent or sterling terms and what, apart from CapEx, what other costs will there be in terms of exceptional items to achieve the GBP 600 million savings?

All right. So why don't I take sort of the middle 2 questions and then let John talk about sort of the speed of the recovery in 2021, '22 and the CapEx. But I think if you look at the percentage of the business in experience, commerce and technology, we really went out and did an exercise with our biggest business units and asked them to estimate it. I have to say that it's not -- I don't say scientific, but you have to categorize assignments and work that we do with clients. But our work in those areas is pretty broadspread across the businesses. You know, within our integrated creative agencies, each of them do work on e-commerce assignments, each of them do work on experiences. Each of them do work in technology. So it would include businesses within Ogilvy, Wunderman Thompson, AKQA, indeed Grey and Ogilvy. Within Group M, the work would be, tend to be more concentrated in the e-commerce area, you're helping clients like L'Oréal succeed in e-commerce, or in the marketing technology area, we do a little work in ad tech. So broadly, it would be those areas. Some elements of our branded agency companies also work on experience. So we really did an exercise with our clients. And it was of that exercise. We can't give you sort of growth rates looking back but we are working on how we can give you growth rates in the future so you can estimate our progress on that. And we're likely to do that, I think, on a 6-month basis and it will be an exercise that we do. We haven't disclosed the size of Xaxis and Finecast. I would say that Xaxis has continued to grow. And I think it's grown in Q3 and Q4 of this year. And Finecast is running actually around 10% of our U.K. TV spend. So these are becoming relatively sizable businesses for us in the context of -- in the context of Group M. John, do you want to take the other 2 questions?

Yes. So your last question in relation to what other costs are there outside of the CapEx in relation to delivering this program. So it's probably just useful to summarize where we are on restructuring costs so that you can put these additional costs into context. So we said back in 2018 that we would have restructuring costs of, I think, GBP 375 million through to 2021 in terms of P&L costs and I think cash costs around GBP 600 million, of which GBP 300 million would be cash. And I think we'll deliver against that commitment. So that will certainly flow through as we described back in 2018. In addition, there will be some restructuring costs in relation to COVID-19 that we will talk about in more detail at the prelims next year. And of course, those costs are in relation to the impact of COVID-19 on our business. But in relation to this transformation program, we would anticipate somewhere in the order of GBP 100 million to GBP 150 million of additional restructuring costs from 2022 through to 2025, for example. And so those would obviously be on top of the CapEx that we've already talked you through. In relation to the bounce back and why 2 years, why not 1 year, why not 3 years? Actually, when you look at the variability of -- so the way we produce our budgets is we task each of one of our operating agencies to come up with a plan. And we inform that plan based on geography and expected GDP growth. We also look back to previous shocks in the systems, on the financial level the financial crisis, and we try and use a multitude of data to try and help us predict the type of recovery. In the end, it's a forecast. And it's an unprecedented forecast because we've never been in this situation before. But if you look at the projections for GDP growth by geography, and you index those across our business and across our agencies, and you look at our correlation performance to GDP, there's enough sort of data that would tend to suggest that this is a 2-year recovery. And again, if you look back at the global financial crisis, similar type relationship there. So that's the basis on which we, on average, recover. That said, if you look across the different agencies, there is quite a wide variance. So I've already talked about Group M, which will mainly recover next year. So what you see [ tendency ] Group M can be more volatile, but it more quickly goes down, more quickly recovers. And whereas in some of our agency businesses, we might see a 2- or a 3-year recovery back to 2019 levels. But on average, across our group, it will be a 2-year recovery.

The next question comes from Pauline Lecoursonnois from Hermes Investment. [Operator Instructions]

So I've got 2 questions. First of all, we welcome the commitment that you've made earlier this year to reduce WPP's own carbon emissions. But really the real impact of WPP is with its activities, the work, the creative work that it does towards customers. So with the new purpose that you also announced to use the power of creativity to build a better future, I think it would be helpful to understand how you plan to use this power in order to help address the environmental challenges facing us, for example, global warming or biodiversity loss, and if you could make some transparency, provide some transparency and make some commitments around that. My second question was following up on the presentation from Jacqui Canney, which provided very helpful KPIs for people. And I was wondering if you intend to report around those KPIs, once you start to see some data coming up. Thank you very much.

All right. Perfect. So I'll take the first question and then I'll ask Jacqui maybe to take the second question. Look, I think in terms of our purpose, I appreciate the question. I think that we've made a lot of progress as an organization in terms of reducing our own carbon footprint. We said earlier on that we reduced our emissions per employee by 69% since 2006, so we intend to reduce our scope one, scope 2 emissions per employee by half by 2030. And I think perhaps we can go further, we set out an objective this year to be carbon 0 on all our campuses by 2025. And I think we should be -- we are and we should be completely transparent in what we achieve as a company. Then there's our scope 3 emissions in terms of the production work that we do, where we've joined AdGreen and the work that we do for our clients, where we do have -- we do work with a large number of clients in there. I think maybe the question isn't really transparency. It's really just about being clear about what we do, and much of the work we do is about helping our clients explain how they're tackling some of these issues. And we do work, [ it has ] to be said with a number of energy companies, but I think that we do work in a way that helps those companies clearly and transparently communicate what they're doing to address these issues and the steps that they're taking, and we work within marketing guidelines and our own code of conduct to make sure that the work we do is a fair and accurate representation of the steps that those companies are taking. So one thing is how we help companies communicate. The second thing actually is how we help companies innovate in terms of what they do. In Mindshare, one of our media agencies, has launched a very interesting program called Change The Brief. So Change The Brief is a program where when a client gives us a brief to tackle something, we actually look at that brief from a different angle, from one of the -- perspectives of one of the United Nations Sustainable Development Goals and say well actually could we achieve the same thing in a different way that's also better for people or better for the planet. And so far, they've worked on 50 briefs over the last year. And we've been launching that into the industry as a kind of way of spreading that throughout the industry. So certainly, we do that. And we'll be reporting on the sort of Task Force on Climate-related Financial Disclosures. We'll publish our third statement there in our 2020 annual report. And I think our goal will be to have a dedicated day like this early next year, to our ESG goals where we can be clear on what it is we're signing up to across the board, and what you as our investors could expect from us. And so we'll be back and tell you exactly when that's going to be, but it probably March, April next year. We recognize this is a really important topic for you, for our clients. And actually, most importantly, for our people. So on that, Jacqui, do you want to tackle the question on people and talent?

Yes, sure. Thank you. And hello from the snowy New Jersey. I mentioned earlier in my presentation that we are just getting started on our people analytics journey. But in June, we also committed to publicly reporting on our representation data in the U.S. and in the U.K., which we've done, and we will continue to do so. As we get more data, we will absolutely be providing that out. And we still, in our annual report, actually do report on the skills that we have accredited like the Adobe, Salesforce, Google that I mentioned before. As we get better data and working with John and the finance team, I expect that we'll be able to share more of it. But to start, we are putting more data in the hands of our CEO of the operating companies. So quarterly, they will be able to see how they're doing on people metrics. And as we get stronger and stronger with more and more, I feel more confident that we'll be able to share that out of our company, but we're starting with what we're sharing inside our company, too.

Pauline, sorry, I gather that, that didn't come across the team session, but it was heard on the webcast. So you'll be able to kind of review the answer on the webcast. So apologies for that. But thank you very much for your questions. And the next question is an off-line question from Dan Salmon at BMO. I've got 2 or 3 questions from him. The first is, within WPP are the elevated level of agency consolidation and agency leadership turnover largely over? And secondly, are you happy with the levels of dialogue with your clients' CTOs and even CEOs today? That's often cited as an advantage of consultants, whereas holding companies were traditionally in dialogue with the CMO.

Yes. Thanks, Peregrine, and thanks -- the good news is that Peregrine doesn't give us the questions in advance, even if you submit them early. So Dan, to your question on the consolidations in agency leadership. I think that those are, I'd say, substantially complete. And when I say substantially, I mean very substantially complete. We've gone from 9 creative and digital agency networks really to 4. And I don't expect us to go further. Within Group M, we have 4 strong media agencies. We have 3 strong public relations, public affairs networks. So I think that the broad picture of the group as it stands today is correct. Similarly, I think that we've tackled all the major leadership changes. We have, I think, refreshed much of our leadership over the last 2 years, both through internal promotions, so bringing people like Lindsay to be Chief Client Officer or Stephan to be Chief Technology Officer; and through hiring from outside, so John and Jacqui, Andy Main and others. So I think that's actually the right balance of what we needed at WPP. We needed to promote some people, but we also needed to bring some expertise into the group from outside. And I think that's very valuable. And interestingly, to your point about consulting firms, being able to hire Andy from Deloitte Digital may bring some of those relationships. I would say that I think during the pandemic, our relationship with CEOs and CMOs has definitely strengthened. And I think we've taken advantage of this way of communicating to be in much closer contact. I'd say, I analyzed my diary during the first 3 months of lockdown, I saw 50% more clients during that time than I did in the same period last year. And I think clients do recognize the value of what we're doing and the value of the advice that we can give them on navigating their way through that. I think the same is true of relationships with CIOs and CTOs in consulting firms. And look, I think I'm not going to say our relationships are as strong as a technology consulting firm. Clearly that's not the case, but nor are their relationships as strong with CMOs as ours. And I think that we come at the problem, we come at the task from different perspectives. And I happen to believe that in a world where there's really a premium on inventing the future, a premium on giving people innovation that they don't expect, a world which is really about how we use technology for the benefit of consumers, not how we sort of implement it according to a spreadsheet or a manual, that actually WPP that has tremendous insight into consumers and tremendous insight into customers, insight into CMOs and marketing organizations. I think we can bring a tremendous amount to bear in those situations. And actually, when we do see CIOs and CTOs we have really productive conversations. But I do think we need to do more marketing, talk more about what we're doing. And push that further with those people, and that's certainly something that we're doing. And I think you see that in our relationships with Adobe and Salesforce and the partnerships we have with them in these joint assignments.

Great. Our next live question comes from Adrien de Saint Hilaire from Bank of America. [Operator Instructions]

I'm sorry, my background is very bland because I just moved in. I didn't get a haircare consultant. But anyway, so a few questions for you, please. So first of all, we heard another agency in the space talk about getting back to like 4% growth something like 2 years ago, and they didn't deliver on that target. So what do you think is different at WPP? Secondly, I'm just curious, what is the competitive edge of WPP against pure players in the field of commerce and technology and experience? I know you've talked about this 2 years ago, but if you could just maybe highlight this again? And maybe a third question for both of you. I'm just wondering what's the merit of M&A? Because historically, it did cause a bit of complexity in the organization, caused a lot of issues. There's another agency holding company right now, which is probably suffering a bit from that as well. So why would these acquisitions be different this time around? What are you going to do to integrate them, perhaps in a better way?

Okay. So look, Adrien, I mean I'm not going to comment on what other people have done. Sorry to disappoint you. I mean, we can just talk about what we've done over the last 2 years. And if you think back to what we said we would do 2 years ago, we said we would, by 2021, so by next year, return ourselves to peer level growth. And you all pushed us to give a number. And for the reasons you've just outlined, we declined to give you a number. We didn't know what it would be. And as it turns out, we probably would have been wrong, whatever number we gave you. We said we'd get back to 15% margins, and we said we'd make significant progress in achieving our leverage ratio. And I think it's fair to say that on the first, I wouldn't declare victory, but we certainly made tremendous progress in coming back to peer level growth, and we've achieved it for the last 2 quarters and touch wood, we will sustain that. On the middle on margins, it's fair to say, given all the disruption, we haven't got there, and we'll see where we get to next year, but that's not what we'll say we're going to do by next year, and we've got some more work to do there. And I'd say on leverage, we've absolutely over delivered. I mean, the deal -- the transaction that Andrew was able to deliver on Kantar which was seen by private [ economists ] as like the most complex transactions they've ever seen in really a very fast period of time. And quite frankly, I'm pleased we did it in December, because it would have been a lot harder to do in March and April. And if we hadn't done it, I don't think the consequences would have been great. So I feel that we've sort of tried to deliver on what we can. And I'll let John add some commentary to that in a second. In terms of the pure players, look, I think the advantage that WPP has is breadth and depth of skill and expertise and an understanding, not just of digital and online, but the breadth of what clients need to achieve, and we're working with 9 of our top 10 clients on the e-commerce space. They do want to have global resources. They do need to have people to understand consumers. They do need to have people that can produce content. And I think the fact that we can do all of those things puts us in a very strong position. Now the reality is we don't have the luxury just to focus on a subsegment of the market. Those weren't the cards, if you like, that we were dealt. So we have to -- you have to deal with the cards that you were dealt. The cards we were dealt were part of our business, a really good part, a very strong part is in the faster-growing parts of the business. And a part of it is in the bit that faces the natural headwinds of technology change and disruption. But I think we've made a really good job of integrating those bits of the business. They work well together and turning what perhaps has been a challenge to us into an advantage. And I think the same goes for M&A. I don't want to repeat the kind of logo charts that we used to have by going on an acquisition spree. That's certainly not our intention, but I do think there is, with discipline, i.e., starting with what do we want to achieve and then what are the companies that can help us achieve it and what is the right amount to pay for them? And how do we integrate the best into the company with what financial structure and a little bit more discipline, the ability to use M&A to drive a better offer to our clients and therefore, better growth? And I think John will help me bring some of that discipline to the process.

Yes. I think from my perspective, I think Mark and I have said before that we value organic growth, first and foremost, overgrowth from acquisition. We think that's more value-additive, and that's absolutely clear. But from time to time, we will want to accelerate our growth by bringing on sort of capabilities or bring on capability en masse in order to drive growth in certain areas faster. I think the key difference going forward will be, we'll take a much more integrative approach to M&A. I think historically the business has largely acquired businesses, run them relatively autonomously and have management on quite long earn-out periods. I think going forward, we'll bring businesses in, we'll aim to integrate them a lot quicker, and we'll want to reward management less on the individual performance of the business, but more on the synergies and the value that we create by bringing that business into the umbrella of WPP and allowing it to leverage our assets and our capabilities, our client base, et cetera. So I think a much faster integration and a much more incentive-based system on delivering the synergies of that integration rather than running the business autonomously. But it's not -- this is not a plan about just growth through acquisition. As I said, it's only in areas where we believe we need to accelerate our capabilities. And I think on your point around what gives you the confidence of hitting your targets? I mean, as you know, I mean, in all business there's risk. So it's about how do you manage that risk. And I can't comment on why others historically have failed. But I would say, for me, it's about having a detailed plan. We have a detailed plan, both in terms of how we grow this business. And how we deliver the cost savings. We've got the right governance structures in place, the right sponsorship in place, the right vision in place in order to drive that change through. I think we always take a sensibly prudent perspective on how we budget and how we model things in the organization. But of course, everything has got risk attached to it, not least in the current environment, when we're, say, in the unprecedented world of COVID-19. So -- but I believe sitting here now, we've got good line of sight of our ability to unlock the savings that we've just talked about in the transformation plan going forward.

So the next question is from Conor O'Shea at Kepler Cheuvreux. [Operator Instructions]

Three questions for me as well, probably initially for John. Just on the first, you mentioned there will be some COVID-related exceptional costs in 2020. And obviously you've still to disclose what they will be, but just to understand the nature of some of those costs because, obviously, you've raised your headline margin guidance for 2020. And there will have been some COVID savings as well in 2020, on travel and so on. So just to understand a little bit the nature of those exceptional costs. Secondly, just in terms of your associates, I think you're expecting a loss there full year 2020. Can you just update us on kind of level we could expect? And then the third question, just in terms of the experience technology side and commerce side of things, obviously, ahead of the full disclosure on that going forward. But can you give us a sense as to whether the margins are, from this starting point, are above or below the group average. And maybe if you can give us a sense of the new business that you won year-to-date through the 9 months. Is the proportion of new business coming from those activities above or below the proportion of revenues that you outlined, the 25% that you outlined previously?

Okay. So I'll have a go at perhaps all 3, and then I'm sure Mark will comment on the new business side. So in relation to COVID related exceptional charges. I mean, it's really 2 components, Conor. It's #1, it's severances. So we've had to accelerate severances through this year as a result of COVID-19. So we'll take a charge in relation to that outside of underlying. And then the second one will be, in the main, property costs where again, we'll have to sort of accelerate early exit from certain properties as a consequence of COVID-19. So they'll be both severance and property sort of exceptional charges. But again, we'll outline those in more detail at the year-end. In relation to associates losses, I'll give you a sort of broad guide, I think, somewhere between GBP 20 million to GBP 25 million loss as opposed to I think what most people are seeing, which is a GBP 60-or-so-million gain. So a slight drag on EPS there through associates. And then in relation to experience commerce technology, from a margin perspective. We don't see -- I mean, often it's cited, obviously, pure technology work or pure commerce work delivers a lower margin. We don't actually see that. We don't evidence that particularly. And actually, in a lot of the work that we do, it's of such an integrative nature, it doesn't, generally speaking, just sit in one of these buckets, but quite often transcends across multiple buckets of experience and commerce technology. So we don't see a massive margin differential. But in any case, I think overall it's fair to say that our business, our industry, like most industries are always under margin pressure. And hence, why we feel there's a need to -- when we think about the GBP 400 million in a way, whilst that is there to fund investment in technology and people, talent, et cetera, it's also there to ensure that we remain competitive on pricing as well. So we feel confident that we can maintain our margin structure, as we've described. And I don't know, Mark, whether you wanted to comment, particularly on the mix of new business?

Yes. Look, I think the mix of new business is probably disproportionately more in those newer areas sort of by definition, because that's where clients are looking to expand, that's where clients -- if I just think about what we're doing with WBA, what are they looking for, data and technology solution. They're looking for some sort of traditional areas, but much of what they're doing is around building new experiences, getting the data technology part of the business sorted out. So I think that as we win business, it would tend to not just organic client growth or acquisitions, but new business wins will tend to shift us into these newer areas. And part of, as John said, the investments are to be able to communicate what we're doing and resource those parts of the business more so that we can grow more quickly. I think the key thing for many of our bigger clients is making sure that we have. The reason we have a sort of digital or data or technology specialist alongside a more sort of traditional client feed because the breadth and range of what we do now at WPP is really hard for any one individual to really sell and do on an expert basis. So for many of our clients we'll have a technologist who would have a very fluid conversation with the CIO as well. And so I think that's another area where we can continue to invest.

Next question is from Tom Singlehurst at Citi.

So yes, 3 questions, I'm afraid. First one on Coke. Recent review is obviously a big opportunity. I don't expect you necessarily to comment on it directly. But one of the interesting features of that review is they're concentrating the number of brands that they're looking to support, which obviously suggests a bit of a headwind still for -- whichever creative agencies end up working with them. I suppose the question is, is that still a broader trend? And are Coke a lead or sort of lagging indicator in terms of concentration of brand count? So that was the first question. The second question was to do with integration. I mean, one of the questions I always get is how come you guys are underperforming IPG. I recognize it's a WPP Investor Day, not an IPG one. So you probably skip commenting on them. But I just wonder whether there is scope for another layer of consolidation in terms of agencies such that you have even more sort of functions integrated. So we've seen sort of VML and Y&R come together, but do we need [ PR ] to be folded in or even media just to make you truly functionally integrated? And then the final question on M&A. Very simply, in the past, you sort of darted around with the odd investment in just a stake in a business, I'm presuming the GBP 200 million to GBP 400 million is going to be all about operational M&A, buying companies that can actively enhance the portfolio rather than [ choicing ] assets.

Yes. Okay. So look, I mean on Coke, I'm obviously not going to comment sort of directly, but I think if you look at what they've said strategically and look at their investor presentations, they've been going through a process of brand simplification, quite frankly like many companies have been going through a process of simplification. And I think that, to some extent, that leads to a reduction in the number of agencies. But I think to the extent they're not intending to shrink the top line. And I think many clients expect them to increase their marketing expenditure. So I think to those companies that take part in their review. And I think someone said, I read in the papers they had 6,000 agencies around the world. I think there's plenty of scope for partners, hopefully like WPP that can provide the right solution to grow their business with them. That's certainly what we would do. I would say that I think 2021 will be a bumper year, if that's the right word, for new business. I would expect a lot of new business to be reviewed next year based on what I'm hearing in the market and what I'm seeing with clients. I think, look, on the integration point, and I'm not going to sort of take necessarily take your point to comment on IPG. All I would say is that they do have 3 main agency groups. But we started at WPP 2 years ago with 9. So going from 9 to 4 is a big consolidation. And given our size, I don't think that there's a lot of difference between 4 and 3. I'd say -- to my mind, WPP is the integration point. So clients should be able to get a seamless service between one of our sort of integrated creative agencies and 1 of our media agencies and 1 of our PR firms, just like that. And we showed you the work in the presentation, you have the sites will win work, which was Landor, Grey, Hill + Knowlton. And actually, something I've heard a lot from clients during COVID is because everyone's just a square on a Zoom screen, they don't actually know what agencies people work for anymore because they can't really see. Not only do we not have business cards, we're all like this from home. And actually, in some respects, cooperation has become a lot easier during COVID, it has broken down a lot of the physical distance. It used to be -- I can remember 10 years ago having arguments about which office people would sit in if they're going to cooperate on a client, maybe more recently than 10 years. When everyone's working from home, you're not going to debate what office people are sitting in. So I think that we've seen a sort of step change in the level of cooperation and the level of collaboration across WPP in solving client problems. And I think that WPP can well integrate the businesses that we have in our brands, to be brands. We don't want them to be silos. I think on the M&A front, look, I think there's still a role for some investment. But I think those would be where we could imagine ourselves getting to a majority situation. There's something we're -- very interesting we're looking at in the U.S. at the moment, really powerful business. And so I think there's a role, but I think you're right in the sense of -- there's a lot in the attic, and we don't want to sort of refill the attic, if you like, in terms of investments.

Our next question comes from Richard Kramer at Arete Research. [Operator Instructions]

So very quickly, I mean we're just getting a daily drumbeat of antitrust actions against the big tech players. And there's a lot of calls among larger advertisers for greater supply chain transparency. And you've put a lot of expectations on Xaxis to lead WPP growth, especially alongside continuing moves to programmatic. How do you think Xaxis and the wider business is going to get affected by changes in targeting that are going to come from the policy changes we're seeing at Apple and Google in their ecosystems? And how do you think about the sustainability of things like rebates in the supply chain from leading buying platforms? Maybe if you could talk through some of those issues and how Xaxis is going to navigate them in what looks like it's going to be a pretty choppy next 18 to 24 months.

Yes. So look, I think what our clients want from the platforms is a safe, a brand-safe environment. They want to know that the privacy of consumers is respected. And they'd like to have transparency into where their advertising is placed and into the results of that advertising. And I think, in particular, given the failings of some of the platforms in terms of providing measurement, I think that they want a degree of independence of measurement on those platforms, so they can verify that what they're being told is accurate. So I think broadly speaking, that is what clients are looking for from the platforms. In terms of how that impacts Xaxis, really Xaxis is a client in this situation. So Xaxis will be looking on behalf of its clients for the same thing and on behalf of its clients giving our clients transparency into what Xaxis is delivering. And I think to your comment about rebates, I mean there aren't rebates from platforms in our business model, so not in the U.S. or the U.K. or other markets where we're very clear on the contracts that we have with our clients and the policies that they follow, and we want to be sort of quite forthright on that point as well.

I've got a few questions now from Pat Wellington that have come in online. Firstly, does your claim to be taking market share include consultancies and other new nontraditional agency competitors? Secondly, can we get the timing of the net cost savings? At the moment, we have the timing of gross savings, but not the reinvestment. Given we had GBP 200 million of COVID savings and this is part of the GBP 600 million, does this mean what we have heard new today is a GBP 400 million new growth plan fully reinvested for no new incremental saving? And then thirdly, people are our key asset, but surely WPP typically has 20% to 25% staff turnover each year. How can this be a truly distinguishing feature? What's the target for staff turnover?

Okay. So why don't I take the question about sort of market share and competitors. And Jacqui, take the question about people. And then John, the other 1 in the middle. So I think, look, in terms of our market share, I think we have classically measured our market share against our traditional competitors. And I can just point to sort of where we are in terms of growth with them. Yes, I think that there are sort of smaller point solutions with the -- focused in particular sectors of those markets. And it's hard to look at what our market share is in those markets compared to those competitors' competitors. What I would say is that we've won significant amounts of new business this year. We've won an amount of new business that's sort of bigger than the whole of some of those competitors. So comparing sort of the law of large numbers, it's hard for us to grow at the same rate, but I still think we can deliver above-market growth, as John said. John, do you want to take the next question, and we'll turn to Jacqui at the end.

Yes. So in terms of the question around, we'll give you the timing and the phasing of the gross cost savings, but not the timing of the net cost savings. I think as a broad rule of thumb, I would say that the net cost savings in any 1 year will be, broadly speaking, 2/3 of the gross cost savings. So we'll try and track that through. Now it won't literally marry up that way. But as a rule of thumb, and in fact, if you -- to get to the margin guidance of 15.5% to 16% by 2023, you have to basically take 2/3 of the savings in that, I think it's about GBP 450 million, you have to assume that 2/3 basically gets reinvested. So GBP 300 million gets reinvested, about GBP 150 million drops through to the bottom line, and that's where you get your margin from. So I would assume roughly 2/3 of the gross savings, only 1 year drop through to net savings. Jacqui?

Sure. As I outlined in my presentation, we are confident in our strategy to attract and retain the most talented people and inspire creativity across the many, many countries. And nothing is more important than fostering an inclusive environment and culture and being a place where our talent will come to work and stay. And because we can offer them this experience of endless work and creativity and discovery, I believe that's how we'll differentiate to retain and attract the very best. I also mentioned that we're focused on growth opportunities for our people through Career Explorer and the ability to move around the network. All of these things I, as I said, believe will attract the best. I know that being purpose-driven is also what our people talk and need and want, and that is what I believe will be our differentiator. So with that, I'll turn it back to you all in London.

We have another question over Teams from Tim Nollen at Macquarie. [Operator Instructions]

I have a couple of related questions on media buying on Group M. First is you've got some very nice wins in there. Over the past few years, we've seen quite a bit of pricing pressure on account wins. I wonder if there's any commentary you could make on the recent wins? And if there's any more incentive component built into those, these days? And relatedly, I appreciate the color you provided on Group M, the numbers over the years. It seems like it's actually quite strong. And interestingly, a lot of people following this industry have been nervous that media buying would be at risk. The argument has always been that media fragmentation is good for the agency business model. I wonder if you could just comment, frankly, on if that is still the case, if it's more so or less so. And if it's even more so, why might you not be getting better pricing on your contracts going forward?

Yes. Thanks. I mean, the best way to answer the pricing question is to look at the chart we showed on the margin, which I think has remained relatively constant, you can probably detect a really slight upward slope over the last 10 years. Look, I think our business is always price-competitive, and there are situations -- some situations are more price-competitive than others. And -- but I don't think that it's substantially changed and the evidence from the margins would suggest that. I think to your point on fragmentation, look, I think fragmentation, to some extent, is good for the media business. But I think what's most important for the media business are results. At the end of the day, our ability to demonstrate and measure superior results to our clients in terms of ROI, our media spend and media savings is what drives the performance of that business. And we're taking -- if a client spends $100 million with us, and we're taking a $3 million, $4 million, $5 million fee, the client's, quite frankly, much more interested in what's the return on the $100 million, they don't know whether or not they can save 5% or 10% or 15% of our fee. If you do that, you're looking down the wrong end of the telescope, if you like. So I think the ability of Group M to use its scale in the marketplace to deliver better results from clients is what's most important. And as the business grows, obviously the benefits of that scale improve as well. Now what I think is also true is the nature of that scale has changed. Classically, the scale has been buying advantage with media outlets, and today, that scale is shifting to data and technology advantage. And Christian Juhl coming in as CEO of Group M, I think, has really strong strategic insight, having bought Essence and led the Google assignment for many years, into what it's going to take to build a forward-thinking media business. He said -- gave an interview in the trade press recently saying he expects Group M to look more like a software company in 5 or 10 years' time than it does today. And there's tremendous opportunity within Group M to automate, to offshore some of that work, all of which can protect and defend the margins as well as deliver improved results to our clients. And I think one of the advantages we have in the media business that I think analysts haven't really understood is, this is a collective business. It's a business that gets stronger the more clients that you have. So it's a business with a sort of a defensible moat around it. And the consulting company can get into the business but if they're just working on a point solution from 1 client, they don't have benchmarks, we don't have insight into media performance, they don't have relationships with the platforms, and so I think that Group M is a really strong business. And I had this debate with analysts over the years. And some said that's why we wanted to share the numbers with you today. Because I think you can see the health and the strength of the business in its financial performance, it should give you confidence as it gives us confidence, that we'll continue to figure it out. There's always naysayers in the world who say, well, just because something's stayed flat that means it's going to drop off the end of the world next quarter. We can't deal with those people. So we have to look at sort of what we've done and the steps that we're taking and understanding that the people who run the business know what to do and are smart people. And I think that, as you say, we'll continue to deliver results to clients and hence, results to shareholders.

Great. So I just have a few more questions that have come over the web or by e-mail, so I'll just do them one by one, if that's all right. The first is from Sarah Simon, and she's asking, you showed how the blended growth rate of your addressable market would improve as your business mix evolves, but you're basically saying you can only grow at 1% to 2% core rate and still at a lower than TAM market growth rate even after the reinvestment. So are you saying you assume, Mark, there a loss? What am I missing here?

Well, I think we have to grow -- we have to invest to grow at the rate of the market, I think, is what you're missing, if you like. And so that's just the nature of the business. So if we invest, we'll grow at the rate or higher than the market, and I think I'd leave it there really.

Okay. The next one is from -- sorry.

This is a rapid-fire questions program.

Yes, yes. So in my inbox from Ian Whittaker. So it's for you, John. At the Q1 results, you mentioned one area where you saw potential efficiency savings was being able to flex the working days of the workforce so you'd be able to align your people costs more closely with business as an alternative to the cycle of firing people in bad times and rehiring expensively in good. Is that still under consideration? And if so, is it included in your efficiency targets?

Well, we definitely see that through the greater visibility of new systems, which will give us a much better understanding of our resource utilization across our business. We see that, that gives us a much better opportunity to manage our greatest asset, which is our talent and our people. For sure. I think one of the things that by having a much better feel for your forecast going forward because of better insights on your pipeline, your ability to convert the pipeline, how we would scope that going forward. By having that ability to look forward sort of 3, 4, 5, 6 months and have a much better understanding of what's coming down the line, I think will enable us to plan as an organization much more effectively. So we still, as an organization, do rely on a fair amount of freelancers because the one -- the disadvantage of freelancers, of course, is that they tend to be a little bit more expensive. The advantage of freelancers is that they're very flexible, and you can bring them on board or you can reduce your freelancers relatively easily. But it is a way of managing your cost base. And we've seen that frankly through COVID-19. As we get better and better at forecasting our work going forward and understanding our resource utilization, we will be able to sort of rely, if you like, on freelancers less and rely on our core people more. And therefore, actually, as a consequence, reduce our cost base. So absolutely, we do see these things as being a benefit. Now is it specifically included in our forecasts? No. I don't think it is. And I think it's fair to say when I talked about this idea about looking at leading indicators in our business as opposed to lagging indicators, until we actually can shine a light on those leading indicators, we won't really fully know what the opportunity will be, and we might, for example, just happen to have the most efficient allocation of resources by chance in our business. We just don't know it because we can't currently measure it. So we don't know until we start measuring perhaps what the opportunity will be. But my experience would suggest that when we do start to shine a light on these things, and we see the variability of performance across our business. There will absolutely be opportunity there, but that's actually currently not baked into our savings, per se.

I might add 1 insight to that. I think if you take Landor's business, COVID has really allowed them to sort of reenvision how they deliver work and how they manage the company. And Landor is, let's say, 1,000 person business operating in 20 markets. So 50 people per studio, and yes, to be blunt, before COVID every studio optimized its results on a 1 by 1 basis because they didn't have the visibility. They didn't have the culture. They weren't used to thinking about what the availability of resource and expertise was in other markets. The beauty of COVID is it's forced them to think about those 1,000 people, because 1,000 people move the work around the world seamlessly. So they might have their Buenos Aires studio help on a program in London or South Africa help New York. And that has 2 benefits: one, a massive efficiency benefit, reduction in use of freelancers, reduction in waste of time, but also enables them to be much better as an organization. Imagine if you are in Buenos Aires, you can work on this amazingly prestigious project in London. So I think that there are many things that we should learn from how we've run the company over the last 9 months that will position us much more effectively for the future.

Great. And the final question. It comes from a big institutional shareholder, but they prefer to remain anonymous, but I do know who it is, and they'd like you to talk a bit about how these targets are linked to management comp and also how ESG targets are linked into management comp?

Yes. So I think we've just been through a exercise on incentive compensation. So sort of going forward, let's just talk about John and myself, but as replicated in our sort of leadership team, will be 75% financial, 25% qualitative. The 75% financial will obviously link to delivery of the financial targets we've outlined in this plan and that we've shared, obviously, with the Board and with the Compensation Committee, and we'll work out what the right targets are within the context of what we've shared. And I think some of those were shared with investors as part of the consultation as well and to judge what level of performance we should deliver to get what level of award. From a qualitative perspective, I think we're really thinking about measures of -- we're thinking about sort of 4 measures: an ESG measure broadly, a client measure, so how well do we serve our clients; a people measure, so a different measure from ESG but people in terms of diversity and inclusion and representation and blogging, the things that Jacqui talked about, and then lastly, some specific targets on strategic delivery of what we're talking about in this plan. So that's really how we will tie our compensation and reward to the performance that delivers to shareholders.

Well, that's it from my end on the Q&A. So back to you, Mark.

Okay. So look, I think just a few final comments from me. Look, I think what we've tried to set out today is an ambitious plan, to grow WPP 4% to 5% over the next 2 years. I do believe that much of what we've done over the last 2 years, and particularly last year, puts us in a really strong position going into 2021 to benefit from the changes taking place in our industry, from a stronger economic environment, from the growing importance of communications and purpose and the issue that we just talked about. So I think as a team we're really excited. I think the people inside WPP are really excited. And what I'm most pleased about is our clients are really supportive of the strategy that we have. And you can see in our client evaluation scores and in our new business performance, that -- where the rubber hits the road, if you like, that it's delivering. There's no doubt that 2020 has been a challenging year for us as it has been, I think, for everybody. Not just professionally, but in many cases, personally. But I do think that we've made a lot of progress this year and the resilience of our business, the relative resilience of our business, should give us confidence going into 2021 for an improved performance. There's no doubt there's a few more months sort of to work our way through, sitting here in London in a sort of Tier 3 lockdown that we feel, but I do think that clients have the confidence to invest ahead of what we see as a good recovery next year. So we're optimistic about the future of WPP and the performance we can deliver. So thank you, everybody. We've taken 3 hours of your time. So thank you for staying with us to the end. And thanks for your support. And John, Jacqui, Peregrine, myself and the rest of our team are here to follow-up with any of you that you want.