Good day, and welcome to the WPP First Quarter Trading Statement Conference Call. .

At this time, I would like to turn the conference over to Roberto Quarta, Executive Chairman. Please go ahead, sir. .

Good morning, everyone. This is Roberto. I have here with me Paul, Mark and Andrew, who will present the trading update; and also Lindsay, who will take some questions about the clients. .

But first of all, I'd like to -- brief introductory remarks, if I may.

I wanted to say a word about succession, and this is just to ensure that everyone is clear that this was very much a part of a long-standing contingency plan that we worked on, certainly since I joined the board, in the event that a sudden CEO departure due to illness, accident or others, and that would kick in.

And hence, you saw that when Sir Martin stepped down, the board immediately appointed Mark and Andrew reporting to me as Executive Chairmen. Their appointment as co-COOs, they are fully empowered to run the business and to help in developing and then implementing the strategy that's approved by the board.

And also during this period, whilst they are in this role, the company will not be standing still and, if anything, the pace of change will definitely increase. .

In terms of process for appointment of a CEO is concerned, we're going to be looking both at internal and external candidate. That process has now begun. We will try to conclude it as quickly and efficiently as possible, but I need to stress that it must be done both thoroughly and properly.

During the last couple of weeks and since Martin's resignation, I have focused my time on speaking to both investors and clients. The feedback from them is that they are supportive of the steps that we've taken so far. And internally, the conversation has been very positive and everyone is rallying around Mark and Andrew.

Also in speaking to clients, what they are telling me is that from their perspective, business as usual, and that's basically driven by a very strong view that they have about the management of our companies throughout our businesses.

And when they talk about WPP, there's widespread recognition that WPP is a strong business with great assets and great people, yes, facing increasingly a more challenging environment.

But once again, I reiterated to them, as I do to you, that Mark and Andrew have my and the board's full backing to review the strategy, make recommendation to the board and then execute. But I will let Mark and Andrew talk more about how we're thinking. But before we do that, I'd like to make a point that I think is quite important.

You may have seen that there's been, in the press, speculation about breakup of the group. Whilst we will be keeping an open mind and we will always go where value is for shareholders, but the starting point is definitely this is not a breakup. And also, it is far too early to speculate about specific asset sales. .

So in summary, we have a full confidence in the management to take this business forward. There will definitely be an increase in pace of change and not a slowdown or a pause on strategy during this period. And we will definitely get back to you with more details at the half year. .

Now before I hand over to Paul, there's one thing I'd like to say. I'd like to thank Sir Martin for his huge contribution to the business, which he created over more than 30 years. And thanks to him, we're now building on a very strong foundation. .

So thanks, Paul. .

Thank you, Roberto. So if you are following on the slide deck online, I will let you know when I'm turning the page. So we are presenting sort of the revenue trading update for the first quarter of 2018. The safe harbor statement is clear on Page 2. I'll let you read that at your leisure, if you don't mind.

And I will then turn to the highlights on Page 3. I have about a 15-page financial presentation, and then we'll hand over to Mark and Andrew. .

So the reported revenue is down 4% at GBP 3.555 billion, currency headwinds of minus 6% in the quarter. And on a constant currency basis, revenues were up 2%. The reported revenue less pass-through costs were down 5.1% on a reported basis at GBP 2,948,000,000, currency headwinds of minus 6.1% and a constant currency growth of 1%..

On a like-for-like basis, revenues were up 0.8%. And on a like-for-like basis, revenues less pass-through costs were down 0.1%, almost flat. United Kingdom, Asia Pacific and Latin America were up strongly, offset by declines in North America and Western Continental Europe.

Media investment management, public relations and public affairs and specialist communications, including direct, digital and interactive, performed well. Advertising and data investment management were more difficult in the quarter.

Our net debt on a constant currency basis at 31st of March, it was GBP 5.2 billion, up GBP 354 million on the same time in 2017. And on an average basis, net debt of GBP 4.77 billion for the first quarter of '18 was up GBP 357 million compared to the first quarter of 2017 but below the full year average for last year of GBP 5.1 billion.

Net new business billing of GBP 1.7 billion in the first quarter compared to just over GBP 2 billion reported in the first quarter a year ago..

So turning now to Slide 4. On the implementation of IFRS 15, which we applied from the 1st of January, this year, we have restated 2017 comparatives. It's approximately GBP 107 million additional revenue that would be reported last year and approximately GBP 7 million that would be reported in revenue less pass-through costs last year.

So fairly negligible on revenue less pass-through costs with GBP 100 million for the first quarter of '17. As we've said before, we expect the effect of this on a full year basis to add approximately GBP 500 million to the revenue line for 2018..

Turning now to Slide 5 and the buildup of the business. So organic growth or like-for-like revenue less pass-through costs was minus 0.1%. Acquisitions in the quarter added 1.1% to give constant currency growth of 1%. Foreign exchange is minus 6.1%. So on a reportable basis in sterling, the revenue less pass-through costs were down 5.1%. .

On Slide 6, you can see the impact of foreign exchange. If you remember last year, foreign exchange was posted around 4% to 5% on revenues and revenue less pass-through costs.

The first quarter we've just gone through, around minus 6%, and the expectation on the full year basis using GBP 1.40 versus dollar and GBP 1.14 versus euro for the balance of the year is to have a headwind, i.e., minus 5% impact of foreign exchange on revenues and revenue less pass-through costs in 2018.

Quite similar to where we were at the beginning of the year, maybe a little more negative. However, the dollar has strengthened against the pound the last few days compared to GBP 1.40. .

Turning now to Slide 7 on revenue less pass-through costs per region. Starting with North America, which is 36% of the group, GBP 1,055,000,000 of revenue less pass-through costs generated in the quarter. And on a like-for-like basis, North America organic growth was down 2.4%.

This compared to a weak fourth quarter 2017 where North America was down 3.4%. And obviously, we have weakness in advertising and media investment management and health care in the U.S.A., but good growth for media, direct, digital and interactive..

The U.K., which is around 14% of the group, had continued good performance with a very strong final quarter last year, up 9%; around GBP 405 million of revenue less pass-through costs; and on a like-for-like basis, was up 1.6% with all sectors growing, except branding and consulting. .

In Western Continental Europe, the trend for the first quarter this year of minus 0.2% was similar to the final quarter of last year would be minus 0.8%. We were impacted by weakness in the first quarter of this year in Germany, which was down 5.7%, following a very strong quarter 1 2017 where Germany grew at 10%.

We had good performance in Holland, Italy, Scandinavia, Spain and Turkey in this quarter in Western Continental Europe..

In Asia Pacific, Latin America, Africa and Middle East and Central and Eastern Europe, we were disappointed at the fourth quarter of last year as this region declined over 3%, and we're pleased with the turnaround to see a positive growth of 2.3% on a like-for-like basis in this region. We break out more details in the slide that follows.

But overall then for the group, revenue less pass-through costs for the quarter are down 0.1%. And this compared to a decline of 1.3% in the fourth quarter of '17..

Turning now to Slide 8. We have the revenue less pass-through costs by region. I think the first point to note is the performance of the mature market and the faster-growth market. For last year, the mature markets declined 0.9%; and the faster-growing markets, as defined, were also declining minus 0.8%.

This quarter, mature markets up similar at minus 1%, but faster-growth markets are growing at 2.3%. And you can see that in the growth coming out of Latin America at over 9%, Central and Eastern Europe coming -- growing at 5.6%.

We've had good growth out of China, Japan, Thailand, Vietnam and Asia Pacific, but we are still down in Africa and the Middle East. Completing the picture, you see on the chart there, we have Western Continental Europe, as mentioned, basically flat; U.K., up 1.6%; and North America, down 2.4%..

Turning on Slide 9. The top 6 markets where we actually look at the U.S.A. as compared to North America. As I mentioned, the U.S.A. last year was disappointing. It was down 3.2% in the first quarter. We're still down at minus 2.2%. U.K.

had a strong couple of years where we've been growing above GDP growth, around sort of 5% to 6%, as you saw 4.8% last year. We continue to grow and be successful in the U.K., but growth this quarter, 1.6%. Germany, as I mentioned, a hard comparator with last year, the growth was 10.2%. This year, first quarter declined 5.7%.

Full year last year, we saw a decline of 1.3%. We're hoping to be better and actually in the positive territory on a full year basis in 2018 in Germany. In Greater China, again, it's been disappointing for a couple of years for us with negative growth, i.e., declines of 3.2% in 2017.

And albeit it was a decline in the first quarter of last year of around 7%, we are pleased to see a turnaround in some of our businesses and growth of 2% coming through in Greater China this year. We are expecting the growth to continue on a full year basis in 2018.

For Australia and New Zealand, we can't really comment because they're listed company, and they haven't produced results in the public domain. And in France, the trending continues at modest single-digit growth with full year last year plus 0.4% and first quarter this year 0.7% growth..

Looking in a bit more detail at the BRIC markets on Slide 10. We've broken out Mainland China, which is growing stronger at 3.6% in the quarter compared to Greater China. When we include Hong Kong and Taiwan, the growth is only 2.1%.

Brazil, we just had a good couple of years overall, is having strong growth this quarter, 6%, probably indicative of the growth we be expect on a full year basis '18 in Brazil. India, a little disappointing towards the end of the year. The Goods and Services Tax definitely had some impact.

And it was a very strong quarter 1 growth in '17 of over 9%, which we're tracking and pairing to with a growth of 0.3% to quarter 1 this year. Again, we are expecting a stronger performance in India overall in 2018. Russia has been a bit choppy.

So last year, it started off very strong, a growth of over 8%, which is a tough comparative for the first quarter of this year at plus 0.6% but actually ended the year quite weak, being down 15% in Russia. .

Turning now to revenue less pass-through costs by discipline. For advertising and media investment management, which was our weakest-performing business last year in the fourth quarter was down 3.8%. Still continues to be relatively weak overall, down 0.9%.

In terms of Data Investment Management, which is 15% of the group, first quarter decline in like-for-like basis is 1.7%. They have a strength in LATAM, Asia and U.K., but weakness in the U.S.A. and Europe. In the public relations and public affairs business.

Around 9% of the group on a like-for-like basis, we saw growth of 1.1%, an improvement in how they finished last year where they were down 1% in the final quarter.

Branding consulting, health and wellness and specialist communications, which is growing quite nicely the end of last year at a 1.8%, continues to grow overall in like-for-like basis growing 1.5% in the first quarter. Good growth coming through our direct and digital businesses, in particular, in this category. .

Turning now to trade estimates and major new business wins and losses. As I mentioned, our approximation of billings 1 is around GBP 1.7 billion compared to just over GBP 2 billion a year ago. We've had a good performance in our creative businesses.

And in terms of net win rate, when comparing the billings numbers for this quarter, you tend to see the majority of the wins, because of their size, in billings being media. So we've had a couple of nice wins since the end of the quarter.

One is Sky, broadening our relationship with them in Europe; and a new piece of business Altice, the Wavemaker and Y&R, also announced in the U.S.A. since the 1st of April. We've had 3 losses throughout the quarter that have been identified in the trade press, and those are listed out on Page 13..

And then turning now to uses of cash flow. So our targets have remained the same. In terms of acquisition spend on a growth basis, we're looking around the GBP 300 million to GBP 400 million. It was what we spent in 2017 on a gross basis, GBP 326 million.

However, disposals, principally the sale of our 20% stake in ADK, generated cash last year in total of GBP 296 million. So net acquisitions in 2017 were only GBP 30 million in total. Likewise in the first quarter of this year, new acquisition spend costs GBP 80 million. However, proceeds from disposals have netted GBP 44 million.

So on a net acquisition basis in the first quarter, we spent GBP 36 million. In share buybacks, we tended to purchase at the same rate in the first quarter of last year. So this quarter, we purchased 0.9% of shared capital. It cost GBP 345 million compared to last year where we purchased 0.8% in shared capital.

In full year 2017, we bought in -- midway in our 2% to 3% range, buying in at 2.5%. Given the current trading outlook, we have revised our target for average net debt-to-EBITDA. Previously, it was at 1.5 to 2x. We've lowered the upper end of the range to 1.75x.

And to achieve that in the next 12 to 18 months, it will require around a debt reduction of GBP 750 million in that period..

And finally from me in terms of outlook, the financial guidance remains unchanged for 2018. Our quarter 1 preliminary revised forecast are in line with the budget, with a slightly stronger second half at a revenue less pass-through costs level. The revised forecast show like-for-like revenue and revenue less pass-through costs growth.

And the margin -- operating margin on the revenue less pass-through basis is flat on the constant currency basis of last year..

And with that, I'll hand over to Mark. .

Thank you, Paul. So I think Andrew and I, before we take questions with Lindsay and Roberto and Paul, we'll talk to you about -- a little bit about what we've been doing the last 2 weeks, some initial thoughts on how we see the market and the strategic direction that's -- we'll be taking to the board and [ establishing ]..

And to start with, we've got clear roles. As co-COOs, I'm focused on our clients, our companies and our people. And Andrew is focused on the commercial management of the business and optimizing our portfolio, and more on that later. .

I've really tried to spend as much of my time as possible speaking to our key clients. I've spoken personally to either the CEO or CMO at each of our top 20 clients, around 23% of our revenues.

They've been universal in their appreciation of the company that Martin has built, but also I'd say confident in the teams, the operating companies and the leadership of those individual operating companies and their ability to work together to provide the service.

And not one has said to me that they'll be moving or reviewing their business as a result of recent events. And then similarly, we have around 52 global client team leads that represent around 1/3 of our business. They've been speaking to their clients with a similar response.

And we've had, around the group, a lot of communication and correspondence with clients. And you can -- Lindsay and I can talk to you a bit more about that if people have any questions. We've mostly been talking to our people.

Not just the operating company leadership who we're regularly in touch with, but also we're trying to communicate with people across the organization about what's going on and the future direction of the company and what exactly is happening.

And when I spent time in the agencies, my observation very much is that people are getting on with their jobs, working on client business. And that there's not been a distraction at all to the broad organization. And then we really let Roberto, in his role as Executive Chairman, focus on talking to our shareholders and investors.

And he's met all of our -- or spoken to all of our top 20 shareholders, around 20% -- 35% of our shareholder base. So it's really been, I think, a good process of getting people back on track. .

I think if we turn to Slide 17 and think a little bit, remind ourselves of the strengths of the business. I think you saw those in the first quarter results. We had a good performance from our media businesses, from our digital agencies, from our public relations businesses.

And also geographically in the U.K., in the fastest-growing markets where we were particularly pleased to see that it was a bit negative growth in Q4 to have positive in Q1 across Asia Pacific, Latin America, Middle East and Africa. I think that's a reassuring result. But we're not complacent. And while we have strengths, we also have issues.

And our goal is to address the underperforming parts of our business and really focus on getting them growing. .

build and manage more direct customer relationships that the Internet and digital technology allows; transform their customer experiences across all categories from fast food to automotive to packaged goods; and sell in a multichannel environment being reshaped by the likes of Amazon and Alibaba.

So I think there's good, strong fundamental demand for our business. And certainly, in my experience at Wunderman over the last few years has been that if you can get our businesses focused on the growth opportunities, then we can see good demand from clients for our services.

However, we need to recognize the challenges facing our industry, and I think there's 3 that we would call out where we're taking distinctive view on where we are in forming the strategic choices that we'll take. The first is that, as I said, we are facing structural change. This is not a cyclical shift in the market.

It's structural in the sense that it's permanent. And when pressure on clients relents, which I don't think it will, we're not going to go back to doing things in the old way. So we need to shift our efforts and emphasis to the faster-growing parts.

And I think part of the reason we've seen sub-peer growth in the last few quarters is we haven't done that fast enough. We need to do that more quickly. Secondly, we are starting to compete with us consulting companies like Accenture and Deloitte. Maybe not in the traditional parts of our business, but certainly in the faster-growing segments.

There will be occasions where we win, and there'll be occasions where they win. But I think we do have strengths. And in particular, in talking to our clients, they're very cognizant of our strengths in creativity and the importance of ideas in driving consumer behavior. This is not just a technical or technological shift.

It's also around a battle for ideas. And the last challenge we need to face is the growth of Amazon, Facebook, Google, who are reshaping how the media business works; competing, frankly, with us for talent and the attention of our clients; and in many cases, either seeking or earning more direct relationships.

And we need to take a look at what we do and make sure that in the context of those companies, we are delivering value to our clients. An objective point of view, we're a trusted adviser.

We can help them navigate the sea of data, their privacy concerns, the YouTube concerns around inappropriate content and other areas of the digital supply chain, which are increasingly concerning clients and actually, having a company like WPP advise them is of value to them. .

With that context, how do we think about the path to growth on Page 19. So Roberto is fully empowered. Andrew and I -- just to take a fresh look at the strategy, and we said -- and really going to come back to the board with our views. I don't think there's any single area that we need to address.

It's really a number of actions we've taken across the business, starting with focusing much more on our clients, providing them with faster, more agile, more effectively integrated solutions.

And one of the opportunities over the last 2 weeks has been for me to speak to our top 20 clients and really listen to what they're saying, and I intend to go back to them or we intend to go back to them to understand more.

And they're all saying they need us to be faster, more innovative, closer to them, both metaphorically as well as physically, and provide them with an access to the best resources from across the group in a simpler way.

We need to look at our offering and focus the investment in the faster-growing parts of our business and then simplify organization to make it easier for clients to get access to the talent, the creativity, the capabilities to make sure we don't get in their way and also, frankly, to make the group easier to manage.

We need to embed data and technology much more into what we're doing in our offer and the way we work while retaining our creative edge, which is our unique differentiator against the consulting companies.

And lastly but by no means least, we need to invest in talent that represents our changing world, which I mean, we want WPP to be the destination for the best talent in our industry, to come and work for us as they work in a dynamic, diverse, attractive, empowering and enjoyable environment. So that's what we're doing.

And we're not, as Roberto said, standing still. We're getting on with it. A key part of what we want to do by shifting our investment is freeing up money from the commercial ends of our business and looking at our portfolio. .

And I'll hand over to Andrew to talk a little bit about what we want to do in that area. .

Thanks, Mark. Hello, everyone. So we've moved on to Slide 20, and then we'll go on to questions. So I guess the first point to stress is Mark and I are very much aligned on how we see the world, the opportunities and challenges we face and the strategic direction that we feel we need to take.

As Mark said, I'm going to focus on managing the commercial side of things and looking at how we shape our portfolio of businesses to achieve our objectives in positioning the company for sustainable growth long term.

A third point to note, WPP today is running a very financially disciplined way, and we've got an excellent track record of delivering on margins and financial performance. We want to maintain that discipline in the future. We don't intend to sort of turn the model upside down 2 weeks in.

We want to -- we just -- what we want to make sure that, that approach doesn't come at the expense of investment in our great businesses to ensure they remain very competitive in the future and can deliver long-term revenue growth for us. So there may be areas where we'll focus more investment in, in people and technology.

And we'll look at also the decision-making process to be more agile, more local, more client-focused and, perhaps, to give more empowerment to the people closest to the clients and the businesses.

I think we feel we can look at some of the underperforming parts more proactively to allow us to address the -- some issues in those businesses and free up resources to support our growth objectives going forward. The group is extensive. We've got major operating brands with as many companies and units across those 112 countries.

And in the past, we've sort of taken approach to take on the challenge of managing every one of those businesses however small or challenged they are. And maybe going forward, this -- we'll look at it in a different lens, do you take actions on some of those businesses to allow us to focus on the main cause.

So you'll see some of our competitors being -- doing this, and we'll -- we're sort of open-minded to look if there's anything that can help there. .

But overall, my message on the sort of commercial side and the operating model is we're going to be very balanced in our approach. We're not in a rush. We'll set ourselves realistic timetable for the delivery of the changes we're thinking there.

We've got a number of existing what I'll call sort of cross-group initiatives that are performing very strongly, that supports our growth and drive efficiencies. And I think in these areas, we'd look to sort of accelerate or look at the potential to accelerate those initiatives to help with our strategic objectives.

So colocations where we brought our operating companies under one roof. That's been very successful from a -- sort of we're seeing revenue benefits and efficiency benefits from those actions. Shanghai, for example, where we have all of our brands together and 4,000 people in one building.

It's helped bring a more integrated offer to clients and enable us to combine resources more flexibly to meet client needs. And we've made some good progress on shared services and seen some good results. But we're sort of at the early stages on that initiative, probably covered around 10% of our business.

And we think we've got the opportunity to scale those initiatives. As appropriate, we'll certainly look at that. It drives efficiencies and cost and working capital management, but also can help us simplify the -- our organization..

And then finally, on global platforms, we've made -- done very well with Hogarth and made good progress with them as our print and digital production platform.

We'll look at other areas with Mark and the team where do we have strong companies sort of in a vertical that can be made available to resources across the group in areas such as marketing or automation. And then largely, we've been asked to sort of look at the overall shape of the portfolio. We'll do that with an open mind.

Our focus will be on sustainable long-term growth and maximizing shareholder value, as Roberto has said. So we'll look at that and make recommendations to the board, and then we'll see where we go. And as Roberto said earlier, just to stress, we believe a sort of separation of the group in several pieces is not value accretive.

Clients want an integrated offering of services. And our portfolio of businesses must be capable of delivering that. We do intend to look at the -- we have a sort of quite extensive portfolio in minority and associate investments and partly as -- part of our objective to bring the average net debt-to-EBITDA ratio down. We will look at that portfolio.

There's 50 or so minority investments with a value of over GBP 1 billion, close to GBP 1.5 billion, and we have over 100 associate investments with a carrying value of about GBP 1.5 billion. So we'll look at that portfolio. We've made some very successful investments in that area.

We're not going to start making investments in the future, but it might makes sense to realize some value on these investments. Again, we're not going to be in a rush. We'll be thoughtful about how we go about it. .

So I think that covers it. And we can take questions, I think. .

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

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

I had two questions. One for Mark and one for Roberto and Paul.

Mark, in your comments here today and in some of the press interviews, you've given already I sense a little bit more of an aggressive stance towards the consultants and of course, you've been down at Wunderman for the past few years where I'm sure you're seeing them on a little bit more regular basis than the average agency.

Can you expand a little bit more on where you see their strengths and weaknesses, your strengths and weaknesses and how that competitive dynamic plays out? And then Roberto, for you, the one notable change here today was to lower the top end of the leverage range.

And we'd love to hear a little bit more on the board's decision and how much of your conversation with investors over the past few weeks informed that choice?.

Yes. I mean, Dan, so -- I mean, you're right. I have seen them much more regularly at Wunderman where I think I wouldn't say we see them in every pitch, but we probably see them in 1 in 3 or 1 in 3 reviews, maybe 1 in 4 reviews.

They're competing more for -- with us in this, the technology-enabled marketing areas, building CRM programs, e-commerce sites, so that area of our business.

We think our strength is our understanding of consumers, consumer behavior, what marketers want, our relationship with CMOs, our ability to come up with ideas and programs rooted in consumer insights rather than just rooted in technology, and then I think our ability to design systems that enable marketers to build relationship with clients rather than just integrate things that sometimes leave marketers scratching their heads as to what to do with them.

Clearly, consultants have strengths in their relationships with CIOs and this -- in the IT function and that they may be stronger in process than we are. They're trying to build some of the experience and idea basis.

And we're not complacent at all about the competition that they have, but I think that there will be times when we win, and we have done; and there'll be times when they win, and they have done. I think the important thing to focus on is that area is growing massively, and what clients need is a combination of ideas and technology.

The best example I can come up with is the Ice Bucket Challenge. They got millions of people to pour cold water over their -- ice water over their head. That was an idea enabled by technology, not something that technology on its own could deliver. And I think that's the power of what we can deliver to our clients.

And when we win with clients, it's because of our combination of consumer understanding and marketing and technology. One piece of evidence to support that would be our relationship with Adobe. And the Adobe Summit here this week in London, I'm going to meet Shantanu later this afternoon. We have a very strong relationship with Adobe.

WPP was the Adobe partner of the year in 2017, and that means not that they liked us the most, but we drove the most business to them measured in terms of revenues. So we drove more business to Adobe than Accenture or Publicis Sapient. So I think -- and they're probably arguably the strongest marketing technology company.

So I think we are competitive and we can compete. And that's a big growth area for us. So Roberto or Paul, do you want to take the... .

So -- maybe I'll start and then Roberto can chip in. So I think we've kept the board sort of very fully informed as we've gone through the last few years about the targets for the range of debt mostly and the share buybacks and the dividends, et cetera.

So -- and I think we were very comfortable with the range we'd set out in the environment then of 1.5 to 2x. It actually is a pretty good indicator of where the ratings bands are also placed at the same time. We've had frequent exercise to access the bond market.

So in the last few years as you've seen, working capital from the trading side has been under some pressure. So we've been pretty clear about that. We're doing our level best to try and mitigate that in our own way of dealing with it in terms of advancing the billing, et cetera. But it hasn't particularly eased up nor has it got any worse.

And I think having topped out at the top end of the range, we'd come close to the range of the rating scale.

And we just think it's more sensible, and I'd say it can sort of wise counsel from the board, who got some very experienced financial heads on their shoulders, looking out over the medium term that in this environment, it's better to be safe rather than sorry and to bring the leverage down.

It's around GBP 750 million to bring it back to the middle of the old range, but rather than just say we're going to head towards the middle of 1.5 to 2x, I want to be more definitive and say the top of our range has come down to 1.75x, so there's no mistake or misunderstanding. That's the range we're trying to achieve.

And I think it's just the right thing to do in an uncertain environment, given that what we see in the business and wanting to continue to use the cash flow in the way that we previously have in terms of payment of dividends, M&A and share buybacks. That's my perspective.

And the board have been -- they're fully informed, giving their advice and basically, we have -- we've taken it together collectively as a decision. .

a, they were confident that there's a board. We've been working with management for some time, not just yesterday or today, but -- and that we will moving forward and executing that strategy, which hopefully we'll be able to see some benefit at the half year and then the full year. .

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

First, I was wondering how much more simplification do you think is likely to occur in the near term.

And generally, when you pursue this, like what we saw with the PR agencies, do you expect the goal is more about revenue growth versus margin improvement in any given situation? And then separately, love to hear a little more depth on the impact of GDPR, especially on the Xaxis.

We certainly hear questions about that to the extent that anyone who doesn't have a direct-to-consumer relationship is potentially challenged under GDPR if they can't secure consent to do what they want to do with targeting. So just curious if you could talk through current thoughts on the impact of GDPR on Xaxis specifically. .

Brian, it's Lindsay. I'll take GDPR to begin with that specific question around Xaxis. I mean, Xaxis evolution, as we talked about, is more of an outcome-based offering, which means it's less reliant on audience data. It's got a great product based -- using AI copilots and algorithm. And that enables us to target using a wider range of inputs.

So that's one way we are safeguarding our future by Xaxis. And then within mPLATFORM, we've been building up sort of previously enhancing design since inception. And we have different sets of rules that can apply to different jurisdictions because the mPLATFORM is a global product. And it's been upgraded and it's pretty compliant.

Thereafter, the 25th of May, it will target only on the basis of consent. And I think as GroupM, we've engaged with over 10,000 suppliers, including publishers, to agree the appropriate contractual commitments. We're reviewing all of our tools and processes against GDPR. We're actively engaged with the IAB, working on consent and transparency.

And we're the only media company, by the way, doing that. And we've educated over 4,000 of our employees with an ongoing training program. So I feel that we are -- I'm touching wood, but I feel we are on top of GDR -- GDPR as we can be. We've had full-time Legal Counsel working with us, a conduit from WPP and in-house at GroupM. .

And to take the question on simplification. I think from our perspective, it is more about revenue growth than margin improvement. I think we're going to have perhaps a smaller number of stronger brands. So we're more focused on revenue growth and strengthening the company's positioning than we are looking at it from a cost-reduction perspective.

Though there may be savings that result from it, but it's really about strengthening the brands. I think we've done most of what we want to do. I won't say we've done all of what we wanted to do, but I think we've done most of what we wanted to do. We need to look at it in a context of sort of the overall strategy where we're going forward.

So I think we need to go through that process, and then we'll look at what further needs to be done. .

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

Two, if I may. One for Andrew and one for Paul. First, Andrew, question about the global agency networks.

When we hear large clients interviewed in the press and they talk about agency relationships and the conversation migrates to areas of concern, there tends to be a fairly consistent refrain, which is sometimes our agencies don't move fast enough, they're not adjusting to the evolving world, we need to move more quickly.

Wondering if you have any thoughts on the structure of the agents -- the large agency networks and what could be done to address some of these client concerns about pace of evolution.

And then secondly, for Paul, when you look at the outlook for the full year, is it possible to give us a sense of what that outlook embeds in terms of new business wins and losses? Is it neutral? Are you embedding a level of headwind into that outlook? Any color there would be great. .

So on the first question. I mean, I think that links with what Mark has just said as we think about the structure. I mean, I would say we have to challenge ourselves to move faster and be more agile. So I think if that's the comment from clients, it's incumbent on us to sort of be responsive and address that.

And I think it's across a number of dimensions, linking with what Mark said, but we need to -- being more local is another factor our clients -- our big CPG clients are under pressure from local competitors who are moving a lot quicker, developing brands that scale production, their advantages in production and scale of distribution are being impacted.

And they have nimbler competitors attacking their business. They're having to think more locally in how they go to market and be responsive to those competitors. We, likewise, have to follow them and be a little bit more local in how we run our business and sort of being responsive and nimble with those clients, as you say, is something we'll do.

Mark, do you want to say anything?.

So Peter, on the sort of the full year outlook. I think it isn't quite as easy to be that specific, but I think you've got the sense. So last year, we stood up at the beginning of the year and were expecting plus 2% outlook for 2017. And actually, we're doing okay in quarter 1 where we grew at 0.8%.

And then the rest of the year, we've got into a negative territory and ended the year at minus 1%. And I think part of that is the reason for not performing as well as we should have in 2017 is we didn't -- we anticipated too much new business coming in, in the second half of the year, in particular the third quarter.

So -- and also we -- our businesses, we have to put in a certain element in new business because many of our businesses are project in nature. So they really have a relatively short pipeline of sort of known commitments to anyone, say, studying their branding business, and especially this is around the 3 months advanced work.

The media businesses and the agency AORs have a much better visibility. And again, when we came to budget time, this year, I think we said to you the bottom-up budgets are also looking at 1% to 1.5%, but we are uncomfortable with the expected pickup in revenues and the level of new business within our system.

And so we basically felt that it was right to not be caught short and increasing the revenues and costs in our outlook but to sort of pull that one down to more reflect what we see as the outlook today. So the only thought is really is we have a degree of new business in there.

When our businesses perform their budget reviews, they do tend to take out those clients that are in review.

But it is really a quiet hard thing for us to be very precise, but you've got the broad understanding from our fifth year that we have basically taken some of the new business cushion out in the second half of this year to ensure that we don't overrun our costs depending on the outcome for the year. So hopefully, I've given you a bit of a flavor.

It's actually a reasonably difficult thing to be very precise about, unfortunately. .

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

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

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

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

Well, yes, but also I think making sure that we listen to what our clients are telling us, which we are doing so, both -- all of us, Mark and I, Lindsay, all sort of are engaging with clients.

And having listened to what they say to be able to ensure that we deliver what they need, they want and do it in a -- with greater fluidity and greater flexibility. And no doubt, we need to be much more agile with our clients. So those are the 3 things that I -- we'd like us to review next year when we have this conversation. .

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

Is there anything to add to that slide in terms of trends?.

Yes. It's not a particularly big category for us, actually, retail. So it's not one that would stand out in terms of significance in terms of underlying trends, if I'm honest with you. Yes, the big categories for us -- I'm just sort of looking at exactly how retail ranks to top 6 in terms of -- 6 or 7 in terms of the size in the category for us.

It's quite modest. Yes, the big ones have always been the personal care and drugs, the auto category, the food, financial services, they all rank ahead of retail. So in one sense, it's a relatively small category. And it will be more the direct result of account wins. Yes.

And particularly, obviously, Walgreen Boots is coming to our portfolio in quite a significant way in the last 12 months. So I think it's more of a function of that than anything of the underlying category improvement overall. .

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

Is there anything else you care to comment on there?.

Well I know I'm a bit of a broken record last year saying I was disappointed with the overall performance of China. But there were 1 or 2 specific items that were quite material in size within the business that was causing us to drag down the overall performance of the Chinese business.

We did have, last year in particular, a very specific issue for one quarter on the media business, which did self-correct. And we knew it's a particular account loss. But we have more than recovered that. And so that has returned to full health. The Insight business in a particular area was struggling for 2 years.

We said we were taking full attention on that. And I think we have solved that for this year.

So really, we're now allowing the rest of the business to perform as it always has been performing relatively well and have -- don't -- we have corrected the 1 or 2 issues that were holding up the overall performance because they're relatively material in terms of revenues.

But underlying, even in the last 2 years, 80% of our businesses in China was doing really pretty well. But we have now addressed those 2 issues and therefore, the whole portfolio. And you never get all 12 cylinders working at the same time, but we are doing relatively well in the Chinese economy. .

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

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

Thank you. .

Thank you. .

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