Thank you very much and welcome everybody to WPP's Preliminary Results for 2023. I'm Mark Read. I'm joined here by Joanne Wilson, our CFO; and Tom Waldron, our Head of Investor Relations. So turning to the presentation, please take notice of our cautionary statements on Page 2.

And for the meeting on Page 3, I'm just going to cover the highlights of our financial performance before Joanne takes through that in more detail. I'll then reiterate the strategy we laid out at the Capital Markets Day just over three weeks ago before taking questions. Turning to Page 5, the highlights.

We had a resilient performance in 2023 with like-for-like growth of 0.9% and a headline operating margin of 14.8%, up 0.2% on a constant-currency basis showed excellent cost-control, and we are pleased to have continued margin progression this year. We had strong growth outside the United States with our non-U.S.

business growing 3.3%, the U.K., and India doing particularly well, and despite some challenges in China. However, the U.S. market declined 2.8%, as strong growth in the CPG sector was outweighed by lower revenues from our technology clients and in the retail sector.

In terms of agency performance, GroupM grew 4.9% with a strong performance in Q4, up 5.7%.

Our public relations businesses grew 1.4% against a strong comparison last year, but this was offset by a tougher year in our specialist & integrated creative agencies, with the exception of Ogilvy that grew very well and should remind us of the growth potential in our creative agencies.

At our Capital Markets Day, we set our strategy to drive accelerated and more profitable growth with focus on AI and a commitment to invest GBP250 million a year in AI and proprietary technology. And at the Capital Markets Day, we also started new financial targets for the medium-term.

Growth target is 3% plus, 16% to 17% headline operating profit margins, and 85% plus operating cash-flow conversion. And lastly, we also shared our guidance for 2024 with like-for-like revenue less pass-through costs at 0% to 1%, continued progression in our headline operating profit margin, up 20 to 40 basis points.

So with that highlights, I'll turn it to Joanne, to take you through the financial performance in more detail..

Thank you, Mark, and good morning, everyone. And so let me take you through the 2023 financial results just starting on Slide 7. Revenue less pass-through costs was up 0.5% on a reported basis and 0.9% on a like-for-like basis. Reported growth includes a 1.3 percentage point headwind from FX and a 0.9 percentage point contribution from M&A.

Like-for-like performance was towards the upper end of the guidance we shared at Q3; however, our full-year performance reflects softer growth than we had anticipated at the beginning of 2023. This was impacted primarily by a slowdown in spending by our technology clients in the U.S.

underlays and technology-related projects as a result of more cautious client spending patterns. Turning to the headline income statement on Slide 8. Overall, revenue less pass-through costs was GBP11.9 billion, an increase of 0.5% year-on-year with headline operating profit of GBP1.75 billion, also up 0.5% year-on-year.

This resulted in an operating margin that was in line with our original target of 15% at constant currency, reflecting the disciplined cost-control measures that we took throughout the year. The reported headline operating profit margin of 14.8% you see here is flat from 2022, reflecting a headwind of 25 basis points from FX.

Moving down the P&L income from associates excludes any contribution from Kantar in 2023 in accordance with IAS 28, due to no carrying value on our balance sheet. This compares to GBP38.1 million contribution in 2022.

Net finance cost increased year-on-year due to higher levels of debt and interest rates and lower investment income compared to 2022, which benefited from disposal. These items were partially offset by higher interest income.

Reflecting an increased tax rate of 27% in the year and non-controlling interest of GBP87 million, the profit attributable to shareholders was GBP1.03 billion, resulting in a headline diluted EPS of 93.8 pence.

Based on that performance, our cash generation and progressive dividend policy, the Board has recommended a flat final dividend of 24.4 pence, giving a total dividend of 39.4 pence to 2023 representing a cash return to shareholders of over GBP420 million. Moving now to Slide 9 and the reconciliation between our headline and reported profit.

Our headline operating profit of GBP1.75 billion is adjusted for a number of items, the majority of which are non-cash. We have taken a goodwill impairment totaling GBP63 million, which relates to two of our smaller businesses within Specialist Agencies.

The creation of VML has triggered the impairment of the balance sheet's current values of intangibles related to legacy brands including Young & Rubicam and Wunderman, which is the majority of the GBP728 million of impairments excluded from headline operating profit.

During 2023, we incurred restructuring and IT-related transformation costs of GBP196 million, including some initial costs of GBP60 million associated with the creation of VML and simplification of GroupM. In addition, the review of our property portfolio has shared interims resulted in a largely non-cash charge of GBP232 million.

This is slightly higher than the around GBP220 million we guided to in July. As a result of an additional non-cash charge reflecting the application of the recent IFRIC agenda decision on IFRS accounting for-sale and leasebacks.

The above, together with some smaller items, results in an overall adjustment of GBP1.2 billion and the reported operating profit of GBP531 million. Moving on to Slide 10. Our Global Integrated Agencies grew 1.3% on a like-for-like basis.

GroupM, our media planning and buying business grew 4.9% in the year with an improved quarter-on-quarter performance in Q4. This was offset by a weaker performance from our integrated creative agencies, which saw an overall decline of 1.6% in 2023. Ogilvy grew well, supported by recent new business wins including SC Johnson and Verizon.

Our other global Integrated Agencies; Wunderman Thompson, VMLY&R, and AKQA were adversely impacted by reduced spend across tech sector clients, predominantly in the U.S., client-led delays and technology-related projects, and the impact of expected client losses in the U.S. retail sector.

In Q4, this included the early impact of the loss of Pfizer, which will continue to weigh on this segment in 2024. Hogarth grew well, benefiting from increased spending by CPG clients and growing demand for its technology and AI capabilities of clients producing more personalized and addressable contents.

The global Integrated Agencies as a whole, headline operating profit was GBP1.5 billion, up 2.9%, delivered a margin of 15% up 30 basis points. And moving now on to Public Relations on Slide 11, where we still continued demand for strategic communications with like-for-like sales of 1.4% overall.

FGS Global, our leading strategic advisory and communications consultancy grew high-single-digits. Hill and Knowlton delivered modest growth lapping a strong 2022, partially offset by a weaker year for BCW. Headline operating profit of GBP191 million, was down 0.5% year-on-year with margin of 16.2%, down 30 basis points year-on-year.

And now turning to Specialist Agencies on Page 12. Revenue less pass-through cost was down 3.4% on a like-for-like basis. While CMI, our U.S. specialist healthcare media agency delivered strong double-digit growth.

Landor, Design Bridge and Partners, and the longer tail of smaller agencies in the segment were impacted by tougher comps and more cautious client spending patterns, which resulted in longer lead times and project delays.

Operating margin of 9.7%, a 3.3 percentage points lower year-on-year reflecting the weaker top-line and the run-off of COVID-19 related contract in Germany. Slide 13 highlights performance across our geographic segments.

North America declined 2.7% in 2023 with quarter-four seeing similar client spending trends to those in the second and third-quarters most notably reduced spend from technology clients and client losses in the retail sector.

Q4 also saw the beginning of the roll-off of the Pfizer creative business and partially offsetting this was good growth across our CPG and telecom clients. The U.K. grew 5.6% in the year, lapping 7.6% growth in 2022 with both GroupM and Ogilvy performing well. CPG and healthcare were the strongest client sectors.

In Western Continental Europe, Germany, our largest market had a challenging end to the year with a more uncertain macro-environment, weighing on client spend in the second half. France returned to growth in Q4 after several quarters of declines and new clients were onboarded.

The Rest of the World saw good growth in 2023, driven by India, which was up 7.7% reflecting strong double-digit growth in the second half. This was partially offset by China, which declined 3.3% with a consistent level of decline across the first and second half and a weak macro-economy weighing on our creative agencies.

Turning to Slide 14, you can see the 2023 client sector split and net sales dynamics. WPP has a diverse client base, but in 2023, three sectors have really dominated the outcome with very strong growth in CPG clients, offset by declines in technology and the retail sector.

In Q4, these trends continued across our five largest sectors with CPG strong, and technology and retail sectors weaker. In addition, automotive accelerated a little in Q4, and then healthcare growths were negative which has begun to be impacted by client loss.

Going forward, we believe our exposure to the technology sector and within that - within that, our strong relationship with some of the world's most valuable companies will be a source of growth and competitive advantage over the medium term. And now moving to Slide 15 and changes in operating margin year-on-year.

We had a reported headline operating margin flat in 2023 despite a weaker topline performance and a 25 basis points FX headwind. Staff costs excluding incentives were up 0.2% year-on-year at GBP7.8 billion, reflecting wage inflation.

This was offset by a small reduction in permanent headcount as we exit 2023 and a 19% reduction in average freelancers through the year, improving our overall mix. Together, these resulted in staff costs, reducing as a percentage of net sales by around 30 basis points.

Incentive costs were lower year-on-year, contributing to further 30 basis-points improvement in margin. These movements were offset by higher personnel costs, driven by more impressive client meetings and some inflationary pressure on travel costs.

Establishment costs fell as more of our people moved into campuses, contributing to 20 basis points of margin improvement. And finally, our investments in IT, both enterprise and client-facing was a headwind and margin of 70 basis points.

This investment included our IT and cloud infrastructure and cyber capability as well as our global capabilities including WPP Open and AI and was partly offset by offshoring savings. As we look to 2024 and beyond, I thought it would be helpful to recap on this slide from our Capital Markets Day. So turning now to Slide 16.

In 2024, despite top-line pressures, we expect to deliver 20 to 40 basis points of margin accretion, benefiting from part realization of the cost savings from the creation of VML and Burson, and the simplification of GroupM.

We expect 40% to 50% of the GBP125 million cost savings to be realized in 2024, partially offset by an expected increase in incentives as a percentage of net sales. Beyond 2024, we expect to realize further structural and efficiency savings and greater operating leverage as our top-line growth towards our medium-term target.

Some of these savings will support continued investment in our business, prioritizing our industry-leading capabilities, including AI, Choreograph, and WPP OPEN. Our plans include annual cash investment of around GBP250 million in 2024 and proprietary technology to support our AI and data strategy.

Taking all of this together, we are confident we can deliver our medium-term margin target of 16% to 17% and invest in our business to accelerate growth. And moving now to Slide 17, which provides an overview of our net debt and cash generation and uses over the last 12 months. Our net debt at year-end of GBP2.5 billion is broadly flat year-on-year.

Looking at the bridge and starting from 2023, EBITDA less income from associates of GBP2.2 billion, you can see the uses of cash. Rent of GBP362 million. Non-headline cash costs, including cash restructuring of GBP280 million, which I'll come back to.

CapEx of GBP217 million with investment primarily in our tech capability in campuses, and a working capital outflow of GBP260 million, which includes an adverse impact from year-end FX of GBP89 million. Excluding FX, the working capital outflow was GBP171 million.

This included a better-than-expected performance from trade working capital, excluding FX, representing an inflow of GBP157 million.

This is offset by a larger-than-expected outflow on non-trade working capital of GBP328 million, excluding FX, impacted by the year-on-year movement of bonus, a shift to prepayment terms for our large IT contract and other smaller items.

Combined, these moving parts translate to adjusted operating cash flow of GBP1.3 billion, which translates to 73% conversion of headline profit before interest and tax. Free cash flow after dividends to minorities, M&A earnouts, interest and tax was around GBP637 million, nearly GBP600 million higher than last year.

Total cash returned to shareholders via the dividend was GBP423 million and acquisitions and disposals resulted in a net cash outlay of GBP158 million.

As I indicated at our recent Capital Markets Day, the fundamentals of our business mean we are confident that we can deliver consistent and stronger cash generation that exceeds 85% conversion of headline operating profit into operating cash flow over the medium term.

The levers to drive that improvement in cash generation include more profitable growth, our focused on working capital management, lower CapEx, and lower cash restructuring costs as we complete our transformation initiatives.

As we flagged our average adjusted net debt to headline EBITDA, slightly above our target range of 1.5 to 1.75 times at 1.3 times at year-end. We are focused on bringing that metric back within our target range. I'm moving on to more detail on our restructuring costs and other adjusting items on Slide 18.

2023 reported operating income includes non-cash charges for impairments to our property portfolio as a result of our 2023 property review and the impairment and accelerated amortization of goodwill associated with legacy brands, which had been impaired following the creation of VML.

The bulk of our restructuring and transformation costs in 2023 consists of the costs associated with the transformation program and the initial cost of the strategic actions taken in the creation of VML and simplification of GroupM. These totaled GBP196 million.

Within that, restructuring costs for our ERP program have declined to GBP52 million in 2023 as we evolve our ERP roadmap to reflect some of the learnings from the past few years. As I shared at our CMD, we now expect the bulk of our ERP consolidation to be completed by 2026, with restructuring costs reducing accordingly.

Other restructuring and transformation costs associated with enterprise IT under campus programs will also decline as initiatives begun in 2020 are completed. The total cash attributable to restructuring costs in 2023 of GBP207 million consists of about GBP196 million, plus an additional GBP11 million of cash cost from our property review.

In 2024, we expect cash restructuring costs to be around GBP285 million. That reflects the GBP125 million of costs associated with the VML and Burson mergers and the GroupM simplification.

Other cash restructuring costs relating to our ERP and IT programs, as well as property-related costs are expected to reduce from GBP196 million you see here, to around GBP160 million in 2024. And finally, let me take you through the guidance for 2024 on Slide 19.

Our headline guidance for like-for-like growth of 0% to 1% and margin improvement of 20 to 40 basis points at constant currency are consistent with the guidance shared at our Capital Markets Day on January 30th.

At current FX rates, we would expect to run a 2% drag on 2024 reported revenue, less pass-through costs growth with a net neutral impact on margin. We expect M&A to contribute between 0.5% to 1% to our growth.

Our net finance costs will rise to around GBP295 million as a result of increase in rates including a full-year impact of last year's bond refinancing and the partial-year impact of refinancing the $750 million bond that matures in 2024.

We expect a tax rate of around 28% in 2024, up from 27% in 2023 as we see upward pressure on our effective tax rates from increased rates in some countries together with minimum tax regimes. Caps on interest deductibility on withholding taxes.

CapEx will be around GBP260 million in 2024 and will reduce from 2025 onwards with lower spend on our campus program. We will continue to focus on our working capital management and are targeting overall net total working capital to be flat in 2024. So thank you and I'll now hand you back to Mark to talk about our strategic progress..

Thank you, Joanne. So turning to our strategic progress on Page 21. We outlined the key elements of our strategy, Innovating to Lead, that we set out at the Capital Markets Day. There is really four key elements to our strategy. The first, leading through our investments in AI, data, and technology.

The second, accelerating our growth with the power of creative transformation. Thirdly, building world-class market-leading brands. And finally, executing efficiently to drive financial returns through margin and cash.

And we went through those in some detail at the Capital Markets Day, but I would like to emphasize some of the key points that we made on this call. Turning to Page 22 and our ambition to lead through AI, data, and technology. Had lot of questions at the meeting and the subsequent discussions.

We showed about the impact of AI on our business model and it's early days, but we do see opportunities for our investments in AI to lead improved growth and better financial performance. And these were the five areas we highlighted at the meeting and they show some of the opportunities that we see and how they can translate into revenue and margin.

Starting the talk, we see the ability to earn technology license fees in areas such as commerce, production, and media from WPP Open.

Secondly, we have the ability to help our clients embrace AI, offering them consulting projects to use AI, as well as technology projects with AI embedded with it and as many examples of those over the past few years with an acceleration into 2023. We also see how AI can help to drive improvements in the effectiveness of our work.

It can augment, not replace roles, to make people more productive and we will see the AI-augmented work is driving better ROI for our clients. You saw that in the Amazon PGP generates we shared at the Capital Markets Day.

And this leads us to believe that we can improve our pricing to clients on the back of improved financial returns on their marketing investment.

AI will also offer the ability to develop new business and financial models and to accelerate the shift away from hours-based compensation to remuneration more linked results, particularly get in areas such as commerce, media, and production where a meaningful percentage of our remuneration today is already non-hours-based.

And lastly, we see the ability of AI to make us more efficient to reduce our back-office costs and to improve profitability. And I'm sure we'll get into it in the Q&A, but these are all reasons why we see AI as an opportunity for us in the future. On Page 23, turning to the second element of our strategy, creative transformation.

And at the Capital Markets Day, we just spent some time demonstrating to the link between creative, production, and media and how this discipline increasingly integrates to drive success for clients. The heart of our work is creativity and there is no bigger platform on the world stage for creative excellence than the Super Bowl.

While for some it's a game, for us it's the Olympics of advertising and the time actually when viewers look forward to the ads, maybe one of the few times in the year. If you look at the viewing, you can see why this year's Super Bowl was the most-watched event on U.S.

TV since the moon landing at an average viewing of 123 million people across all platforms, not just on linear TV but on many of the streaming platforms. And WPP agency was this year, responsible for the creative work on 12 TV spots and bought media for 19 spots. Really significant involvement given there are only 57 spots in the Super Bowl.

Forbes Magazine, in an assessment of a number of indicators, called out what they evaluated to be the top five ads at the Super Bowl. I'm pleased to say that four came from WPP agencies.

So the work we do for Verizon from Ogilvy, the Hellmann's work, they searched Super Bowl ads from VML and Mindshare, work for Progressive Insurance from VML, and the survey work from WPPOnefluence team made-up of WPP agencies. These are just some of the examples of the work that we're doing.

Now, we're really pleased by the impact particularly the work we had for Verizon. If you remember, this is a client Ogilvy One during the course of 2024 and the work that they did with Beyoncé at Super Bowl, was talked about by many commentators to be the ad that one Super Bowl. So let's look at that piece if you could run that film.

[Video Presentation] All right. So we endorsed you with a full 90-second version. Why is that important?? Well, I'll start with, it should remind us that in this digital age, there is still some events that bring people together and the Super Bowl is one of them and we also have the Olympics coming up this summer.

These events aren't just linear TV events, although that's at the heart of the multimedia digital events. There's many, many digital elements around our work. The Verizon amplified the idea. The sort of the heart of it was a creative idea from a talented team and the power of creativity and ability to amplify clients' investment.

Superbowl at $7 million for 30 seconds isn't cheap, but clients are really looking for a meaningful financial return. And while we can't yet share details of the business impact from that work, I can say the clients saw a meaningful increase in the business following Super Bowl.

On Page 24, the third element of our - Page 25, the third element of our strategy is building world-class brands, and six brands today account for approximately 90% of WPP's business. We share here some of the business, those brands that won over the course of the past year.

Just to highlight some examples here, VML won the Krispy Kreme business globally. The first, new business win is VML. It has been followed up by several wins since then. Ogilvy had a very strong business performance, let's say, but not least, Verizon also wins globally and in Europe, the business has done well.

Hogarth's had an excellent year, supported by many new business wins and expansion of key client relationships.

And GroupM may have had a more challenging times since the new business in the United States, has been successful globally, make us top for global new business shots and they won a number of important global reviews, not least the Nestle business in Europe.

And lastly in the next page, we lay out at our Capital Markets Day our medium-term financial framework of 3% plus organic growth, 16% to 17% headline operating margin, 85% adjusted operating cash flow conversion, and 1.5x to 1.75x average net debt headline EBITDA. All of that supported by a disciplined capital allocation.

So on the last Page in 28 where we discussed at the Capital Markets Day. I'd just conclude by touching on the investment case for WPP that we've covered. Our unrivaled global reach and scale, our ability to help global and domestic champions reach their clients. We operate in attractive and growing addressable markets.

We have deep client relationships with many of the world's leading businesses. We worked with three of the world's four biggest companies by market capitalization. They rely on WPP for growth.

We have a strategy to lead through AI, data, and technology, supported by an investment of GBP250 million a year, a strong investment-grade balance sheet, and lastly and by no means least, world-leading talent, ambitious for the future.

All of this has aimed deliver accelerated growth, margin expansion, and improve cash generation to drive returns for our shareholders. So that's what we're absolutely focused on as a team. Thank you for listening, and now we'll take your questions..

[Operator Instructions] Our first question comes from Laura Metayer of Morgan Stanley. Laura, your line is open. Please go ahead..

Hi, Mark. Hi, Joanne. Thank you for taking my question. Three questions, please. The first one is on the GroupM growth acceleration this quarter. Can you give us a little bit more details on what drove the growth acceleration? Second question is on the assumptions for the low end and the high end of your growth guidance.

Is it fair to assume that the biggest moving part is the return of tech clients outspend? And then the third question is regarding OpenAI that recently announced Sora, the AI model that can create realistic scenes from text instructions.

Just curious how you think about the impact it can have on your business and if you think it can be an opportunity for your business in your industry? Thank you..

Joanne, why don't you take the financial questions, and I'll finish up on the AI question at the end..

Okay, well, just starting with your first question on GroupM. Yes, we were pleased with the performance in Q4. So, it grew at 5.7% and that was higher than the Q3 growth. We always see Q4 is a strong quarter for our media business. I think we have tougher comps in Q3 as well, which impacted the year-on-year growth.

And as we look forward into 2024, we're expecting to see continued good growth in 2024, but obviously that growth will be impacted by some of the client decisions in 2023, particularly in the U.S. business. In terms of the growth guidance, 0% to 1%. In terms of Q4 trends, as we said, we saw similar trends to Q3.

We'd expect the H2 trend from 2023 to continue through H1. That'd been the macro, some uncertainty still. And in terms of client losses that we saw in 2023, we started to see some impact from that in Q4. And those will continue throughout 2024, particularly weighing on the first half.

And as we shared at the Capital Markets Day, if we look at our comps, Q1 is our toughest comp at 2.9% growth in 2023, Q3 is our easiest comp, which is negative 0.6 and so I think that will also impact the year-on-year growth that we are seeing.

And just finally, what I'd say is, we've talked about our pipeline being higher than it was this time a year ago. It's more skewed to offensive pictures which is good.

And of course, we will start to lap the impact from the tech sector from Q2 onwards, so I think it's too early to call a recovery in the tech sector, but certainly it feels like about stabilizing and the comps will get easier from Q2.

So overall, Laura, I think the way you should think about it is, gross Q2 H2, and just given all the factors I talked about, I think we will expect to see negative like-for-like growth in Q1..

Thanks, Joanne. Now on the AI video, Sora. Look, I think it's impressive. At one level, that shouldn't be a surprise, but it does remind us of the speed and pace at which innovation is taking place in AI. I don't think it changes our strategy and that I think it reinforces what we are doing. What clients need is work that's copyright-proof.

That able to accurately represent their brands and reality. And Sora is not yet at that stage.

And I think as we showed at the Capital Markets Day, our strategy is very much to work with these models and work with the technologies out there but adapt them to use them for our clients and apply our understanding of brands and marketing and creative work to direct them in ways that are most effective for clients and I think that shows what we can do.

We've shown examples with you in the past the work that we're doing with NVIDIA.

We again mentioned in NVIDIA's conference call - earnings call yesterday as one of their partners, key strategic partners in this area, to deliver video using AI and I think that's sort of a direction in which clients will go this copyright-safe and protection highlights that brands in ways that they would want..

Very clear. Thank you..

Thank you..

Thank you. Our next question comes from Lisa Yang of Goldman Sachs. Lisa, your line is open. Please proceed..

Good morning. I have three questions, please. Firstly, you mentioned in terms of new business environment, there are more offensive pitches.

I was just wondering like if you can comment on how well you think WPP is positioned, I think, in those pitches and what sort of gives you that confidence that you could potentially win many of those pitches and what are the clients really looking for? I think those pitches, I think they'll be really, really helpful.

The second question is on capital allocation. I don't think you gave an M&A envelope for this year. I think last year was GBP300 million to GBP400 million and some of your peers, I mean, per business day, the increased actually, the M&A spend for this year to GBP700 million to GBP800 million.

So I'm just wondering like how you think about the priorities for the company in terms of de-leveraging versus M&A over the next few years? And is there a risk that the gap could potentially widen versus some of your peers if you do less M&A? And the third question, thanks for giving the guidance on tax and interest of '24.

I think at the CMD you mentioned these items will be headwinds for medium-term cash generation. Is there any sort of comment you can give on tax and interest beyond '24 or is '24 the peak? Thank you..

Okay, well, I'll tackle the new business question and Joanne can take - to follow. So I think in terms of new business, we said our pipeline is very strong. It's probably a little bit more offensive for us than is defensive, but we do have defensive reviews that you would know about.

I think the reviews span creative, media, and production and we are going to highlight all of the capabilities that we highlighted at our Capital Markets Day to demonstrate to our clients why we would be the best partner for them.

I think we absolutely have the capabilities that they need in terms of skills, investments in technology, geographic expertise, expect AI to be a big focus of reviews, looking to see who is best positioned to partner with them on that in the future. I think in each of those cases, we have a strong case to make.

In our industry, as you know, this is competitive and we won't win them all, but we're absolutely focused on winning as many as become..

So just taking your other two questions, Lisa. On capital allocation and M&A specifically, you shouldn't read anything into the fact that we haven't given specific guidance. Over the last few years, we spent around GBP200 million to GBP300 million on M&A.

As we said at the Capital Markets Day, we think our M&A approach has worked well for us, buying businesses that accelerate our capability and tend to be high-growth businesses and we'll continue to look for those opportunities.

At the CMD, we also talked about our priorities from a capital allocation perspective, starting with our organic investments. We shared some of what we've done with regards to organic investment over the last few years, brought to life for you, hopefully at the CMD, and we'll continue to prioritize that in 2024.

In terms of the risk of the gap widening that we didn't think about the risk, I think we're very confident in our capabilities, in particular, WPP Open and AI, and we'll continue to invest in this in 2024. As regards to tax and interest, maybe start with interest.

So the increase in 2024 is really a result of rising interest rates as we have refinanced our bonds. So we have a full-year impact of the '23 refinancing and '24. I'd expect the GBP295 million to really be the peak of our interest cost so it will probably stabilize around that level and come down over the medium-term.

In terms of tax, the reasons for the increase in tax this year are the best 2.0, and the minimum tax and also interest deductibility caps. I think, rising interest rates were generally interest deductibility caps and withholding tax will continue to put some upward pressure on our tax rate beyond 2024..

That's helpful. Thank you..

Thank you. Our next question comes from Nicolas Langlet of BNP Paribas. Nicolas, your line is open. Please go ahead..

Hello. Good morning, everyone. So I've got three question please, the first one on the AI investments of up to GBP250 million you plan to spend annually. How much was already spent in '23 and what's the net addition we should expect in '24? Second, on media in the U.S.

During the CMD, you mentioned the new strategy in the country to improve the go-to-market there. How long will it take to materialize in new contract gains and the plan? Is it something, resiliency better at the end of '24 months? And finally on China. We are now four months after the bad press reports in the country.

What has been the feedback from clients here? What's the situation in the country media business and what's to look for in '24? Thank you..

All right. So what my attack on those. Look, I think on the AI investment, really we're talking about the GBP250 million going into AI. It is not really to say what's incremental and what's not incremental. You saw an increase in investment in technology from '22 to '23, to significant and we expect some of that refocus to take base in '24.

I think the thing to focus on is included within our budgets and really, investment in AI 10 years ago was zero, and now it's GBP250 million, so I think about - on that basis as being GBP250 million of incremental investment from where we started.

In terms of the go-to-market, I think that we're very focused on new business, and we expect to have an impact as we go through the year.

And lastly on China, I can't comment on the specifics of what's going on in the market, but we - China has been a challenging market for us and for others and we do expect it to continue to be challenging from a macro perspective in 2024..

Okay. Thank you..

Thank you. Our next question comes from Tom Singlehurst of Citi. Tom, your line is open. Please go ahead..

Yes, thanks. It's Tom here from Citi. Thanks for the presentation. The sort of standard three questions, I'm afraid. First one, on organic growth. Last year, especially at the 2Q and the 3Q, it felt like the sort of outturn caught you by surprise as well as us. Now, I'm conscious that might just been a function of a tough last month of each quarter.

But can you just talk more broadly about visibility and how much visibility you think you have on the year and therefore on the phasing of growth? That was the first question. Second question on the new business side that the $4.5 billion figure. It's a nice big chunky number. It's slightly down year-on-year, but it's still big.

I just wanted to check whether that included retentions as well as sort of new, new business and then I suppose, overall for the year, would we expect the contribution from new business wins to be net positive, albeit, I'm conscious Pfizer will be, the loss will be skewed to the first half and when may take..

Yes. One, I may take that, and Joanne add what you want on the first question. Look, I think visibility in our business has always been good until it's not good. And I think that we were - we did not expect the cuts in technology spend that happened throughout the year to take place when we started the year.

I do think it's a month-end in the quarter issue. It's just that we saw continued series of cuts as those companies adjusted that buckets to reflect reality and maybe they were slow to tell us what they find, but I think it was a surprise to us as we went through the year.

And the biggest delta versus our budget, we expected to see some pressure in retail, because we knew about that, but the biggest delta versus our budget was in technology companies, which you know is 20% of our business. We have the biggest exposure in our industry out there. In terms of new business, we don't include retentions. It's wins or losses.

We don't include retentions. Some of the convergence. Some of the media analysts do that, but that's not the basis on which we do that. And then the last question, Tom, sorry, remind me. I didn't write it down..

Actually, no, I haven't got there, but I was going to say--.

You haven't got there? Okay..

Yes. That's fine. That's fine. I was going to say, though, on that point about budget cuts creeping up on you.

Do you think budget recovery will creep up on you or is that more visible?.

Well, I think if we look at our technology clients in '24, given the comparatives, but don't turn positive in Q1, but we do expect them to be much more stable for the year overall and I think we probably would expect to see a little bit more stability of the adjustments they've made last year..

Fair enough. The final question was going to be, I mean, you sold a couple of investment stakes that has obviously been the discussion about weighing options for cancer.

Is there a systematic process in place to wind down investments in holdings or is it an ad-hoc opportunistic policy?.

No. I think we look at it systematically. But with government by, when we can get the right price in terms of shareholder value. So we do look at it consistently. But the opportunities don't always present themselves when you want.

I think you asked me a question on new business, look, I think that the reality is that we will be impacted by losses in the beginning of the year and - but we will see an underlying positive impact from new business if we're successful over the course of this year. So I'd say, it's why we do expect the business to be somewhat second half weighted.

Joanne, do you want to add anything on the visibility or?.

No. I think Mark pretty much covered it. The big drivers will be tech recovery for us, which we've talked about. We like our exposure to tech and that will recover at some point. The timing is a bit uncertain. We talked about macro H1 versus H2. The expectation is that the macro will improve from the H2. And then as Mark said, winning new business.

I think that's how you should think the biggest factors..

Very clear. Thank you..

Thank you. Our next question comes from Adrien de Saint Hilaire of Bank of America. Adrien, your line is open. Please go ahead..

Thank you, good morning, and thank you for taking the questions. I've got a few, if that's okay. So first of all, how much pricing contributed in your 2023 like-for-like growth? I think you previously talked about two or three points and how do you think about 2024. And then I've got two questions for Joanne.

A bit of an economic question, but in 2023, there was a negative impact of FX on margin, but you're not assuming this for 2024.

Why is that not the case given the dollar move? And the third question is, could you provide a bit more guidance on what you would expect cash-flow conversion generation to be for 2024 or perhaps go straight to like, what do you expect average net debt to be for 2024 - at the end of 2024? Thank you..

Joanne, why don't you want to tackle them all?.

Yes. I mean, on pricing, we talked about 2% to 3%. Yes, I think that's a reasonable assumption on 2023. Obviously, wage inflation is stabilizing a little bit, and so we expect similar levels in terms of pricing in '24.

Of course, as you all know, Adrien, and our business is not as simple as just looking at a pricing increases and applying that to the topline is much more nuanced to the conversations that we have with clients around half in all the stations that we're seeing, but also delivering efficiencies and how we operate with them and how that gets shared.

In terms of the negative impacts of 25 basis points, and that was really driven by the U.S. dollar and sterling exchange rate and what really is a big factor in the FX impact on our profitability is the waiting through the year. So each month, the buildup of that through 2023 contributed a result in that 25 basis points.

And as we look at the rates as they stand today, we expect, I'm taking into that the waiting and the profit mix through the year, we expect that to be flat on profit as we go through the year, but 2% headwind on the topline. And then on the cash-flow conversion, I mean, you asked about net debt.

I would expect net debt to end up broadly as flat year-on-year in terms of how we think about cash and we've given some guidance, restructuring costs will be a little bit higher because of the mergers and the GroupM simplification, and we've shared what that looks like. CapEx will be a little bit higher.

That's really driven by a one-off CapEx related to some IT assets that we are in-house payment that will impact in 2024 and then we have the interest and the tax cost headwinds as well. I'd expect working capital to be improved in the next year. So when you take all of that into the mix, I think you should assume that that will be flat..

And that's reported net debts and not average net debt, just to be clear?.

Yes..

Yes. Thank you, Joanne..

Thank you..

Thank you. [Operator Instructions] Our next question comes from Julien Roch of Barclays. Julien, your line is open. Please go ahead..

Yes, good morning, and thank you for taking the question. My first question is, I know it's not something you focused on in the Investor Day anymore, and it's more relic of the 2020 Investor Day. But when you guide to creative being up 2% to get to your 3% within creative, you have some faster gross business.

You used to call them data commerce and technology. You have Hogarth. So it used to be about 39% of creative, ex GroupM, or sorry of Global Integrated Agencies, ex GroupM. If we could get the historical numbers for '23 or some indication of how much it was of GIA? That's my first question.

And then the second question is going on Page 17 of the presentation to get to free cash flow. You've given us some indication on CapEx, taxes, and interest, but taxes and interest are P&L, not cash flow.

So I was wondering whether you could give us some indication on cash net interest, cash taxes, and also if there is any variation in rent for '24? Thank you..

All right. On the first point, thank you for referring to our Relic. I think - we just didn't find looking at - it was communications, experience, commerce, and technology helpful in terms of - it's not the way we run our business. It's not the way clients buy our services. It's not the way we invoice it. So it's just difficult to track.

I don't think it was that helpful so I don't have a number comparable to the 39%.

If you remember when we came back out of COVID, we did see very rapid growth in the communications part of our business and actually we've seen, as you know, during '23, some pullback on the technology part, but like others have said, Julien, I don't think those sort of year-on-year movements reflect the secular and structural trends to continue to persist towards technology.

I think the best way for you to look at our business is the way we look at it and I think that that's what the disclosure currently supports.

Joanne, can you take the rest of Julien's questions?.

Yes. So, Julien, I would expect interest and tax from a cash perspective to increase as well along with the P&L impact. And on rent, I'd expect rent to be probably slightly up on the year, just reflecting some of the inflation-linked leases that we have..

Okay. Thank you..

Thank you. Our next question comes from Adam Berlin of UBS. Adam, your line is open. Please go ahead..

Yes. Hi, good morning, everyone. Two questions left from me. The first one is within Global Integrated Agencies. You're showing the split between GroupM and the others, which I suppose as the creative agencies which were - which accelerated - decelerated to minus 3.4% in the quarter.

Can you just give us a split of how much of that decline was due to account losses versus cuts from your existing clients, and maybe some commentary about how that will look in Q1? That would be helpful. And then the second thing on interest costs. We - you've got a fair amount of bonds coming up over the next few years to renew. Are you planning.

Just to use cash to pay down some of these bonds or to renew them on, if you're going to just renew the bonds. Can you give us a sense of what the interest rates you're seeing in the market are like at the moment as you do that? Thanks..

Yes, okay, look, I think in terms of that split, I think the biggest impact that we had of that had on all creative businesses was really lack of new projects work, particularly in more technology-related areas to replace technology work naturally finished and we've only really had one significant client loss last year.

As you know, it was Pfizer but that was substantial and that did impact the creative agencies largely starting in Q4. But I'd say that in the main, we had a good new business performance overall with that exception. Actually all three came out yesterday in which we ranked WPP second across creative plus media and we're strong creatively.

Talked about Ogilvy has very strong new business performance during the year and Ogilvy did grow, but I think the impact on our creative agencies is largely project-related technology work and work from technology clients where they are particularly strong.

Joanne, do you want to take the second part?.

Yes. So just on the bond refinancing that we did last year, we've refinanced that bond at about 5.1%. Our blended interest rate is 3.25%, and so as we refinanced our blonds this year, I'd expect that blended interest rate to increase 10, 20 basis points and interest rates are of course expected to come down.

I'd expect that we'd be refinancing it up at around 5%. It is our intention to refinance those bonds to mature..

Thank you very much..

Thank you. [Operator Instructions] We'll just pause briefly to allow for any final questions to be registered. At this stage, we have no further questions registered, so I hand back over to you, Mark Read, for any closing remarks..

So, thank you very much, everybody. I think, hopefully, that was all-clear. We know what we need to get on with in 2024, so thank you all and we'll keep in touch..