Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the WPP 2020 Third Quarter Trading Statement Conference Call and Webcast. Today's conference is being recorded. At this time, I would like to hand the conference over to WPP CEO, Mr. Mark Read. Please go ahead.

Thank you very much, operator, and good morning, everybody, and welcome to our third quarter results call. I would like to start by asking you to read the statement on Page 2 of the presentation. If we turn to Page 3, I will cover the highlights of the third quarter, and then John Rogers, our CFO, will take you through the financial presentation and financial performance. John and I will come back at the end to answer any questions that you have. On Page 4, I would describe our performance in the third quarter as resilient in a challenging environment. As we expected, the second quarter was the toughest quarter of the year so far. The third quarter came in slightly better than analyst expectations and probably slightly better than we had expected at the end of the second quarter. The progression has been from minus 3.3% in Q1 to minus 15.1% in Q2 to minus 7.6% in Q3. We saw a good recovery in our integrated agencies, particularly at GroupM driven by media spend. The public relations sector was the strongest performing sector in our business, and we had a good performance from both BCW and Hill+Knowlton. However, our specialist agencies did remain challenged, which reflects the nature of those companies working in events or with airlines or in the branding identity business, which is project-based. What we're most pleased about is the continued new business momentum at WPP, which continued into the third quarter. Our new wins included Zespri, Whirlpool, Alibaba, and Uber. Last night, we announced that Walgreens Boots Alliance renewed and extended our relationship with them. This is a new relationship we will focus on accelerating their digital transformation and extending our work from communications into public relations with deep emphasis on data and technology. We continue to put major focus on cost. As John will discuss, we still expect to come in at the upper end of our £700 million to £800 million savings range in 2020, and the progress we have made on the balance sheet remains strong. Average net debt down £2.5 billion year-on-year with good working capital. For the full year, we do expect to be in line with analyst expectations, which have improved somewhat since the last quarter. This reflects better momentum overall and our new business performance. Turning to Page 5, as we said before, in the long run, one positive takeaway from the results is the relationship and value we have with our clients. We have seen our customer satisfaction scores improve throughout the pandemic, demonstrating that we are a critical partner to our clients. The net sales from our top 100 clients improved from minus 8.1% in Q2 to minus 2.4% in Q3, showing a balanced improvement across most sectors of our clients. In those parts of our business classified as significantly impacted, we saw some improvements in automotive, luxury, and premium, although the travel and leisure sector continues to be impacted. You saw that improvement from minus 17.9% in Q2 to minus 9.7% in Q3. This was somewhat in the middle, also improved. Most importantly, clients in the resilient sectors like consumer packaged goods, technology, health care, and pharma actually grew in the third quarter. We saw growth from 18 of our top 30 clients, notably in the health care, pharmaceutical sector, and consumer packaged goods. As mentioned on Page 6, we have seen continued new business momentum across the company. Our new business pipeline appears stronger than it did three months ago, and we do expect to see a heightened level of new business activity in Q4 and into Q1 of next year. We find ourselves more competitive in business pitches than possibly we were a year or two ago. Significantly, last night, we could announce the Walgreens Boots win. If you look at the wins we've had across the company, several of them are with technology companies like Uber where the focus is on data and technology, and transformation like Walgreens. Several of them are integrated across creative and media, showing clients' demand for a simplified integrated approach. We have also had numerous wins that I would describe as creatively focused, with clients seeking strong creative solutions, notably perhaps the McDonald's win in Germany, and the win at Carlsberg by Grey. On Page 7, we confirm the date of our Capital Markets Day, which is scheduled for the 17th of December. As mentioned in the last call, we expect to update you on our strategic progress two years into our three-year plan. COVID has accelerated many industry trends, requiring us to speed up our approach. We want to share our insights on this, as well as details on longer-term efficiency savings, how we can reinvest them for growth, our long-term capital allocation strategy, and medium-term financial targets. Now I will hand over to John Rogers to discuss the financial performance of WPP.

Thank you, Mark. Good morning, everyone. Mark has taken you through the trends on a quarterly basis. To reinforce messaging, Q1 was down minus 3.3%, reflecting the early impact of COVID-19, particularly in China and Italy. In Q2, like-for-like net sales declined by 15.1%, which clearly reflects the lockdown across most of the Western markets in which we operate. However, as the market began to recover, we saw steady improvement in Q3, resulting in a decrease of minus 7.6% for the quarter. Remember, at the half, we reported a number for July at minus 9.2%, showing momentum building through Q3. We have confidence in the momentum of the business going forward, but remain sensibly cautious about Q4 due to market uncertainty. Moving to Slide 10 and examining the breakdown by segment. Again, you’ll see here the performance of the global integrated agencies. Despite a significant impact in Q2 at minus 15.7%, we are pleased with the recovery in Q3 at minus 6.7%. All agencies showed sequential improvement from Q2 to Q3. VMLY&R remains the strongest performing agency, only slightly down year-on-year and up in the U.S., although the strongest recovery between Q2 and Q3 was observed at GroupM, reflecting the correlation to the uptick in client media spend. All integrated agencies are steadily recovering. Now on to Slide 11 and public relations. This was our best-performing segment, most resilient throughout Q2 and down only minus 7.5%, reflecting clients managing messaging during challenging times. Our performance improved in Q3 to minus 2.9%, reflecting positive momentum. Our specialist PR companies returned to growth in Q3, as BCW and H+K, as Mark indicated earlier, both performed well. Moving on to Slide 12 regarding specialist agencies, there's been slow recovery as this remains a more challenging sector. We saw the impact in Q1 at minus 7.4%, minus 16.3% in Q2, and a slightly disappointing minus 13.9% in Q3. Although we are pleased to see GTB improve for the second consecutive quarter as we begin to annualize the impact of the major assignment ending. Brand consulting remains under pressure due to client budget cuts and sector exposure, leading to recovery in Q3, though not as strong as we would have hoped. On Slide 13, let's look at our top five markets. The U.S. was the least volatile during the COVID-19 pandemic, down 1.9% in Q1, down 9.6% in Q2, and saw a good recovery in Q3 at minus 5.5%. The U.K. was more adversely impacted in Q2, with a decline of 23.3%, reflecting the hard lockdown experienced then. However, we are pleased with performance improvement in Q3 at minus 6.5%. Germany performed better with a decline of only 11.6% in Q2, followed by a strong bounce back in Q3 to minus 1.8%. Greater China faced disappointment, with performance in Q1 down 21.3%, better performance in Q2 at minus 3.1%, but Q3 saw a return to minus 16.7%. The disappointing performance in China is driven by our sectoral exposure, particularly in automotive and luxury goods, which haven't recovered as robustly as expected. India also faced significant impact in Q2, with performance down 25.1%, and recovery has been slow in Q3 compared to Western Europe, primarily due to ongoing lockdowns. Moving on to other major European markets, we saw impacts in France, Italy, and Spain due to lockdowns in Q2, with recovery coming through in Q3. Italy has shown the most significant recovery, as it was earlier in the recovery cycle than Spain or France. Brazil also faced challenges like India but is slightly recovering in Q3, yet not as strongly as some Western European markets. On Slide 15, looking at improvements in net debt year-on-year. Net debt started at £4.47 billion last year, with improvements in trade working capital allowing for CapEx, share buybacks, and dividends, reaching a net position of £2.3 billion by September this year, showcasing a strong overall balance sheet. We currently have liquidity of approximately £5 billion, positioning us strongly year-on-year. Conclusively, guidance for 2020 financial performance is expected to align with current market expectations, which have improved since the first half. This implies like-for-like revenue less pass-through costs between minus 8.5% to minus 10.7%, and headline operating margin between 11.4% and 12.5%. We foresee a small working capital outflow for the full year, conservatively viewing it as a small trade working capital outflow, and CapEx around £300 million. Expected average net debt over EBITDA is projected between 1.5 and 1.75 times by the end of 2021, estimating slightly below that range this year-end. This concludes our presentation today, and I will now hand back to the operator for Q&A.

We will now take our first question from Lisa Yang at Goldman Sachs.

Congratulations on the results. I appreciate the high level of uncertainty going ahead, especially with COVID. I'm wondering if you can share anything on what you've seen in October so far. It looks like some of the other media owners have mentioned October remains resilient. Can you provide updates for WPP and how the tone of conversation with advertisers has evolved recently? My second question is on cost savings. You mentioned in the press release that all the revenue decline was offset by cost savings in Q3, implying around £600 million in 9 months. Can you confirm that? And could you provide color on the main areas of cost savings left for Q4 and the underlying cost inflation you're expecting this year? Lastly, regarding new business activity, it remains very positive this year. You mentioned on the call the expectation of increased activity in Q4 and Q1. Can you specify what sorts of pitches you expect? Are they more about defending accounts or new opportunities?

I will start, and then John can discuss cost savings. I think we expect Q4 to be in line with analyst expectations. We haven’t seen anything from clients indicating a knee-jerk reaction to reduce their spend similar to what we saw in March, April, or May. We see governments balancing the need to limit virus spread with protecting economic activity. While we expect the second quarter to remain the toughest quarter this year, I stand by that assessment. John, can you address the savings?

Regarding cost savings, we had a good quarter, and I want to reiterate the full-year guidance. We expect total savings for the year to be at the upper end of our £700 million to £800 million range. You asked about specific cost savings year-to-date. While I won’t discuss specifics on a monthly basis, extrapolating the £800 million aligns roughly with the figure you mentioned. Cost savings in Q4 will have a similar mix to those seen earlier this year, including property savings, travel, and subsistence costs, total headcount, and salary costs adjustments due to COVID-19 impacts. The mix will remain steady, and savings will continue. Regarding inflation, I would estimate it around 1.5% to 2% this year. We have managed to hold salary increases this year, but expect some salary inflation next year.

On new business activity, we started the year with a strong new business pipeline and limited new business risks. We had retained our key business with Walgreens Boots Alliance. We see new pitch activity predominantly as integrated pitches combining media and creativity—mostly net new business for WPP, without any specific risks in the last few weeks.

Your next question comes from Julien Roch of Barclays.

Three questions if I may. Regarding GroupM, you mentioned good recovery with industry spread being wide. IPG reported media positive in Q3; what about you? Better than minus 7.6%, I assume? Also, can you provide Q3 quarterly progression? Was it minus 9%, minus 6%, minus 3%? Lastly, on October, do you get weekly revenue indications? Have your major agencies implemented this to understand how much revenue it represents?

I will address the October question first. We don’t see weekly revenue by agency, but none of our agency conversations imply a significant pull back in spend. John, can you speak to GroupM?

Regarding GroupM, we observed a strong recovery from Q2 to Q3. We were down approximately 17% to 18% in Q2, and about 4% in Q3. So we saw a good bounce back in GroupM, as well as in other areas across our integrated agencies. In terms of progression through Q3, we won't provide specifics for August, but the quarter indicates improvement. On weekly revenues, we have some line of sight for revenue forecasting, but we primarily confirm monthly numbers. Regarding your question on free cash flow, I will say we expected a couple of hundred million outflow related to operations. This indicates a slight negative cash flow from operations despite a positive inflow in the second half. After considering acquisitions and disposals, we anticipate broadly flat cash flow before shareholder distributions this year to guide you.

Your next question comes from the line of Tom Singlehurst, Citi.

For the fourth quarter, the guidance implies a wide range. How is Q4 expected to work relative to history? With many project works, is there any chance for a budget flush? Do you think clients might increase budgets due to savings?

We don’t consider Q4 based on budget flushes or the reverse. It’s about how clients view the year overall and the impact of lockdowns. At its worst, it was at minus 15%, above our expectations, but I don't expect lockdowns to be as severe in the future.

As you stated, Tom, there’s a broad range of analyst consensus for Q4. There’s also wide potential outcomes. Positive momentum persists, but uncertainty remains. If there are significant lockdowns, we might see an impact on performance, but I believe Q2 will still be seen as our worst quarter. Governments are working to balance economic needs with virus containment, and temporary lockdowns are likely.

Has there been a fighting spirit from CEOs of clients you’re talking to?

Clients are proactively seeking growth. Despite the pandemic negatively impacting overall economic growth, some sectors are thriving and spending more. Every conversation I have revolves around e-commerce and how they can shift business online and invest more in digital media. Certain sectors are looking positively toward recovery, demonstrating resilience.

Does this e-commerce point feed into the U.K. as an export market?

U.K. is not merely about an export market; it leads in e-commerce. We support clients transitioning successfully to e-commerce. For instance, we helped several of our top clients with e-commerce expansions. The market is advancing rapidly, with many clients increasing targets on online sales.

Your next question comes from Adrien de Saint Hilaire at Bank of America.

On China, it remains one of the worst-performing markets. If the luxury and automotive sectors performed well recently, what are the primary issues affecting advertising spend? Also, regarding net new business, when do you anticipate recognizing revenue from the $5.6 billion? How does this compare to the same period last year? Lastly, does your guidance hold as no lockdowns in the top markets, or could Q4 potentially be worse than Q2?

We are disappointed with performance in China, which hasn't recovered as strongly as expected, though it is showing improvement. The advertising perspective remains challenging compared to competitors but is relatively comparable to the market. If significant lockdowns occur in Q4, spend might slow, but I believe declines won’t match Q2's levels.

Net new business of $5.6 billion shows a 43% increase over last year’s $3.9 billion. The pandemic complicates immediate business impacts, but I anticipate more effects will be felt next year. The U.S. numbers show we are relatively stable compared to last year, showcasing stability in our client base and increased new business wins.

Your next question comes from Tim Nollen of Macquarie.

Could you confirm if WPP is considering acquisitions now, as reported? Is this due to improved debt ratios, target pricing, or needs for developing areas like data-driven marketing in light of privacy changes?

It reflects our progress in streamlining the company, simplifying structure, and reducing leverage. We've raised £3.5 billion from selling Kantar while navigating the past months with greater confidence. Moving forward, our priority lies in achieving organic growth, but we also see opportunities for selective acquisitions to enhance our service in technology and data areas.

Your next question comes from Dan Salmon at BMO.

With regard to e-commerce shift, what are you hearing from e-commerce-focused agencies about demand? Are you tapping into trade promotion budgets with retailers like Walmart, and what are your thoughts on that?

WPP has strong e-commerce capabilities through companies like Wunderman Thompson Commerce, which has grown significantly. We assist clients like Sainsbury's and Walmart with their e-commerce platforms. The convergence of communication, content, and commerce is significant, and we help clients allocate budgets efficiently in these areas. We also work to assist them in building direct-to-consumer platforms and navigating their sales strategies across major retailers. This sector presents a major growth opportunity for WPP as brands look to navigate e-commerce complexities. In terms of hybrid work, employees are not looking to return to 5-day office weeks. Our people indicate a desire for 3-4 days in-office arrangements. As working practices fundamentally change, we focus on maintaining flexibility and efficiency across WPP and client interactions.

The way we use office space is likely to become less about individual desks and more focused on collaborative environments. Current working practices indicate we might need 10% to 20% less space moving forward. Our campus strategy aligns well with this transformation, enabling accelerated consolidation of our space and associated savings going forward.

Your next question comes from Matthew Walker, Crédit Suisse.

Regarding the resumption of the Kantar buyback, can you share thoughts on timing given your confidence in Q4 against uncertainties?

It's important to read the headline and article contextually about the buyback timing. We won’t resume until we have a clearer vision for the future.

While we remain confident in our current momentum, Q4 uncertainty still looms. As stated at half time, we would avoid resuming the Kantar share buyback until we have more visibility. We plan to address this at the Capital Markets Day in December.

Your next question comes from Richard Eary at UBS.

Regarding cost savings you’ve achieved, are clients inquiring about passing those savings onto them? As we step into the December cost-saving exercise, will any savings flow through to end clients?

Currently, some clients inquire whether savings can be passed through, but in a competitive market, higher margins than we sustain may provide an opportunity for WPP to simplify operations. While costs can be homologated and savings can arise from simplified structures, the market remains highly competitive. For free cash flow, I estimate around £600 million from operations before adjustments, resulting in a £200 million outflow when factoring in restructuring and working capital changes. This results in a flat cash flow position this year before shareholder distributions, and I anticipate year-end net debt to be around £2.2 billion.

There are no further questions at this time. I will now hand the call over to Mr. Mark Read for further closing remarks.

Thank you, everyone, for your questions. While it's been a challenging year, we're pleased with the progress made in the third quarter. The momentum in the business continues alongside new business record activity and recent wins. Thank you all for your time, and we'll see you in a few months.

That does conclude the conference for today. Thank you for participating. You may all disconnect.

Thank you.