00:03 Good morning, and welcome to the Dentsu Group Third Quarter Earnings Call. My name is Kate Stewart. I’m the Dentsu Group IR Office. Please be aware that today's call is being recorded. The call is simultaneously held in Japanese and English, and you can choose the language you listen to, by using the interpretation key at the bottom of the Zoom screen as shown. 00:28 Please make sure the original voice is always on, otherwise, the sound could be disconnected. And for those joining on the telephone line, you can listen to original voice only. 00:39 [Foreign Language] 00:52 [Interpreted] Today's presentations are available on our website named Q3 Earnings Call Presentation materials and will be displayed on the screen during the call. Joining me today from Tokyo, Toshihiro Yamamoto, CEO Dentsu Group. 01:12 [Interpreted] Hiroshi Igarashi, CEO, Dentsu Japan Network. 01:23 [Interpreted] Yushin Soga, CFO Dentsu Group. 1:27 [Interpreted] From the U.S. Wendy Clark, Global CEO, Dentsu International.

01:38 Hello everyone. This is Wendy Clark.

01:41 And from the UK, Nick Priday, CFO Dentsu International.

01:47 Hi, everybody. This is Nick Priday.

01:52 The agenda for today, we will start with the Q3 review and highlights. Yushin Soga will then present the Q3 financial update. Followed by a presentation from Mr. Yamamoto and Mr. Igarashi. After that, we will invite you to ask questions. Mr. Yamamoto, please go ahead.

02:15 [Foreign Language] 02:19 [Interpreted] This is Yamamoto. Good evening. Good afternoon. Good morning. Thank you for attending Dentsu Group’s fiscal twenty one third quarter earnings call. Page two please. The Group's recovery continued into the third quarter. Today, we upgrade guidance from August to organic growth of approximately twelve percent and operating margin of eighteen percent for the Group this year. We expect revenues to now exceed those reported in twenty nineteen with underlying operating profit over twenty percent higher. This performance demonstrates the commitment of our people under COVID and through the time of business transformation. 03:16 The recovery began with the post-pandemic bounce in media spend on a global scale as client confidence follows consumer confidence. And spending as COVID-19 related restrictions continue to be lifted. In addition to that, both advertising and promotional spending were boosted in Japan in the third quarter of the year, and then to Japan Network was well prepared to capture the increased client spend. We have achieved a big transformation in the past one and half years. I am confident that we are set to benefit from the continued cyclical recovery in twenty twenty one and the first quarter twenty twenty two, as well as the fast growing demand in customer transformation and technology which will result in our continuous growth. 04:13 Slide three please. I have selected a number of our successes to share from the third quarter. Firstly, about client and capabilities, in Japan, we announced -- we had increased our stake in Septeni Holdings for deeper collaboration. Septeni will become a consolidated subsidiary making Dentsu one of the largest digital marketing partners in Japan, bringing on board expertise and the complimentary client base. I cannot give specific client names, but in Dentsu Japan Network, we are starting to see a new type of partnership with our clients, as we further execute against our strategy of becoming an integrated growth partner, integrating our capabilities to support our client’s transformation beyond our traditional marketing specialisms. 05:18 At Dentsu International, we further expanded our existing relationship with Pernod Ricard and successfully redeemed our global [indiscernible] with Standard Chartered. Dentsu International also saw an integrated win from Burger King covering CXM and creative capabilities. 05:37 Moving to Sustainability and ESG. Wendy Clark spoke at COP26 past week, as Dentsu International is a signatory to the G20 Letter and the World Economic Forum open letter calling for ambitious Climate Policy at COP26. I’m proud to announce that Dentsu International has been recognized as one of only seven companies worldwide to have its net zero targets validated under the new standard as defined by the Science Based Targets Initiative as SBTI. 06:15 We have also announced today a number of changes to our Group Governance, which I will address later in this presentation. But average point to Dentsu Group continuing its progressive journey to improve our governance leading to the enhancement of value for our old stakeholders. Finally, on our industry recognition, we were delighted for Merkle to be honored with the Salesforce Partner Innovation award. Merkle was also recognized as the strong performer in the Forrester Wave for loyalty solutions. Carat was named as P&G Partner of the Year. And Dentsu International won the Grand Prix at the World Media Awards 2021 with campaign Draw The Line for Malaria No More UK. 07:16 I will now hand over to Soga Yushin to talk through our financials.

07:24 [Foreign Language] 07:25 [Interpreted] Thank you, Yamamoto. I would now like to take you through the financial results for Q3 and nine months twenty twenty one. Starting with our headline Q3 results. We reported organic growth of twenty seven point eight percent with an operating margin of twenty three point five percent, one thousand one hundred sixty basis point increase year-on-year due to operational leverage from the strong top line. Q3 is the fifth quarter of consecutive improvement Dentsu Japan saw an exceptional quarter against the weakest quarter of twenty twenty. Dentsu International saw double-digit growth and although the organic figure is down quarter-on-quarter. The recovery ratio versus fiscal nineteen on two year basis continues to improve. 08:30 Moving to our nine month headline results. Revenue in this cost of sales and underlying operating profit and margins were all very strong. The business continues to benefit from the transformation we have undertaken over the past twelve months. Also, as a result of the sale of the shadow Shiodome building net profit at the nine month stage is over one hundred billion JPY. 09:00 Slide eight shows the organic growth broken down across our four regions. In Japan boosted by Q3 due to the rapid recovery of TV especially spot advertising and strong demand for digital advertising and solutions. In Americas, Q3 organic growth rate was sixteen point three percent. The Americas was boosted by media which reported over twenty five percent organic growth as clients continue to invest in their brands. In EMEA organic growth rate was twelve point nine percent in Q3. Media and CXM did growth with Denmark, Russia, UK, Switzerland, Italy, Germany, all reporting double-digit growth in the third quarter. 09:48 In APAC, the third quarter organic growth rate was seven point six percent. APAC was weakened because of organic revenue declines in China the biggest market in the region. However, Australia had a strong quarter up over twenty percent and India returned to growth. In DJN, Dentsu Inc., reported over twenty percent growth driven by TV media digital advertising and out of home media. Dentsu Digital show also strong growth in both media and digital solutions reporting forty percent organic growth in nine months demonstrating the strength of our offer. ISID had returned to positive organic growth. Solutions for financials and manufacturing were the drivers of Q3 performance. The overall DJN environment remains strong in especially in information and telecommunication sector. Our win rate remains strong, giving us the confident outlook. 11:11 In Dentsu International, media showed a standard performance for Q3 at seventeen point three percent. Clients are reengaging with our consumers with the trend towards premiumization. Creative performance improved in the third quarter, reporting seven point three percent, due to almost twenty percent organic growth in the Americas, weakness in APAC, particularly China brought the growth rate lower. CXM is now thirty three percent of international revenues, reporting over eleven percent. LiveArea the acquisition announced last quarter has already started to deliver synergies for both revenue and costs. Demand is strong for technology, implementation, data services and commerce. This is why that covers the management of revenue less cost of sales on a year-on-year basis adding to currency effect, organic growth is the main driver of the revenue increase. 12:28 Slide twelve shows us the operating margin on an upward trends over the past two years, demonstrating the impact of our transformation efforts to lower our cost base. 12:41 Slide thirteen shows the movement of underlying operating profit year-on-year. As I mentioned, the lower operating expenses both in Dentsu Japan and Dentsu International have helped operating profit to rise seventy percent year-on-year, reconciliation of operating profit from the underlying to statutory. In the third quarter, we recognized the gain from the total headquarter building sale, which is already factored in the full year guidance. 13:13 The next slide is on the reconciliation from underlying to net profit. Firstly, the loss of earn-out and put-option liabilities. The better than expected performance means we reevaluate the business at a higher level, which is then recognized as a loss on P&L. Secondly, related tax expenses. This is due to sale and leaseback of headquarters building. We upgrade our fiscal year guidance today for the top line, the group's revenue less cost of sales will get back to the level of FY twenty nineteen. Dentsu Group's organic growth rate for this year is to be around twelve percent, Dentsu Japan Network approximately seventeen percent, and Dentsu International, high-single digit. 14:10 As for margin, Dentsu Group is expected to deliver eighteen point zero percent for this year, Dentsu Japan Network twenty point five percent and Dental International fifteen point zero percent. As a result, underlying basic EPS of FY twenty twenty one is upgraded by twelve percent. Based on the raised guidance, we also upgraded the annual dividend forecast based on a thirty percent payout ratio. The dividend is now forecast at one hundred and thirteen point five JPY per share a record level. 14:54 Finally in my concluding thoughts, Q4 margins will be lower year-on-year in both Japan and international due to phasing of investments in talent, training and technology. Yet, our guidance is eighteen percent for the group's operating margin still implying three hundred and ten basis points year-on-year improvement. The group recovery remains on track with FY twenty one revenues less cost of sales to be higher than FY twenty nineteen levels. We forecast a record dividend for FY twenty one at one hundred and thirteen point five JPY. And we continue to see the impact of the cyclical recovery in a FY twenty one and structural growth in customer transformation and technology in FY twenty two and beyond. 15:42 Thank you very much. I will pass the microphone to Yamamoto.

15:46 [Foreign Language] 15:47 [Interpreted] Thank you, Yushin Soga. Yamamoto, will deliver the updates on the medium term management plan. Slide twenty please. As always, I start with our purpose. We exist to realize a better society by contributing to the growth of our clients, partners, people and all consumers. All sixty four thousand employees understand the importance and purpose of Dentsu Group’s role in society. That sustainability is the lens through which we do business. By positioning social value creation at the heart of our business strategy, not only will we be able to better serve our clients bring consistency to our actions and drive growth, but also achieve sustainable business growth for another one hundred years to come. 16:50 Slide twenty one, please. In August twenty twenty, I announced a comprehensive review to accelerate our transformation across the group. The review launched with four clear objectives and each saw significant progress. One, create a simplified structure benefiting both clients and internal operations. Significant transformation has taken place across the Group. At Dentsu International, we are reducing our brands from one hundred sixty to six as we de-duplicate the business, making it easier to navigate our clients and our people. In Dentsu Japan Network, the consolidation of a number of our brands is ongoing. 17:40 Two, structurally and permanently lower operating expenses, due to cost reduction across the group, we have delivered the reduction of circa thirty three billion JPY operating costs at the nine month stage against the same period in twenty nineteen and remain committed to increasing margins across the group year-on-year. Three, enhance the efficiency of our balance sheet. Over the past twelve months, we have sold a number of assets on the balance sheet including the headquarters building in other (ph) property assets in Japan and the strategic shareholders in Recruit, Macromill and others. 18:10 Four, maximize long term shareholder value. We announced in February and are expecting to complete a maximum thirty billion JPY buyback as Soga Yushin stated earlier, our dividend guidance for fiscal year twenty twenty one is at record level for the group. In twenty twenty and twenty twenty one, the transformation of Dentsu Group was significant and we took a big step forward to realize sustainable growth of corporate value. The most important thing at this point is to accelerate and improve the scale and quality of transformation. We should not believe the transformation is complete. January is the right time to change the leadership. 19:01 Please turn the page to twenty two. As we shift to the new management team Dentsu Group's transformation will accelerate sustaining or momentum, Igarashi is the best candidate to drive that process. For thirty five years of his career, he has been at the forefront working with clients and contributing to their growth. Cratering with our clients, contributing with clients to realize a sustainable society, building an ecosystem with diverse players to achieve the goals, these are all the things he has led, and experience has brought rose to Dentsu too. He knows deeply about Dentsu. I believe Igarashi is the only person who can lead the acceleration of the transformation and improvement of the corporate value. 20:20 Igarashi, please.

20:24 [Foreign Language] 20:26 [Interpreted] Thank you, Yamamoto. Everyone this is Igarashi speaking. I'm honored to be the CEO of Dentsu Group after Yamamoto. My priority is to execute the medium term management plan as one of the members who committed to build the plan and achieve the goals. And I will accelerate the transformation for the sustainable growth of Dentsu Group’s corporate value. To do so with the Board, I am going to establish the governance to move the Group onto to the next level. 21:12 Firstly, Tim Andree will step down as an Executive Officer and he will be nominated as the Chairman at our AGM in March. Today, we announce the separation of the Chairman and CEO role to strengthen our governance. Secondly, we announce four new nominations as Board Members who bring diverse experience of Global Management, Digital Businesses and Finance and Accounting. Their combined backgrounds will broaden the experience on the board, and reinforce the foundation of the governance for growth. 22:05 Finally, I'm pleased to announce Norihiro Kuretani as CEO of Dental Japan Network. He has accelerated the expansion of our digital capabilities across the whole group. We share the same ambition of transforming Dentsu Group to become an integrated growth partner to our clients. He is considered a talented individual with a track record of progressing our transformation. Wendy Clark remains Global CEO of Dentsu International. I'm looking forward to collaborating with her deeper than before as we expand our vision of integrated growth solutions, ensuring that Dentsu Japan Network and Dentsu International can work closely together. 22:55 The new Board make up will provide improved diversity as we welcome new directors with global experience and a track record of business transformation. Our new members have experience with multi-national organizations such as Sony, Disney and Recruit. The new board make up will help lead Dentsu Group into the next stage of growth. In February twenty twenty one, we set our medium term goals for the business against four pillars: first, transformation and growth; second, operations and margins; third cash at allocation priorities and shareholders return; and fourth, social impacts and ESG initiatives. These pillars and the focus on customer, transformation and technology and growing our exposure to the fast growth areas of the industry will continue for our group. 24:08 We are seeing the fast and scaled recovery in the advertising business this year. The post-pandemic cyclical recovery will continue to benefit group throughout twenty twenty one and into the first quarter of twenty twenty two and we remain well placed to capture structural growth in customer transmission and technology in twenty twenty two and beyond. Our fiscal year guidance indicates group revenues for FY twenty one will be higher than those seen in twenty nineteen and underlying operating profit over twenty percent higher. I’m confident in our outlook and look forward to engaging with as many of our shareholders and other stakeholders in the coming months. 25:13 Thank you very much. I will now hand back to Yamamoto.

25:19 Thank you. This is Yamamoto again. This is my final presentation as CEO of Dentsu Group. It has been an honor and a privilege to serve for many years at an exciting company with such a rich history and to take a responsible role through the period of transformation. Since the summer of a year ago, we have laid the foundation for the company to achieve sustainable growth or we can say that not only for the last twelve months, but for the past five years, we have put our effort to keep updating the foundation for the transformation and sustainable growth. 26:02 The Q3 results show a company in full recovery and business transformation, capitalizing on the market opportunities with rebalance across all business lines. I'm sure the new executive team led by Igarashi and board leadership will accelerate the path forward to become the world's leading organization that transforms our clients business, and drives top line growth through the power of our creativity, technology, and people. 26:36 Thank you for your time, and we look forward to answering your question Keith, please. A - Kate Stewart: 26:45 Thank you Yamamoto. We will now start the Q&A session. [Operator Instructions] Our first question comes from Julian Roch from Barclay. Julian, please go ahead.

27:28 Good morning. Can you hear me?

27:30 We can. Thank you. Go ahead, Julian.

27:33 Yes. Good morning. So two questions. The first one, if I look at your guidance for the full year organic of twelve percent for the group and seventeen for Japan, we can work out the international is eight to nine about eight point five and based on the performance over the first nine months, then we have about eight point five in Q4. Eight point five in Q4 is a three point slowdown versus Q3, if you look at the two year stack, which is kind of similar guidance to Publicis, [indiscernible] and WPP. But are you actually seeing a slowdown or are you just being conservative because you want to account for potential supply chain disruption or budget adjustment in December? So that's my first question. Are you really seeing a slowdown or users being conservative? 28:36 And my second question is, this year organic is higher than usual because of the recovery. But if you look into next year, do you see next year can be a normal growth share for Dentsu overall i.e. kind of three to four organic or is there other factors that might make twenty twenty two a another abnormal year? Thank you.

29:10 Hey, Julian. Thank you for your questions. The first question will be addressed by Wendy the second question will be addressed by Soga. Wendy, please?

29:23 Thank you, Julian, Hello. It's Wendy. Yes, look as we're looking into Q4 much as your referencing in your question. We are obviously responding to what we're seeing from clients and looking at our plans accordingly. I think that our clients very much have a gross mindset going into Q4. I want to say that when we talk to our clients, we hear continued mindset of seeking incremental growth, but we're -- obviously consolidating what we see from them and charting plans accordingly and yes, to your point, our guidance would be holding, you see us coming in about eight point six percent right now, and we would be holding that for the remainder of the year. So there's not a conservatism in this, it's more reflection of our plans and understanding with our clients.

30:22 Hi. This is Soga speaking. I would like to respond to the second question. Julian, thank you for your question. As many of you know, twenty twenty one, we were able to record a very high growth rate recovering from twenty twenty in business. In our medium term business plan, as it is pointed out in the plan, during the term of the medium term business plans three to four percent CAGR is to be achieved. In the first year hurdle becomes higher certainly, but beyond next year, we expect we would like to expect growth. In any event, in twenty twenty two and years beyond the guidance in the March earnings announcement that we would like to indicate our outlook. Thank you.

31:14 Thank you very much.

31:18 Thank you. Our second question will come from Mr. Maeda from SMBC Nikko Securities. Mr. Maeda, please go ahead.

31:22 This is Maeda from SMBC Nikko Securities. I have two questions. First is about the third quarter Japan organic growth, it was high. So judging from that, Tokyo Olympics effect was enjoyed to a certain extent, I think. So this may overlap with the earlier question, but going forward, looking into the future, especially next year, is there going to be a reactionary fall from the Tokyo Olympics? So will this be a factor that pushes down the growth rate next year? So that is my first question. 32:15 Second question is, the medium to long term organic growth -- to maintain the medium to long term organic growth rate, customer transformation and technology will be important. So with the growth of CT&T, how much can this sustainably push up the organic growth? Thank you very much if you could show us your thinking.

32:48 Thank you very much, Mr. Maeda. So both first and second question will be answered by Soga. And also I have additional information from others if any. Soga?

32:59 Yes Soga speaking. Thank very much Maeda for your question. So first, the third quarter results of the Japan business. As you know, Japan business third quarter, the advertisement industry as a whole recovered from COVID-19. In other words, us advertising agency and TV and mass media, Internet media, those companies performance improved significantly. So with this expected recovery from COVID, the clients demand was very strong. And as you correctly mentioned, Olympics, Paralympics contents were in mass media pushed the usage of mass media and internet media. So in that sense of this -- you can say that it's one off event, but from twenty twenty, the advertisement industry, it pushed up the entire recovery of the entire advertisement industry. So if we look at third quarter alone, this year is a big growth. So third quarter twenty twenty two will have some reactionary fall. However, for the full year next year, we will use the recovery from COVID as a basis and expect for further growth, so that is all for the first question. 34:31 Now second question, as you correctly mentioned, our entire group is now pursuing group transformation, business transformation, and we just started as I alluded to earlier, overseas we acquired LiveArea and in Japan, the DC and DX business will be expanded going forward. Now, in terms of profit margin, how much impact will this have on the profit? It's difficult to say in one word. First of all, the business transformation will progress in phases. And so depending on the speed, the profit being generated may be different And in order to achieve the transformation, we need to spend costs in their various ways, but at any [indiscernible], in the medium term management plan, we announced in February, the operating margin faced improvement is committed to you. So we will look at the progress of the business and confirm our appropriate level of operating margin. Thank you.

35:51 Thank you.

35:57 It's Wendy. I might just layer on here, if that's okay with you on Merkel’s performance because I think it's material to that CT&T question. In Q3, as you know, we saw double-digit performance from Merkel that's already ahead of the twenty nineteen revenues for them. They were cycling a less impact in twenty twenty. We've got very strong pipeline for Merkel. And they enjoy a sixty percent win rate. So to Soga point on the investment here, we see that investment turn into growth. We're up over twenty percent in commerce and experience up over thirty percent in B2B and we're over twenty percent in our analytics business. So I think taken together, you can see our positioning around CT&T, we know it's going to be the fastest growth vector in the industry. We're investing to yield the growth and position a company well for the future.

37:00 Thank you. Our next question will come from Mr. Ishihara from Daiwa Securities. Mr. Ishihara, please go ahead.

37:19 This is Ishihara from Daiwa Securities. Thank you for taking my question. I have two questions. The first question is about the sale of Shiodome headquarters building? This deal was closed and cash, I believe was received and this cash from Shiodome building sales will it be invested in growth business or return to shareholders or retained as a retained earnings, I believe, the cash will be allocated. And based on what thinking will you be allocating the cash? 37:58 The second question is a similar question, but investments in growth business -- when you make investments in growth business, what are your priorities for example, between internationally and Japan is primarily given to international over Japan or is Japan prioritized over international or I believe you will be investing in digital domains to increase head account is that why investment will be necessary or do you need strength in data for the digital solutions? What parts are you going to accumulate? So these are my questions, please.

38:45 Ishihara, thank you for your questions. The first question will be addressed by Soga and second question, initially will be addressed by Soga and additional comments may be offered by other members.

38:59 This is Soga speaking. Ishihara, thank you for your question. First as you correctly pointed out, we are -- we sold non-core assets after comprehensive review, and we have cash accumulated as a result. As for the use of the proceeds and growth investment and shareholder return, all of these combined, we have to look at how the proceeds will be used. First we are implementing transformation -- business transformation and we also have to invest in growth over medium to long term, and we consider this to be most important. Under, MTMP management direction had already been indicated and including specific direction of growth investment, we would like to update in MTMP next year. And in addition, regarding additional shareholder return, we would like to indicate that when we update our MTMP next year, that is my answer to your first question. 40:13 Excuse me, and as for the priority of business investment, we did not divide between international or Japan. Of course, Japan is an important target and outside of Japan, North America is an important market. Priority market for group as a whole will be clarified and there will be focused investment as for business areas so far during the MTMP, CT&T business, data technology, [indiscernible] business will be increased to fifty percent in terms of the ratio of revenue less cost of sales and business is to be expanded and therefore, in these focused markets, investment will be made that is the thinking. Thank you for your questions.

41:06 Igarashi and Wendy will offer additional comment. Igarashi, please.

41:04 Thank you. This is Igarashi speaking. In Japan business, customer transformation and technologies CT&T, DC, DX, BCD that is how we define CT&T. And in Japan, especially CX domain -- customer experience domain, if that domain is considered to be important emphasis area, especially digital marketing and digital promotion are considered important and also commerce area is important. These areas are considered very important and we have to enhance our capabilities in these areas and as for DX, how to secure talent. These are emphasis areas in Japan business. 42:03 Now Wendy could you discuss international business?

42:07 Thank you for…

42:08 I just…

42:11 Yeah. Go ahead, Nick. You jump in please.

42:15 Sorry, thank you, Wendy. Just very quickly, adding the app. You have recognized that we have good balance sheet flexibility again, which is very positive, our pipeline is certainly active again, or MTMP resumed meeting early this year we've already the LiveArea acquisition, which is very positive for the developments of our broader business, not just the CRX and service line and we do really continue to focus our M&A firepower on developing the CRX and CT& T business in fast growth areas, such as digital transformation and e-commerce, and that's where we really see the long term structural growth in the industry. As well as that we want to enhance our marketing leading capabilities with our key technology, a large partners including Salesforce though being Google. And so expect not to comment in terms of us investment I mean growth for the medium and long term to the benefit of our shareholders. Thanks.

43:20 Okay. Thank you very much. Our next question comes from Fiona Orford-Williams from Edison. Fiona, please go ahead. Fiona Orford-Williams: 43:32 Good morning. First of all, thank you for your update on Merkel. Wendy perhaps if you could tell us a little bit more about what's going on in the rest of the international business, particularly on the Creative and whether you're looking for that to pick up in Q4 and into next year? And my second question is regarding the transformation program. Could you give us an update on the progress that's been made in Q3 and the short term outlook for that particularly in [indiscernible] and intention to accelerate the transformation? Thank you.

44:18 Thank you very much, Mrs. Williams. So the second question is also on the international side, right? Am I right? So both first and second question will be from Wendy. Wendy, please.

44:33 Thank you, Toshihiro. Thank you, Fiona. Yeah. Let's talk about our Creative business. I mean, in Q3 you'll see that we're reporting seven point three percent growth that does start to indicate the bounce back of Creative. We've seen that drag the business a little bit early in the year based on the events business and KTG, obviously, significantly impacted last year, but we're starting to see those events come back. We're starting to actually see virtual events too. So we have both physical and virtual and so you've seeing that play on our Q3 results. Within those results, both the Americas and EMEA had double-digit performance increases. So, we're particularly feeling positive about that and we're seeing client confidence now come back into this space along with what would been the quicker avenue, which is obviously switching media on. So you see that substantially within our performance but now creative coming in behind that. Also probably worthy noting that Fred Levron, our new Global Chief Creative Officer started November, first, so he now is on onboard very rapidly integrating into our business with our people, and with our clients already having client meetings and engagement. So we feel very positively about where creative is heading from here on out starting with this performance in Q3. 46:00 And switching to the transformation, Nick, I might hand over to you for a comprehensive update, if I may?

46:08 Sure. Thank you, Wendy thank you Fiona for the question. But I think we continue to make really good progress on our transformation. The goal is to be the most integrated agency business in the world. And I think our program is ambitious, but we're making really good progress against it. We are de-duplication of business simplifying the business making easier for the clients to navigate as services and for us to drive growth in medium to long term. We're also centralizing our back office assumptions and that really good progress in that regard. Aligning all of that businesses onto the same common systems of platforms really pursuing not showing agenda to drive efficiency, but also can [indiscernible] business from pitching for the new business. And so, I think we would say we're making good progress in terms of our accelerated transformation. We are delivering returns in line with that business place, when we set out on this journey. We're doing that for a lower cost to achieve, which is very positive. And so we've delivered a strong improvement in profitability this year as a result of these initiatives. Profitability is also over twenty percent versus twenty nineteen. So it's significantly improvement. And as we look forward, I think we'll miss steps that we are undertaking, provide a strong mid-term margin case. So very positive in terms of our progress. There is still more work to do, but we will undertake that that with a continued rigor and rigor. Thank you.

47:43 Thank you. [Operator Instructions] For our next question, we will hear from Mr. Kinoshita from Bank of America. Mr. Kinoshita, please go ahead.

48:05 Hello. Can you hear me?

48:08 We can, please carry on.

48:13 Thank you for taking my question. I was not -- my PC went down. I was not able to hear everything so if I -- this is the same question as before, my apologies. So first question, international organic growth in comparison to your peers, seems that recently in Americas in comparison to the trend of the peers, you are superior, but in Asia or in Europe it seems somewhat behind. Is this due to client reasons or is it because of Markel capability and because of Markel capability strengthen the United States is that why growth is higher in Americas. If matter is the case, then this strong capabilities will -- these capabilities be deployed in Europe and Asia more effectively are there specific measures, you have in mind to achieve this? That is my first question. 49:24 And the second question is, when I look at your full year forecast in the fourth quarter, excluding one-time factor expenses from revenue less cost of sales, underlying profit operating profit, the cost seems to increase by twenty three percent, a very large increase in cost, for international towards the end of the year, cost was contained significantly towards the end of the year. So I can understand that it will increase as reaction to that but it seems that according as far as I look at the margins, the cost will also increase substantially in japan as well, how do you plan to expand the money and how will that be reflected in the growth going forward beyond next year?

50:14 Kinoshita, thank you for your question. First question will be addressed by Wendy. Second question will be addressed by Soga.

50:25 Thank you, Kinoshita for the question. Yes, you are reading our results correctly. We had a very strong performance in the Americas that's growth across all service lines. So that is confidence in spine, but you do pull out Merkel and as well as media. And then just to my previous answer on creative, so we've seen wins an expansion with Walgreens, J&J and Altria with CXM. We've seen wins on Hilton, Cracker Barrel and COX and media, and creatively statements and expansions with existing clients American Express, Seven/Eleven [indiscernible] and GM, so across the board a very strong performance. In APAC, We have seen some softening in China, particularly that was referenced in Soga’s earlier comments. What we're seeing is some delay and cancellation of some projects in that region, we have particular exposure in the automotive sector, and that has impacted our performance so far. But we do see performance continue in media and CXM. So this is really focusing on the creative area where we need to restore and gain our footing back with some of those delayed and canceled projects. We also have limited exposure to local clients in China. And so that is an area of focus for us also. 51:50 So, yes, to your question, we are focusing on that. I would comment though in that region, we've seen now a standout performance from Australia after many quarters of challenged performance we're seeing Australia really restored performance now twenty percent growth in the quarter. So we feel strongly that that market is going to continue to contribute to our performance.

52:23 This is Soga speaking. I would like to address your second question. As you correctly pointed out, in the first quarter, we expect increasing cost. First, a top line will increase as a result they will be increasing personnel costs and that we will hire a personnel for customer transformation and technology. And as an assumption, the third quarter in a positive way was an exceptional quarter, it was a special quarter. Revenue less cost of sales increased substantially and cost side in comparison to last year did not grow as much. In February, when we announced MTMP and in this year's performance, there was a very strong commitment after that announcement and there was a very stringent control of cost. Therefore, the spending where it was needed there was not as much spending and we have to make that spending including hiring of personnel. 53:25 As for operating expenses, we announced consolidation of Septeni and we are preparing for integration of companies in Japan and there will be expenses for reorganization. I will not be -- I'm not able to discuss breakdown, but personal cost increase and technology or IT cost increase account for the majority and how much of an impact that there will be for performance in the next fiscal year and beyond. First, we are committed to CT&T transformation in our MTMP and this investment in CT&T is necessary. In an event we will make sure that there will be appropriate growth in the top line and ensure margin that is satisfactory to our stakeholders and we will dynamically use cost that is in between the top line and profits. 54:16 Regarding international, Nick will respond. Nick, please.

54:22 Thank you, Soga. Thank you for the question. Let me build quickly on the International margins. Having first of all, it's recognized that we've delivered a strong margin performance in Q3 and on a year-to-date basis. As we said, margin up significantly year-to-date. As a result of the transformation and the cost savings we initiated last year as well as a tremendous effort from all of that people. We've reiterated not only the revenue guidance for the full year, but also fifteen percent margin guidance for the full year, which we brought forward from twenty twenty two. But we do need to recognize that there is an ongoing need for us to invest in the business. There is an outsized impact of that in the fourth quarter due to timing and phasing. We're investing in our people in incentives which were not recognized for the most part in twenty twenty and talent programs as well as IT infrastructure to make working with us from the client perspective as frictionless as possible. We also continue to invest heavily in automation as I've talked about previously, as well as investing in overseas, delivery hubs and initial locations that produce our cost to serve over time, and ultimately that makes us more competitive and will drive sustainable long term growth. 55:35 If we look at the longer term margin, I've just talked previously about what I think is a compelling case for our margins over the mid-term. Going into twenty twenty two, we think the scope for margin increase is more modest as we need to continue to balance the need for investment in the business as well as sustaining delivering long term margin improvement. But we certainly see a strong case for the margin improvement over the midterm. And I hope the comments that may explain the full year margin guidance as well. Thank you.

56:09 Thank you. Our next question comes from Rajesh Panjwani from JPMorgan Asset Management. Rajesh, please go ahead.

56:23 Hi. Can you hear me?

56:24 Hi. We can please go ahead.

56:27 Thank you. So first of all, I would like to thank Yamamoto for his service to the company and wish you all the best to Igarashi and his team. I have two questions more related to margins. First question is on Japan margins, this year margins are substantially higher than what we have seen over the last few years. Are these levels sustainable going forward? And second, there's a big gap now between international margins and Japan margins, over the midterm, should we expect the gap to narrow and is there room for international margins to catch up at least partly with Japan margins.

57:13 Hi. Thank you very much Rajesh. Thank you very much for your kind warm words. So first and second question will be answered by Soga.

57:26 This is Soga speaking. Thank you very much for your question. So, first of all, Japan's margin, whether it's sustainable or not, let me answer. First of all, it's true that the third quarter performance was extremely high margin in our full year guidance, eighteen percent. As I mentioned earlier, third quarter, the entire industry was recovering. So this will be the starting line for twenty twenty two. So how we can conduct the structural reform and business transformation to grow our top line that we are in that phase now. So it’s true that the third quarter has helped us a lot, but in the full year, this margin level we hope is sustainable. We want to make this sustainable. In the MTMP, a sustainable improvement, continuous improvement of margin is committed to you. So but as Nick mentioned earlier, the pace of improvement will slow down. Now, regarding the gap between Japan and international margin, will this gap narrow going forward? Japan's market is one country and international market is over one hundred and forty countries. And so the content of the business is now changing. And so margin can -- it's difficult to compare on an apple to apple basis. So my conclusion, my answer is the margin may -- whether margin will merge, it's difficult because the business is completely different. So the operational efficiency is difficult to compare. Thank you. I hope this answer your question.

59:28 Yes, it does. Thank you very much.

59:44 Our next question is from Mr. [indiscernible] please go ahead. Our next question is from Mr. [indiscernible] please go ahead. Mr. [indiscernible] can you hear us. Please go ahead with your question. I think we'll leave it there. He's lowered his hands. So given that we've reached 11:30, I think we'll close the call there. Thank you very much for joining the call, and please feel free to disconnect. Thank you.

60:34 This is Yamamoto. Thank you very much.

60:39 This is Igarashi. Thank you very much.