UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 6-K
____________________
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the Month of August 2024
Commission File Number: 001-38303
______________________
WPP plc
(Translation of registrant's name into English)
________________________
Sea Containers, 18 Upper Ground
London, United Kingdom SE1 9GL
(Address of principal executive offices)
_________________________
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F:
Form
20-F X Form 40-F
___
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1): ___
Note: Regulation S-T Rule 101(b)(1) only permits the
submission in paper of a Form 6-K if submitted solely to provide an
attached annual report to security holders.
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7): ___
Note: Regulation S-T Rule 101(b)(7) only permits the
submission in paper of a Form 6-K if submitted to furnish a report
or other document that the registrant foreign private issuer must
furnish and make public under the laws of the jurisdiction in which
the registrant is incorporated, domiciled or legally organized (the
registrant’s “home country”), or under the rules
of the home country exchange on which the registrant’s
securities are traded, as long as the report or other document is
not a press release, is not required to be and has not been
distributed to the registrant’s security holders, and, if
discussing a material event, has already been the subject of a Form
6-K submission or other Commission filing on EDGAR.
Forward-Looking Statements
In
connection with the provisions of the U.S. Private Securities
Litigation Reform Act of 1995 (the ‘Reform Act’), the
Company may include forward-looking statements (as defined in the
Reform Act) in oral or written public statements issued by or on
behalf of the Company. These forward-looking statements may
include, among other things, plans, objectives, beliefs,
intentions, strategies, projections and anticipated future economic
performance based on assumptions and the like that are subject to
risks and uncertainties. These statements can be identified by the
fact that they do not relate strictly to historical or current
facts. They use words such as ‘aim’,
‘anticipate’, ‘believe’,
‘estimate’, ‘expect’,
‘forecast’, ‘guidance’,
‘intend’, ‘may’, ‘will’,
‘should’, ‘potential’,
‘possible’, ‘predict’,
‘project’, ‘plan’, ‘target’,
and other words and similar references to future periods but are
not the exclusive means of identifying such statements. As such,
all forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances that are beyond the
control of the Company. Actual results or outcomes may differ
materially from those discussed or implied in the forward-looking
statements. Therefore, you should not rely on such forward-looking
statements, which speak only as of the date they are made, as a
prediction of actual results or otherwise. Important factors which
may cause actual results to differ include but are not limited to:
the impact of epidemics or pandemics including restrictions on
businesses, social activities and travel; the unanticipated loss of
a material client or key personnel; delays or reductions in client
advertising budgets; shifts in industry rates of compensation;
regulatory compliance costs or litigation; changes in competitive
factors in the industries in which we operate and demand for our
products and services; changes in client advertising, marketing and
corporate communications requirements; our inability to realise the
future anticipated benefits of acquisitions; failure to realise our
assumptions regarding goodwill and indefinite lived intangible
assets; natural disasters or acts of terrorism; the Company’s
ability to attract new clients; the economic and geopolitical
impact of the conflicts in Ukraine and Gaza; the risk of global
economic downturn; slower growth, increasing interest rates and
high and sustained inflation; supply chain issues affecting the
distribution of our clients' products; technological changes and
risks to the security of IT and operational infrastructure,
systems, data and information resulting from increased threat of
cyber and other attacks; effectively managing the risks, challenges
and efficiencies presented by using Artificial Intelligence (AI)
and Generative AI technologies and partnerships in our business;
risks related to our environmental, social and governance goals and
initiatives, including impacts from regulators and other
stakeholders, and the impact of factors outside of our control on
such goals and initiatives; the Company’s exposure to changes
in the values of other major currencies (because a substantial
portion of its revenues are derived and costs incurred outside of
the UK); and the overall level of economic activity in the
Company’s major markets (which varies depending on, among
other things, regional, national and international political and
economic conditions and government regulations in the world’s
advertising markets). In addition, you should consider the risks
described in Item 3D, captioned “Risk Factors,” which
could also cause actual results to differ from forward-looking
information. In light of these and other uncertainties, the
forward-looking statements included in this document should not be
regarded as a representation by the Company that the
Company’s plans and objectives will be achieved. Neither the
Company, nor any of its directors, officers or employees, provides
any representation, assurance or guarantee that the occurrence of
any events anticipated, expressed or implied in any forward-looking
statements will actually occur. The Company undertakes no
obligation to update or revise any such forward-looking statements,
whether as a result of new information, future events or
otherwise.
EXHIBIT INDEX
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Exhibit
No.
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Description
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1
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2024
Interim Results dated 07 August 2024,
prepared by WPP plc.
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7 August 2024
2024 Interim Results
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Sequential improvement in LFL growth in Q2. Strong progress against
January 2024 strategic objectives and significant value unlocked
from sale of majority stake in FGS Global. Full year LFL guidance
now -1% to 0% reflecting macro pressures
and weakness in China
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Key figures (£m)
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H1 2024
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‘+/(-)
% reported1
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‘+/(-)
%
LFL2
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H1 2023
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Revenue
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7,227
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0.1
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2.6
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7,221
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Revenue less pass-through costs
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5,599
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(3.6)
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(1.0)
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5,811
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Reported:
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Operating profit
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423
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38.2
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306
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Operating profit margin3
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5.9%
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1.7pt
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4.2%
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Diluted EPS (p)
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18.8
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82.5
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10.3
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Dividends per share (p)
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15.0
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0.0
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15.0
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Headline4:
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Operating profit
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646
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(3.0)
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0.5
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666
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Operating profit margin
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11.5%
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0.0pt
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0.1pt
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11.5%
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Diluted EPS (p)
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30.9
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(6.6)
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33.1
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H1 and Q2 highlights
•H1
reported revenue +0.1%, LFL revenue +2.6%. H1 revenue less
pass-through costs -3.6%, LFL revenue less pass-through costs
-1.0%
•Q2
LFL revenue less pass-through costs -0.5%, with North America +2.0%
and Western Continental Europe +0.3%, offset by the UK -5.3% and
Rest of World -2.2%, with growth in India +9.1% offset by a decline
in China -24.2%
•Global
Integrated Agencies Q2 LFL revenue less pass-through costs fell
0.6% with GroupM growing 1.4%, offset by a 2.4% decline at
integrated creative agencies
•Top
ten clients5
grew 2.5% in H1. CPG, TME6
and automotive client sectors grew well in Q2. Technology client
sector stabilising, with a decline of 1.0% LFL in Q2, an
improvement from Q1’s -9.0%. Healthcare and retail sectors
impacted by 2023 client losses
•Strong
progress on strategic initiatives with new products and solutions
launched within WPP Open, our AI-powered marketing operating
system, and Burson, GroupM and VML on track to deliver targeted
savings
•Agreement
to sell WPP’s majority stake in FGS Global to KKR at an
enterprise valuation of $1.7bn, generating total cash proceeds to
WPP of c.[£604m7]
after tax. Proceeds will be used to reduce leverage, implying
pro-forma average net debt to EBITDA of c.1.60x8,
comfortably within the range of 1.50-1.75x
•H1
headline operating profit £646m. Headline operating margin of
11.5% (H1 2023: 11.5%), up 0.1pt LFL, reflecting disciplined cost
management as we continue to invest in our proposition. H1 reported
operating profit £423m up 38.2%, reflecting the above factors
and lower restructuring costs of £153m (H1 2023:
£267m)
•$1.7bn
net new billings9
(H1 2023: $2.0bn), with Q2 net new billings $0.9bn (Q2 2023:
$0.5bn). New client wins included assignments for AstraZeneca,
Colgate-Palmolive, J&J and Government of Canada
•Adjusted
net debt as at 30 June 2024 £3.4bn down £0.1bn
year-on-year
•Interim
dividend of 15.0p declared (2023: 15.0p)
Mark Read, Chief Executive Officer of WPP, said:
“At our Capital Markets Day earlier this year we set out our
strategy to build on and improve the competitiveness of WPP’s
offer. I am very pleased with the progress we have made in the past
six months against each of our strategic objectives, particularly
our continued investment in AI, the creation of VML and Burson, and
the simplification of GroupM. We are strengthening our offer for
clients while building a more efficient company.
“Our second quarter performance delivered sequential
improvement in net sales10
with continued growth in GroupM, Ogilvy and Hogarth and sequential
improvement at Burson, VML and our Specialist Agencies.
Importantly, we also saw North America return to growth in the
second quarter. That said, we have seen pressure in China and in
our project-related businesses which, together with an uncertain
macro environment, has led us to moderate our expectations for the
full-year.
“The sale of our stake in FGS Global is an excellent outcome
less than four years after its creation from three separate
businesses within WPP. It will allow us to focus and invest in our
core creative transformation offer while significantly
strengthening our financial position.
“As a team, our priority continues to be improving our
competitiveness by delivering a modern, global, creative and
integrated offer for our clients. The steps we have taken since
January to integrate our offer, bring in new talent and invest in
AI represent strong progress towards delivering on our medium-term
financial targets and to shareholders.”
This announcement contains information that qualifies or may
qualify as inside information. The person responsible for arranging
the release of this announcement on behalf of WPP plc is Balbir
Kelly-Bisla, Company Secretary.
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For further information:
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Media
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Investors and analysts
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Chris Wade
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+44 20 7282 4600
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Tom Waldron
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+44 7788 695864
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Anthony Hamilton
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+44 7464 532903
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Richard Oldworth
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+44 7710 130 634
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Caitlin Holt
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+44 7392 280178
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Burson Buchanan
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+44 20 7466 5000
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irteam@wpp.com
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press@wpp.com
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wpp.com/investors
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1. Percentage
change in reported sterling.
2. Like-for-like.
LFL comparisons are calculated as follows: current year, constant
currency actual results (which include acquisitions from the
relevant date of completion) are compared with prior year, constant
currency actual results from continuing operations, adjusted to
include the results of acquisitions and disposals for the
commensurate period in the prior year.
3. Reported
operating profit divided by revenue (including pass-through
costs).
4. In
this press release not all of the figures and ratios used are
readily available from the unaudited interim results included in
Appendix 1. Management believes these non-GAAP measures, including
constant currency and like-for-like growth, revenue less
pass-through costs and headline profit measures, are both useful
and necessary to better understand the Group's results. Details of
how these have been arrived at are shown in Appendix
4.
5. Top
10 clients by revenue less pass-through costs in H1 2023. Growth
rate includes the impact of a client loss in the healthcare
sector.
6. Telecommunications,
Media and Entertainment.
7. Comprising
£557m consideration (after tax) for WPP's c.50% stake as well
as a net £47m inflow for the repayment of a loan from WPP to
FGS, less FGS's cash on balance sheet.
8. Pro-forma
average adjusted net debt to headline EBITDA (last 12 months)
(including depreciation of right-of-use assets) of c.1.60x, versus
WPP's average adjusted net debt to headline EBITDA (last 12 months)
(including depreciation of right-of-use assets) of c.1.84x at 30
June 2024. Calculated by reducing WPP's average adjusted net debt
over the last twelve months by the expected cash proceeds after tax
of c.£604m and reducing headline EBITDA by FGS's headline
EBITDA contribution.
9. As
defined in the glossary on page 45.
10. "Net
sales" refers to revenues less pass-through
costs.
Strategic progress
At our Capital Markets Day in January 2024, we announced the next
phase of our strategy – ‘Innovating to Lead’
– to improve our competitive performance, embrace the
opportunities of AI, data and technology and drive financial
returns; and we have continued to make strong progress against each
of our four strategic pillars.
Lead through AI, data and technology
It’s clear that AI is going to fundamentally change the way
in which our clients reach consumers, the way in which we deliver
and produce work and the way in which we operate as a company.
While it is undoubtedly early days in the application of AI to
marketing, we can see enough already to know that its impact will
be significant.
At our Capital Markets Day, we laid out our plans to embrace AI and
invest in the technology and data that is required. WPP Open, our
intelligent marketing operating system powered by AI, is a critical
component of our strategy, enabling us to use AI in how we work.
But it is also important to understand that this is only one part
of our strategy. We also need to train and upskill our teams,
engage with our clients and create new, AI-driven
experiences.
We have continued to invest in WPP Open as part of our annual
investment of £250m in AI-driven technology. We have developed
new functionality and integrated new AI models and as a result,
have seen growing adoption and usage across WPP and by our
clients.
Since the start of the year, we are seeing monthly active users up
74%, LLM usage up 177% and image generation up 241%. We are also
seeing growing adoption by clients, with key clients using the
platform including Google, IBM, L'Oréal, LVMH, Nestlé and
The Coca-Cola Company. In particular, clients are seeing
significant value in using WPP Open to streamline how they work
with WPP, using the workflow elements of the platform to
standardise processes.
Functionality and Model Integration
WPP Open is a single marketing operating system that powers all of
WPP’s businesses. The core Studios – Creative,
Production, Media, Experience, Commerce and PR – are designed
to support key functional areas with AI-powered applications in a
way that allows for integrated ways of working across the
company.
WPP Open’s Creative Studio gained further functionality to
support our strategy and creative teams. In May, we announced a
collaboration to integrate Anthropic’s Claude AI model family
using Amazon Bedrock, a fully managed service from Amazon Web
Services (‘AWS’), and in June, WPP and IBM
announced
WPP Open B2B, powered by watsonx, bringing together IBM’s
generative AI technology and consulting capabilities with
WPP’s industry expertise to deliver higher conversion rates
and lower costs for B2B marketers.
WPP Open’s Media Studio was deployed more broadly to clients
in the first half with an end-to-end workflow solution accessing
GroupM’s scale, and Choreograph data and technology. It
enables the automation of complex media decisions, choosing from
thousands of AI-powered strategies and leveraging 2.3 trillion
AI-evaluated impressions to build unique audiences and activate and
measure campaigns across a full range of channels.
Media Studio provides access to Choreograph’s global data
graph that enables intelligent activation across more than 73
markets and 5 billion consumer profiles. That includes access to
AmeriLINK, our data asset in the US, containing 10,000 attributes
on more than 300 million addressable individuals, with particular
strength in data on consumer health and age. We are able to further
contextualise and enrich that data graph with data that we generate
from planning, optimisation and campaigns across
GroupM.
We launched our upgraded Performance Brain™ at Google Cloud
Next in April, allowing us to predict creative effectiveness before
the first media impression is served, allowing clients to improve
the ROI on their media and creative investments.
We also announced the integration into Media Studio of services
from
Incremental,
a leading provider of neutral retail media solutions, incorporating
their retail media forecasting, planning and measurement
capabilities, and from
Shalion,
a retail intelligence leader, integrating their advanced retail
media, digital shelf analytics, and unified market intelligence
across 18 markets and more than 5,000 retailer and category
combinations.
In June, we launched Production Studio, an AI-enabled, end-to-end
production application. Production Studio is based on our
multi-year partnership with NVIDIA, allowing us to develop
industry-first solutions that provide the brand and product
fidelity and the design control needed in developing advertising
content.
In July, at SIGGRAPH, the annual computer graphics conference,
we
unveiled
the next phase of our partnership with NVIDIA – using new
NVIDIA NIM microservices and Shutterstock’s 3D asset library
to create brand-compliant generative 3D landscapes and worlds. The
Coca-Cola Company will be one of the first of WPP’s clients
to begin scaling the opportunities of generative 3D across its 100
markets. WPP has also been working with Ford to build physically
accurate, real-time digital twins of its vehicles to create car
configurators that customers can explore and adapt according to
their needs.
Our Work with Clients
Not only is AI enabling us to innovate in how we work with clients
and to produce work in new ways, it’s also allowing us to
develop new ground-breaking consumer experiences for our clients.
We continue to lead the way in demonstrating the power of the
technology to build more relevant and personalised experiences for
our clients.
Some examples include:
•Mars’
Snickers Own Goal from T&Pm:
Powered by AI technology from ElevenLabs, Synclabs and Open AI,
this application uses a personalised AI José Mourinho to
humorously coach fans out of their “own goals”. By
generating custom video responses for fans' mistakes, this campaign
leverages AI to create unique, shareable content and engage fans in
a new, interactive way. The application is integrated with WhatsApp
for social sharing and co-created with agency Helo.
•Coke
SoundZ for The Coca-Cola Company by WPP Open X, led by
AKQA:
An AI-powered instrument creating uplifting tunes from Coca-Cola's
iconic sounds. This innovative auditory branding engages consumers
through sound psychology, featuring both digital and physical
versions. Collaborations with artists like Marshmello have
amplified its impact, reinforcing Coca-Cola's leadership in
innovative marketing and delivering more than 500 million
impressions globally.
•Mondelēz’s
Bournvita D For Dreams by Ogilvy and Wavemaker:
Uses advanced AI technology to offer children personalised cricket
training from legend Rahul Dravid. The AI tool tracks kids' time
spent in the sun, translating it into virtual coaching sessions,
and so promoting Vitamin D intake. The campaign combines AI-driven
interactive experiences with the nutritional benefits of Bournvita,
encouraging outdoor activity and health awareness.
Accelerate growth through the power of creative
transformation
Creativity is what sets WPP apart, and when combined with AI,
technology, data and the largest global media platform, we have an
unparalleled integrated offer to clients.
That offer is resonating well, as reflected in growth across our
largest clients. The first half of the year saw expansion in scope
for many top clients, with wins including media assignments for
Nestlé and Colgate-Palmolive’s decision to name WPP as
its Amazon agency of record for Europe.
We continue to win industry recognition for our creative
excellence. In June, the Cannes Lions International Festival of
Creativity named WPP as ‘Creative Company of the Year’
for 2024, with Ogilvy taking home ‘Creative Network of the
Year’. WPP agencies collected a total of 160 Lions, including
a Titanium, 6 Grand Prix, 27 Gold, 43 Silver and 83 Bronze
Lions.
The Coca-Cola Company, whose global marketing partner is WPP Open
X, was named ‘Creative Brand of the Year’ for the first
time in its history. This follows the announcement in May that
Unilever, one of WPP’s largest clients, was named
‘Creative Marketer of the Year’ for 2024, thanks in
part to work from WPP agencies on its brands.
WPP's media agencies EssenceMediacom, Mindshare and Wavemaker also
made a very strong showing at the festival, with GroupM ending the
week as the industry’s leading media group with 90 Lions, up
from 59 last year.
In addition, WPP's agencies won the most awards at this
year’s Clio Health competition in June, with a total of more
than 50 awards across Grand, Gold, Silver, and Bronze categories,
further solidifying WPP’s position as a leader in health
marketing and communications.
Build world-class, market-leading brands
We have made excellent progress towards building stronger
world-class brands.
VML launched in January 2024 and, by the end of the first-half, the
integration of VMLY&R and Wunderman Thompson was broadly
complete. VML played a key role in recent client assignment wins,
including AstraZeneca, Colgate-Palmolive and Perrigo.
The new Burson agency launched in June, with the new leadership
team in place globally and in most markets around the world. As a
further simplification of our offer, Buchanan Communications joined
Burson under the brand Burson Buchanan with the intention to expand
its offer into the United States.
The GroupM simplification initiative also progressed well in the
first half. We made good progress on the structural cost actions,
with GroupM operating as one entity in markets around the world. As
part of this, we have launched Media Studio, a key component of WPP
Open, bringing together key media tools and simplifying our
go-to-market proposition. Execution of the plan will continue
through the second half with all related cost actions due to be
complete in 2024.
In July, WPP announced the appointment of Brian Lesser as the new
Global CEO of GroupM, succeeding Christian Juhl, who will be moving
to a new role within WPP. Brian is a leading industry figure with a
track record of creating addressable advertising products and
technology. He previously spent 10 years with WPP, joining with the
acquisition of 24/7 Real Media in 2007, and most recently serving
as CEO of GroupM in North America from 2015 to 2017.
In the final COMvergence report for 2023, GroupM remained the
largest media planning and buying agency by some distance with
leading positions in key global markets such as China, India,
Japan, Germany and the UK, and an unchanged #2 position in the
US.
GroupM continues to invest in retail media initiatives around the
world, and of particular note is its partnership with Tesco to
create a Media and Insight Platform, powered by dunnhumby, to
deliver
best-in-class delivery of data-led solutions, education and
innovation across all areas of retail media in the UK.
We have a strong pipeline of new business in media, and while our
new business performance at GroupM in North America was below our
expectations in the first half of the year, we expect that the
actions that we are taking will see an improvement in our
competitive performance and success rate.
Execute efficiently to drive financial returns through margin and
cash
As well as the structural cost savings relating to the initiatives
above, we are making good progress in our back-office efficiency
programme across enterprise IT, finance, procurement and real
estate.
In enterprise IT, we successfully rolled out Maconomy in certain
markets in EMEA and South America in the first half. Our cloud
migration continued to deliver benefits as we migrate workloads to
the cloud and decommission legacy equipment and
capacity.
Across IT and Finance, we continue to optimise our finance shared
service centres, including migrating teams from VML in North
America and Brazil, and WPP HQ.
Our category-led procurement model continues to consolidate spend
by sub-category to drive further savings. We are digitalising our
source-to-contract processes, enabling further automation as we
consolidate our ERP landscape.
In real estate, our ongoing campus programme and consolidation of
leases continues to deliver benefits. Several new campus openings
are planned for the second half of 2024, including WPP’s
third London campus.
We have also opened a new operations and delivery hub in Wuxi,
Jiangsu as part of an ongoing optimisation of our cost base in
China.
Purpose and ESG
WPP’s purpose is to use the power of creativity to build
better futures for our people, planet, clients and communities.
Read more on the ways WPP is working to deliver against its purpose
in our
2023 Sustainability Report.
First half overview
Revenue was £7.2bn, up 0.1% from £7.2bn in H1 2023,
and
up 2.6%
like-for-like. Revenue less pass-through costs was £5.6bn,
down 3.6% from £5.8bn in H1 2023, and down
1.0%
like-for-like.
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Q2 2024
£m
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%
reported
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%
M&A
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%
FX
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%
LFL
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Revenue
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3,815
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1.4
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0.3
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(2.0)
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3.1
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Revenue less pass-through costs
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2,912
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(2.3)
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0.1
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(1.9)
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(0.5)
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H1 2024
£m
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%
reported
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%
M&A
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%
FX
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%
LFL
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Revenue
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7,227
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0.1
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0.5
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(3.0)
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2.6
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Revenue less pass-through costs
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5,599
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(3.6)
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0.3
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(2.9)
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(1.0)
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Segmental review
Business segments - revenue less pass-through costs
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% LFL +/(-)
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Global
Integrated Agencies
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Public Relations
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Specialist Agencies
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Q2 2024
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(0.6)
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1.5
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(2.0)
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H1 2024
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(0.7)
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(0.9)
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(4.7)
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Global Integrated Agencies:
GroupM, our media planning and buying business, grew 1.9% in H1
(Q2: +1.4%), offset by a 2.8% decline at other Global Integrated
Agencies (Q2: -2.4%).
GroupM growth continues to be impacted by 2023 client assignment
losses, which have been partially offset by wins including
Nestlé. Q2 growth of 1.4% slowed sequentially from 2.4% in Q1
as an acceleration to mid-single digit growth in the US was more
than offset by weaker second quarter trends in Germany, which was
lapping a strong quarter last year, and in China which has been
impacted by client losses and a challenging macro
environment.
Ogilvy’s performance benefited from recent new business wins,
including Verizon, good growth in CPG clients and stabilisation of
spending by technology clients in Q2. Hogarth grew well, benefiting
from new business wins and growing demand for its technology and
AI-driven capabilities, as clients seek to produce more
personalised and addressable content. VML continued to be impacted
by the loss of Pfizer creative assignments, but saw sequential
improvement in Q2, benefiting from recent new business wins and
stabilisation of spending by technology clients. AKQA was impacted
by delays in project-related spend.
Public Relations:
FGS Global continued to grow strongly in H1 2024, offset by
declines at Burson due to the loss of Pfizer assignments and the
impact of macroeconomic uncertainty on some areas of client
spending.
Specialist Agencies:
CMI Media Group, our specialist healthcare media planning and
buying agency, grew well, offset by declines at Landor and Design
Bridge and Partners. Our smaller specialist agencies continued to
be adversely affected by more cautious client spending and delays
in project-based spending.
Regional segments - revenue less pass-through costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% LFL +/(-)
|
North America
|
United Kingdom
|
Western Continental Europe
|
Rest of World
|
|
Q2 2024
|
2.0
|
(5.3)
|
0.3
|
(2.2)
|
|
H1 2024
|
(1.6)
|
(2.6)
|
1.7
|
(1.4)
|
North America declined by 1.6% in H1 2024, reflecting lower
revenues from technology clients and in the retail and healthcare
sectors, reflecting 2023 client losses. This was partially offset
by growth in CPG, telecommunications and automotive. Within the
half, Q2 growth of 2.0% showed a marked sequential improvement,
(Q1: -5.2%) driven by GroupM and as technology client spend began
to stabilise against easier comparisons.
United Kingdom declined 2.6% in H1, reflecting a strong comparator
(H1 2023: +8.2%). Ogilvy, GroupM and Hogarth grew in H1, offset by
declines in other agencies due to delays in project-based
spending.
In Western Continental Europe, Germany declined 4.8%, reflecting
the impact of macroeconomic pressures and delays to project-related
spend, offset by good growth in Spain and France as new clients
were onboarded.
The Rest of World declined in H1 2024 as good growth in India
(+8.1%) was offset by a decline of 20.3% in China on client
assignment losses and persistent macroeconomic pressures impacting
both our media and creative businesses.
We appointed a new President of WPP China in February who is
working closely with the local CEOs of each of our agencies,
including the new senior leadership team at GroupM, to bring
together the best of our talent and capabilities in China and build
on our leading market position. While we expect performance to
continue to be challenging in the second half of 2024, we are
confident these actions will strengthen our business in what is an
important strategic market for WPP.
Top five markets - revenue less pass-through costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% LFL +/(-)
|
USA
|
UK
|
Germany
|
China
|
India
|
|
Q2 2024
|
2.6
|
(5.3)
|
(7.4)
|
(24.2)
|
9.1
|
|
H1 2024
|
(1.4)
|
(2.6)
|
(4.8)
|
(20.3)
|
8.1
|
Client sector review - revenue less pass-through costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2024
|
H1 2024
|
H1 2024
|
|
|
% LFL +/(-)
|
% LFL +/(-)
|
% share, revenue less pass-through costs11
|
|
CPG
|
5.1
|
7.2
|
28.3
|
|
Tech & Digital Services
|
(1.0)
|
(5.1)
|
17.2
|
|
Healthcare & Pharma
|
(9.7)
|
(9.0)
|
11.4
|
|
Automotive
|
3.6
|
1.5
|
10.4
|
|
Retail
|
(10.7)
|
(9.9)
|
8.8
|
|
Telecom, Media & Entertainment
|
5.1
|
5.9
|
6.8
|
|
Financial Services
|
1.9
|
0.5
|
6.2
|
|
Other
|
(15.7)
|
(15.3)
|
4.8
|
|
Travel & Leisure
|
1.9
|
3.0
|
3.7
|
|
Government, Public Sector & Non-profit
|
(7.6)
|
(7.2)
|
2.4
|
11.
Proportion of WPP revenue less pass-through costs in H1 2024; table
made up of clients representing 78% of WPP total
revenue less pass-through costs.
Financial results
Unaudited headline income statement12:
|
|
|
|
|
Analysis of cash flows
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
H1 2024
|
H1 2023
|
+/(-) % reported
|
+/(-) % LFL
|
|
|
|
|
|
|
|
Revenue
|
7,227
|
7,221
|
0.1
|
2.6
|
|
Revenue less pass-through costs
|
5,599
|
5,811
|
(3.6)
|
(1.0)
|
|
Operating profit
|
646
|
666
|
(3.0)
|
0.5
|
|
Operating profit margin %
|
11.5%
|
11.5%
|
–
|
0.1pt*
|
|
Income from associates
|
15
|
8
|
87.5
|
|
|
PBIT
|
661
|
674
|
(1.9)
|
|
|
Net finance costs
|
(136)
|
(128)
|
(6.3)
|
|
|
Profit before taxation
|
525
|
546
|
(3.8)
|
|
|
Tax
|
(146)
|
(148)
|
1.4
|
|
|
Profit after taxation
|
379
|
398
|
(4.8)
|
|
|
Non-controlling interests
|
(41)
|
(37)
|
(10.8)
|
|
|
Profit attributable to shareholders
|
338
|
361
|
(6.4)
|
|
|
Diluted EPS
|
30.9p
|
33.1p
|
(6.6)
|
|
|
|
|
|
|
|
|
Reported:
|
|
|
|
|
|
Revenue
|
7,227
|
7,221
|
0.1
|
|
|
Operating profit
|
423
|
306
|
38.2
|
|
|
Profit before taxation
|
338
|
204
|
65.7
|
|
|
Diluted EPS
|
18.8p
|
10.3p
|
82.5
|
|
*margin points
12
Non-GAAP measures in this table are reconciled in Appendix
4.
Operating profit
Headline operating profit was £646m (H1 2023: £666m), at
a headline operating profit margin of 11.5% (H1 2023: 11.5%), 0.1
points higher than the prior period on a constant currency basis.
This reflects the decline in revenue less pass-through costs, cost
inflation and investment for future growth, partially offset by
continued cost discipline and restructuring
initiatives.
Total headline operating costs were down 3.7%, to £4,953m (H1
2023: £5,145m). Staff costs (excluding incentives) of
£3,837m were down 3.3% compared to the prior period (H1 2023:
£3,969m), reflecting higher wage inflation offset by lower
headcount as a result of the actions we have taken to mitigate the
top-line decline in H1 and our restructuring initiatives.
Incentives of £148m were down 14.0% compared to the prior
period (H1 2023: £172m) due to phasing relating to the
weighting of business performance through the year against annual
incentive targets.
Establishment costs of £242m were down 11.1% compared to the
prior period (H1 2023: £272m) driven by benefits from the
campus programme and consolidation of leases. IT costs of
£341m were down 2.6%, personal costs of £103m were down
8.0% driven by savings in travel and entertainment, and other
operating expenses of £282m were up 4.4% driven by higher
commercial costs.
On a like-for-like basis, the average number of people in the Group
in the first half was 113,000 compared to 115,000 in the first half
of 2023. The total number of people as at 30 June 2024 was 111,000
compared to 114,000 as at 30 June 2023.
Headline EBITDA (including IFRS 16 depreciation) for the period was
down 1.4% to £756m (H1 2023: £767m).
Reported operating profit was £423m (H1 2023: £306m) at a
reported operating profit margin of 5.9% (H1 2023: 4.2%). Reported
operating profit includes restructuring costs of £153m (H1
2023: £267m), amortisation and impairment of acquired
intangible assets and impairment of investments in associates of
£80m (H1 2023: £100m, including £53m of goodwill
impairment).
The restructuring and transformation costs (£153m) relate to
actions set out at the January Capital Markets Day, primarily the
structural cost saving plan relating to the creation of VML and
Burson and the simplification of GroupM (£72m). These
structural savings are to deliver annualised net cost savings of
c.£125m in 2025, with more than 50% of that saving now
expected to be achieved in 2024 (ahead of the original plan of
40-50%) and an associated restructuring cost of c.£125m in
2024. Also included within restructuring and transformation costs
are the Group’s IT transformation projects (£47m) and
property costs associated with impairments prior to 2024
(£22m).
Net finance costs
Headline net finance costs of £136m were up 6.3% compared to
the prior period (H1 2023: £128m), primarily due to the impact
of refinancing bonds at higher rates.
Reported net finance costs were £101m (H1 2023: £103m),
including net income of £35m (H1 2023: net income £25m)
relating to the revaluation and retranslation of financial
instruments.
Tax
The headline effective tax rate (based on headline profit before
tax) was 28.0% (H1 2023: 27.0%). The increase in the headline
effective tax rate is driven by changes in tax rates or tax bases
in the markets in which we operate. Given the Group’s
geographic mix of profits and the changing international tax
environment, the tax rate is expected to increase over the next few
years.
The reported effective tax rate was 27.2% (H1 2023: 26.9%). The
reported effective tax rate is lower than the headline effective
tax rate due to gains on disposal of investments and subsidiaries
not being taxable.
Earnings per share (“EPS”) and dividend
Headline diluted EPS was 30.9p (H1 2023: 33.1p), a decrease of 6.6%
due to lower headline operating profit (which includes an adverse
FX impact which reduced headline diluted EPS by 1.5 pence) higher
headline net finance costs and a higher headline effective tax
rate.
Reported diluted EPS was 18.8p (H1 2023: 10.3p), an increase of
82.5% due to higher reported operating profit.
For 2024, the Board is declaring an interim dividend of 15.0p
(2023: 15.0p). The record date for the interim dividend is
11 October 2024, and the dividend will be payable on
1 November 2024.
Cash flow13
|
|
|
|
|
|
|
|
|
|
|
Six months ended (£ million)
|
30 June 2024
|
30 June 2023
|
|
Headline operating profit
|
646
|
666
|
|
Income from associates
|
15
|
8
|
|
Depreciation of property, plant and equipment
|
81
|
84
|
|
Amortisation of other intangibles
|
14
|
9
|
|
Depreciation of right-of-use assets
|
110
|
129
|
|
Headline EBITDA
|
866
|
896
|
|
Less: income from associates
|
(15)
|
(8)
|
|
Repayment of lease liabilities and related interest
|
(187)
|
(184)
|
|
Non-cash compensation
|
56
|
76
|
|
Non-headline cash costs (including restructuring cost)
|
(144)
|
(114)
|
|
Capex
|
(107)
|
(104)
|
|
Working capital
|
(1,056)
|
(1,044)
|
|
Adjusted operating cash flow
|
(587)
|
(482)
|
|
% conversion of Headline operating profit
|
(91)%
|
(72)%
|
|
Dividends (to minorities)/ from associates
|
(16)
|
(42)
|
|
Earnout payments
|
(25)
|
(12)
|
|
Net interest
|
(49)
|
(48)
|
|
Cash tax
|
(168)
|
(171)
|
|
Adjusted free cash flow
|
(845)
|
(755)
|
|
Disposal proceeds
|
33
|
14
|
|
Net initial acquisition payments
|
(29)
|
(203)
|
|
Dividends
|
—
|
—
|
|
Share purchases
|
(57)
|
(37)
|
|
Adjusted net cash flow
|
(898)
|
(981)
|
Adjusted operating cash outflow was £587m (H1 2023:
£482m). The main driver of the larger cash outflow year on
year was an increase in non headline cash costs to £144m (H1
2023: £114m), mainly driven by costs related to the previously
announced restructuring plan, including the creation of VML and
Burson and the simplification of GroupM. The working capital
outflow was £1,056m, in line with the prior period (H1 2023:
£1,044m) and reflects the usual seasonality of client activity
and timing of payments. Reported net cash outflow from operating
activities (see Note 6) increased to £540m (H1 2023:
£445m outflow).
Adjusted free cash outflow was £845m, higher than prior period
(H1 2023: £755m) due to higher adjusted operating cash outflow
and higher earnout payments, offset by lower dividends to
minorities. Adjusted net cash outflow of £898m was lower than
the prior period (H1 2023: £981m) due to lower net acquisition
payments.
A summary of the Group’s unaudited cash flow statement and
notes for the six months to 30 June 2024 is provided in Appendix
1.
13
Non-GAAP measures in this table are reconciled in Appendix
4.
Balance sheet
As at 30 June 2024, the Group had total equity of £3,958m (31
December 2023: £3,833m).
Non-current assets of £12,438m decreased by £241m (31
December 2023: £12,679m), primarily driven by the amortisation
of intangible assets and right-of-use assets.
Current assets of £13,375m decreased by £569m (31
December 2023: £13,944m). The decrease principally relates to
trade and other receivables which decreased by £478m to
£7,982m.
Current liabilities of £14,988m decreased by £1,317m (31
December 2023: £16,305m). The decrease principally relates to
trade and other payables which decreased by £1,411m, partially
offset by a net increase in bank overdrafts and bonds of
£255m.
The decrease in both trade and other receivables and trade and
other payables is primarily due to the seasonality of client
activity and timing of payments, with the relative movement from
December consistent with prior years.
Non-current liabilities of £6,867m (31 December 2023:
£6,485m) increased by £382m, primarily due to a
£523m increase in bonds to £4,298m, relating to the
issuance of two new bonds in March 2024 (€600m and
€650m) offset by a €500m bond due in March 2025
classified within current liabilities as at 30 June 2024 (31
December 2023: non-current).
Recognised within total equity, other comprehensive loss of
£62m (H1 2023: £210m) for the period includes a £37m
loss (H1 2023: £285m) for foreign exchange differences on
translation of foreign operations, and an
£18m
loss (H1 2023: gain of £78m)
on the Group’s net investment hedges.
A summary of the Group’s unaudited balance sheet and selected
notes as at 30 June 2024 is provided in Appendix 1.
Adjusted net debt
As at 30 June 2024, the Group had cash and cash equivalents of
£1.9bn (31 December 2023: £1.9bn) and total liquidity,
including undrawn credit facilities, of £3.9bn (31 December
2023: £3.8bn). Bonds and bank overdrafts totalled £5.5bn
as at 30 June 2024 (31 December 2023: £4.7bn).
As at 30 June 2024 adjusted net debt was £3.4bn, against
£2.5bn as at 31 December 2023, up £0.9bn on a reported
basis and at 2024 exchange rates, reflecting seasonal cash outflows
in the first half of the year. Average adjusted net debt in H1 2024
was £3.6bn, compared to £3.6bn in H1 2023, at 2024
exchange rates.
The average adjusted net debt to headline EBITDA ratio in the 12
months ended 30 June 2024 is 1.84x (12 months ended 30 June 2023:
1.68x), which excludes the impact of IFRS 16.
In February 2024, we refinanced our five-year Revolving Credit
Facility of $2.5bn, with the new facility running for five years,
with two one-year extension options maturing in February 2029
(excluding options) and with no financial covenants.
In March 2024 we refinanced $750m of 3.75% bonds due September 2024
and €500m of 1.375% bonds due March 2025 as planned, issuing
€600m of 3.625% bonds due September 2029 and €650m of
4.0% bonds due September 2033.
Our bond portfolio as at 30 June 2024 had an average maturity of
5.9 years.
Outlook
Our guidance for 2024 is as follows:
|
|
|
|
|
Like-for-like revenue less pass-through costs growth of -1% to 0%
(previously 0-1%)
Headline operating margin improvement of 20-40bps (excluding the
impact of FX)
|
Other 2024 financial indications:
•Mergers
and acquisitions will add <0.5% to revenue less pass-through
costs growth (previously 0.5-1.0%)
•FX
impact: current rates (at 2 August 2024) imply a c.2.8% drag
on FY 2024 revenues less pass-through costs, with a 0.1pt drag
expected on FY 2024 headline operating margin
•Headline
income from associates and non-controlling interests at similar
levels to 2023
•Net
finance costs of around £295m
•Effective
tax rate (measured as headline tax as a % of headline profit before
tax) of around 28%
•Capex
of around £260m
•Cash
restructuring costs of around £285m
•Working
capital expected to be broadly flat year-on-year
Medium-term targets
In January 2024 we presented an updated medium-term financial
framework including the following three targets:
•3%+
LFL growth in revenue less pass-through costs
•16-17%
headline operating profit margin
•Adjusted
operating cash flow conversion of 85%+14
14.
Adjusted operating cash flow divided by headline operating
profit.
Business sector and regional analysis
Business sector15
Revenue analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
|
|
H1
|
|
£m
|
+/(-) % reported
|
+/(-) % LFL
|
|
£m
|
+/(-) % reported
|
+/(-) % LFL
|
|
Global Int. Agencies
|
3,238
|
1.5
|
3.3
|
|
6,117
|
0.6
|
3.2
|
|
Public Relations
|
311
|
(0.1)
|
1.1
|
|
601
|
(2.8)
|
(0.9)
|
|
Specialist Agencies
|
266
|
1.9
|
3.0
|
|
509
|
(2.3)
|
(0.5)
|
|
Total Group
|
3,815
|
1.4
|
3.1
|
|
7,227
|
0.1
|
2.6
|
Revenue less pass-through costs analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
|
|
H1
|
|
£m
|
+/(-) % reported
|
+/(-) % LFL
|
|
£m
|
+/(-) % reported
|
+/(-) % LFL
|
|
Global Int. Agencies
|
2,392
|
(2.6)
|
(0.6)
|
|
4,595
|
(3.5)
|
(0.7)
|
|
Public Relations
|
293
|
0.1
|
1.5
|
|
568
|
(2.7)
|
(0.9)
|
|
Specialist Agencies
|
227
|
(3.2)
|
(2.0)
|
|
436
|
(6.6)
|
(4.7)
|
|
Total Group
|
2,912
|
(2.3)
|
(0.5)
|
|
5,599
|
(3.6)
|
(1.0)
|
Headline operating profit analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
H1 2024
|
% margin*
|
H1 2023
|
% margin*
|
|
Global Int. Agencies
|
551
|
12.0
|
550
|
11.6
|
|
Public Relations
|
80
|
14.1
|
88
|
15.1
|
|
Specialist Agencies
|
15
|
3.4
|
28
|
6.0
|
|
Total Group
|
646
|
11.5
|
666
|
11.5
|
* Headline operating profit as a percentage of revenue less
pass-through costs
15
Prior year figures have been re-presented to reflect the
reallocation of a number of businesses between Global Integrated
Agencies and Specialist Agencies. The impact of the re-presentation
is not material.
Regional
Revenue analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
|
|
H1
|
|
£m
|
+/(-) % reported
|
+/(-) % LFL
|
|
£m
|
+/(-) % reported
|
+/(-) % LFL
|
|
N. America
|
1,467
|
6.5
|
6.2
|
|
2,781
|
1.3
|
2.5
|
|
United Kingdom
|
544
|
(4.1)
|
(4.4)
|
|
1,058
|
(0.7)
|
(1.2)
|
|
W Cont. Europe
|
762
|
(2.4)
|
0.1
|
|
1,458
|
(1.3)
|
1.9
|
|
AP, LA, AME, CEE16
|
1,042
|
0.5
|
5.1
|
|
1,930
|
(0.3)
|
5.5
|
|
Total Group
|
3,815
|
1.4
|
3.1
|
|
7,227
|
0.1
|
2.6
|
Revenue less pass-through costs analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
|
|
H1
|
|
£m
|
+/(-) % reported
|
+/(-) % LFL
|
|
£m
|
+/(-) % reported
|
+/(-) % LFL
|
|
N. America
|
1,152
|
1.5
|
2.0
|
|
2,207
|
(3.4)
|
(1.6)
|
|
United Kingdom
|
396
|
(5.4)
|
(5.3)
|
|
779
|
(2.1)
|
(2.6)
|
|
W Cont. Europe
|
608
|
(2.1)
|
0.3
|
|
1,164
|
(1.3)
|
1.7
|
|
AP, LA, AME, CEE
|
756
|
(6.3)
|
(2.2)
|
|
1,449
|
(6.6)
|
(1.4)
|
|
Total Group
|
2,912
|
(2.3)
|
(0.5)
|
|
5,599
|
(3.6)
|
(1.0)
|
Headline operating profit analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
H1 2024
|
% margin*
|
H1 2023
|
% margin*
|
|
N. America
|
336
|
15.2
|
287
|
12.6
|
|
United Kingdom
|
78
|
10.0
|
98
|
12.3
|
|
W Cont. Europe
|
117
|
10.1
|
111
|
9.4
|
|
AP, LA, AME, CEE
|
115
|
7.9
|
170
|
11.0
|
|
Total Group
|
646
|
11.5
|
666
|
11.5
|
* Headline operating profit as a percentage of revenue less
pass-through costs
16
Asia Pacific, Latin America, Africa & Middle East and Central
& Eastern Europe.
Appendix 1: Interim results for the six months ended 30 June
2024
Unaudited condensed consolidated interim income statement for the
six months ended 30 June 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Notes
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
|
Revenue
|
3
|
7,227
|
7,221
|
|
|
Costs of services
|
|
(6,187)
|
|
(6,157)
|
|
|
|
Gross profit
|
|
1,040
|
1,064
|
|
|
General and administrative costs
|
|
(617)
|
|
(758)
|
|
|
|
Operating profit
|
|
423
|
306
|
|
|
Earnings from associates - after interest and tax
|
|
16
|
|
1
|
|
|
|
Profit before interest and taxation
|
|
439
|
307
|
|
|
Finance and investment income
|
|
74
|
103
|
|
|
Finance costs
|
|
(210)
|
|
(231)
|
|
|
|
Revaluation and retranslation of financial instruments
|
|
35
|
25
|
|
|
Profit before taxation
|
3
|
338
|
204
|
|
|
Taxation
|
|
(92)
|
(55)
|
|
|
Profit for the period
|
|
246
|
149
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
Equity holders of the parent
|
|
205
|
|
112
|
|
|
|
Non-controlling interests
|
|
41
|
|
37
|
|
|
|
|
|
246
|
|
149
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
Basic earnings per ordinary share
|
5
|
19.1p
|
10.5p
|
|
|
Diluted earnings per ordinary share
|
5
|
18.8p
|
10.3p
|
|
|
|
|
|
|
The accompanying notes form an integral part of this unaudited
condensed consolidated interim income statement.
18
Unaudited
condensed consolidated interim statement of comprehensive income
for the six months ended 30 June 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Profit for the period
|
|
246
|
|
149
|
|
|
Items that may be reclassified subsequently to profit or
loss:
|
|
|
|
|
Foreign exchange differences on translation of foreign
operations
|
|
(37)
|
|
(285)
|
|
|
(Loss)/gain on net investment hedges
|
|
(18)
|
|
78
|
|
|
Cash flow hedges:
|
|
|
|
|
Fair value loss arising on hedging instruments
|
|
(45)
|
|
(24)
|
|
|
Less: gain reclassified to profit or loss
|
|
29
|
|
24
|
|
|
Costs of hedging1
|
|
11
|
|
—
|
|
|
|
|
(60)
|
|
(207)
|
|
|
|
|
|
|
Items that will not be reclassified subsequently to profit or
loss:
|
|
|
|
|
Movements on equity investments held at fair value through other
comprehensive income
|
|
(2)
|
|
(3)
|
|
|
|
|
(2)
|
|
(3)
|
|
|
Other comprehensive loss for the period
|
|
(62)
|
|
(210)
|
|
|
Total comprehensive income/(loss) for the period
|
|
184
|
|
(61)
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the parent
|
|
142
|
|
(76)
|
|
|
Non-controlling interests
|
|
42
|
|
15
|
|
|
|
184
|
|
(61)
|
|
The accompanying notes form an integral part of this unaudited
condensed consolidated interim statement of comprehensive
income.
1
During 2024, WPP entered into hedging arrangements for which the
foreign currency basis within the hedging instrument was excluded
from the hedge designation, and identified as a cost of hedging, as
permitted by IFRS.
Unaudited condensed consolidated interim cash flow statement for
the six months ended 30 June 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Notes
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Net cash outflow from operating activities1
|
6
|
(540)
|
|
(445)
|
|
|
Investing activities
|
|
|
|
|
Acquisitions1
|
|
(33)
|
|
(198)
|
|
|
Disposals of investments and subsidiaries
|
|
29
|
|
11
|
|
|
Purchases of property, plant and equipment
|
|
(82)
|
|
(81)
|
|
|
Purchases of other intangible assets (including
software)
|
|
(25)
|
|
(23)
|
|
|
Proceeds on disposal of property, plant and equipment
|
|
1
|
|
3
|
|
|
Net cash outflow from investing activities
|
|
(110)
|
|
(288)
|
|
|
Financing activities
|
|
|
|
|
Principal elements of lease payments
|
|
(140)
|
|
(135)
|
|
|
Share option proceeds
|
|
—
|
|
1
|
|
Cash consideration received from non-controlling
interests
|
|
3
|
|
—
|
|
Cash consideration for purchase of non-controlling
interests
|
|
(20)
|
|
(16)
|
|
|
Share repurchases and buybacks
|
|
(57)
|
|
(37)
|
|
|
Proceeds from borrowings and bonds
|
|
1,060
|
|
1,044
|
|
Repayment of borrowings and bonds
|
|
(13)
|
|
(470)
|
|
|
Financing and share issue net costs
|
|
(6)
|
|
(5)
|
|
|
Dividends paid to non-controlling interests in subsidiary
undertakings
|
|
(34)
|
|
(61)
|
|
|
Net cash inflow from financing activities
|
|
793
|
|
321
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
143
|
|
(412)
|
|
|
Translation of cash and cash equivalents
|
|
(59)
|
|
(59)
|
|
|
Cash and cash equivalents at beginning of period
|
|
1,860
|
|
1,986
|
|
|
Cash and cash equivalents at end of period
|
7
|
1,944
|
|
1,515
|
|
The accompanying notes form an integral part of this
unaudited condensed
consolidated interim cash flow statement.
1
This includes initial cash consideration for acquisitions (less
cash and cash equivalents acquired) as well as earnout payments
made. Earnout payments in excess of the amount determined at
acquisition are recorded as operating activities.
20
Unaudited condensed consolidated interim balance sheet as at
30 June 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Notes
|
30 June 2024
|
31 December 2023
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
Goodwill
|
|
8,345
|
|
8,389
|
|
|
|
|
|
Other intangibles
|
|
793
|
|
850
|
|
|
|
|
|
Property, plant and equipment
|
|
835
|
|
828
|
|
|
|
|
|
Right-of-use assets
|
|
1,312
|
|
1,382
|
|
|
|
|
|
Interests in associates
|
|
251
|
|
287
|
|
|
|
|
|
Other investments
|
|
312
|
|
333
|
|
|
|
|
|
Deferred tax assets
|
|
340
|
|
324
|
|
|
|
|
|
Corporate income tax recoverable
|
|
50
|
|
77
|
|
|
|
|
|
Trade and other receivables
|
|
200
|
|
209
|
|
|
|
|
|
|
|
12,438
|
|
12,679
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Corporate income tax recoverable
|
|
146
|
|
115
|
|
|
|
|
|
Trade and other receivables
|
|
7,982
|
|
8,460
|
|
|
|
|
|
Accrued income
|
|
3,119
|
|
3,151
|
|
|
|
|
|
Cash and short-term deposits
|
7
|
2,128
|
|
2,218
|
|
|
|
|
|
|
|
13,375
|
|
13,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Trade and other payables
|
|
(11,912)
|
|
(13,323)
|
|
|
|
|
|
Deferred income
|
|
(1,271)
|
|
(1,319)
|
|
|
|
|
|
Corporate income tax payable
|
|
(264)
|
|
(370)
|
|
|
|
|
|
Lease liabilities
|
|
(263)
|
|
(292)
|
|
|
|
|
|
Bank overdrafts and bonds
|
7
|
(1,201)
|
|
(946)
|
|
|
|
|
|
Provisions for liabilities and charges1
|
|
(77)
|
|
(55)
|
|
|
|
|
|
|
|
(14,988)
|
|
(16,305)
|
|
|
|
|
|
Net current liabilities
|
|
(1,613)
|
|
(2,361)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
Bonds
|
7
|
(4,298)
|
|
(3,775)
|
|
|
|
|
|
Trade and other payables
|
|
(228)
|
|
(283)
|
|
|
|
|
|
Deferred tax liabilities
|
|
(184)
|
|
(179)
|
|
|
|
|
|
Employee benefit obligations
|
|
(134)
|
|
(136)
|
|
|
|
|
|
Provisions for liabilities and charges1
|
|
(243)
|
|
(250)
|
|
|
|
|
|
Lease liabilities
|
|
(1,780)
|
|
(1,862)
|
|
|
|
|
|
|
|
(6,867)
|
|
(6,485)
|
|
|
|
|
|
Net assets
|
|
3,958
|
3,833
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Called-up share capital
|
|
114
|
|
114
|
|
|
|
|
|
Share premium account
|
|
577
|
|
577
|
|
|
|
|
|
Other reserves
|
|
138
|
|
187
|
|
|
|
|
|
Own shares
|
|
(940)
|
|
(990)
|
|
|
|
|
|
Retained earnings
|
|
3,608
|
|
3,488
|
|
|
|
|
|
Equity shareholders’ funds
|
|
3,497
|
|
3,376
|
|
|
|
|
|
Non-controlling interests
|
|
461
|
|
457
|
|
|
|
|
|
Total equity
|
|
3,958
|
3,833
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of this
unaudited condensed
consolidated interim balance sheet.
1
Current
provisions for liabilities and charges were previously presented
within Non-current provisions for liabilities and
charges.
Unaudited condensed consolidated interim statement of changes in
equity for the period ended 30 June 2024
|
£ million
|
Called-up
share capital
|
Share
premium account
|
Other reserves
|
Own shares
|
Retained earnings1
|
Total equity
share
holders’ funds
|
Non-
controlling interests
|
Total
|
|
Balance at 1 January 2023
|
114
|
|
576
|
|
285
|
|
(1,054)
|
|
3,760
|
|
3,681
|
|
479
|
|
4,160
|
|
|
Profit for the period
|
—
|
|
—
|
|
—
|
|
—
|
|
112
|
|
112
|
|
37
|
|
149
|
|
|
Other comprehensive loss
|
—
|
|
—
|
|
(184)
|
|
—
|
|
(4)
|
|
(188)
|
|
(22)
|
|
(210)
|
|
|
Total comprehensive (loss)/income
|
—
|
|
—
|
|
(184)
|
|
—
|
|
108
|
|
(76)
|
|
15
|
|
(61)
|
|
|
Dividends paid
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(61)
|
|
(61)
|
|
|
Ordinary shares issued
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
1
|
|
|
Treasury shares used for share option schemes
|
—
|
|
—
|
|
—
|
|
55
|
|
(55)
|
|
—
|
|
—
|
|
—
|
|
|
Non-cash share-based incentive plans (including share
options)
|
—
|
|
—
|
|
—
|
|
—
|
|
76
|
|
76
|
|
—
|
|
76
|
|
|
Tax adjustment on share-based payments
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
2
|
|
—
|
|
2
|
|
|
Net movement in own shares held by ESOP Trusts
|
—
|
|
—
|
|
—
|
|
(14)
|
|
(23)
|
|
(37)
|
|
—
|
|
(37)
|
|
|
Recognition/derecognition of liabilities in respect of put
options
|
—
|
|
—
|
|
4
|
|
—
|
|
(2)
|
|
2
|
|
—
|
|
2
|
|
|
Net movement in non-controlling interests2
|
—
|
|
—
|
|
—
|
|
—
|
|
(11)
|
|
(11)
|
|
(6)
|
|
(17)
|
|
|
Total transactions with owners
|
—
|
|
1
|
|
4
|
|
41
|
|
(13)
|
|
33
|
|
(67)
|
|
(34)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2023
|
114
|
|
577
|
|
105
|
|
(1,013)
|
|
3,855
|
|
3,638
|
|
427
|
|
4,065
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2024
|
114
|
|
577
|
|
187
|
|
(990)
|
|
3,488
|
|
3,376
|
|
457
|
|
3,833
|
|
|
Profit for the period
|
—
|
|
—
|
|
—
|
|
—
|
|
205
|
|
205
|
|
41
|
|
246
|
|
|
Other comprehensive loss
|
—
|
|
—
|
|
(61)
|
|
—
|
|
(2)
|
|
(63)
|
|
1
|
|
(62)
|
|
|
Total comprehensive (loss)/income
|
—
|
|
—
|
|
(61)
|
|
—
|
|
203
|
|
142
|
|
42
|
|
184
|
|
|
Dividends paid
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(34)
|
|
(34)
|
|
|
Ordinary shares issued
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Treasury shares used for share option schemes
|
—
|
|
—
|
|
—
|
|
54
|
|
(54)
|
|
—
|
|
—
|
|
—
|
|
|
Non-cash share-based incentive plans (including share
options)
|
—
|
|
—
|
|
—
|
|
—
|
|
56
|
|
56
|
|
—
|
|
56
|
|
|
Tax adjustment on share-based payments
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Net movement in own shares held by ESOP Trusts
|
—
|
|
—
|
|
—
|
|
(4)
|
|
(53)
|
|
(57)
|
|
—
|
|
(57)
|
|
|
Recognition/derecognition of liabilities in respect of put
options
|
—
|
|
—
|
|
12
|
|
—
|
|
2
|
|
14
|
|
—
|
|
14
|
|
|
Net movement in non-controlling interests2
|
—
|
|
—
|
|
—
|
|
—
|
|
(34)
|
|
(34)
|
|
(4)
|
|
(38)
|
|
|
Total transactions with owners
|
—
|
|
—
|
|
12
|
|
50
|
|
(83)
|
|
(21)
|
|
(38)
|
|
(59)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2024
|
114
|
|
577
|
|
138
|
|
(940)
|
|
3,608
|
|
3,497
|
|
461
|
|
3,958
|
|
The accompanying notes form an integral part of this unaudited
condensed consolidated interim statement of changes in
equity.
1
Accumulated losses on existing equity investments held at fair
value through other comprehensive income are £349 million at
30 June 2024 (31 December 2023: £347
million).
2
Net movement in non-controlling interests represents movements in
retained earnings and non-controlling interests arising from
changes in ownership of existing subsidiaries and recognition of
non-controlling interests on new acquisitions.
Notes to the unaudited condensed consolidated interim financial
statements
1. Basis of preparation
The unaudited condensed consolidated interim financial statements
for the six months ended 30 June 2024 comply with IAS 34 Interim
Financial Reporting as issued by the International Accounting
Standards Board (IASB) and with the accounting policies of WPP plc
and its subsidiaries (the Group), which were set out on pages 172
– 177 of the 2023 Annual Report and Accounts. No changes have
been made to the Group’s accounting policies in the period
ended 30 June 2024, with the exception of taxation described
below.
The tax charge for the Group is calculated in accordance with IAS
34, by applying management’s best estimate of the effective
tax rate (excluding discrete items) expected to apply to total
annual earnings, to the profit before tax for the six months ended
30 June 2024. This is then adjusted for certain discrete items
which occurred in the interim period and incorporates the Group's
assessment of the impact of the OECD Pillar Two rules, which was
insignificant in calculating the Group’s tax
charge.
The Group does not consider that the amendments to standards
adopted during the period have a significant impact on the
financial statements.
The unaudited condensed consolidated interim financial statements
are prepared under the historical cost convention, except for the
revaluation of certain financial instruments as disclosed in our
accounting policies. The unaudited condensed consolidated interim
financial statements for the six months to 30 June 2024 and six
months to 30 June 2023 do not constitute statutory accounts. The
statutory accounts for the year ended 31 December 2023, reported on
by the Group’s previous auditor, have been delivered to the
Jersey Registrar and received an unqualified auditors’
report.
On 8 May 2024, the Group appointed PricewaterhouseCoopers LLP as
the company’s new auditor.
Having considered the principal risks (as outlined on pages 98 -
105 of the 2023 Annual Report and Accounts), the directors consider
it appropriate to adopt the going concern basis of accounting in
preparing these interim financial statements. In making this
assessment, the directors have reviewed the results of latest cash
flow forecasts, incorporating a severe but plausible downside
modelling the impact of a 29% decrease in revenue, offset by cost
mitigations.
The unaudited condensed consolidated interim financial statements
do not include all the information and disclosures required in the
annual financial statements and should be read in conjunction with
the Group’s annual consolidated financial statements as at 31
December 2023.
2. Costs of services and general and
administrative costs
Costs of services and general and administrative costs
include:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Staff costs
|
3,985
|
|
4,141
|
|
|
Establishment costs
|
242
|
|
272
|
|
|
Media pass-through costs
|
1,208
|
|
1,023
|
|
|
Other costs of services and general and administrative
costs1
|
1,369
|
|
1,479
|
|
|
6,804
|
|
6,915
|
|
Other cost of services and general and administrative costs include
the following significant items:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Goodwill impairment
|
—
|
53
|
|
Amortisation and impairment of acquired intangible
assets
|
57
|
36
|
|
Restructuring and transformation costs
|
131
|
87
|
|
Property-related restructuring costs
|
22
|
180
|
1
Other costs of services and general and administrative costs
include £420 million (period ended 30 June 2023: £387
million) of other pass-through costs.
Notes to the unaudited condensed consolidated interim financial
statements
2. Costs of services and general and
administrative costs (continued)
In the prior period, the goodwill impairment charge of
£53 million related to businesses in the Group that were
closed or where the impact of macroeconomic conditions and trading
circumstances indicated impairment to the carrying
value.
Amortisation and impairment of acquired intangible assets of
£57 million (2023: £36 million) includes an accelerated
amortisation charge of £20 million (2023: £2 million
impairment charge) for certain brands that no longer have an
indefinite useful life due to the creation of Burson.
Restructuring and transformation costs of £131 million (2023:
£87 million) include £47 million (2023: £54 million)
in relation to the Group’s IT transformation programme. These
IT costs include £27 million (2023: £24 million) of costs
in relation to the rollout of new ERP systems in order to drive
efficiency and collaboration throughout the Group; and £19
million (2023: £15 million) related to an IT transition
programme to move to a multi-vendor environment.
Restructuring and transformation costs also include £76
million (2023: £26 million) of costs related to the continuing
restructuring plan, including the creation of VML and Burson, and
simplification of GroupM. The prior period costs include
restructuring actions at under-performing businesses, aimed to
reduce ongoing costs and simplify operational structures. Also
included within restructuring and transformation costs is £8
million (2023: £7 million) of on-going property costs, related
to impairments the Group recognised in prior years in response to
the COVID-19 pandemic.
Property-related restructuring costs of £22 million (2023:
£180 million) include £16 million (2023: £nil) of
on-going property costs related to property impairments recognised
in the prior year as part of the Group’s property
requirements review in 2023; and £6 million of additional
impairment charges related to the reassessment of sublet
assumptions on previously impaired properties. The impairment
charges included within property-related costs include £3
million (2023: £102 million) in relation to right-of-use
assets and £1 million (2023: £38 million) of related
property, plant and equipment.
Notes to the unaudited condensed consolidated interim financial
statements
3. Segmental analysis
Reported contributions by reportable segments were as
follows:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Revenue1,2
|
|
|
|
Global Integrated Agencies
|
6,117
|
6,082
|
|
Public Relations
|
601
|
618
|
|
Specialist Agencies
|
509
|
521
|
|
|
7,227
|
7,221
|
|
Revenue less pass-through costs1,3
|
|
|
|
Global Integrated Agencies
|
4,595
|
4,760
|
|
Public Relations
|
568
|
584
|
|
Specialist Agencies
|
436
|
467
|
|
|
5,599
|
5,811
|
|
Headline operating profit1,4
|
|
|
|
Global Integrated Agencies
|
551
|
550
|
|
Public Relations
|
80
|
88
|
|
Specialist Agencies
|
15
|
28
|
|
|
646
|
666
|
|
Adjusting items within IFRS operating profit5
|
(223)
|
(360)
|
|
Financing items6
|
(101)
|
(103)
|
|
Earnings from associates - after interest and tax
|
16
|
1
|
|
Reported profit before tax
|
338
|
204
|
|
|
|
1
Prior year figures have been re-presented to reflect the
reallocation of a number of businesses between Global Integrated
Agencies and Specialist Agencies. The impact of the re-presentation
is not material.
2
Intersegment sales have not been separately disclosed as they are
not material.
3
Revenue less pass-through costs is defined and reconciled by
segment and by geographical area in Appendix 4.
4
Headline operating profit is defined in Appendix 4. A
reconciliation from reported profit before tax to headline
operating profit is also provided in Appendix 4.
5
Adjusting items are defined and reconciled in Appendix
4.
6
Financing items include finance and investment income, finance
costs and revaluation and retranslation of financial
instruments.
Notes to the unaudited condensed consolidated interim financial
statements
3. Segmental analysis
(continued)
Reported contributions by geographical area were as
follows:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Revenue1
|
|
|
|
North America3
|
2,781
|
2,744
|
|
United Kingdom
|
1,058
|
1,065
|
|
Western Continental Europe
|
1,458
|
1,477
|
|
Asia Pacific, Latin America, Africa & Middle East and Central
& Eastern Europe
|
1,930
|
1,935
|
|
|
7,227
|
7,221
|
|
Revenue less pass-through costs
|
|
|
|
North America3
|
2,207
|
2,284
|
|
United Kingdom
|
779
|
796
|
|
Western Continental Europe
|
1,164
|
1,179
|
|
Asia Pacific, Latin America, Africa & Middle East and Central
& Eastern Europe
|
1,449
|
1,552
|
|
|
5,599
|
5,811
|
|
Headline operating profit2
|
|
|
|
North America3
|
336
|
287
|
|
United Kingdom
|
78
|
98
|
|
Western Continental Europe
|
117
|
111
|
|
Asia Pacific, Latin America, Africa & Middle East and Central
& Eastern Europe
|
115
|
170
|
|
646
|
666
|
1
Intersegment sales have not been separately disclosed as they are
not material.
2
Headline operating profit is defined in Appendix 4. A
reconciliation from reported profit before tax to headline
operating profit is also provided in Appendix 4.
3
North America includes the US, which has revenue of £2,609
million (2023: £2,579 million), revenue less pass-through
costs of £2,071 million (2023: £2,144 million) and
headline operating profit of £316 million (2023: £268
million).
Notes to the unaudited condensed consolidated interim financial
statements
4. Ordinary dividends
The Board has recommended an interim dividend of 15.0p (2023:
15.0p) per ordinary share. This is expected to be paid on
1 November 2024 to shareholders on the register at
11 October 2024. The Board recommended a final dividend of
24.4p per ordinary share in respect of 2023. This was paid on 5
July 2024.
5. Earnings per share (EPS)
Basic EPS
The calculation of basic EPS is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Earnings1
(£
million)
|
205
|
112
|
|
Weighted average shares used in basic EPS calculation
(million)
|
1,075
|
1,071
|
|
EPS
|
19.1p
|
10.5p
|
Diluted EPS
The calculation of diluted EPS is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Earnings1
(£ million)
|
205
|
112
|
|
Weighted average shares used in diluted EPS calculation
(million)
|
1,092
|
1,091
|
|
|
|
|
|
Diluted EPS
|
18.8p
|
10.3p
|
A reconciliation between the shares used in calculating basic and
diluted EPS is as follows:
|
|
|
|
|
|
|
|
|
|
|
million
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Weighted average shares used in basic EPS calculation
|
1,075
|
1,071
|
|
Dilutive share options outstanding
|
—
|
1
|
|
Other potentially issuable shares
|
17
|
19
|
|
Weighted average shares used in diluted EPS
calculation
|
1,092
|
1,091
|
At 30 June 2024 there were 1,141,513,946 (2023: 1,141,513,196)
ordinary shares in issue, including 62,959,463 treasury shares
(2023: 66,675,497).
1
Earnings is equivalent to profit for the period attributable to
equity holders of the parent.
Notes
to the unaudited condensed consolidated interim financial
statements
6. Analysis of cash flows
The following tables analyse the net cash outflow from operating
activities presented within the cash flow statement on page
19:
Net cash outflow from operating activities:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Profit for the period
|
246
|
|
149
|
|
|
Taxation
|
92
|
|
55
|
|
|
Revaluation and retranslation of financial instruments
|
(35)
|
|
(25)
|
|
|
Finance costs
|
210
|
|
231
|
|
|
Finance and investment income
|
(74)
|
|
(103)
|
|
|
Earnings from associates - after interest and tax
|
(16)
|
|
(1)
|
|
|
Operating profit
|
423
|
|
306
|
|
|
Adjustments for:
|
|
|
|
Non-cash share-based incentive plans (including share
options)
|
56
|
|
76
|
|
|
Depreciation of property, plant and equipment
|
81
|
|
84
|
|
|
Depreciation of right-of-use assets
|
110
|
|
129
|
|
|
Impairment charges included within adjusting
items1
|
4
|
|
140
|
|
|
Goodwill impairment
|
—
|
|
53
|
|
|
Amortisation and impairment of acquired intangible
assets
|
57
|
|
36
|
|
|
Amortisation of other intangible assets
|
14
|
|
9
|
|
|
Impairment of investments in associates
|
23
|
|
11
|
|
|
(Gains)/losses on disposal of investments and
subsidiaries
|
(8)
|
|
3
|
|
|
Gains on sale of property, plant and equipment
|
(2)
|
|
(1)
|
|
|
Operating cash flow before movements in working capital and
provisions
|
758
|
|
846
|
|
|
Decrease in trade receivables and accrued income
|
430
|
|
1,090
|
|
|
Decrease in trade payables and deferred income
|
(1,055)
|
|
(1,612)
|
|
|
Increase in other receivables
|
(109)
|
|
(65)
|
|
|
Decrease in other payables
|
(337)
|
|
(509)
|
|
|
Increase in provisions
|
15
|
|
52
|
|
|
Cash used by operations
|
(298)
|
|
(198)
|
|
|
Corporation and overseas tax paid
|
(168)
|
|
(171)
|
|
|
Interest paid on lease liabilities
|
(47)
|
|
(49)
|
|
|
Other interest and similar charges paid
|
(118)
|
|
(156)
|
|
|
Interest received
|
69
|
|
108
|
|
|
Investment income
|
5
|
|
3
|
|
|
Dividends from associates
|
18
|
|
19
|
|
|
Earnout payments recognised in operating
activities2
|
(1)
|
|
(1)
|
|
|
Net cash outflow from operating activities
|
(540)
|
|
(445)
|
|
1
Impairment charges included within adjusting items includes
impairments for right-of-use assets, property, plant and equipment,
and other intangible assets.
2
Earnout payments in excess of the amount determined at acquisition
are recorded as operating activities.
Notes to the unaudited condensed consolidated interim financial
statements
7. Cash and cash equivalents and adjusted
net debt
|
|
|
|
|
|
|
|
|
|
|
£ million
|
30 June 2024
|
31 December 2023
|
|
Cash at bank and in hand
|
1,698
|
2,037
|
|
Short-term bank deposits
|
430
|
181
|
|
Overdrafts1
|
(184)
|
|
(358)
|
|
|
Cash and cash equivalents
|
1,944
|
1,860
|
|
|
Bonds due within one year
|
(1,017)
|
|
(588)
|
|
|
Bonds due after one year
|
(4,298)
|
|
(3,775)
|
|
|
Bond borrowings
|
(5,315)
|
|
(4,363)
|
|
|
Cash and cash equivalents less bond borrowings
|
(3,371)
|
|
(2,503)
|
|
The Group estimates that the fair value of corporate bonds
is
£5,041
million at 30 June 2024 (31 December 2023: £4,120
million).
The following table is an analysis of future payments in relation
to the Group’s borrowings, on an accruals and undiscounted
basis which, therefore, differs from the carrying
value:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
30 June 2024
|
31 December 2023
|
|
Within one year
|
(1,165)
|
|
(711)
|
|
|
Between one and two years
|
(138)
|
|
(535)
|
|
|
Between two and three years
|
(1,397)
|
|
(746)
|
|
|
Between three and four years
|
(742)
|
|
(726)
|
|
|
Between four and five years
|
(83)
|
|
(704)
|
|
|
Over five years
|
(2,956)
|
|
(1,859)
|
|
|
Bond borrowings (including interest)
|
(6,481)
|
|
(5,281)
|
|
|
Short-term overdrafts – within one year
|
(184)
|
|
(358)
|
|
|
Future anticipated cash flows
|
(6,665)
|
|
(5,639)
|
|
|
Effect of discounting and interest
|
1,166
|
|
918
|
|
Borrowings
|
(5,499)
|
|
(4,721)
|
|
|
Cash and short-term deposits
|
2,128
|
2,218
|
|
Cash and cash equivalents less bond borrowings
|
(3,371)
|
|
(2,503)
|
|
1
Bank overdrafts are included in cash and cash equivalents because
they form an integral part of the Group’s cash
management.
Notes to the unaudited condensed consolidated interim financial
statements
8. Related party transactions
The Group enters into transactions with its associate undertakings.
The Group has continuing transactions with Compas and Kantar,
including sales, purchases, the provision of IT services, subleases
and property-related items.
In the period ended 30 June 2024, revenue of £202 million
(2023: £112 million) was reported in relation to Compas, an
associate in the USA, and revenue of £5 million (2023: £7
million) was reported in relation to Kantar.
The following amounts were outstanding at 30 June
2024:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
30 June 2024
|
31 December 2023
|
|
Amounts owed by related parties
|
83
|
74
|
|
|
|
|
|
Amounts owed to related parties
|
(63)
|
|
(75)
|
|
There are no material provisions for doubtful debts relating to
these balances and no material expense has been recognised in the
income statement in relation to bad or doubtful debts for the
period ended 30 June 2024.
9. Financial instruments - fair
value
The following table provides an analysis of financial instruments
that are measured subsequent to initial recognition at fair value,
grouped into levels 1 to 3 based on the degree to which the fair
value is observable, or based on observable inputs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
30 June 2024
|
|
|
|
|
|
Derivatives in designated hedge relationships
|
|
|
|
|
|
Derivative assets
|
—
|
|
4
|
|
—
|
|
4
|
|
|
Derivative liabilities
|
—
|
|
(57)
|
|
—
|
|
(57)
|
|
|
Held at fair value through profit or loss
|
|
|
|
|
|
Other investments
|
—
|
|
—
|
|
238
|
|
238
|
|
|
Derivative assets
|
—
|
|
2
|
|
—
|
|
2
|
|
|
Derivative liabilities
|
—
|
|
(4)
|
|
—
|
|
(4)
|
|
|
Payments due to vendors (earnout agreements)
|
—
|
|
—
|
|
(151)
|
|
(151)
|
|
|
Held at fair value through other comprehensive income
|
|
|
|
|
|
Other investments
|
7
|
|
—
|
|
67
|
|
74
|
|
The fair values of financial assets and liabilities are based on
quoted market prices where available. Where the market value is not
available, the Group has estimated relevant fair values on the
basis of available information from outside sources. There have
been no transfers between levels during the period.
Notes to the unaudited condensed consolidated interim financial
statements
9. Financial instruments - fair value (continued)
Reconciliation of level 3 fair value measurements:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Payments due to vendors (earnout agreements)
|
Other investments
|
|
1 January 2024
|
(199)
|
|
325
|
|
|
Gains/(losses) recognised in the income statement
|
24
|
|
(20)
|
|
|
Losses recognised in other comprehensive income
|
—
|
|
(1)
|
|
|
Exchange adjustments
|
—
|
|
—
|
|
|
Additions
|
(1)
|
|
1
|
|
|
Settlements
|
25
|
|
—
|
|
|
30 June 2024
|
(151)
|
|
305
|
|
10. Contingent liabilities
The Group operates in a large number of markets with complex tax
and legislative regimes that are open to subjective interpretation,
and for which tax audits can take several years to resolve. The
Group has received a number of demands and assessments from
different states in India that have been or will be appealed to the
courts, none of which are individually material. However, as
permitted by IAS 37, the provision of any further information
within this disclosure is expected to seriously prejudice the
Group’s position in the dispute, given that appeals are
ongoing. The Group continues to believe that we will be successful
in our appeals, however any appeal process is intrinsically
uncertain. There is no significant change to the contingent
liability since the publication of the Annual Report and Accounts
on 21 March 2024.
11. Events after the reporting period
On 7 August 2024, the Group announced it has entered into an
agreement to sell its entire majority stake in FGS Global (FGS) to
Kite Bidco Inc., an entity controlled by investment funds managed
or advised by Kohlberg Kravis Roberts & Co. L.P. (KKR), at an
enterprise value of $1.7 billion. FGS, a leading strategic
communications and advisory firm, is a constituent of the
Group’s Public Relations operating segment. The transaction
is expected to close before the end of 2024, subject to regulatory
approvals and other customary closing conditions.
Directors’ responsibility statement
The Directors confirm that to the best of their
knowledge:
a.the
condensed set of financial statements, which has been prepared in
accordance with the applicable set of accounting standards, gives a
true and fair view of the assets, liabilities, financial position
and profit or loss of the issuer, or the undertakings included in
the consolidation as a whole as required by DTR
4.2.4R;
b.the
interim management report includes a fair review of the information
required by DTR 4.2.7R; and
c.the
interim management report includes a fair review of the information
required by DTR 4.2.8R.
The names and functions of the WPP plc Board can be found at:
wpp.com/about/our-leadership/the-wpp-board
This responsibility statement is approved by the Board of Directors
and is signed on its behalf by:
J Wilson
Chief Financial Officer
7 August 2024
Independent review report to WPP plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed WPP plc’s condensed consolidated interim
financial statements (the “interim financial
statements”) in the 2024 Interim Results of WPP plc for the
six months ended 30 June 2024 (the
“period”).
Based on our review, nothing has come to our attention that causes
us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34 “Interim Financial
Reporting” as issued by the IASB and the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom’s
Financial Conduct Authority.
The interim financial statements comprise:
•the
condensed consolidated interim balance sheet at 30 June
2024;
•the
condensed consolidated interim income statement for the period then
ended;
•the
condensed consolidated interim statement of comprehensive income
for the period then ended;
•the
condensed consolidated interim cash flow statement for the period
then ended;
•the
condensed consolidated interim statement of changes in equity for
the period then ended; and
•the
explanatory notes to the interim financial statements.
The interim financial statements included in the 2024 Interim
Results of WPP plc have been prepared in accordance with
International Accounting Standard 34 “Interim Financial
Reporting” as issued by the IASB and the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom’s
Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard
on Review Engagements (UK) 2410 “Review of Interim Financial
Information Performed by the Independent Auditor of the
Entity” issued by the Financial Reporting Council for use in
the United Kingdom (“ISRE (UK) 2410”). A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the 2024 Interim
Results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those
performed in an audit as described in the basis for conclusion
section of this report, nothing has come to our attention to
suggest that the directors have inappropriately adopted the going
concern basis of accounting or that the directors have identified
material uncertainties relating to going concern that are not
appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However,
future events or conditions may cause the group to cease to
continue as a going concern.
33
Independent review report to WPP plc
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The 2024 Interim Results, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the 2024
Interim Results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom’s
Financial Conduct Authority. In preparing the 2024 Interim Results,
including the interim financial statements, the directors are
responsible for assessing the group’s ability to continue as
a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group or to
cease operations or have no realistic alternative but to do
so.
Our responsibility is to express a conclusion on the interim
financial statements in the 2024 Interim Results based on our
review. Our conclusion, including our conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom’s Financial Conduct Authority and for no
other purpose. We do not, in giving this conclusion, accept or
assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in
writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
7 August 2024
Appendix 2: Principal risks and uncertainties
The Board regularly reviews the principal and emerging risks and
uncertainties affecting the Group and these were set out on pages
98 - 105 of the 2023 Annual Report and Accounts. No changes to the
Group’s principal risks and uncertainties have occurred in
the period ended 30 June 2024.
Appendix 3: Cautionary statement regarding forward-looking
statements
This document contains statements that are, or may be deemed to be,
“forward-looking statements”. Forward-looking
statements give the Company’s current expectations or
forecasts of future events.
These forward-looking statements may include, among other things,
plans, objectives, beliefs, intentions, strategies, projections and
anticipated future economic performance based on assumptions and
the like that are subject to risks and uncertainties. These
statements can be identified by the fact that they do not relate
strictly to historical or current facts. They use words such as
‘aim’, ‘anticipate’, ‘believe’,
‘estimate’, ‘expect’,
‘forecast’, ‘guidance’,
‘intend’, ‘may’, ‘will’,
‘should’, ‘potential’,
‘possible’, ‘predict’,
‘project’, ‘plan’, ‘target’,
and other words and similar references to future periods but are
not the exclusive means of identifying such statements. As such,
all forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances that are beyond the
control of the Company. Actual results or outcomes may differ
materially from those discussed or implied in the forward-looking
statements. Therefore, you should not rely on such forward-looking
statements, which speak only as of the date they are made, as a
prediction of actual results or otherwise. Important factors which
may cause actual results to differ include but are not limited to:
the impact of epidemics or pandemics including restrictions on
businesses, social activities and travel; the unanticipated loss of
a material client or key personnel; delays or reductions in client
advertising budgets; shifts in industry rates of compensation;
regulatory compliance costs or litigation; changes in competitive
factors in the industries in which we operate and demand for our
products and services; changes in client advertising, marketing and
corporate communications requirements; our inability to realise the
future anticipated benefits of acquisitions; failure to realise our
assumptions regarding goodwill and indefinite lived intangible
assets; natural disasters or acts of terrorism; the Company’s
ability to attract new clients; the economic and geopolitical
impact of the conflicts in Ukraine and Gaza; the risk of global
economic downturn; slower growth, increasing interest rates and
high and sustained inflation; supply chain issues affecting the
distribution of our clients’ products; technological changes
and risks to the security of IT and operational infrastructure,
systems, data and information resulting from increased threat of
cyber and other attacks; effectively managing the risks, challenges
and efficiencies presented by using Artificial Intelligence (AI)
and Generative AI technologies and partnerships in our business;
risks related to our environmental, social and governance goals and
initiatives, including impacts from regulators and other
stakeholders, and the impact of factors outside of our control on
such goals and initiatives; the Company’s exposure to changes
in the values of other major currencies (because a substantial
portion of its revenues are derived and costs incurred outside of
the UK); and the overall level of economic activity in the
Company’s major markets (which varies depending on, among
other things, regional, national and international political and
economic conditions and government regulations in the world’s
advertising markets). In addition, you should consider the risks
described in Item 3D, captioned ‘Risk Factors’ in the
Group’s Annual Report on Form 20-F for 2023, which could also
cause actual results to differ from forward-looking information.
Neither the Company, nor any of its directors, officers or
employees, provides any representation, assurance or guarantee that
the occurrence of any events anticipated, expressed or implied in
any forward-looking statements will actually occur. Accordingly, no
assurance can be given that any particular expectation will be met
and investors are cautioned not to place undue reliance on the
forward-looking statements.
Other than in accordance with its legal or regulatory obligations
(including under the Market Abuse Regulation, the UK Listing Rules
and the Disclosure and Transparency Rules of the Financial Conduct
Authority), The Company undertakes no obligation to update or
revise any such forward-looking statements, whether as a result of
new information, future events or otherwise.
Any forward looking statements made by or on behalf of the Group
speak only as of the date they are made and are based upon the
knowledge and information available to the Directors at the
time.
Appendix 4: Alternative performance measures for the period ended
30 June 2024
The Group presents alternative performance measures, including
headline operating profit, headline operating profit margin,
headline profit before interest and tax, headline profit before
tax, headline earnings, headline basic and diluted EPS, headline
EBITDA, revenue less pass-through costs, adjusted net debt and
average adjusted net debt, adjusted operating cash flow, adjusted
free cash flow and adjusted net cash flow. These are used by
management for internal performance analyses. The presentation of
these measures facilitates comparability with other companies,
although management’s measures may not be calculated in the
same way as similarly titled measures reported by other companies,
and these measures are useful in connection with discussions with
the investment community.
In the calculation of headline profit, judgement is required by
management in determining which items are considered to be large,
unusual and non-recurring such that they are to be
excluded.
The exclusion of certain adjusting items may result in headline
earnings being materially higher or lower than reported earnings,
for example when significant impairments or restructuring charges
are excluded but the related benefits are included headline
earnings will be higher. Headline measures should not be considered
in isolation as they provide additional information to aid the
understanding of the Group’s financial
performance.
Reconciliation of revenue to revenue less pass-through
costs:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Revenue
|
7,227
|
7,221
|
|
Media pass-through costs
|
(1,208)
|
|
(1,023)
|
|
|
Other pass-through costs
|
(420)
|
|
(387)
|
|
|
Revenue less pass-through costs
|
5,599
|
5,811
|
Reconciliation of revenue to revenue less pass-through costs by
reportable segment:
Six months ended 30 June 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Global Integrated Agencies
|
Public Relations
|
Specialist Agencies
|
|
Revenue
|
6,117
|
601
|
509
|
|
Media pass-through costs
|
(1,208)
|
—
|
—
|
|
Other pass-through costs
|
(314)
|
(33)
|
(73)
|
|
Revenue less-pass through costs
|
4,595
|
568
|
436
|
Six months ended 30 June 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Global Integrated Agencies
|
Public Relations
|
Specialist Agencies
|
|
Revenue
|
6,082
|
618
|
521
|
|
Media pass-through costs
|
(1,023)
|
—
|
—
|
|
Other pass-through costs
|
(299)
|
(34)
|
(54)
|
|
Revenue less-pass through costs
|
4,760
|
584
|
467
|
Appendix 4: Alternative performance measures for the period ended
30 June 2024
Reconciliation of revenue to revenue less pass-through costs by
geographical area:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
North America
|
|
|
|
Revenue
|
2,781
|
2,744
|
|
Media pass-through costs
|
(395)
|
|
(292)
|
|
|
Other pass-through costs
|
(179)
|
|
(168)
|
|
|
Revenue less pass-through costs
|
2,207
|
2,284
|
|
|
|
|
United Kingdom
|
|
|
|
Revenue
|
1,058
|
1,065
|
|
Media pass-through costs
|
(182)
|
|
(180)
|
|
|
Other pass-through costs
|
(97)
|
|
(89)
|
|
|
Revenue less pass-through costs
|
779
|
796
|
|
|
|
|
Western Continental Europe
|
|
|
|
Revenue
|
1,458
|
1,477
|
|
Media pass-through costs
|
(231)
|
|
(239)
|
|
|
Other pass-through costs
|
(63)
|
|
(59)
|
|
|
Revenue less pass-through costs
|
1,164
|
1,179
|
|
|
|
|
Asia Pacific, Latin America, Africa & Middle East and Central
& Eastern Europe
|
|
Revenue
|
1,930
|
1,935
|
|
Media pass-through costs
|
(400)
|
|
(312)
|
|
|
Other pass-through costs
|
(81)
|
|
(71)
|
|
|
Revenue less pass-through costs
|
1,449
|
1,552
|
Pass-through costs comprise fees paid to external suppliers when
they are engaged to perform part or all of a specific project and
are charged directly to clients. This includes the cost of media
where the Group is buying digital media for its own account on a
transparent opt-in basis and, as a result, the subsequent media
pass-through costs have to be accounted for as revenue, as well as
billings. Therefore, management considers that revenue less
pass-through costs gives a helpful reflection of top-line
growth.
Appendix 4: Alternative performance measures for the period ended
30 June 2024
Reconciliation of profit before taxation to headline operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Margin
|
Six months ended 30 June 2024
|
Margin
|
Six months ended 30 June 2023
|
|
Profit before taxation
|
|
338
|
|
|
204
|
|
Finance and investment income
|
|
(74)
|
|
|
(103)
|
|
|
Finance costs
|
|
210
|
|
|
231
|
|
|
Revaluation and retranslation of financial instruments
|
|
(35)
|
|
|
(25)
|
|
|
Profit before interest and taxation
|
|
439
|
|
307
|
|
|
Earnings from associates - after interest and tax
|
|
(16)
|
|
|
(1)
|
|
|
Operating profit1
|
5.9%
|
423
|
|
4.2%
|
306
|
|
Goodwill impairment
|
|
—
|
|
53
|
|
Amortisation and impairment of acquired intangible
assets
|
|
57
|
|
|
36
|
|
Impairment of investments in associates
|
|
23
|
|
|
11
|
|
|
Restructuring and transformation costs
|
|
131
|
|
87
|
|
Property-related restructuring costs
|
|
22
|
|
|
180
|
|
(Gains)/losses on disposal of investments and
subsidiaries
|
|
(8)
|
|
|
3
|
|
|
Gains on disposal of property
|
|
(2)
|
|
|
—
|
|
|
Litigation settlement
|
|
—
|
|
|
(10)
|
|
|
Headline operating profit1
|
11.5%
|
646
|
|
11.5%
|
666
|
|
|
Finance and investment income
|
|
74
|
|
|
103
|
|
Finance costs (excluding interest expense related to lease
liabilities)
|
|
(163)
|
|
|
(180)
|
|
|
Non-lease net interest expense
|
|
(89)
|
|
|
(77)
|
|
|
Non-lease interest cover2
on
headline operating profit
|
|
7.3 times
|
|
8.6 times
|
Headline operating profit margin before and after earnings from
associates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Margin
|
Six months ended 30 June 2024
|
Margin
|
Six months ended 30 June 2023
|
|
Revenue less pass-through costs
|
|
5,599
|
|
5,811
|
|
Headline operating profit
|
11.5%
|
646
|
|
11.5%
|
666
|
|
Earnings from associates (after interest and tax, excluding
adjusting items)
|
|
15
|
|
|
8
|
|
Headline PBIT
|
11.8%
|
661
|
11.6%
|
674
|
Calculation of headline EBITDA:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Headline PBIT
|
661
|
|
674
|
|
Depreciation of property, plant and equipment
|
81
|
|
84
|
|
Amortisation of other intangible assets
|
14
|
|
9
|
|
Headline EBITDA (including depreciation of right-of-use
assets)
|
756
|
767
|
|
Depreciation of right-of-use assets
|
110
|
|
129
|
|
Headline EBITDA
|
866
|
896
|
Headline EBITDA (including depreciation of right-of-use assets) is
used in the Group’s key leverage metric (average adjusted net
debt/headline EBITDA within the range of 1.5x-1.75x by year end
2024).
1
Operating profit margin is calculated as operating profit as a
percentage of revenue. Headline operating profit margin is
calculated as headline operating profit as a percentage of revenue
less pass-through costs.
2
Interest expense related to lease liabilities is excluded from
interest cover as lease liabilities are excluded from the
Group’s key leverage metrics.
Appendix 4: Alternative performance measures for the period ended
30 June 2024
Adjusted net debt and average adjusted net debt
Management believes that adjusted net debt and average adjusted net
debt are appropriate and meaningful measures of the debt levels
within the Group. Adjusted net debt at a period end consists of
cash and short-term deposits, bank overdrafts and bonds due within
one year, and bonds due after one year.
Presentation of adjusted net debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
30 June 2024
|
31 December 2023
|
30 June 2023
|
|
Cash and short-term deposits
|
2,128
|
|
2,218
|
|
1,963
|
|
|
Bank overdrafts and bonds due within one year
|
(1,201)
|
|
(946)
|
|
(1,093)
|
|
|
Bonds due after one year
|
(4,298)
|
|
(3,775)
|
|
(4,338)
|
|
|
Adjusted net debt
|
(3,371)
|
|
(2,503)
|
|
(3,468)
|
|
|
Average adjusted net debt
|
(3,614)
|
|
(3,620)
|
|
(3,616)
|
|
Adjusted net debt excludes lease liabilities.
Average adjusted net debt is calculated as the average monthly net
borrowings of the Group. Average adjusted net debt for 30 June 2024
and 30 June 2023 represents the average for the six month periods
ended 30 June 2024 and 30 June 2023 respectively. Average adjusted
net debt for 31 December 2023 represents the average for the twelve
month period ended 31 December 2023.
Average adjusted net debt to headline EBITDA ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
30 June 2024
|
31 December 2023
|
30 June 2023
|
|
Average adjusted net debt (12 month rolling)
|
(3,619)
|
|
(3,620)
|
|
(3,379)
|
|
|
Headline EBITDA (12 month rolling)
|
1,966
|
|
1,976
|
|
2,026
|
|
|
Average adjusted net debt to headline EBITDA ratio
|
1.84
|
|
1.83
|
|
1.68
|
|
The average adjusted net debt and headline EBITDA
(including depreciation of right-of-use assets)
amounts used in the average adjusted net debt to headline
EBITDA
(including depreciation of right-of-use assets)
ratio
calculation above are for the 12 months ended 30 June 2024, 31
December 2023 and 30 June 2023 respectively.
Reconciliation of profit before taxation to headline PBT and
headline earnings:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Profit before taxation
|
338
|
|
204
|
|
|
Goodwill impairment
|
—
|
|
53
|
|
|
Amortisation and impairment of acquired intangible
assets
|
57
|
|
36
|
|
|
Impairment of investments in associates
|
23
|
|
11
|
|
|
Restructuring and transformation costs
|
131
|
|
87
|
|
|
Property-related restructuring costs
|
22
|
|
180
|
|
|
(Gains)/losses on disposal of investments and
subsidiaries
|
(8)
|
|
3
|
|
|
Gains on disposal of property
|
(2)
|
|
—
|
|
|
Litigation settlement
|
—
|
|
(10)
|
|
|
Share of adjusting and other items for associates
|
(1)
|
|
7
|
|
|
Revaluation and retranslation of financial instruments
|
(35)
|
|
(25)
|
|
|
Headline PBT
|
525
|
|
546
|
|
|
Headline tax charge
|
(146)
|
|
(148)
|
|
|
Non-controlling interests
|
(41)
|
|
(37)
|
|
|
Headline earnings
|
338
|
|
361
|
|
Headline PBT and headline earnings are metrics that management use
to assess the performance of the business.
Appendix 4: Alternative performance measures for the period ended
30 June 2024
Calculation of headline taxation:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Headline PBT
|
525
|
|
546
|
|
|
Tax charge
|
92
|
|
55
|
|
|
Tax credit relating to restructuring and transformation costs and
property-related costs
|
36
|
|
89
|
|
|
Tax charge relating to litigation settlement
|
—
|
|
(3)
|
|
|
Deferred tax impact of the amortisation of acquisition related
intangible assets and liabilities
|
8
|
|
11
|
|
|
Deferred tax relating to investments in associates
|
10
|
|
(4)
|
|
|
Headline tax charge
|
146
|
|
148
|
|
|
Headline tax rate
|
28.0%
|
27.0%
|
The headline tax rate as a percentage of headline PBT (that
includes the share of headline results of associates) is 28.0%
(2023: 27.0%).
Headline earnings per share:
The calculation of basic headline EPS is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Headline earnings
(£
million)
|
338
|
361
|
|
Weighted average shares used in basic EPS calculation (million)
(note 5)
|
1,075
|
1,071
|
|
Headline EPS
|
31.4p
|
33.7p
|
The calculation of diluted headline EPS is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Diluted headline earnings (£ million)
|
338
|
361
|
|
Weighted average shares used in diluted EPS calculation (million)
(note 5)
|
1,092
|
1,091
|
|
|
|
|
|
Diluted headline EPS
|
30.9p
|
33.1p
|
Earnings/(loss) from associates - after interest and tax
Management reviews the 'earnings/(loss) from associates –
after interest and tax' by assessing the underlying component
movements including 'share of profit before interest and taxation
of associates', 'share of adjusting and other items for
associates', 'share of interest and non-controlling interests of
associates', and 'share of taxation of associates', which are
derived from the income statements of the associate undertakings.
Management applies consistent principles in determining items
adjusted from headline profit as with subsidiaries.
The following table is an analysis of 'earnings/(loss) from
associates – after interest and tax' and underlying component
movements:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Six months ended 30 June 2024
|
Six months ended 30 June 20231
|
|
Share of profit before interest and taxation
|
18
|
|
13
|
|
Share of adjusting and other items for associates
|
1
|
|
(7)
|
|
Share of interest and non-controlling interests
|
2
|
|
1
|
|
Share of taxation
|
(5)
|
|
(6)
|
|
Earnings from associates - after interest and tax
|
16
|
|
1
|
1
The share of profit before interest and taxation, share of interest
and non-controlling interests and share of taxation amounts for the
six months ended 30 June 2023 were restated from £66 million,
£(55) million and £(3) million to £13 million,
£1 million and £(6) million respectively. There was nil
impact on earnings from associates - after interest and
tax.
Reconciliation of adjusted operating cash flow, adjusted free cash
flow and adjusted net cash flow:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Six months ended 30 June 2024
|
Six months ended 30 June 2023
|
|
Cash used by operations
|
(298)
|
|
(198)
|
|
|
Purchase of property, plant and equipment
|
(82)
|
|
(81)
|
|
|
Purchase of other intangible assets (including
software)
|
(25)
|
|
(23)
|
|
|
Repayment of lease liabilities
|
(140)
|
|
(135)
|
|
|
Interest paid on lease liabilities
|
(47)
|
|
(49)
|
|
|
Investment income
|
5
|
|
3
|
|
|
Share option proceeds
|
—
|
|
1
|
|
|
Adjusted operating cash flow
|
(587)
|
|
(482)
|
|
|
Corporation and overseas tax paid
|
(168)
|
|
(171)
|
|
|
Other interest and similar charges paid
|
(118)
|
|
(156)
|
|
|
Interest received
|
69
|
|
108
|
|
|
Dividends from associates
|
18
|
|
19
|
|
|
Earnout payments
|
(25)
|
|
(12)
|
|
|
Dividends paid to non-controlling interests in subsidiary
undertakings
|
(34)
|
|
(61)
|
|
|
Adjusted free cash flow
|
(845)
|
|
(755)
|
|
|
Disposal proceeds
|
33
|
14
|
|
Net initial acquisition payments
|
(29)
|
|
(203)
|
|
|
Share purchases
|
(57)
|
|
(37)
|
|
|
Adjusted net cash flow
|
(898)
|
|
(981)
|
|
The Group bases its internal cash flow objectives on adjusted
operating cash flow, adjusted free cash flow and adjusted net cash
flow. Management believes adjusted operating cash flow is a target
that can be translated into targets for operating business units
that do not have direct control of items which influence adjusted
free cash flow, such as tax and leverage; and is meaningful to
investors as a measure of the degree to which headline operating
profit is converted into cash after the cost of leased operating
assets, investment in capital expenditure, and working
capital.
Adjusted free cash flow is meaningful to investors because it is
the measure of the Group’s funds available for acquisition
related payments, dividends to shareholders, share repurchases and
debt repayment. The purpose of presenting adjusted free cash flow
is to indicate the ongoing cash generation within the control of
the Group after taking account of the necessary cash expenditures
of maintaining the capital and operating structure of the Group (in
the form of payments of interest, corporate taxation, and capital
expenditure).
Adjusted net cash flow is meaningful to investors because it is the
measure of the Group’s funds available for debt repayment or
to increase cash on hand after acquisition related payments,
dividends to shareholders and share repurchases. The purpose of
presenting adjusted net cash flow is to indicate the ongoing cash
generation within the control of the Group after taking account of
the necessary cash expenditures of maintaining the capital and
operating structure of the Group (in the form of payments of
interest, corporate taxation, and capital expenditure) and after
acquisitions, dividend payments to shareholders and share
repurchases.
Constant currency and
‘like-for-like’
These condensed consolidated interim financial statements are
presented in pounds sterling. However, the Group’s
significant international operations give rise to fluctuations in
foreign exchange rates. To neutralise foreign exchange impact and
illustrate the underlying change in revenue and profit from one
period to the next, the Group has adopted the practice of
discussing results in both reportable currency (local currency
results translated into pounds sterling at the prevailing foreign
exchange rate) and constant currency.
Management also believes that discussing like-for-like contributes
to the understanding of the Group’s performance and trends
because it allows for meaningful comparisons of the current period
to that of prior periods.
Further details of the constant currency and like-for-like methods
are given in the glossary on page 45 and 44.
Reconciliation of reported revenue to like-for-like
revenue:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
|
|
|
Revenue
|
|
|
|
Six months ended 30 June 2023 reported
|
7,221
|
|
|
|
Impact of exchange rate changes
|
(218)
|
|
(3.0
|
%)
|
|
Impact of acquisitions and disposals
|
37
|
|
0.5
|
%
|
|
Like-for-like growth
|
187
|
|
2.6
|
%
|
|
Six months ended 30 June 2024 reported
|
7,227
|
|
0.1
|
%
|
Reconciliation of reported revenue less pass-through costs to
like-for-like revenue less pass-through costs:
|
|
|
|
|
|
|
|
|
|
|
£ million
|
|
|
|
Revenue less pass-through costs
|
|
|
|
Six months ended 30 June 2023 reported
|
5,811
|
|
|
Impact of exchange rate changes
|
(170)
|
|
(2.9)%
|
|
Impact of acquisitions and disposals
|
17
|
0.3%
|
|
Like-for-like growth
|
(59)
|
(1.0)%
|
|
Six months ended 30 June 2024 reported
|
5,599
|
|
(3.6)%
|
Reconciliation of headline operating profit to like-for-like
headline operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ million
|
Margin
|
|
|
|
Headline operating profit
|
|
|
|
|
Six months ended 30 June 2023 reported
|
11.5%
|
666
|
|
|
|
Impact of exchange rate changes
|
|
(24)
|
|
(3.6)%
|
|
Impact of acquisitions and disposals
|
|
1
|
0.1%
|
|
Like-for-like growth
|
|
3
|
0.5%
|
|
Six months ended 30 June 2024 reported
|
11.5
|
%
|
646
|
|
(3.0)%
|
Glossary
Adjusted operating cash flow
Adjusted operating cash flow is calculated as cash used
in/generated by operations plus investment income received, and
share option proceeds, less repayment of lease liabilities
(including interest), and purchases of property, plant and
equipment and purchases of other intangible assets.
Adjusted free cash flow
Adjusted free cash flow is calculated as cash used in/generated by
operations plus dividends received from associates, interest
received, investment income received, and share option proceeds,
less corporation and overseas tax paid, interest and similar
charges paid, dividends paid to non-controlling interests in
subsidiary undertakings, repayment of lease liabilities (including
interest), earnout payments and purchases of property, plant and
equipment and purchases of other intangible assets.
Adjusted net cash flow
Adjusted net cash flow is calculated as adjusted free cash flow (as
defined above) plus disposal proceeds, less net initial acquisition
payments and share purchases.
Adjusting items
Adjusting items include gains/losses on disposal of investments and
subsidiaries, gains/losses on disposal of property, impairment of
investments in associates, litigation settlement, restructuring and
transformation costs, property-related restructuring costs,
goodwill impairment, amortisation and impairment of acquired
intangible assets, revaluation and retranslation of financial
instruments and share of adjusting and other items for
associates.
Average adjusted net debt and adjusted net debt
Average adjusted net debt is calculated as the average monthly net
borrowings of the Group. Adjusted net debt at a period end consists
of cash and short-term deposits, bank overdraft, bonds due within
one year and bonds due after one year. Adjusted net debt excludes
lease liabilities.
Billings and estimated net new business billings
Billings comprise the gross amounts billed to clients in respect of
commission-based/fee-based income together with the total of other
fees earned. Net new business billings represent the estimated
annualised impact on billings of new business gained from both
existing and new clients, net of existing client business lost. The
estimated impact is based upon initial assessments of the
clients’ marketing budgets, which may not necessarily result
in actual billings of the same amount.
Constant currency
The Group uses US dollar-based, constant currency models to measure
performance across all jurisdictions. These are calculated by
applying budgeted 2024 exchange rates to local currency reported
results for the current and prior year, which excludes any
variances attributable to foreign exchange rate
movements.
Establishment costs
Establishment costs are costs directly related to the occupancy of
the buildings utilised by WPP. These include the depreciation of
right of use assets and
leasehold improvements; and the costs of property taxes, utilities,
maintenance and facilities management amongst others.
General and administrative costs
General and administrative costs include marketing costs, certain
professional fees, and an allocation of other costs, including
staff and establishment costs, based on the function of employees
within the Group.
Headline costs
Headline costs comprise costs of services and general
administrative costs excluding gains/losses on disposal of
investments and subsidiaries, gains/losses on disposal of property,
impairment of investments in associates, goodwill impairment,
amortisation and impairment of acquired intangible assets,
restructuring and transformation costs, property-related
restructuring costs, litigation settlement, revaluation and
retranslation of financial instruments and share of adjusting and
other items for associates.
Headline earnings
Headline PBT less headline tax charge and non-controlling
interests.
Headline EBITDA
Profit before finance income/costs and revaluation and
retranslation of financial instruments, taxation, gains/losses on
disposal of investments and subsidiaries, gains/losses on disposal
of property, impairment of investments in associates, goodwill
impairment, amortisation and impairment of acquired intangible
assets, amortisation of other intangibles, depreciation of
property, plant and equipment, depreciation of right-of-use assets,
restructuring and transformation costs, property-related
restructuring costs, litigation settlement, and share of adjusting
and other items for associates.
Headline net finance costs
Net finance costs excluding revaluation and retranslation of
financial instruments.
Headline operating profit
Operating profit before gains/losses on disposal of investments and
subsidiaries, gains/losses on disposal of property, impairment of
investments in associates, goodwill impairment, amortisation and
impairment of acquired intangible assets, restructuring and
transformation costs, property-related restructuring costs, and
litigation settlement.
Headline operating profit margin
Headline operating profit margin is calculated as headline
operating profit (defined above) as a percentage of revenue less
pass-through costs.
Headline PBIT
Profit before net finance costs, taxation, gains/losses on disposal
of investments and subsidiaries, gains/losses on disposal of
property, impairment of investments in associates, goodwill
impairment, amortisation and impairment of acquired intangible
assets, restructuring and transformation costs, property-related
restructuring costs, litigation settlement and share of adjusting
and other items for associates.
Headline PBT
Profit before taxation, gains/losses on disposal of investments and
subsidiaries, gains/losses on disposal of property, impairment of
investments in associates, goodwill impairment, amortisation and
impairment of acquired intangible assets, restructuring and
transformation costs, property-related restructuring costs,
litigation settlement, share of adjusting and other items for
associates, and revaluation and retranslation of financial
instruments.
Headline tax charge
Taxation excluding tax/deferred tax relating to restructuring and
transformation costs and property-related costs, litigation
settlement, the deferred tax impact of the amortisation of
acquisition related intangible assets and liabilities, and deferred
tax relating to investments in associates.
Glossary
Like-for-like
Like-for-like comparisons are calculated as follows: current year,
constant currency actual results (which include acquisitions from
the relevant date of completion) are compared with prior year,
constant currency actual results, adjusted to include the results
of acquisitions and disposals.
Net finance costs
All costs related to interest expense on bank overdrafts, bonds,
bank loans, lease liabilities, and revaluation and retranslation of
financial instruments less any interest income on cash surplus and
investments.
Net working capital
The movement in net working capital consists of movements in trade
working capital and movements in other working capital and
provisions per the analysis of cash flows note.
Pass-through costs
Pass-through costs comprise fees paid to external suppliers where
they are engaged to perform part or all of a specific project and
are charged directly to clients, predominantly media
costs.
Revenue less pass-through costs
Revenue less pass-through costs is revenue less media and other
pass-through costs.
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
|
WPP
PLC
|
|
|
(Registrant)
|
|
Date:
07 August 2024
|
By:
______________________
|
|
|
Balbir
Kelly-Bisla
|
|
|
Company
Secretary
|
WPP (NYSE:WPP)
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