2023 Preliminary
Results
Resilient performance in 2023
with 0.9% like-for-like growth and improved headline margin up
0.2pt like-for-like. Investing in AI and innovation to deliver
improved growth, margin and cash
Key
figures
£m
|
2023
|
+/(-) %
reported1
|
+/(-)
%
LFL2
|
2022
|
Revenue
|
14,845
|
2.9
|
3.2
|
14,429
|
Revenue less pass-through
costs
|
11,860
|
0.5
|
0.9
|
11,799
|
|
|
|
|
|
Reported:
|
|
|
|
|
Operating profit
|
531
|
(60.9)
|
|
1,358
|
Profit before tax
|
346
|
(70.1)
|
|
1,160
|
Diluted EPS (p)
|
10.1*
|
(83.5)
|
|
61.2
|
Dividends per share (p)
|
39.4
|
-
|
|
39.4
|
|
|
|
|
|
Headline3:
|
|
|
|
|
Operating profit
|
1,750
|
0.5
|
|
1,742
|
Operating profit margin
|
14.8%
|
0.0pt
|
0.2pt
|
14.8%
|
Profit before tax
|
1,525
|
(4.8)
|
|
1,602
|
Diluted EPS
|
93.8
|
(4.8)
|
|
98.5
|
* includes the impact of accelerated
amortisation of previously indefinite life
brands and impairment of leases related to the 2023 property
review
Full year and Q4 financial highlights
• FY reported revenue
+2.9%, LFL revenue +3.2%
• FY revenue less pass-through
costs +0.5%, LFL revenue less pass-through
costs +0.9%
• Q4 LFL
revenue less pass-through costs +0.3% with
ex-US4 +3.1% benefiting from
strong growth in the UK and India partially offset by declines in
Germany and China. US Q4 LFL decline of 4.5% primarily due to lower spend by technology,
healthcare and retail clients, partially offset by growth in CPG,
telecoms and automotive sectors
•
Global Integrated Agencies FY LFL revenue less pass-through
costs +1.3% (Q4: +0.7%): within which GroupM, our media planning and
buying business, grew +4.9% (Q4:
+5.7%), partially offset by a 1.6% decline in other Global Integrated Agencies (Q4:
-3.4%)
• Solid new business
performance: $4.5bn net new billings5 (2022: $5.9bn) with Q4 net new billings $1.1bn (Q4 2022: $0.8bn). The
current pipeline of potential new business remains higher
year-on-year
• FY
headline operating profit margin in line with original
guidance6 of 15.0% (excluding the impact of FX).
Headline operating profit margin of 14.8% (2022: 14.8%) reflecting
a 0.2pt drag from FX, disciplined cost control and continued
investment in our technology, data and AI
offer
• Reported EPS of 10.1p (2022: 61.2p) reflects the impact of accelerated amortisation of intangible assets as a
result of the creation of VML, and property impairments
announced earlier in the year
• Headline EPS
of 93.8p (2022: 98.5p) reflects a zero contribution from Kantar in
income from associates in 2023, which in 2022 represented 3.3p in
headline EPS7
• Adjusted operating cash flow
of £1,280m (2022: £669m) reflecting an improved working capital
performance
• Adjusted net debt at
31 December 2023 of £2.5bn, flat
year-on-year
• Final dividend of 24.4p
proposed (2022: 24.4p) resulting in a proposed total dividend of
39.4p (2022: 39.4p) in line with our payout policy of approximately
40% of headline diluted EPS
Strategic progress and 2024 guidance
•
VML launched in January following the merger of
VMLY&R and Wunderman Thompson with senior leadership appointed.
GroupM simplification plan on track. Burson, created from the
merger of Hill & Knowlton and BCW, scheduled to launch in
July
•
Acquisitions in the year included influencer
marketing agencies Goat and Obviously and are contributing well to
growth
• 2020 transformation programme
gross annual savings of £475m in 2023
against a 2019 base, ahead of planned £450m, with savings
from our campus programme, procurement
initiatives, simpler WPP and lower travel costs
• 2024 guidance: LFL revenue
less pass-through costs growth of 0-1%,
with improvement in headline operating profit margin of
20-40bps (excluding the impact of
FX)
Innovating to Lead
At
our Capital Markets Day in January 2024 we announced the next phase
of our strategy - 'Innovating to Lead' - which is built on four
strategic pillars:
1. Lead through AI, data and
technology, by building on our
leadership position in the application of artificial intelligence
through the acquisition of the AI research firm Satalia in 2021;
organic investment in WPP Open, our AI-driven platform, client
technology and data; and deep partnerships with strategic
technology partners such as Adobe, Google, IBM, Microsoft, Nvidia
and OpenAI. Our plans include annual cash investment of around
£250m in proprietary technology to support our AI and data
strategy
2.
Unlock the full potential of creative transformation to drive
growth, expanding our client
relationships by further leveraging WPP's global scale, integrated
offer in creative, media, production and PR, and capabilities in
growth areas such as commerce, influencer marketing and retail
media to capture share in a growing market
3.
Build world-class, market-leading brands
through our six powerful agency networks - VML,
Ogilvy, AKQA, Hogarth, GroupM and Burson - which now represent
close to 90% of WPP's revenue less pass-through costs, and in
particular reap the benefits of unrivalled scale from VML as the
world's largest integrated creative agency, leverage GroupM's
simplified operating model and scale as the world's largest media
agency and establish Burson as a leading global strategic
communications agency by bringing together BCW and Hill &
Knowlton
4.
Execute efficiently to drive strong financial
returns, by delivering growth and
structural cost savings from the creation of VML and Burson, and
simplification of GroupM, unlocking scale advantages and further
efficiency savings
Our strategy will continue to be
underpinned by a disciplined
approach to capital allocation with ongoing organic
investment, a progressive dividend policy and a disciplined
approach to M&A, supported by a strong balance sheet and an
investment grade credit rating.
Mark Read, Chief Executive Officer of WPP,
said:
"At our recent Capital Markets Day
we detailed our strategy to capture the opportunities of AI, data
and technology, while harnessing the full power of our offer to
clients, building world-class agency brands, and driving strong
financial returns through efficient execution.
"AI will be fundamental for our
business and we are embracing the opportunities that it presents,
putting it at the heart of our operations and our work for clients.
Our AI-powered platform, WPP Open, is now being used by more than
30,000 people across WPP with growing adoption by our
clients.
"While 2023 was more challenging
than we expected due to cuts in spending by technology clients, we
delivered a resilient performance for the year with 0.9%
like-for-like growth and a 0.2 point improvement in our headline
operating margin at constant currency. This was driven by
disciplined cost control, while continuing to invest in AI, data
and technology.
"Our net new business of
$4.5bn in 2023 included major new
assignments with clients such as Allianz, Krispy Kreme, Mondelēz,
Nestlé, PayPal and Verizon and reflects a stronger year-on-year
performance in the fourth quarter.
"We are optimistic about the
strategic opportunities ahead of us and are confident that we can
deliver accelerated and increasingly profitable growth over the
medium term."
WPP's 2023 Preliminary Results
announcement has been submitted in full unedited text to the
Financial Conduct Authority's National Storage Mechanism and will
be available shortly for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
The Report is also available
at http://www.rns-pdf.londonstockexchange.com/rns/0232E_1-2024-2-22.pdf
and on the WPP investor relations website www.wpp.com/investors.
For further information:
Investors and analysts
Tom Waldron
|
+44 7788 695864
|
Anthony Hamilton
|
+44 7464 532903
|
Caitlin Holt
|
+44 7392 280178
|
|
|
irteam@wpp.com
|
|
|
|
Media
|
|
Chris Wade
|
+44 20 7282 4600
|
|
|
Richard Oldworth
|
+44 7710 130 634
|
Buchanan Communications
|
+44 20 7466 5000
|
press@wpp.com
wpp.com/investors
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. 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 2.
4. The aggregate of markets outside the US.
5. As defined in the glossary on page 46.
6. Original FY23 guidance given on 23 February 2023.
7. In accordance with IAS 28: Investments in Associates and Joint
Ventures once an investment in an associate reaches zero carrying
value, the Group does not recognise any further losses, nor income,
until the cumulative share of income returns the carrying value to
above zero. At the end of 2022 WPP's cumulative reported share of
losses in Kantar has reduced the carrying value of the investment
to nil.
Full year overview
Revenue was £14.8bn, up 2.9% from
£14.4bn in 2022, and up 3.2% like-for-like. Revenue less pass-through costs was
£11.9bn, up 0.5%
from £11.8bn in 2022, and up 0.9% like-for-like.
|
Q4 2023
£m
|
%
reported
|
%
M&A
|
%
FX
|
%
LFL
|
Revenue
|
4,116
|
0.4
|
1.3
|
(4.2)
|
3.3
|
Revenue less pass-through costs
|
3,211
|
(2.8)
|
0.9
|
(4.0)
|
0.3
|
|
2023
£m
|
%
reported
|
%
M&A
|
%
FX
|
%
LFL
|
Revenue
|
14,845
|
2.9
|
1.2
|
(1.5)
|
3.2
|
Revenue less pass-through costs
|
11,860
|
0.5
|
0.9
|
(1.3)
|
0.9
|
Business segment review
Business segments - revenue less pass-through
costs
%
LFL +/(-)
|
Global
Integrated
Agencies
|
Public
Relations
|
Specialist
Agencies
|
Q4
2023
|
0.7
|
2.4
|
(6.8)
|
2023
|
1.3
|
1.4
|
(3.4)
|
Global Integrated
Agencies: GroupM, our media planning and buying business, grew well in
2023, benefiting from continued client investment in media, with
like-for-like growth in revenue less pass-through costs of
4.9% (Q4 +5.7%),
partially offset by a 1.6% LFL decline at
other Global Integrated Agencies (Q4 -3.4%).
GroupM grew in all major regions
with mid-single digit growth in ex-US markets and low-single digit
growth in the US. The digital billings mix within GroupM increased
to 51% (2022: 48%).
Ogilvy's performance benefited from
recent new business wins including SC Johnson and Verizon, which
contributed to mid-single digit growth.
Hogarth grew well benefiting from
increased spend by CPG clients and growing demand for its
technology and AI-driven capabilities as clients seek to produce
more personalised and addressable content.
Other Global Integrated Agencies:
Wunderman Thompson and VMLY&R (which
were merged in January 2024 to become VML) and AKQA felt the
greatest impact from reduced spend across the technology sector and
delays in technology-related projects. Revenue less pass-through
costs in the retail sector was impacted by 2022 and 2023 client
losses and lower spend by some retail clients in an uncertain
macroeconomic environment.
Public
Relations: FGS Global continued to
grow strongly in 2023, while Hill & Knowlton delivered modest
growth lapping strong performance in 2022; partially offset by a
weaker year for BCW.
Specialist
Agencies: CMI Media Group, our
specialist healthcare media planning and buying agency, grew
strongly, offset by declines at Landor and Design Bridge and
Partners. Our smaller specialist agencies continued to be affected
by more cautious client spending, including delays in project-based
spending.
Regional review
Regional segments - revenue less pass-through
costs
%
LFL +/(-)
|
North
America
|
United
Kingdom
|
Western Continental
Europe
|
Rest of
World
|
Q4
2023
|
(4.1)
|
5.1
|
(0.8)
|
5.3
|
2023
|
(2.7)
|
5.6
|
1.8
|
3.7
|
North America declined by 2.7% in 2023 reflecting
lower revenues from technology clients and in the retail sector.
This was partially offset by growth in CPG and telecommunications.
Lower revenues from technology clients had a greater adverse impact
on our integrated creative agencies, whilst GroupM grew low-single
digits in the region.
The United Kingdom delivered good
growth, building on a strong prior year
performance (2022: +7.6%) with both GroupM and Ogilvy
performing well. CPG and healthcare were the strongest client
sectors.
In Western Continental Europe,
Germany, our largest market, had a challenging end to the year with
a more uncertain macro environment weighing on client spend in the
second half. France returned to growth in Q4 after several quarters
of decline as new clients were onboarded.
The Rest of World saw good growth in
2023 driven by India which was up 7.7%
reflecting strong double-digit growth in the second half. This was
partially offset by China which declined
3.3% with a consistent level of decline across the first and
second half.
Top
five markets - revenue less pass-through costs
%
LFL +/(-)
|
USA
|
UK
|
Germany
|
China
|
India
|
Q4
2023
|
(4.5)
|
5.1
|
(5.3)
|
(1.2)
|
22.0
|
2023
|
(2.8)
|
5.6
|
0.1
|
(3.3)
|
7.7
|
Client sector review
Client sector - revenue less pass-through
costs8
2023
|
% share, revenue less
pass-through costs8
|
% LFL +/(-)
|
CPG
|
27.0
|
14.2
|
Tech & Digital
Services
|
17.5
|
(6.9)
|
Healthcare & Pharma
|
12.0
|
0.6
|
Automotive
|
10.3
|
1.3
|
Retail
|
9.2
|
(11.3)
|
Telecom, Media &
Entertainment
|
6.4
|
2.9
|
Financial Services
|
6.2
|
4.3
|
Other
|
5.4
|
(3.4)
|
Travel & Leisure
|
3.5
|
7.1
|
Government, Public Sector &
Non-profit
|
2.5
|
0.2
|
Strategic progress
Clients:
We won $4.5bn of net new
business in 2023 (2022: $5.9bn) including
the loss of certain Pfizer creative assignments. Key assignment
wins include Adobe, Allianz, Estée Lauder, Ford, Hyatt, Krispy
Kreme, Lenovo, Lloyds Banking Group, Maruti Suzuki, Mondelēz,
Nestlé, Pernod Ricard, SC Johnson and Verizon.
Creativity and
awards: Creativity is applied to
everything that we do at WPP, and we are proud that our world-class
talent has continued to be recognised through prestigious awards.
We had another successful year at the Cannes Lions International
Festival of Creativity, with WPP agencies winning a total of
165 Lions including one Titanium Lion, five Grand
Prix, and 24 Gold awards. Mindshare was
named Media Network of the Year.
At the Effies, WPP was awarded the
most effective communications company globally, with Ogilvy ranked
the most effective network. WARC named WPP the top company in all
three of their rankings, the Creative 100, Effective 100 and Media
100 lists. Ogilvy ranked as the top network of the year in both the
Creative 100 and Effective 100 while EssenceMediacom took first
place in the Media 100.
WPP was named holding company of the
year and VMLY&R network of the year at the New York Festivals
Advertising Awards. Ogilvy was the most awarded agency at the
Global Influencer Marketing Awards for the fifth year running and
was recently named AdWeek's 2023 Global Agency of the Year. Gain
Theory, WPP's global marketing effectiveness consultancy, was
recognised by Forrester as a Wave Leader in marketing measurement
and optimisation.
8. Proportion of WPP group revenue less pass-through costs in
2023; table made up of clients representing 77% of WPP total
revenue less pass-through costs.
Investment for
growth: We have invested
significantly in client-facing technology over the last five years
and this continued in 2023, with priorities including WPP Open, our
AI-driven platform; Choreograph, our data products and technology
unit; and other AI tools and services delivered through WPP
Open.
WPP Open brings together all of
WPP's proprietary tools, technologies, data and services into one
operating system, and is already being deployed across some of our
largest global clients, with broad adoption by over 30,000 of WPP's
people.
We have bolstered our capabilities
through acquisitions during the year, including: influencer
marketing agencies Goat, based in London and Obviously, based in
New-York; 3K Communication, a Frankfurt-based healthcare PR agency;
and amp, one of the world's leading sonic branding companies. We
also made a minority investment in Majority, a diversity-focused US
creative agency.
In July, KKR completed their
minority investment to become a 29%
shareholder in FGS Global, after acquiring all of Golden Gate
Capital's equity and a proportion of the interests of WPP and FGS
Global management. WPP remains the majority owner at 51%. The transaction valued FGS Global at $1.425bn.
Transformation:
At our Capital Markets Day in December 2020 we set
out a plan to deliver £600m of annual gross savings by 2025 against
the 2019 cost base. At the end of 2023 we
had delivered around £475m of gross savings, which is ahead of the
originally planned £450m.
Savings have come from our operating
model, including a simpler WPP and lower travel costs; from
efficiency initiatives driven by our procurement team and our
successful campus strategy; and from functional effectiveness,
focused on IT and finance with savings from our cloud migration and
workforce optimisation.
Our ERP consolidation has taken longer than we originally expected, but we
are realising benefits from the deployment of Workday at VML
(formerly Wunderman Thompson) in North America and from Maconomy in
Asia Pacific and other markets. We anticipate the bulk of new
systems will be rolled out by 2026 with associated restructuring
costs reducing accordingly.
At our Capital Markets Day in
January 2024 we outlined an updated target for headline operating
margin of 16-17% over the medium term underpinned by a plan focused
on structural cost savings and efficiencies which will enable us to
deliver more profitable growth whilst continuing to invest in the
business.
This plan builds on the 2020
programme and the structural changes announced in the last six
months with the creation of VML and Burson and the simplification
of GroupM.
Structural cost savings from the
creation of VML and Burson and simplification of GroupM are
expected to deliver annualised net cost savings of c.£125m in 2025, with 40-50% of those savings expected
to be realised in 2024. Restructuring costs associated with the
completion of these programmes in 2024 are expected to be around
£125m.
Targeted efficiency savings across
both back office and commercial delivery represent a further
opportunity for annualised gross savings of around £175m over the
next three to five years which will support delivery of our
medium-term margin target and investment for growth.
Purpose and ESG
WPP's purpose is to use the power of
creativity to build better futures for our people, planet, clients
and communities.
WPP maintained a low-risk rating in
the 2023 Sustainalytics risk rating, which scores the ESG
performance of companies. WPP has the lowest risk
rating of its peer group and saw an improvement in its score from
12.1 in 2022 to 11.0 in 2023.
People: We are committed to building a strong, purpose-driven culture
at WPP where everyone feels valued. WPP ranked sixth best performer
in the 2023 FTSE Women Leaders ranking, recognising our gender
diversity in leadership roles. In addition, WPP was awarded Leader
status for the fifth year running in the Bloomberg Gender Equality
Index. In May, eleven leaders from across WPP were recognised in
the 2023 Empower Role Model Lists, designed to celebrate leaders
who are championing inclusion for people of colour within global
businesses.
Planet:
In 2021, we set near-term science-based targets to
reduce our absolute Scope 1 and 2 emissions by at least
84% by 2025 and reduce Scope 3 emissions
(including emissions from media buying - an industry first) by at
least 50% by 2030, both from a 2019 base
year.
In April, our 2022 Sustainability
Report stated that we have delivered a reduction in Scope 1 and 2
emissions of 71% in absolute terms since our 2019 baseline. Our
2023 Sustainability Report will be issued in March 2024.
Clients:
Sustainability is a priority for all stakeholders
including our clients. We aim to use our creativity for good,
delivering client work which is inclusive and accessible and
supporting clients on their own sustainability journeys. At the Ad
Net Zero Awards, which recognise the companies and organisations
that are leading the way on sustainability and the move to a
net zero carbon economy, we were proud to
win six awards including both International and UK Grand Prix. The
Grand Prix awards were won by EssenceMediacom for their partnership
eBay x Love Island and Grey Colombia for their Life Extending
Stickers innovation for Makro; both were recognised for their
simple, scalable solutions to shifting consumer behaviour whilst
driving material transformation within their respective
industries.
Scrutiny over brands' environmental
claims continues to grow. To support clients in making effective
claims, in 2023 we launched a client version of our Green Claims
Guide and ran targeted training for employees and clients in high
emissions sectors.
Communities:
We aim to use the power of our creativity and
voice to support the communities in which we live and work. For
example, during the year we launched the Creative Data School in
partnership with leading non-profit and educational organisations
which has already taught essential technical skills to over 6,000
young people across the UK.
Further detail on how WPP is focused
on realising a more sustainable, equitable future can be read in
our 2022
Sustainability Report.
Outlook
Our guidance for 2024 is as follows:
Like-for-like revenue less pass-through costs
growth of 01%.
Headline operating margin improvement of
20-40bps
(excluding the impact of
FX)
|
Other 2024 financial
indications:
• Mergers
and acquisitions will add 0.5-1.0% to
revenue less pass-through costs growth
• FX impact:
current rates (at 15 February 2024) imply a c.2% drag on FY 2024
revenues less pass-through costs, with no meaningful impact
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 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%+9
9. Adjusted operating cash flow divided by headline operating
profit.
Financial results
Unaudited headline income
statement10:
£
million
|
2023
|
2022
|
+/(-) %
reported
|
+/(-) %
LFL
|
|
|
|
|
|
Revenue
|
14,845
|
14,429
|
2.9
|
3.2
|
Revenue less pass-through
costs
|
11,860
|
11,799
|
0.5
|
0.9
|
Operating profit
|
1,750
|
1,742
|
0.5
|
|
Operating profit margin %
|
14.8%
|
14.8%
|
-
|
0.2pt*
|
Income from associates
|
36
|
74
|
(51.0)
|
|
PBIT
|
1,786
|
1,816
|
(1.6)
|
|
Net finance costs
|
(261)
|
(214)
|
(21.8)
|
|
Profit before taxation
|
1,525
|
1,602
|
(4.8)
|
|
Tax
|
(412)
|
(409)
|
(0.8)
|
|
Profit after taxation
|
1,113
|
1,193
|
(6.7)
|
|
Non-controlling interests
|
(87)
|
(93)
|
6.4
|
|
Profit attributable to
shareholders
|
1,026
|
1,100
|
(6.8)
|
|
Diluted EPS
|
93.8p
|
98.5p
|
(4.8)
|
|
*margin points
Reconciliation of profit before taxation to headline operating
profit:
£
million
|
2023
|
2022
|
|
|
|
Profit before taxation
|
346
|
1,160
|
Finance and investment
income
|
(127)
|
(145)
|
Finance costs
|
389
|
359
|
Revaluation and retranslation of
financial instruments
|
(7)
|
(76)
|
Profit before interest and taxation
|
601
|
1,298
|
(Earnings)/loss from associates -
after interest and tax
|
(70)
|
60
|
Operating profit
|
531
|
1,358
|
Goodwill impairment
|
63
|
38
|
Amortisation and impairment of
acquired intangible assets
|
728
|
62
|
Investment and other impairment
charges
|
18
|
77
|
(Gains)/losses on disposal of
investments and subsidiaries
|
(7)
|
36
|
Gains on remeasurement of equity
interests arising from a change in scope of ownership
|
-
|
(66)
|
Litigation settlement
|
(11)
|
-
|
Restructuring and transformation
costs
|
196
|
219
|
Property related costs
|
232
|
18
|
Headline operating profit
|
1,750
|
1,742
|
10 Non-GAAP measures in this table are reconciled in Appendix
2.
Business sector11
Revenue analysis
£
million
|
2023
|
2022
|
+/(-) %
reported
|
+/(-) %
LFL
|
Global Int. Agencies
|
12,595
|
12,192
|
3.3
|
3.7
|
Public Relations
|
1,262
|
1,232
|
2.4
|
2.0
|
Specialist Agencies
|
988
|
1,005
|
(1.8)
|
(2.5)
|
Total Group
|
14,845
|
14,429
|
2.9
|
3.2
|
Revenue less pass-through costs analysis
£
million
|
2023
|
2022
|
+/(-) %
reported
|
+/(-) %
LFL
|
Global Int. Agencies
|
9,808
|
9,743
|
0.7
|
1.3
|
Public Relations
|
1,180
|
1,161
|
1.6
|
1.4
|
Specialist Agencies
|
872
|
895
|
(2.6)
|
(3.4)
|
Total Group
|
11,860
|
11,799
|
0.5
|
0.9
|
Headline operating profit analysis
£
million
|
2023
|
% margin*
|
2022
|
% margin*
|
Global Int. Agencies
|
1,474
|
15.0
|
1,433
|
14.7
|
Public Relations
|
191
|
16.2
|
192
|
16.5
|
Specialist Agencies
|
85
|
9.7
|
117
|
13.0
|
Total Group
|
1,750
|
14.8
|
1,742
|
14.8
|
* Headline operating profit as a
percentage of revenue less pass-through costs
Regional
Revenue analysis
£
million
|
2023
|
2022
|
+/(-) %
reported
|
+/(-) %
LFL
|
N. America
|
5,528
|
5,550
|
(0.4)
|
(0.4)
|
United Kingdom
|
2,155
|
2,004
|
7.6
|
6.5
|
W Cont. Europe
|
3,037
|
2,876
|
5.6
|
3.8
|
AP, LA, AME,
CEE12
|
4,125
|
3,999
|
3.1
|
6.3
|
Total Group
|
14,845
|
14,429
|
2.9
|
3.2
|
11 Prior year figures have been re-presented to reflect the
reallocation of a number of businesses.
12 Asia Pacific, Latin America, Africa & Middle East and
Central & Eastern Europe.
Revenue less pass-through costs analysis
£
million
|
2023
|
2022
|
+/(-) %
reported
|
+/(-) %
LFL
|
N. America
|
4,556
|
4,688
|
(2.8)
|
(2.7)
|
United Kingdom
|
1,626
|
1,537
|
5.8
|
5.6
|
W Cont. Europe
|
2,411
|
2,319
|
4.0
|
1.8
|
AP, LA, AME, CEE
|
3,267
|
3,255
|
0.3
|
3.7
|
Total Group
|
11,860
|
11,799
|
0.5
|
0.9
|
Headline operating profit analysis
£
million
|
2023
|
% margin*
|
2022
|
% margin*
|
N. America
|
834
|
18.3
|
771
|
16.4
|
United Kingdom
|
215
|
13.2
|
187
|
12.2
|
W Cont. Europe
|
258
|
10.7
|
301
|
13.0
|
AP, LA, AME, CEE
|
443
|
13.6
|
483
|
14.8
|
Total Group
|
1,750
|
14.8
|
1,742
|
14.8
|
* Headline operating profit as a
percentage of revenue less pass-through costs
Operating profitability
Reported profit before tax was
£346m, compared to £1,160m in the prior period, principally reflecting the
accelerated amortisation of previously indefinite
life brands related to the creation of VML and the
impairment taken as a result of the 2023 property
review.
Reported profit after tax was
£197m compared to £775m in the prior period.
Headline EBITDA (including IFRS 16
depreciation) for the year was down 1.4% to
£1,976m. Headline operating profit was up
0.5% to £1,750m.
Headline operating profit margin was
flat year on year at 14.8% and up
0.2 points year on year on a constant
currency basis. Total operating costs were up 0.5% to £10.1bn. Staff costs,
excluding incentives, were up 0.1%
year-on-year at £7.8bn, reflecting wage
inflation offset by lower use of freelancers. Staff costs include
severance costs of £78m (2022:
£44m). Incentive costs were down
8.5% year-on-year to £387m, compared to £423m in
2022.
Establishment costs were down
3.8% at £516m
reflecting the progress in our campus programme. IT costs were up
12.6% at £698m,
reflecting investment in enterprise technology and our IT
infrastructure, as well as our global client-facing technology
capabilities including WPP Open, Choreograph and AI
capabilities.
Personal costs rose 9.3% to £223m, reflecting greater client-related business travel and inflationary
pressures. Other operating expenses were
down 0.8% at £535m.
The average number of people in the
Group in the year was 114,732 compared to 114,129 in 2022. The
total number of people as at 31 December 2023 was 114,173 compared
to 115,473 as at 31 December 2022.
Adjusting items
The Group incurred £1,219m of adjusting
items in 2023, mainly relating to the amortisation of acquired
intangible assets, restructuring and transformation costs, and
property and goodwill impairments. This compares with net adjusting
items in 2022 of £384m.
Goodwill
impairment, amortisation and impairment of acquired intangibles and
other impairment charges were £809m (2022: £177m), mainly related
to the accelerated amortisation of indefinite life brands resulting
from the VML merger. This includes accelerated amortisation charges
of £431m and £202m for Wunderman Thompson and Y&R brands
respectively.
Restructuring costs of £196m in 2023 (2022: £219m)
mainly relate to: the Group's IT transformation; property costs associated with impairments prior to
2023; and costs related to the continuing
restructuring plan, including the creation of VML and
simplification of GroupM.
Charges associated with property,
including the property review conducted in 2023, were £232m and primarily relate to non-cash lease impairments in
the US.
Interest and taxes
Net finance costs (excluding the
revaluation of financial instruments) were £261m, an increase of £47m
year-on-year, due to higher levels of debt through the year, higher
interest rates and lower investment income
partially offset by higher interest earned on cash.
The headline tax rate (based on
headline profit before tax) was 27.0%
(2022: 25.5%) and on reported profit before
tax was 43.1% (2022: 33.1%). The increase in the headline tax rate is driven
by lower income from associates and 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.
Earnings and dividend
Profits
attributable to shareholders were £110m, compared to a profit of £683m in the prior period, principally reflecting the
accelerated amortisation of indefinite life brands and the
impairment taken as a result of the 2023 property
review.
Reported diluted earnings per share
was 10.1p, compared to 61.2p in the prior period. Headline diluted earnings
per share from continuing operations decreased by 4.8% to 93.8p.
The Board is proposing a final
dividend for 2023 of 24.4 pence per share, which together with the
interim dividend paid in November 2023 gives a full-year dividend
of 39.4 pence per share. The record date for the final dividend is
7 June 2024, and the dividend will be
payable on 5 July 2024.
Further details of WPP's financial
performance are provided in Appendix 1.
Cash flow highlights
Twelve months ended (£
million)
|
31 December
2023
|
31 December
2022
|
Headline operating profit
|
1,750
|
1,742
|
Income from associates
|
36
|
74
|
Depreciation of property, plant and
equipment
|
165
|
167
|
Amortisation of other
intangibles
|
25
|
22
|
Depreciation of right-of-use
assets
|
257
|
262
|
Headline EBITDA
|
2,233
|
2,267
|
Less: income from
associates
|
(36)
|
(74)
|
Repayment of lease liabilities and
related interest
|
(362)
|
(402)
|
Non-cash compensation
|
140
|
122
|
Non headline cash costs (including
restructuring cost)
|
(218)
|
(174)
|
Capex
|
(217)
|
(223)
|
Working capital
|
(260)
|
(847)
|
Adjusted operating cash flow
|
1,280
|
669
|
%
conversion of Headline operating profit
|
73%
|
38%
|
Dividends (to minorities)/ from
associates
|
(58)
|
(32)
|
Earnout payments
|
(31)
|
(71)
|
Net interest
|
(159)
|
(121)
|
Cash tax
|
(395)
|
(391)
|
Adjusted free cash flow13
|
637
|
53
|
Disposal proceeds
|
122
|
51
|
Net initial acquisition
payments
|
(280)
|
(274)
|
Dividends
|
(423)
|
(365)
|
Share purchases
|
(54)
|
(863)
|
Net
cash flow
|
2
|
(1,398)
|
In 2023, net cash inflow was broadly
neutral, compared to a £1.4bn outflow in
2022. The main drivers of the improved cash flow performance
year-on-year were a smaller outflow from investment in net working
capital and lower share purchases.
A working capital outflow of
£260m (2022: £847m) includes an adverse
impact of £89m from less favourable FX rates at the end of the year
compared to the prior year. The movement in total working capital
of £260m reflects a favourable movement of
£113m in trade working capital and an
outflow of £373m from non-trade working
capital, primarily reflecting year on year movements in bonus,
landlord incentives relating to our campus programme and
prepayments.
A summary of the Group's unaudited
cash flow statement and notes for the twelve months to 31 December
2023 is provided in Appendix 1.
13 Adjusted free cash flow is reconciled to cash generated by
operations in Appendix 2.
Balance sheet highlights
As at 31 December 2023 we had
cash and cash equivalents of £1.9bn (2022: £2.0bn) and total
liquidity, including undrawn credit facilities, of £3.8bn. Average
adjusted net debt was £3.6bn, compared to £2.9bn in the prior
period, at 2023 exchange rates. As at 31 December 2023
adjusted net debt was £2.5bn, against £2.5bn as at 31 December
2022, unchanged on a reported basis and an increase of £0.1bn at
2023 exchange rates.
We spent £54
million on share purchases during the year to offset dilution from
share-based payments.
Our bond portfolio at
31 December 2023 had an average maturity of 6.2
years.
In May 2023, we refinanced the
November 2023 €750m bond as planned, issuing a May 2028 €750m bond
priced at 4.125%.
The average adjusted net debt to
Headline EBITDA ratio in the 12 months to
31 December 2023 is 1.83x, which
excludes the impact of IFRS 16.
A summary of the Group's unaudited
balance sheet and notes as at 31 December 2023 is provided in
Appendix 1.