WPP plc 6-K, filed Feb 23, 2023
WPP plc (WPP)
6-K
2023-02-23
For: 2023-02-23
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Added on
April 12, 2026
About this 6-K
WPP plc filed this 6-K on February 23, 2023.
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 February 2023
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 ‘anticipate’,
‘estimate’, ‘expect’, ‘intend’,
‘will’, ‘project’, ‘plan’,
‘believe’, ‘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 outbreaks, epidemics or pandemics, such as the Covid-19 pandemic
and ongoing challenges and uncertainties posed by the Covid-19
pandemic for businesses and governments around the world; 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; 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 Russian invasion of Ukraine; the risk of global
economic downturn; 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; 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
|
Exhibit No.
|
Description
|
|
1
|
2022 Preliminary Results dated 23 February 2023, prepared by WPP
plc.
|
23 February 2023
2022 Preliminary Results
|
Strong performance
driven by growth across all key WPP agencies. Headline fully
diluted EPS growth of over 25%. Expect LFL top-line growth of 3-5%
and further progress on operating margin to around 15% in
2023
|
Key figures
|
£
million
|
2022
|
+/(-)%
reported[1]
|
+/(-)%
LFL[2]
|
2021
|
|
Revenue
|
14,429
|
12.7
|
6.7
|
12,801
|
|
Revenue
less pass-through costs
|
11,799
|
13.5
|
6.9
|
10,397
|
|
|
|
|
|
|
|
Reported:
|
|
|
|
|
|
Operating
profit
|
1,358
|
10.5
|
-
|
1,229
|
|
Profit
before tax
|
1,160
|
22.0
|
-
|
951
|
|
Diluted
EPS (p)
|
61.2
|
16.6
|
-
|
52.5
|
|
Dividends
per share (p)
|
39.4
|
26.3
|
-
|
31.2
|
|
|
|
|
|
|
|
Headline[3]:
|
|
|
|
|
|
Operating
profit
|
1,742
|
16.6
|
10.0
|
1,494
|
|
Operating
profit margin
|
14.8%
|
0.4pt*
|
0.4pt*
|
14.4%
|
|
Profit
before tax
|
1,602
|
17.3
|
-
|
1,365
|
|
Diluted
EPS (p)
|
98.5
|
25.5
|
-
|
78.5
|
* Margin points
Full year and Q4 financial highlights
■ FY reported
revenue +12.7%, LFL revenue +6.7%
■ FY LFL revenue
less pass-through costs +6.9%; with good performance in Q4
+6.4%
■ Q4 LFL revenue
less pass-through costs by major market: US +3.5%, UK
+12.0%, Germany +4.9%, China -8.4%, India +8.5%
■ Three-year FY
LFL revenue less pass-through costs +10.0%; Q4
+10.2%
■ FY headline
operating margin 14.8%, up 0.4
points LFL with strong top-line growth and efficiency savings
supporting investment and margin expansion
■ Reported
diluted EPS 61.2 pence; headline diluted EPS up 25.5% to 98.5
pence
■ Adjusted net
debt at 31 December 2022 £2.5 billion (2021: £0.9
billion) after investments and over £1.1 billion of cash
returned to shareholders. Average adjusted net debt to EBITDA ratio
of 1.46x, slightly below the 1.5-1.75 target
range
■ Trade working
capital adverse movement of £226 million[4] at
year-end driven by mix and timing factors. Average trade working
capital across 2022 was flat year-on-year
■ Final dividend
of 24.4 pence proposed, up 30.5%, for a proposed total dividend for
2022 of 39.4 pence, in line with our policy of approximately 40% of
headline diluted EPS
Strategic progress, shareholder returns and 2023
guidance
■ Strong performance across
major WPP agencies: continued strength in GroupM 2022 with FY LFL
revenue less pass-through costs growth of +9.1%, with other Global
Integrated Agencies delivering 5.0% LFL growth; Public Relations
8.2% and Specialist Agencies 5.6%
■ Breadth and
depth of capabilities resonating well with clients: $5.9
billion[5] of
net new business won, including
Audible, Danone, SC Johnson and Verizon
■ Recognised for
creativity: most awarded company at the 2022 Cannes Lions Festival
for the second year running
■ Transformation
programme gross annual savings of around £375 million against
a 2019 base are ahead of the planned £300 million, with
savings in property, procurement and ways of working, enabling
additional investment in talent for growth
areas. On
track to reach target of £600 million by
2025
■ Over £1.1
billion returned to shareholders in 2022 comprising £807
million of share buybacks completed and £365 million of
dividends paid
■ 2023 guidance:
LFL revenue less pass-through costs growth of 3 to 5%, and further
margin improvement reflecting continued operating leverage, to
deliver a headline margin of around 15% (excluding the impact of
FX)
Mark Read, Chief Executive Officer, WPP:
"WPP
delivered strong growth in 2022, despite the macro challenges,
reflecting the priority placed by our clients on investing in
communications, customer experience, commerce, data and
technology.
"The
competitiveness of our offer drove net new business of $5.9 billion
in 2022, including new assignments with Audible, SC Johnson, and
Verizon among many others and the quality of our work was
recognised at the Cannes Lions Festival of Creativity where WPP was
named Creative Company of the Year.
"Our
transformation is now delivering measurable results. Over the past
three years, WPP has grown like-for-like net sales at a compound
average rate of 3.2%, including 3.3% in North America, while
improving our headline operating profit margin by 40 basis points.
Our adjusted net debt has declined from over £4 billion at the
end of 2018 to £2.5 billion, while over £3.4 billion has
been returned to shareholders via share buybacks and
dividends.
"We
enter 2023 in a strong financial position with good momentum from
new business and the many opportunities ahead of us. While there
will no doubt be challenges, the continued need for major companies
to build brands, sell products, reinvent and transform their
business, understand their data, invest in technology and exploit
the potential of AI remains, as does their need for modern partners
who can help them navigate this new world."
For
further information:
Investors and analysts
Tom
Waldron
+44 7867
975920
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
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,
adjusted to reflect the results of acquisitions and
disposals.
[3] In this press release not all of the figures and
ratios used are readily available from the unaudited preliminary
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.
Where required, details of how these have been arrived at are shown
in Appendix 2.
[4] Includes a benefit of £102 million due to more
favourable FX rates at year end compared to the prior
year
[5] Billings, as defined in the glossary.
Overview and strategic progress
Market environment
The global marketing and advertising industry has demonstrated
great resilience as brands continue to invest in marketing despite
turbulence in the global economy. According to GroupM estimates,
global advertising spend[1] grew
by 6.5% in 2022, slightly lower than the 8.4% forecast in June
2022, a change primarily due to lower than expected growth in
China.
Digital advertising has continued to grow. As the number of scaled
advertising platforms increases the market is becoming more
complex. GroupM estimates that global digital advertising spend
grew by 9.3% in 2022, following unprecedented 31.9% growth in 2021.
Digital advertising made up 67% of total advertising in 2022, up
from 64% in 2021. Retail media is one of the fastest growing
segments within digital advertising, reflecting the growth in
ecommerce post the pandemic. GroupM estimates retail media spending
will have reached $110.7 billion globally in 2022, around 20% of
overall digital spend.
Spend on TV is recovering to pre-pandemic levels as advertisers
value the medium's effectiveness in satisfying reach and frequency
goals. GroupM estimates that TV advertising grew by 1.7% in 2022, a
slowdown in growth from 11.7% in 2021. The robustness of TV spend
has been supported by growth in connected TV inventory, which made
up 12.7% of the market in 2022, up from 11.0% in 2021. GroupM
expects connected TV to make up nearly a third of all US TV
advertising by 2027.
Global out of home advertising saw modest growth in 2022, curtailed
by lockdown restrictions in China - the largest market for out of
home advertising. Audio saw low-single-digit growth, supported by
growth in digital which represents nearly a quarter of total audio
advertising revenue. Print continues to face pressure as publishers
are diversifying their offerings and revenue streams.
By geography, 2022 saw healthy growth in most major markets. Based
on GroupM findings, advertising spend in the US and UK grew by 7.1%
and 8.9% respectively. China was the only major market to see
declines in advertising spend in 2022 as lockdown restrictions
impacted consumer spending.
For 2023, GroupM expects global advertising spend to grow 5.9%
including a return to growth in China as the economy re-opens,
which is expected to grow 6.3% after a decline of 0.6% in
2022.
Ukraine
Since
the war in Ukraine began in February 2022, our colleagues in
Ukraine have shown extraordinary resilience and bravery and we
remain in regular contact with our leaders in the country to
support our employees. This has included financial support packages
and other forms of assistance, including access to medical advice,
counselling, immigration and relocation support, language classes,
schooling for children and other practical resources.
WPP
partnered with the UN's Refugee Agency (UNHCR) to launch an
emergency appeal for families forced to flee their homes in
Ukraine. Our people donated $675,000 which WPP match-funded,
bringing the total to $1.35 million. Through GroupM, we secured
$1.5 million in pro bono media support for the wider public appeal
through our partners.
We also
supported the Ukrainian government through a pro bono initiative to
encourage inward investment and help revitalise the country's
economy. Advantage Ukraine launched in September 2022, when we
arranged for President Zelensky to virtually ring the opening bell
at the New York Stock Exchange.
In
early March, the Board of WPP concluded that WPP's ongoing presence
in Russia would be inconsistent with our values as a company and we
have subsequently divested our businesses there. This led to a loss
on disposal of £63 million. Russia represented approximately
0.8% of WPP's revenue and 0.6% of revenue less pass-through costs
in 2021.
Performance and progress
Since 2019, WPP's LFL revenue less pass-through costs have grown
10%, headline operating profit is 15% higher and headline EPS has
grown by 26%.
Revenue was £14.4 billion, up 12.7% from £12.8 billion in
2021, and up 6.7% like-for-like. Revenue less pass-through costs
was £11.8 billion, up 13.5% from £10.4
billion in 2021, and up 6.9% like-for-like.
We delivered a strong performance in 2022, with LFL growth in
revenue less pass-through costs across all our major creative,
media, public relations and specialist agencies. Client demand has
been strong, particularly for commerce services and in commerce
media. GroupM's commerce billings increased 18% year-on-year in
2022 while the proportion of digital billings has grown to 48% in
2022, from 43% in 2021.
Revenue less pass-through costs from higher-growth areas of our
offer in experience, commerce and technology remained around a
quarter of the Group. Global revenue less pass-through costs from
experience, commerce and technology grew high-single digits in line
with expected market growth, but in 2022 this growth was matched by
the rest of the portfolio, including a resurgent performance in
broader creative, PR and other communications activities. For
Global Integrated Agencies, excluding GroupM, experience, commerce
and technology accounted for 39%, compared to 38% in 2021 and 35%
in 2019.
Clients and partners
By sector, we have had continued momentum from clients in
the technology, healthcare & pharma and consumer
packaged goods sectors, which together represent 55% of our revenue
less pass-through costs for designated clients. On a three-year
basis, these sectors recorded like-for-like growth of 27.9%, 19.4%
and 21.4% respectively. At the client level, we also saw a broad
commitment to investing in marketing for growth, with 14 out of our
top 30 clients in 2022 showing double-digit
growth.
We won $5.9 billion of net new billings in 2022. Key assignment
wins include Audible, Danone, Migros, SC Johnson, Nationwide
and Verizon. Key retentions included Sony Playstation, Tesco, Mars
Wrigley and MasterKong. Account losses included L'Oréal (US
media) and PepsiCo.
Following the Coca-Cola Company account win in 2021, this global
partnership of unprecedented scale in the industry has been
onboarded at pace, with expectations for further growth, as well as
a strong new business pipeline, helping to underpin our overall
guidance for 2023.
Our relationships with the world's largest brands
continue to broaden, with 90% of WPP's top
50 clients working with five or more of our agencies, demonstrating
the integrated nature of our offer.
We continue to develop new strategic partnerships with leading and
emergent technology companies to build expertise, gain unique
insights and develop our offering for clients.
We have recently announced several partnerships to enhance our
commerce capabilities. These include a first-of-its-kind
partnership with Instacart, the leading online grocery platform in
North America, giving WPP early product insights, access to custom
features and a co-developed certification programme; a partnership
with financial infrastructure platform Stripe to enhance our
digital commerce capabilities across the
business; and a partnership with
BigCommerce a leading Open SaaS ecommerce platform, giving WPP
priority access to new product tools and data sets that will enable
WPP agencies to develop unique insights, maximise omnichannel sales
and optimise spend for both B2C and B2B clients.
Agencies across WPP are using a broad range of generative
artificial intelligence tools to automate workflows, speed the
process of ideation and concepting, and produce innovative creative
work for clients.
Creativity and awards
Our success in 2022 was again underpinned by the strength of our
creative work. We were honoured to win the prestigious title of
most creative company of the year at Cannes Lions International
Festival of Creativity for the second year in a row. Ogilvy won
global network of the year, regaining the top spot it last won in
2016.
In the 2022 WARC rankings, Ogilvy also topped the creativity
ranking and placed second for effectiveness, becoming the only
agency to secure top rankings in both categories and reflecting the
breadth of its offer. WARC also named Mindshare the number one
media agency network for the third consecutive year.
VMLY&R was recognised by Forrester as a leader in Marketing
Creative and Content Services, AKQA secured two Grand Clio awards
and Wunderman Thompson won the inaugural Creative B2B Grand Prix
award at Cannes Lions.
Investments for growth
During the year we made a number of acquisitions investing net
£237m, excluding earnout payments, to expand our presence in
fast growing regions such as Latin America, and our global offer in
experience, commerce and technology. Key acquisitions included:
influencer marketing agency Village Marketing in North America;
Bower House Digital a leading marketing technology services agency
in Australia; Latin American ecommerce agency Corebiz;
JeffreyGroup, one of the most respected independent corporate
communications, public affairs, and marketing consulting firms in
Latin America; Passport Brand Design in the US; Diff, a leading
commerce agency based in Montreal; and New York-based digital transformation agency Fenom
Digital.
We also continued to make organic investments to drive significant
long-term growth opportunities, with a focus on unifying and
accelerating our data capabilities and partnerships, embedding AI
into our workflows through Satalia, and further building out our
proprietary software portfolio.
Choreograph, our data company, continues to invest in its data
products, allowing brands to predict relevance and drive deeper
customer connections, with recent innovative work for Ford,
Unilever and Bayer. Choreograph continues to play a central role in
key client assignment wins, including Verizon in 2022.
In April 2022, we launched GroupM Nexus, bringing together 9,000
practitioners globally across addressable TV (Finecast), AI, retail
media and commerce, programmatic (Xaxis), search and social to be
the performance engine for GroupM's agencies and deliver
transformational outcomes for clients across digital channels and
platforms. We are continuing to see great potential for innovation
and growth in this area, as brands increasingly focus more of their
budgets on delivering cross-channel digital performance and as
traditional TV budgets continue to follow audiences onto new
platforms offering better addressability and measurement such as
Connected TV. Finecast added 150 new clients in 2022 and grew
strongly.
Transformation programme
Good progress has been made on our transformation programme,
designed to simplify WPP, build greater collaboration, drive
efficiency and free up funds for reinvestment in growth. By the end
of 2022 we had delivered around £375 million of gross annual
savings against a 2019 base, ahead of planned savings of £300
million, with savings across property, procurement and ways of
working.
We remain comfortably on target to achieve our goal of £600
million annual cost efficiencies against a 2019 base by
2025.
Transformation cost saving enabled additional investment in talent
in growth areas, allowing WPP to end 2022 with a better balance of
freelance and salaried staff.
The transformation of our property estate continues, with a further
five campuses opened in 2022 (Brussels, Düsseldorf, Santiago,
Tokyo, Toronto), taking the total to 36, accommodating around half
our people. In January we opened a new office in Guangzhou, China,
and we plan to open additional offices including Atlanta, Paris and
Manchester, in 2023. The programme has driven significant savings
to date and our goal remains to complete at least 65 campuses,
housing more than 85,000 people, by 2025.
As part of our transformation, we are consolidating and modernising
our Enterprise Resource Planning and Human Capital Management tools
by deploying Workday and Maconomy. We have also established 24x7 IT
services capabilities for the Group, moving over 1,000 people from
agency roles into WPP and establishing global hubs in Chennai,
Mexico, Bucharest and Kuala Lumpur.
We continue to implement a new procurement operating model
leveraging our global scale, aligned around categories and
consolidating suppliers. As part of this programme, we launched an
initiative in 2022 to optimise our use of flexible talent across
the Group.
We have also merged more of our businesses to simplify our
organisation and respond to our clients' needs for integrated
solutions. Within GroupM we announced the merger of Essence and
MediaCom to form EssenceMediacom and the formation
of GroupM Nexus. In our specialist design agencies,
we announced the merger of Design Bridge and Superunion to create a
single leading design company, Design Bridge and
Partners.
Purpose
WPP's purpose is to use the power of creativity to build better
futures for our people, our planet, our clients and our
communities. We outlined our sustainability strategy at an ESG
event for stakeholders in June 2021. Since then, we have continued
to make good progress in our commitments across each pillar of our
purpose.
People
Throughout the year we have launched and expanded programmes across
our agencies to attract, engage and develop top talent, including
the Future Readiness Academies programme, a unique global learning
programme, based on the four elements of WPP's offer:
communications, experience, commerce and technology; to help
everyone across the company gain the skills and knowledge needed
for success in a growing digital world.
WPP is
committed to improving diversity, equity and inclusion across the
company. During the year we were pleased to appoint a new Chief
Talent and Inclusion Officer, LJ Louis, who will oversee global
initiatives and we continue to link our leaders' compensation and
performance reviews to our DE&I goals and
achievements.
Our
Mental Health Allies programme has been rolled out in Singapore,
following the success of the UK initiative and its extension to the
United States, aimed at supporting our people and reducing stigmas
around mental health. So far, we have trained over 550 Mental
Health Allies and aim to continue to expand into more markets in
2023.
Recognising
our commitment to building an inclusive culture, WPP achieved a top
score on the Corporate Equality Index and has been named among the
Best Places to Work for LGBTQ+ equality. In partnership with
Choreograph, WPP Unite our company-wide LGBTQ+ community published
Beyond the Rainbow, a survey of over 7,500 people in the United
States, UK and Canada to better understand their perceptions and
experiences of viewing LGBTQ+ identities in media and
advertising.
We
continue to invest in programmes to drive greater gender balance
across the business. WPP's women's network, Stella, has been
expanded across EMEA aiming to connect, inspire and support women
across WPP to maximise their potential.
In June
2020, as part of a wider set of commitments to help combat racial
injustice, WPP pledged to invest $30 million over a three-year
period to fund inclusion programmes and support external
organisations. WPP agencies globally are invited to apply to
receive resources to create and run impactful programmes to advance
racial equity. Successful third-round proposals include:
Mindshare's Impact Index, an AI Human safety tool that examines the
social impact of editorial content on historically underrepresented
communities; WPP Belgium's Surboum from a WPP team in Belgium, a
platform for companies, organisations and creatives dedicated to
make the creative scene in Belgium more diverse; and Set Creative's
Pathways Network, an industry-wide coalition to power diversity,
equity and inclusion in suppliers across the experiential event
marketing industry.
Planet
WPP has
committed to reach net zero carbon emissions across its direct
operations by 2025 and across its supply chain by 2030. Our net
zero pledges are backed by science-based reduction targets, which
have been verified by the Science-Based Targets initiative. We have
committed to reducing our absolute Scope 1 and 2 emissions by at
least 84% by 2025 and reduce Scope 3 emissions by at least 50% by
2030, both from a 2019 base year.
WPP is
the only marketing communications company to include the emissions
from media placement in our emissions reduction target. Currently,
media accounts for more than half of WPP's supply chain emissions.
GroupM has launched a media decarbonisation framework for measuring
and reducing ad-based carbon emissions. Supporting this, GroupM has
created a client coalition uniting leading advertisers,
collectively representing $10 billion in global advertising
investment, with a shared commitment to accelerate the
decarbonisation of the world's media supply chain.
During
the year, WPP was awarded a 'Prime' ESG rating by ISS, one of the
world's leading rating agencies for sustainable investment. WPP
received an 'A-' rating in CDP's 2022 climate change assessment for
the second year in a row.
Clients
Purpose is at the heart of our offer, and we continue to support
our clients on their own diversity, equity and inclusion goals. For
example, Mindshare Inclusive Innovation hosted a panel with key
clients and Mindshare leaders for TikTok's NextGen Diverse Creator
Cohort. The goal of the panel was empower diverse creators and
provide insight on the role of influencer marketing for brands, how
media agencies work, on how to land a brand
partnership.
In our annual survey of our client satisfaction, our
key Likelihood to
recommend score was 8 out
of a possible 10, with Quality of
work scored at 8.1
and Diversity, Equity and
Inclusion scored at 8.2,
maintaining the high levels achieved in the 2021 survey and showing
a significant improvement over 2018-2020.
Communities
WPP is
committed to making a positive contribution to the communities in
which we operate. Earlier this year, WPP launched Creative Data
School a learning programme for 6,000 young people aged 10-25
across the UK, designed by WPP's data and AI team, aiming to
inspire young people and build their confidence in Data and
AI.
In
November, WPP published The Consumer Equality Equation report, a
study into the relationship between ethnicity and the consumer
experience in the UK, urging brands to rethink assumptions and
address inequality. The report, supported by the WPP Racial Equity
Programme, is an important milestone in our commitment to be a
catalyst towards greater consumer equality.
Outlook for 2023
WPP is
entering 2023 with a compelling client offer, good momentum from
new business wins, and a robust balance sheet.
Our
guidance for 2023 is as follows:
|
Like-for-like
revenue less pass-through costs growth of 3-5%;
further
margin improvement reflecting continued operating leverage to
deliver a headline margin of around 15% (excluding the impact of
FX)
|
Other
2023 financial guidance:
■ We also anticipate
mergers and acquisitions will add 0.5-1.0% to revenue less
pass-through costs growth
■ Headline income from
associates is expected to be around £40 million*
■ Effective tax rate
(measured as headline tax as a % of headline profit before tax) of
around 27.0%
■ Capex £300
million
■ Restructuring costs of
around £180 million
■ Trade working capital
expected to be broadly flat year-on-year with operational
improvement offsetting increased client focus on cash
management
■ Average net debt/EBITDA
within the range of 1.5x-1.75x
*Kantar associate income
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 zero. This means that we expect that around £40-50 million
of Kantar headline income will not be recognised in our headline
income from associates during 2023.
Medium-term guidance
We
remain confident in our ability to deliver annual revenue less
pass-through costs growth of 3-4% and headline operating profit
margin of 15.5-16%, as a result of the actions we have taken to
broaden and strengthen our services, to increase our exposure to
attractive industry segments and to leverage our global
scale.
Financial results
Unaudited headline income statement[2]:
|
£ million
|
2022
|
2021
|
+/(-) %
reported
|
+/(-) %
LFL
|
|
Revenue
|
14,429
|
12,801
|
12.7
|
6.7
|
|
Revenue
less pass-through costs
|
11,799
|
10,397
|
13.5
|
6.9
|
|
Operating
profit
|
1,742
|
1,494
|
16.6
|
10.0
|
|
Operating
profit margin %
|
14.8%
|
14.4%
|
0.4pt
|
0.4pt
|
|
Income
from associates
|
74
|
86
|
(14.2)
|
|
|
PBIT
|
1,816
|
1,580
|
14.9
|
|
|
Net
finance costs
|
(214)
|
(215)
|
0.1
|
|
|
Profit
before tax
|
1,602
|
1,365
|
17.3
|
|
|
Tax
|
(409)
|
(328)
|
(24.7)
|
|
|
Profit
after tax
|
1,193
|
1,037
|
15.0
|
|
|
Non-controlling
interests
|
(93)
|
(83)
|
(11.7)
|
|
|
Profit
attributable to shareholders
|
1,100
|
954
|
15.3
|
|
|
Diluted
EPS
|
98.5p
|
78.5p
|
25.5
|
|
Reconciliation of profit before
taxation to headline operating profit:
|
£ million
|
2022
|
2021
|
|
Profit before taxation
|
1,160
|
951
|
|
Finance
and investment income
|
145
|
70
|
|
Finance
costs
|
(359)
|
(284)
|
|
Revaluation
and retranslation of financial instruments
|
76
|
(88)
|
|
Profit before interest and taxation
|
1,298
|
1,253
|
|
Earnings
from associates - after interest and tax
|
60
|
(24)
|
|
Operating profit
|
1,358
|
1,229
|
|
Goodwill
impairment
|
38
|
2
|
|
Amortisation
and impairment of acquired intangible assets
|
62
|
98
|
|
Investment
and other impairment charges/(reversals)
|
48
|
(42)
|
|
Intangible
asset impairment
|
29
|
-
|
|
Restructuring
and transformation costs
|
204
|
146
|
|
Restructuring
costs in relation to COVID-19
|
15
|
30
|
|
Property
related costs
|
18
|
-
|
|
Losses
on disposal of investments and subsidiaries
|
36
|
10
|
|
Gains
on remeasurement of equity interests arising from a change in scope
of ownership
|
(66)
|
-
|
|
Litigation
settlement
|
-
|
21
|
|
Headline operating profit
|
1,742
|
1,494
|
Reported
revenue was up 12.7% at £14.4 billion. Reported revenue on a
constant currency basis was up 7.0% compared with last year. Net
changes from acquisitions, disposals had a negative impact of 0.3%
on growth.
Like-for-like
revenue growth for 2022 excluding the impact of currency,
acquisitions and disposals, and the other adjustments, was
6.7%.
Reported
revenue less pass-through costs was up 13.5%, and up 7.6% on a
constant currency basis. Excluding the impact of acquisitions and
disposals and the other adjustments, like-for-like growth was 6.9%.
In the fourth quarter, like-for-like revenue less pass-through
costs was up 6.4%.
Business sector review
Revenue analysis
|
£
million
|
2022
|
2021
|
+/(-)%
reported
|
+/(-)%
LFL
|
|
Global
Integrated Agencies
|
12,191
|
10,890
|
11.9
|
6.9
|
|
Public
Relations
|
1,228
|
959
|
28.1
|
9.4
|
|
Specialist
Agencies
|
1,010
|
952
|
6.1
|
1.9
|
|
Total Group
|
14,429
|
12,801
|
12.7
|
6.7
|
Prior
year figures have been re-presented to reflect the reallocation of
a number of
businesses
between Global Integrated Agencies and Specialist Agencies. This
increases
Global
Integrated Agencies' Q4 and FY 2021 revenue by £13 million and
£54 million
respectively
and reduces Specialist Agencies' by the same amount.
Revenue less pass-through costs analysis
|
£
million
|
2022
|
2021
|
+/(-) %
reported
|
+/(-)%
LFL
|
|
Global
Integrated Agencies
|
9,742
|
8,683
|
12.2
|
6.9
|
|
Public
Relations
|
1,157
|
910
|
27.1
|
8.2
|
|
Specialist
Agencies
|
900
|
804
|
11.9
|
5.6
|
|
Total Group
|
11,799
|
10,397
|
13.5
|
6.9
|
Prior
year figures have been re-presented to reflect the reallocation of
a number of businesses between Global Integrated Agencies and
Specialist Agencies. This increases Global Integrated Agencies' Q4
and FY 2021 revenue less pass-through costs by £11 million and
£44 million respectively and reduces Specialist Agencies' by
the same amount.
Headline operating profit analysis
|
£
million
|
2022
|
%
margin*
|
2021
|
%
margin*
|
|
Global
Int. Agencies
|
1,432
|
14.7
|
1,222
|
14.1
|
|
Public Relations
|
191
|
16.5
|
143
|
15.7
|
|
Specialist Agencies
|
119
|
13.2
|
129
|
16.0
|
|
Total Group
|
1,742
|
14.8
|
1,494
|
14.4
|
*
Headline operating profit as a percentage of revenue less
pass-through costs
Prior
year figures have been re-presented to reflect the reallocation of
a number of businesses between Global Integrated Agencies and
Specialist Agencies. This increases Global Integrated Agencies'
2021 headline operating profit by £6 million and reduces
Specialist Agencies' by the same amount.
Global Integrated Agencies reported revenue was up
18.7% in the final quarter. Like-for-like revenue less pass-through
costs was up 6.6% in the final quarter, and up 9.8% on a three-year
basis. GroupM, which represented 37% of WPP's revenue less
pass-through costs in the fourth quarter, was up 8.8%
like-for-like. The other integrated agencies all recorded broadly
similar levels of growth. For the full year, like-for-like revenue
less pass-through costs for the segment was up 6.9%, and up 9.5%
over three years.
Public Relations reported revenue was up
30.1% in the final quarter. Like-for-like revenue less pass-through
costs was up 6.5% in the final quarter, and up 17.5% on a
three-year basis. All agencies continued to grow well, with Hill +
Knowlton Strategies growing strongly. During the period we launched
FGS Global, the new name and branding for the merger of Finsbury
Glover Hering and Sard Verbinnen. For the full year, like-for-like
revenue less pass-through costs for the segment was up 8.2%, and up
15.9% over three years.
Specialist Agencies reported revenue was up
19.3% in the final quarter. Like-for-like revenue less pass-through
costs was up 4.4% in the final quarter, and up 8.7% on a three-year
basis. For the full year, like-for-like revenue less pass-through
costs for the segment was up 5.6%, and up 13.8% over three
years.
Regional review
Revenue analysis
|
£ million
|
2022
|
2021
|
+/(-)%
reported
|
+/(-)%
LFL
|
|
N. America
|
5,550
|
4,494
|
23.5
|
7.8
|
|
United Kingdom
|
2,004
|
1,867
|
7.3
|
6.3
|
|
W. Cont Europe
|
2,876
|
2,786
|
3.2
|
4.8
|
|
AP, LA, AME, CEE[3]
|
3,999
|
3,654
|
9.5
|
7.0
|
|
Total Group
|
14,429
|
12,801
|
12.7
|
6.7
|
Revenue less pass-through costs analysis
|
£ million
|
2022
|
2021
|
+/(-) %
reported
|
+/(-) %
LFL
|
|
N. America
|
4,688
|
3,849
|
21.8
|
6.6
|
|
United Kingdom
|
1,537
|
1,414
|
8.7
|
7.6
|
|
W. Cont Europe
|
2,319
|
2,226
|
4.2
|
5.5
|
|
AP, LA, AME, CEE
|
3,255
|
2,908
|
11.9
|
8.0
|
|
Total Group
|
11,799
|
10,397
|
13.5
|
6.9
|
Headline operating profit analysis
|
£ million
|
2022
|
%
margin*
|
2021
|
%
margin*
|
|
N. America
|
771
|
16.4
|
656
|
17.0
|
|
United
Kingdom
|
187
|
12.3
|
181
|
12.8
|
|
W Cont. Europe
|
301
|
13.0
|
289
|
13.0
|
|
AP, LA, AME, CEE
|
483
|
14.8
|
368
|
12.7
|
|
Total Group
|
1,742
|
14.8
|
1,494
|
14.4
|
*
Headline operating profit as a percentage of revenue less
pass-through costs
North America reported revenue was up
30.6% in the final quarter. Like-for-like revenue less pass-through
costs was up 3.4% in the final quarter, and up 8.6% on a three-year
basis. The US continued to grow at a high-single-digit rate, led by
Ogilvy, Hogarth and GroupM. On a full year basis, like-for-like
revenue less pass-through costs in North America was up 6.6%, and
up 10.2% over three years.
United Kingdom reported revenue was up
24.3% in the final quarter. Like-for-like revenue less pass-through
costs was up 12.0% in the final quarter, and up 14.0% on a
three-year basis. GroupM and Hogarth were the strongest performers.
On a full year basis, like-for-like revenue less pass-through costs
was up 7.6%, and up 10.8% over three years.
Western Continental Europe reported revenue was up
12.7% in the final quarter. Like-for-like revenue less pass-through
costs was up 8.7% in the final quarter, and up 12.7% on a
three-year basis. Spain was the strongest performer in the quarter,
up 38.6% driven by good growth Ogilvy and Wunderman Thompson.
France declined 12.2% in the quarter and 18.7% over three years
reflecting the full year impact of client losses in 2021. On a full
year basis, like-for-like revenue less pass-through costs in the
region was up 5.5%, and up 11.0% over three years.
In Asia
Pacific, Latin America, Africa & the Middle East and Central
& Eastern Europe, reported revenue was up 10.4% in the
final quarter. Like-for-like revenue less pass-through costs was up
5.9% in the final quarter, and up 8.7% on a three-year basis. In
Latin America growth benefited from a strong performance in Brazil
and very strong growth in Argentina, while Asia Pacific continued
to be negatively impacted by COVID-related restrictions in China.
On a full year basis, like-for-like revenue less pass-through costs
was up 8.0%, and up 8.8% over three years.
The
decline of like-for-like revenue less pass-through costs in China
in Q4 reflected widespread COVID-related lockdowns during the
quarter. Policy changes and the subsequent re-opening late in the
quarter is expected to benefit WPP later in 2023 with media and
programmatic business recovering first, followed by creative
activities.
Operating profitability
Reported
profit before tax was £1.2 billion, compared to a profit of
£1.0 billion in 2021, reflecting the strong operating
performance.
Reported
profit after tax was £0.8 billion compared to a profit in 2021
of £0.7 billion.
Headline
EBITDA (including IFRS 16 depreciation) for 2022 was up 14.5% to
£2.0 billion, compared to £1.8 billion the previous year.
Headline operating profit was up 16.6% to £1.7 billion. The
significant growth in profitability year-on-year reflects revenue
growth and the progress on our transformation programme, with
£375 million of gross savings towards our 2025 annual run rate
target of £600 million.
Headline
operating profit margin was up 40 basis points to 14.8%, and up 40
basis points like-for-like. Staff costs pre-incentives were a 240
basis points drag on margin, reflecting the tight labour market and
inflationary backdrop. Personal costs were a 50 basis points drag
as travel and in-person meetings recommenced. Offsetting tailwinds
were staff incentives (210 basis points), establishment costs (50
basis points), IT costs (30 basis points) and other operating costs
(40 basis points).
The
Group's headline operating profit margin is after charging £44
million of severance costs, compared with £42 million in 2021
and £424 million of incentive payments, compared to £592
million in 2021.
The
average number of people in the Group in 2022 was 114,129 compared
to 104,808 in 2021. The total number of people at 31 December 2022
was 115,473 compared to 109,382 at 31 December 2021.
Adjusting items
The
Group incurred a net loss from adjusting items of £341 million
in 2022. This comprises the Group's share of adjusting items from
associates (£134 million), restructuring and transformation
costs (£219 million) and other net gains from adjusting items
(£12 million). Restructuring and transformation costs mainly
comprise severance and property-related costs arising from the
continuing structural review of parts of the Group's operations,
investments in IT and ERP systems as part of our transformation
programme. This compares with a net loss from adjusting items in
2021 of £270 million.
Interest and taxes
Net
finance costs (excluding the revaluation and retranslation of
financial instruments) were £214 million, a decrease of
£1 million year-on-year.
The
reported tax charge was £384 million (2021: £230
million). The headline tax rate (measured on headline profit before
tax, including associate income) was 25.5% (2021: 24.0%). Given the
Group's geographic mix of profits and the changing international
tax environment, the tax rate is expected to be around 27.0% in
2023, and to continue to increase in the next few
years.
Earnings and dividend
Reported
profit before tax was up 22.0% to £1.2 billion. Headline
profit before tax was up 17.3% to £1.6 billion, and headline profits attributable
to share owners were £1.1 billion.
Reported
diluted earnings per share were 61.2 pence, compared to 52.5 pence
in the prior period. Headline diluted earnings per share were up
25.5% to 98.5 pence.
The
Board is proposing a final dividend for 2022 of 24.4 pence per
share, which together with the interim dividend paid in November
2022 gives a full-year dividend of 39.4 pence per share. The record
date for the final dividend is 9 June
2023, and the dividend will be payable on 7 July 2023.
Further
details of WPP's financial performance are provided in Appendix
1.
Cash flow highlights
|
Twelve months ended (£ million)
|
31 December 2022
|
31 December 2021
|
|
|
Operating profit
|
1,358
|
1,229
|
|
|
Depreciation and amortisation
|
513
|
542
|
|
|
Investment and other impairment charges/(reversals)
|
158
|
(1)
|
|
|
Lease payments (inc interest)
|
(402)
|
(409)
|
|
|
Non-cash compensation
|
122
|
100
|
|
|
Net interest paid
|
(121)
|
(126)
|
|
|
Tax paid
|
(391)
|
(391)
|
|
|
Capex
|
(223)
|
(293)
|
|
|
Earnout payments
|
(71)
|
(57)
|
|
|
Other
|
(43)
|
(31)
|
|
|
Trade working capital
|
(328)
|
319
|
|
|
Other receivables, payables and provisions
|
(519)
|
383
|
|
|
Adjusted free cash
flow[4]
|
53
|
1,265
|
|
|
Disposal proceeds
|
51
|
77
|
|
|
Net initial acquisition payments
|
(274)
|
(464)
|
|
|
Dividends
|
(365)
|
(315)
|
|
|
Share repurchases and buybacks
|
(863)
|
(819)
|
|
|
Net cash flow
|
(1,398)
|
(256)
|
|
|
|
|
|
|
In 2022, net cash outflow was £1,398 million, compared to a
£256 million outflow in 2021. The main driver of the cash flow
performance year-on-year was the £328 million adverse movement
in trade working capital lapping positive movement in the prior
year, driven by year-end mix and timing factors, the £519
million adverse movement in other receivables, payables and
provisions was driven by a reduction in staff incentives payable,
prepayments and year-end mix and timing factors associated with
VAT, growth in the dividend and the increase in the share buyback.
A summary of the Group's unaudited cash flow statement and notes
for the twelve months to 31 December 2022 is provided in Appendix
1.
Balance sheet highlights
As at
31 December 2022 we had cash and cash equivalents of £2.1
billion and total liquidity, including undrawn credit facilities,
of £4.1 billion. Average adjusted net debt in 2022 was
£2.9 billion, compared to £1.6 billion in the prior
period, at 2022 exchange rates. On 31 December 2022 adjusted net
debt was £2.5 billion, against £0.9 billion on 31
December 2021, an increase of £1.4 billion at 2022 exchange
rates. The higher adjusted net debt figure mainly reflects the
£1,172 million returned to shareholders in 2022 comprising
£807 million of share buybacks completed and £365 million
of dividends paid.
We
spent £863 million on share purchases during the year, of
which £807 million
related
to share buybacks.
Around
£50 million of share repurchases planned for 2023 continuing
to offset dilution from share-based payments.
Our
bond portfolio at 31 December 2022 had an average maturity of 6.4
years.
The
average adjusted net debt to EBITDA ratio in the 12 months to 31
December 2022 is 1.46x, which excludes the impact of IFRS 16. This
is slightly below our target range of 1.5 - 1.75x average adjusted
net debt to EBITDA.
A
summary of the Group's unaudited balance sheet and notes as at 31
December 2022 is provided in Appendix 1.
Foreign exchange sensitivity
Foreign
exchange rates at 22nd February 2023 imply around a 1% tailwind to
reported revenue less pass-through costs in 2023 from the movement
in sterling year-on-year.
Management change
In November, we announced
that Chief Financial Officer John Rogers has
decided to step down from the company. The Board has appointed
Joanne Wilson to succeed John as Chief Financial Officer. Joanne is
currently Chief Financial Officer at Britvic plc (LSE:BVIC), the
UK-listed international soft drinks company. It is expected that
Joanne will join WPP in the first half of 2023. To ensure a smooth
transition, John will remain available until later in
2023.
Appendix 1: Preliminary results for the year
ended 31 December
2022
Unaudited preliminary consolidated income statement for the year
ended 31 December 2022
|
£
million
|
Notes
|
2022
|
2021
|
|
Revenue
|
7
|
14,428.7
|
12,801.1
|
|
Costs
of services
|
4
|
(11,890.1)
|
(10,597.5)
|
|
Gross profit
|
|
2,538.6
|
2,203.6
|
|
General
and administrative costs
|
4
|
(1,180.4)
|
(974.6)
|
|
Operating profit
|
|
1,358.2
|
1,229.0
|
|
Earnings
from associates - after interest and tax
|
5
|
(60.4)
|
23.8
|
|
Profit before interest and taxation
|
|
1,297.8
|
1,252.8
|
|
Finance
and investment income
|
6
|
145.4
|
69.4
|
|
Finance
costs
|
6
|
(359.4)
|
(283.6)
|
|
Revaluation
and retranslation of financial instruments
|
6
|
76.0
|
(87.8)
|
|
Profit before taxation
|
|
1,159.8
|
950.8
|
|
Taxation
|
8
|
(384.4)
|
(230.1)
|
|
Profit for the year
|
|
775.4
|
720.7
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity
holders of the parent
|
|
682.7
|
637.7
|
|
Non-controlling
interests
|
|
92.7
|
83.0
|
|
|
|
775.4
|
720.7
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
Basic
earnings per ordinary share
|
10
|
62.2p
|
53.4p
|
|
Diluted
earnings per ordinary share
|
10
|
61.2p
|
52.5p
|
|
|
|
|
|
The accompanying notes form an integral part of this unaudited
preliminary consolidated income statement.
Unaudited preliminary consolidated statement of comprehensive
income for the year ended 31 December 2022
|
£
million
|
|
2022
|
2021
|
|
Profit for the year
|
|
775.4
|
720.7
|
|
Items that may be reclassified subsequently to profit or
loss:
|
|
|
|
|
Exchange
adjustments on foreign currency net investments1
|
|
424.2
|
(143.0)
|
|
(Loss)/gain on net investment hedges
|
|
(141.5)
|
45.5
|
|
Cash
flow hedges:1
|
|
|
|
|
Fair value gain/(loss) arising on hedging instruments
|
|
38.5
|
(38.0)
|
|
Less: (loss)/gain reclassified to profit or loss
|
|
(38.5)
|
38.0
|
|
Share of other comprehensive income of associates
undertakings
|
|
51.2
|
13.5
|
|
|
|
333.9
|
(84.0)
|
|
|
|
|
|
|
Items that will not be reclassified subsequently to profit or
loss:
|
|
|
|
|
Movements on equity
investments held at fair value through other comprehensive
income
|
|
(22.3)
|
(35.5)
|
|
Actuarial
gain on defined benefit pension plans
|
|
16.6
|
14.3
|
|
Deferred
tax on defined benefit pension plans
|
|
(7.4)
|
(3.0)
|
|
|
|
(13.1)
|
(24.2)
|
|
Other comprehensive income/(loss) relating to the year
|
|
320.8
|
(108.2)
|
|
Total comprehensive income relating to the year
|
|
1,096.2
|
612.5
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity
holders of the parent
|
|
988.3
|
539.8
|
|
Non-controlling
interests
|
|
107.9
|
72.7
|
|
|
|
1,096.2
|
612.5
|
The accompanying notes form an integral part of this unaudited
preliminary consolidated statement of comprehensive
income.
1 Balance
for the year ended 31 December 2021 has been re-presented following
a £38.0 million reclassification between the Hedging Reserve
and Translation Reserves.
Unaudited preliminary consolidated cash flow statement for the year
ended
31 December 2022
|
£
million
|
Notes
|
2022
|
2021
|
|
Net cash inflow from operating activities1
|
11
|
700.9
|
2,029.0
|
|
Investing activities
|
|
|
|
|
Acquisitions1
|
11
|
(236.2)
|
(382.3)
|
|
Disposals
of investments and subsidiaries
|
11
|
37.7
|
28.3
|
|
Purchase
of property, plant and equipment
|
|
(208.4)
|
(263.2)
|
|
Purchase
of other intangible assets (including capitalised computer
software)
|
|
(14.9)
|
(29.9)
|
|
Proceeds
on disposal of property, plant and equipment
|
|
12.9
|
8.7
|
|
Net cash outflow from investing activities
|
|
(408.9)
|
(638.4)
|
|
Financing activities
|
|
|
|
|
Repayment
of lease liabilities
|
|
(309.6)
|
(320.7)
|
|
Share
option proceeds
|
|
1.2
|
4.4
|
|
Cash
consideration received from non-controlling interests
|
11
|
-
|
39.5
|
|
Cash
consideration for purchase of non-controlling
interests
|
11
|
(84.2)
|
(135.0)
|
|
Share
repurchases and buy-backs
|
11
|
(862.7)
|
(818.5)
|
|
Repayment of borrowings
|
11
|
(220.6)
|
(397.1)
|
|
Financing
and share issue costs
|
|
(0.2)
|
(0.4)
|
|
Equity
dividends paid
|
|
(365.4)
|
(314.7)
|
|
Dividends
paid to non-controlling interests in subsidiary
undertakings
|
|
(69.5)
|
(114.5)
|
|
Net cash outflow from financing activities
|
|
(1,911.0)
|
(2,057.0)
|
|
Net decrease in cash and cash equivalents
|
|
(1,619.0)
|
(666.4)
|
|
Translation
of cash and cash equivalents
|
|
64.2
|
(130.1)
|
|
Cash
and cash equivalents at beginning of year
|
|
3,540.6
|
4,337.1
|
|
Cash and cash equivalents at end of year
|
12
|
1,985.8
|
3,540.6
|
The
accompanying notes form an integral part of this unaudited
preliminary consolidated cash flow
statement.
1 Earnout payments in excess of the amount
determined at acquisition are recorded as operating activities.
Prior year excess amounts were recorded as investing activities and
have been re-presented as operating activities.
Unaudited preliminary consolidated balance sheet as at
31 December 2022
|
£
million
|
Notes
|
2022
|
2021
|
|
Non-current assets
|
|
|
|
|
Intangible
assets:
|
|
|
|
|
Goodwill
|
13
|
8,453.4
|
7,612.3
|
|
Other
|
14
|
1,451.9
|
1,359.5
|
|
Property,
plant and equipment
|
|
1,000.7
|
896.4
|
|
Right-of-use
assets
|
|
1,528.5
|
1,395.1
|
|
Interests
in associates and joint ventures
|
|
305.1
|
412.9
|
|
Other
investments
|
|
369.8
|
318.3
|
|
Deferred
tax assets
|
|
322.1
|
341.5
|
|
Corporate
income tax recoverable
|
|
74.1
|
46.6
|
|
Trade
and other receivables
|
15
|
218.6
|
152.6
|
|
|
|
13,724.2
|
12,535.2
|
|
Current assets
|
|
|
|
|
Corporate
income tax recoverable
|
|
107.1
|
90.4
|
|
Trade
and other receivables
|
15
|
12,499.7
|
11,362.3
|
|
Cash
and short-term deposits
|
|
2,491.5
|
3,882.9
|
|
|
|
15,098.3
|
15,335.6
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade
and other payables
|
16
|
(15,834.9)
|
(15,252.3)
|
|
Corporate
income tax payable
|
|
(422.0)
|
(386.2)
|
|
Short-term
lease liabilities
|
|
(282.4)
|
(279.7)
|
|
Bank
overdrafts, bonds and bank loans
|
|
(1,169.0)
|
(567.2)
|
|
|
|
(17,708.3)
|
(16,485.4)
|
|
Net current liabilities
|
|
(2,610.0)
|
(1,149.8)
|
|
Total assets less current liabilities
|
|
11,114.2
|
11,385.4
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Bonds
and bank loans
|
|
(3,801.8)
|
(4,216.8)
|
|
Trade
and other payables
|
17
|
(490.9)
|
(619.9)
|
|
Deferred
tax liabilities
|
|
(350.8)
|
(312.5)
|
|
Provisions
for post-employment benefits
|
|
(137.5)
|
(136.6)
|
|
Provisions
for liabilities and charges
|
|
(244.6)
|
(268.5)
|
|
Long-term
lease liabilities
|
|
(1,928.2)
|
(1,762.1)
|
|
|
|
(6,953.8)
|
(7,316.4)
|
|
Net assets
|
|
4,160.4
|
4,069.0
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Called-up
share capital
|
18
|
114.1
|
122.4
|
|
Share
premium account
|
|
575.9
|
574.7
|
|
Other
reserves
|
|
285.2
|
(335.9)
|
|
Own
shares
|
|
(1,054.1)
|
(1,112.1)
|
|
Retained
earnings
|
|
3,759.7
|
4,367.3
|
|
Equity shareholders' funds
|
|
3,680.8
|
3,616.4
|
|
Non-controlling
interests
|
|
479.6
|
452.6
|
|
Total equity
|
|
4,160.4
|
4,069.0
|
|
|
|
|
|
The
accompanying notes form an integral part of this unaudited
preliminary consolidated balance sheet.
Unaudited preliminary consolidated statement of changes in equity
for the year ended 31 December 2022
|
£
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 2021
|
129.6
|
570.3
|
191.2
|
(1,118.3)
|
4,959.2
|
4,732.0
|
318.1
|
5,050.1
|
|
Ordinary shares issued
|
-
|
4.4
|
-
|
-
|
-
|
4.4
|
-
|
4.4
|
|
Share
cancellations
|
(7.2)
|
-
|
7.2
|
-
|
(729.3)
|
(729.3)
|
-
|
(729.3)
|
|
Treasury
share allocations
|
-
|
-
|
-
|
3.7
|
(3.7)
|
-
|
-
|
-
|
|
Profit
for the year
|
-
|
-
|
-
|
-
|
637.7
|
637.7
|
83.0
|
720.7
|
|
Exchange
adjustments on foreign currency net investments2
|
-
|
-
|
(132.7)
|
-
|
-
|
(132.7)
|
(10.3)
|
(143.0)
|
|
Gain on net investment hedges
|
-
|
-
|
45.5
|
-
|
-
|
45.5
|
-
|
45.5
|
|
Cash
flow hedges2:
|
|
|
|
|
|
|
|
|
|
Fair value loss arising on hedging instruments
|
-
|
-
|
(38.0)
|
-
|
-
|
(38.0)
|
-
|
(38.0)
|
|
Less: gain reclassified to profit or loss
|
-
|
-
|
38.0
|
-
|
-
|
38.0
|
-
|
38.0
|
|
Share of other comprehensive income of associates
undertakings
|
-
|
-
|
7.3
|
-
|
6.2
|
13.5
|
-
|
13.5
|
|
Movements
on equity investments held at fair value through other
comprehensive income
|
-
|
-
|
-
|
-
|
(35.5)
|
(35.5)
|
-
|
(35.5)
|
|
Actuarial
gain on defined benefit pension plans
|
-
|
-
|
-
|
-
|
14.3
|
14.3
|
-
|
14.3
|
|
Deferred
tax on defined benefit pension plans
|
-
|
-
|
-
|
-
|
(3.0)
|
(3.0)
|
-
|
(3.0)
|
|
Other
comprehensive loss
|
-
|
-
|
(79.9)
|
-
|
(18.0)
|
(97.9)
|
(10.3)
|
(108.2)
|
|
Total
comprehensive (loss)/income
|
-
|
-
|
(79.9)
|
-
|
619.7
|
539.8
|
72.7
|
612.5
|
|
Dividends
paid
|
-
|
-
|
-
|
-
|
(314.7)
|
(314.7)
|
(114.5)
|
(429.2)
|
|
Non-cash share-based incentive plans (including share
options)
|
-
|
-
|
-
|
-
|
99.6
|
99.6
|
-
|
99.6
|
|
Tax adjustment on share-based payments
|
-
|
-
|
-
|
-
|
15.4
|
15.4
|
-
|
15.4
|
|
Net movement in own shares held by ESOP Trusts
|
-
|
-
|
-
|
2.5
|
(91.7)
|
(89.2)
|
-
|
(89.2)
|
|
Recognition/derecognition
of liabilities in respect of put options
|
-
|
-
|
(242.7)
|
-
|
1.1
|
(241.6)
|
-
|
(241.6)
|
|
Share
purchases - close period commitments3
|
-
|
-
|
(211.7)
|
-
|
-
|
(211.7)
|
-
|
(211.7)
|
|
Share of other equity movements of associates
|
-
|
-
|
-
|
-
|
(8.0)
|
(8.0)
|
-
|
(8.0)
|
|
Acquisition
of subsidiaries4
|
-
|
-
|
-
|
-
|
(180.3)
|
(180.3)
|
176.3
|
(4.0)
|
|
Balance at 31 December 2021
|
122.4
|
574.7
|
(335.9)
|
(1,112.1)
|
4,367.3
|
3,616.4
|
452.6
|
4,069.0
|
|
Ordinary shares issued
|
-
|
1.2
|
-
|
-
|
-
|
1.2
|
-
|
1.2
|
|
Share
cancellations
|
(8.3)
|
-
|
8.3
|
-
|
(807.4)
|
(807.4)
|
-
|
(807.4)
|
|
Treasury
share allocations
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
Profit
for the year
|
-
|
-
|
-
|
-
|
682.7
|
682.7
|
92.7
|
775.4
|
|
Exchange
adjustments on foreign currency net investments
|
-
|
-
|
409.0
|
-
|
-
|
409.0
|
15.2
|
424.2
|
|
Loss on net investment hedges
|
-
|
-
|
(141.5)
|
-
|
-
|
(141.5)
|
-
|
(141.5)
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
Fair value gain arising on hedging instruments
|
-
|
-
|
38.5
|
-
|
-
|
38.5
|
-
|
38.5
|
|
Less: loss reclassified to profit or loss
|
-
|
-
|
(38.5)
|
-
|
-
|
(38.5)
|
-
|
(38.5)
|
|
Share of other comprehensive income of associates
undertakings
|
-
|
-
|
31.9
|
-
|
19.3
|
51.2
|
-
|
51.2
|
|
Movements
on equity investments held at fair value through other
comprehensive income
|
-
|
-
|
-
|
-
|
(22.3)
|
(22.3)
|
-
|
(22.3)
|
|
Actuarial
gain on defined benefit pension plans
|
-
|
-
|
-
|
-
|
16.6
|
16.6
|
-
|
16.6
|
|
Deferred
tax on defined benefit pension plans
|
-
|
-
|
-
|
-
|
(7.4)
|
(7.4)
|
-
|
(7.4)
|
|
Other
comprehensive income
|
-
|
-
|
299.4
|
-
|
6.2
|
305.6
|
15.2
|
320.8
|
|
Total
comprehensive income
|
-
|
-
|
299.4
|
-
|
688.9
|
988.3
|
107.9
|
1,096.2
|
|
Dividends
paid
|
-
|
-
|
-
|
-
|
(365.4)
|
(365.4)
|
(69.5)
|
(434.9)
|
|
Non-cash share-based incentive plans (including share
options)
|
-
|
-
|
-
|
-
|
122.0
|
122.0
|
-
|
122.0
|
|
Tax adjustment on share-based payments
|
-
|
-
|
-
|
-
|
(9.2)
|
(9.2)
|
-
|
(9.2)
|
|
Net movement in own shares held by ESOP Trusts
|
-
|
-
|
-
|
58.0
|
(113.3)
|
(55.3)
|
-
|
(55.3)
|
|
Recognition/derecognition
of liabilities in respect of put options
|
-
|
-
|
101.7
|
-
|
(40.3)
|
61.4
|
-
|
61.4
|
|
Share
purchases - close period commitments3
|
-
|
-
|
211.7
|
-
|
-
|
211.7
|
-
|
211.7
|
|
Share of other equity movements of associates
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Acquisition
of subsidiaries4
|
-
|
-
|
-
|
-
|
(82.9)
|
(82.9)
|
(11.4)
|
(94.3)
|
|
Balance at 31 December 2022
|
114.1
|
575.9
|
285.2
|
(1,054.1)
|
3,759.7
|
3,680.8
|
479.6
|
4,160.4
|
The accompanying notes form an integral part of this unaudited
preliminary consolidated statement of changes in
equity.
1 Accumulated
losses on existing equity investments held at fair value through
other comprehensive income are £330.8 million at 31 December
2022 (2021: £308.5 million).
2 Balance
for the year ended 31 December 2021 has been re-presented following
a £38.0 million reclassification between the Hedging Reserve
and Translation Reserves.
3 During 2021, the Company entered
into an arrangement with a third party to conduct share buybacks on
its behalf in the close period commencing on 16 December 2021 and
ending on 18 February 2022, in accordance with UK listing rules.
The commitment resulting from this agreement constituted a
liability at 31 December 2021 and was recognised as a movement in
other reserves in the year ended 31 December 2021. After the close
period ended on 18 February 2022, the liability was settled and the
amount in other reserves was reclassified to retained
earnings.
4 Acquisition
of subsidiaries 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 preliminary consolidated financial
statements
1. Basis of accounting
The
unaudited preliminary consolidated financial statements are
prepared under the historical cost convention, except for the
revaluation of certain financial instruments as disclosed in our
accounting policies.
2. Accounting policies
The unaudited preliminary consolidated financial statements comply
with the recognition and measurement criteria of International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB) as they apply to the financial
statements of the Group. With the exception of the adoption of hedge
accounting requirements under IFRS 9 Financial Instruments, which
is discussed below, no changes have been made to the Group's
accounting policies in the year ended 31 December 2022. The Group
does not consider that the amendments to standards adopted during
the year have a significant impact on the financial
statements.
Whilst
the financial information included in this preliminary announcement
has been computed in accordance with IFRS, this announcement does
not itself contain sufficient information to comply with all IFRS
disclosure requirements. The Company's 2022 Annual Report and Accounts will
be prepared in compliance with IFRS. The unaudited preliminary
announcement does not constitute a dissemination of the annual
financial report and does not therefore need to meet the
dissemination requirements for annual financial reports. A separate
dissemination announcement in accordance with Disclosure and
Transparency Rules (DTR) 6.3 will be made when the annual report
and audited financial statements are available on the Company's
website.
Impact of the adoption of hedge accounting under IFRS 9 Financial
Instruments
The
Group has elected to
adopt the hedge accounting requirements of IFRS 9
Financial Instruments from 1 January 2022. The IFRS 9 hedge
accounting requirements are applied prospectively, and all hedge
arrangements in place at the point of transition are regarded as
continuing hedging relationships under IFRS 9. Accordingly, prior
year financial information has not been restated and will continue
to be reported under IAS 39. There has been no significant impact
on the financial statements as a result of the adoption of IFRS 9
hedge accounting requirements, both at the point of transition and
in the year ended 31 December 2022.
Statutory information
The
financial information included in this preliminary announcement
does not constitute statutory accounts. The statutory accounts for
the year ended 31 December
2021 have been delivered to the Jersey Registrar and
received an unqualified auditors' report. The statutory accounts
for the year ended 31 December 2022 will be
finalised on the basis of the financial information presented by
the directors in this unaudited preliminary announcement and will
be delivered to the Jersey Registrar following the Company's
General Meeting. The audit report for the year
ended 31 December
2022 has yet to be signed. The announcement of the
preliminary results was approved on behalf of the board of
directors on 23 February 2023.
3. Currency
conversion
The
presentation currency of the Group is pound sterling and the
unaudited preliminary consolidated financial statements have been
prepared on this basis.
The 2022 unaudited
preliminary consolidated income statement is prepared using, among
other currencies, average exchange rates of US$1.2363 to the pound (2021: US$1.3757) and €1.1733 to the pound
(2021:
€1.1633). The unaudited preliminary consolidated
balance sheet as at 31 December 2022 has been
prepared using the exchange rates on that day of US$1.2083 to the pound (2021: US$1.3532) and €1.1295 to the pound
(2021:
€1.1893).
Notes to the unaudited preliminary consolidated financial
statements (continued)
4. Costs of services and general and administrative
costs
|
£
million
|
2022
|
2021
|
|
Costs
of services
|
11,890.1
|
10,597.5
|
|
General
and administrative costs
|
1,180.4
|
974.6
|
|
|
13,070.5
|
11,572.1
|
Costs
of services and general and administrative costs
include:
|
£
million
|
2022
|
2021
|
|
Staff
costs
|
8,165.8
|
7,166.7
|
|
Establishment
costs
|
536.0
|
529.0
|
|
Media
pass-through costs
|
1,905.7
|
1,865.3
|
|
Other
costs of services and general and administrative costs1
|
2,463.0
|
2,011.1
|
|
|
13,070.5
|
11,572.1
|
Staff
costs include:
|
£
million
|
2022
|
2021
|
|
Wages
and salaries
|
5,721.0
|
4,797.2
|
|
Cash-based
incentive plans
|
292.6
|
455.2
|
|
Share-based
incentive plans
|
122.0
|
99.6
|
|
Social
security costs
|
689.4
|
630.1
|
|
Pension
costs
|
204.8
|
177.7
|
|
Severance
|
44.2
|
41.8
|
|
Other
staff costs
|
1,091.8
|
965.1
|
|
|
8,165.8
|
7,166.7
|
Other costs of services and general and administrative costs
include:
|
£
million
|
2022
|
2021
|
|
Goodwill
impairment
|
37.9
|
1.8
|
|
Amortisation
and impairment of acquired intangible assets
|
62.1
|
97.8
|
|
Investment
and other impairment charges/(reversals)
|
48.0
|
(42.4)
|
|
Intangible asset impairment
|
29.0
|
-
|
|
Restructuring
and transformation costs
|
203.7
|
145.5
|
|
Restructuring costs in relation to COVID-19
|
15.1
|
29.9
|
|
Property related costs
|
18.0
|
-
|
|
Losses
on disposal of investments and subsidiaries
|
36.3
|
10.6
|
|
Gains
on remeasurement of equity interests arising from a change in scope
of ownership
|
(66.5)
|
-
|
|
Litigation
settlement
|
-
|
21.3
|
|
Amortisation
of other intangible assets
|
21.9
|
19.9
|
|
Depreciation
of property, plant and equipment
|
166.9
|
151.2
|
|
Depreciation
of right-of-use assets
|
262.2
|
272.9
|
|
Short-term
lease expense
|
20.2
|
18.0
|
|
Low-value
lease expense
|
1.9
|
2.3
|
In
2022, operating profit includes credits totalling £29.3 million (2021: £19.3 million) relating to
the release of
provisions and other balances established in respect of
acquisitions completed prior to 2021.
The
goodwill impairment charge of £37.9 million in 2022
(2021: £1.8 million) relates to a number
of businesses in the Group and investments where the impact
of increases in discount rates and current, local economic
conditions and trading circumstances is sufficiently severe to
indicate impairment to the carrying value.
1 Other costs of services and general and
administrative costs include £723.7 million (2021: £538.6 million) of other pass-through
costs.
Notes
to the unaudited preliminary consolidated financial statements
(continued)
4. Costs of services and general and administrative costs
(continued)
Amortisation and impairment of acquired intangible assets of
£62.1 million (2021: £97.8 million) includes an
impairment charge in the year of £1.4 million (2021:
£47.9 million) in regard to certain brand names that are no
longer in use.
The investment and other impairment charges of £48.0
million (2021: reversal of £42.4 million) relate to the same
macro-economic factors noted above. The reversal in the prior year
for investments primarily relates to the partial reversal of a
£255.6 million impairment taken in 2020 relating to Imagina,
an associate in Spain.
Intangible asset impairment of £29.0 million in 2022 (2021:
£nil) relates to the write off of capitalised configuration
and customisation costs related to a software development
project.
Restructuring and transformation costs of £203.7 million
(2021: £145.5 million) include £134.5
million (2021: £94.2 million) in relation to the Group's IT
transformation programme. This programme will allow technology to
become a competitive advantage in the market as our clients, and
their clients, move to an ever-increasing digital world. It
includes costs of £96.8 million (2021: £62.2 million) in
relation to the rollout of a new ERP system in order to drive
efficiency and collaboration throughout the Group. The remaining
£69.2 million relates to the continuing restructuring plan. As
part of that plan, restructuring actions have been taken to
right-size under-performing businesses, address high-cost severance
markets and simplify operational structures.
Restructuring costs in relation to COVID-19 of £15.1 million
(2021: £29.9 million) primarily relate to property costs which
the Group undertook in response to the COVID-19
pandemic.
Property related costs include further right-of-use assets
impairment taken for properties that were previously impaired due
to challenging conditions in the subletting market. In 2022,
£18.0 million (2021: £nil) were incurred.
Losses on disposal of investments and subsidiaries of £36.3
million in 2022 (2021: £10.6 million) primarily includes a
loss of £63.1 million on the divestment of our Russian
interests which completed in May 2022. This was partially
offset by gains on other disposals during the period including Res
Publica for £17.7 million and Mutual Mobile for £9.4
million with the remaining gains/losses due to individually
insignificant transactions.
Gains on remeasurement of equity interests arising from a change in
scope of ownership of £66.5 million comprises a gain in
relation to the reclassification of the Group's interest in Imagina
in Spain from interests in associates to other
investments.
5. Earnings from associates - after interest and tax
Earnings
from associates - after interest and tax include:
|
£
million
|
2022
|
2021
|
|
Share
of profit before interest and taxation
|
219.6
|
208.5
|
|
Share
of adjusting items
|
(134.3)
|
(62.3)
|
|
Share
of interest and non-controlling interests
|
(104.7)
|
(83.9)
|
|
Share
of taxation
|
(41.0)
|
(38.5)
|
|
|
(60.4)
|
23.8
|
Share of adjusting items of £134.3 million (2021: £62.3
million) primarily comprise £75.8 million (2021: £38.8
million) of amortisation and impairment of acquired intangible
assets as well as restructuring and one-off transaction costs of
£54.8 million (2021: £18.8 million) within
Kantar.
Notes to the unaudited preliminary consolidated financial
statements (continued)
6. Finance and investment income,
finance costs and revaluation and retranslation of financial
instruments
Finance
and investment income includes:
|
£
million
|
2022
|
2021
|
|
Income
from equity investments
|
24.5
|
17.9
|
|
Interest
income
|
120.9
|
51.5
|
|
|
145.4
|
69.4
|
Finance
costs include:
|
£
million
|
2022
|
2021
|
|
Net
interest expense on pension plans
|
2.2
|
1.8
|
|
Interest
on other long-term employee benefits
|
3.7
|
2.4
|
|
Interest
payable and similar charges
|
257.8
|
188.5
|
|
Interest
expense related to lease liabilities
|
95.7
|
90.9
|
|
|
359.4
|
283.6
|
Revaluation and retranslation of financial instruments
include:
|
£
million
|
2022
|
2021
|
|
Movements
in fair value of treasury instruments
|
0.5
|
9.1
|
|
Premium
on the early repayment of bonds
|
-
|
(13.0)
|
|
Revaluation
of investments held at fair value through profit or
loss
|
23.1
|
(7.5)
|
|
Revaluation
of put options over non-controlling interests
|
27.9
|
(40.6)
|
|
Revaluation
of payments due to vendors (earnout agreements)
|
26.2
|
(58.7)
|
|
Retranslation
of financial instruments
|
(1.7)
|
22.9
|
|
|
76.0
|
(87.8)
|
Notes to the unaudited preliminary consolidated financial
statements (continued)
7. Segmental analysis
Reported
contributions by operating sector were as follows:
|
£
million
|
2022
|
20211
|
|
Revenue
|
|
|
|
Global
Integrated Agencies
|
12,191.0
|
10,890.5
|
|
Public
Relations
|
1,228.3
|
959.0
|
|
Specialist
Agencies
|
1,009.4
|
951.6
|
|
|
14,428.7
|
12,801.1
|
|
Revenue less pass-through costs2
|
|
|
|
Global
Integrated Agencies
|
9,742.8
|
8,683.1
|
|
Public
Relations
|
1,157.0
|
909.7
|
|
Specialist
Agencies
|
899.5
|
804.4
|
|
|
11,799.3
|
10,397.2
|
|
Headline operating profit3
|
|
|
|
Global
Integrated Agencies
|
1,432.4
|
1,221.8
|
|
Public
Relations
|
190.8
|
143.1
|
|
Specialist
Agencies
|
118.6
|
128.6
|
|
|
1,741.8
|
1,493.5
|
Reported
contributions by geographical area were as follows:
|
£
million
|
2022
|
2021
|
|
Revenue
|
|
|
|
North
America4
|
5,549.5
|
4,494.2
|
|
United
Kingdom
|
2,003.8
|
1,866.9
|
|
Western
Continental Europe
|
2,876.2
|
2,786.3
|
|
Asia
Pacific, Latin America, Africa & Middle East and Central &
Eastern Europe
|
3,999.2
|
3,653.7
|
|
|
14,428.7
|
12,801.1
|
|
Revenue less pass-through costs2
|
|
|
|
North
America4
|
4,688.1
|
3,849.2
|
|
United
Kingdom
|
1,537.2
|
1,414.3
|
|
Western
Continental Europe
|
2,318.5
|
2,225.4
|
|
Asia
Pacific, Latin America, Africa & Middle East and Central &
Eastern Europe
|
3,255.5
|
2,908.3
|
|
|
11,799.3
|
10,397.2
|
|
Headline operating profit3
|
|
|
|
North
America4
|
770.4
|
655.7
|
|
United
Kingdom
|
187.1
|
180.9
|
|
Western
Continental Europe
|
301.3
|
288.6
|
|
Asia
Pacific, Latin America, Africa & Middle East and Central &
Eastern Europe
|
483.0
|
368.3
|
|
|
1,741.8
|
1,493.5
|
1 Prior year figures have been
re-presented to reflect the reallocation of a number of businesses
between Global Integrated Agencies and Specialist
Agencies.
2 Revenue less pass-through costs is defined in
Appendix 2.
3 Headline operating profit is defined in Appendix
2. A reconciliation from reported profit before tax to headline
operating profit is also provided in Appendix 2
4 North America includes the US with revenue
of £5,230.9 million (2021:
£4,220.8 million),
revenue less pass-through costs of £4,402.0 million (2021:
£3,597.4 million) and headline operating profit of £727.6
million (2021: £615.2 million).
Notes to the unaudited preliminary consolidated financial
statements (continued)
8. Taxation
The tax
rate on reported profit before tax was 33.1% (2021: 24.2%). The tax charge
comprises:
|
£
million
|
2022
|
2021
|
|
Corporation tax
|
|
|
|
Current
year
|
425.8
|
404.0
|
|
Prior
years
|
(55.5)
|
(41.4)
|
|
|
370.3
|
362.6
|
|
Deferred tax
|
|
|
|
Current
year
|
9.4
|
(131.0)
|
|
Prior
years
|
4.7
|
(1.5)
|
|
|
14.1
|
(132.5)
|
|
Tax charge
|
384.4
|
230.1
|
The tax
charge may be affected by the impact of acquisitions, disposals and
other corporate restructurings, the resolution of open tax issues,
and the ability to use brought forward tax losses. Changes in local
or international tax rules, for example, increasing tax rates as a
consequence of the financial support programmes implemented by
governments during the COVID-19 pandemic, the OECD/G20 Inclusive
Framework on Base Erosion and Profit Shifting, and changes arising
from the application of existing rules or challenges by tax or
competition authorities, may expose the Group to additional tax
liabilities or impact the carrying value of deferred tax assets,
which could affect the future tax charge.
Liabilities
relating to open and judgemental matters are based upon an
assessment of whether the tax authorities will accept the position
taken, after considering external advice where appropriate. Where
the final tax outcome of these matters is different from the
amounts which were initially recorded then such differences will
impact the current and deferred income tax assets and liabilities
in the period in which such determination is made. The Group does
not currently consider that judgements made in assessing tax
liabilities have a significant risk of resulting in any material
additional charges or credits in respect of these matters, within
the next financial year, beyond the amounts already
provided.
Following
the enactment in 2021 of an increase in the UK corporation tax rate
from 19% to 25% from 1 April 2023, the Group
remeasured UK deferred tax balances accordingly and recognised a
tax credit of £23.8 million
in the prior period.
9. Ordinary
dividends
The Board has recommended a final dividend of 24.4p (2021: 18.7p)
per ordinary share in addition to the interim dividend of 15.0p
(2021: 12.5p) per share. This makes a total for the year of 39.4p
(2021: 31.2p). Payment of the final dividend of 24.4p per ordinary
share will be made on 07 July 2023 to holders of ordinary shares in
the Company on 09 June 2023.
Notes to the unaudited preliminary consolidated financial
statements (continued)
10. Earnings per share
Basic EPS
The
calculation of basic reported and headline EPS is as follows:
|
|
2022
|
2021
|
|
Reported earnings1 (£
million)
|
682.7
|
637.7
|
|
Headline earnings2 (£
million)
|
1,100.2
|
954.5
|
|
Weighted
average shares used in basic EPS calculation (million)
|
1,097.9
|
1,194.1
|
|
Reported
EPS
|
62.2p
|
53.4p
|
|
Headline
EPS
|
100.2p
|
79.9p
|
Diluted EPS
The
calculation of diluted reported and headline EPS is as
follows:
|
|
2022
|
2021
|
|
Diluted
reported earnings (£ million)
|
682.7
|
637.7
|
|
Diluted
headline earnings (£ million)
|
1,100.2
|
954.5
|
|
Weighted
average shares used in diluted EPS calculation
(million)
|
1,116.4
|
1,215.3
|
|
Diluted
reported EPS
|
61.2p
|
52.5p
|
|
Diluted
headline EPS
|
98.5p
|
78.5p
|
A
reconciliation between the shares used in calculating basic and
diluted EPS is as follows:
|
million
|
2022
|
2021
|
|
Weighted
average shares used in basic EPS calculation
|
1,097.9
|
1,194.1
|
|
Dilutive
share options outstanding
|
0.7
|
1.3
|
|
Other
potentially issuable shares
|
17.8
|
19.9
|
|
Weighted
average shares used in diluted EPS calculation
|
1,116.4
|
1,215.3
|
At 31 December 2022 there were 1,141,427,296 (2021:
1,224,459,550) ordinary shares in issue, including treasury shares
of 70,489,953 (2021: 70,489,953).
1 Reported earnings is equivalent to profit for the
year attributable to equity holders of the
parent.
2 Headline earnings is defined in Appendix
2.
Notes to the unaudited preliminary consolidated financial
statements (continued)
11. Analysis of cash flows
The
following tables analyse the items included within the main cash
flow headings on page 19:
Net cash inflow from operating activities:
|
£
million
|
2022
|
2021
|
|
Profit for the year
|
775.4
|
720.7
|
|
Taxation
|
384.4
|
230.1
|
|
Revaluation
and retranslation of financial instruments
|
(76.0)
|
87.8
|
|
Finance
costs
|
359.4
|
283.6
|
|
Finance
and investment income
|
(145.4)
|
(69.4)
|
|
Earnings
from associates - after interest and tax
|
60.4
|
(23.8)
|
|
Operating profit
|
1,358.2
|
1,229.0
|
|
Adjustments
for:
|
|
|
|
Non-cash
share-based incentive plans (including share options)
|
122.0
|
99.6
|
|
Depreciation
of property, plant and equipment
|
166.9
|
151.2
|
|
Depreciation
of right-of-use assets
|
262.2
|
272.9
|
|
Impairment
charges included within restructuring costs1
|
72.3
|
39.2
|
|
Goodwill
impairment
|
37.9
|
1.8
|
|
Amortisation
and impairment of acquired intangible assets
|
62.1
|
97.8
|
|
Amortisation
of other intangible assets
|
21.9
|
19.9
|
|
Investment
and other impairment charges/(reversals)
|
48.0
|
(42.4)
|
|
Losses
on disposal of investments and subsidiaries
|
36.3
|
10.6
|
|
Gains
on sale of property, plant and equipment
|
(6.4)
|
(1.3)
|
|
Gains
on remeasurement of equity interests arising from a change in scope
of ownership
|
(66.5)
|
-
|
|
Operating cash flow before movements in working capital and
provisions
|
2,114.9
|
1,878.3
|
|
Movements
in trade working capital2
|
(328.0)
|
318.9
|
|
Movements
in other working capital and provisions3
|
(518.7)
|
383.1
|
|
Cash generated by operations
|
1,268.2
|
2,580.3
|
|
Corporation
and overseas tax paid
|
(390.9)
|
(391.1)
|
|
Premium on early settlement of bonds
|
-
|
(13.0)
|
|
Interest
and similar charges paid
|
(210.2)
|
(173.7)
|
|
Interest
paid on lease liabilities
|
(92.4)
|
(88.4)
|
|
Interest
received
|
88.9
|
47.5
|
|
Investment
income
|
24.5
|
17.8
|
|
Dividends
from associates
|
37.6
|
53.4
|
|
Earnout
payments recognised in operating activities4
|
(24.8)
|
(3.8)
|
|
Net cash inflow from operating activities
|
700.9
|
2,029.0
|
1 Impairment charges included within restructuring
costs includes impairments for right-of-use assets, property, plant
and equipment and other intangible assets.
2 Trade working capital represents trade
receivables, work in progress, accrued income, trade payables and
deferred income.
3 Other working capital represents
other receivables and other payables.
4 Earnout payments in excess of the
amount determined at acquisition are recorded as operating
activities. Prior year excess amounts were recorded as investing
activities and have been re-presented as operating
activities.
Notes to the unaudited preliminary consolidated financial
statements (continued)
11. Analysis of cash flows (continued)
Acquisitions and disposals:
|
£
million
|
2022
|
2021
|
|
Initial
cash consideration
|
(218.3)
|
(227.6)
|
|
Cash and cash equivalents acquired
|
38.8
|
(2.3)
|
|
Earnout
payments recognised in investing activities2
|
(46.6)
|
(53.2)
|
|
Purchase
of other investments (including associates)
|
(10.1)
|
(99.2)
|
|
Acquisitions
|
(236.2)
|
(382.3)
|
|
|
|
|
|
Proceeds
on disposal of investments and subsidiaries1
|
50.1
|
51.9
|
|
Cash
and cash equivalents disposed
|
(12.4)
|
(23.6)
|
|
Disposals of investments and subsidiaries
|
37.7
|
28.3
|
|
|
|
|
|
Cash consideration received from non-controlling
interests
|
-
|
39.5
|
|
Cash consideration for purchase of non-controlling
interests
|
(84.2)
|
(135.0)
|
|
Cash consideration for non-controlling interests
|
(84.2)
|
(95.5)
|
|
|
|
|
|
Net acquisition payments and investments
|
(282.7)
|
(449.5)
|
Share repurchases and buy-backs:
|
£
million
|
2022
|
2021
|
|
Purchase
of own shares by ESOP Trusts
|
(55.3)
|
(89.2)
|
|
Shares
purchased into treasury
|
(807.4)
|
(729.3)
|
|
|
(862.7)
|
(818.5)
|
Repayments of
borrowings
|
£
million
|
2022
|
2021
|
|
Net
decrease in drawings on bank loans
|
(11.3)
|
(36.3)
|
|
Repayment
of €250 million bonds
|
(209.3)
|
-
|
|
Repayment of $500 million bonds
|
-
|
(360.8)
|
|
|
(220.6)
|
(397.1)
|
1 Proceeds on disposal of investments and
subsidiaries includes return of capital from investments in
associates.
2 Earnout payments in excess of the amount
determined at acquisition are recorded as operating activities.
Prior year excess amounts were recorded as investing activities and
have been re-presented as operating activities.
Notes to the unaudited preliminary consolidated financial
statements (continued)
12. Cash and cash equivalents and adjusted net debt
|
£
million
|
2022
|
2021
|
|
Cash at
bank and in hand
|
2,271.6
|
2,776.6
|
|
Short-term
bank deposits
|
219.9
|
1,106.3
|
|
Overdrafts1
|
(505.7)
|
(342.3)
|
|
Cash and cash equivalents
|
1,985.8
|
3,540.6
|
|
Bonds
due within one year
|
(663.3)
|
(210.2)
|
|
Loans
due within one year
|
-
|
(14.7)
|
|
Bonds due after one year
|
(3,801.8)
|
(4,216.8)
|
|
Adjusted net debt
|
(2,479.3)
|
(901.1)
|
The
Group estimates that the fair value of corporate bonds
is £4,049.1 million
at 31 December
2022 (2021:
£4,790.3 million). The Group considers that the carrying
amount of bank loans approximates their fair value.
The
following table is an analysis of future anticipated cash flows in
relation to the Group's debt, on an undiscounted basis which,
therefore, differs from the carrying value:
|
£
million
|
2022
|
2021
|
|
Within
one year
|
(791.6)
|
(326.8)
|
|
Between
one and two years
|
(724.3)
|
(745.4)
|
|
Between
two and three years
|
(524.2)
|
(646.5)
|
|
Between
three and four years
|
(740.3)
|
(492.8)
|
|
Between
four and five years
|
(719.9)
|
(698.0)
|
|
Over
five years
|
(1,963.7)
|
(2,546.3)
|
|
Debt financing (including interest) under the Revolving Credit
Facility and in relation to unsecured loan notes
|
(5,464.0)
|
(5,455.8)
|
|
Short-term
overdrafts - within one year
|
(505.7)
|
(342.3)
|
|
Future anticipated cash flows
|
(5,969.7)
|
(5,798.1)
|
|
Effect
of discounting/financing rates
|
998.9
|
1,014.1
|
|
Debt financing
|
(4,970.8)
|
(4,784.0)
|
|
Cash
and short-term deposits
|
2,491.5
|
3,882.9
|
|
Adjusted net debt
|
(2,479.3)
|
(901.1)
|
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 preliminary consolidated financial
statements (continued)
13. Goodwill and acquisitions
Goodwill in relation to subsidiary undertakings increased by
£841.1 million in the year. This movement primarily relates to
goodwill arising from the effect of currency translation of
£616.4 million, acquisitions completed in the year and
adjustments to goodwill relating to acquisitions completed in prior
years of £262.6 million, and partially offset by £37.9
million of impairment charges.
The contribution to revenue and operating profit of acquisitions
completed in the year was not material. There were no material
acquisitions completed during the year or between 31 December 2022
and the date these preliminary consolidated financial statements
were approved.
14. Other intangible assets
The
following are included in other intangibles:
|
£
million
|
2022
|
2021
|
|
Brands
with an indefinite useful life
|
1,103.4
|
1,010.5
|
|
Acquired
intangibles
|
288.7
|
273.4
|
|
Other
(including capitalised computer software)
|
59.8
|
75.6
|
|
|
1,451.9
|
1,359.5
|
15. Trade and other receivables
Amounts falling due within one year:
|
£
million
|
2022
|
2021
|
|
Trade
receivables
|
7,403.9
|
6,600.5
|
|
Work in
progress
|
352.4
|
254.0
|
|
VAT and
sales taxes recoverable
|
448.1
|
350.3
|
|
Prepayments
|
236.6
|
215.3
|
|
Accrued
income
|
3,468.3
|
3,435.7
|
|
Fair
value of derivatives
|
5.1
|
2.5
|
|
Other
debtors
|
585.3
|
504.0
|
|
|
12,499.7
|
11,362.3
|
Amounts falling due after more than one year:
|
£
million
|
2022
|
2021
|
|
Prepayments
|
3.9
|
3.0
|
|
Fair
value of derivatives
|
0.6
|
0.5
|
|
Other
debtors
|
214.1
|
149.1
|
|
|
218.6
|
152.6
|
The
Group has applied the practical expedient permitted by IFRS 15 to
not disclose the transaction price allocated to performance
obligations unsatisfied (or partially unsatisfied) as of the end of
the reporting period as contracts typically have an original
expected duration of a year or less.
The
Group considers that the carrying amount of trade and other
receivables approximates their fair value.
The bad
debt expense of £20.7 million (2021: credit of £10.6
million) on the Group's trade receivables in the period is a result
of the increase in expected credit losses since 31 December
2021. A loss allowance of £71.5 million (2021: £70.5
million) has been recognised against trade receivables which is
equivalent to 1.0% (2021: 1.1%) of gross trade
receivables.
Other debtors falling due after more than one year for 31 December
2022 includes £15.4 million in relation to pension plans in
surplus. The corresponding figure for 31 December 2021 is included
in provision for post-employment benefits.
Notes to the unaudited preliminary consolidated financial
statements (continued)
16. Trade and other payables: amounts falling due within one
year
|
£
million
|
2022
|
2021
|
|
Trade
payables
|
11,182.3
|
10,596.9
|
|
Deferred
income
|
1,599.0
|
1,334.0
|
|
Payments
due to vendors (earnout agreements)
|
62.0
|
85.6
|
|
Liabilities
in respect of put option agreements with vendors
|
18.8
|
58.4
|
|
Fair
value of derivatives
|
58.0
|
6.4
|
|
Share
repurchases - close period commitments1
|
-
|
211.7
|
|
Other
creditors and accruals
|
2,914.8
|
2,959.3
|
|
|
15,834.9
|
15,252.3
|
The
Group considers that the carrying amount of trade and other
payables approximates their fair value.
17. Trade and other payables:
amounts falling due after more than one year
|
£
million
|
2022
|
2021
|
|
Payments
due to vendors (earnout agreements)
|
98.1
|
111.1
|
|
Liabilities
in respect of put option agreements with vendors
|
323.3
|
333.1
|
|
Fair
value of derivatives
|
-
|
47.2
|
|
Other
creditors and accruals
|
69.5
|
128.5
|
|
|
490.9
|
619.9
|
The
Group considers that the carrying amount of trade and other
payables approximates their fair value.
The
following table sets out payments due to vendors, comprising
contingent consideration and the directors' best estimates of
future earnout related obligations:
|
£
million
|
2022
|
2021
|
|
Within
one year
|
62.0
|
85.6
|
|
Between
1 and 2 years
|
19.5
|
24.0
|
|
Between
2 and 3 years
|
27.6
|
35.7
|
|
Between
3 and 4 years
|
28.6
|
51.4
|
|
Between
4 and 5 years
|
22.4
|
-
|
|
|
160.1
|
196.7
|
The
Group's approach to payments due to vendors is outlined in note
21.
The
Group does not consider there to be any material contingent
liabilities as at 31 December 2022.
18. Issued share capital
|
Number
of equity ordinary shares (million)
|
2022
|
2021
|
|
At the beginning of the year
|
1,224.5
|
1,296.1
|
|
Exercise of share options
|
0.1
|
0.6
|
|
Share
cancellations
|
(83.2)
|
(72.2)
|
|
At the end of the year
|
1,141.4
|
1,224.5
|
1 During
2021, the Company entered into an arrangement with a third party to
conduct share buybacks on its behalf in the close period commencing
on 16 December 2021 and ending on 18 February 2022, in accordance
with UK listing rules. The commitment resulting from this agreement
constituted a liability at 31 December 2021 and was recognised as a
movement in other reserves in the year ended 31 December
2021. After the close period ended on 18 February 2022,
the liability was settled and the amount in other reserves was
reclassified to retained earnings.
Notes to the unaudited preliminary consolidated financial
statements (continued)
19. Related party transactions
The
Group enters into transactions with its associate undertakings. The
Group has continuing transactions with Kantar, including sales,
purchases, the provision of IT services, subleases and property
related items.
In the year ended 31 December 2022, revenue of £88.3
million (2021: £117.2 million) was reported in relation to
Compas, an associate in the USA, and revenue of £42.7 million
(2021: £11.3 million) was reported in relation to
Kantar. All other transactions in the years presented were
immaterial.
The
following amounts were outstanding at 31 December 2022:
|
£ million
|
2022
|
2021
|
|
Amounts owed by related parties
|
|
|
|
Kantar
|
26.1
|
30.3
|
|
Other
|
62.4
|
45.7
|
|
|
88.5
|
76.0
|
|
Amounts owed to related parties
|
|
|
|
Kantar
|
(10.5)
|
(6.2)
|
|
Other
|
(65.2)
|
(51.4)
|
|
|
(75.7)
|
(57.6)
|
20. Going concern and liquidity risk
In
considering going concern and liquidity risk, the Directors have
reviewed the Group's future cash requirements and earnings
projections. The Directors believe these forecasts have been
prepared on a prudent basis and have also considered the impact of
a range of potential changes to trading performance. The Company
modelled a range of revenue less pass-through costs compared with
the year ended 31 December 2022 and a number of mitigating cost actions that are
available to the Group. Considering the Group's bank covenant and
liquidity headroom and cost mitigation actions which could be
implemented, the Company and the Group would be able to operate
with appropriate liquidity and within its banking covenants and be
able to meet its liabilities as they fall due with a decline in
revenue less pass-through costs up to 28% in 2023 (2021: 30% in
2022). The
likelihood of such a decline is considered remote. The Directors
have concluded that the Group will be able to operate within its
current facilities and comply with its banking covenants for the
foreseeable future and therefore believe it is appropriate to
prepare the financial statements of the Group on a going concern
basis and that there are no material uncertainties which gives rise
to a significant going concern risk.
Notes to the unaudited preliminary consolidated financial
statements (continued)
20. Going concern and liquidity risk (continued)
At 31 December 2022, the Group has access to
£6.6 billion of committed
facilities with maturity dates spread over the years 2023
to 2046 as illustrated
below:
|
£
million
|
|
|
|
|
|
|
|
|
|
2023
|
2024
|
2025
|
2026
|
2027+
|
|
£ bonds £400m (2.875% '46)
|
400.0
|
|
|
|
|
400.0
|
|
US bond $220m (5.625% '43)
|
181.9
|
|
|
|
|
181.9
|
|
US bond $93m (5.125% '42)
|
76.8
|
|
|
|
|
76.8
|
|
£ bonds £250m (3.750% '32)
|
250.0
|
|
|
|
|
250.0
|
|
Eurobonds €600m (1.625% '30)
|
531.2
|
|
|
|
|
531.2
|
|
Eurobonds €750m (2.375% '27)
|
664.0
|
|
|
|
|
664.0
|
|
Eurobonds €750m (2.25% '26)
|
664.0
|
|
|
|
664.0
|
|
|
Bank revolver ($2,500m '26)
|
2,069.0
|
|
|
|
2,069.0
|
|
|
Eurobonds €500m (1.375% '25)
|
442.7
|
|
|
442.7
|
|
|
|
US bond $750m (3.75% '24)
|
620.7
|
|
620.7
|
|
|
|
|
Eurobonds €750m (3.0% '23)
|
664.0
|
664.0
|
|
|
|
|
|
Total committed facilities available
|
6,564.3
|
664.0
|
620.7
|
442.7
|
2,733.0
|
2,103.9
|
|
Drawn down facilities at 31 December 2022
|
4,495.3
|
664.0
|
620.7
|
442.7
|
664.0
|
2,103.9
|
|
Undrawn committed credit facilities
|
2,069.0
|
|
|
|
|
|
|
Drawn down facilities at 31 December 2022
|
4,495.3
|
|
|
|
|
|
|
Net cash at 31 December 2022
|
(1,985.8)
|
|
|
|
|
|
|
Other adjustments
|
(30.2)
|
|
|
|
|
|
|
Adjusted net debt at 31 December 2022
|
2,479.3
|
|
|
|
|
|
Given its debt maturity profile and available facilities, the
Directors believe the Group has sufficient liquidity to match its
requirements for the foreseeable future.
Notes to the unaudited preliminary consolidated financial
statements (continued)
21. Financial
instruments
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
|
|
Derivatives in designated hedge relationships
|
|
|
|
|
|
Derivative
assets
|
-
|
0.6
|
-
|
0.6
|
|
Derivative
liabilities
|
-
|
(53.3)
|
-
|
(53.3)
|
|
Held at fair value through profit or loss
|
|
|
|
|
|
Other
investments
|
0.4
|
-
|
255.3
|
255.7
|
|
Derivative
assets
|
-
|
5.1
|
-
|
5.1
|
|
Derivative
liabilities
|
-
|
(4.7)
|
-
|
(4.7)
|
|
Payments
due to vendors (earnout agreements)
|
-
|
-
|
(160.1)
|
(160.1)
|
|
Liabilities
in respect of put options
|
-
|
-
|
(342.1)
|
(342.1)
|
|
Held at fair value through other comprehensive income
|
|
|
|
|
|
Other
investments
|
10.9
|
-
|
103.2
|
114.1
|
Reconciliation of level 3 fair value measurements:
|
£
million
|
Payments due to vendors (earnout agreements)
|
Liabilities in respect of put options
|
Other investments
|
|
1 January 2022
|
(196.7)
|
(391.5)
|
290.0
|
|
Gains
recognised in the income statement
|
26.2
|
27.9
|
23.1
|
|
Losses
recognised in other comprehensive income
|
-
|
-
|
(5.3)
|
|
Exchange
adjustments
|
(14.3)
|
(39.9)
|
-
|
|
Additions
|
(46.7)
|
(5.0)
|
66.7
|
|
Disposals
|
-
|
-
|
(16.0)
|
|
Cancellations
|
-
|
11.0
|
-
|
|
Settlements
|
71.4
|
55.4
|
-
|
|
31 December 2022
|
(160.1)
|
(342.1)
|
358.5
|
Payments due to vendors and liabilities in respect of put
options
Future
anticipated payments due to vendors in respect of contingent
consideration (earnout agreements) are recorded at fair value,
which is the present value of the expected cash outflows of the
obligations. Liabilities in respect of put option agreements are
initially recorded at the present value of the redemption amount in
accordance with IAS 32 and subsequently measured at fair value in
accordance with IFRS 9. Both types of obligations are dependent on
the future financial performance of the entity and it is assumed
that future profits are in line with directors' estimates. The
directors derive their estimates from internal business plans
together with financial due diligence performed in connection with
the acquisition.
Other investments
The
fair value of other investments included in level 1 are based on
quoted market prices. Other investments included in level 3 are
unlisted securities, where market value is not readily available.
The Group has estimated relevant fair values on the basis
of information from outside
sources using the most appropriate valuation technique, including
all external funding rounds, revenue and EBITDA multiples, the
share of fund net asset value and discounted cash
flows.
Principal risks and uncertainties
The
Board regularly reviews the principal and emerging risks and
uncertainties affecting the Group and these are summarised
below:
Strategic and External Risks
Economic Risk
● Adverse
economic conditions, including those caused by the pandemic, the
Ukrainian conflict, severe and sustained inflation in key markets
where the Group operates, supply chain issues affecting the
distribution of clients' products and/or disruption in credit
markets, pose a risk the Group's clients may reduce or cancel
spend, or be unable to satisfy obligations.
Geopolitical Risk
Growing geopolitical tension and conflicts continue to have
a destabilising effect in markets where the Group has operations.
This rise in geopolitical activity continues to have an adverse
effect upon the economic outlook, the general erosion of trust and
an increasing trend of national ideology and regional convergence
over global cooperation and integration. Such factors and economic
conditions may reflect in clients' confidence in making longer term
investments and commitments in marketing spend.
Pandemic
●
The extent of a pandemic on our business will depend on
numerous factors that we are not able to accurately predict,
including the duration and scope of a pandemic, any existing or new
variants, government actions to mitigate the effects of a pandemic
and the continuing and long-term impact of a pandemic on our
clients' spending plans.
Strategic Plan
●
The failure to successfully complete the strategic plan
updated in December 2020 - to simplify the Group structure,
continue to introduce market leading products and services,
identify cost savings and successfully integrate acquisitions- may
have a material adverse effect on the Group's market share and its
business revenues, results of operation, financial condition, or
prospects.
IT Transformation
● The
IT Transformation programme prioritises the most critical changes
necessary to support the Group's Strategic Plan whilst maintaining
the operational performance and security of core Group systems. The
Group is also reliant on third parties for the performance of a
significant portion of our worldwide information technology and
operations functions. A failure to provide these functions could
have an adverse effect on our business.
Operational Risks
Client Loss
●
The Group competes for clients in a highly competitive
industry which has been evolving and undergoing structural change.
Client net loss to competitors or as a consequence of client
consolidation, insolvency or a reduction in marketing budgets due
to a geopolitical change or shift in client spending would have a
material adverse effect on our market share, business, revenues,
results of operations, financial condition and
prospects.
Client Concentration
●
The Group receives a significant portion of its revenues from
a limited number of large clients and the net loss of one or more
of these clients could have a material adverse effect on the
Group's prospects, business, financial condition and results of
operations.
Reputation
●
The Group is subject to increased reputational risk
associated with working on client briefs perceived to be
environmentally detrimental and/or misrepresenting environmental
claims.
People, Culture and Succession
●
The Group's performance could be adversely affected if we do
not react quickly enough to changes in our market and fail to
attract, develop and retain key and diverse creative, commercial
technology and management talent or are unable to retain and
incentivise key and diverse talent.
Principal risks and uncertainties (continued)
Cyber and Information Security
●
The Group has in the past and may in the future experience a
cyber-attack that leads to harm or disruption to its operations,
systems or services. Such an attack may also affect suppliers and
partners through the unauthorised access, manipulation, corruption
or the destruction of data.
Financial Risks
●
The Group is subject to credit risk through the default of a
client or other counterparty.
●
Challenging economic conditions, heightened geopolitical
issues, shocks to consumer confidence, disruption in credit
markets, challenges in the supply chain disrupting client
operations can lead to a reduction, suspension or cancellation of
client spend or an inability to satisfy obligations.
Internal Controls
●
The Group's performance could be adversely impacted if we
failed to ensure adequate internal control procedures are in
place.
● The
Group has previously identified material weaknesses in internal
control over financial reporting and a failure to properly
remediate these or any new material weaknesses could adversely
affect our results of operations, investor confidence in the Group
and the market price of our ADSs and ordinary shares.
Compliance Risks
Data Privacy
●
The Group is subject to strict data protection and privacy
legislation in the jurisdictions in which we operate and rely
extensively on information technology systems. The Group stores,
transmits and relies on critical and sensitive data. Security of
this type of data is exposed to escalating external cyber threats
that are increasing in sophistication as well as internal
breaches.
Environment Regulation and Reporting
●
The Group could be subject to increased costs to comply with
potential future changes in environmental law and regulations and
increasing carbon offset pricing to meet net zero
commitments.
Regulatory, Sanctions, Anti-Trust and Taxation
●
The Group may be subject to regulations restricting its
activities or effecting changes in taxation.
●
The Group is subject to anti-corruption, anti-bribery and
anti-trust legislation and enforcement in the countries in which it
operates and violations could have an adverse effect on our
business and reputation.
●
Civil liabilities or judgements against the Company or
its Directors or officers based on United States federal or state
securities laws may not be enforceable in the United States or in
England and Wales or in Jersey.
●
The Group is subject to the laws of the United States, the EU and
other jurisdictions that impose sanctions and regulate the supply
of services to certain countries. The Ukraine conflict has caused
the adoption of comprehensive sanctions by, among others, the EU,
the United States and the UK, which restrict a wide range of trade
and financial dealings with Russia and Russian persons.
Failure to comply which these laws could expose the Group to civil
and criminal penalties.
Emerging Risks
●
The Group's operations could be disrupted by an increased
frequency of extreme weather and climate related natural
disasters.
●
A failure to manage the complexity in carbon emission
accounting for marketing & media or to consider scope 3
emissions in new technology and business model innovation across
the supply chain could have an adverse effect on our business and
reputation.
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 Group's current expectations or forecasts of
future events. An investor can identify these statements by the
fact that they do not relate strictly to historical or current
facts.
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
'anticipate', 'estimate', 'expect', 'intend', 'will', 'project',
'plan', 'believe', '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 outbreaks,
epidemics or pandemics; 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; 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 conflict in Ukraine;
the risk of global economic downturn; 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; 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 under Item 3D
'Risk Factors' in the Group's Annual Report on Form 20-F for 2021,
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 on the date of this
document.
Appendix 2: Alternative performance measures for the year ended
31 December 2022
The Group presents alternative performance measures, including
headline operating profit, headline profit before interest and tax,
headline EBITDA, headline profit before tax, headline earnings,
headline EPS, revenue less pass-through costs, adjusted net debt
and adjusted free cash flow. They 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 revenues and costs are considered to be
significant, non-recurring or volatile items that 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
|
2022
|
2021
|
|
Revenue
|
14,428.7
|
12,801.1
|
|
Media
pass-through costs
|
(1,905.7)
|
(1,865.3)
|
|
Other
pass-through costs
|
(723.7)
|
(538.6)
|
|
Revenue less pass-through costs
|
11,799.3
|
10,397.2
|
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, predominantly media and data
collection costs. 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.
Reconciliation of profit before taxation to headline operating
profit:
|
£
million
|
Margin
|
2022
|
Margin
|
2021
|
|
Profit before taxation
|
|
1,159.8
|
|
950.8
|
|
Finance
and investment income
|
|
145.4
|
|
69.4
|
|
Finance
costs
|
|
(359.4)
|
|
(283.6)
|
|
Revaluation and retranslation of financial instruments
|
|
76.0
|
|
(87.8)
|
|
Profit before interest and taxation
|
|
1,297.8
|
|
1,252.8
|
|
Earnings
from associates - after interest and tax
|
|
60.4
|
|
(23.8)
|
|
Operating profit
|
11.5%
|
1,358.2
|
11.8%
|
1,229.0
|
|
Goodwill
impairment
|
|
37.9
|
|
1.8
|
|
Amortisation
and impairment of acquired intangible assets
|
|
62.1
|
|
97.8
|
|
Investment
and other impairment charges/(reversals)
|
|
48.0
|
|
(42.4)
|
|
Intangible asset impairment
|
|
29.0
|
|
-
|
|
Restructuring
and transformation costs
|
|
203.7
|
|
145.5
|
|
Restructuring costs in relation to COVID-19
|
|
15.1
|
|
29.9
|
|
Property related costs
|
|
18.0
|
|
-
|
|
Losses
on disposal of investments and subsidiaries
|
|
36.3
|
|
10.6
|
|
Gains
on remeasurement of equity interests arising from a change in scope
of ownership
|
|
(66.5)
|
|
-
|
|
Litigation
settlement
|
|
-
|
|
21.3
|
|
Headline operating profit
|
14.8%
|
1,741.8
|
14.4%
|
1,493.5
|
|
Finance and investment income
|
|
145.4
|
|
69.4
|
|
Finance costs (excluding interest expense related to lease
liabilities)
|
|
(263.7)
|
|
(192.7)
|
|
|
|
(118.3)
|
|
(123.3)
|
|
Interest cover1 on
headline operating profit
|
|
14.7 times
|
|
12.1 times
|
Headline operating profit and headline operating margin are metrics
that management use to assess the performance of the
business.
Headline operating profit margin before and after earnings
from associates:
|
£
million
|
Margin
|
2022
|
Margin
|
2021
|
|
Revenue less pass-through costs
|
|
11,799.3
|
|
10,397.2
|
|
Headline operating profit
|
14.8%
|
1,741.8
|
14.4%
|
1,493.5
|
|
Earnings
from associates (after interest and tax, excluding adjusting
items)
|
|
73.9
|
|
86.1
|
|
Headline PBIT
|
15.4%
|
1,815.7
|
15.2%
|
1,579.6
|
Headline
PBIT is one of the metrics that management uses to assess the
performance of the business.
Calculation of headline EBITDA:
|
£
million
|
2022
|
2021
|
|
Headline
PBIT
|
1,815.7
|
1,579.6
|
|
Depreciation
of property, plant and equipment
|
166.9
|
151.2
|
|
Amortisation
of other intangible assets
|
21.9
|
19.9
|
|
Headline EBITDA (including depreciation of right-of-use
assets)
|
2,004.5
|
1,750.7
|
|
Depreciation
of right-of-use assets
|
262.2
|
272.9
|
|
Headline EBITDA
|
2,266.7
|
2,023.6
|
Headline EBITDA is a key metric that private equity firms, for
example, use for valuing companies, and is one of the metrics that
management uses to assess the performance of the business.
Headline EBITDA (including depreciation of right-of-use assets) is
used in the Group's key leverage metric.
1 Interest expense related to lease liabilities is
excluded from interest cover as lease liabilities are excluded from
the Group's key leverage metrics.
Reconciliation of profit before taxation to headline PBT and
headline earnings:
|
£
million
|
2022
|
2021
|
|
Profit before taxation
|
1,159.8
|
950.8
|
|
Goodwill
impairment
|
37.9
|
1.8
|
|
Amortisation
and impairment of acquired intangible assets
|
62.1
|
97.8
|
|
Investment
and other impairment charges/(reversals)
|
48.0
|
(42.4)
|
|
Intangible asset impairment
|
29.0
|
-
|
|
Restructuring
and transformation costs
|
203.7
|
145.5
|
|
Restructuring costs in relation to COVID-19
|
15.1
|
29.9
|
|
Property related costs
|
18.0
|
-
|
|
Losses on disposal of investments and subsidiaries
|
36.3
|
10.6
|
|
Gains
on remeasurement of equity interests arising from a change in scope
of ownership
|
(66.5)
|
-
|
|
Litigation
settlement
|
-
|
21.3
|
|
Share
of adjusting items of associates
|
134.3
|
62.3
|
|
Revaluation
and retranslation of financial instruments
|
(76.0)
|
87.8
|
|
Headline PBT
|
1,601.7
|
1,365.4
|
|
Headline
tax charge
|
(408.8)
|
(327.9)
|
|
Non-controlling
interests
|
(92.7)
|
(83.0)
|
|
Headline earnings
|
1,100.2
|
954.5
|
Headline PBT and headline earnings are metrics that management use
to assess the performance of the business.
Calculation of headline taxation:
|
£
million
|
2022
|
2021
|
|
Headline PBT
|
1,601.7
|
1,365.4
|
|
Tax
charge
|
384.4
|
230.1
|
|
Tax
(charge)/credit relating to gains on disposal of investments and
subsidiaries
|
(9.0)
|
31.5
|
|
Tax
credit relating to restructuring and transformation
costs
|
41.1
|
38.4
|
|
Tax credit relating to restructuring and transformation costs in
relation to COVID-19
|
5.4
|
7.3
|
|
Tax
charge relating to litigation settlement
|
-
|
(5.4)
|
|
Deferred tax impact
of the amortisation of acquired intangible assets and other
goodwill items
|
(15.4)
|
5.6
|
|
Deferred
tax relating to gains on disposal of investments and
subsidiaries
|
2.3
|
20.4
|
|
Headline tax charge
|
408.8
|
327.9
|
|
Headline
tax rate
|
25.5%
|
24.0%
|
The
headline tax rate as a percentage of headline PBT (that includes
the share of headline results of associates) is 25.5% (2021:
24.0%).
Given
the Group's geographic mix of profits and the changing
international tax environment, the headline tax rate is expected to
increase over the next few years.
Reconciliation of free cash flow:
|
£
million
|
2022
|
2021
|
|
Cash generated by operations
|
1,268.2
|
2,580.3
|
|
Plus:
|
|
|
|
Interest
received
|
88.9
|
47.5
|
|
Investment
income
|
24.5
|
17.8
|
|
Dividends
from associates
|
37.6
|
53.4
|
|
Share
option proceeds
|
1.2
|
4.4
|
|
Less:
|
|
|
|
Earnout
payments
|
(71.4)
|
(57.0)
|
|
Corporation
and overseas tax paid
|
(390.9)
|
(391.1)
|
|
Interest
and similar charges paid
|
(210.2)
|
(173.7)
|
|
Interest
paid on lease liabilities
|
(92.4)
|
(88.4)
|
|
Repayment
of lease liabilities
|
(309.6)
|
(320.7)
|
|
Purchase
of property, plant and equipment
|
(208.4)
|
(263.2)
|
|
Purchase
of other intangible assets (including capitalised computer
software)
|
(14.9)
|
(29.9)
|
|
Dividends
paid to non-controlling interests in subsidiary
undertakings
|
(69.5)
|
(114.5)
|
|
Adjusted free cash flow
|
53.1
|
1,264.9
|
The
Group bases its internal cash flow objectives on
adjusted free cash flow.
Management believes 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).
Future restructuring and transformation costs
Further
restructuring and transformation costs are expected from 2023 to
2025, with approximately £250
million in relation to the continued rollout of the Group's new ERP
system in order to drive efficiency and collaboration throughout
the Group. Costs of between £100 and £150 million are
also expected in relation to other IT transformation
projects, shared service centres and co-locations.
Constant currency and pro forma ('like-for-like')
These
preliminary consolidated 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 year 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 pro forma or like-for-like
contributes to the understanding of the Group's performance and
trends because it allows for meaningful comparisons of the current
year to that of prior years.
Further
details of the constant currency and pro forma methods are given in
the glossary on page 45.
Reconciliation of reported revenue less pass-through costs to
like-for-like revenue less pass-through costs:
|
£
million
|
|
|
|
Revenue less pass-through costs
|
|
|
|
2021
Reported
|
10,397.2
|
|
|
Impact
of exchange rate changes
|
611.9
|
5.9%
|
|
Impact
of acquisitions and disposals
|
72.8
|
0.7%
|
|
Like-for-like growth
|
717.4
|
6.9%
|
|
2022 Reported
|
11,799.3
|
13.5%
|
Glossary and basis of preparation
Adjusted free cash flow
Adjusted
free cash flow is calculated as cash generated by operations plus
dividends received from associates, interest received, investment
income received, and proceeds from the issue of shares, 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.
Adjusting items
Adjusting
items include gains/losses on disposal of investments and
subsidiaries, gains/losses on remeasurement of equity interests
arising from a change in scope of ownership, investment and other
charges/reversals, litigation settlement, restructuring and
transformation costs, restructuring costs in relation to COVID-19
and share of adjusting items of associates.
Average adjusted net debt and adjusted net debt
Average
adjusted net debt is calculated as the average daily net borrowings
of the Group. Adjusted net debt at a period end consists of cash
and short-term deposits, bank overdraft, bonds and bank loans due
within one year and bonds and bank loans due after one year.
Adjusted net debt excludes lease liabilities.
Billings and estimated net new 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 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. These are calculated by applying
budgeted 2022 exchange rates to local currency
reported results for the current and prior year, which excludes any
variances attributable to foreign exchange rate
movements.
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 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, investment and other
charges/reversals, goodwill impairment, amortisation and impairment
of acquired intangible assets, intangible asset impairment,
amortisation of other intangibles, depreciation of property, plant
and equipment, depreciation of right-of-use assets, restructuring
and transformation costs, restructuring costs in relation to
COVID-19, property related costs, litigation settlement,
share of
adjusting items of
associates and gains/losses on remeasurement of equity interests
arising from a change in scope of ownership.
Headline operating profit
Operating
profit before gains/losses on disposal of investments and
subsidiaries, investment and other charges/(reversals), goodwill
impairment, amortisation and impairment of acquired intangible
assets, intangible asset impairment, restructuring and
transformation costs, restructuring costs in relation to COVID-19,
property related costs, litigation settlement, and gains/losses on
remeasurement of equity interests arising from a change in scope of
ownership.
Headline PBIT
Profit before finance income/costs and revaluation and
retranslation of financial instruments,
taxation, gains/losses
on disposal of investments and subsidiaries, investment and other
charges/reversals, goodwill impairment, amortisation and impairment
of acquired intangible assets, intangible asset impairment,
restructuring and transformation costs, restructuring costs in
relation to COVID-19, property related costs, litigation
settlement, share of adjusting
items of associates and
gains/losses on remeasurement of equity interests arising from a
change in scope of ownership.
Headline operating profit margin
Headline
operating profit margin is calculated as headline operating profit
as a percentage of revenue less pass-through costs.
Headline PBT
Profit
before taxation, gains/losses on disposal of investments and
subsidiaries, investment and other charges/reversals, goodwill
impairment, amortisation and impairment of acquired intangible
assets, intangible asset impairment, restructuring and
transformation costs, restructuring costs in relation to COVID-19,
property related costs, litigation settlement, share
of adjusting items of
associates, gains/losses arising from the revaluation and
retranslation of financial instruments and gains/losses on
remeasurement of equity interests arising from a change in scope of
ownership.
Headline tax charge
Taxation
excluding tax/deferred tax relating to gains/losses on disposal of
investments and subsidiaries, investment and other charges/reversals, goodwill
impairment, restructuring and transformation costs,
restructuring costs in relation to COVID-19, litigation settlement,
and the deferred tax impact of the amortisation of acquired
intangible assets and other goodwill items.
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.
Pro forma ('like-for-like')
Pro
forma 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, the reclassification of certain
businesses to associates in 2022 and the restatement of agency
arrangements under IFRS 15 for the commensurate period in the prior
year. Both periods exclude results from Russia. The Group uses the
terms 'pro forma' and 'like-for-like' interchangeably.
Revenue less pass-through costs
Revenue
less pass-through costs is revenue less media and other
pass-through costs.
[1] All references to estimates and forecasts for
advertising spend exclude US political
advertising.
[2] Non-GAAP measures in this table are reconciled in
Appendix 2.
[3] Asia Pacific, Latin America, Africa & Middle
East and Central & Eastern Europe.
[4] Adjusted free cash flow is reconciled to cash
generated by operations in Appendix 2.
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:
23 February 2023
|
By:
______________________
|
|
|
Balbir
Kelly-Bisla
|
|
|
Company
Secretary
|