WPP plc 6-K, filed Mar 21, 2024
WPP plc (WPP)
6-K
2024-03-21
For: 2024-03-21
View Original
Added on
July 04, 2026
About this 6-K
WPP plc filed this 6-K on March 21, 2024.
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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 March 2024
Commission File Number: 001-38303
______________________
WPP plc
(Translation of registrant's name into English)
________________________
Sea Containers, 18 Upper Ground
London, United Kingdom SE1 9GL
(Address of principal executive offices)
_________________________
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F:
Form
20-F X Form 40-F
___
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1): ___
Note: Regulation S-T Rule 101(b)(1) only permits the
submission in paper of a Form 6-K if submitted solely to provide an
attached annual report to security holders.
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7): ___
Note: Regulation S-T Rule 101(b)(7) only permits the
submission in paper of a Form 6-K if submitted to furnish a report
or other document that the registrant foreign private issuer must
furnish and make public under the laws of the jurisdiction in which
the registrant is incorporated, domiciled or legally organized (the
registrant’s “home country”), or under the rules
of the home country exchange on which the registrant’s
securities are traded, as long as the report or other document is
not a press release, is not required to be and has not been
distributed to the registrant’s security holders, and, if
discussing a material event, has already been the subject of a Form
6-K submission or other Commission filing on EDGAR.
Forward-Looking Statements
In
connection with the provisions of the U.S. Private Securities
Litigation Reform Act of 1995 (the ‘Reform Act’), the
Company may include forward looking statements (as defined in the
Reform Act) in oral or written public statements issued by or on
behalf of the Company. These forward-looking statements may
include, among other things, plans, objectives, beliefs,
intentions, strategies, projections and anticipated future economic
performance based on assumptions and the like that are subject to
risks and uncertainties. These statements can be identified by the
fact that they do not relate strictly to historical or current
facts. They use words such as ‘aim’,
‘anticipate’, ‘believe’,
‘estimate’, ‘expect’,
‘forecast’, ‘guidance’,
‘intend’, 'may', ‘will’,
‘should’, ‘potential’,
‘possible’, ‘predict’,
‘project’, ‘plan’, ‘target’,
and other words and similar references to future periods but are
not the exclusive means of identifying such statements. As such,
all forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances that are beyond the
control of the Company. Actual results or outcomes may differ
materially from those discussed or implied in the forward-looking
statements. Therefore, you should not rely on such forward looking
statements, which speak only as of the date they are made, as a
prediction of actual results or otherwise. Important factors which
may cause actual results to differ include but are not limited to:
the impact of, epidemics or pandemics including restrictions on
businesses, social activities and travel; the unanticipated loss of
a material client or key personnel; delays or reductions in client
advertising budgets; shifts in industry rates of compensation;
regulatory compliance costs or litigation; changes in competitive
factors in the industries in which we operate and demand for our
products and services; changes in client advertising, marketing and
corporate communications requirements; our inability to realise the
future anticipated benefits of acquisitions; failure to realise our
assumptions regarding goodwill and indefinite lived intangible
assets; natural disasters or acts of terrorism; the Company’s
ability to attract new clients; the economic and geopolitical
impact of the Russian invasion of Ukraine; the risk of global
economic downturn, slower growth, increasing interest rates and
high and sustained inflation; supply chain issues affecting the
distribution of our clients’ products; technological changes
and risks to the security of IT and operational infrastructure,
systems, data and information resulting from increased threat of
cyber and other attacks; effectively managing the risks, challenges
and efficiencies presented by utilising Artificial Intelligence
(AI) technologies and partnerships in our business; the
Company’s exposure to changes in the values of other major
currencies (because a substantial portion of its revenues are
derived and costs incurred outside of the UK); and the overall
level of economic activity in the Company’s major markets
(which varies depending on, among other things, regional, national
and international political and economic conditions and government
regulations in the world’s advertising markets). In addition,
you should consider the risks described in Item 3D, captioned
“Risk Factors” in the company's 2022 Annual Report on
Form 20-F, which could also cause actual results to differ from
forward-looking information. In light of these and other
uncertainties, the forward-looking statements included in this
document should not be regarded as a representation by the Company
that the Company’s plans and objectives will be achieved.
Neither the Company, nor any of its directors, officers or
employees, provides any representation, assurance or guarantee that
the occurrence of any events anticipated, expressed or implied in
any forward looking statements will actually occur. The Company
undertakes no obligation to update or revise any such
forward-looking statements, whether as a result of new information,
future events or otherwise.
EXHIBIT INDEX
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Exhibit
No.
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Description
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1
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Annual Report 2023 and AGM Notice dated 21 March 2024, prepared by
WPP plc.
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FOR IMMEDIATE RELEASE
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21 March 2024
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WPP PLC ("WPP" or "the Company")
Publication of Annual Report 2023, Sustainability Report and 2024
Notice of Annual General Meeting
WPP has today published on its website its Annual Report for the
year ended 31 December 2023 ('Annual Report
2023', https://www.wpp.com/annualreport2023)
together with its Sustainability Report. WPP has also today
published its 2024 Notice of Annual General Meeting (the '2024 AGM
Notice', www.wpp.com/investors/shareholder-centre/shareholder-meetings),
which will be distributed to shareholders
shortly.
The Company's AGM will be held on 8 May 2024 at 11.00am at Rose
Court, 2 Southwark Bridge Road, London SE1 9HS, with facilities to
follow the business of the AGM virtually.
In compliance with 9.6.1 of the Listing Rules, copies
of the Annual Report 2023 and 2024
AGM Notice will
be submitted to the UK Listing Authority and will shortly be
available for inspection at the National Storage
Mechanism https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
A hard copy version of the Annual Report 2023 will be sent to those
shareholders who have elected to receive paper communications on or
about 4 April 2024.
The information included in the unaudited preliminary results
announcement released on 22 February 2024, together with the
information in the Appendices to this announcement which is
extracted from the Annual Report 2023, constitute the materials
required by the FCA's Disclosure Guidance and Transparency Rule
6.3.5R. This announcement is not a substitute for reading the
Annual Report 2023 in full. Page and note references in the
Appendices below refer to page and note references in the Annual
Report 2023.
Balbir Kelly-Bisla
Company Secretary
Further information
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Chris Wade, WPP
Richard Oldworth,
Buchanan Communications
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+44 (0)20 7282 4600
+44 (0)20 7466 5000
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About WPP
WPP is the creative transformation company. We use the power of
creativity to build better futures for our people, planet, clients
and communities. For more information, visit www.wpp.com.
APPENDIX A: PRINCIPAL RISKS AND UNCERTAINTIES
The Board has carried out a robust assessment of the principal
risks and uncertainties affecting the Group and the markets we
operate in and strategic decisions taken by the Board as at 31
December 2023 and up to the date of this report - including any
adverse effects of the geopolitical situation resulting from the
conflicts in Ukraine and Gaza - which are described in the table on
the following pages.
ECONOMIC RISK
Risk definition
Adverse economic conditions, including those caused by the
conflicts in Ukraine and Gaza, severe and sustained inflation in
key markets where we operate, supply chain issues including around
resilience affecting the distribution of our clients' products
and/or disruption in credit markets, pose a risk our clients may
reduce, suspend or cancel spend with us or be unable to satisfy
obligations.
Potential impact
Economic conditions, including inflation and increasing interest
rates, among others, have a direct impact on our business, results
of operations and financial position.
In the past, clients have responded to weak economic and financial
conditions by reducing or shifting their marketing budgets which
are easier to reduce in the short term than their other operating
expenses.
How it is managed and reflected in our strategic
priorities
Our account teams work proactively with our clients to understand
the challenges they are facing, determine general trends in
marketing spend and develop plans in advance to help us prepare,
redeploy resources and manage costs accordingly.
Our crisis management and business resilience team works with our
networks to identify priority services and the key dependencies
they rely on and develops market-specific incident response and
service continuity plans to best ensure business operations are
resilient to external factors.
Our client portfolio is diverse, consisting of organisations
operating in different industry sectors and across a broad
geographical spread which further helps mitigate the impact of any
specific challenges individual clients or markets might be
facing.
GEOPOLITICAL RISK
Risk definition
Growing geopolitical tension and conflicts continue to have a
destabilising effect in our markets and across geographical
regions. 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 be reflected in our clients' confidence
in making longer-term investments and commitments in marketing
spend.
Potential impact
Actual or threatened geopolitical tension and conflicts lead to
greater uncertainty, economic instability and a general lack of
confidence for many of our clients who are inclined to scale back,
delay or cancel their marketing plans and budgets.
How it is managed and reflected in our strategic
priorities
We work closely with our in-country teams, third-party advisors,
clients and other agencies in monitoring the level and nature of
geopolitical issues, events and developments across all markets and
regions.
Our primary focus is the safety and security of our people, and for
extreme events or periods of disruption we have developed a series
of crisis and response plans with clear lines of escalation to the
Board and Executive Committee that focus upon the wellbeing of our
people and their families.
We have detailed operational and financial plans, developed through
the consideration of a range of potential scenarios and outcomes
that are continuously monitored and, if required, used to make
interventions and support decision-making over our operations,
investments and advice to clients.
PANDEMIC
Risk definition
The impact 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.
Potential impact
A pandemic and any new variants and the measures to contain its
spread may have an adverse effect on our business, revenues,
results of operations and financial condition and
prospects.
How it is managed and reflected in our strategic
priorities
A strong balance sheet, supported further by action to maintain
liquidity including, if needed, the suspension of share buybacks,
dividends and acquisitions, cost reduction and cash conservation
measures, savings on property and IT capex.
Constant monitoring of working capital position and detailed
operational and financial plans, developed from previous experience
and, as noted above, continuously assessed against potential
scenarios and outcomes.
STRATEGIC PLAN
Risk definition
The failure to successfully complete the strategic plan updated in
January 2024 to lead through AI, data and technology, to accelerate
growth through the power of creative transformation, to build
world-class, market-leading brands and to execute efficiently to
drive financial returns through margin and cash.
Potential impact
A failure or delay in implementing or realising the benefits from
the strategic plan may have a material adverse effect on our market
share and our business, revenues, results of operations, financial
condition or prospects.
How it is managed and reflected in our strategic
priorities
Board oversight of the implementation of the strategic plan and
Group simplification and regular briefings on the Group's response
to economic and geopolitical risks.
The Executive Committee regularly reviews progress against the
strategic plan and actions required to deliver against the plan and
convenes regularly to discuss the Group's response to and
implementation of the measures highlighted above to mitigate the
impact of economic and geopolitical risks on the Group's
operations, people, clients and financial condition.
The focus on managing cost and changes in ways of working have
accelerated aspects of the strategic plan as we continue to move
towards a simplified company structure and enhanced use of
technology, including generative AI, by our people.
GENERATIVE AI STRATEGY
Risk definition
Delayed adoption and leverage of the opportunities and commercial
models offered by generative AI in the services WPP provides to its
clients, as well as the overall operation of the
business.
WPP may incur costs when ensuring it can comply with the
introduction of artificial intelligence laws and regulations,
including the EU AI Act. This will be through review of IT systems
and processes, which may require refinement or amendment, to ensure
regulation can be adhered to.
IP laws and in particular the analysis of copyright infringement is
evolving in generative AI. Where AI is used in client deliverables,
IP infringement risk, in particular copyright infringement risk,
must be assessed in the context of the underlying data sets used in
the creation of client works.
Potential impact
Without the automation and efficiency gains offered by generative
AI, we may experience increased costs and inefficiencies in our
operations impacting profitability and
competitiveness.
Clients will increasingly expect us to use generative AI-driven
tools and technologies in our services and deliverables. If we fail
to adopt generative AI at pace and evolve our commercial model, we
may struggle to keep up with these demands, leading to decreased
relevance and effectiveness of our services and deliverables for
clients, and allow an opportunity for AI vendors to contract
directly with our clients.
Falling behind competitors leveraging the opportunities generative
AI offers to gain a competitive advantage could result in lost
market share, decreased revenue and reduced
profitability.
We may struggle to attract and retain talent, further hindering our
ability to innovate and compete.
Generated materials may infringe third-party IP resulting in legal
costs and client reputation impact.
How it is managed and reflected in our strategic
priorities
The Chief AI Officer is responsible for the strategic direction of
generative AI in the business.
We have established a Generative AI Governance Committee which
oversees the application and adoption of and risks associated with
generative AI across WPP. This committee includes the CEO, CTO and
Chief Privacy Officer and other senior stakeholders in the business
with responsibility for the safe and responsible use of generative
AI within the Group.
We have developed and continue to invest in a WPP generative AI
platform using market-leading technologies which is available to
all staff in order to support our work and deliverables both
internally and for clients.
We have established partnerships with leading generative AI
platforms, technologies and companies, including
NVIDIA.
We actively monitor the changing regulatory landscape and the
introduction of new laws regulating AI to assess the impact on our
business and work, including detailed review of the EU AI Act and
evolving IP laws (including copyright), and how they will impact
how we service our clients.
We have a comprehensive due diligence process in place to review
the third-party generative AI tools/platforms used in the business.
This process considers the use case for the tool/platform and
includes reviews of the security, legal and technology aspects of
the tool/platform as well as sources of underlying learning data,
where applicable, to develop a 'traffic light' approach to
risk.
Whilst AI provides many opportunities (including efficiencies and
new services and offerings) we also continue to review and consider
the impact around our business model through the Generative AI
Governance Committee, reporting to the Board and Audit Committee on
identified risks and impacts.
IT AND SYSTEMS
Risk definition
We continue to undertake a series of IT programmes devised to
prioritise the most critical changes necessary to support the
Group's strategic plan whilst maintaining the operational
performance and security of core systems.
The Group is 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.
Potential impact
Any failure or delay in implementing the IT programmes may have a
material adverse effect upon the overall strategic plan and the
realisation of key targeted benefits and savings.
Disruption and unavailability of critical systems may lead to
disruption in our operations and client service
delivery.
How it is managed and reflected in our strategic
priorities
The Board and management team provide oversight and governance of
the most important IT and systems change initiatives the business
is pursuing.
Detailed plans have been prepared for each major systems initiative
and overall progress, challenges and risks are monitored as part of
our project management processes and discussed in dedicated
steering committees who also agree upon any corrective action that
may be required, including around supplier resilience.
Progress reports are also completed as part of regular briefings
that the Board receives on the overall implementation of the
strategic plan.
CLIENT LOSS
Risk definition
We compete for clients in a highly competitive industry which is
continuously evolving and undergoing structural change and
advancements in AI, data and technology. 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.
Potential impact
The competitive landscape in our industry is constantly evolving
and the role of more traditional services and operators in our
sector who have not successfully diversified is being challenged.
Competitors include multinational advertising and marketing
communication groups, marketing services companies, database
marketing information and measurement and professional services,
and consultants and consulting internet companies.
Client contracts can generally be terminated on 90 days' notice or
are on an assignment basis and clients put their business up for
competitive review from time to time.
The ability to attract new clients and to retain or increase the
amount of work from existing clients may be impacted if we fail to
react quickly enough to changes in the market and to evolve our
structure, as a consequence of any loss of reputation, and may be
limited by clients' policies on conflicts of interest.
How it is managed and reflected in our strategic
priorities
The strategic plan updated in January 2024 places emphasis on
leading through AI, data and technology, accelerating growth
through the power of creative transformation, building world-
class, market-leading brands and executing efficiently to drive
financial returns through margin and cash.
The plan is also delivering a continued simplification of our
organisational structure by reducing the number of legal entities
in the Group, the disposal of non-core minority holdings and more
collaborative working through the opening of further campus
co-locations (see page 19).
The Board is focused on the importance of a positive and inclusive
culture across our business to attract and retain talent and
clients. Accordingly, work continues on diversity and inclusion
across the Group, including focus from the work of the global WPP
Inclusion Council.
Continuous improvement of our creative capability and reputation of
our businesses. The development and implementation of senior
leadership incentives to align more closely with our strategy and
performance.
Business review at every Board, Executive Committee and network
management meeting to identify client loss. Monthly updates to the
executive management team on the status of the Group's major
clients and upcoming pitches for potential new
clients.
Continuous engagement with our clients and suppliers through this
period of uncertainty and reduction in economic
activity.
CLIENT CONCENTRATION
Risk definition
We receive a significant portion of our revenues from a limited
number of large clients and the net loss of one or more of these
clients or of a major assignment with them could have a material
adverse effect on our prospects, business, financial condition and
results of operations.
Potential impact
A relatively small number of clients contribute a significant
percentage of our consolidated revenues. Our ten largest clients
accounted for 18.9% of revenue less pass-through costs in the year
ended 31 December 2023.
Clients can reduce their marketing spend, terminate contracts or
cancel projects on short notice. The loss of one or more of our
largest clients or of a major assignment with them, if not replaced
by new accounts or an increase in business from existing clients,
would adversely affect our financial condition.
How it is managed and reflected in our strategic
priorities
Increased flexibility in the cost structure (including incentives,
consultants and freelancers).
Business review at every Board meeting and regular engagement at
executive level with our clients.
A 'new and existing business' tracker is reviewed by the Executive
Committee on a monthly basis with regular updates provided to the
Board.
REPUTATION
Risk definition
Increased reputational risk associated with working on client
briefs perceived to be environmentally detrimental and/or
misrepresenting environmental claims.
Potential impact
As societal consciousness around climate change rises, our sector
is seeing increased scrutiny of its role in driving consumption.
Our clients seek expert partners who can give recommendations that
take into account their impact and stakeholder concerns around
climate change.
Additionally, WPP serves some clients whose business models are
under increased scrutiny, for example energy companies or
associated industry groups. This creates both a reputational and
related financial risk for WPP if we are not rigorous in our
content standards.
How it is managed and reflected in our strategic
priorities
Our climate training seeks to ensure that our people
recognise
the importance of our sector's role in addressing the climate
crisis. It is part of a broader sustainability training programme
being run in multiple markets with localised content in key
regions.
We have developed internal tools to help our people identify
potentially environmentally harmful briefs. These tools embed
climate-related issues within existing content review procedures
across the organisation. The misrepresentation of environmental
issues is governed by our Code of Conduct. We also ensure our
policies reduce the risk that any client brief undermines the
implementation of the Paris Agreement. In 2022, we introduced the
revised Assignment Acceptance Policy and Framework and the Green
Claims Guide to provide further guidance about how to conduct
additional due diligence in relation to clients and any work we are
asked to undertake.
PEOPLE, CULTURE AND SUCCESSION
Risk definition
Our performance could be adversely affected if we: do not react
quickly enough to changes in our market; fail to attract, develop
and retain key creative, commercial, technology and management
talent; are unable to retain and incentivise key and diverse
talent; or are unable to adapt to new ways of working by balancing
home and office working.
Potential impact
We are highly dependent on the talent, creative abilities and
technical skills of our people as well as their relationships with
clients.
We are vulnerable to the loss of people to competitors (traditional
and emerging) and clients, leading to disruption to the
business.
How it is managed and reflected in our strategic
priorities
The Compensation Committee provides oversight for the Group's
compensation and incentive plans, which are structured to provide
retention value by, for example, paying part of annual incentives
in shares that vest two years after grant date.
WPP's All In survey provides the board, Executive Committee and
senior leaders across the Group with the general sentiment,
opinions and concerns of employees and was completed by 75% of our
people in 2023. Headline findings included general and local views
on engagement, career growth, leadership, client, wellbeing and
inclusion and have contributed to the menu of initiatives available
to our people.
We continue to work across the Group to embed collaboration and
invest in training and development to retain and attract talented
people.
The investment in co-located campus properties continues to
increase the cooperation across our companies and provides
extremely attractive and motivating working environments. Our real
estate teams work closely with people teams across the business to
consider how space is being utilised to support collaboration and
innovation.
We also continue to focus on the mental health of our people by
providing access to wellbeing resources, support networks, funded
events, discussion forums and additional time off.
Looking ahead, succession planning for the Chief Executive Officer,
the Chief Financial Officer and key executives of the Company is
undertaken by the Board and Nomination and Governance Committee on
a regular basis and a pool of potential internal and external
candidates is identified for both emergency and planned
scenarios.
CYBER AND INFORMATION SECURITY
Risk definition
WPP has in the past, and may in the future, experience a cyber
attack that leads to harm or disruption to our operations, systems
or services. This risk is also likely to increase as the prevalence
and sophistication of generative AI means there is potential for
both human and AI-generated attacks.
Such an attack may also affect suppliers and partners through the
unauthorised access to or manipulation, corruption or destruction
of data.
Potential impact
We may be subject to investigative or enforcement action or legal
claims or incur fines, damages or costs and client loss if we fail
to adequately protect data.
A system breakdown or intrusion could have a material adverse
effect on our business, revenues, results of operations, financial
condition or prospects and have an impact on long-term reputation
and lead to client loss.
The imposition of sanctions and the associated geopolitical
situation following the conflicts in Ukraine and Gaza have
triggered an increase in cyber attacks generally.
How it is managed and reflected in our strategic
priorities
WPP has a single IT control framework that is mandatory for all WPP
businesses and is aligned to the WPP Data Privacy & Security
Charter, NIST, IS27001 and COBIT.
We monitor and log our network and systems through the WPP 24/7
Cyber Security Operations Centre, as well as undertaking threat
intelligence activities, vulnerability scanning and penetration
testing, where appropriate.
Breach and attack simulation software provides continuous
assessment and WPP's Cyber Security Incident Exercise Specialists
regularly test the incident response plans and playbooks, with
lessons learned and improvements continually made.
We continually raise our people's security awareness through our
mandatory WPP Safer Data training and rolling phishing simulation
and education programmes.
WPP's Data Privacy, Security & Ethics Risk Sub-committee (a
sub-committee of the WPP Risk Committee) meets quarterly and
includes WPP's Chief Information Officer, Chief Information
Security Officer, Chief Privacy Officer, Chief Sustainability
Officer and Chief Technology Officer. This committee is responsible
for identifying and responding to privacy, technology, data and
cybersecurity risk across WPP.
CREDIT RISK
Risk definition
We are 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 and
challenges in the supply chain disrupting our client operations can
lead to a worsening of the financial strength and outlook for our
clients who may reduce, suspend or cancel spend with us, request
extended payment terms beyond 60 days or be unable to satisfy
obligations.
Potential impact
We are generally paid in arrears for our services. Invoices are
typically payable within 30 to 60 days.
We commit to media and production purchases on behalf of some of
our clients as principal or agent depending on the client and
market circumstances. If a client is unable to pay sums due, media
and production companies may look to us to pay those amounts and
there could be an adverse effect on our working capital and
operating cash flow.
How it is managed and reflected in our strategic
priorities
Evaluating and monitoring clients' ongoing creditworthiness and in
some cases requiring credit insurance or payments in
advance.
We work closely with our clients to ensure timely payment for
services in line with contractual commitments and with vendors to
maintain the settlement flow on media.
Our treasury position and compliance with lending covenants is a
recurring agenda item for the Audit Committee and
Board.
Increased management processes to manage working capital and review
cash outflows and receipts.
INTERNAL CONTROLS
Risk definition
Our performance could be adversely impacted if we fail to ensure
adequate internal control procedures are in place.
If material weaknesses are identified, they could adversely affect
our results of operations, investor confidence in the Group and the
market price of our ADSs and ordinary shares.
Potential impact
Failure to ensure that our networks have robust control
environments, or that the services we provide and trading
activities within the Group are compliant with client obligations,
could adversely impact client relationships and business volumes
and revenues.
If material weaknesses in internal controls are discovered or occur
in the future, our ability to accurately record, process and report
financial information and, consequently, our ability to prepare
financial statements within required time periods, could be
adversely affected.
In addition, the Group may be unable to maintain compliance with
the federal securities laws and NYSE listing requirements regarding
the timely filing of periodic reports. Any of the foregoing could
cause investors to lose confidence in the reliability of our
financial reporting, which could have a negative effect on the
trading price of the Group's ADRs and ordinary shares.
How it is managed and reflected in our strategic
priorities
Transparency and contract compliance are embedded through the
networks and reinforced by audits at a WPP and network
level.
Regular monitoring of key performance indicators for trading are
undertaken to identify trends and issues.
An authorisation matrix on inventory trading is agreed with the
Board and the Audit Committee.
Our controls function continually reviews and, as needed, enhances
controls across the Group, under the direction of our Global
Director of Risk and Controls. Our technical accounting function
supports both these review efforts and complex accounting matters
and judgments, and changes in accounting standards.
Management is committed to maintaining a strong internal control
environment, with appropriate oversight from controls committees
which sit at WPP and at network level as sub-committees of the risk
committees and meet quarterly, and from our Audit Committee.
Regular actions include engagement of an independent valuation
specialist to assist with the impairment assessment of intangible
assets and goodwill, an annual refresh on discount rate methodology
and reviews of the selection of cash flow periods and net working
capital assumptions.
DATA PRIVACY
Risk definition
We are subject to strict data protection and privacy legislation in
the jurisdictions in which we operate and rely extensively on
information technology systems. We store, transmit and rely on
critical and sensitive data such as strategic plans, personally
identifiable information and trade secrets:
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Security of this type of data is exposed to escalating external
threats, that are increasing in sophistication, as well as internal
data breaches
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Data transfers between our global operating companies, clients or
vendors may be interrupted due to changes in law (for example, EU
adequacy decisions, CJEU Schrems II decision)
Potential impact
We may be subject to investigative or enforcement action or legal
claims or incur fines, damages, or costs and client loss if we fail
to adequately protect data or observe privacy legislation in every
instance:
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The Group has in the past, and may in the future, experience a
system breakdown or intrusion that could have a material adverse
effect on our business, revenues, results of operations, financial
condition or prospects
-
Restrictions or limitations on international data transfers could
have an adverse effect on our business and operations
How it is managed and reflected in our strategic
priorities
We develop principles on privacy and data protection and compliance
with local laws. We also monitor pending changes to regulations and
identify changes to our processes and policies that would need to
be implemented. In the case of data transfers, we also identify
alternative approaches, including using other permitted transfer
mechanisms, in order to limit any potential disruption (for
example, SCCs instead of the US Data Protection
Framework).
We implement extensive training ahead of new data protection
regulations (including GDPR and CPPA) and roll out toolkits to
assist our people to prepare for their implementation.
A Chief Privacy Officer and Global Data Protection Officer are
appointed at the Company and are supported by a Data Protection
Office. Data privacy activities across WPP are governed by the WPP
Data Privacy & Security Charter and follow the WPP Privacy
Management Framework.
WPP's Data Privacy, Security & Ethics Risk Sub-committee (a
sub-committee of the WPP Risk Committee) meets quarterly and
includes WPP's CIO, CSO, Chief Privacy Officer, Chief
Sustainability Officer and CTO. The committee has responsibility
for identifying and responding to privacy, technology, data and
cybersecurity risk across WPP.
Our people must take Privacy & Data Security Awareness training
and understand the WPP Data Code of Conduct and WPP policies on
data privacy and security.
The Data Health Checker survey is performed annually to understand
the scale and breadth of data we collect so the level of risk
associated with this can be assessed.
Annual reporting to the Audit Committee on significant regulatory
changes, data privacy risks and steps taken to mitigate those
risks.
TAXATION
Risk definition
We may be subject to regulations restricting our activities or
effecting changes in taxation.
Potential impact
Changes in local or international tax rules and rates, changes
arising from the application of existing rules, new demands and
assessments or challenges by tax or competition authorities, may
expose us to significant additional tax liabilities or impact the
carrying value of our deferred tax assets, which would affect the
future tax charge.
How it is managed and reflected in our strategic
priorities
We actively monitor any proposed regulatory or statutory changes
and consult with government agencies and regulatory bodies where
possible on such proposed changes.
Biannual briefings to the Audit Committee of significant changes in
tax laws and their application and regular briefings to executive
management. We engage advisors and legal counsel to obtain opinions
on tax legislation and principles.
REGULATORY
Risk definition
We are subject to strict anti- corruption, anti-bribery and
anti-trust legislation and enforcement and incoming anti-fraud
legislation in the countries in which we operate.
Potential impact
We operate in a number of markets where the corruption risk has
been identified as high by groups such as Transparency
International.
Failure to comply or to create a culture opposed to fraud and
corruption or failing to instil business practices that prevent
fraud and corruption could expose us to civil and criminal
sanctions.
How it is managed and reflected in our strategic
priorities
Online and in-country ethics, anti-bribery, anti-corruption,
anti-fraud and antitrust training on a Group-wide basis to raise
awareness and seek compliance with our Code of Conduct and ABC and
Fraud Policy.
A continuously evolving business integrity function to ensure
compliance with our codes and policies and remediation of any
breaches of policy.
Continuous communication of the confidential, independently
operated Right to Speak helpline for our people and stakeholders to
raise any potential breaches of our Code and policies, which are
investigated and reported to the Audit Committee on a regular
basis.
Due diligence on acquisitions and on selecting and appointing
suppliers, an actively managed disclosure programme around
conflicts of interest and related party interests and restrictions
on the use of third-party consultants in connection with any client
pitches.
Rolling programme of creating shared financial services in the
markets in which we operate and a controls function which operates
at WPP and at network level.
Risk committees are well established at WPP and across the networks
to monitor risk and compliance through all of our businesses and
the enhancement of our business integrity programme across our
markets. For details of the risk committees' responsibilities and
our business integrity programme see pages 93-96.
Gift and hospitality register and approvals process.
SANCTIONS
Risk definition
We are subject to the laws of the US, the EU, the UK and other
jurisdictions that impose sanctions and regulate the supply of
services to certain countries.
The conflict in Ukraine has caused the adoption of comprehensive
sanctions by, among others, the EU, the US and the UK, which
restrict a wide range of trade and financial dealings with Russia
and Russian persons.
Potential impact
Failure to comply with these laws could expose us to civil and
criminal penalties including fines and the imposition of economic
sanctions against us and reputational damage and withdrawal of
banking facilities which could materially impact our
results.
How it is managed and reflected in our strategic
priorities
Online training to raise awareness and seek compliance and updates
for our companies on any new sanctions.
Regular briefings to the Audit Committee and constant monitoring by
the WPP legal team with assistance from external advisors of the
sanctions regimes. Executive Committee briefed and working with the
WPP legal team to ensure compliance with escalating sanctions as a
consequence of the conflict in Ukraine.
We have taken a number of actions as a consequence of the conflict
in Ukraine. We discontinued our operations in Russia and have
ensured compliance with all sanctions as they impact any clients,
suppliers or financial arrangements.
ESG REGULATION AND REPORTING
Risk definition
The Group could be subject to increased costs to comply with the
potential future changes in Environmental, Social and Governance
(ESG) law and regulations.
A failure to manage the complexity in carbon emission accounting
for marketing and 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.
Potential impact
We could be subject to increased costs to comply with potential
future changes in ESG laws and regulations. This includes
increasing carbon offset pricing to meet our net zero
commitments.
Increased investment is also required in building renovation,
electrification, embedding sustainability in AI development and
supplier engagement to meet targets, including developing internal
ESG capacity and capabilities.
In addition, carbon emission accounting for marketing and media is
in its infancy and methodologies continue to evolve. This is
particularly the case for emissions associated with digital
media.
How it is managed and reflected in our strategic
priorities
We are developing an ESG compliance roadmap to deliver against our
regulatory obligations, including for the EU Corporate
Sustainability Reporting Directive.
Our Transition Plan will provide the roadmap to achieving our net
zero commitments. As part of this plan and through our work to
decarbonise media and media supply chains, we are exploring
opportunities to improve accounting for emissions from
media.
To manage the cost and quality of carbon credits purchased to
offset residual emissions, in 2022 WPP updated its Sustainability
Policy and released a new Environmental Policy which includes
policy guidance around offsetting and we are further developing our
offsetting strategy as part of our net zero roadmap.
The Board Sustainability Committee, formed in 2019, gives increased
focus on sustainability and implementation of our plans and
policies.
Measuring and monitoring sustainability KPIs is critical to meet
our sustainability strategy and targets. In 2022, we introduced new
ESG controls which we continued to roll out across the business in
2023 and regular testing of which provides crucial measurement
data.
ESG KPIs are included as part of the scorecard that determines the
short-term incentive rewards for WPP's CEO, CFO and some key
members of the Executive Committee. This includes WPP's performance
against carbon reduction targets.
Further information on ESG governance and ESG reporting is provided
in the Sustainability section of this report (pages
53-61).
EMERGING RISKS
Risk definition
The Group's operations could be disrupted by an increased frequency
of extreme weather and climate-related natural
disasters.
Potential impact
This includes storms, flooding, wildfires and water and heat stress
which can damage our buildings, jeopardise the safety and wellbeing
of our people and significantly disrupt our
operations.
How it is managed and reflected in our strategic
priorities
Our Crisis Management and Business Resilience function provides
global standards for operational resilience: strategy, governance,
policy, resources and training assets to better plan for and
respond to crisis events of all types and at all degrees of scale.
This includes extreme weather events.
Co-locating our people in fewer, higher-capacity campus buildings
means we can centralise emergency preparedness procedures and
deploy climate mitigation measures more efficiently.
Climate-related risk is considered when we invest in new campus
buildings.
Our hybrid working approach, which incorporates new ways of working
adopted during the pandemic, provides additional resilience by
enabling fully remote working - provided employees and their
families are in safe locations - during extreme weather
events.
The Employee Assistance Programme is activated in response to
climate-related extreme weather events.
APPENDIX B: DIRECTORS' RESPONSIBILITY STATEMENT
Each of the current Directors whose names and functions are listed
in the Corporate Governance section of the Annual Report 2023
confirms that, to the best of his or her knowledge:
● the
Group financial statements, which have been prepared in accordance
with IFRS, issued by the International Accounting Standards Board
(IASB) as they apply to the financial statements of the Group for
the year ended 31 December 2023, give a true and fair view of the
assets, liabilities, financial position and profit of the Group.
and
● the
Strategic Report and risk sections of the Annual Report, which
represent the management report, include a fair review of the
development and performance of the business and the position of the
Company and the Group taken as a whole, together with a description
of the principal risks and uncertainties that it
faces.
APPENDIX C: 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 2023, revenue
of £233.0 million (2022: £159.7 million) was reported in
relation to Compas, an associate in the USA, and revenue of
£20.9 million (2022: £42.7 million) was reported in
relation to Kantar. All other transactions in the years presented
were immaterial.
The following amounts owed by related parties were outstanding at
31 December 2023:
Kantar £17.5 million
Other £56.0 million
The following amounts owed to related parties were outstanding at
31 December 2022:
Kantar £(4.7) million
Other £(70.4) million
END
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.
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WPP
PLC
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(Registrant)
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Date:
21 March 2024
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By:
______________________
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Balbir
Kelly-Bisla
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Company
Secretary
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