Slide 1: 2020 Preliminary Results
2020 PRELIMINARY RESULTS 11 March 2021
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This presentation 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
Slide 3: Agenda
AGENDA 1. FULL YEAR HIGHLIGHTS 2. FINANCIAL PERFORMANCE 3. BUSINESS UPDATE 4. Q&A
Slide 4: Resilient Performance, Significant Progress
RESILIENT PERFORMANCE, SIGNIFICANT PROGRESS • Sequential recovery1 since initial lockdowns: Q2 –15.1%, Q3 -7.6%, Q4 –6.5% • Major sectors growing well in Q4: CPG, Tech, Pharma +1.9%2 • Growing demand for commerce services: working with 76 of our top 100 clients • Ongoing pivot to digital and commerc
Slide 5: Financial Performance
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Slide 6: Unaudited Headline IFRS Income Statement
UNAUDITED HEADLINE¹ IFRS INCOME STATEMENT YEAR TO 31 DECEMBER 2020 £M 2019 £M Δ REPORTED Δ LFL² Continuing operations • Disposals account for 0.6% reduction in revenue less pass- Revenue 12,003 13,234 (9.3%) (7.3%) through costs with currency 1.2% Revenue less pass-through costs 9,762 10,847 (10.0%)
Slide 7: Reconciliation of Headline Operating Profit to Reported Operating (Loss)/Profit
RECONCILIATION OF HEADLINE OPERATING PROFIT TO REPORTED OPERATING (LOSS)/PROFIT 2020 2019 Δ YEAR TO 31 DECEMBER £M £M £M Headline Operating Profit 1,261 1,561 (300) • Investment and other Goodwill impairment (2,823) (48) (2,775) write-downs primarily relates to impairment Amortisation and impairment
Slide 8: Goodwill Impairment
GOODWILL IMPAIRMENT • Impairments of £3,119m (including £2,823m of goodwill impairments for subsidiaries and £296m for associates shown as investment and other write-downs): TOTAL IMPAIRMENTS YEAR TO 31 DECEMBER £M Wunderman Thompson 1,208 VMLY&R 517 Geometry Global 306 Imagina (associate) 256 Lando
Slide 9: Restructuring Costs
RESTRUCTURING COSTS 2020 2019 Δ YEAR TO 31 DECEMBER £M £M £M • Restructuring and transformation costs relate to ongoing costs for Restructuring and transformation the continuing restructuring plan costs first outlined in December 2018, Severance 27 53 26 in line with guidance at the time Establishme
Slide 10: Global Integrated Agencies: VMLY&R and GroupM Lead H2 Recovery
GLOBAL INTEGRATED AGENCIES: VMLY&R AND GROUPM LEAD H2 RECOVERY £M FY 2020 Δ REPORTED Δ LFL PERFORMANCE REVIEW Revenue less pass-through 7,319 (9.7%) (7.9%) • Steady recovery – LFL revenue less costs pass-through costs -6.3% in Q4 Headline operating profit 968 (20.6%) • VMLY&R continues to be the bes
Slide 11: Public Relations: Strongest Sector Throughout the Year
PUBLIC RELATIONS: STRONGEST SECTOR THROUGHOUT THE YEAR £M FY 2020 Δ REPORTED Δ LFL PERFORMANCE REVIEW Revenue less pass- 854 (4.9%) (4.0%) • Like-for-like revenue less pass- through costs through costs -4.1% in Q4 against Headline operating profit 141 0.5% strong comparable period Headline operating
Slide 12: Specialist Agencies: Encouraging Trajectory
SPECIALIST AGENCIES: ENCOURAGING TRAJECTORY £M FY 2020 Δ REPORTED Δ LFL Revenue less pass-through PERFORMANCE REVIEW 1,589 (13.7%) (11.5%) costs • Like-for-like revenue less pass- Headline operating profit 152 (24.4%) through costs -8.6% in Q4 – Headline operating margin 9.5% (1.4)pt strongest seque
Slide 13: Top Markets Performance
TOP 5 MARKETS¹ PERFORMANCE USA: FY LFL2 (5.8%) UK: FY LFL (10.5%) GERMANY: FY LFL (4.4%) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020 (1.9%) (1.8%) (0.8%) (5.5%) (4.2%) (4.3%) (6.2%) (6.5%) (7.4%) (9.6%) (11.6%) (23.3%) GREATER CHINA³: FY LFL (13.1%
Slide 14: Other Major Markets Performance
OTHER MAJOR MARKETS PERFORMANCE FRANCE: FY LFL1 (14.7%) ITALY: FY LFL (14.7%) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020 (4.0%) (5.0%) (7.4%) (13.1%) (12.7%) (16.2%) (27.9%) (29.9%) SPAIN: FY LFL (10.2%) BRAZIL: FY LFL (11.4%) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2020 Q2 2020 Q3 2
Slide 15: Top Line Decline Mitigated Through Strong Cost Performance
TOP LINE DECLINE MITIGATED THROUGH STRONG COST¹ PERFORMANCE Continuing operations, reportable £ actuals 2020 2019 Δ • Reported revenue less pass-through costs YEAR TO 31 DECEMBER £M £M £M % down by £1,084m or 10.0% Revenue less pass-through costs 9,762 10,847 (1,085) (10.0%) • Staff costs excluding
Slide 16: Free Cash Flow and Free Cash Flow Conversion
FREE CASH FLOW AND FREE CASH FLOW CONVERSION YEAR TO 31 DECEMBER 2020 £M 2019 £M Operating profit (2,267) 1,580 - Continuing Operations (2,278) 1,296 - Discontinued Operations 11 284 Depreciation & amortisation charges 631 686 - Depreciation & amortisation ex IFRS 16 299 368 - Depreciation of right-
Slide 17: Uses of Cash Flow
USES OF CASH FLOW YEAR TO 31 DECEMBER 2020 £M 2019 £M Free cash flow 1,283 1,044 Net disposals/(acquisitions) ex earnout payments 140 2,221 - Disposal proceeds¹ 284 2,315 - Net initial payments² (144) (94) Net cash flow before distributions 1,423 3,265 Distributions to shareholders (412) (794) - Div
Slide 18: Working Capital Improvement Driven by Reduction in Overdue Debtors
WORKING CAPITAL IMPROVEMENT DRIVEN BY STRONG FOCUS ON REDUCTION IN OVERDUE DEBTORS % DEBTORS OVERDUE 35% 30% 25% 20% 15% 10% 5% 0% 2020 PRELIMINARY RESULTS 18
Slide 19: Significant Improvement in Net Debt Since December 2019
SIGNIFICANT IMPROVEMENT IN NET DEBT¹ SINCE DECEMBER 2019(£M) (696) (1,540) 1 Itemised movements in net debt represent management figures, which may vary from the presentation of the cash flow under IFRS 2 Acquisitions/disposals include earnout payments 2020 PRELIMINARY RESULTS 19 3 Dividends to shar
Slide 20: Leverage Metrics
LEVERAGE METRICS Continuing operations YEAR TO 31 DECEMBER 2020 £M 2019 £M Δ £M Average net debt¹ on constant currency basis (2,331) (4,358) 2,027 Average net debt¹ on reportable basis (2,331) (4,282) 1,951 Net debt¹ at 31 December on constant currency basis (696) (1,700) 1,004 Net debt¹ at 31 Decem
Slide 21: 2021 Expected Impact of FX on Revenue Less Pass-Through Costs
2021 EXPECTED IMPACT OF FX ON REVENUE LESS PASS-THROUGH COSTS¹ 20/FY Act 21/Q1 Est 21/Q2 Est 21/Q3 Est 21/Q4 Est 21/FY Est 0% • 2021 full year (1.2%) expected currency headwind -5.0% -2% (4.0%) (4.2%) (5.1%) (5.0%) • 2021 H1 expected currency (7.0%) headwind -5.4% -4% • 2020 full year actual currenc
Slide 22: Dividend, Buyback and Outlook
DIVIDEND, BUYBACK AND OUTLOOK • 2020 final dividend of 14.0p proposed • Full year 2020 dividend of 24.0p, in line with new policy • Remaining £620 million Kantar buyback to recommence immediately, with up to £300 million to be completed by June • 2021 and medium-term guidance reiterated 2020 PRELIMI
Slide 23: Business Update
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Slide 24: We Enter 2021 Having Made Significant Progress
WE ENTER 2021 • Improved organic growth performance o Above peer group for 2020, a year ahead of HAVING MADE plan o Improving relative performance in US SIGNIFICANT • Stronger client performance PROGRESS — o 15 of top 30 clients grew in 2020 o Customer satisfaction scores improving MUCH OF IT throug
Slide 25: Four Key Changes in 2020
FOUR KEY CHANGES IN 2020 MEDIA COMMERCE PURPOSE LOCALISATION 2020 PRELIMINARY RESULTS 25
Slide 26: Critical Partner to Our Clients
CRITICAL PARTNER TO OUR CLIENTS Top 200 clients -2.3% in Q4, -2.8% in FY 2020 SIGNIFICANTLY IMPACTED BALANCED RESPONSE MORE RESILIENT 22% 21% 57% Automotive 14% Telco, Media, Ent 7% CPG 26% Luxury, Premium 6% Retail 5% Tech 18% Travel, Leisure 2% Financial services 4% Healthcare, Pharma 13% Other 5%
Slide 27: We Have Won and Retained Major Clients
WE HAVE WON AND RETAINED MAJOR CLIENTS Source: COMvergence Source: R3 2020 PRELIMINARY RESULTS 27
Slide 28: Significant Progress on Our Purpose Agenda
WE HAVE ALSO MADE SIGNIFICANT PROGRESS ON OUR PURPOSE AGENDA PEOPLE PLANET CLIENTS COMMUNITIES 2020 PRELIMINARY RESULTS 28
Slide 29: Bringing It Together in Our Work
BRINGING IT TOGETHER IN OUR WORK SPEED AND RELEVANCE PURPOSE INTO ACTION 2020 PRELIMINARY RESULTS 29
Slide 30: Market Drivers of Growth for 2021
MARKET DRIVERS OF GROWTH FOR 2021 GLOBAL ECOMMERCE TO GROW BY 19% IN 2021 STRONGEST GROWTH IN TECH, LUXURY, AND RETAIL COMPANIES 2021 FORECAST ECOMMERCE SALES GROWTH1 REVENUE GROWTH BY CATEGORY, CAGR (2021 – 2023) 2 TOTAL 19% 11% JAPAN 8% 8% GERMANY 14% 6% 6% 6% US 19% 5% 4% 4% UK 19% CHINA 20% AUST
Slide 31: WPP Drivers of Growth in 2021
WPP DRIVERS OF GROWTH IN 2021 • Good exposure to growth sectors – CPG, tech, pharma • Global footprint to capture phased recovery across multiple markets • GroupM strength in digital, commerce, programmatic and connected TV − Xaxis and Finecast “speedboats” • Integrated agencies deeply engaged in ex
Slide 32: Summary
SUMMARY • Resilient 2020 performance on top line, bottom line and cash flow • Well set up for 2021: clients focused on growth and transformation • Confident on medium-term outlook: – Simpler, more agile organisation – Multiple growth drivers – Momentum underpinned by significant cultural change – Ma
Slide 33: Q&A
Q&A
Slide 34: Other Financial Information
OTHER FINANCIAL INFORMATION
Slide 35: Unaudited IFRS Income Statement
UNAUDITED IFRS INCOME STATEMENT Δ Δ CONSTANT YEAR TO 31 DECEMBER 2020 £M 2019¹ £M REPORTED CURRENCY Continuing operations • Share of associate Revenue 12,003 13,234 (9.3%) (8.1%) exceptional loss of £146m Gross profit 2,015 2,409 (16.4%) (15.3%) (2019: £47m) primarily Operating profit pre exceptiona
Slide 36: Revenue Less Pass-Through Costs Growth vs Prior Year
REVENUE LESS PASS-THROUGH COSTS GROWTH VS PRIOR YEAR Q1 Q2 Q3 Q4 FULL YEAR Continuing Operations: Reported (4.3%) Reported (15.6%) Reported (11.9%) Reported (7.8%) Reported (10.0%) FX (0.3%) FX 0.4% FX (3.9%) FX (1.0%) FX (1.2%) Acquisitions/ (0.7%) Acquisitions/ (0.9%) Acquisitions/ (0.4%) Acquisit
Slide 37: Revenue Less Pass-Through Costs by Sector
REVENUE LESS PASS-THROUGH COSTS BY SECTOR YEAR TO 31 DECEMBER 2020 £M 2019 £M Δ REPORTED Δ LFL Global Integrated Agencies 7,319 8,108 (9.7%) (7.9%) Public Relations 854 898 (4.9%) (4.0%) Specialist Agencies 1,589 1,841 (13.7%) (11.5%) Total Continuing Operations 9,762 10,847 (10.0%) (8.2%) 2020 PREL
Slide 38: Revenue Less Pass-Through Costs by Region
REVENUE LESS PASS-THROUGH COSTS BY REGION YEAR TO 31 DECEMBER 2020 £M 2019 £M Δ REPORTED Δ LFL North America 3,744 4,034 (7.2%) (5.8%) UK 1,234 1,390 (11.2%) (10.5%) Western Continental Europe 2,019 2,177 (7.2%) (8.1%) Asia Pacific, Latin America, Africa & Middle East and 2,765 3,246 (14.8%) (10.3%)
Slide 39: Revenue Less Pass-Through Costs Growth by Region Like-for-Like
REVENUE LESS PASS-THROUGH COSTS GROWTH¹ BY REGION LIKE-FOR-LIKE % C. & E. Europe % Q1 Q2 Q3 Q4 FY 4.7 (7.0) (2.7) (3.9) (2.6) UK % Q1 Q2 Q3 Q4 FY North America % (4.2) (23.3) (6.5) (7.4) (10.5) Q1 Q2 Q3 Q4 FY W. Cont. Europe % (1.9) (10.2) (5.1) (5.7) (5.8) Q1 Q2 Q3 Q4 FY (3.7) (18.8) (5.5) (3.9) (8
Slide 40: BRIC Markets Performance
BRIC MARKETS¹ PERFORMANCE CHINA: FY LFL (11.1%) GREATER CHINA²: FY LFL (13.1%) BRAZIL FY: (11.4%) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020 3.5% (3.1%) (1.3%) (9.1%) (10.5%) (12.1%) (14.1%) (16.1%) (16.7%) (18.7%) (23.4%) (21.3%) INDIA: FY LFL (1
Slide 41: Headline Operating Profit and Margin by Sector
HEADLINE¹ OPERATING PROFIT AND MARGIN By Sector OPERATING PROFIT £M OPERATING MARGIN² YEAR TO 31 DECEMBER 2020 2019 2020 2019 Global Integrated Agencies 968 1,219 13.2% 15.0% Public Relations 141 141 16.5% 15.7% Specialist Agencies 152 201 9.5% 10.9% Total Continuing Operations 1,261 1,561 12.9% 14.
Slide 42: Headline Operating Profit and Margin by Region
HEADLINE¹ OPERATING PROFIT AND MARGIN By Region OPERATING PROFIT £M OPERATING MARGIN² YEAR TO 31 DECEMBER 2020 2019 2020 2019 North America 612 662 16.3% 16.4% UK 138 189 11.2% 13.6% Western Continental Europe 199 261 9.8% 12.0% Asia Pacific, Latin America, Africa & Middle 312 449 11.3% 13.8% East a
Slide 43: Client Sector Mix
CLIENT SECTOR MIX Travel & leisure Luxury & premium 2% 6% Financial services 4% CPG Other 26% 5% Retail 5% Telecom, media & entertainment 7% Automotive 14% Healthcare & pharma 13% Tech 18% Note: all figures relate to LFL revenue less pass-through costs from WPP’s top 200 designated clients attributa
Slide 44: Debt Maturity Profile at December 31, 2020
DEBT MATURITY PROFILE £M AT DECEMBER 31, 2020 £ TOTAL £ TOTAL CREDIT DRAWN 700 ◼ £ bonds £400m (2.875% Sep ’46) 400 400 ◼ US bond $220m (5.625% Nov ’43) 161 161 600 ◼ US bond $93m (5.125% Sep ’42) 68 68 ◼ £ bonds £250m (3.75% May ’32) 250 250 500 ◼ Eurobonds €600m (1.625% Mar ’30) 537 537 400 ◼ Euro
Slide 45: Uses of Free Cash Flow
USES OF FREE CASH FLOW FY FY FY TARGET 2020 2019 (Disposals)/acquisitions (excluding earnouts): Acquisitions¹ c. £200M £144M £94M Less disposals² c. £(200M) £(284M) £(2,315M) Net (disposals)/acquisitions NEUTRAL £(140M) £(2,221M) Share buybacks: - £285M £44M % of issued share capital - 2.6% 0.4% Bal
Slide 46: Effects of Currency
EFFECTS OF CURRENCY STERLING FULL YEAR 2020 2019 (WEAKER)/STRONGER US$ 1.28 1.28 - • Currency movements accounted for 1.2% € 1.12 1.14 (1%) decrease¹ in revenue less pass-through costs Chinese Renminbi 8.85 8.82 - • £ sterling not moved Brazilian Real 6.61 5.03 31% significantly against US$ or € but
Slide 47: 2020 Actual Impact of FX on Revenue Less Pass-Through Costs
2020 ACTUAL IMPACT OF FX ON REVENUE LESS PASS-THROUGH COSTS¹ 19/FY Act 20/Q1 Act 20/Q2 Act 20/Q3 Act 20/Q4 Act 20/FY Act 2% • 2020 full year currency headwind -1.2% 1.2% • 2020 H2 currency 0.4% 0% headwind -2.4% (0.3%) (1.0%) (1.2%) • 2019 full year currency tailwind 1.2% -2% (3.9%) -4% 1 Continuing
Slide 48: Net Finance Costs/(Income)
NET FINANCE COSTS/(INCOME) YEAR TO 31 DECEMBER 2020 £M 2019¹ £M Δ £M Net debt interest 131 171 40 Lease liabilities 101 100 (1) Investment income (8) (18) (10) Pensions 6 7 1 Sub-total 99 89 (10) Headline finance costs 230 260 30 Financial instruments 147 (163) (310) Net finance costs 377 97 (280) 1
Slide 49: Taxation
TAXATION YEAR TO 31 DECEMBER 2020 £M 2019 £M Δ £M Headline PBT 1,041 1,363 (322) Less income from associates (10) (62) 52 Headline PBT excluding associate income 1,031 1,301 (270) Headline tax charge 242 300 58 Headline tax rate 23.5% 23.0% Tax credit on COVID-19 restructuring costs (51) - 51 Tax cr
Slide 50: Pensions Deficit
PENSIONS DEFICIT YEAR TO 31 DECEMBER 2020 £M 2019 £M Deficit B/F (159) (184) Asset Allocation 2020 2019 Service cost (12) (15) Bonds & insured Plan liabilities interest charge (17) (26) 87% 84% annuities Funding 20 37 Equities 7% 9% Investment returns 71 39 Other 6% 7% Δ valuation assumptions¹ (55)
Slide 51: Earnout Accrual
EARNOUT ACCRUAL¹ YEAR TO 31 DECEMBER 2020 £M EXPECTED PAYMENTS £M Accrual B/F 244 2021 58 Earnouts paid (115) 2022 17 New acquisitions 7 2023 6 Revised estimates taken to goodwill (3) 2024 30 Revaluations of payments (13) 2025+ 3 Excluding FX 120 Total 114 Foreign exchange impact (6) Accrual C/F 114
Slide 52: Ordinary Shares - Diluted
ORDINARY SHARES - DILUTED NUMBER SHARES MILLION 2020 2019 Δ Average Basic 1,223 1,250 -2.2% Other Potentially Issuable Shares 13 11 Average Diluted 1,236 1,261 -2.0% 2020 PRELIMINARY RESULTS 52
Slide 53: Ordinary Shares - Basic
ORDINARY SHARES - BASIC NUMBER SHARES MILLION 2020 2019 Δ 1 January 1,328 1,333 -0.4% Share cancellation (32) (5) 31 December 1,296 1,328 -2.4% Weighted Average 1,300 1,333 -2.5% ESOP, Treasury & Other (77) (83) Average Basic 1,223 1,250 -2.2% 2020 PRELIMINARY RESULTS 53