Slide 1: Interim Results
INTERIM RESULTS 04 August 2023
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This document contains statements that are, or may be limited to: the impact of, epidemics or pandemics including economic conditions and government regulations in the deemed to be, “forward-looking statements”. Forward- restrictions on busin
Slide 3: Agenda
• First half highlights • Financial performance • Strategic progress • Q&A
Slide 4: Highlights
HIGHLIGHTS • Resilient growth in H1 2023 with like-for-like growth +2.0% (Q2 +1.3%) • UK, Western Continental Europe and Rest of World delivered improved performance in Q2 • Continued investment in media. GroupM maintained strong stable growth across H1 • North America with reduced spend by technolo
Slide 5: Financial Performance
FINANCIAL PERFORMANCE
Slide 6: Revenue less pass-through costs growth
REVENUE LESS PASS-THROUGH COSTS GROWTH 2023 H1 +5.5% +2.6pt +0.9pt +2.0% Reported growth FX contribution to M&A contribution to Like-for-like growth (+12.5% in H1 ‘22) reported growth reported growth (+8.9% in H1 ‘22) 6
Slide 7: Unaudited Headline IFRS Income Statement
UNAUDITED HEADLINE¹ IFRS INCOME STATEMENT HALF YEAR TO 30 JUNE 2023 £M 2022 £M Δ REPORTED Δ LFL 2 • Continued LFL growth in revenue and revenue less pass-through costs Revenue 7,221 6,755 6.9% 3.5% • Foreign exchange tailwind of 2.6pt Revenue less pass-through costs 5,811 5,509 5.5% 2.0% on revenue
Slide 8: Reconciliation of Headline Operating Profit to Reported Operating Profit
RECONCILIATION OF HEADLINE OPERATING PROFIT TO REPORTED OPERATING PROFIT 2023 2022 Δ HALF YEAR TO 30 JUNE £M £M £M • Restructuring and transformation costs: include £54m in relation to Headline operating profit 666 639 27 the IT transformation programme and £24m in relation to the ERP Goodwill impai
Slide 9: Global Integrated Agencies
GLOBAL INTEGRATED AGENCIES £M H1 2023 Δ REPORTED Δ VS 22 LFL INTEGRATED CREATIVE AGENCIES Revenue less pass-through costs 4,782 5.4% 2.2% • Continued growth at Ogilvy, reflecting client wins including H&R Block, Mondelēz, Samsung, SC Headline operating profit 540 6.6% Johnson and Verizon • Hogarth:
Slide 10: Public Relations
PUBLIC RELATIONS £M H1 2023 Δ REPORTED Δ VS 22 LFL • H+K: continued growth on double- digit comp Revenue less pass-through costs 584 6.7% 2.1% • FGS Global: strong performance. PERFORMANCE REVIEW KKR acquired a 29% stake. Ranked #1 Headline operating profit 88 4.8% in PR by Chambers and Partners1 •
Slide 11: Specialist Agencies
SPECIALIST AGENCIES £M H1 2023 Δ REPORTED Δ VS 22 LFL • Landor & Fitch continued growth. Revenue less pass-through costs 445 4.5% 0.2% Acquisition of sonic branding agency, amp PERFORMANCE REVIEW Headline operating profit 38 (21.2)% • CMI, specialist healthcare unit, maintained double-digit growth H
Slide 12: Diverse Client Sector Mix
DIVERSE CLIENT SECTOR MIX 1 LFL REVENUE LESS PASS-THROUGH COSTS (H1 2023) 4% 3% 5% 26% Telecom, media & 6% CPG +15.1% entertainment -1.4% Financial services +10.0% 6% Tech & digital services -4.9% Other -0.3% Healthcare & pharma +4.2% Travel & leisure +8.9% 9% Automotive -0.2% Government, public 18%
Slide 13: Major Markets
MAJOR MARKETS LFL REVENUE LESS PASS-THROUGH COSTS GROWTH IN H1 2023 (%) Q1 2023 Q2 2023 • USA: H1 -1.2% growth in CPG, 9.0 healthcare and financial services; 7.4 6.6 offset by lower technology and 4.0 4.8 retail client revenues 2.3 2.5 • UK: H1 +8.2% strong performance from CPG and healthcare with (
Slide 14: Change in Operating Margin Year-on-Year
CHANGE IN OPERATING MARGIN YEAR-ON-YEAR Net 0.3pt saving in people- related costs • Margin: reported basis 11.5% down 10bps YoY; up 10bps on a constant FX basis 11.6% • Staff costs pre incentives: good 11.5% control over freelance costs, partly offset by higher severance as we aligned headcount to m
Slide 15: Transformation Programme
TRANSFORMATION PROGRAMME PROGRESS IN H1 • Continued progress: EFFICIENCY OPERATING MODEL FUNCTIONAL/SHARED to date mostly driven SERVICES by property and personal costs • On target to achieve annual savings of £450m by end 2023 (2022: £375m) and £600m by end 2025 Property Personal IT 5 more campuses
Slide 16: Cash Generation
CASH GENERATION MOVEMENT IN NET DEBT SINCE JUNE 2021 £M £(151)m net working capital outflow Disciplined capital allocation 1.74x (3,135) (3,468) 1.68x Average net debt/EBITDA3 1 Dividends to shareholders, share buybacks and share purchases for ESOP 2 M&A excluding earnout payments. Earnouts are in o
Slide 17: Consistent Capital Allocation Policy
CONSISTENT CAPITAL ALLOCATION POLICY • Organic investment: in technology infrastructure, campuses and standardised systems • Acquisitions to enhance our offer: in H1 2023 these included Goat (influencer), E.G. INVESTMENT CONSISTENT IN CAMPUS RETURNS Obviously (influencer), 3K Communications BUILDING
Slide 18: Guidance
GUIDANCE FY 2023 LFL revenue less pass-through costs growth of 1.5-3.0% (previously 3-5%); FY 2023 headline operating margin of around 15% (excluding the impact of FX) – Mergers and acquisitions will add 0.5-1.0% to revenue less pass-through costs growth – FX impact: current rates (31st July 2023) i
Slide 19: Strategic Progress
STRATEGIC - PROGRESS
Slide 20: Increasingly Complex Environment
INCREASINGLY COMPLEX ENVIRONMENT June 2023 June 2023 June 2023 June 2023 May 2023 April 2023 June 2023 April 2023 June 2023 June 2023 January 2023 20
Slide 21: Clients Priorities Focus on the Future
CLIENTS PRIORITIES FOCUS ON THE FUTURE INVESTMENT CREATIVITY & SIMPLICITY & TECHNOLOGY & ARTIFICIAL BEHIND BRANDS EFFECTIVENESS TRANSFORMATION DATA INTELLIGENCE 21
Slide 22: Clients Are Investing in Their Brands
CLIENTS ARE INVESTING IN THEIR BRANDS GROUPM – THIS YEAR, NEXT YEAR CITI CMO SURVEY – MARKETING INTENTIONS MEDIA GROWTH FORECASTS FOR 2023 (%)1 MARKETING BUDGET GROWTH OVER THE NEXT 2-3 YEARS (%)2 Jun 2023 Jul 2023 18 Dec 2022 16.8 30 Jan 2023 16 26.9 25 14 12.0 21.1 12 20 19.3 19.0 18.8 18.0 18.5 1
Slide 23: Clients Are Investing in Their Brands: New Business H1 2023
CLIENTS ARE INVESTING IN THEIR BRANDS NEW BUSINESS H1 2023 Social Media Media Media Media Media Media Media Global India EMEA India UK Americas UK Creative Creative Production Public Relations Public Relations Public Relations CRM Global Global Global Switzerland UK Australia UK 23
Slide 24: Creativity & Effectiveness
CREATIVITY & EFFECTIVENESS RECOGNITION FOR OUR CREATIVITY Cannes Effies Mindshare: Media Network of the Year WPP named most effective communications company globally; Ogilvy ranked most effective agency network 24
Slide 25: Simplicity & Transformation: Coca-Cola Open Agency Model
SIMPLICITY & TRANSFORMATION OPEN AGENCY MODEL CREATED FOR THE COCA-COLA COMPANY WITH CREATIVE EXCELLENCE AT THE CORE FIRST OF ITS KIND TO DRIVE REVENUE AND AGENCY MODEL CONSUMPTION GROWTH A single integrated solution Converting through digital, social, PR, retail and live Experiences, consumption oc
Slide 26: Technology & Data: Partnerships
TECHNOLOGY & DATA: PARTNERSHIPS NEW TECHNOLOGY CAPABILITY PARTNERSHIPS IN H1 Customer engagement platform Commerce and payments solutions first party data and listener intelligence Saas Ecommerce platform Content management systems 26
Slide 27: Early Client Views on Gen AI Are Positive
EARLY CLIENT VIEWS ON GEN AI ARE POSITIVE CITI CMO SURVEY – MARKETING INTENTIONS CITI CMO SURVEY – MARKETING INTENTIONS IMPACT OF GENERATIVE AI ON OVERALL ADVERTISING SPEND1 IMPACT OF ON MONEY SPENT ON AGENCY SERVICES1 Significantly more Somewhat more 100% 4 3 3 3 100% 1 3 3 14 9 9 No change 90% 10
Slide 28: AI: Broad Capabilities Across WPP
AI: BROAD CAPABILITIES ACROSS WPP CREATIVE PRODUCTION MEDIA The Next Rembrandt Copilot Utilising AI to power AI and Omniverse- AI-powered campaign creativity since 2016 powered content engine performance for virtual production enhancement 28
Slide 29: AI: Delivering Work to Clients Today
AI: DELIVERING WORK TO CLIENTS TODAY SUPERCHARGING OUR SCALING MAXIMISING CREATIVE WORK PERSONALISATION PERFORMANCE Meet Jen AI. An AI version of AI tools to generate AI-powered measurement and Jennifer Lopez - designed to invite personalised Happy Birthday optimisation of media and creative your fr
Slide 30: AI: Long-Term Partnership with Nvidia
AI: LONG-TERM PARTNERSHIP WITH NVIDIA NVIDIA OMNIVERSE™ POWERED CONTENT ENGINE FOR VIRTUAL PRODUCTION • A best-in-class creative production pipeline: connecting an ecosystem of 3D design, manufacturing and creative supply chain tools • Based on copy-right safe content, including CAD/CAM data, Adobe
Slide 31: NVIDIA Omniverse & Generative AI: WPP's Content Engine
NVIDIA Omniverse & Generative Al WPP’s Content Engine Transforms Advertising nviDia nVIDIA, ) 0:02/1:20 om *# @ O ft WPP 31
Slide 32: Acquisitions Supporting AI Strategy: amp
ACQUISITIONS SUPPORTING AI STRATEGY: AMP GROWING IMPORTANCE OF AMP, THE WORLD’S LEADING SONIC HUB®: END-TO-END AI SONIC BRANDING SONIC BRANDING BUSINESS SOLUTION 60 people in US, Europe and Asia sonic ecosystem BRAND CHANNELS Key clients Sound is a key element of every Deep expertise in music and so
Slide 33: Summary
SUMMARY • Mixed market environment: progress • GroupM (Media) continues to perform well. Regions excluding the US saw strong Q2, with China recovering • Lower spend by technology clients and on technology-related projects impacted our US integrated creative agencies • Continued strategic progress: •
Slide 34: Q&A
Q&A
Slide 35: Contacts and Further Resources
CONTACTS AND FURTHER RESOURCES TOM WALDRON INVESTOR WEBSITE Group Investor Relations Director wpp.com/investors tom.waldron@wpp.com Tel: +44 (0) 7788 695 864 INVESTOR WEBINARS ANTHONY HAMILTON A series of webinars designed to give investors and analysts Investor Relations Director deeper insight int
Slide 36: Appendix
APPENDIX
Slide 37: Examples of Our Work
EXAMPLES OF OUR WORK COMMUNICATIONS EXPERIENCE COMMERCE DATA & TECHNOLOGY THE MOST BEAUTIFUL SOUND DOVE’S #TURNYOURBACK FIRST DIRECT SKUNK VIRGIN VOYAGES: JEN AI Nothings more beautiful than the sound of cancer Challenging beauty standards on social media Bringing a whiff of hope to the nation An AI
Slide 38: Revenue Less Pass-Through Costs Growth
REVENUE LESS PASS-THROUGH COSTS GROWTH Central & Eastern Europe % Q1 23 Q2 23 H1 23 11.0 10.3 10.6 UK % Q1 23 Q2 23 H1 23 7.4 9.0 8.2 North America % Q1 23 Q2 23 H1 23 Western Continental Europe % 1.9 (4.1) (1.2) Q1 23 Q2 23 H1 23 3.4 3.9 3.7 Asia Pacific % Q1 23 Q2 23 H1 23 (2.8) 1.3 (0.6) Africa &
Slide 39: Like-for-Like Revenue Less Pass-Through Costs Growth
LIKE-FOR-LIKE REVENUE LESS PASS-THROUGH COSTS GROWTH USA UK GERMANY Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 40% 40% 40% 30% 30% 30% 20% 20% 11.5% 20% 10% 6.6% 10.4% 4.9% 4.0% 10% 4.5% 12.0% - 3.5% 2.3% 10% 9.0% 7.4% 0% 6
Slide 40: Like-for-Like Revenue Less Pass-Through Costs Growth
LIKE-FOR-LIKE REVENUE LESS PASS-THROUGH COSTS GROWTH AUSTRALIA CANADA FRANCE Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 10% 8.0% 7.7% 3.2% 4.0% 2.6% - 2.5% 2.3% 0.9% (1.3%) 0% - (
Slide 41: Exchange Rate Analysis
EXCHANGE RATE ANALYSIS STERLING 1 1 1 HALF YEAR TO 30 JUNE 2023 2022 (WEAKER)/STRONGER 2022 Act Q1 23 Act Q2 23 Q3 23 Est Q4 23 Est 2023 FY Est US $ 1.23 1.30 (5%) 6.3% € 1.14 1.19 (4%) 5.9% Chinese Renminbi 8.55 8.41 2% Indian Rupee 101.4 99.0 2% Brazilian Real 6.25 6.60 (5%) (0.6%) Australian $ 1.
Slide 42: Change in Headline Operating Margin
CHANGE IN HEADLINE¹ OPERATING MARGIN 2023 2022 Δ HALF YEAR TO 30 JUNE £M £M £M % Revenue less pass-through costs 5,811 5,509 302 5.5 Staff costs pre incentives (3,969) (3,766) (203) (5.4) Establishment (272) (263) (9) (3.6) IT (350) (308) (42) (13.6) Personal (112) (96) (16) (16.3) Other operating e
Slide 43: Free Cash Flow
FREE CASH FLOW HALF YEAR TO 30 JUNE 2023 £M 2022 £M Operating profit 306 539 Depreciation & amortisation charges 259 255 Investment and other impairment (reversals)/charges 204 8 Lease payments (including interest) (184) (190) Non-cash compensation 76 67 Working capital, other receivables, payables
Slide 44: Debt Maturity Profile
DEBT MATURITY PROFILE £ TOTAL £ TOTAL CREDIT DRAWN EUR GBP USD 800 £ bonds £400m (2.875% Sep ’46) 400 400 700 US bond $220m (5.625% Nov ’43) 173 178 US bond $93m (5.125% Sep ’42) 73 73 600 £ bonds £250m (3.75% May ’32) 250 250 500 Eurobonds €600m (1.625% Mar ’30) 516 516 400 Eurobonds €7
Slide 45: Leverage Calculation
LEVERAGE CALCULATION 12 months to end June 2023 Average net debt on a reportable basis (£m) (3,378) Average headline EBITDA¹ (£m) 2,008 Average adjusted net debt/headline EBITDA¹ 1.68x 1. Net debt, headline finance costs, interest cover, headline EBITDA, exclude impact of IFRS 16 45
Slide 46: Thank You
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