2018 Interim Results London 4 SEPTEMBER 2018 WPP plc 1 2018 - PowerPoint PPT Presentation

2018 Interim Results London 4 SEPTEMBER 2018 WPP plc 1

2018 INTERIM RESULTS Safe Harbour Statement The following cautionary statement is included for safe harbour purposes in connection with the Private Securities Litigation Reform Act of 1995 introduced in the United States of America. This presentation may contain forward-looking statements within the meaning of the US federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially including adjustments arising from the annual audit by management and the Company’s independent auditors. For further information on factors which could impact the Company and the statements contained herein, please refer to public filings by the Company with the Securities and Exchange Commission. The statements in this presentation should be considered in light of these risks and uncertainties. WPP plc 2

2018 INTERIM RESULTS First Half Highlights  Improving top-line growth – like-for-like revenues less pass-through costs up 0.7% in Q2, the first quarter of growth since Q1 2017.  Overall North America like-for-like growth still challenging, as advertising, data investment management and brand consulting came under further pressure, but strong improvement in media investment management. Remains the highest priority to improve.  Slight decline in like-for-like Headline PBIT margin of 0.4 margin points (of which 0.1 margin point is due to lower associate income), with higher incentives accounting for 0.2 margin points. Increase in property and other operating costs offsetting improvement in staff costs pre-incentives. Average headcount reduced by over 2,000 staff or 1.7%.  Good progress on the asset disposal plan, raising £676m cash proceeds so far this year, with no loss of revenue and minimal impact on profit.  Net debt at 30 June only £84m better, despite asset disposals of £469m in first half, following worse NWC position. However, significant improvement in net debt position at 31 July, favourable £508m compared with last year, reflecting improved NWC. Further cash proceeds of £207m received in August and early September .  Interim dividends maintained at 22.7p same as 2017.  Full year guidance updated to reflect the revenue less pass-through costs and margin performance in the first half. WPP plc 3

2018 INTERIM RESULTS Summary IFRS Income Statement Δ CONSTANT HALF YEAR TO 30 JUNE 2018 £M 2017¹ £M Δ REP EPORTED² CU CURRENCY³ Revenue 7,493 7,650 -2.1% 2.9% Gross profit 1,274 1,368 -6.9% -2.2% Operatin ing pr profit 842 842 724 724 16.2% 16.2 22.5 22.5% PBIT⁴ 851 851 784 784 8.6% 8.6 14.5% 14.5 Profit be before tax 846 846 779 779 8.6% 8.6 14.2% 14.2 Tax rate 16.7% 18.7% - - Profit after tax 705 634 11.3% 16.8% Reported dil diluted EPS PS 53.4 53.4p 46.6 46.6p 14.6 14.6% 20.3 20.3% 1 2017 revenue and revenue less pass-through costs restated by £247m and £14m respectively for the implementation of IFRS 15 2 Percentage change in reported sterling 3 Percentage change at constant currency rates WPP plc 4 4 Includes net exceptional gain of £114m

2018 INTERIM RESULTS Summary Headline¹ Results Δ CONSTANT HALF YEAR TO 30 JUNE 2018 £M 2017² £M Δ RE REPORTED CURR RRENCY Δ LI LIKE-FOR-LIKE³ Revenue 7,493 7,650 -2.1% 2.9% 1.6% Revenue less pass-through costs 6,149 6,376 -3.6% 1.4% 0.3% PBIT be before ass associates 783 783 836 836 -6.3 6.3% -1.6 1.6% PBIT 821 821 882 882 -7.0 7.0% -2.3 2.3% EBITDA 948 1,016 -6.7% -1.9% PBIT before associates margin⁴ 12.8% 13.1% - 0.4⁵ - 0.4⁵ - 0.3⁵ PBIT margin⁶ 13.3% 13.8% - 0.5⁵ - 0.5⁵ - 0.4⁵ Tax rate 22.5% 22.0% n/a n/a Dilu iluted EP EPS 42.6 42 .6p 45.4 45 .4p -6.2 6.2% -1.3 1.3% Dividend pe per r sh share 22.7 22 .7p 22.7 22 .7p - - Average net debt (4,979) (4,811) -3.5% -5.8% Rolling average net debt/EBITDA ⁷ 2.1x 1.9x n/a n/a 1 Figures before goodwill and intangibles charges, gains/losses on step-ups, gains/losses on 4 Headline PBIT before associates as a percentage of revenue less pass-through costs margin disposals of subsidiaries and investments, investment write-downs, share of exceptional 5 Margin points gains/losses of associates, restructuring costs and revaluation of financial instruments 6 Headline PBIT as a percentage of revenue less pass-through costs margin 2 2017 revenue and revenue less pass-through costs restated by £247m and £14m respectively 7 Average Net debt/EBITDA for 12 months to 30 June for the implementation of IFRS 15 WPP plc 5 3 Like-for-like growth at constant currency exchange rates and excluding the effects of acquisitions and disposals

2018 INTERIM RESULTS Revenue Less Pass-Through Costs Growth versus Prior Year Q1 H1 Q2 1.1% Like-for-lik Li like Li Like-for-lik like Like-for-lik Li like 1.1% -0.1% 1% 0.7% 7% 0.3% 3% 0.7% 0.3% -3.9% -5.0% Acquisitions Acquisitions Acquisitions 1.1% 1.1% 1.1% FX FX FX -6.1% -3.9% -5.0% Reported Reported Reported -5.1% -2.1% -3.6% WPP plc 6

2018 INTERIM RESULTS Impact of Foreign Exchange on Revenue Less Pass-Through Costs 2017 FY ACT 2018 Q1 ACT 2018 Q2 ACT 2018 Q3 EST 2018 Q4 EST 2018 FY EST 6% 4% 4.6% 2%  H1 headwind -5%.  Full year headwind -3%. 0%  Q3-Q4 run at £/US$ 1.30 -0.7% and £/ € 1.11. -2.3% -3.1% -2% -3.9% -6.1% -4% -6% -8% WPP plc 7

2018 INTERIM RESULTS Revenue Less Pass-Through Costs by Region REVENUE LESS PASS-THROUGH COSTS Δ CONSTANT Δ LIKE- HALF YEAR TO 30 JUNE % GROUP 2018 £M 2017¹ £M Δ REPORTED CURRENCY FOR-LIKE North America 35.0 2,155 2,407 -10.5% -2.4% -2.9% UK 13.5 833 815 2.2% 2.2% 1.5% Western Continental Europe 21.5 1,319 1,236 6.7% 5.5% 1.9% Asia Pacific, Latin America, Africa & Middle East 30.0 1,842 1,918 -4.0% 3.1% 2.6% and Central & Eastern Europe Total 100.0 6,149 6,376 -3.6% 1.4% 0.3% 1 2017 revenue less pass-through costs restated by £14m for the implementation of IFRS 15 WPP plc 8

2018 INTERIM RESULTS Revenue Less Pass-Through Costs Like-For-Like Growth by Region C. & & E. E. Eur Europ ope Q1 Q2 Q2 5.6% 3. 3.1% 1% UK UK Q1 Q2 Q2 1.6% 1. 1.4% 4% North Americ Nor ica Q1 Q2 Q2 -2.4% -3. 3.3% W. Con ont. Eur Europe Q1 Q2 Q2 -0.2% 3.9% 3. 9% Asi sia Pacifi fic Q1 Q2 Q2 0.7% 1.8% 1. 8% Afr fric ica & & M. Eas ast Q1 Q2 Q2 -3.1% -1. 1.6% La Latin tin Americ ica Q1 Q2 Q2 9.1% 8.6% 8. 6% Q1 Q2 H1 H1 Mature Mar arkets -1.0% -0.3% -0.6% “Faster Growing” Markets 2.3% 2.9% 2.6% WPP plc 9 Total -0.1% 0.7% 0.3%

2018 INTERIM RESULTS Major Markets USA UK Germany Greater China² France REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2018 H1 -2.8% 2.8% 1.5% 1.5% 0.0% 0.0% 4.5% 4.5% 0.3% 0.3% 2018 Q2 -3.3% 1.4% 5.5% 6.5% -0.1% 2018 Q1 -2.2% 1.6% -5.7% 2.1% 0.7% 2017 FY -3.2% 4.8% -1.3% -3.2% 0.4% WPP plc 10 1 Like-for-like growth vs prior year 2 Includes Hong Kong and Taiwan

2018 INTERIM RESULTS BRIC Markets Mainland China Greater China² Brazil India Russia REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2018 H1 6.6% 6.6% 4.5% 4.5% 5.9% 5.9% 0.9% 0.9% -4.6% 4.6% 2018 Q2 9.0% 6.5% 5.9% 1.4% -9.3% 2018 Q1 3.6% 2.1% 6.0% 0.3% 0.6% 2017 FY -1.8% -3.2% 1.6% 1.1% -15.4% WPP plc 11 1 Like-for-like growth vs prior year 2 Includes Hong Kong and Taiwan

2018 INTERIM RESULTS Revenue Less Pass-Through Costs by Sector REVENUE LESS PASS-THROUGH COSTS Δ CONSTANT Δ LIKE- HALF YEAR TO 30 JUNE % GROUP 2018 £M 2017¹ £M Δ REPORTED CURRENCY FOR-LIKE Advertising, Media Investment 42.9 2,639 2,848 -7.3% -2.8% -0.8% Management Data Investment Management 15.4 946 997 -5.1% -0.8% -1.5% Public Relations & Public Affairs 9.0 551 568 -3.0% 2.6% 3.5% Brand Consulting, Health & Wellness 32.7 2,013 1,963 2.5% 8.4% 1.9% and Specialist Communications Total 100.0 6,149 6,376 -3.6% 1.4% 0.3% WPP plc 12 1 2017 revenue less pass-through costs restated by £14m for the implementation of IFRS 15

2018 INTERIM RESULTS Like-For-Like Change in Headline ¹ PBIT Margin ² 0.2% -0.2% 13.7% -0.1% -0.2% -0.1% 13.3% -0.4% 1 Figures before goodwill and intangibles charges, gains/losses on step-ups, gains/losses on disposals of subsidiaries and investments, investment write-downs, share of exceptional gains/losses of associates, restructuring costs and revaluation of financial instruments 2 Headline PBIT as a percentage of revenue less pass-through costs margin WPP plc 13 3 2017 proforma headline PBIT margin restated for the implementation of IFRS 15

2018 INTERIM RESULTS Headline PBIT and Margin by Region HEADLINE PBIT¹ £M HEADLINE PBIT MARGIN² HALF YEAR TO 30 JUNE 2018 2017 2018 2017³ North America 348 401 16.2% 16.7% UK 110 112 13.2% 13.8% Western Continental Europe 136 153 10.3% 12.4% Asia Pacific, Latin America, Africa & Middle 227 216 12.3% 11.2% East and Central & Eastern Europe Total 821 882 13.3% 13.8% 1 Figures before goodwill and intangibles charges, gains/losses on step-ups, gains/losses on disposals of subsidiaries and investments, investment write-downs, share of exceptional gains/losses of associates, restructuring costs and revaluation of financial instruments 2 Headline PBIT as a percentage of revenue less pass-through costs margin WPP plc 14 3 2017 headline PBIT margin restated for the implementation of IFRS 15