2019 INTERIM RESULTS London 9 AUGUST 2019 2019 INTERIM RESULTS 1 - - PowerPoint PPT Presentation

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2019 INTERIM RESULTS London 9 AUGUST 2019 2019 INTERIM RESULTS 1 - - PowerPoint PPT Presentation

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2019 INTERIM RESULTS London 9 AUGUST 2019 2019 INTERIM RESULTS 1 SAFE HARBOUR STATEMENT In order to utilise the safe harbour provisions of the United States Private Securities Litigation Reform Act of 1995 (the PSLRA), WPP plc is

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SLIDE 1

2019 INTERIM RESULTS

2019 INTERIM RESULTS

London

9 AUGUST 2019 1

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SLIDE 2

2019 INTERIM RESULTS

SAFE HARBOUR STATEMENT

2

In order to utilise the ‘safe harbour’ provisions of the United States Private Securities Litigation Reform Act of 1995 (the ‘PSLRA’), WPP plc is providing the following cautionary statement. This presentation contains certain forward-looking statements – that is, statements related to future, not past events and circumstances – which may relate to one or more of the financial conditions, results of operations and businesses of WPP plc and certain of the plans and

  • bjectives of WPP with respect to these items. These statements are generally, but not always,

identified by the use of words such as ‘will’, ‘expects’, ‘is expected to’, ‘aims’, ‘should’, ‘may’, ‘objective’, ‘is likely to’, ‘intends’, ‘believes’, ‘anticipates’, ‘plans’, ‘we see’ or similar

  • expressions. Actual results may differ from those expressed in such statements, depending on a

variety of factors including the risk factors set forth in our most recent Annual Report and Form 20-F under “Risk factors” and in any of our more recent public reports. Nothing in this presentation is intended as a forecast, nor should it be taken as such. Our most recent Annual Report and Form 20-F and other period filings are available on our website at www.wpp.com, or can be obtained from the SEC by calling 1-800-SEC-0330 or on its website at www.sec.gov.

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SLIDE 3

2019 INTERIM RESULTS

2019 INTERIM RESULTS

3

PROGRESS ON STRATEGY CONCLUSION AND Q&A

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SLIDE 4

2019 INTERIM RESULTS

SIX MONTHS OF GOOD STRATEGIC PROGRESS

4

  • H1 revenue less pass-through costs -2.0%; signs of progress in Q2
  • Encouraging areas of growth: media businesses, tech clients and faster-growth economies
  • USA (Q1 -8.8%, Q2 -5.4%) remains a major area of focus
  • Improved client retention and key new business wins: L’Oréal, eBay, Instagram
  • Kantar transaction further simplifies WPP and significantly reduces leverage
  • Many key hires now in place; more to come
  • 2019 guidance unchanged; greater confidence in full year
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SLIDE 5

2019 INTERIM RESULTS

2019 INTERIM RESULTS

5

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SLIDE 6

2019 INTERIM RESULTS

FIRST HALF AND Q2 HIGHLIGHTS

6

  • H1 LFL revenue less pass-through costs -2.0%
  • Q2 LFL revenue less pass-through costs -1.4%, improved on Q1 -2.8%
  • Q2 LFL revenue less pass-through costs improved significantly for North America -5.3% (Q1
  • 8.5%) and UK 1.3% (Q1 -0.9%)
  • Western Continental Europe improved slightly in Q2, LFL revenue less pass-through costs

flat (Q1 -0.3%). Belgium, France, Italy and Turkey performed well, Germany slower

  • Asia Pacific, Latin America, Africa & M East and C&E Europe strongest performing region,

LFL revenue less pass-through costs up 1.2% in Q2 (Q1 2.3%). Improvement in Latin America, Africa & M East, C&E Europe offset by slower growth in Asia Pacific

  • H1 operating margin 11.9%, down 1.2 margin points LFL, reflecting revenue less pass-

through costs trend; IFRS 16: Leases benefit to reported margin 0.5 margin points

  • Average net debt £4.384B, down £595M (down £709M constant currency) year-on-year

supported by disposal programme

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SLIDE 7

2019 INTERIM RESULTS

SUMMARY UNAUDITED IFRS INCOME STATEMENT

7

  • 1. % change in reported sterling
  • 2. % change at constant currency rates
  • 3. Operating profit includes net exceptional gain £10m (2018 gain £143m) and goodwill/intangible charges £67m (2018 charges £84m)
  • 4. PBIT includes net exceptional loss £3m (2018 gain £114m) and goodwill/intangible charges £67m (2018 charges £84m)
  • 5. PBT includes net exceptional loss £3m (2018 gain £114m), goodwill/intangible charges £67m (2018 charges £84m) and revaluation of financial instruments charge £57m (2018 credit £81m)

HALF YEAR TO 30 JUNE 2019 £M 2018 £M Δ REPORTED¹ Δ CONSTANT CURRENCY²

Revenue 7,616 7,493 1.6% 0.0% Gross profit 1,226 1,274

  • 3.8%
  • 5.1%

Operating profit³ 673 842

  • 20.1%
  • 21.0%

PBIT⁴ 681 851

  • 20.0%
  • 20.9%

Profit before tax⁵ 478 846

  • 43.5%
  • 44.1%

Tax rate 26.9% 16.7% Profit after tax 349 705

  • 50.5%
  • 51.2%

Reported diluted EPS 24.8p 53.4p

  • 53.6%
  • 54.3%
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SLIDE 8

2019 INTERIM RESULTS

SUMMARY UNAUDITED HEADLINE¹ RESULTS

8

HALF YEAR TO 30 JUNE 2019 £M 2018 £M Δ REPORTED Δ CONSTANT CURRENCY Δ LIKE-FOR- LIKE²

Revenue 7,616 7,493 1.6% 0.0%

  • 0.6%

Revenue less pass-through costs 6,149 6,149 0.0%

  • 1.6%
  • 2.0%

EBITDA³ 875 948

  • 7.7%
  • 8.9%

Operating profit 730 783

  • 6.8%
  • 8.0%

PBIT 751 821

  • 8.5%
  • 9.6%

Operating profit margin⁴ 11.9% 12.7%

  • 0.8⁵
  • 0.8⁵
  • 1.2⁵

PBIT margin⁴ 12.2% 13.3%

  • 1.1⁵
  • 1.1⁵
  • 1.3⁵

Tax rate 22.8% 22.5% n/a n/a Diluted EPS 34.2p 42.6p

  • 19.7%
  • 20.9%

Dividend per share 22.7p 22.7p

  • Average net debt

(4,384) (4,979)

  • 12.0%
  • 13.9%

Rolling average net debt/EBITDA⁶ 2.1x 2.1x n/a n/a

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 and transformation costs, litigation settlement, gain on sale of New York freehold property and revaluation of financial instruments 2. Like-for-like growth at constant currency exchange rates and excluding effect of acquisitions and disposals 3. Headline EBITDA excluding reversal of depreciation of right-of-use assets 4. Margin as % of revenue less pass-through costs 5. Margin points 6. Average net debt/EBITDA for 12 months to 30 June

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SLIDE 9

2019 INTERIM RESULTS

REVENUE LESS PASS-THROUGH COSTS GROWTH VS PRIOR YEAR

9

  • 0.7%

1.6% 0.5%

  • 2.8%
  • 3.9%

1.1% 0.7 %

  • 5.0%

1.1% 0.3 %

Q1 Q1 Q2 Q2 H1 H1

0.7% 1.7% 0.4%

  • 1.4%

0.0% 1.6% 0.4%

  • 2.0%

Like-for-like Acquisitions FX Reported Like-for-like Acquisitions FX Reported Like-for-like Acquisitions FX Reported

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SLIDE 10

2019 INTERIM RESULTS

IMPACT OF FX ON REVENUE LESS PASS-THROUGH COSTS

10

  • 2.8%

1.6% 1.7% 3.9% 4.0% 2.8%

  • 3%
  • 2%
  • 1%

0% 1% 2% 3% 4% 5% 2018 FY ACT 2019 Q1 ACT 2019 Q2 ACT 2019 Q3 EST 2019 Q4 EST 2019 FY EST

  • 2019 H1 currency

tailwind 1.6%

  • 2019 currency tailwind

2.8%¹

  • 2018 full year

headwind -2.8%

  • 1. Based on applying 31 July 2019 exchange rates of £/US 1.22 and £/€1.10 to H2 2019 revenue less pass-through costs
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SLIDE 11

2019 INTERIM RESULTS

REVENUE LESS PASS-THROUGH COSTS

BY REGION

11

HALF YEAR TO 30 JUNE % GROUP 2019 £M 2018 £M Δ REPORTED Δ CONSTANT CURRENCY Δ LIKE- FOR-LIKE

North America 35.1 2,157 2,155 0.1%

  • 5.7%
  • 6.9%

UK 13.5 831 833

  • 0.2%
  • 0.2%

0.2% Western Continental Europe 21.2 1,306 1,319

  • 1.0%

0.2%

  • 0.1%

Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe 30.2 1,855 1,842 0.7% 1.6% 1.7%

Total 100.0 6,149 6,149 0.0%

  • 1.6%
  • 2.0%
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SLIDE 12

2019 INTERIM RESULTS

  • W. Cont. Europe %

Q1 Q2

  • 0.3

0.0 UK % Q1 Q2

  • 0.9

1.3

REVENUE LESS PASS-THROUGH COSTS GROWTH BY REGION

LIKE-FOR-LIKE %

12

% Q1 Q2 H1 Mature Markets

  • 4.7
  • 2.5
  • 3.6

Faster Growing Markets 2.3 1.2 1.7 Total

  • 2.8
  • 1.4
  • 2.0

North America % Q1 Q2

  • 8.5
  • 5.3

Africa & M. East % Q1 Q2

  • 4.7
  • 0.5

Latin America % Q1 Q2 8.0 9.3

  • C. & E. Europe %

Q1 Q2 5.0 6.3 Asia Pacific % Q1 Q2 1.4

  • 1.6
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SLIDE 13

2019 INTERIM RESULTS

TOP 5 MARKETS

13

  • 1. Like-for-like growth vs prior year
  • 2. Includes Hong Kong and Taiwan

REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2019 H1

  • 7.1%

0.2%

  • 2.4%
  • 2.9%
  • 0.3%

2019 Q2

  • 5.4%

1.3%

  • 5.0%
  • 8.7%

0.9% 2019 Q1

  • 8.8%
  • 0.9%

0.4% 4.5%

  • 1.5%

2018 FY

  • 4.2%
  • 0.5%

0.0% 2.1% 0.1%

USA UK Germany Greater China² France

Headcount 23,000 14,000 8,000 10,000² 4,000

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SLIDE 14

2019 INTERIM RESULTS

BRIC MARKETS

14

  • 1. Like-for-like growth vs prior year
  • 2. Includes Hong Kong and Taiwan

REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2019 H1

  • 2.8%
  • 2.9%

10.2% 12.6% 5.0% 2019 Q2

  • 10.1%
  • 8.7%

11.6% 15.8% 11.1% 2019 Q1 6.6% 4.5% 8.6% 9.3%

  • 1.1%

2018 FY 2.6% 2.1% 5.6% 5.5% 1.3%

Mainland China Greater China² Brazil India Russia

Headcount 8,000 10,000 7,000 11,000 2,000

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SLIDE 15

2019 INTERIM RESULTS 15

HALF YEAR TO 30 JUNE % GROUP 2019 £M 2018£M Δ REPORTED Δ CONSTANT CURRENCY Δ LIKE- FOR-LIKE

Global Integrated Agencies 62.8 3,858 3,844 0.4%

  • 1.4%
  • 1.8%

Data Investment Management 15.4 949 940 1.0% 0.6% 0.4% Public Relations 7.2 442 430 2.8%

  • 0.1%
  • 1.5%

Specialist Agencies 14.6 900 935

  • 3.8%
  • 5.5%
  • 5.7%

Total 100.0 6,149 6,149 0.0%

  • 1.6%
  • 2.0%

REVENUE LESS PASS-THROUGH COSTS

BY SECTOR¹

  • 1. As outlined in the Group’s RNS statement on 5 August and following a review of the appropriateness of the existing sector reporting, this has been changed to bring it into line with the various

structural changes that have taken place over the last year and the simplification of the Group’s structure. Comparatives have been restated to reflect these sector changes

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2019 INTERIM RESULTS

HEADLINE¹ OPERATING PROFIT AND MARGIN

BY REGION

16

  • 1. Figures before goodwill and intangibles charges, gains/losses on step-ups, gains/losses on disposals of subsidiaries and investments, investment write-downs,

restructuring and transformation costs, litigation settlement and gain on sale of New York freehold property

  • 2. Margin as % of revenue less pass-through costs

OPERATING PROFIT £M OPERATING MARGIN² HALF YEAR TO 30 JUNE 2019 2018 2019 2018

North America 301 342 14.0% 15.9% UK 107 107 12.8% 12.9% Western Continental Europe 119 122 9.1% 9.3% Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe 203 212 11.0% 11.5% Total 730 783 11.9% 12.7%

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SLIDE 17

2019 INTERIM RESULTS

HEADLINE¹ OPERATING PROFIT AND MARGIN

BY SECTOR²

17

OPERATING PROFIT £M OPERATING MARGIN³ HALF YEAR TO 30 JUNE 2019 2018 2019 2018

Global Integrated Agencies 471 485 12.2% 12.6% Data Investment Management 101 110 10.7% 11.7% Public Relations 70 69 15.7% 16.0% Specialist Agencies 88 119 9.7% 12.7% Total 730 783 11.9% 12.7%

  • 1. Figures before goodwill and intangibles charges, gains/losses on step-ups, gains/losses on disposals of subsidiaries and investments, investment write-downs, restructuring and

transformation costs, litigation settlement and gain on sale of New York freehold property

  • 2. As outlined in the Group’s RNS statement on 5 August and following a review of the appropriateness of the existing sector reporting, this has been changed to bring it into line with the

various structural changes that have taken place over the last year and the simplification of the Group’s structure. Comparatives have been restated to reflect this

  • 3. Margin as % of revenue less pass-through costs
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2019 INTERIM RESULTS

TRADE ESTIMATES OF ASSIGNMENT WINS (1)

FIRST HALF

18

Shaded are Q2 wins

WPP AGENCY MEDIA (M)/ CREATIVE (C) INCUMBENT ACCOUNT OFFICE BILLINGS $M MediaCom M OMC Signet

  • N. America

360 Wavemaker M OMC Huawei China 350 Mindshare M DEN/PUB KangShiFu Drinks China 145 Essence M Wavemaker L’Oréal¹ UK/Ireland 130 Wunderman Thompson C N/A Duracell International 100 Mindshare M N/A GSK India 82 Wavemaker M DEN Eurostar Europe 80 Wavemaker M DEN William Hill UK 80

  • 1. Transfer within WPP
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SLIDE 19

2019 INTERIM RESULTS

TRADE ESTIMATES OF ASSIGNMENT WINS (2)

FIRST HALF

19

WPP AGENCY MEDIA (M)/ CREATIVE (C) INCUMBENT ACCOUNT OFFICE BILLINGS $M Wavemaker M N/A Little Red Book China 66 Wavemaker M N/A Chimelong China 47 WPP C N/A Distell Global 45 MediaCom M DEN Adidas EMEA 42 MediaCom M PUB Coca-Cola Russia 40 Mindshare M OMC Newell Brands

  • N. America

40 Grey C MDC Nokia Global 40 m/SIX M IND Regions Bank USA 36 Ogilvy C N/A Instagram Global >30

Shaded are Q2 wins

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SLIDE 20

2019 INTERIM RESULTS

TRADE ESTIMATES OF ASSIGNMENT LOSSES

FIRST HALF

20

WPP AGENCY MEDIA (M)/ CREATIVE (C) WINNING AGENCY ACCOUNT OFFICE BILLINGS $M Wavemaker M Essence L’Oréal¹ UK/Ireland 130 Essence M PUB NBC Entertainment USA 110

Shaded are Q2 wins

  • 1. Transfer within WPP
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SLIDE 21

2019 INTERIM RESULTS

TRADE ESTIMATES OF ASSIGNMENT WINS/LOSSES

SINCE 1 JULY

21

  • 1. Transfer within WPP

WPP AGENCY MEDIA (M)/ CREATIVE (C) INCUMBENT ACCOUNT OFFICE BILLINGS $M Mindshare M MediaCom Allergan¹ USA 378 MediaCom M OMC/PUB/IPG eBay

  • N. America/China

250 WPP AGENCY MEDIA (M)/ CREATIVE (C) WINNING AGENCY ACCOUNT OFFICE BILLINGS $M MediaCom M Mindshare Allergan¹ USA 378

WINS LOSS

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SLIDE 22

2019 INTERIM RESULTS

FREE CASH FLOW¹ AND FREE CASH FLOW CONVERSION

22

  • 1. Cash flow presentation amended to reflect definitions of free cash flow set out in 11 December 2018 Investor Day “Financial Outlook” presentation available on wpp.com
  • 2. 2019 includes impact of IFRS 16

HALF YEAR TO 30 JUNE 2019² £M 2018 £M

Operating profit 673 842 Depreciation & amortisation charges 360 211

  • Depreciation & amortisation ex IFRS 16

192 211

  • Depreciation of right to use assets

168

  • Lease payments (including interest)

(156)

  • Non-cash compensation

33 42 Net interest paid & similar charges (75) (50) Tax paid (261) (251) Capital expenditure (167) (178) Earnout payments (58) (38) Other (83) (231) Free cash inflow pre working capital/provisions 266 347

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SLIDE 23

2019 INTERIM RESULTS

USES OF CASH FLOW¹

23

  • 1. Cash flow presentation amended to reflect definitions of free cash flow outlined in 11 December 2018 Investor Day “Financial Outlook” presentation available on wpp.com
  • 2. Includes proceeds from disposals of property, plant & equipment (£167m), and investments and subsidiaries (£137m)
  • 3. Net initial payments are net of cash acquired, and includes other investments and associates

HALF YEAR TO 30 JUNE 2019 £M 2018 £M

Free cash inflow pre working capital/provisions 266 347 Working capital and provisions (779) (556)

  • Trade working capital

(297) (192)

  • Other receivables, payables & provisions

(482) (364)

Free cash outflow (513) (209) Net disposals/(acquisitions) ex earnout payments 278 348

  • Disposal proceeds²

304 484

  • Net initial payments³

(26) (136)

Net cash (outflow)/inflow before distributions (235) 139 Distributions to share owners

  • (201)
  • Dividends
  • Share buy-backs
  • (201)

Net cash outflow (235) (62)

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SLIDE 24

2019 INTERIM RESULTS

DISPOSAL PROCEEDS¹

24

H1 2019 £M

Property - 3 Columbus Circle, New York City 159 Chime 54 The Farm 27 Blue State Digital Tools 20 Other disposals 44 Total 304

  • 1. Includes proceeds from disposals of property, plant & equipment (£167m), and investments and subsidiaries (£137m)
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SLIDE 25

2019 INTERIM RESULTS

2018

AppNexus CMC Content Domo Fullscreen Fullsix Imagine Ooh!Media Raine Capital II Woven Inc/UpRoxx YouEarnedIt Zappistore

2019

BNTI Gimlet Information Resources UK1 IMAX Wild Tangent

Investments

RESTRUCTURING : DISPOSALS

25

2018

Big Idea Group Bruin Sports Capital DASL Globant Imagina (Return of Capital) OptimizeRx Rediffusion Teledirect

2019

Artistree Captivate Group Chime Communications Etecture Jan Kelley Planorama1 Richard Attias

Associates/JV’s

2018

Grey Bulgaria Grey Serbia IEG JWT Mirum Miami Maxx Marketing OnCall Pace PXP Sudler & Hennessey India TNS France CATI & F2F

2019

Action Line Brazil Blue State Digital Tools CEEOR Mannov PR The Farm WPP Manufacturing1

Subsidiaries 2018 and H1 2019 Cash Inflow £986m 2018 PBIT Contribution £17m

  • 1. H2 2019 disposals. Total Cash Inflow and 2018 PBIT Contribution relates to 2018 and H1 2019 disposals only
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SLIDE 26

2019 INTERIM RESULTS

NET DEBT

26

HALF YEAR TO 30 JUNE: 2019 £M 2018 £M Δ £M

Average net debt¹ on constant currency basis (4,384) (5,093) 709 Average net debt¹ on reportable basis (4,384) (4,979) 595 Net debt¹ at 30 June on constant currency basis (4,271) (4,742) 471 Net debt¹ at 30 June on reportable basis (4,271) (4,632) 361 Headline finance costs¹,² (94) (86) Interest cover¹ on headline operating profit 7.8x 9.1x Headline EBITDA¹ 841 948 Rolling 12 month headline EBITDA¹ 2,204 2,466 Rolling average net debt/headline EBITDA¹ 2.1x 2.1x

  • 1. Net debt, headline finance costs, interest cover, headline EBITDA, rolling 12 month headline EBITDA, rolling average net debt/headline EBITDA exclude impact of IFRS16
  • 2. Headline finance costs of £94m excludes £52m IFRS 16 impact of all leases, which is £3m higher than £49m IFRS 16 impact of leases existing at 1 January 2019
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SLIDE 27

2019 INTERIM RESULTS

USES OF FREE CASH FLOW

27

FY TARGET JUNE YTD 2019 JUNE YTD 2018 FY 2018

(Disposals)/acquisitions (excluding earnouts): Acquisitions¹

  • c. £200M

£26M £136M £288M Less disposals²

  • c. £(200M)

£(304M) £(469M) £(849M) Net (disposals)/acquisitions NEUTRAL £(278M) £(333M) £(561M) Share buy-backs: % of issued share capital

  • £201M

1.3% £207M 1.3% Balance Sheet Headroom: Undrawn facilities & surplus cash

  • £3.6B

£3.6B £4.3B Average net debt at 2019 exchange rates

  • £4.4B

£5.1B £5.0B³ Target range of average net debt/EBITDA ratio⁴ of 1.5-1.75x to be achieved by end of 2021

  • 1. Acquisitions are initial payments, net of cash acquired, and include other investments and associates
  • 2. Includes proceeds from disposals of property, plant & equipment (£167m), and investments and subsidiaries (£137m)
  • 3. FY 2018 net debt stated at 2018 actual exchange rates
  • 4. Net debt/EBITDA ratio calculated excluding impact of IFRS 16
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SLIDE 28

2019 INTERIM RESULTS

DEBT MATURITY PROFILE £M AT 30 JUNE 2019

28

Exchange Rates £/$ 1.2695 £/€ 1.1175 £/A$ 1.8109

1

Swapped to £444m at 2.61%

2

These instruments are subject to financial covenants

Weighted Average Coupon 2.7% Weighted Average Maturity 7.1 years Available Liquidity £3,564M

100 200 300 400 500 600 700

£ T TOTAL CREDIT £ T TOTAL DRAWN

◼ £ bonds £400M (2.875% Sep ’46)

400 400

◼ US bond $220M (5.625% Nov ’43)

173 173

◼ US bond $93M (5.125% Sep ’42)

73 73

◼ Eurobonds €600M (1.625% Mar ’30)

537 537

◼ Eurobonds €750M (2.25% Sep '26)

671 671

◼ Eurobond €500M (1.375% Mar ‘25)/£444M Swap1

444 444

◼ US bond $750M (3.75% Sep '24)

591 591

◼ Eurobonds €750M (3.0% Nov ’23)

671 671

◼ US bond $500M (3.625% Sep ’22)

394 394

◼ Eurobond €250M (3m EURIBOR + 0.45% Mar ’22)

224 224

◼ US bond $812M (4.75% Nov ’21)

640 640

◼ Eurobonds €250M (3m EURIBOR + 0.32% May ’20)

224 224

◼ Eurobonds €600M (0.75% Nov ’19)

537 537 Debt Facilities 5,579 5,579 Bank revolver2 WPP ($2,500M Mar ’24) 1,969 358 Bank revolver2 WPP AUNZ (A$520M Jun’20/Jun ‘21) 287 213 Net cash, overdrafts & other adjustments – (1,879) Total Borrowing Capacity / Net Debt 7,835 4,271

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SLIDE 29

2019 INTERIM RESULTS

IFRS 16 : OVERVIEW

29

IFRS 16 effective 1 January 2019:

  • All leases treated the same, no finance and operating designation
  • Primarily real estate (97%)
  • All leases on balance sheet except short-term and low value leases
  • Balance sheet gross up at 30 June 2019 includes £1.8B right-of-use asset and £ 2.3B lease

liabilities shown on balance sheet

  • Right-of-use asset = lease liability + lease payments prior to commencement + direct costs +

costs to restore the site or asset – incentives

  • Lease liability = PV of future lease payments
  • Higher total expense initially as interest front loaded
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SLIDE 30

2019 INTERIM RESULTS

IFRS 16: HEADLINE¹ P&L IMPACT

BASED ON 1 JANUARY 2019 LEASES

30

  • 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 and transformation costs, litigation settlement, gain on sale of New York freehold property and revaluation of financial instruments

  • 2. Margin as % of revenue less pass-through costs

2019 H1 2018 H1

P&L impact £M

EX IFRS 16 P&L IMPACT IFRS 16 EX RIGHT- OF-USE DEP’N RIGHT-OF- USE DEP’N AS REPORTED AS REPORTED

EBITDA 841 34 875 169 1,044 948 Operating profit 696 34 730

  • 730

783 Operating margin² 11.4% 0.5% 11.9%

  • 11.9%

12.7% PBIT 717 34 751

  • 751

821 Net finance costs (97) (49) (146)

  • (146)

(86) Profit before tax 620 (15) 605

  • 605

735 Diluted EPS 35.0p (0.8p) 34.2p

  • 34.2p

42.6p

No cash impact

slide-31
SLIDE 31

2019 INTERIM RESULTS

KANTAR TRANSACTION¹

STRENGTHENS BALANCE SHEET, LIMITS DILUTION

31

  • Successfully executed: simplification and de-leverage
  • Net proceeds c. $3.1B
  • “First Completion” (≥86% of Kantar and associated proceeds) expected early 2020
  • Subsequent completion(s) and remainder of proceeds within 12 months of announcement
  • Takes leverage to low end of target range well ahead of plan with c. $1.9B of proceeds

used to reduce debt

  • c. $1.2B to be returned to shareholders, expected to minimise earnings dilution
  • Potential value upside for WPP shareholders through retained 40% equity stake
  • 1. Transaction completion conditional upon:
  • WPP shareholder vote (simple majority)
  • Antitrust clearances
  • Kantar legal reorganisation
slide-32
SLIDE 32

2019 INTERIM RESULTS

OUTLOOK

32

Our 2019 financial targets remain as:

  • Like-for-like revenue less pass-through costs -1.5% to -2.0%
  • Headline operating margin¹ down around 1.0 margin point on constant

currency basis (excluding impact of IFRS 16)

  • 1. Margin as % of revenue less pass-through costs
slide-33
SLIDE 33

2019 INTERIM RESULTS

PROGRESS ON STRATEGY

33

slide-34
SLIDE 34

2019 INTERIM RESULTS

RADICAL EVOLUTION: A STRATEGY FOR GROWTH

CREATIVITY DATA AND TECHNOLOGY VISION AND OFFER CULTURE SIMPLER STRUCTURE

34

slide-35
SLIDE 35

2019 INTERIM RESULTS

CLIENTS’ NEEDS SIGNIFICANTLY GROWING OUR ADDRESSABLE MARKET

35

EXPERIENCE COMMERCE TECHNOLOGY COMMUNICATIONS

$1 trillion market: +/- 3% growth1 >$100 billion market: 5-10% growth2 Platform spend $9.5bn: 15% growth3 $300 billion market: 5-10% growth2

1. GroupM forecast 2. Exane BNP Paribas 3. Forrester (Data Commerce Platform Technology Forecast)

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SLIDE 36

2019 INTERIM RESULTS

India +13% Brazil +10% Xaxis +16% “Big Tech” clients1 +16% Luxury Goods clients +7%

ENCOURAGING GROWTH AREAS IN H1

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  • 1. “Big Tech” represents 13 technology companies in our top 100 clients
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SLIDE 37

2019 INTERIM RESULTS

RECENT CAMPAIGNS INTEGRATE TECH, PURPOSE AND CREATIVITY

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SLIDE 38

2019 INTERIM RESULTS

IMPROVED OFFER REFLECTED IN NEW AND EXPANDED/ RETAINED BUSINESS

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NEW CLIENTS EXPANDED REMIT/RETENTION

Highlights 2019 YTD

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SLIDE 39

2019 INTERIM RESULTS 39

  • Transformative approach to reaching customers based on a clear data strategy.

Advanced use of tech, Essence tools and deep knowledge of Google stack to support greater ecommerce focus SCOPE AND VALUE HOW IT WILL OPERATE WPP AGENCIES INVOLVED CLIENT VIEW

NEW BUSINESS CASE STUDY: L’ORÉAL BEAUTY TECH LAB

  • Client and agency teams share the same software, tools and processes. Location-

agnostic – teamworking on both client site and Essence offices

  • Switch from Wavemaker to Essence. Agency is the gateway to all expertise within WPP

(eg Wunderman Thompson for ecommerce) on a “sprint” basis

  • “Buying media technology is not our job; our job is beauty”

WHY WE WON

  • UK&I media planning/buying. Total media billings £106m. Top 5 UK&I advertiser
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SLIDE 40

2019 INTERIM RESULTS 40

  • WPP’s ability to deliver a unique integrated client model
  • access to best in class talent across all disciplines
  • Strong vindication of campus strategy

SCOPE AND VALUE HOW IT WILL OPERATE WPP AGENCIES INVOLVED CLIENT VIEW

NEW BUSINESS CASE STUDY: VODAFONE ZIGGO/GO ONE

  • Wunderman Thompson, Greenhouse, Kantar, GroupM, Wavemaker, VBAT

WHY WE WON

  • Multi-disciplinary strategic marketing and communications partnership model
  • 2018 media billings €140m; top 5 NL advertiser
  • Core WPP/client team leadership team
  • Partly open ecosystem including in-house capability, WPP agencies and outside partners
  • Flexible, customer-centric and efficient structure
  • "With the arrival of new competitors in the agency world, more and more integrated,

customer-focused control models arise. WPP proved to be the best partner for us to work with in future.”

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SLIDE 41

2019 INTERIM RESULTS

CAMPUSES DRIVING ENGAGEMENT FOR CLIENTS AND OUR PEOPLE

MUMBAI BUENOS AIRES AMSTERDAM MILAN

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NEW YORK MADRID

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SLIDE 42

2019 INTERIM RESULTS

SIMPLER STRUCTURE: INCREASED EFFICIENCY

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Investor Day Target Current Status Business Unit Rationalisation Business Unit Closures Gross Headcount Reduction 100 planned mergers (at local office level) by end of 2019 80 planned closures by end of 2019 3,500 by end of 2019 102 completed or in progress 68 closed or in progress 3,100 On Plan? Expected 2019 OP Benefit from Gross Savings £160m £160m

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SLIDE 43

2019 INTERIM RESULTS

SUMMARY

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  • Good operational execution of our strategic plan to date
  • H1 financial performance in line, and Q2 sequentially better
  • Kantar transaction successfully executed: simplification and de-leverage
  • Fewer, stronger businesses to drive better retention and new business
  • Further progress in H2 but 2018 assignment losses will continue to drag
  • On track to meet three year targets
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SLIDE 44

2019 INTERIM RESULTS

OTHER FINANCIAL INFORMATION

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SLIDE 45

2019 INTERIM RESULTS

UNAUDITED IFRS INCOME STATEMENT

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  • 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 and transformation costs, litigation settlement, gain on sale of New York freehold property and revaluation of financial instruments

HALF YEAR TO 30 JUNE 2019 £M 2018 £M Δ REPORTED Δ CONSTANT CURRENCY Revenue 7,616 7,493 1.6% 0.0% Gross profit 1,226 1,274

  • 3.8%
  • 5.1%

Operating profit pre exceptional & goodwill/intangibles¹ 730 783

  • 6.8%
  • 8.0%

Net exceptional gain 10 143

  • Goodwill/intangible charges

(67) (84) 20.4% 20.6% Operating profit 673 842

  • 20.1%
  • 21.0%

Income from associates 21 38

  • 43.4%
  • 43.3%

Share of associate exceptional loss (13) (29)

  • 55.2%
  • 52.9%

PBIT 681 851

  • 20.0%
  • 20.9%

Net finance costs (203) (5)

  • Profit before tax

478 846

  • 43.5%
  • 44.1%

Tax (129) (141) 8.7% 7.9% Profit after tax 349 705

  • 50.5%
  • 51.2%

Non-controlling interests (37) (33)

  • 11.8%
  • 12.7%

Attributable to share owners 312 672

  • 53.5%
  • 51.2%

Reported diluted EPS 24.8p 53.4p

  • 53.6%
  • 54.3%
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SLIDE 46

2019 INTERIM RESULTS

IMPACT OF NON HEADLINE ITEMS ON PBT

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2019 2018 Δ REPORTED Δ CONSTANT CURRENCY HALF YEAR TO 30 JUNE £M £M £M % %

Exceptional (loss)/gain (3) 114 (117) Goodwill/intangible charges (67) (84) 17 Revaluation of financial instruments¹ (57) 81 (138) Non headline items (127) 111 (238) Reported PBT 478 846 (368)

  • 43.5%
  • 44.1%

Headline PBT 605 735 (130)

  • 17.6%
  • 18.4%
  • 1. Revaluation of financial instruments comprises movements in fair value of treasury instruments -£25m (2018 £4m), revaluation of investments held at fair value through P&L £2m (2018 £26m), revaluation
  • f put options over non-controlling interests -£26m (2018 £21m) and revaluation of payments due to vendors (earnout agreements) -£8m (2018 £30m)
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SLIDE 47

2019 INTERIM RESULTS

NET EXCEPTIONAL GAIN/(LOSS)

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HALF YEAR TO 30 JUNE 2019 £M

Gain on disposals of investments and subsidiaries 40 Litigation settlement 17 Gain on sale of New York freehold property 8 Restructuring and transformation costs (55) Net exceptional gain 10 Share of associate exceptionals (13) Net exceptional loss including associate exceptionals (3)

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SLIDE 48

2019 INTERIM RESULTS

UNAUDITED HEADLINE¹ IFRS INCOME STATEMENT

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  • 1. Figures before goodwill and intangibles charges, gains/losses on step-ups, gains/losses
  • n disposals of subsidiaries and investments, investment write-downs, share of

exceptional gains/losses of associates, restructuring and transformation costs, litigation settlement, gain on sale of New York freehold property and revaluation of financial instruments

  • 2. Margin as % of revenue less pass-through costs
  • 3. Margin points
  • 4. Headline EBITDA excluding reversal of depreciation of right-of-use assets

HALF YEAR TO 30 JUNE 2019 £M 2018 £M Δ REPORTED Δ CONSTANT CURRENCY Δ LIKE-FOR- LIKE Revenue 7,616 7,493 1.6% 0.0%

  • 0.6%

Revenue less pass-through costs 6,149 6,149 0.0%

  • 1.6%
  • 2.0%

Operating profit 730 783

  • 6.8%
  • 8.0%

Income from associates 21 38

  • 43.4%
  • 43.3%

PBIT 751 821

  • 8.5%
  • 9.6%

Net finance costs (146) (86)

  • 69.6%
  • 63.1%

Profit before tax 605 735

  • 17.6%
  • 18.4%

Tax at 22.8% (2018: 22.5%) (138) (165) 16.6% 12.9% Profit after tax 467 570

  • 18.0%
  • 20.0%

Non-controlling interests (37) (33)

  • 11.8%
  • 12.7%

Attributable to share owners 430 537

  • 20.0%
  • 22.0%

Diluted EPS 34.2p 42.6p

  • 19.7%
  • 20.9%

Operating profit margin² 11.9% 12.7%

  • 0.8³
  • 0.8³
  • 1.2³

PBIT margin² 12.2% 13.3%

  • 1.1³
  • 1.1³
  • 1.3³

EBITDA⁴ 875 948

  • 7.7%
  • 8.9%
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SLIDE 49

2019 INTERIM RESULTS

REVENUE LESS PASS-THROUGH COSTS GROWTH

BY COUNTRY

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  • 1. Like-for-like growth vs prior year
  • 2. Australia and New Zealand not disclosed as WPP AUNZ has not reported Q2 trading
  • 3. Includes Hong Kong and Taiwan

REVENUE LESS PASS-THROUGH COSTS GROWTH¹ TOP COUNTRIES²

More than 10% Argentina, Belgium, Brazil, India, Turkey 5% to 10% Denmark, Mexico, Poland, Russia 0% to 5% Colombia, Indonesia, Italy, Netherlands, Singapore, Sweden, Switzerland, UK Less than 0% Canada, Mainland China, Greater China³, Dubai, France, Germany, Japan, South Africa, South Korea, Spain, Thailand, USA

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SLIDE 50

2019 INTERIM RESULTS

REVENUE LESS PASS-THROUGH COSTS GROWTH

BY CATEGORY

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  • 1. Like-for-like growth vs prior year

REVENUE LESS PASS-THROUGH COSTS GROWTH¹ CATEGORIES

More than 10% Government 0% to 10% Tech, Food, Retail, Telecommunications Less than 0% Automotive, Drinks, Electronics, Financial Services, Media & Entertainment, Oil, Personal Care & Drugs, Travel & Airline

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2019 INTERIM RESULTS 51

REVENUE LESS PASS-THROUGH COSTS BY INDUSTRY

Auto 12% Consumer Products 6% Personal Care 10% Healthcare 11% Food & Drink 14% Financial Services 7% Oil 2% Government 2% Retail 7% Technology 6% Telecommunications 5% Travel & Entertainment 7% Other 11%

Chart represents the amount of revenue less pass-through costs attributed to each industry expressed as a percentage of the total revenue less pass-through costs from WPP’s designated clients (over 3,000) for the period ended 30 June 2019

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SLIDE 52

2019 INTERIM RESULTS

EFFECTS OF CURRENCY

2019 2018 STERLING (WEAKER)/STRONGER

US$ 1.29 1.38

  • 7%

€ 1.15 1.14 1% ¥ 142 150

  • 5%

Chinese Renminbi 8.8 8.8

  • Brazilian Real

4.97 4.71 6% Australian $ 1.83 1.78 3% Canadian $ 1.73 1.76

  • 2%

Indian Rupee 91 90 1% Singapore $ 1.76 1.83

  • 4%

Russian Rouble 84 82 2% South African Rand 18.4 16.9 9%

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  • Currency movements

accounted for 1.6% increase in revenue less pass-through costs

  • Reflects overall

weakness of £ sterling, primarily against US$

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SLIDE 53

2019 INTERIM RESULTS

2019 INTERIM RESULTS

London

9 AUGUST 2019 53