TRADING UPDATE FIRST QUARTER 2020 29.4.2020
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 providing the following cautionary statement. This presentation contains certain forward-looking statements – that is, statements related to future, not past events and circumstances, and including statements relating to the potential impact of the COVID-19 outbreak – 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 objectives 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 . 2 FIRST QUARTER 2020 TRADING UPDATE
AGENDA Q1 Q1 HIGHLIGHTS HIGHLIGHTS FINA FINANCIAL PERF NCIAL PERFORMA ORMANCE NCE BUSINESS BUSINESS UPDATE UPDATE Q&A Q&A
COVID-19 RESPONSE: FOUR AREAS OF FOCUS 1 Maintain health and safety of our people Provide uninterrupted service to our clients 2 Help our communities through our creativity, media and technology 3 Ensure WPP’s financial resilience to protect all our stakeholders 4 4 FIRST QUARTER 2020 TRADING UPDATE
Q1 HIGHLIGHTS • Good start (Jan-Feb ex Greater China up 0.4% 1 ) with March impacted by COVID-19 (-7.9% 1 ) • Significant impact in Q2, business well diversified • Clients: Packaged goods, technology, pharma more resilient to date • Geography: China emerging through other side • Services: PR, ecommerce, production less impacted, some in greater demand • Excellent net new business: $1 billion won in Q1, no significant losses YTD • Strong liquidity and balance sheet: average net debt £2.1 billion, £4.4 billion of cash and undrawn facilities • Action taken to mitigate COVID-19 impact on profit and cash flow • Careful balance to protect business for recovery 1. Like-for-like growth in revenue less pass-through costs. Like-for-like growth is at constant exchange rates 5 FIRST QUARTER 2020 TRADING UPDATE and excludes the effects of acquisitions and disposals
FINANCIAL PERFORMANCE
REVENUE LESS PASS-THROUGH COSTS BY SECTOR Δ CONSTANT Δ LFL CURRENCY 1 Δ LFL 2 FIRST QUARTER 2020 £M 2019 £M Δ REPORTED MARCH Global Integrated Agencies 1,745 1,807 -3.5% -3.2% -2.6% -6.6% Public Relations 212 214 -1.0% -1.3% -1.4% -4.4% Specialist Agencies 409 450 -9.0% -8.6% -7.4% -15.2% Total Continuing Operations 2,366 2,471 -4.3% -4.0% -3.3% -7.9% 1. Percentage change at constant currency exchange rates 7 FIRST QUARTER 2020 TRADING UPDATE 2. Like-for-like growth at constant exchange rates and excluding the effects of acquisitions and disposals
REVENUE LESS PASS-THROUGH COSTS BY REGION Δ CONSTANT Δ LFL FIRST QUARTER 2020 £M 2019 £M Δ REPORTED CURRENCY 1 Δ LFL 2 MARCH North America 938 945 -0.8% -2.7% -1.9% -3.6% United Kingdom 313 332 -5.5% -5.5% -4.2% -9.8% Western Continental Europe 467 490 -4.7% -3.6% -3.7% -9.6% Asia Pacific, Latin America, Africa & 648 704 -8.0% -5.4% -4.6% -11.5% Middle East, Central & Eastern Europe Total Continuing Operations 2,366 2,471 -4.3% -4.0% -3.3% -7.9% 1. Percentage change at constant currency exchange rates 8 FIRST QUARTER 2020 TRADING UPDATE 2. Like-for-like growth at constant exchange rates and excluding the effects of acquisitions and disposals
TOP 5 MARKETS¹ USA UK Germany Greater China³ India 20,000 11,000 7,000 9,000 8,000 Headcount REVENUE LESS PASS-THROUGH COSTS GROWTH² 2020 March -3.7% -9.8% -14.9% -29.9% -1.1% 2020 Q1 -1.9% -4.2% -4.3% -21.3% 6.1% 2019 FY -6.0% 0.3% -0.3% -3.8% 9.7% 1. Top 5 markets for continuing operations 9 FIRST QUARTER 2020 TRADING UPDATE 2. Like-for-like growth vs prior year from continuing operations 3. Includes Hong Kong and Taiwan
OTHER MAJOR MARKETS France Italy Spain Brazil 2,000 2,000 2,000 5,000 Headcount REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2020 March -7.1% -23.7% 0.0% -16.7% 2020 Q1 2020 Q1 -4.0% -16.2% 3.8% -1.3% 2019 FY -1.3% -2.1% 1.0% 9.3% 10 FIRST QUARTER 2020 TRADING UPDATE 1. Like-for-like growth vs prior year from continuing operations
TRADE ESTIMATES OF YTD ASSIGNMENT WINS/LOSSES WI WINS NS MEDIA (M)/ WPP AGENCY CREATIVE (C) ACCOUNT OFFICE BILLINGS $M WPP C Intel Global 800 Wavemaker M Novo Nordisk Global 350 Grey C Discover NA 258 Mediacom M Hasbro Global 225 Mindshare M Playmobile Europe 30 Mediacom M P&G Turkey 30 VMLY&R M/C BASF Global 30 11 Shaded wins announced Q2 2020 FIRST QUARTER 2020 TRADING UPDATE
SIGNIFICANT IMPROVEMENT IN NET DEBT YEAR-ON-YEAR (£M) -1.2% 1.2% -1,540 -4,017 -4,624 -2,827 Notes: - Itemised movements in net debt represent management figures, which may vary from the presentation of the cash flow under IFRS 12 - Acquisitions/disposals include earn-out payments
USES OF FREE CASH FLOW MA MARCH CH YTD YTD MARCH MA RCH YTD YTD 2020 202 2019 2019 FY FY 2019 2019 (Disposals)/acquisitions (excluding earnouts): Acquisitions¹ £22M £18M £94M Less disposals² (£161M) £(179M) £(2,315M) Net (disposals)/acquisitions (£139M) £(161M) £(2,221M) Share buybacks: £285M - £44M % of issued share capital 2.6% - 0.4% Balance Sheet Headroom: Undrawn facilities & surplus cash £4.4B £3.3B £4.8B Net debt at 31 March at 2020 exchange rates £2.8B £4.8B £1.5B³ Average net debt at 2020 exchange rates £2.1B £4.2B £4.3B³ 1. Acquisitions are initial payments, net of cash acquired, and include other investments and associates 2. Includes proceeds from disposals of property, plant & equipment (Q1 2020 nil, Q1 2019 nil, FY 2019 £174m), investments and subsidiaries (Q1 2020 £161m, Q1 2019 13 FIRST QUARTER 2020 TRADING UPDATE £179m, FY 2019 £2,468m), less cash on disposals (Q1 2020 nil, Q1 2019 nil, FY 2019 £327m) 3. FY 2019 net debt stated at 2019 actual exchange rates
SIGNIFICANT LIQUIDITY AVAILABLE £ T TOTAL £ T TOTAL CREDIT DRAWN ◼ £ bonds £400m (2.875% Sep ’46) 700 400 400 ◼ US bond $220m (5.625% Nov ’43) 177 177 600 ◼ US bond $93m (5.125% Sep ’42) 75 75 ◼ Eurobonds €600m (1.625% Mar ’30) 531 531 500 ◼ Eurobonds €750m (2.25% Sep '26) 664 664 400 ◼ Eurobond €500m (1.375% Mar ‘25)/£444m Swap 1 444 444 ◼ US bond $750m (3.75% Sep '24) 605 605 300 ◼ Eurobonds €750m (3.0% Nov ’23) 664 664 200 ◼ US bond $500m (3.625% Sep ’22) 403 403 ◼ Eurobond €250m (3m EURIBOR + 0.45% Mar ’22) 100 221 221 ◼ Eurobonds €250m (3m EURIBOR + 0.32% May 221 221 0 ’20) Debt Facili liti ties es 4,405 4,405 Other facilities 2,823 112 Weighted Average Coupon 2.7% Net cash, overdrafts & other adjustments – (1,690) Weighted Average Maturity 7.9 years Total l Borrow owin ing Capacit city y / Net Debt 7,228 2,827 Available Liquidity £4,401M Exchange Rates £/$ 1.240 £/€ 1.130 14 FIRST QUARTER 2020 TRADING UPDATE 1. Swapped to £444m at 2.61%
EXTENSIVE PROGRAMME OF ACTIONS TO PROTECT BUSINESS AND PEOPLE FROM COVID-19 IMPACT COST CAPEX AND WORKING CAPITAL • Hiring freeze, freelancer review, delays • £100m reduction in capex budget to pay rises and stopping discretionary • Continuous review of working capital spend movements • Exec and Board salary sacrifice • Significant self-help opportunity remains • In-year impact of £700-800m SHAREHOLDER RETURNS ONGOING • Kantar buyback suspended with £330m • Further action on cost including reduced out of £950m completed working hours, salary sacrifice, headcount reductions • 2019 final dividend suspended • Plans developed against range of • Immediate cash saving of £1.1bn economic scenarios • Material longer term efficiency potential 15
BUSINESS UPDATE
OUR PRIORITIES PEOPLE PEOPLE CLIENTS COMM COMMUNITIES UNITIES FIRST QUARTER 2020 TRADING UPDATE 17
PEOPLE: EFFECTIVE RESPONSE TO ”LOCKDOWN” PROTECT JO PROTECT JOBS BS WO WORKIN RKING G REM REMOTELY OTELY REGU REGULA LAR R SUPP SUPPORT ORT WHERE WH EREVE VER POSSI POSSIBL BLE • WPP Town Halls • Over 3,000 people by Market on salary sacrifice • CEO and team • Internal jobs communications market • WPP TV • Upping training and development • Mental wellbeing with our partners a particular focus 95% of our people 18 FIRST QUARTER 2020 TRADING UPDATE
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