2018 PRELIMINARY RESULTS London 1 MARCH 2019 2018 PRELIMINARY 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 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 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. 2018 PRELIMINARY RESULTS 2
OVERVIEW 2018 FINANCIAL RESULTS STRATEGY UPDATE CONCLUSION AND Q&A 2018 PRELIMINARY RESULTS 3
INTRODUCTION • 2018 at upper end of guidance in October • 2019 challenging due to headwinds from client losses in 2018, with greater first half impact • Good initial progress on strategy, with a focus on execution and North America – Simplifying the offer – Strengthening leadership team – Implementing the restructuring plans – 30 disposals raising £849m in 2018 • Initial signs positive with clients, partners and talent - but work remains to be done 2018 PRELIMINARY RESULTS 4
2018 FINANCIAL RESULTS 2018 PRELIMINARY RESULTS 5
FULL YEAR HIGHLIGHTS • Fourth quarter like-for-like revenue less pass-through costs down 0.7%, improved on third quarter down 1.5% • Full year like-for-like revenue less pass-through costs down 0.4%, ahead of guidance • North America continued weakness with like-for-like revenue less pass-through costs in fourth quarter down 5.7%, and down 4.2% for full year. Continuing difficulties in creative agencies, data investment management and healthcare • UK like-for-like revenue less pass-through costs in fourth quarter down 2.7%, against strong comparative, and down 0.5% for full year. Media investment management and specialist communications businesses strong, data investment management improving • Western Continental Europe fourth quarter revenue less pass-through costs up 4.1%. Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe also improved with fourth quarter 2.6% growth • Significant reduction in net debt at 31 December, down £605m at 2018 exchange rates 2018 PRELIMINARY RESULTS 6
SUMMARY UNAUDITED IFRS INCOME STATEMENT Δ CONSTANT YEAR TO 31 DECEMBER 2018 £M 2017 ¹ £M Δ REPORTED ² CURRENCY ³ Revenue 15,602 15,804 -1.3% 1.5% Gross profit 2,939 3,175 -7.4% -5.0% Operating profit ⁴ -25.0% -22.2% 1,431 1,908 PBIT ⁵ 1,475 2,022 -27.0% -24.4% Profit before tax ⁵ 1,463 2,109 -30.6% -28.1% Tax rate 22.1% 9.3% Profit after tax 1,139 1,912 -40.4% -38.5% -40.8% -38.9% Reported diluted EPS 84.3p 142.4p 1. 2017 revenue and revenue less pass-through costs restated by £539m and £30m respectively for the implementation of IFRS 15 2. % change in reported sterling 3. % change at constant currency rates 2018 PRELIMINARY RESULTS 7 4. Operating profit includes net exceptional loss of £67m (2017 loss of £24m) 5. PBIT/PBT includes net exceptional loss of £108m (2017 loss of £23m)
SUMMARY UNAUDITED HEADLINE ¹ RESULTS Δ CONSTANT Δ LIKE-FOR- YEAR TO 31 DECEMBER 2018 £M 2017 ² £M Δ REPORTED CURRENCY LIKE ³ Revenue 15,602 15,804 -1.3% 1.5% 0.8% Revenue less pass-through costs 12,827 13,170 -2.6% 0.2% -0.4% Operating profit ⁴ 1,962 2,154 -8.9% -6.6% PBIT 2,047 2,267 -9.7% -7.4% EBITDA 2,311 2,534 -8.8% -6.4% Operating profit margin ⁵ 15.3% 16.4% -1.1 ⁶ -1.1 ⁶ -1.1 ⁶ PBIT margin ⁷ 16.0% 17.2% -1.2 ⁶ -1.3 ⁶ -1.2 ⁶ Tax rate 22.5% 22.0% n/a n/a Diluted EPS 108.0p 120.4p -10.3% -8.1% Dividend per share 60.0p 60.0p - - Average net debt (4,966) (5,143) 3.4% 3.1% Average net debt/EBITDA 2.1x 2.0x n/a n/a 1 Figures before goodwill and intangibles charges, gains/losses on step-ups, gains/losses on disposals of 4 Headline PBIT before associates subsidiaries and investments, investment write-downs, share of exceptional gains/losses of associates, 5 Headline PBIT before associates as % of revenue less pass-through costs restructuring and transformation costs, and revaluation of financial instruments 6 Margin points 2018 PRELIMINARY RESULTS 8 2 2017 revenue and revenue less pass-through costs restated by £539m and £30m respectively for implementation 7 Headline PBIT as % of revenue less pass-through costs of IFRS 15 3 Like-for-like growth at constant currency exchange rates and excluding effect of acquisitions and disposals
REVENUE LESS PASS-THROUGH COSTS GROWTH VS 2017 Q4 FULL YEAR Q1 Q2 Q3 Like-for-like -0.1% 0.7% Like-for-like -1.5% Like-for-like -0.7% -0.4% Like-for-like Like-for-like Acquisitions 1.1% Acquisitions 1.1% Acquisitions 0.6% Acquisitions -0.1% Acquisitions 0.6% -6.1% -3.9% -2.0% 0.1% -2.8% FX FX FX FX FX Reported -5.1% Reported -2.1% Reported -2.9% Reported -0.7% Reported -2.6% 2018 PRELIMINARY RESULTS 9
IMPACT OF FX ON REVENUE LESS PASS-THROUGH COSTS 2017 FY ACT 2018 Q1 ACT 2018 Q2 ACT 2018 Q3 ACT 2018 Q4 ACT 2018 FY ACT 6% 4% • 2018 Q4 minimal 4.6% 2% currency impact • 2018 full year headwind 0% almost 3% 0.1% -2.0% • 2019 full year headwind -2.8% c. 1% at budget -2% -3.9% exchange rates -6.1% -4% -6% -8% 2018 PRELIMINARY RESULTS 10
REVENUE LESS PASS-THROUGH COSTS BY REGION Δ CONSTANT Δ LIKE- % GROUP Δ REPORTED CURRENCY FOR-LIKE 2018 £M 2017 ¹ £M North America 34.9 4,474 4,794 -6.7% -3.5% -4.2% UK 13.2 1,691 1,688 0.2% 0.2% -0.5% Western Continental Europe 21.3 2,736 2,631 4.0% 4.1% 2.0% Asia Pacific, Latin America, Africa & Middle 30.6 3,926 4,057 -3.2% 2.0% 2.5% East and Central & Eastern Europe Total 100.0 12,827 13,170 -2.6% 0.2% -0.4% 1. 2017 revenue less pass-through costs restated by £30m for the implementation of IFRS 15 2018 PRELIMINARY RESULTS 11
REVENUE LESS PASS-THROUGH COSTS GROWTH BY REGION 2018 LIKE-FOR-LIKE % C. & E. Europe % Q1 Q2 Q3 Q4 FY 5.6 3.1 4.9 12.7 6.9 UK % Q1 Q2 Q3 Q4 FY 1.6 1.4 -2.0 -2.7 -0.5 North America % Q1 Q2 Q3 Q4 FY W. Cont. Europe % -2.4 -3.3 -5.3 -5.7 -4.2 Q1 Q2 Q3 Q4 FY -0.2 3.9 -0.4 4.1 2.0 Asia Pacific % Q1 Q2 Q3 Q4 FY 0.7 1.8 1.5 0.9 1.2 Africa & M. East % Q1 Q2 Q3 Q4 FY -3.2 -1.6 -3.1 -4.3 -3.1 Latin America % Q1 Q2 Q3 Q4 FY 9.1 8.6 6.8 7.3 7.9 % Q1 Q2 Q3 Q4 FY Mature Markets -1.0 -0.3 -3.3 -2.1 -1.7 Faster Growing Markets 2.3 2.9 2.4 2.6 2.5 Total -0.1 0.7 -1.5 -0.7 -0.4 2018 PRELIMINARY RESULTS 12
MAJOR MARKETS USA UK Germany Greater China ² France REVENUE LESS PASS-THROUGH COSTS GROWTH ¹ -4.2% 2018 FY -0.5% 0.0% 2.1% 0.1% 2018 Q4 -5.7% -2.7% 1.1% -1.0% 4.0% 2018 Q3 -5.3% -2.0% -1.0% 1.8% -4.5% 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% 1. Like-for-like growth vs prior year 2. Includes Hong Kong and Taiwan 2018 PRELIMINARY RESULTS 13
BRIC MARKETS Mainland China Greater China ² Brazil India Russia REVENUE LESS PASS-THROUGH COSTS GROWTH ¹ 2018 FY 2.6% 2.1% 5.6% 5.5% 1.3% 2018 Q4 -3.0% -1.0% 2.2% 7.4% 13.2% 2018 Q3 2.5% 1.8% 9.0% 12.9% -0.8% 9.0% 6.5% 5.9% 1.4% -9.3% 2018 Q2 3.6% 2.1% 6.0% 0.3% 0.6% 2018 Q1 2017 FY -1.8% -3.2% 1.6% 1.1% -15.4% 1. Like-for-like growth vs prior year 2. Includes Hong Kong and Taiwan 2018 PRELIMINARY RESULTS 14
REVENUE LESS PASS-THROUGH COSTS BY SECTOR Δ CONSTANT Δ LIKE- % GROUP Δ REPORTED CURRENCY FOR-LIKE 2018 £M 2017 ¹ £M Advertising, Media Investment 43.1 5,530 5,889 -6.1% -3.3% -1.2% Management Data Investment Management 15.3 1,966 2,052 -4.2% -1.3% -1.8% Public Relations & Public Affairs 8.9 1,136 1,141 -0.4% 2.5% 2.6% Brand Consulting, Health & 32.7 4,195 4,088 2.6% 5.6% 0.6% Wellness and Specialist Communications Total 100.0 12,827 13,170 -2.6% 0.2% -0.4% 1. 2017 revenue less pass-through costs restated by £30m for the implementation of IFRS 15 2018 PRELIMINARY RESULTS 15
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