WPP Group plc Annual Report 2015

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FY2015 Annual Report · WPP Group plc

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Annual Report & Accounts 2015

Contents

The fast read
1

A six-minute read

Who we are
12 Our companies & associates

Why we exist
14 Our mission

Our 4 strategic priorities
16

Horizontality; new markets; new media;
technology, data & content

WPP: a global company
18 Our growth markets

How we’re doing
21
24
50

Financial summary
Strategic report to share owners
Reports from our company leaders
52 Advertising
64
69
71
74
76 Healthcare Communications
78

Media Investment Management
Data Investment Management
Public Relations & Public Affairs
Branding & Identity

Direct, Digital, Promotion
& Relationship Marketing
Specialist Communications

79
80 WPP Digital
WPP’s Global Client Teams
WPP’s Regional, Sub-Regional
and Country Managers

82
85

What we think
87

The case for sticking your neck out
by Sir Martin Sorrell

103 Sorry to Disappoint You – But the Business

We’re in is Unusually Low in Risk
(Which is why experiment and adventure
can be so confidently explored)
by Jeremy Bullmore

Who runs WPP
107 Board of Directors

The island in the sun
This year, our Annual Report has drawn
inspiration from the vibrant art of Cuba, a
Caribbean island coming in from the cold.
See pages 234 to 237 for information about
the artworks and Cuban artistic culture.

How we behave and how we’re rewarded
113 Directors’ report
113
116

Letter from the chairman of the Company
Review of the Company’s governance and
the Nomination and Governance Committee
Review of the Audit Committee
Letter from the chairman of the
Compensation Committee
Implementation report
Implementation of reward policy
for management outside the Board
Executive Remuneration Policy

118
121

125
139

140
155 Sustainability review

How we comply
163 Corporate governance
168 Other statutory information

Our 2015 financial statements
171 Accounting policies
178 Directors’ responsibility statement
180 Consolidated income statement
Consolidated statement of
181
comprehensive income

Company statement of comprehensive income

182 Consolidated cash flow statement
183 Consolidated balance sheet
184 Consolidated statement of changes in equity
186 Notes to the consolidated financial statements
217 Company profit and loss account
217
218 Company balance sheet
219 Company statement of changes in equity
220 Notes to the Company financial statements
222
227 Five-year summary
228 Financial glossary

Independent auditors’ report

About share ownership
231

Information for share owners

234 About the artists
238 Awards for recent WPP Annual Reports
239 WPP news and updates

Where to find us
240 Parent company centres
240 Group information
240 Parent company regional contacts
240 Contact points
240 Business development
240

WPP Regional, Sub-Regional and Country Managers

The fast read

For a quick, pre-digested,
highly-compressed version
of this Annual Report: read
the next seven pages.

The full story starts on page 14.

Please read that, too.

Visit us online

Annual Report
wpp.com/annualreport2015

Sustainability Report*
wpp.com/sustainabilityreport2015-16

Pro bono work 2015*
wpp.com/probonoreport2015-16

*June 2016

The fast read

Who we are

WPP is the world leader in communications services. It comprises leading
companies in all these disciplines:

Advertising

Media Investment Management

Data Investment Management

Public Relations & Public Affairs

Branding & Identity

Healthcare Communications

Direct, Digital, Promotion
& Relationship Marketing

Specialist Communications

There are more than 160 companies within the Group – and each is a distinctive brand in
its own right. Each has its own identity, commands its own loyalty, and is committed to
its own specialist expertise. That is their individual strength. Clients seek their talent and
their experience on a brand-by-brand basis. Between them, our companies work with 352
of the Fortune Global 500, all 30 of the Dow Jones 30 and 77 of the NASDAQ 100. It is
also of increasing value to clients that WPP companies and their people can work together,
as increasingly they do: providing a tailor-made range of integrated communications
services. Some 830 clients are now served in three distinct disciplines. Over 550 clients
are served in four disciplines, and these clients account for almost 52% of Group revenues.
Group companies also work with 448 clients across six or more countries.

Collectively, over 190,000 people (including associates) work for WPP companies,

out of over 3,000 offices in 112 countries.

Why we exist

Within WPP, our clients have access to companies
with all the necessary marketing and communications
skills; companies with strong and distinctive cultures
of their own; famous names, many of them. WPP,
the parent company, complements these companies
in three distinct ways.

Our mission
To develop and manage talent;
to apply that talent,
throughout the world,
for the benefit of clients;
to do so in partnership;
to do so with profit.

Second, the parent company encourages and enables operating companies of different

disciplines to work together for the benefit of clients. It also plays an across-the-Group
role in the management of talent, property, procurement, IT, knowledge sharing, practice
development and sustainability.

And, finally, WPP itself can function as the 21st-century equivalent of the full-service
agency. For some clients, predominantly those with a vast geographical spread and a need
for a wide range of marketing services, WPP can act as a portal to provide a single point
of contact and accountability.

Read more about our role on page 14.

WPP ANNUAL REPORT 2015

The fast read

What we think

The case for sticking your neck out
by Sir Martin Sorrell
The danger of losing your head notwithstanding, at WPP we are very much in favour of
sticking your neck out. Establishing an office in Havana, the day after Washington announced
the reopening of the US Embassy last July, no doubt caused palpitations in the internal audit
department and red lights to flash all over the risk dashboard. We did much the same in
Myanmar three years earlier when sanctions were lifted. It is not beyond the realms of possibility
that Iran will become our 113th country of operation in the course of the next year or so.

For some these are risky moves. We see them as market leadership.
From WPP’s entrepreneurial beginnings, with two people in one room and a stake in a

manufacturer of wire baskets and teapots, to the acquisition of J. Walter Thompson and
Ogilvy & Mather, the consolidation of media buying under Mindshare and later GroupM,
the identification of the digital and data revolutions, and our unique, cross-Group, ‘horizontal’
approach to serving clients, the Company’s story has been one of doing things differently.

Sir Martin Sorrell’s article begins on page 87.

Sorry to Disappoint You – But the Business We’re in is Unusually Low in Risk
(Which is why experiment and adventure can be so confidently explored)
by Jeremy Bullmore
To be reminded just how unlikely we are to make a catastrophic error is to be liberated:
liberated to be less of a slave to caution; liberated to experiment, both in content and
in levels of expenditure; liberated to test the waters, to try things out, to suck it and see.
The penalties for getting it wrong will be barely measurable. The rewards for getting it
right can be heady.

Read Jeremy Bullmore’s essay on pages 103 to 105.

Four strategic priorities

Our goal remains to be the world’s most admired and respected communications services
advisor to global, multinational, regional and local companies. To that end, we have four
core strategic priorities:

Advance ‘horizontality’ by ensuring our people work together for the benefit of clients,
primarily through two horizontal integrators: Global Client Leaders and Regional,
Sub-Regional and Country Managers.

Increase the combined geographic share of revenues from the faster-growing markets
of Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe to
40-45% of revenues.

Increase the share of revenues from new media to 40-45% of revenues.

Maintain the share of more measurable marketing services – such as data investment
management and direct, digital and interactive – at 50% of revenues, with a focus on
the application of technology, data and content.

Our Strategic report starts on page 24. Our 2015 financial statements are presented in full
on pages 171 to 229 and at wpp.com/investor.

WPP ANNUAL REPORT 2015

The fast read

How we’re doing
Financial summary

WPP celebrated its thirtieth birthday
in 2015 with another record year:
revenue, profitability, net sales margins
and earnings per share all reached
new highs, despite strong currency
headwinds and a generally
low-growth global environment.

Billings*
£47,632m

Reported +3.1%
Constant +4.9%

Revenue
£12,235m

Reported +6.1%
Constant +7.5%

Net sales*
£10,524m

Reported +4.6%
Constant +5.8%

Headline EBITDA*
£2,002m

Reported +4.9%
Constant +7.7%

Headline PBIT*
£1,774m

Reported +5.6%
Constant +8.7%

Net sales margin*
16.9%

Reported +0.2%1
Constant +0.4%1

Headline PBT*
£1,622m

Reported +7.3%
Constant +11.2%

Reported profit
before tax
£1,493m

Reported +2.8%
Constant +7.3%

Headline diluted
EPS*
93.6p

Reported +10.2%
Constant +13.3%

Reported diluted
EPS*
88.4p

Reported +9.8%
Constant +13.4%

Dividends per
share
44.69p

Reported +17.0%
Constant +17.0%

(% change from 2014 in reported and constant currency)

* Refer to financial summary on page 21 for additional information.
1 Margin points.

WPP ANNUAL REPORT 2015

2015 results

Reported billings were £47.6 billion, up
almost 5% in constant currencies, driven by
a strong overall leadership position in net new
business league tables for the fourth year in a
row. Revenue was up over 6% to £12.2 billion
and up well over 7% in constant currencies.

Dividends increased by 17% to 44.69p, a
new high. This represents a dividend pay-out
ratio of 47.7% of headline diluted earnings
per share, compared with 45.0% in 2014.
The newly targeted pay-out ratio of 50%
could well be achieved by the end of 2016,
a year ahead of target.

Headline PBIT was up well over 5% to
£1.774 billion and up well over 8% in constant
currencies. Net sales margins increased by 0.2
margin points to an industry-leading 16.9%
and, on a constant currency basis, were up 0.4
margin points, ahead of the targeted constant
currency increase of 0.3 margin points.

Reported profit before interest and

tax rose 7% to £1.679 billion from
£1.569 billion, up well over 10% in constant
currencies. Headline EBITDA increased
by almost 5% to £2.002 billion, crossing
£2 billion for the first time, up well over
7% in constant currencies. Headline profit
before tax was up over 7% to £1.622 billion
and reported profit before tax was up almost
3% to £1.493 billion. Diluted headline
earnings per share rose by over 10% to
93.6p (an all-time high) and diluted reported
earnings per share were up almost 10% to
88.4p, both reflecting strong like-for-like
revenue and net sales growth, margin
improvement and the benefit of acquisitions.
The value of the Group’s non-controlled
investments rose by almost £500 million to
£1.2 billion during the year, chiefly reflecting
the increasing value of our content businesses,
primarily VICE, and the partnership formed
during the year with comScore.

The fast read
How we’re doing

With a current equity market capitalisation

of approximately £21.4 billion, the total
enterprise value of your Company is
approximately £25.5 billion, a multiple
of 12.8 times 2015 headline EBITDA.

Free cash flow and net debt

Free cash flow amounted to almost
£1.3 billion in 2015, over £1 billion for the
fifth consecutive year. This free cash flow was
absorbed by £0.7 billion of net cash acquisition
payments and investments, £0.6 billion of
share buy-backs and £0.5 billion of dividends,
a total outflow of £1.8 billion. This resulted in
a net cash outflow of £0.5 billion, before any
changes in working capital. Average net debt
was therefore £3.6 billion in 2015, compared
to £3.1 billion in 2014, at 2015 exchange
rates, and net debt at 31 December 2015
was £3.2 billion, against £2.3 billion at
31 December 2014. The average net debt to
headline EBITDA ratio in 2015 was 1.8 times,
which is in the middle of the Group’s target
range of 1.5-2.0 times.

Revenue growth

On a like-for-like basis, which excludes

the impact of currency and acquisitions,
revenue was up 5.3%, with net sales up
3.3%. In the fourth quarter, like-for-like
revenue was up well over 6%, the strongest
quarter of the year, following like-for-like
growth in the third quarter of well over 4%,
due to stronger growth in the fourth quarter
in North America, the UK and Asia Pacific,

Latin America, Africa & the Middle East
and Central & Eastern Europe, partly offset
by slightly slower growth in Western
Continental Europe. Like-for-like net sales
were up almost 5% in the fourth quarter,
the strongest quarter of the year, with
all regions, except the UK and Western
Continental Europe, recording their
strongest quarter of the year.

Geographic performance

Western Continental Europe revenue grew
by well over 4% like-for-like (well over 5% in
the second half), compared with almost 4%
in 2014.

In Asia Pacific, Latin America, Africa &
Middle East and Central & Eastern Europe,
on a constant currency basis, revenue growth in
the fourth quarter remained strong at over 9%,
ahead of the first nine months growth of over
8%. Like-for-like revenue growth in the fourth
quarter was over 6%, slightly lower than the
almost 7% in quarter one. On a full year basis,
constant currency net sales growth in the
region as a whole was over 7% with like-for-
like net sales up 3%.

Sector performance

Advertising and Media Investment Management
was the strongest performing sector, with

WPP ANNUAL REPORT 2015

The fast read
How we’re doing

2015 revenue by geography %

o North America
o UK
o Western Continental Europe
o Asia Paciﬁc, Latin America,
Africa & Middle East and
Central & Eastern Europe

37
14
20

2015 headline PBIT1 by geography %

o North America
o UK
o Western Continental Europe
o Asia Paciﬁc, Latin America,
Africa & Middle East and
Central & Eastern Europe

41
14
15

2015 revenue by sector %

o Advertising and Media

Investment Management

o Data Investment Management
o Public Relations & Public Affairs
o Branding & Identity, Healthcare
and Specialist Communications 27

2015 headline PBIT1 by sector %

o Advertising and Media

Investment Management

o Data Investment Management
o Public Relations & Public Affairs
o Branding & Identity, Healthcare
and Specialist Communications 27

45
20
8

48
16
9

1 The calculation of headline PBIT is set out in note 31 of the

financial statements.

WPP ANNUAL REPORT 2015

constant currency revenue growth of almost
10% for the year, and 9% in quarter four.
Data Investment Management revenue
grew by almost 6% in the fourth quarter
on a constant currency basis, the strongest
quarter of 2015, and 1.4% like-for-like.
Net sales showed a similar pattern, up over
5% in constant currency in quarter four and
almost 1% like-for-like. On a full-year basis,
revenue was up 3.5% in constant currency,
but down 0.2% like-for-like, with the second
half stronger than the first half.

The Group’s Public Relations & Public

Affairs businesses continued the growth
shown earlier in the year. On a full-year
basis, revenues were up well over 4% in
constant currency and 3% like-for-like.
At the Group’s Branding & Identity,
Healthcare and Specialist Communications
businesses (including direct, digital and
interactive), constant currency revenue grew
strongly at over 11% in quarter four (as with
most of our businesses, the strongest quarter of
2015) and like-for-like revenue was up almost
9%, a significant improvement over quarter
three. Full-year revenue was up over 7% in
constant currency and over 5% like-for-like.
In 2015, the reported headline net sales
margin was up 0.2 margin points to 16.9%,
achieving the highest reported comparative
level in the industry.

Industry rankings

For the fifth successive year, WPP was named
Creative Holding Company of the Year at the
Cannes International Festival of Creativity,
in recognition of your Company’s collective
creative excellence; and also for the fourth
consecutive year, WPP was ranked Most
Effective Holding Company in the Effie
Global Effectiveness Index; and, for the
second year in a row, Warc’s Most Effective
Holding Company.

The Group is ranked first for both net

new business and retentions in media
investment management by RECMA.

The fast read

Who runs WPP
Non-executive chairman

Roberto Quarta
Chairman of the Nomination and
Governance Committee
Member of the Compensation Committee

Executive directors

Sir Martin Sorrell
Chief executive

Paul Richardson
Finance director
Chairman of the Sustainability Committee

Non-executive directors

Jacques Aigrain
Chairman of the Audit Committee
Member of the Compensation Committee

Charlene Begley
Member of the Audit Committee and
Nomination and Governance Committee

Timothy Shriver
Member of the Compensation Committee

Sally Susman
Member of the Nomination and
Governance Committee

Sol Trujillo
Member of the Audit Committee

Members of the Advisory Board

Jeremy Bullmore

John Jackson

Bud Morten

Koichiro Naganuma

John Quelch

Richard Rivers

Guiseppe Sala

Cuneyd Zapsu

Company Secretary

Sir John Hood
Chairman of the Compensation Committee

Marie Capes

Directors’ biographies appear on pages 108 to 110.

Ruigang Li
Member of the Nomination and
Governance Committee

Daniela Riccardi
Member of the Nomination and
Governance Committee

Nicole Seligman
Senior independent director

Hugo Shong
Member of the Nomination and
Governance Committee

WPP ANNUAL REPORT 2015

The fast read

How we behave and
how we’re rewarded

Governance

Sustainability

The Board of Directors is committed to
achieving compliance with the principles
of corporate governance set out in the
UK Corporate Governance Code and to
comply with relevant laws, regulations,
and guidelines such as the US Sarbanes-
Oxley Act 2002, the NASDAQ rules and,
where practicable, with the guidelines
issued by institutional investors and their
representative bodies.

WPP operates a system of internal
control, which is maintained and reviewed
in accordance with the UK Corporate
Governance Code, COSO and the
FRC guidance on risk management and
internal control.

Further details on corporate governance,
and how we comply, can be found on pages
163 to 167.

Compensation

Executive Remuneration Policy is set by
WPP’s Compensation Committee and is
governed by three guiding principles:

Performance
Competitiveness
Alignment with share owner interest

The full report from WPP’s Compensation
Committee can be found on pages 121 to 153.

Sustainability issues increasingly impact
the products, operations, strategies and
communications of leading brands. As these
brands – our clients – adapt to social and
environmental challenges they look to our
companies for the best advice and insight.
By developing our sustainability expertise
and by improving our own social and
environmental performance, we can forge
stronger relationships with our clients and
generate value for our business and society.

Clients

Clients who engaged with us on

sustainability were worth at least
£1.29 billion to the Group in 2015,
equivalent to 11% of revenues.

People

We invested £41.1 million on training

in 2015.

At year-end 2015, women comprised
29% of the WPP Board, 33% of directors
and executive leaders of our companies
and 54% of total employees.

Environment

We have cut our carbon footprint per
employee to 2.07 tonnes of CO2e, a 39%
reduction from 2006.

Social contribution

In 2015, our social investment was worth
£19.4 million, equivalent to 1.3% of reported
profit before tax.

In addition, WPP media agencies

negotiated free media space worth
£24.4 million on behalf of pro bono clients.

Read a summary of our performance and
activities in 2015 on pages 155 to 161.

WPP ANNUAL REPORT 2015

Who we are

WPP ANNUAL REPORT 2015

Who we are

Our companies & associates

Advertising

ADK1
adk.jp
Bates CHI&Partners
bateschi.com
Berlin Cameron
bcunited.com
Blue Hive
thebluehive.com
CHI&Partners1
chiandpartners.com
Cole & Weber
coleweber.com
Grey
grey.com
HS Ad1
hsad.co.kr
J. Walter Thompson
Worldwide
jwt.com
Ogilvy & Mather Advertising
ogilvy.com
Santo
santo.net
WPP-Scangroup
wpp-scangroup.com
Scholz & Friends*
s-f.com
Sra. Rushmore
srarushmore.com
Soho Square
sohosquareasia.com
TAXI■
taxi.ca
Team Detroit
teamdetroit.com
The Jupiter Drawing Room1
thejupiterdrawingroom.com

Key
1 Associate
2 Joint venture
3 Investment
♦ A Hill+Knowlton Strategies company
† An Ogilvy company
■ A Young & Rubicam Group

company

● A member of Group XP
★ A member of The Partnership
+ Part of the Wunderman network
* A Commarco company
Ω A J. Walter Thompson company
▲ Partnership with GroupM/Kantar
As at April 2016.

WPP AUNZ
wppaunz.com
Y&R■
yr.com

Media Investment
Management and
Data Investment
Management

GroupM:
groupm.com
Catalyst
catalystdigital.com
KR Media
krmedia-france.com
Maxus
maxusglobal.com
MediaCom
mediacom.com
MEC
mecglobal.com
MetaVision Media
metavisionmedia.com
Mindshare
mindshareworld.com
QUISMA
quisma.com
Xaxis
xaxis.com
tenthavenue:
tenthavenue.com
Forward
forwardww.com
Joule
jouleww.com
Kinetic Worldwide
kineticww.com
Spafax
spafax.com
TMARC
tmarcweb.co.za
Other media agencies
Gain Theory
gaintheory.com
m/SIX2
msixagency.com
Kantar:
kantar.com
Added Value
added-value.com
Benenson Strategy Group
bsgco.com

WPP ANNUAL REPORT 2015

IMRB International
imrbint.com
Kantar Health
kantarhealth.com
Kantar Japan
kantar.jp
Kantar Media
kantarmedia.com
Kantar Retail
kantarretail.com
Kantar Worldpanel
kantarworldpanel.com
Lightspeed GMI
lightspeedgmi.com
Millward Brown
millwardbrown.com
The Futures Company
thefuturescompany.com
TNS
tnsglobal.com
comScore3,▲
comscore.com

Public Relations &
Public Affairs

Blanc & Otus♦
blancandotus.com
Buchanan Communications
buchanan.uk.com
Burson-Marsteller■
burson-marsteller.com
BWR†
bwr-pr.com
Clarion Communications
clarioncomms.net
Cohn & Wolfe■
cohnwolfe.com
Dewey Square Group
deweysquare.com
Finsbury
finsbury.com
Glover Park Group
gpg.com
HERING SCHUPPENER
heringschuppener.com
Hill+Knowlton Strategies
hkstrategies.com
Ogilvy Government Relations†
ogilvygr.com
Ogilvy Public Relations†
ogilvypr.com

Penn Schoen Berland■
psbresearch.com
Prime Policy Group
prime-policy.com
QGA
qga.com
Wexler & Walker Public
Policy Associates♦
wexlerwalker.com

Branding & Identity

Addison Group★
addison-group.net
BDG architecture + design
bdg-a-d.com
Brand Union●
brandunion.com
CBA†
cba-design.com
Coley Porter Bell†
coleyporterbell.com
Dovetail
dovetailfurniture.com
FITCH●
fitch.com
Lambie-Nairn★
lambie-nairn.com
Landor ■
landor.com
PeclersParis★
peclersparis.com
The Partners★
the-partners.com
SET ●
set-live.com
VBAT★
vbat.com

Healthcare
Communications

Feinstein Kean Healthcare†
fkhealth.com
GCI Health
gcihealth.com
ghg
ghgroup.com
Ogilvy CommonHealth
Worldwide†
ogilvychww.com

Who we are
Our companies & associates

Domo3
domo.com
Fullscreen3
fullscreen.com
HDT Holdings Technology3
hdtmedia.com
Indigenous Media3
indigenousmedia.com
In Game Ad Interactive3
igagroup.net
Invidi3
invidi.com
Mitú3
mitunetwork.com
mySupermarket3
mysupermarket.co.uk
Moment Systems3
miaozhen.com
MRC3
mrcstudios.com
OrderDynamics3
orderdynamics.com
Percolate3
percolate.com
Polestar3
Proclivity Media3
proclivitysystems.com
Say Media3
saymedia.com
SFX Entertainment3
sfxii.com
Vice Media3
vice.com
The Weinstein Company3
weinsteinco.com
WildTangent3
wildtangent.com

WPP knowledge
communities

Government & Public Sector
Practice
wpp.com/govtpractice
The Store
wpp.com/store

Sudler & Hennessey■
sudler.com
Wunderman World Health+
wundermanworldhealth.com

VML■
vml.com
Wunderman■
wunderman.com

Direct, Digital,
Promotion &
Relationship
Marketing

AdPeople Worldwide+
adpeople.com
A. Eicoff & Co†
eicoff.com
AKQA
akqa.com
Barrows1
barrowsglobal.com
Blast Radius+
blastradius.com
Cerebra
cerebra.co.za
deepblue networks*
db-n.com
Digit●
digitlondon.com
EWA
ewa.ltd.uk
FullSIX3
fullsix.it/en
Grass Roots1
grassrootsgroup.com
Geometry Global
geometry.com
HighCo1
highco.fr
iconmobile■
iconmobile.com
KBM Group+
kbmg.com
Mando
mando.co.uk
Maxx Marketing†
maxx-marketing.com
MirumΩ
mirumagency.com
OgilvyOne Worldwide†
ogilvyone.com
SJR◆
groupsjr.com
Smollan Group1
smollan.co.za

Specialist
Communications

Corporate/B2B
OgilvyOne Business†
ogilvyonebusiness.com
Demographic marketing
Bravo■
bebravo.com
UniWorld1
uwg.is
Wing
insidewing.com
Employer branding/
recruitment
JWT INSIDEΩ
jwtinside.com
Event/face-to-face
marketing
MJM
mjmcreative.com
Metro
metrobroadcast.com
Richard Attias & Associates1
richardattiasassociates.com
Foodservice marketing
The Food Group
thefoodgroup.com
Sports marketing
9ine Sports & Entertainment
9ine.com
Bruin Sports Capital3
bruinsportscapital.com
Chime Communications1
chimegroup.com
ESP
espglobal.com
PRISM Group
prismteam.com
Real estate marketing
PACE
paceadv.com
Media & production services
The Farm Group
farmgroup.tv
H+O
hogarth-ogilvy.com

Imagina3
mediapro.es
United Visions*
uv.tv
Policy & regulation
Global Counsel1
global-counsel.co.uk

WPP Digital

Acceleration
acceleration.biz
Blue State Digital
bluestatedigital.com
Cognifide
cognifide.com
The Data Alliance
thedataalliance.com
F.biz
fbiz.com.br
Globant1
globant.com
Hogarth Worldwide
hogarthww.com
Interlude1
interlude.fm
Johannes Leonardo1
johannesleonardo.com
Mutual Mobile1
mutualmobile.com
POSSIBLE
possible.com
Rockfish
rockfishdigital.com
Salmon
salmon.com
Syzygy
syzygy.net

WPP Digital partner
companies

Ace Metrix3
acemetrix.com
AppNexus3
appnexus.com
CMC Capital3

WPP ANNUAL REPORT 2015

Why we exist

Our mission
To develop and manage talent;
to apply that talent,
throughout the world,
for the benefit of clients;
to do so in partnership;
to do so with profit.

etween them, WPP companies have tens of
thousands of individual clients. They range from
Fortune 500 global giants through single-nation
start-ups to the smallest of specialist charities.
Diverse as they are, they have one thing in
common: in pursuing their objectives, they face
formidable competition. Growing affluence in many parts
of the world – combined with overcapacity and over-supply
in almost every significant consumer market – has put more
and more power into the hands of consumers, accelerated
by technology.

As always, if they are to succeed – or even to survive

with profit – every competitive company needs an
intrinsically appealing product or service. Increasingly,
part of that appeal must lie in a company’s evident sense
of a wider responsibility; one that extends beyond share
owners, employees and consumers and recognises a duty
to the environment and to society as a whole. Today’s
most successful companies are founded on strong values.

But even all that, though remaining the most
fundamental of requirements, is seldom enough. Just
as competitive costermongers arrange their apples in
appealing displays and polish them lovingly to catch
their customers’ eyes, so all companies need to display
their wares compellingly.

They need access to high-quality information, strategic

advice and specialist communications skills. And it’s in
the nature of specialist and creative talent that it is unlikely
to flourish within the confines of a client company.

WPP ANNUAL REPORT 2015

People with specialist talents work best – and contribute
more – when recruited, trained and inspired by
specialist companies.

Within WPP, our clients have access to companies with

all the necessary marketing and communications skills;
companies with strong and distinctive cultures of their own;
famous names, many of them. WPP, the parent company,
complements these companies in three distinct ways.

First, it relieves them of much administrative work.
Financial matters (such as planning, budgeting, reporting,
control, treasury, tax, mergers, acquisitions, investor
relations, legal affairs and internal audit) are co-ordinated
centrally. For the operating companies, every administrative
hour saved is an extra hour to be devoted to the pursuit of
professional excellence.

Second, the parent company encourages and enables
operating companies of different disciplines to work together
for the benefit of clients. Such collaborations have the
additional benefit of enhancing the job satisfaction of our
people. The parent company also plays an across-the-Group
role in the following functions: the management of talent,
including recruitment and training; in property management;
in procurement and IT; in knowledge sharing and practice
development – with an emphasis on sustainability.

And finally, WPP itself can function as the 21st-century

equivalent of the full-service agency. For some clients,
predominantly those with a vast geographical spread and
a need for marketing services ranging from advertising
through design and website construction to research
and internal communications, WPP can act as a portal
to provide a single point of contact and accountability.
No two clients are structured in precisely the same

way. Within WPP’s operating companies, teams can
be tailor-made to match any and all.

Our strategic priorities

HORIZONTALITY

Advance
horizontality by
ensuring our people
work together for the
beneﬁt of clients

NEW
MARKETS

Increase share of
revenues from
faster-developing
markets to 40-45%

NEW

MEDIA

TECHNOLOGY, DATA

& CONTENT*

Increase share of

revenues from new

media to 40-45%

Maintain share of more

measurable marketing

services at 50% of revenues

Cross-Group client teams

Are we on target?

2010

WPP ANNUAL REPORT 2015

28%

2015

2010

29%

2015

42.5%

2020

29%

2010

37.5%

42.5%

49%

52%

50%

2015

2020

2010

2015

2020

* Also known as Data Investment Management &

Application of Technology

Our strategic priorities

HORIZONTALITY

Advance

horizontality by

ensuring our people

work together for the

beneﬁt of clients

NEW

MARKETS

Increase share of

revenues from

faster-developing

markets to 40-45%

NEW
MEDIA

TECHNOLOGY, DATA
& CONTENT*

Increase share of
revenues from new
media to 40-45%

Maintain share of more
measurable marketing
services at 50% of revenues

Cross-Group client teams

Are we on target?

2010

28%

2015

2010

29%

2015

42.5%

2020

29%

2010

37.5%

42.5%

49%

52%

50%

2015

2020

2010

2015

2020

* Also known as Data Investment Management &
Application of Technology

WPP ANNUAL REPORT 2015

WPP: a global company

WPP companies now operate in 112 countries; the latest: Cuba. Here we
show WPP’s strength in growth markets of the world as well as in some of
our key mature markets.

Ger many

$1.3bn

7,500

France

$750m

5,000

Nigeria
$20m

200

USA

$6.7bn

$3.2bn

Mexico

17,000

$200m

25,000

2,400

Colombia

$100m

1,800

Brazil

$600m

6,000

WPP ANNUAL REPORT 2015

Revenues denote the collective ﬁgure for all WPP

companies (including associates) in a given country

REVENUE

and are reported at 2015 constant currency rates.

People denotes the number of people employed

by WPP companies (including associates) in a

given country.

As at 31 December 2015.

PEOPLE

Greater China

$1.6bn

Russia

$150m

2,000

Japan

$600m

Pakistan

$30m

1,600

Bangladesh

$10m

India

500

$500m

14,000

South

Korea

$300m

14,000

4,000

Vietnam

1,400

$100m

1,200

Philippines

$80m

1,200

Indonesia

$100m

1,400

Australia &

New Zealand

$800m

4,000

Turkey

$140m

1,400

Egypt

$30m

400

East Africa

$60m

1,600

South Africa

$500m

32,000*

* Includes ﬁeldforce of 28,000.

WPP: a global company

WPP companies now operate in 112 countries; the latest: Cuba. Here we

show WPP’s strength in growth markets of the world as well as in some of

our key mature markets.

USA

$6.7bn

$3.2bn

Mexico

17,000

$200m

25,000

2,400

Colombia

$100m

1,800

Brazil

$600m

6,000

Ger many

$1.3bn

7,500

France

$750m

5,000

Nigeria

$20m

200

Revenues denote the collective ﬁgure for all WPP
companies (including associates) in a given country
and are reported at 2015 constant currency rates.

REVENUE

People denotes the number of people employed
by WPP companies (including associates) in a
given country.

PEOPLE

As at 31 December 2015.

Greater China

$1.6bn

Russia

$150m

2,000

Pakistan
$30m

1,600

14,000

Bangladesh
$10m

Japan

$600m

4,000

South
Korea

$300m

Vietnam

1,400

$100m

1,200

Philippines

$80m

1,200

Indonesia

Australia &
New Zealand

$100m

1,400

$800m

4,000

WPP ANNUAL REPORT 2015

Turkey

$140m

1,400

Egypt
$30m

400

East Africa

$60m

1,600

South Africa

$500m

32,000*

* Includes ﬁeldforce of 28,000.

India

500

$500m

14,000

How we’re doing

Financial summary

Billings1
Revenue
Net sales1
Headline EBITDA2
Headline operating profit2
Reported operating profit
Headline PBIT2
Net sales margin2
Headline PBT2
Reported PBT
Headline earnings2
Reported earnings

Headline diluted earnings per share2,3
Reported diluted earnings per share3
Ordinary dividend per share
Ordinary dividend per ADR4

Net debt at year-end
Average net debt5
Ordinary share price at year-end
ADR price at year-end
Market capitalisation at year-end

At 14 April 2016
Ordinary share price
ADR price
Market capitalisation

2015
£47,632m
£12,235m
£10,524m
£2,002m
£1,705m
£1,632m
£1,774m
16.9%
£1,622m
£1,493m
£1,229m
£1,160m

93.6p
88.4p
44.69p
$3.42

£3,211m
£3,562m
1,563.0p
$114.74
£20,237m

1,656.0p
$117.38
£21,423m

2014
£46,186m
£11,529m
£10,065m
£1,910m
£1,611m
£1,507m
£1,681m
16.7%
£1,513m
£1,452m
£1,136m
£1,077m

84.9p
80.5p
38.20p
$3.15

£2,275m
£3,001m
1,345.0p
$104.10
£17,831m

Change %
+3.1
+6.1
+4.6
+4.9
+5.8
+8.3
+5.6
+0.2*
+7.3
+2.8
+8.2
+7.7

+10.2
+9.8
+17.0
+8.6

+41.1
+18.7
+16.2
+10.2
+13.5

The financial statements have been prepared under International Financial Reporting Standards (IFRS).
1 Billings and net sales are defined on page 228.
2 The calculation of ‘headline’ measurements of performance (including headline EBITDA, headline operating profit,

headline PBIT, net sales margin, headline PBT and headline earnings) is set out in note 31 of the financial statements.

3 Earnings per share is calculated in note 9 of the financial statements.
4 One American Depositary Receipt (ADR) represents five ordinary shares. These figures have been translated for
convenience purposes only using the Consolidated income statement exchange rates shown on page 180. This
conversion should not be construed as a representation that the pound sterling amounts actually represent, or
could be converted into, US dollars at the rates indicated.

5 Average net debt is defined on page 228.
* Margin points.

WPP ANNUAL REPORT 2015

How we’re doing

Financial summary

Revenue £m

10,022

10,373

11,019

11,529

12,235

Net sales £m

9,239

9,515

10,076

10,065

10,524

12,235m

10,524m

Reported revenue was up 6.1% at £12,235 million.
On a constant currency basis, revenue was up 7.5%
and, on a like-for-like basis, revenue was up 5.3%.

Reported net sales were up 4.6% at £10,524 million.
On a constant currency basis, net sales were up 5.8%
and, on a like-for-like basis, net sales were up 3.3%.

Headline PBIT1 £m

o Net sales margin1 %

1,774m

1,662

1,681

1,774

1,429

1,531

Headline EBITDA1 £m

1,640

1,756

1,896

1,910

2,002

2,002m

Headline PBIT was up 5.6% to £1,774 million. Net sales
margin was up 0.2 margin points (0.4 margin points on
a constant currency basis) to an industry-leading 16.9%.

Headline EBITDA (headline earnings before interest,
taxation, depreciation and amortisation) rose
by 4.9% (7.7% in constant currencies), crossing
£2 billion for the first time.

Return on equity2 %

o Weighted average cost
of capital (WACC)

16.3%

14
12
10
8
6
4
2
0

12.9

13.6

14.4

15.0

16.3

Return on equity increased to 16.3% in 2015, while the
weighted average cost of capital rose to 6.7%.

Headline diluted earnings per share1 p
84.9

93.6

80.8

o Dividends per share p

93.6p

67.7

73.4

Headline diluted earnings per share were up 10.2% to
93.6p. Dividends were up 17.0% to 44.69p per share,
giving a payout ratio of 47.7% compared with 45.0%
in 2014.

1 The calculation of ‘headline’ measurements of performance (including headline EBITDA, headline PBIT, net sales margin and headline earnings)

is shown in note 31 of the financial statements.

2 Return on equity is headline diluted earnings per share divided by equity share owners’ funds per share.

WPP ANNUAL REPORT 2015

How we’re doing
Financial summary

Average net debt £m

o Average net debt to
headline EBITDA2 ratio

3,562m

3,203

2,989

3,001

2,811

3,562

Debt maturity3 £m

1,539

367

400

443

186

200

551

339

553

509

25+

Average net debt was up at £3.6 billion in 2015, reflecting
incremental spend on acquisitions, share buy-backs and
dividends. The average net debt to headline EBITDA ratio
increased to 1.8 times, in the middle of the Group’s target
range of 1.5-2.0 times.

The Group continues to work to achieve continuity and
flexibility of funding. Undrawn committed borrowing
facilities are maintained in excess of peak net-borrowing
levels and debt maturities are monitored closely.

2015 revenue by geography %

2015 headline PBIT1 by geography %

o North America
o UK
o Western Continental Europe
o Asia Paciﬁc, Latin America,
Africa & Middle East and
Central & Eastern Europe

37
14
20

o North America
o UK
o Western Continental Europe
o Asia Paciﬁc, Latin America,
Africa & Middle East and
Central & Eastern Europe

41
14
15

In 2015, 29% of the Group’s revenue came from Asia
Pacific, Latin America, Africa & Middle East and Central
& Eastern Europe. Our target is to increase this to 40-45%
of revenues over the next five years.

Profit growth was strongest in North America in 2015,
with margins of almost 19%.

2015 revenue by sector %

2015 headline PBIT1 by sector %

o Advertising and Media

Investment Management

o Data Investment Management
o Public Relations & Public Affairs
o Branding & Identity, Healthcare
and Specialist Communications 27

45
20
8

o Advertising and Media

Investment Management

o Data Investment Management
o Public Relations & Public Affairs
o Branding & Identity, Healthcare
and Specialist Communications 27

48
16
9

Marketing services comprised 55% of our revenues in
2015, a little less than 2014. Revenue growth was strongest
in Advertising and Media Investment Management at
almost 10% in constant currencies.

PBIT contributions were broadly in line with prior year,
with Data Investment Management and Public Relations
& Public Affairs showing significant margin growth.

1 The calculation of headline PBIT is set out in note 31 of the financial statements.
2 The calculation of headline EBITDA is set out in note 31 of the financial statements.
3 Includes corporate bonds and bank loans payable at par value, excluding any redemption premium due, by due date.

WPP ANNUAL REPORT 2015

How we’re doing

Strategic report to share owners*

Dear share owner

our Company celebrated its
thirtieth birthday in 2015 with
another record year: revenue,
profitability, net sales margins
and earnings per share all
reached new highs, despite
strong currency headwinds in the second
half and a generally low-growth global
environment. For the fifth successive year,
WPP was named Creative Holding Company
of the Year at the Cannes International
Festival of Creativity, in recognition of your
Company’s collective creative excellence; and
also for the fourth consecutive year, WPP
was ranked Most Effective Holding Company
in the Effie Global Effectiveness Index; and,
for the second year in a row, Warc’s Most
Effective Holding Company.

Cannes International Festival of Creativity
Holding Company of the Year
2011, 2012, 2013, 2014, 2015

Effie Global Effectiveness Index
Most Effective Holding Company of the Year
2012, 2013, 2014, 2015

* This strategic report to share owners should be read in conjunction with
and as part of the Directors’ report on pages 113 to 161 and the section
headed How we comply on pages 163 to 169.

WPP ANNUAL REPORT 2015

At the same time, we have responded to the changing
competitive landscape by accelerating the implementation of
our strategic goals. Sector targets for faster-growth markets
and new media have been raised to 40-45% of revenue over the
next five years and horizontality across clients, countries and
regions has been raised to our number one strategic priority.

Your share price increased by over 16% in 2015, closing

at 1,563.0p at year end. Since then it has strengthened
further to 1,656.0p, up a further 6%, at the time of writing,
reflecting our record results for 2015, as well as slightly
stronger global stock markets in recent weeks. Dividends
increased by 17% to 44.69p, a new high. This represents a
dividend pay-out ratio of 47.7% of headline diluted earnings
per share, compared with 45.0% in 2014. It now seems
possible that the newly targeted pay-out ratio of 50% will
be achieved by the end of 2016, one year ahead of target.
Reported billings were £47.6 billion, up almost 5% in
constant currencies, driven by a strong overall leadership
position in net new business league tables for the fourth year
in a row and GroupM topping both the RECMA media
tsunami net new business and retention tables. Revenue was
up over 6% to £12.2 billion and up well over 7% in constant
currencies. Net sales were up well over 4% and almost 6%
in constant currencies. Including 100% of associates and
investments, revenue is estimated to total around £17 billion
(over $27 billion). Headline PBIT was up well over 5% to
£1.774 billion and up well over 8% in constant currencies.
Net sales margins increased by 0.2 margin points to an
industry-leading 16.9% and, on a constant currency basis,
were up 0.4 margin points, ahead of the targeted constant
currency increase of 0.3 margin points.

Reported profit before interest and tax rose 7% to
£1.679 billion from £1.569 billion, up well over 10% in
constant currencies. Headline EBITDA increased by almost 5%
to £2.002 billion, crossing £2 billion for the first time, up well
over 7% in constant currencies. Headline profit before tax was
up over 7% to £1.622 billion and reported profit before tax
was up almost 3% to £1.493 billion. Diluted headline earnings
per share rose by over 10% to 93.6p (an all-time high) and
diluted reported earnings per share were up almost 10% to
88.4p, both reflecting strong like-for-like revenue and net sales
growth, margin improvement and the benefit of acquisitions.
Return on equity increased 1.3 percentage points to

16.3% in 2015 compared with 15.0% in 2014, while the
weighted average cost of capital increased to 6.7% in 2015
from 6.1% in 2014. Additionally, the value of the Group’s
non-controlled investments rose by almost £500 million
to £1.2 billion during the year, chiefly reflecting the
increasing value of our content businesses, primarily VICE,
and the partnership formed during the year with comScore.

How we’re doing
Strategic report to share owners

Free cash flow amounted to almost £1.3 billion in 2015,
over £1 billion for the fifth consecutive year. This free cash
flow was absorbed by £0.7 billion of net cash acquisition
payments and investments, £0.6 billion of share buy-backs
and £0.5 billion of dividends, a total outflow of £1.8 billion.
This resulted in a net cash outflow of £0.5 billion, before
any changes in working capital. Average net debt was
therefore £3.6 billion in 2015, compared to £3.1 billion in
2014, at 2015 exchange rates, and net debt at 31 December
2015 was £3.2 billion, against £2.3 billion at 31 December
2014. The average net debt to headline EBITDA ratio in
2015 was 1.8 times, which is in the middle of the Group’s
target range of 1.5-2.0 times.

Headline interest cover in 2015 was 11.7 times. So far,

in the first two months of 2016, average net debt is up
at £3.5 billion against £2.7 billion for the same period in
2015, at 2016 exchange rates, reflecting the same factors
as the full-year average for 2015. Our long-term debt is
currently rated Baa2 and BBB and our short-term debt P2
and A2, by Moody’s and Standard & Poor’s respectively.
With the equity market capitalisation at the time of
writing of approximately £21.4 billion, the total enterprise
value of your Company is approximately £25.5 billion,
a multiple of 12.8 times 2015 headline EBITDA.

Revenue growth impacted by strong
currency headwinds in the second half

Our reported revenue growth for the year was 6.1%,
and on a constant currency basis, which excludes the
impact of currency movements, revenue was up 7.5%.
This difference of 1.4% reflects strong foreign currency
headwinds in the second half: chiefly due to the strength of
the pound sterling, primarily against the euro, partly offset
by the weakness of the pound sterling against the US dollar.
On a like-for-like basis, which excludes the impact of
currency and acquisitions, revenue was up 5.3%, with net
sales up 3.3%. In the fourth quarter, like-for-like revenue
was up well over 6%, the strongest quarter of the year,
following like-for-like growth in the third quarter of well
over 4%, due to stronger growth in the fourth quarter in
North America, the UK and Asia Pacific, Latin America,
Africa & the Middle East and Central & Eastern Europe,
partly offset by slightly slower growth in Western
Continental Europe. Like-for-like net sales were up almost
5% in the fourth quarter, the strongest quarter of the year,
with all regions, except the UK and Western Continental
Europe, recording their strongest quarter of the year.

Greater China

Germany

Australia/
New Zealand

Our 5 ‘Billion Dollar Markets’
WPP companies (including associates
and investments) generated revenues
of more than $1 billion in ﬁve markets

WPP ANNUAL REPORT 2015

How we’re doing
Strategic report to share owners

Constant currency1 revenue growth %

North America leads the way

North America

Western Continental Europe

Asia Paciﬁc, Latin America,
Africa & Middle East and
Central & Eastern Europe

15
14

Constant currency1 net sales growth
by geography %
North America

15
14

Western Continental Europe

Asia Paciﬁc, Latin America,
Africa & Middle East and
Central & Eastern Europe

15
14

Net sales margin2 by geography %

North America

Western Continental Europe

Asia Paciﬁc, Latin America,
Africa & Middle East and
Central & Eastern Europe

15
14

Revenue by geography £m

o North America
o UK
o Western Continental Europe
o Asia Paciﬁc, Latin America,
Africa & Middle East and
Central & Eastern Europe

12,000

10,000

8,000

6,000

4,000

2,000

0
11

7.9
10.0

8.4
16.0

4.7
5.1

8.5
15.8

4.7
3.4

7.8
7.1

4.3
2.5

7.3
12.5

18.8
17.9

16.2
15.8

13.7
12.9

16.8
18.3

North America, with constant currency revenue growth
of over 11% in the final quarter and like-for-like growth
of well over 9%, strengthened further, exceeding the strong
growth seen in the first nine months, an improvement over
the third quarter year-to-date constant currency growth
of well over 6% and like-for-like growth of over 6%.
Particularly strong growth was achieved in Advertising and
Media Investment Management, parts of the Group’s Public
Relations & Public Affairs businesses and Branding &
Identity, direct, digital and interactive operations. On a full-
year basis, constant currency revenue was up almost 8%,
with like-for-like up over 7%. Net sales were up well over
4% in constant currency, with like-for-like up over 4%.
The UK rate of growth in the final quarter, although
lower than quarter three, remained strong at well over 6%
in constant currency, compared to well over 7% in quarter
three, with like-for-like growth of almost 3%, well ahead of
the 1% seen in quarter three. The Group’s Advertising, Public
Relations & Public Affairs, Branding & Identity and direct,
digital and interactive businesses performed particularly well.
Despite the slight slow-down in the rate of revenue growth,
net sales remained strong, with constant currency growth of
almost 7%, slightly down on quarter three, with like-for-like
growth of 3.5% compared with over 2% in quarter three.
On a full-year basis, constant currency revenue was up over
8%, with like-for-like up over 4%. Net sales were up almost
8% in constant currency, with like-for-like up almost 3%.

Western Continental Europe, although remaining patchy

from a macroeconomic point of view, continued the

2015 revenue by geography versus peers $bn

o Rest of World5
o Western Europe
(including UK)
o North America

WPP1

Omnicom1,3

Publicis1,2,3

IPG1,4

Dentsu

Havas1,2

1 WPP – reportable US$’s per WPP results. Omnicom, IPG, Publicis and Havas –

1 See definition on page 228.
2 The calculation of net sales margin is set out in note 31 of the

company presentations for 2015 with CEE estimated at 3%.

2 FX. Havas and Publicis assumes $1 = €0.9013 based on the average for 2015.
3 OMC and PUB CEE based on analyst estimates.
4 IPG assumes Canada is ca 1.5% of revenue.
5 Rest of World. Asia Pacific, Latin America, Africa & Middle East and Central

financial statements.

& Eastern Europe.

26 WPP ANNUAL REPORT 2015

How we’re doing
Strategic report to share owners

Constant currency1 revenue growth by sector
%
Advertising and Media
Investment Management

9.9
19.8

15
14

Data Investment
Management

Public Relations
& Public Affairs

Branding & Identity,
Healthcare and
Specialist Communications

15
14

3.5
1.5

4.7
2.6

7.3
9.5

Constant currency1 net sales growth by sector
%
Advertising and Media
Investment Management

5.3
7.8

15
14

4.6
0.9

4.3
2.7

7.8
8.6

18.4
18.6

16.2
15.6

16.7
15.8

15.0
14.7

Data Investment
Management

Public Relations
& Public Affairs

Branding & Identity,
Healthcare and
Specialist Communications

15
14

Net sales margin2 by sector %

Advertising and Media
Investment Management

Data Investment
Management

Public Relations
& Public Affairs

Branding & Identity,
Healthcare and
Specialist Communications

15
14

Revenue by sector £m

o Advertising and Media

Investment Management

o Data Investment
Management
o Public Relations &
Public Affairs
o Branding & Identity,
Healthcare and Specialist
Communications

12,000

10,000

8,000

6,000

4,000

2,000

0
11

improvement seen in quarter three, with constant currency
revenue growth of well over 6%, the highest rate of quarterly
growth in 2015, and partly driven by acquisitions. Like-for-
like revenue was up over 5% in the final quarter, down
slightly on the 6% seen in quarter three. Similarly, net sales
growth on a constant currency basis was up over 7% in the
final quarter, the highest rate of quarterly growth in 2015,
compared to over 4% in quarter three, again partly driven
by acquisitions. On a like-for-like basis, net sales were up 3%
in the final quarter, compared with well over 4% in quarter
three. For the year, Western Continental Europe revenue
grew by well over 4% like-for-like (well over 5% in the
second half), compared with almost 4% in 2014, with
net sales growth of 2.5% like-for-like (well over 3% in
the second half), compared to over 1% in 2014. Belgium,
Denmark, Germany, Italy and Turkey all showed good
growth in the final quarter, but Austria, France, Ireland, the
Netherlands, Spain, Sweden and Switzerland were tougher.

In Asia Pacific, Latin America, Africa & Middle East and

Central & Eastern Europe, on a constant currency basis,
revenue growth in the fourth quarter remained strong at over
9%, ahead of the first nine months growth of over 8%.
Like-for-like revenue growth in the final quarter was over 6%,
the second highest quarter of 2015, slightly lower than the
almost 7% seen in quarter one. Growth in the fourth quarter
was driven principally by Asia Pacific, Latin America and
Africa, the CIVETS1, the Next 112 and the MIST3. Central &
Eastern Europe, after the improvement seen in quarter three,
slipped back slightly, with full-year like-for-like revenue down
over 1%. Constant currency net sales growth in the region as
a whole was over 7%, with like-for-like net sales up 3%. In
Asia, Bangladesh, Cambodia, India, Indonesia, Myanmar,
Pakistan and Vietnam, had double-digit like-for-like growth,
while Japan and Malaysia were more challenging.

Quarter four in Latin America was the strongest of the year,
with like-for-like revenue up almost 8%, compared with quarter
three, the next highest, with over 4%. Like-for-like net sales
grew over 7% in quarter four, also the highest quarterly growth
in 2015, with full-year growth of almost 5% (over 6% in the
second half compared with well over 2% in the first half).

Africa also grew strongly, with like-for-like revenue up

over 8% in both quarter four and the full year, driven by
the Group’s Media Investment Management, Data
Investment Management and direct, digital and interactive
businesses. In Central & Eastern Europe, like-for-like

1 Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa.
2 Bangladesh, Egypt, Indonesia, Mexico, Nigeria, Pakistan, the Philippines,
South Korea, Turkey and Vietnam (the Group has no operations in Iran).

1 See definition on page 228.
2 The calculation of net sales margin is set out in note 31 of the

3 Mexico, Indonesia, South Korea and Turkey.

financial statements.

WPP ANNUAL REPORT 2015

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revenue was up over 1% in quarter four, compared with
3% in quarter three, with Croatia, the Czech Republic,
Hungary and Kazakhstan up strongly. Poland, Russia and
the Slovak Republic were tougher.

Full-year revenue for the BRICs4, which account for over

$2.8 billion of revenue, was up well over 3% on a like-for-
like basis, with the Next 11 and the CIVETS up over 9%
and well over 11% respectively. The MIST was up almost
8%. In 2015, 29% of the Group’s revenue came from Asia
Pacific, Latin America, Africa & Middle East and Central &
Eastern Europe – down slightly from almost 30% in 2014,
due to the strength of sterling against the currencies of many
of the markets in these regions still having a significant
impact. On a net sales basis, there was also a slight drop to
almost 30%, which compares with the Group’s strategic
objective of 40-45% in the next five years. Markets outside
North America now account for 63% of our revenue.

4 Brazil, Russia, India and China.

Strong growth in advertising and media

Advertising and Media Investment Management was
the strongest performing sector, with constant currency
revenue growth of almost 10% for the year, and 9% in
quarter four. Like-for-like revenue was up over 8% for
both the year and quarter four. Advertising grew strongly
in North America and Latin America in quarter four, but
the UK, Continental Europe and Africa were more difficult
and, overall, Advertising remained challenged. Media
Investment Management showed strong like-for-like
growth, with double-digit growth in all regions and
sub-regions, except the UK and the Middle East.

Of the Group’s advertising networks, J. Walter
Thompson Worldwide, Ogilvy & Mather and Grey
performed well in quarter four. Growth in the Group’s
Media Investment Management businesses has been very
consistent throughout the year, with constant currency
and like-for-like revenue up strongly for the year, but
with a slightly weaker second half, principally in the UK.
tenthavenue, the ‘engagement’ network focused on out-of-
home media, also performed strongly in the fourth quarter,
with like-for-like net sales growth up almost 9%. The
strong revenue and net sales growth across most of the
Group’s businesses, partly offset by the challenges in the

Our 9 ‘Billion Dollar Brands’
Nine WPP brands have
generated revenues of
$1 billion or more

WPP ANNUAL REPORT 2015

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Group’s Advertising businesses in most regions, resulted
in the combined net sales margin of this sector dropping
0.2 margin points to 18.4%, but improving by 0.2 margin
points in constant currency.

In 2015, J. Walter Thompson Worldwide, Ogilvy &

Mather, Y&R and Grey generated estimated net new
business billings of almost £1.1 billion ($1.7 billion).
GroupM (the Group’s Media Investment Management
arm, which includes Mindshare, MEC, MediaCom,
Maxus, GroupM Connect, Xaxis and now Essence),
together with tenthavenue, generated estimated net new
business billings of £3.8 billion ($6.0 billion). The Group’s
net new billings totalled £5.6 billion ($8.6 billion), slightly
down on the £5.8 billion ($9.3 billion) recorded in 2014.

Data Investment Management revenue grew by almost
6% in the fourth quarter on a constant currency basis, the
strongest quarter of 2015, and 1.4% like-for-like. Net sales
showed a similar pattern, up over 5% in constant currency
in quarter four and almost 1% like-for-like. On a full-year
basis, revenue was up 3.5% in constant currency, but down
0.2% like-for-like, with the second half stronger than the
first half. Net sales showed a similar trend, with a stronger
second half on both a constant currency and like-for-like
basis. The mature markets were more difficult, remaining
under pressure, but in the faster growth markets net sales
were up almost 2%. Syndicated research continues to show
resilience, with like-for-like net sales growth up well over
2%, but custom research, which accounts for almost half
of Data Investment Management net sales, was down by
a similar amount.

Kantar Worldpanel, Kantar Health, Kantar Retail and
IMRB all showed strong like-for-like net sales growth, while
TNS, Millward Brown and Lightspeed were more challenged.
There seems to be a growing recognition of the value of ‘real’
first-party data businesses, rather than those that depend on
third-party data. Net sales margins improved by 0.6 margin
points to 16.2% and by 1.1 margin points in constant
currency. Good cost control and the continued benefits of
restructuring contributed to the improvement in net sales
margins. Although there has been further improvement during
2015, the slowest sub-sector continues to be like-for-like net
sales growth in the custom businesses in mature markets,
where discretionary spending remains under review by clients.

The Group’s Public Relations & Public Affairs

businesses continued the growth shown earlier in the year,
with a stronger second half and even stronger quarter four.
Constant currency revenue growth in quarter four was
over 8%, and like-for-like net sales were up almost 6%,
with strong growth in all regions, but particularly in the

UK, Latin America and Africa & the Middle East. On a
full-year basis, revenues were up well over 4% in constant
currency and 3% like-for-like. Ogilvy Public Relations,
Cohn & Wolfe and the specialist Public Relations &
Public Affairs businesses in the US, the UK and
Germany performed well, with Burson-Marsteller and
Hill+Knowlton Strategies less buoyant. An improving
top-line and good control of costs resulted in net sales
margins for the year improving by 0.9 margin points to
16.7% and by 1.0 margin point in constant currency.

At the Group’s Branding & Identity, Healthcare and
Specialist Communications businesses (including direct,
digital and interactive), constant currency revenue grew
strongly at over 11% in quarter four (as with most of our
businesses, the strongest quarter of 2015) and like-for-like
revenue was up almost 9%, a significant improvement over
quarter three. Full-year revenue was up over 7% in constant
currency and over 5% like-for-like. The Group’s direct,
digital and interactive businesses, especially JWT Mirum
(the digital arm of J. Walter Thompson Worldwide), WPP
Digital and VML performed strongly, with parts of the
Group’s Healthcare Communications and Branding &
Identity businesses slower. Net sales margins for the sector
as a whole improved 0.3 margin points to 15.0% and by
0.3 margin points in constant currency.

In 2015, 37.5% of the Group’s revenue came from
direct, digital and interactive, up over one percentage point
from the previous year, with revenue growing well over 7%
like-for-like.

Margins reach new high, ahead of target

Net sales margins were up 0.2 margin points to a new
historical high of 16.9% and increased 0.4 margin points
in constant currencies, ahead of the Group’s margin target
of 0.3 margin points, excluding currency. Over the last
three years, reported net sales margins have improved by
0.8 margin points and by 1.2 margin points, excluding
the impact of currency.

Group revenue is more weighted to the second half of

the year across all regions and sectors, especially in the
faster-growing markets of Asia Pacific and Latin America.
As a result, the Group’s profitability and margin continue
to be skewed to the second half of the year, with the Group
earning approximately one-third of its profits in the first
half and two-thirds in the second half.

Given the significance of Data Investment Management

revenues to the Group, with none of our parent company

WPP ANNUAL REPORT 2015

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competitors presently represented in that sector, net sales
are a more meaningful measure of comparative top-line
growth, although we know competitors do have significant
principal media, barter, telesales, food broking and field
marketing operations, where the same issue may arise.
Net sales are a more appropriate measure because Data
Investment Management revenue includes pass-through
costs, principally for data collection, on which no margin
is charged. In addition, the Group’s Media Investment
Management sub-sector is increasingly buying digital
media for its own account on a transparent opt-in basis
and, as a result, the subsequent billings to clients have
to be accounted for as revenue, as well as billings. We
believe a number of our competitors face the same issue
and, consequently, that reporting practices should be
standardised. Thus, it is possible that revenue and the
revenue growth rate could increase, whilst net sales and the
net sales growth rate remain the same and, therefore, the
latter presents a clearer picture of underlying performance.
Because of these two significant factors, and whilst
continuing to report revenue and revenue growth, we
will focus even more on our net sales margins. In 2015,
the reported headline net sales margin was up 0.2 margin
points to 16.9%, achieving the highest reported
comparative level in the industry.

Operating costs contained

During 2015, the Group continued to manage operating
costs effectively, with improvements across most cost
categories, particularly staff and property costs. On a
like-for-like basis, headline operating costs rose by 2.6%,
less than the rate of growth for revenue and net sales.

On a like-for-like basis, the average number of people

in the Group decreased by 1.9% in 2015. On the same
basis, the number of people in the Group at 31 December
2015 decreased by 1.6% compared with the end of 2014.
These average and point-to-point figures partly reflect the
transfer of almost 1,500 staff to IBM in the first half of
2015, as part of the strategic partnership agreement and
IT transformation program, together with the continuing
sound management of headcount and staff costs in 2015 to
balance revenue and costs. On a like-for-like basis, revenue
and net sales increased by 5.3% and 3.3% respectively.

Reported staff costs, excluding incentives, increased
by 3.2% and rose by over 4% in constant currency. Staff
costs included £24 million ($37 million) of severance costs
compared with £37 million ($63 million) in 2014. Incentive

WPP ANNUAL REPORT 2015

costs amounted to £331 million ($505 million), which
was 16.2% of headline operating profit before incentives
and income from associates, compared with £313 million
($512 million) or 16.3% in 2014. Achievement of target
objectives generates 15% of operating profit before bonus
as an incentive pool.

Net sales margins, before all incentives and income

from associates, were 19.3%, up 0.2 margin points,
compared with 19.1% last year. The Group’s staff cost-to-
net sales ratio, including severance and incentives,
decreased by 0.8 margin points to 63.2% compared to
64.0% in 2014, indicating an improvement in productivity.
As a result of all this, headline PBIT was up well over
5% to £1.774 billion from £1.681 billion and up well over
8% in constant currencies.

In 2015, the Group generated exceptional gains of
£296 million, largely representing gains on the sale of
certain Kantar internet measurement businesses to
comScore Inc., the sale of the Group’s interests in
e-Rewards and Chime Communications plc, together with
re-measurement gains of £165 million, which included
a gain of £132 million in relation to the acquisition of a
majority stake in IBOPE in Latin America. These were
partly offset by investment write-downs of £79 million,
resulting in a net gain of £217 million, which in accordance
with prior practice, has been excluded from headline profit.
The Group also incurred £106 million of restructuring
costs which largely comprised £52 million of severance
costs, primarily in relation to certain of the Group’s Data
Investment Management businesses in Western Continental
Europe, and £37 million of IT transformation costs.
With £29 million of one-off IT asset write-downs, this all
resulted in a net exceptional gain of £82 million. After all
these gains and restructuring costs, reported PBIT rose by
7% to £1.679 billion from £1.569 billion, up well over 10%
in constant currencies.

Net finance costs (excluding the revaluation of financial

instruments) were £152 million, down almost 10% from
£168 million in 2014. This reflected the beneficial impact
of lower bond coupon costs resulting from refinancing
maturing debt at cheaper rates, partially offset by lower
income from investments. Headline profit before tax
increased by over 7% (over 11% in constant currencies) to
£1.622 billion and reported profit before tax was up almost
3% (over 7% in constant currencies) to £1.493 billion, the
latter reflecting lower relative levels on the revaluation of
financial instruments.

The Group’s headline tax rate was 19.0%, compared

with 20.0% in 2014, and on reported profit before tax

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was 16.6% against 20.7% in 2014. The reported tax rate
is lower than the headline tax rate because most of the
gains on disposals of subsidiaries and investments, and
the gains on re-measurement of equity interests, are not
taxable. Reported profit after tax rose by over 8% (almost
12% in constant currencies) to £1.245 billion.

Diluted headline earnings per share rose by over 10%

(over 13% in constant currencies) to 93.6p and diluted
reported earnings per share increased by almost 10%
(over 13% in constant currencies) to 88.4p.

Parallel universes

The Group’s record performance in 2015, its fifth record
year in a row, was particularly creditable given the
absence of any maxi- or mini-quadrennial factors, and
the slowdown in worldwide GDP growth, both nominal
and real, in the second half of the year and into 2016.
Pleasingly, bottom-line growth and net sales margin
improvement has been particularly strong, beyond budget,
target and last year. Revenue and net sales growth were
also better, or similar, with all geographies and sectors
(except data investment management) growing revenue
and net sales on both a constant currency and like-for-like
basis. Like-for-like revenue and net sales were up almost
5% and over 2% respectively in the first six months and
up almost 6% and over 4% for the second half. Revenue
and net sales momentum continues, with the two-year
half-yearly growth rates at 13.6% and 6.4% to 13.5% and
6.6% respectively. Our operating companies are still hiring
cautiously and responding to any geographic, functional
and client changes in revenue – positive or negative. On a
constant currency basis, headline PBIT was above budget
and well ahead of last year and the increase in the net sales
margin was well above the Group’s full-year target of a 0.3
margin points improvement on a constant currency basis.
Despite this strong performance, the always on, Don

Draperish general industry optimism seems misplaced.
To survive in the advertising and marketing services sector,
you have to remain positive, indeed optimistic, seeing the
glass half-full and industry and company reports generally
continue, understandably, to reflect that attitude. However,
general client behaviour does not reflect that state of mind,
as tepid GDP growth, low or no inflation and consequent
lack of pricing power encourage a focus on cutting costs
to reach profit targets, rather than revenue growth. In
addition, there seem to be little, if any, reason for an upside
breakout from the current levels of real or nominal GDP

growth, which remain stuck around 3% to 4% and
below the pre-Lehman trend rate, which by definition was
unsustainable. In fact, in recent months, whilst real GDP
forecasts have remained steady, nominal forecasts have
deteriorated significantly to under 3%, due to the strength
of the US dollar, although the same pundits expect inflation
(somewhat optimistically?) to increase in the coming years.
In this respect, oil price reductions, the Iranian nuclear
‘armistice’ and the international currency wars have
not been helpful black or grey swans. The faster growth
markets of the BRICs and Next 11, located in Asia, Latin
America, Africa & the Middle East and Central & Eastern
Europe continue to grow faster than the slower markets of
North America and Western Europe, although the growth
gap has narrowed significantly as Brazil, Russia and China
have slowed and the US and UK, and even some parts
of Western Continental Europe, have quickened.

Brand investment drives
top-line like-for-like sales
growth, which, in turn, is the
biggest determinant of total
share owner return

Geopolitical issues remain top of business leaders’

concerns. The continuing crisis in the Ukraine and
consequent bilateral sanctions, continued tensions in the
Middle East and North Africa and the continuing risk,
despite the negotiated agreement, of a ‘Grexit’, or even
more seriously now, a ‘Brexit’ from the European Union top
the agenda. Lower oil prices and first-time and continued
quantitative easing in Europe and continued easing in Japan
may seem to bottom or underpin the recovery and a
continued, but somewhat patchy, US recovery and UK and
Indian strength may help confidence. But concerns about
China, aggravated by the recent renminbi devaluation and
stock market decline, and Brazil remain, although we
remain unabashed bulls of both.

Countries and opportunities like Indonesia, the
Philippines, Vietnam, Egypt, Nigeria, Mexico, Colombia
and Peru and now post-Macri Argentina add to confidence
(and maybe even Cuba and Iran will), along with a mild
recovery in Western Continental Europe, chiefly in
Germany, Spain and Italy. France remains soft, although
there are some small signs of improvement.

WPP ANNUAL REPORT 2015

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But there are other ‘grey swans’, chiefly three. First,
will the Federal Reserve pre-Christmas tightening falter,
or even reverse and what will be the further impact on
bond and equity markets? Although interest rates are
likely to remain lower, longer than many anticipate, due
to mediocre growth rates, when the tightening comes, as
it inevitably will, it may have a dramatic impact on bond
and equity valuations, as recent gyrations in the markets
indicate. Will continued renminbi weakness, for example,
blow the Federal Reserve Bank off course from further
tightening in 2016?

Secondly, the somewhat surprising result of the
UK General Election (at least to the pollsters), with the
Conservatives winning an overall majority, has resulted
in an uncertainty-stimulating European Union referendum,
now pegged for 23 June. In addition, the reduction of
the still remaining, substantial, UK budget deficit, is
being re-addressed in the context of a new fixed five-year
political cycle.

Finally, the free fall in the oil price, although effectively

a tax cut for consumers, has not resulted, it seems, in
increased consumer spending, perhaps due to the lingering,
psychological impact of that now infamous weekend in
September 2008. Moreover, oil producing states and their
sovereign wealth funds have had to pull in their investment
horns, which in turn has caused concerns in relation to
energy bank loans to both public and private sectors and
the liquidity of banks themselves.

So all in all, whilst clients are certainly more confident

than they were in September 2008 post-Lehman, with
stronger balance sheets (over $7 trillion in net cash and
limited leverage), sub-trend long-term global GDP growth
at around 2.5% to 3.0% real and 3.5% to 4.0% nominal,
combined with these levels of geopolitical uncertainty,
with low inflation or fears of deflation resulting in limited
pricing power, with short-term focused activist investors
and strengthened corporate governance scrutiny, make
them unwilling to take further risks.

They, therefore, focus on costs, rather than revenue
growth. If you are trying to run a legacy business, at one
end of the spectrum you have the disrupters, like Uber and
Airbnb, and at the other end you have the cost-focused
models like 3G or JAB in fast-moving consumer goods and
Valeant and Endo in pharmaceuticals (although their models
are under considerable pressure currently), whilst in the
middle, towering above you, you have the activists led by
such as Nelson Peltz, Bill Ackman and Dan Loeb, with a
perception of stressing short-term performance – maybe they
need a marketing campaign to establish they really are long

WPP ANNUAL REPORT 2015

term? Not surprising then, that corporate leaders tend to
be risk averse. The average ‘life expectancy’ of US CEOs is
around six to seven years, US CFOs around four to five years
and US CMOs two years. No wonder conservatism rules.
Interestingly, the company structures that offend

corporate governance with ‘geared’ voting structures, seem
to be the ones that encourage more long-term strategic
thinking. In these conditions, procurement and finance take
the lead over marketing and investment and suppliers are
encouraged to play the additional roles of banks and/or
insurance companies. At best, clients focus on a strategy
of adding capacity and brand building in both fast growth
geographic markets and functional markets, like digital,
and containing or reducing capacity, perhaps with brand
building to maintain or increase market share, in the
mature, slow growth markets. This approach also has the
apparent virtue of limiting fixed cost increases and
increasing variable costs, although we naturally believe
that marketing is an investment, not a cost. We know from
our own annual Millward Brown BrandZ Top 100 Most
Valuable Global Brands report, that brand investment
drives top-line like-for-like sales growth, which, in turn,
is the biggest determinant of total share owner return.
Investment in the top 10 brands from this report annually
over the last 10 years would yield a total investment return
300% greater than the MSCI.

We see little reason, if any, for this pattern of behaviour

to change in 2016, with continued caution being the
watchword. There is certainly no evidence, based on 2015,
to suggest any such change in behaviour, although one
or two institutional investors, including, most notably,
BlackRock, Legal & General and the UK Government,
are saying that they are tiring with some companies’
total focus on short-term cost cutting and would favour
strategies based more on the long-term and top-line
growth and the end to quarterly reporting.

Outlook for 2016

The pattern for 2016 looks very similar to 2015, but
with the bonus of the maxi-quadrennial events of the
visually-stunning Rio Olympics, the UEFA Euro Football
Championships and, of course, the US Presidential Election
to boost marketing investments, as usual by up to 1%
or so, above advertising as a proportion of GDP.

Forecasts of worldwide real GDP growth still hover

around 3.0% to 3.5%, with recently reduced inflation
estimates of 0.5% giving nominal GDP growth, in dollars,

of even less than 3%. Advertising as a proportion of GDP
should at least remain constant overall. Although it is still
at relatively depressed historical levels, particularly in
mature markets, post-Lehman, it should be buoyed by
incremental branding investments in the under-branded
faster-growing markets.

Although both consumers and corporates seem to be

increasingly cautious and risk averse, the latter should
continue to purchase or invest in brands in both fast and
slow growth markets to stimulate top-line sales growth.
Merger and acquisition activity may be regarded as an
alternative way of doing this, particularly funded by cheap
long-term debt, but we believe clients may regard this as
a more risky way than investing in marketing and brand
and hence growing market share, particularly as equity
valuations have been, at least until recently, strong. The
recent, potentially record, spike in merger and acquisition
activity may be driven more by companies running out
of cost-reduction opportunities, rather than trying to find
revenue growth opportunities or synergies.

In 2016, our prime focus will remain on growing revenue

and net sales faster than the industry average, driven by our
leading position in the new markets, in new media, in Data
Investment Management, including data analytics and the
application of technology, in creativity and ‘horizontality’ –
the increasing opportunities for coordination and co-operation
between activities both nationally and internationally, and
at a client and country level. New markets, new media and
Data Investment Management account respectively for
29%, 37.5% and 20% of the Group’s revenues of $19 billion,
demonstrating the success of our strategic focus.

At the same time, we will concentrate on meeting our

net sales margin objectives by managing absolute levels
of costs and increasing our flexibility in order to adapt
our cost structure to significant market changes and by
ensuring that the benefits of the restructuring investments
taken in 2014 and 2015 continue to be realised.

The initiatives taken by the parent company in the areas
of human resources, property, procurement, IT and practice
development continue to improve the flexibility of the
Group’s cost base. Flexible staff costs (including incentives,
freelance and consultants) remain close to historical highs
of above 8% of net sales and continue to position the
Group extremely well should current market conditions
deteriorate. Some commentators and analysts believe
that the markets are signalling a recession. Whilst some
countries may technically go into recession (i.e. two
consecutive quarters of negative GDP growth), we do not
believe there will be a general recession. More likely the

How we’re doing
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markets are adjusting to continued low growth; so lower,
longer – both growth and interest rates.

The budgets for 2016 have been prepared on a

cautious basis as usual (hopefully), but continue to reflect
the faster-growing geographical markets of Asia Pacific,
Latin America, Africa & the Middle East and Central &
Eastern Europe and faster-growing functional sectors of
Advertising, Media Investment Management and direct,
digital and interactive to some extent moderated by the
slower growth in the mature markets of Western
Continental Europe. Our 2016 budgets show like-for-like
revenue growth of well over 3% and net sales growth
of over 3% and a target net sales margin improvement
of 0.3 margin points excluding the impact of currency.
At the time of writing, we have revenue and profit
data for the first two months of 2016. The Group has
had a good start to the year, with like-for-like revenue
growth up over 5% in the first two months and net sales

2015 digital revenue1 vs peers $bn

$7.3bn

$5.5bn

$4.7bn

$2.3bn

$0.7bn

WPP

Publicis

Omnicom

Dentsu

IPG

Havas

1 Peer digital revenue according to Sanford Bernstein percentages applied

to FY 2015 US$ revenue.

WPP ANNUAL REPORT 2015

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up over 3% on the same basis, again reflecting the
divergence between revenue and net sales in the Group’s
Media and Data Investment Management businesses.
All regions and sectors, except Data Investment

Management, showed revenue and net sales growth, with
Advertising and Media Investment Management, digital,
direct and interactive and the specialist communications
businesses up the strongest. These trends are in line with our
budgets, which also indicate a broadly steady rate of growth
throughout the year, albeit with the usual conservatism in
quarter four. Operating profits and margins for the first two
months were significantly above budget.

add value to our clients’ businesses and our people’s careers,
an objective which has been specifically built into short-
term incentive plans. We have decided that up to half of
operating company incentive pools are funded and
allocated on the basis of Group-wide performance in 2016
and beyond. Horizontality has been accelerated through
the appointment of 45 Global Client Leaders for our major
clients, accounting for over one-third of total revenue of
almost $20 billion, and 17 Regional, Sub-Regional and
Country Managers in a growing number of ‘test’ markets
and sub-regions covering 51 of the 112 countries in which
we operate.

Horizontality across clients,
countries and regions (a strategy
the Group has pursued for many
years), is clearly becoming an
increasingly important part of
our clients’ strategies

The Group continues to lead the industry in

coordinating communication services geographically and
functionally through parent company initiatives and
winning Group pitches. For example, the Group has been
very successful in the recent tsunami of Media Investment
Management pitches, chiefly in the US and is now ranked
first by RECMA, for both net new business reviews and
retentions. The swing factor between the most and least
successful firms totals approximately $6 billion on net new
business currently (even more including retentions) and
will probably go higher in due course. This has resulted in
an increase in our global Media Investment Management
market share to about a third and market leadership in
all regions, with North America now at around 30%.

Horizontality

Including associates, the Group currently employs almost
190,000 people in over 3,000 offices in 112 countries, now
including Cuba. It services 352 of the Fortune Global 500
companies, all 30 of the Dow Jones 30, 77 of the NASDAQ
100, and 830 national or multinational clients in three or
more disciplines. Over 550 clients are served in four disciplines
and these clients account for over 52% of Group revenue. The
Group also works with 448 clients in six or more countries.
These statistics reflect the increasing opportunities
for horizontality – developing client relationships between
activities nationally, internationally and by function.
We estimate that well over a third of new assignments
in the year were generated through the joint development
of opportunities by two or more Group companies.
Horizontality across clients, countries and regions
(a strategy the Group has pursued for many years),
is clearly becoming an increasingly important part
of our clients’ strategies, particularly as they continue
to invest in brand in slower-growth markets, and both
capacity and brand in faster-growth markets.

The Group continues to improve co-operation and
coordination among its operating companies in order to

RECMA media reviews 20151,2
Billings $bn

o New client
o Incl retained

-2

-4

WPP

Omnicom

Publicis

Dentsu

IPG

Havas

¹ RECMA 2016 Major Wins 2015 – 44 largest pitches & moves.
2 Adjusted for Publicis loss of Walmart and WPP win of Sony (Omnicom/Carat loss).

WPP ANNUAL REPORT 2015

How we’re doing
Strategic report to share owners

Four core strategic priorities

Our six specific objectives

Our reason for being, the justification for WPP’s existence,
continues to be to add value to our clients’ businesses and
our people’s careers. Our goal remains to be the world’s most
admired and respected communications services advisor
to global, multinational, regional and local companies.
To that end, we have four core strategic priorities,

as presented on pages 16 and 17.

Advance ‘horizontality’ by ensuring our people
work together for the benefit of clients, primarily
through two horizontal integrators: Global
Client Leaders and Regional, Sub-Regional
and Country Managers.

Increase the combined geographic share of revenues
from the faster-growing markets of Asia Pacific,
Latin America, Africa & Middle East and Central
& Eastern Europe to 40-45% of revenues.

Increase the share of revenues from new media
to 40-45% of revenues.

Maintain the share of more measurable marketing
services – such as data investment management and
direct, digital and interactive – at 50% of revenues,
with a focus on the application of technology, data
and content.

If we implement this strategy effectively then our
business will be geographically and functionally well-
positioned to compete successfully and to deliver on
our long-term financial targets:

Revenue and net sales growth greater than the

industry average.

Annual improvement in net sales margin of 0.3
margin points or more, excluding the impact of currency,
depending on net sales growth and staff cost-to-net
sales ratio improvement of 0.2 margin points or more.
Annual diluted headline EPS growth of 10% to
15% delivered through revenue and net sales growth,
margin expansion, acquisitions and share buy-backs.

Here are six objectives which represent our key
performance indicators (KPIs). For an assessment
of how we performed against them in 2015,
read on.

Continue to improve operating
margins on net sales.

Increase flexibility in the
cost structure.

Use free cash flow to enhance share
owner value and improve return on
capital employed.

Continue to develop the value added
by the parent company.

Emphasise revenue and net sales
growth more as margins improve.

Improve still further the creative
capabilities and reputation of all
our businesses.

First, to continue to improve operating margins.
In 2015, we achieved a margin of 16.9% on net
sales, the highest-reported level in the industry.
We continue to believe a margin of well over 19%
on net sales, is a tough, but realistic, objective
given that our best-performing companies in

each services sector have already demonstrated they can
perform at a combined Group margin of 18% on net sales.
The Group has embarked on a number of programs
to improve operational effectiveness including process
simplification, shared service centres, offshoring certain
tasks to lower-cost markets and, where appropriate,
outsourcing. We are consolidating IT infrastructure
and services, and centralising systems development and
applications to create efficiencies and focus investment.
These programs are projected to deliver a 1.0 margin point
benefit (excluding the impact of currency) over the course
of the next two to four years, with 2016 being the first year
of significant delivery.

WPP ANNUAL REPORT 2015

How we’re doing
Strategic report to share owners

Second, to increase flexibility in the cost
structure. In 2015, flexible staff costs
(including incentives, freelance and
consultants) remained close to historical
highs of above 8% of net sales and continue
to position the Group extremely well should
current market conditions deteriorate.

Change in variable costs %

11.4

12.7

12.5

13.1

7.3

8.2

8.0

8.3

o 2015
o 2014
o 2013
o 2012

Variable staff costs
as a % of staff costs

Variable staff costs
as a % of net sales

Headline operating margins1 vs peers %

o WPP including
associates
o WPP
o Publicis
o Havas
o Omnicom
o IPG

Third, to enhance share owner value and
maximise the return on investment on the
Company’s substantial free cash flow of almost
£1.3 billion (or almost $2.0 billion) per annum.
As capital expenditure remains relatively stable,
there are broadly three alternative uses of
funds: acquisitions, share buy-backs and

dividends. We have increasingly come to the view, based on
co-operative research with leading investment institutions,
that, currently, the markets favour consistent increases in
dividends and higher sustainable pay-out ratios, along with
anti-dilutive progressive buy-backs and, of course, sensibly-
priced small- to medium-sized strategic acquisitions.

Mergers and acquisitions. There is still a very significant

pipeline of reasonably priced small- and medium-sized
potential acquisitions, with the exception of Brazil and
India and digital in the US, where prices seem to have got
ahead of themselves because of pressure on our competitors
to catch up. This is clearly reflected in some of the
operational issues that are starting to surface elsewhere
in the industry, particularly in faster-growing markets
like Brazil, India and China.

Our acquisition focus in 2015 was again on the triple
play of faster-growing geographic markets, new media and
data investment management, including the application of

2010

2011

2012

2013

2014

2015

1 Based on headline operating profit as a proportion of net sales as defined on page 228, excluding share of results of associates. As our competitors do not disclose

net sales, competitor operating margins have been calculated on a revenue basis, and sourced from relevant public filings.

36 WPP ANNUAL REPORT 2015

How we’re doing
Strategic report to share owners

technology, data and content, totally consistent with
our strategic priorities in the areas of geography, new
communication services and measurability. In 2015, the
Group spent almost £650 million on initial acquisition
payments, net of cash acquired and disposal proceeds.
Whilst talent and creativity (in the broadest sense)
remain the key potential differentiators between us and
our competitors, increasingly differentiation can also be
achieved in three additional ways: through the application
of technology, for example, Xaxis and AppNexus; through
integration of data investment management, for example,
Kantar and comScore; and investment in content, for
example, the Group’s minority investments in Imagina,
VICE, Media Rights Capital, Fullscreen, Indigenous
Media, China Media Capital and Bruin Sports Capital.

Net acquisition spend is currently targeted at around

£300-£400 million per annum, excluding slightly more
significant ‘one-offs’, like the purchase of a controlling
stake in IBOPE in Latin America and our investment
in comScore. We will continue to seize opportunities
in line with our strategy.

Dividends. As outlined in the June 2015 AGM
statement, the achievement of the previous targeted
pay-out ratio of 45% one year ahead of schedule, raised
the question of whether the pay-out ratio target should
be increased further. Following that review, your Board
decided to up the dividend pay-out ratio to a target of
50%, to be achieved by 2017, and, as a result, declared
an increase of almost 37% in the 2015 interim dividend
to 15.91p per share, representing a pay-out ratio of 47.5%
for the first half, against the traditionally lower first-half
pay-out of 40% in the previous year. This has the effect
of evening out the pay-out ratio between the two half-year
periods and consequently balancing out the dividend
payments themselves, although the pattern of profitability
and hence dividend payments seems likely to remain
one-third in the first half and two-thirds in the second half.
Given your Company’s strong progress, your Board has

recommended an increase of 8.3% in the final dividend to
28.78p per share, which, together with the interim dividend
of 15.91p per share, makes a total of 44.69p per share for
2015, an overall increase of 17.0%. This represents a
dividend pay-out ratio of 47.7%, compared to a pay-out
ratio of 45.0% in 2014.

It now seems possible that the newly targeted pay-out

ratio of 50% will be achieved by the end of 2016, one year
ahead of target. Dividends paid in respect of 2015 will total
approximately £575 million.

Distributions to share owners1 £m

o Buy-backs
o Dividends paid

6.0%

1200

1000

800

600

400

200

6.0%

5.9%

3.8%

4.5%

4.3%

1 Sum of share buy-backs and dividends paid divided by average shares in
issue for the relevant period, as a percentage of the average share price for
the relevant period.

Share buy-backs. They continue to be targeted to absorb
any share dilution from issues of options or restricted stock.
However, given the net sales margin target of 0.3 margin
points improvement, the targeted level of share buy-backs
will be 2-3% of the outstanding share capital. If achieved,
the impact on headline diluted EPS would be equivalent to
an incremental improvement of 0.2 margin points.

In addition, the Company also has considerable free
cash flow to take advantage of any anomalies in market
values, particularly as the average 2015 net debt to
EBITDA ratio was under 1.8 times, at the mid-point of our
market guidance of 1.5-2.0 times. Share buy-backs in 2015
cost £588 million, representing 3.0% of issued share
capital, at the top-end of our target range.

In 2015, the Company returned over £1.1 billion to
share owners, including share buy-backs, an increase of
17% over 2014. Funds returned to share owners total
£3.5 billion over the last five years and £5.2 billion over
the last 10 years.

Fourth, we will continue to develop the value
added by the parent company and build unique
integrated marketing approaches for clients.
WPP is not just a holding company focused on
planning, budgeting, reporting and financial
issues, but a parent company that can add

value to our clients and our people in the areas of human
resources, property, procurement, IT and practice
development, including sustainability. We will continue
to do this through a limited group of 400 or so people
at the centre in London, New York, Tokyo, Hong Kong,
Singapore, Shanghai and São Paulo. This does not mean
that we seek to diminish the strength of our operating
brands, but rather to learn from one another. Our objective
is to maximise the added value for our clients in their
businesses and our people in their careers.

WPP ANNUAL REPORT 2015

How we’re doing
Strategic report to share owners

Many of our initiatives are possible because of the scale
on which we now operate. In the optimum use of property,
in IT and in procurement generally, we are able to achieve
efficiencies that would be beyond the reach of any
individual operating company. But it is also clear that there
is an increasing requirement for the centre to complement
the operating companies in professional development and
client coordination. It is a relatively recent development for
certain multinational marketing companies, when looking
to satisfy their global communications needs, to make their
initial approach not to operating companies, but directly to
holding or parent companies.

Such assignments present major, and increasingly frequent,

opportunities for the few groups of our size. It is absolutely
essential that we have the professional resources and the
practice development capability to serve such clients
comprehensively, actively and creatively. Initiatives involving
some of the world’s largest marketers continue to gain
momentum. The world’s largest advertiser is itself integrating
its efforts around brands, in the areas of advertising, media
investment management, market research, packaging design
and public relations. For our largest client, amongst others,
we have implemented a seamless model, effectively a one-client
agency within our Group. All our clients, whether global,
multinational or local, continue to focus on the quality of
our thinking, coordination of communications and price.
In response, we focus on talent, structure and incentives.

Managing talent is the priority

Talent and its management therefore remain at the heart
of our reason to be: that is what our clients pay us for.
Development of our people and the way we manage that
talent is a critical determinant of performance and on that
critical dimension, we continue to make significant progress.
In April 2015, WPP was named one of America’s 500
best employers by Forbes magazine, the only company in
the communications services industry to be placed among
the top 500 employers.

In developing highly-competitive incentives combined

with extremely attractive working environments, we
increasingly differentiate ourselves from our competitors
and improve the attractiveness of WPP companies as
destinations for talent. Our quarterly reviews with the
operating companies have been structured to give more
time and attention to talent and to clients. Our recruiting
efforts throughout 2015 were especially fruitful as we
successfully targeted and recruited top talent within and

WPP ANNUAL REPORT 2015

beyond our industry, often competing with investment
banking, management consulting, new media and private
equity offers. The war for talent is fierce and will intensify
further, with ageing and lower birth rate demographic
changes, and there is, therefore, more to be done.

The blueprint for our executive development curriculum

has been completed, and our flagship client leadership
training program, Maestro, now in its 13th year, is being
continuously developed. The parent company and each of
our operating companies have installed their own approach
to performance assessment and succession planning, aimed
at developing the careers of their people, improving the
quality of feedback, coaching and mentoring they receive
and providing for orderly succession.

Following recent events, we are, even more importantly,

focusing on gender sensitivity and the appropriateness and
effectiveness of male interactions with women. A senior
management mentoring and development program,
‘The X Factor’, run by Charlotte Beers, the former
chairman and CEO of Ogilvy & Mather and chairman
of J. Walter Thompson, continues to prepare women
for the next level of leadership in the Group and has
been broadened and deepened. (More information about
additional programs, including WPP Stella, appears on
page 156.)

In 2011, your Company teamed up with the Shanghai

Art & Design Academy to establish the WPP School
of Marketing and Communications. This jointly run
school offers China’s first professional marketing and
communications three-year diploma program. This initiative
continued in 2015, with the fifth intake of 100 students.
In 2015, WPP partnered with the Indian School of
Design and Innovation to offer a three-year undergraduate
course on marketing communications; and, in 2016, your
Company has announced the launch of the WPP Africa
Academy in Johannesburg, South Africa, in collaboration
with the Red & Yellow School of Logic and Magic. This
initiative will enable WPP companies across Africa to
access high quality, relevant and cost-effective training
programs for their agency people.

After more than 20 years, the WPP Fellowship program

remains (surprisingly) the only multidisciplinary and
multi-geographical recruitment and training initiative in
the industry, with a lower acceptance rate than Harvard
Business School’s MBA program. Of those recruited to the
program since 1995, 109 are women and 72 are men.

We continued to scrutinise and modify our compensation

practices, both to offer competitive and appropriately
based rewards to our people and to attract outstanding

How we’re doing
Strategic report to share owners

talent from elsewhere. This is a key strategic priority for us.
Our competition is, sometimes, not so rigorous in evaluating
and rewarding performance – for example, taking advantage
of sharp falls in share prices to re-price or issue options or
giving limited disclosure to investors of compensation plan
details. A failure of external, as well as internal, audiences to
understand the importance of globally competitive incentive-
based compensation will undermine the Company’s
leadership position. After all, we invest well over $10 billion
a year in human capital, as opposed to only $400 million in
fixed assets – 25 times more.

Communications

We aim to be a model of excellent external and internal
communications, through our website content, social media
channels and in print. These include: frequent tweets and
regular internal emails; a monthly public news e-bulletin
and company FactFiles; our multi-awarded quarterly global
newspaper and e-book, The WIRE; and our annual Atticus
Journal of original thinking in communications services; as
well as the promotion of Group initiatives such as the Atticus
Awards and Worldwide Partnership Program, BrandZ
studies, and our consistently-awarded Sustainability Reports
and Annual Reports.

To support WPP’s focus on horizontality, enhancements

have been made to the directories and search engines
on both our public website and Group intranet, enabling
users to find quickly individual experts, client knowledge,
company information and office locations via multiple
devices. The Group intranet continues to undergo
redevelopment and now holds an extensive database of
WPP talent, as well as a comprehensive range of business
and personal development resources.

In the first quarter of 2016, wpp.com was rated No.2
out of over 500 corporate websites assessed for accessibility
by SiteMorse.

Property management

In 2015, we saw the benefit of more ‘agile working’,
supported by more technology in the office environment, as
our property portfolio was reduced by nearly 1% to end the
year with 24.0 million square feet while net sales were up
almost 6% in constant currency and average headcount grew
by almost 3%. As a result, the establishment cost-to-net-sales
ratio dropped by 0.2 margin points to 6.9%, contributing

substantially to the Group’s overall margin improvement.

We have also ensured our new buildings are designed
to focus on sustainability and we look to achieve BREEAM
standard in the UK and LEED standard in the US and
similar standards elsewhere. Our operating companies’
workplaces continue to be cited for their creativity,
innovation and effectiveness.

2016 will see the completion of our Shanghai WPP

Plaza co-location, housing 3,000 of our people, the
shared space at Sea Containers House in London housing
2,300 people, and the renovation of our shared space on
Lexington Avenue in New York. These new co-location
projects all meet our new planning standards and support
our horizontality goal. Longer-term co-location projects
are in the planning stage for New York, São Paulo and
central Madrid, where the former Telefónica building
will house more than 40 Group companies.

Our goal is to continue to deliver excellent work space,

while reducing the portfolio further and so mitigate the
impact of property inflation. Our focus on continuing to
reduce the establishment cost-to-net-sales ratio will help
the Group achieve its margin targets for 2016, and beyond.

Procurement

In procurement, our goal is to make savings, add value
and minimise risk across all of WPP’s external spend,
with particular emphasis on opportunities to leverage
our scale to the benefits of our clients and our companies.
In 2015, we continued to implement and develop a
spend analytics system, which now provides supplier-level
and category visibility of over $5 billion of external spend,
across 12 of our largest markets – the US, Canada, the UK,
Germany, France, Spain, Italy, China, India, Brazil, Mexico
and South Africa. Australia, Hong Kong and Singapore will
be implemented in 2016. Capturing and making sense of
‘big data’ is increasingly driving procurement opportunity
assessment and new project activities across the Group.

For 2016, we will continue our focus on the key drivers

of supplier cost, combined with an increased emphasis on
internal demand management (what we buy, why we buy
and how we buy). For indirect procurement, our goal
remains to have a minimum of 50% supplier spend in each
major country covered by WPP preferred suppliers and
contracts, and for these preferred suppliers to work with
us to deliver year-on-year value improvement.

WPP ANNUAL REPORT 2015

How we’re doing
Strategic report to share owners

Information technology

In 2015, we continued to make considerable progress
in the transformation of the Group’s IT capability. In
March 2015, we launched the new global IT function
simultaneously with the creation of the IT shared
services organisation. To demonstrate a key step towards
horizontality, we successfully deployed Microsoft Office365
as our single collaboration and email platform throughout
the Group. Other key achievements included establishing
a single global service desk for over 150,000 IT users, to
support the IT infrastructure.

Key strategic partnership agreements were signed
in 2015 to transform additional IT services, including
managed print and telecommunications. September 2015
marked a second landmark, where we extended our
strategic partnership with IBM for the transformation
of back office application support and maintenance. This
phase went live in March 2016 with the transfer of service
responsibility and approximately 300 people to IBM.

As a result of the IT transformation, IT costs in 2015

were held to a like-for-like growth rate that was in line
with net sales growth and significantly less than revenue
growth on the same basis. 2016 should see the first year
of significant cost reduction.

Practice development

In practice development, we continue to develop horizontal
initiatives in a focused set of high-potential areas across
our vertical operating brands: in Media Investment
Management, healthcare, sustainability, government, new
technologies, new markets, retailing, shopper marketing,
internal communications, financial services and media and
entertainment. Specifically, we continue to invest in sharing
insights and developing initiatives through WPP Digital
(in digital marketing and media), The Store (in distribution
and retail) and our Government & Public Sector Practice.

In key geographic markets we are increasingly coordinating

our activities through WPP Regional, Sub-Regional and
Country Managers. We continue to believe that increasing
coordination is required between our brands at global and
country levels, as the arguments for investment in regional
management become weaker, partly because of improved
technology. In addition, we have increased the number of WPP
Global Client Leaders to coordinate our efforts on behalf of
clients and to ensure they receive maximum benefit from their
relationships with WPP regional operating brands.

WPP ANNUAL REPORT 2015

Furthermore, we continue to encourage internal
strategic alliances and promote co-operation. Practice
development initiatives have therefore been reinforced in
such areas as healthcare, retail, internal communications,
corporate sustainability and media and entertainment.

This has been especially important in developing our
portfolio of direct investments in new media under WPP
Digital and WPP Ventures and where our investments
are working with our agencies and people to bring new
technology capabilities and understanding to our clients.

All these initiatives are designed to ensure that we, the

parent company, really do (as well as being perceived to)
inspire, motivate, coach, encourage, support and incentivise
our operating companies to achieve their strategic and
operational goals.

Fifth, to emphasise revenue and net sales
growth more as margins improve. One
legitimate criticism of our performance against
the best-performing competition has been our
comparative level of organic revenue growth,
although the methods used to calculate rates of

organic growth ‘vary’ to say the least and we may have put
too much emphasis on margin improvement. Encouragingly,
our like-for-like revenue growth of 5.3% put your Company
near the top-end of the pack in 2015, and followed a leading
position in 2014. Net sales growth on the same basis of 3.3%
was (we believe) more than respectable, given there is no
standard reporting practice and so accurate comparisons
with our competitors is not currently possible. Investment
analysts – please demand this disclosure! Our net sales
margin of 16.9% in 2015 was the highest reported level in
the industry. We continue to believe that profitable growth
is preferable to sacrificing margins.

Our net sales margin of
16.9% in 2015 was the highest
reported level in the industry.
We continue to believe that
profitable growth is preferable
to sacrificing margins

Estimated net new business billings of £5.6 billion

($8.6 billion) were won in 2015, with the Group first overall
in net new business tables for the fourth year in a row. The

How we’re doing
Strategic report to share owners

Group continues to benefit from consolidation trends in the
industry, winning assignments from existing and new clients,
including several very large industry-leading advertising,
digital, media, pharmaceutical and shopper marketing
assignments. These wins partly benefited the second half
of 2015, but the full benefit will be seen in 2016.

The Group has been actively engaged in the tsunami
of media investment management reviews, chiefly in the US,
totalling approximately $20 billion. The Group has been
particularly successful in these reviews and is now ranked
first by RECMA, both for net new business and retentions.
There is, probably, more net new business to come,
increasingly driven by the Group’s differentiation in
technology, data and content.

Our practice development activities are also aimed
at helping us position our portfolio in the faster-growing
geographic and functional areas. The Group completed
52 acquisitions and investments in 2015: 18 were in new
markets; 37 in quantitative and digital; and 8 were driven
by individual client or agency needs. Out of all these
transactions, 11 were in both new markets and quantitative
and digital.

Specifically, in 2015, acquisitions and increased equity
stakes were completed in Advertising and Media Investment
Management in the US, the UK, France, Germany, the
Netherlands, Turkey, South Africa, Singapore, Australia,
New Zealand and Mexico; in Data Investment Management
in the US, the UK, the Czech Republic, Israel and Brazil; in
Public Relations & Public Affairs in the US, Germany and
India; in Branding & Identity in the US and the UK; in
direct, digital and interactive in the US, the UK, Belgium,
Germany, Sweden, Lebanon, the UAE, South Africa, Peru
and China; in Healthcare Communications in the US, the
UK and Australia; and in sports marketing in the US.

Organic revenue growth vs peers %

A further 15 acquisitions and investments were made

in the first two months of 2016, with one in Advertising
and Media Investment Management; two in Data
Investment Management; three in Public Relations &
Public Affairs; seven in direct, digital and interactive; one in
Healthcare Communications; and one in sports marketing.
These acquisitions continue to target our previously-

described strategic priorities; expanding the share of
revenues of our businesses in Asia Pacific, Latin America,
Africa & Middle East and Central & Eastern Europe to
40-45%; in new media to 40-45%; and in Data Investment
Management, direct, digital and interactive, to one-half.

Expansion plans

We intend to expand our strong networks – J. Walter
Thompson, Ogilvy & Mather, Y&R, Grey, Bates
CHI&Partners, Scangroup, Mindshare, MEC, MediaCom,
Maxus, tenthavenue, TNS, Millward Brown, Kantar

Revenue in faster-growing markets 2013-2015
$bn

o WPP
o Dentsu JPN1
o Dentsu
o Omnicom2
o Publicis2
o IPG2,3
o Havas2

2013

2014

2015

1 Dentsu revenue reported in Japan.
2 Peer data sourced from annual results translated at average exchange rate
for the year and assumed non-Euro countries in Europe are 3% of revenue.

3 Assumed Canada is 1.5% of revenue.

o WPP
WPP net sales
o Dentsu1
o IPG1
o Omnicom1
o Havas1
o Publicis1

Q114

Q214

Q314

Q414

Q115

Q215

Q315

Q415

1 Peer data sourced from company presentations.

WPP ANNUAL REPORT 2015

influential BrandZ studies and Y&R’s equally influential
BrandAsset® Valuator.

Training and development programs remain a key

focus, as of course does the judicious use of our M&A
skills to identify the best and most like-minded creative
businesses to join us.

In 2015, we celebrated our ninth annual internal
WPPED Cream awards, showcasing what we consider
our very best work. wppedcream.com is a key online
destination website for anyone searching for the very
best in marketing creative excellence.

Maybe we should start saying
that in order to be creative you
need to be effective. Because
we do appear to have proven
both tenets

For those of us concerned with marketing that actually
works, it’s common to say that, in order to be effective, you
need to be creative. Maybe we should start saying that in
order to be creative you need to be effective. Because we do
appear to have proven both tenets. For a record fifth time
in a row, our peers across the entire industry voted WPP
Creative Holding Company of the Year at the Cannes
International Festival of Creativity. Meanwhile, a similarly
diverse Effies jury named WPP the Most Effective Holding
Company, for a fourth consecutive year, and Warc named
WPP the most effective Holding Company for the second
year in a row. Congratulations to all the WPP companies
throughout the world for another amazing year.

How we’re doing
Strategic report to share owners

Media, Kantar Health, Kantar Retail, Kantar Worldpanel,
Hill+Knowlton Strategies, Ogilvy Public Relations,
Burson-Marsteller, Cohn & Wolfe, Brand Union, Landor,
FITCH, Ogilvy CommonHealth Worldwide, Sudler &
Hennessey, ghg, OgilvyOne Worldwide, Wunderman,
Geometry Global, POSSIBLE and AKQA – in high-growth
markets or where their market share is insufficient.

We will also enhance our leadership position in Data
Investment Management by further development of our
key brands with particular emphasis on North America,
Asia Pacific, Latin America and Continental and Eastern
Europe. We will continue our growth of data panels and
have established a Kantar-wide operational capability.
We will reinforce our growing position in media research
through Kantar Media and Kantar IBOPE Media, which
include our investments in television and internet audience
research and Marktest, Finpanel and CSM/CTR, and
which, combined, is the market leader outside North
America. Combined with our licensee partners in Europe
and Asia Pacific, we currently measure television and/or
internet audiences in 52 markets around the world.

In addition, we intend to reinforce our worldwide
strength in direct and interactive marketing and research
through our traditional channels such as Wunderman,
OgilvyOne Worldwide, Geometry Global, Blanc &
Otus and Lightspeed. We will also invest directly in
new channels through start-ups, particularly as US
and French valuations in search, for example, are still
prohibitive. Other opportunities will be sought to
enhance our online capabilities.

Lastly, we will continue to develop our specialist

expertise in areas such as healthcare, retail and interactive
and to identify new high-growth areas.

Creativity remains paramount

Sixth, to build on, still further, the impressive
creative reputation WPP now enjoys globally.
The creative capability of the Group is led
by John O’Keeffe, WPP’s worldwide creative
director. John reminds us constantly that while
many issues facing WPP are very important

– margin growth, acquisitions, geographical spread and the
like – the creative quality of the work will always be
priority No.1. We live or die by the ideas we deliver to our
thousands of clients: design ideas, media and digital ideas,
consumer insights and, of course, Millward Brown’s

WPP ANNUAL REPORT 2015

How we’re doing
Strategic report to share owners

Assessing and managing our risks

Risk management and internal control

We recognise that the success of the strategic objectives of
the Group discussed in this report depends to a significant
extent on the identification, understanding of and response
to the risks that the Group faces. The Board, with support
from the Audit Committee, has overall responsibility for
the system of internal control and risk management in the
Group and has reviewed the design and effectiveness of the
system during the year and up to the date of this report and
carried out a robust assessment of the principal risks facing
the Group. The system of controls described below is
designed to manage or mitigate, but may not eliminate, the
risks of failure to achieve WPP’s strategic objectives and
is not an absolute assurance against material misstatement
or loss.

Control environment and culture

The quality and competence of our people, their integrity,
ethics and behaviour and the culture embedded within
the Group are all vital to the maintenance of the Group’s
system of internal control.

The Code of Business Conduct, which is regularly
reviewed by the Board, sets out the principal obligations
of all employees. Senior executives throughout the Group
are required to sign this Code each year and all employees
are required on joining the Group, and at regular intervals,
to complete the WPP How We Behave, Anti-Bribery and
Corruption and Privacy & Data Security Awareness
training modules, which embed all of the principles of the
Code in addition to operating company training programs.
The WPP Policy Book which is updated with control
bulletins includes required practices in many operational,
tax, legal and human resource areas. Breaches or alleged
breaches of the Code are investigated by the director of
internal audit, head of compliance, the Group chief counsel
and external advisers where appropriate. Group companies
are also required to follow the Data Code of Conduct and
the Supplier Code of Conduct.

The Group has an independently operated helpline, Right

to Speak, to enable our people to report issues that they
feel unable to raise locally, and anonymously, if necessary.
Through 60 calls to this helpline, a number of issues have
been raised during 2015, all of which have been followed
through and investigated where appropriate and reported
to the Audit Committee. The Compensation Committee

continues to review how the Group’s performance rewards
support the risk management and internal control systems.
The adoption of clawback provisions during 2015 to take
effect in 2016 and discussed on page 122 underline the
principles of the Code of Conduct.

Risk assessment

The Group uses a three lines of defence model in relation
to risk management.

First, each operating company undertakes monthly and
quarterly procedures and day-to-day management activities
to review their operations and business risks, supported
by Group policies, training and SOX and reviews within
their network.

Secondly, the operating network reviews are formally

communicated to the Group chief executive, the Group
finance director and senior parent company executives in
monthly reports and quarterly review meetings and, in
turn, to the Board. At each Board meeting, the Group chief
executive presents a Brand Check review of each of the
business’ operations, including an assessment of the risk in
each business, providing feedback on the business risks and
details of any change in the risk profile since the last Board
meeting. The Brand Check includes the possibility of
winning or losing major business, succession and the
addition or loss of a key executive; introduction of new
legislation in an important market; sustainability, including
risks relating to marketing ethics, privacy and employment;
political instability and changes in accounting or corporate
governance practice.

Thirdly, internal audit at the Company, with Audit
Committee oversight and external resource as required,
provides an independent review of risk management and
internal control.

Control activities and monitoring

Policies and procedures for all operating companies are set
out and communicated in the WPP Policy Book, internal
control bulletins and accounting guidelines. The application
of these policies and procedures is monitored within the
individual businesses and by the director of internal audit,
head of compliance and the Group chief counsel.

Operating companies are required to maintain and

update documentation of their internal controls and
processes. This documentation incorporates an analysis
of business risks, detailed control activities and monitoring,
together with controls over security of data and the

WPP ANNUAL REPORT 2015

How we’re doing
Strategic report to share owners

provision of timely and reliable information to
management. IT and financial controls are also included.
The internal audit department was responsible for
reviews and testing of the documentation and the relevant
controls for a majority of the Group during 2015, the
results of which were reported to the Audit Committee.

Financial reporting

Each operating company annually updates a three-year
strategic plan, which incorporates financial objectives.
These are reviewed by the parent company’s management
and are agreed with the chief executive of the relevant
operating company.

The Group operates a rigorous procedure for the
development of operating company budgets, which build
up the Group’s budget. During the final quarter of each
financial year, operating companies prepare detailed
budgets for the following year for review by the parent
company. The Group’s budget is reviewed by the Board
before being adopted formally. Operating company results
are reported monthly and are reviewed locally, regionally
and globally by the business groups and by Group
management on a consolidated basis and ultimately by

the Board. The results are compared to budget and the
previous year, with full-year forecasts prepared and
updated quarterly throughout the year.

At each year-end, all operating companies supply their
full-year financial results with such additional information
as is appropriate. This information is consolidated to
allow the Group to present the necessary disclosures for
International Financial Reporting Standards (IFRS) as
adopted by the European Union and issued by the IASB.

The Disclosure Committee gives further assurance that
publicly-released information is free from material omission
or misstatement.

Principal risks and uncertainties

The Board has carried out a robust assessment of the
principal risks and uncertainties affecting the Group
as at 31 December 2015 and up to the date of this report
and which are described in the table below and overleaf.
These risks relate to the Group and the industry in which
we operate and the strategic decisions taken by the Board.
A risk dashboard and map are discussed regularly by the
Audit committee and bi-annually by the Board.

Principal risk
Clients
The Group competes for clients in
a highly-competitive and evolving industry
and client loss may have a material adverse
effect on the Group’s market share and its
business, revenues, results of operations,
financial condition or prospects.

Potential impact and any
change from the prior year

How it is managed

Operating companies seek to establish
reputations in the industry and an ethical
culture that attract and retain talent
and clients, including by improving the
quality of their creative output and
technical capability.

The Group’s different agency networks
limit potential conflicts of interest and the
Group’s cross-discipline team approach
seeks to retain clients.

Brand Check at every Board meeting
to identify the potential risk of client loss.

The competitive landscape in the industry
in which we operate is constantly evolving.
Competitors include large multinational
advertising and marketing communication
companies and regional and national
marketing services companies, database
marketing and modelling companies,
telemarketers, information and
measurement, social media and
consulting internet companies.

Service agreements with clients are
generally terminable by the client on
90 days’ notice and many clients put their
business up for competitive review from
time to time. The ability to attract new
clients and to retain or increase the
amount of work from existing clients
may be impacted by loss of reputation
and be limited by clients’ policies on
conflicts of interest.

WPP ANNUAL REPORT 2015

Principal risk
The Group receives a significant portion
of its revenues from a limited number
of large clients and the net loss of some
of these clients could have a material
adverse effect on the Group’s prospects,
business, financial condition and results
of operations.

Data security
The Group is subject to strict data
protection and privacy legislation in the
jurisdictions in which it operates and relies
extensively on information technology
systems. The Group stores, transmits and
relies on critical and sensitive data such
as strategic plans, personally identifiable
information and trade secrets. Security of
this type of data is exposed to escalating
external threats that are increasing
in sophistication as well as internal
data breaches.

Existing and new data protection laws, in
particular the GDPR in the EU concerning
user privacy, use of personal information
and online tracking may restrict some of
the Group’s activities and increase costs.

The Group is carrying out an IT
transformation project and is reliant
on third parties for the performance
of a significant portion of its worldwide
information technology and operations
functions. A failure to provide these
functions could have an adverse effect
on our business.
Financial
The Group is subject to credit risk through
the default of a client or other counterparty.

Potential impact and any
change from the prior year
A relatively small number of clients
contribute a significant percentage
of the Group’s consolidated revenues.
The Group’s 10 largest clients accounted
for 16.2% of revenues in the year ended
31 December 2015. Clients generally are
able to reduce advertising and marketing
spend or cancel projects on short notice.
The loss of one or more of the Group’s
largest clients, if not replaced by new
client accounts or an increase in business
from existing clients, would adversely
affect the Group’s financial condition.

The Group may be subject to investigative
or enforcement action or legal claims or
incur fines, damages, or costs and client
loss if the Group fails to adequately protect
data or observe privacy legislation in every
instance. A system breakdown or intrusion
could have a material adverse effect on
the Group’s business, revenues, results of
operations, financial condition or prospects.

The risk of a data breach, cyber attack or
potential infringement of data protection
laws has increased in 2015.

The Group is generally paid in arrears for
its services. Invoices are typically payable
within 30 to 60 days.

The Group commits to media and
production purchases on behalf of some
of its clients as principal or agent depending
on the client and market circumstances.
If a client is unable to pay sums due, media
and production companies may look to
the Group to pay such amounts to which
it committed on behalf of those clients.

How we’re doing
Strategic report to share owners

How it is managed
Global client account managers and the
‘Team’ model seeks to ensure the Group
maintains partnership relationship with
major clients. Operating companies seek to
establish reputations, talent and technical
capability in the industry and an ethical
culture that attract and retain clients and
key talent.

Brand Check at every Board meeting and
regular dialogue between executive directors
of the Company and directors of the Group’s
largest clients.

The Group assists the operating companies
in developing principles on privacy and data
protection and compliance with local laws.

Nominated senior executives provide
leadership on privacy and data protection.

Our people are required to take Privacy
& Data Security Awareness training
and understand the WPP Data Code of
Conduct and WPP policies on data privacy
and security.

The WPP Data Health Checker survey
is performed annually to understand the
scale and breadth of data collected by WPP
agencies, so the level of risk associated with
this can be assessed.

The IT transformation project will enhance
the Group’s data security. In addition, the
Group has established a global internal IT
company responsible for providing core IT
shared services to all Group companies and
manage external technology providers.

Evaluating and monitoring clients’ ongoing
creditworthiness and in some cases
requiring credit insurance or payments
in advance.

The Group’s treasury position is a recurring
agenda item for the Audit Committee and
the Board.

WPP ANNUAL REPORT 2015

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Principal risk
Operational
The Group’s performance could be
adversely impacted if it failed to ensure
adequate internal control procedures
are in place in relation to the Group’s
increased media trading.

Potential impact and any
change from the prior year

How it is managed

Failure to ensure that trading activities are
compliant with client obligations where
relevant could adversely impact client
relationships and business volumes. The
risks associated with media trading have
increased in 2015 as the volume of trading
has increased.

The principles of adherence to the terms of
client contracts are embedded through the
networks and reinforced by audits at a WPP
and network level.

Regular monitoring of KPIs for trading are
undertaken to identify trends and issues.

People and succession
The Group’s performance could be
adversely affected if it were unable
to attract and retain key talent or had
inadequate talent management and
succession planning for key roles at
the parent and operating companies,
including but not limited to the founder
CEO and long-serving members of the
management team.

The Group is highly dependent on the
talent, creative abilities and technical
skills of our personnel as well as their
relationships with clients. The Group
is vulnerable to the loss of personnel
to competitors and clients leading
to disruption to the business.

The founder CEO has over 30 years’
service with the Company and is identified
with the success of the Group’s strategy
and a failure to plan for his succession
could impact investor confidence in
the Company.

Regulatory, sanctions, anti-trust and taxation
The Group may be subject to regulations
restricting its activities or effecting changes
in taxation.

Changes in local or international tax rules,
for example prompted by the OECD’s
emerging recommendations on Base
Erosion and Profit Shifting (a global
initiative to improve the fairness and
integrity of tax systems), or new challenges
by tax or competition authorities, may
expose the Group to significant additional
tax liabilities or impact the carrying value
of our deferred tax assets, which would
affect the future tax charge.

These risks to the Group have increased
in 2015.

An authorisation matrix on inventory
trading is agreed with the Company
and the Audit Committee.

The Group’s incentive plans are structured
to provide retention value, for example by
paying part of annual incentives in shares
that vest two years after grant date.

Operating companies seek to establish
reputations in the industry that attract
and retain key personnel, including by
improving the quality of their creative
output and by offering competitive
performance-based compensation.

Succession planning for CEO, CFO
and key executives of the Company is
undertaken by the Board and Nomination
and Governance Committee on a regular
basis and a pool of potential internal and
external candidates identified in emergency
and planned scenarios.

Compensation Committee oversight for the
Group’s incentive plans and compensation.

The Group actively monitors any proposed
regulatory or statutory changes and consults
with government agencies and regulatory
bodies where possible on such proposed
changes.

Annual briefings to the Audit Committee
of significant changes in tax laws and their
application and regular briefings to the
executive directors. The Group engages
advisors and legal counsel to obtain
opinions on tax legislation and principles.

46 WPP ANNUAL REPORT 2015

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Strategic report to share owners

How it is managed
Online and in-country ethics, anti-bribery,
corruption and anti-trust training on
a Group-wide basis to raise awareness
and seek compliance with the WPP Code
of Conduct.

Confidential, independently operated
helpline for WPP staff to raise any concerns,
which are investigated and reported to
the Audit Committee on a regular basis.

Due diligence on acquisitions and
on selecting and appointing suppliers.

Gift and hospitality register and
approvals process.
Online training on a Group-wide basis
to raise awareness and seek compliance
and updates to Group companies on any
new sanctions.

Regular briefings to the Audit Committee.

Principal risk
The Group is subject to strict anti-
corruption, anti-bribery and anti-trust
legislation and enforcement in the countries
in which it operates.

Potential impact and any
change from the prior year
The Group operates in a number of
markets where the corruption risk has
been identified as high by groups such
as Transparency International. Failure
to comply or to create a corporate
environment opposed to corruption or
failing to instil business practices that
prevent corruption could expose the
Group and senior officers to civil and
criminal sanctions.

The Group is subject to the laws of the US,
the EU and other jurisdictions that impose
sanctions and regulate the supply of
services to certain countries.

Failure to comply with these laws could
expose the Group to civil and criminal
penalties including fines and the imposition
of economic sanctions against the Group
and reputational damage which could
materially impact the Group’s results. As
certain EU sanctions in relation to Iran
have been lifted the risk of non-compliance
has reduced since 2015.

Longer-term viability statement

Going concern

The directors are required to consider whether it
is appropriate to prepare the financial statements on
the basis that the Company and the Group are going
concerns. As part of its normal business practice,
the Group prepares annual and longer-term plans
and in reviewing this information and, in particular,
the three-year plan and budget, the directors believe
that the Company and the Group have adequate
resources for the foreseeable future. Therefore the
Company and the Group continue to adopt the going
concern basis in preparing the financial statements.

The directors confirm that they have a reasonable
expectation that the Group will continue to operate and
meet its liabilities, as they fall due, for the next three years.
The directors’ assessment of the Group’s viability for the
next three years, has been made with reference to the
Group’s current position and prospects and changing
competitive landscape. This period has been chosen as
it aligns with our three-year plan and budget. Sensitivity
analysis has been applied to reflect the potential impact
of one or a combination of the principal risks on the
Group and consequential contract breach, loss of
reputation, client loss and inability to win new business
and the impact of revenue loss. Based on the results of
this analysis and the assumption that the global economy
and markets continue to function and there is no flock of
‘black swans’, the directors have a reasonable expectation
that the Company will be able to continue in operation
and meet its liabilities as they fall due over the three-year
period of their assessment.

WPP ANNUAL REPORT 2015

How we’re doing
Strategic report to share owners

Sustainability matters

And finally…

The Group’s commitment to, and investment in,
sustainability supports major business wins, increases
access to talent, improves efficiency and reduces risks
to our business. We estimate that clients who engaged
with WPP on our approach to sustainability were worth
£1.29 billion out of our total revenues of £12.2 billion
to the Group in 2015.

We are in business for the long term and, like all leading

companies today, we recognise our wider responsibilities
and the opportunity to generate value for share owners,
clients, our people and the world at large through our
business. Sustainability at WPP cuts across all areas: from
the work we do for clients, to the time we donate to causes
through pro bono work, the way we run our Company and
look after our people, and our commitment to respect
human rights. Sustainability issues are ever more important
to our clients and, as they feel the impact of long-term
demographic, environmental and social trends, they need a
marketing services provider who understands the changing
landscape and shares their values. Our track record on
sustainability gives us credibility.

A summary of the Group’s approach to sustainability

can be found on pages 155 to 161, including our
commitment to respect human rights on page 158. Please
also see our annual Sustainability Report on the work our
clients and our people do in this important area.

Sustainability performance summary

2015

2014

2013

WPP companies have always been conscious of the need
for diversity in the workplace; and not just out of a sense
of moral responsibility, which we take very seriously.
On behalf of their clients, our companies’ people are
responsible for understanding, and appealing to, just about
every one of the world’s seven billion citizens. And while we
have never believed that only a teenager can understand a
teenager or only a pensioner can understand a pensioner,
there can be no doubt that diversity among our people is
a professional necessity. For us, diversity is not simply a
question of race, colour or gender; at least as important is
a diversity of attitude, of mind-set, of ways of approaching
problems. Uniform, conventional thinking will never of
itself meet the demands of our clients. Clearly, given recent
events at one of our operating companies, we have to
redouble our efforts to emphasise the importance and
acceptance of diversity across the Group.

The results reported here, presented in dispassionate
numbers, are all the product of the inventive work of tens
of thousands of talented individuals – and with no two
alike. They come from countless different backgrounds
and have countless different ways of looking at the world.
They embody skills that range from the statistician to the
screenwriter. They represent perhaps the most diverse
example of diversity of any single organisation.

We welcome this opportunity to salute them all and
thank them for everything they have done to make 2015,
another record year, as good a year as it has been.

£1.29bn £1.35bn £1.26bn

54%

Roberto Quarta
Chairman

Value of client business
supported by our sustainability
credentials1
Gender diversity (% female
employees)
Gender diversity (% female
executive leaders)
Investment in training
Carbon footprint (tonnes of CO2
per employee)
Social contribution2

33%

32%
£41.1m £38.2m £40.0m

31%

2.07

2.35
£43.8m £46.9m £39.4m

2.28

1 Value of clients who requested information on our sustainability policies and

performance through their supplier management process.

2 Includes free media space donations.

WPP ANNUAL REPORT 2015

Sir Martin Sorrell
Group chief executive

Paul Richardson
Group finance director

In Memoriam

Roger Agnelli
1959-2016

We mourn the loss of Roger Agnelli, his
wife Andréia, son, João, daughter, Anna
Carolina and their spouses – along with
their pilot – in a tragic aircraft accident in
São Paulo on 19 March 2016. Roger had
been a WPP Board director since 2013.

We miss his insight, charm, humour and
smile – a true Brazilian.

How we’re doing
Strategic report to share owners

Forward-looking statements

In connection with the provisions of the Private Securities
Litigation Reform Act of 1995 (the ‘Reform Act’), the
Company may include forward-looking statements (as
defined in the ‘Reform Act’) in oral or written public
statements issued by or on behalf of the Company. These
forward-looking statements may include, among other
things, plans, objectives, projections and anticipated future
economic performance based on assumptions and the like
that are subject to risks and uncertainties. As such, actual
results or outcomes may differ materially from those
discussed in the forward-looking statements. Important
factors which may cause actual results to differ include
but are not limited to: the unanticipated loss of a material
client or key personnel, delays or reductions in client
advertising budgets, shifts in industry rates of
compensation, regulatory compliance costs or litigation,
natural disasters or acts of terrorism, the Company’s
exposure to changes in the values of other major currencies
(because a substantial portion of its revenues are derived
and costs incurred outside of the UK) and the overall level
of economic activity in the Company’s major markets
(which varies depending on, among other things, regional,
national and international political and economic
conditions and government regulations in the world’s
advertising markets). In addition, you should consider the
risks described under the heading Principal risks and
uncertainties on pages 44 to 47, which could also cause
actual results to differ from forward-looking information.
In light of these and other uncertainties, the forward-
looking statements included in this document should not
be regarded as a representation by the Company that the
Company’s plans and objectives will be achieved. The
Company undertakes no obligation to update or revise
any such forward-looking statements, whether as a result
of new information, future events or otherwise.

WPP ANNUAL REPORT 2015

Reports from
our company
leaders*

Our business is best understood through
an understanding of its constituent parts.
On the following pages, the leaders of
our major companies give summary
accounts of their performance and
progress in 2015.

19 20

1. Mark Inskip
2. Mario Simon
3. Eric Salama
4. Laurence Mellman
5. Brian Gleason
6. Brian Fetherstonhaugh
7. Michael Coates
8. Dominic Proctor
9. Matt Giegerich
10. Ajaz Ahmed
11. David Mayo
12. Peter Law-Gisiko
13. Michael Gross

14. Michelle Harrison
15. Rupert Day
16. Mary-Ellen Howe
17. David Day
18. Toby Southgate
19. Matt Eastwood
20. Johnny Hornby
21. Simon Bolton
22. Travyn Rhall
23. Frank-Michael Schmidt
24. Andy Brown
25. Donna Imperato
26. Nick Emery

27. Josep Montserrat
28. Joel Benenson
29. Bart Michels
30. Charles Courtier
31. Wendy Lund
32. Christian Juhl
33. David Sable
34. Sabina Teshler
35. Jed Beitler

* More on our leaders at

wpp.com/annualreport2015

Advertising

Media Investment
Management

Data Investment
Management

Public Relations &
Public Affairs

Branding & Identity

p52

p64

p69

p71

p74

Healthcare Communications p76

Direct, Digital, Promotion
& Relationship Marketing

Specialist Communications

WPP Digital

p78

p79

p80

19 20

36. Phil Smiley
37. Preeti Reddy
38. Steve Pattinson
39. Eric Hoyt
40. Ralf Hering
41. John Seifert
42. Donald Baer
43. David Moore
44. Stuart Smith
45. Tamara Ingram
46. Jack Martin
47. Miles Young
48. Christopher Graves

49. Jim Heekin
50. Lois Jacobs
51. Stefano Zunino
52. Mark Read
53. Sir Martin Sorrell
54. Jim Prior
55. Lynnette Cooke
56. Hidehiko Otake
57. Richard Ingleton
58. Jon Cook
59. Roland Rudd
60. Lynn Vos
61. Steve Harding

62. Lindsay Pattison
63. Shane Atchison
64. Christian Tiedemann
65. Stephen Allan
66. Dan Khabie
67. Irwin Gotlieb
68. Mark Povey

How we’re doing

J. Walter Thompson

Report by Tamara Ingram
Chief executive officer

am both excited and honoured to be leading a
company with more than 151 years of delivering
Pioneering Solutions to its clients.

As a network of pioneers, J. Walter Thompson
has an innate thirst for transformation that has fuelled
the agency’s momentum over the last year.

I am eager to continue that journey, and Matt

Eastwood, our worldwide chief creative officer, along with
Guy Murphy, our worldwide planning director, have led
the launch of our new North Star, a new agency creative
process that will elevate our creative product and ensure
that we develop more Pioneering Solutions for our clients.
In pursuing that goal, I absolutely believe that the
diversity of people and diversity of spirit will produce
diversity of ideas that will serve as our guideposts as
we move forward.

The ‘Promise of Cuba’
is the first major agency
report to explore emerging
opportunities for North
American brands

Harnessing that diversity of ideas was integral
to the launch of J. Walter Thompson Intelligence, a new
specialised practice offering a unique blend of research,
innovation and data analytics. Central to the practice is
the Innovation Group, our trends forecasting consultancy.
The Group has offered our client partners invaluable
insight into consumer behaviors in ‘The Future 100,’
‘Generation Z – Brazil,’ and most recently, the ‘Promise of
Cuba,’ the first major agency report to explore emerging
opportunities for North American brands in the country
since the normalisation of US-Cuba diplomatic relations.

Adding to our intellectual capital, we launched Female
Tribes, a global initiative that represents our largest effort
yet in provoking real change in the conversations that
brands have with and about female consumers.

And, of course, in today’s business landscape,

delivering Pioneering Solutions requires deep digital and
tech expertise. In 2015, we saw Mirum, our global digital
agency network, mark its milestone first anniversary.

Mirum has hit its stride and truly blossomed under the

fantastic leadership of Dan Khabie. It has not only been
an incredible collaborative partner for the clients it shares
with J. Walter Thompson Worldwide, but it’s also put its
unique stamp on work for clients of its own: Mirum led
the development of Hum, Verizon’s connected vehicle
platform, from inception to product launch.

This unified network added Mazda and Getty to its client

roster in North America, expanded its relationship with
Qualcomm globally, picked up ASUS in Asia, and Dubai
Tourism in MEA; and was named a Visionary in Gartner’s
Digital Marketing Services Magic Quadrant Report.

Mirum also grew in India, where Social Wavelength

joined the global digital network as Mirum India.

To feed this always-on digital world, we added to our

solutions toolkit with Colloquial, our new content-
marketing joint venture with Group SJR that is up and
running in Mexico City, Sydney, London and New York.
And we continued to bolster our leadership team to

support our growth objectives.

Stefano Zunino was appointed to the newly created

role of CEO of the Americas, overseeing Colloquial,
Mirum and J. Walter Thompson in the North America
and Latin America regions.

Maria Teresa Arnal was appointed CEO of

J. Walter Thompson Company in Mexico, a testament
to our commitment to deep transformation and the
integration of communications and digital innovation
in Latin America.

We also fortified our creative bench-strength, elevating
Brent Choi to CCO of our New York and Canada offices,
and naming Senthil Kumar as the regional CCO and
creative partner to Tarun Rai, CEO of J. Walter
Thompson South Asia.

52 WPP ANNUAL REPORT 2015

And we’ve invested in training the next generation of
creative leaders. Our international Helen Lansdowne Resor
(HLR) Scholarship, launched in support of young female
creative talent, also saw its first group of scholarship
winners last summer.

New business and organic growth were equally robust,
with wins throughout the global network, including Abbott,
AstraZeneca, Apollo, Bristol-Myers Squibb, Cargill,
Challenger, Cobra Puma Golf, Crabtree & Evelyn, Dubai
Tourism, Egypt Tourism, FindIt Malaysia, Hotels.com,
JP Morgan Private Bank, Special K, KPMG, Northwell
Health and Treasury Wine Estates, among others.

2015 saw some of the most significant growth in our
151-year history. We expanded our roster of multinational
clients, diversified our offering and broadened our talent base.
We created ideas that better connected to human truths

and unleashed the strength of our creative potential; and
ultimately, grew our clients’ businesses.

As we look forward to 2016, we will put diversity at
the top of our agenda and continue bolstering our creative
product in order to deliver Pioneering Solutions to our clients.

How we’re doing
Advertising

Ogilvy & Mather

Report by Miles Young
Worldwide chairman
and
John Seifert
Worldwide chief executive officer

erhaps one of the most interesting statistics
of 2015 is that by the end of the year we were
operating over 200 content studios for different
clients around the world. Nothing illustrates

more graphically how the nature of our business has
changed. So what are they doing? The answer is – in
various combinations – six primary things. First, they have
a ‘community’ function, managing social media content
very specifically; then they have an editorial role, playing
off the news agenda; next they partner with established
media to deliver content and scale; they leverage cultural
‘buzz’ in real-time; key curate and crowd-source content;
and, finally, they generate leads using social and research
data for effective targeting. And they do it all seamlessly.
We believe we are at the pioneering edge of driving models
such as these; for us this is not the future: it is the present.

We have amazing talent and
capabilities for the modern
marketing world, and an
enviable portfolio of clients
and brands to grow with

But while we are doing that we are very conscious
of what it is all for: for driving the power of the brand.
Last year, we completed some significant research which
showed that consumers value brands in the world of
content by the degree to which they do, in other words
the way in which they provide a real service to the consumer,
and behave according to the way in which they talk. This
theme of ‘behavioral branding’ is one on which we now are
working with many clients in all regions and categories.
2015 was another outstanding year for Ogilvy –
evidenced in terms of creative pre-eminence, new business
success, new talent acquisition and discipline advances

WPP ANNUAL REPORT 2015

How we’re doing
Advertising

(with OgilvyOne, Ogilvy Public Relations and Geometry
Global and H&O all performing strongly). As we have
moved into 2016 so we are transitioning our leadership.
After eight wonderful years, I am handing over my
responsibilities to John Seifert. Ogilvy born and Ogilvy
bred, John represents the very best of our own brand.
It is a carefully planned transition, and will be completed
by September 2016.
John writes:
“I inherit a company and brand that has revitalized in
the last eight years, particularly creatively. Together with
co-chairman, Tham Khai Meng, I am very clear about our
opportunity: growth through great work.

We have amazing talent and capabilities for the modern

marketing world, and an enviable portfolio of clients and
brands to grow with.

We will continue to adapt our business system to

transform how we work: faster, more connected, and more
agile – and all globally. Great work demands: sharper
thinking through deeper and more relevant brand, business,
and market insights; big and enduring ideas that unify,
breaking out from an explosion of fragmented content and
delivery channels; and creative craft skills that enable
irresistible storytelling and deeper audience engagement.

All this, is for one purpose: to better serve our clients

by making their brands matter in our dynamic and
ever-changing world.”

I wish John and his new leadership team good fortune
as they drive us forward into the new world of content and
brands that do.

Ogilvy has been a family for me, not just a workplace,
for almost 35 years. While I will continue to remain close
to it, I cannot help but feel pangs of sadness, and a great
sense of gratitude to all who live the family values of our
brand day by day.

OgilvyOne Worldwide
Report by Brian Fetherstonhaugh
Chairman and chief executive officer

t OgilvyOne Worldwide, we measure our
success against three core pillars: financial
performance, strategic differentiation and
creative excellence. In 2015, we delivered
on our expectations in all three areas.

We set new all-time records for revenue and profit,
driven by a combination of growth with current clients and
new client wins. Special shout-outs go to several operations
that contributed so significantly to our strong performance:

WPP ANNUAL REPORT 2015

OgilvyOne New York, Shanghai and our offices in India,
Neo@Ogilvy Worldwide and The Lacek Group. It is also
particularly gratifying to see that three of our newest
additions to the OgilvyOne global network were among
our top performers: Bottle Rocket, which specializes in
mobile; Social Lab, our social marketing offering; and
Verticurl, which specializes in marketing technology. All
these achievements are testimony to the talent, innovation
and fortitude of our network.

We fully appreciate the power
that digital has on how
customers shop and buy

Strategically, 2015 was the year in which we

consolidated our positioning as ‘The Customer Agency.’
We combine data and creativity to create compelling,
personalized experiences that help clients win more
customers and make them more valuable. Integral to our
offering is DAVE, our proprietary strategic planning and
execution methodology. DAVE stands for Data-inspired,
Always-on, Valuable Experiences. It’s an innovative
approach for us globally and the results are clear: offices
that embraced the DAVE process for client engagements
had a substantially higher probability of success. In 2016,
we will continue to invest in DAVE and bring it to our
staff and clients every day and everywhere in the world.
OgilvyOne remains a dominant creative force in the

industry. At the Cannes Lions International Festival of
Creativity, we won a total of 14 awards, including four Silver
and 10 Bronze Lions. We were once again by far the most
awarded agency at the global Direct Marketing Association’s
ECHOs, outpacing the No.2 agency network by two to one.
Over the course of 2015, we also added 17 Effies, 13 Clios
and a host of Agency of the Year honors, for entities
including Asia (Regional ECHOs), Gloo South Africa,
OgilvyOne Business in the UK and OgilvyOne Mexico.

As a customer-centric agency, we fully appreciate the

power that digital has on how customers shop and buy.
OgilvyOne has been a pioneer in the field of interactive and
digital marketing for over three decades and was recently
named a Leader in Gartner’s Magic Quadrant for Global
Digital Marketing Agencies report. In 2016, we will
deepen our digital capabilities in fast-growing areas such
as customer experience design, mobile marketing and
e-commerce. Our future continues to look bright.

Ogilvy Public Relations
Report by Christopher Graves
Global chairman
and
Dr Stuart Smith
Global chief executive officer

015 was the year we returned to significant,
profitable organic growth, further strengthened
our leadership in creativity and redefined our
purpose as a discipline within Ogilvy & Mather.

For four consecutive years we have dominated The

Holmes Report’s Creativity Index. We won more Gold Lions,
supported by the highly effective Chinese Names campaign
(Visit Britain). We were named Agency of the Year, in both
the UK and Asia Pacific, by The Holmes Report.

Our return to growth was driven by several factors.
We grew our top 30 clients significantly and four new brands
entered our top 10. We lead in the area of social and content,
benefiting from the scale of the Ogilvy & Mather group.
We invested in a new global marketing and business
development function, improving our visibility and pitch wins.

Earned influence will
speed our growth through
integration by defining a
broader marketplace for
PR services

We open-sourced our growth strategy, asking over 50
of our brightest minds from across many geographies and
demographics to help force the pace of innovation. Over
65% of our country leaders are women and we improved
diversity and inclusion at our highest levels by creating
a new Executive Committee and Board. We invested in
new leadership (UK, India, EMEA, Germany, Spain and
Indonesia) through promotions and external hires. We
proudly launched Ogilvy Pride in the UK and Hong Kong.
We demonstrated both our commitment to Latin

America and to grow globally through acquisition
(ConceptPR, Brazil). Asia Pacific thrives under the
leadership of Scott Kronick. EMEA entered a new phase
under the newly-promoted Michael Frohlich. In North
America we saw continued growth in New York and

How we’re doing
Advertising

Chicago (Jennifer Scott and Michele Anderson
respectively), with our US healthcare practice growing
strongly (Kate Cronin).

Growth also comes from differentiation. Our role in
the industry, and within Ogilvy & Mather, is to redefine
the unique purpose of public relations in a world where
the lines between marketing disciplines are increasingly
blurred. This year Ogilvy PR laid claim to the powerful
concept called ‘earned influence’, a move recognized as
one of 2015’s top innovations in PR. Earned influence will
speed our growth through integration by defining a broader
marketplace for PR services. It recognizes the increasing
appetite of CMOs for what we do, rejects a narrow
definition of earned media and goes beyond concepts
underpinning other thinking in the PR industry.

In 2016, we will push forward our aspiration that PR
exists to harness the power of earned influence by creating
campaign platforms for our clients that matter to the lives
of consumers, customers and key opinion leaders. In doing
so we hope Ogilvy PR will increasingly contribute to the
effectiveness of all channels, not just earned, and shift
behaviors, opinions and generate sales.

Ogilvy CommonHealth Worldwide
See report on page 76.

Geometry Global
See report on page 78.

WPP ANNUAL REPORT 2015

How we’re doing
Advertising

Y&R Group

Report by Peter Stringham
Retiring chief executive officer

consumption. And we are great storytellers, adept at
creating narratives and images and ideas that build brands
that not only live in culture but create culture and resonate
in the minds of consumers.

n my tenure as CEO of Young & Rubicam Group,
it’s been our mission to make collaboration among
the companies as productive, as possible, for our
clients. To that end, we’ve built cross-disciplinary
training programs, expanded our Global Intelligence team
and made Rubicam University a robust workshop that
tackles a real client challenge in real-time. At the same
time, we have encouraged each company to develop the
capabilities and craft that make them unique.

As I retire and Peter Law-Gisiko succeeds me,
I am confident that Young & Rubicam Group will
remain a unique offering within WPP.

Report by Peter Law-Gisiko
Chief executive officer

Horizontality is a way of
life for us, and always has
been

Over the next pages, you will read the achievements
of each of the companies. The Y&R Group remains unique
in our industry as a long-standing group within a group,
offering not only some of the world’s strongest and most
iconic marketing and communications brands but a proven
history of working together and an outlook that embraces
horizontality across WPP.

e are all thankful to Peter Stringham for
the leadership he has given Y&R Group over
the past seven years. Peter has helped sustain
the connective tissue that makes working

Y&R
Report by David Sable
Global chief executive officer

together across Y&R Group and WPP on behalf of
clients a seamless, productive and natural proposition.
Horizontality is a way of life for us, and always has
been. More than four decades ago, Young & Rubicam
staked out new territory by creating a way for its companies
– all leaders in their disciplines – to connect and collaborate
in a way that made us, as our mantra said: Best Alone.
Better Together.

When you look at Y&R Group’s companies – Y&R,
VML, Wunderman, Burson-Marsteller, Cohn & Wolfe,
Landor and Sudler & Hennessey – they are differentiated
by the currency and relevance of their core capabilities.
They are unified by a set of values, a collaborative ethos
and a shared experience of more than 40 years of working
side by side.

Looking at Y&R Group as a whole, we are armed

to address every challenge marketers face today and
tomorrow. Our capabilities align in the key areas of market
demand: All our companies are digital to the core, with the
digital thinking and technology that redefines the customer
experience. We have big data and analytics that drive
insights, innovation, targeting and messaging. We can
create content that keeps pace with real-time, 24/7 media

s digital took hold, no matter where you were
or what you did in the industry, the conversation
became all about DIGITAL FIRST. Then,
industry buzz turned to mobile as device and
software enabled us to untether and MOBILE

FIRST became the password. Next came wearable, and
now virtual reality seems to be following. And no doubt
something else is sure to take its place in due time.

Our belief, our mantra – and we’ve spread the word from

Davos to Mobile World Congress to DMEXCO – is this:
It’s not digital first, or mobile first or wearable first.
It’s PEOPLE FIRST.
Without the context, without the insight, without
understanding basic human need and creating a narrative
rooted in deep human truth, no marketing – digital, mobile
or otherwise – will ever matter. How could it possibly?

It is important to remember this now, when there are
so many incredible innovations like Facebook and Snapchat
and YouTube changing the way we communicate and share
content. They are all intrinsically filled with possibility,
but without filling them with stories, they are merely empty
software loops.

56 WPP ANNUAL REPORT 2015

How we’re doing
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Digital, the basis of it all, makes the things we
do more efficient and creates new opportunities for
engagement. Mobile isn’t about devices, it’s about freedom
and empowerment. Virtual reality isn’t about glasses or
gizmos, it’s about unleashing imagination.

Being human to the core is what makes today’s

innovations and technology so powerful and efficient. It’s
what gives brands credibility as global citizens. It’s what
resonates and activates. And it’s what makes things go viral.
Last year, for example, our New Zealand office came up

with an idea for Burger King to support Peace One Day. It
began with an understanding of the burger wars – itself a very
human and humorous manifestation of brand loyalty. In an
open letter placed in The New York Times, Chicago Tribune
and Miami Herald, Burger King offered an ‘olive branch’ to
McDonald’s and suggested that, in the spirit of Peace Day,
for one day they join burger forces and create a McWhopper.
A full range of content, digital and otherwise, as well
as online engagement vehicles, events and activation gave
people the ability to share, participate, and create struck
such a chord that DIY McWhoppers were created,
Instagrammed, Snapchatted, posted on Pinterest and
Facebook, shared all around the world. Both Peace One
Day and Burger King benefited.

Earlier this month, the McWhopper was awarded the
GRANDY, the top award at the ANDY awards. Y&R also
won the top award for Outstanding Public Service with
GPY&R Brisbane’s ‘Melanoma Likes Me.’

Creativity is telling the story,
innovation is how we share
it and technology is how we
engage with the story

The most elegant stories are often quite simple. In the
Philippines, our agency created a print ad for North Face.
Dipped into water, the ad becomes an LED camping light
with 24 hours of power, giving someone a pragmatic
solution rooted in the brand’s exploring nature.

And in Turkey, we worked with Vodafone to create a
Cannes Grand Prix-winning ‘secret campaign’, ‘Between
Us’, promoting an app to help women alert trusted friends
when they are facing immediate domestic violence. The app
has been activated over 100,000 times.

Cannes awarded us 89 Lions last year, including a
Grand Prix and a Chimera Lion, placing us as the fourth
most-awarded network for the fourth consecutive year.
Perhaps even more important, we had more offices across
more regions winning Lions than any other agency, a
validation of our creative community and our Global
Boutique philosophy.

Not unrelated, since 2015, we were named Agency
of the Year in 19 markets, spanning Europe, Asia, Latin
America and Australia/New Zealand. And our 42 Effies,
won in every region, reflects the depth of our planning
community. The strength across our network comes out
of the same Global Boutique philosophy that recognizes
the importance of local strength, while leveraging a global
community that shares values, resources, tools and talent.
We promoted Andrew Dimitriou and Phil McDonald
to lead Europe and Australia, respectively. We brought in
Ramzy Abou-Ezzedine to lead the Middle East and John
Lynn to lead Latin America. Leslie Sims joined Y&R New
York as the Chief Creative Officer and Adweek named her
one of the Top 10 Creatives doing breakthrough work at
agencies. Ken Dowling returned to Y&R after many years
to lead the US Navy business won in spring and to launch
Y&R Memphis.

We began 2016 with the launch of a new platform at
Davos. Best Countries, based on BrandAsset® Valuator data
and created in partnership with US News & World Report
and The Wharton School, gives exceptional insights on
nations as brands. News of their countries’ strengths had
heads of state, including Justin Trudeau and Benjamin
Netanyahu, as well as the German, Swedish, Dutch, Peruvian
and Slovenian governments tweeting and quoting their
rankings, and even merited a mention on Jimmy Kimmel’s
late night show. Going forward, we believe this an important
tool not only for governments and tourism agencies, but for
companies wanting a new filter for understanding markets
around the world. This will be annual and we are already
working to expand Best Countries to Best Cities thinking.

At the Y&R companies, we understand that creativity

is telling the story, innovation is how we share it and
technology is how we engage with the story. We have
talented people in place who know how to leverage these
incredible opportunities competitively, and we have a way
of working together that drives great creative product and
strong business results. We are optimistic that in 2016
we are positioned to help our clients meet today’s market
challenges, understand their customers in an unparalleled
way, and create compelling stories that are brand- and
business-building.

WPP ANNUAL REPORT 2015

How we’re doing
Advertising

VML
Report by Jon Cook
Global chief executive officer

Wunderman
Report by Mark Read
Global chief executive officer

breakout year” is how Advertising Age
described VML’s 2015 performance when
it recognized the agency in its annual A-List
honors. We were thrilled to be included as
one of the top 10 agencies chosen by

Ad Age. It was a special recognition to top off a year in
which – across the VML global network – we experienced
the best financial growth in our 23-year history.

There were many groundbreaking aspects to the past
12 months – notably, becoming an active member of WPP’s
Global Team Ford. VML is supporting Ford on a variety
of transformative initiatives, leveraging VML’s maturing
global network of 2,500 employees in 28 locations around
the world.

Increasingly, VML is handling expanded global duties
for client partners such as Bridgestone, Colgate, Wendy’s
and others. We also initiated major new global client
partnerships with FedEx and the International Olympic
Committee (IOC).

In the US, we dramatically expanded our presence in
Chicago to 80 people – with significant expertise to support
increasing opportunities with Kellogg’s, Kimberly-Clark
and PepsiCo. Additionally, VML secured significant agency
of record relationships with Kashi and Motorola.

Our balance between creativity and technology
continues to be VML’s differentiator. Forrester Research
named VML a Strong Performer for Digital Experience
Service Providers among the foremost global providers.

At the same time, it was the most creatively-awarded
year in our history. VML received notable recognition from
every top-tier global awards competition, including Cannes
Lions, Webby Awards, Effie Awards, One Show awards,
CLIO Awards and more. From full television broadcast
production to enterprise technology solutions, the breadth
and scope of VML’s capabilities have never been stronger.

VML is sincerely grateful to earn Ad Age A-List honors,

although what continues to drive us forward is an
unrelenting pursuit to be our clients’ most important partner.

n January 2015, I joined Wunderman as CEO and
began working closely with a team of very talented
executives to build on Wunderman’s unique strengths,
of which there are many, and position us for success

across a global network of 175 offices in 60 countries.
As I reflect on our first year together, I am pleased to report
that 2015 has been a period of tremendous progress.

We established Wunderman’s positioning as ‘Creatively

Driven. Data Inspired’, to showcase our unique ability
to combine big, bold, creative ideas and insights with an
unmatched knowledge of data and analytics. In a world
where clients struggle to derive value from the mass of data
they collect, Wunderman’s offering is distinct, measurable
and delivers results. It is important to clients and true to
what the agency can deliver. The success of this messaging
was validated by Forrester Research, which officially
acknowledged Wunderman as a “leader in marketing
database operations” as well as a “strong performer in
customer engagement strategy.”

We have committed to
building a more dynamic and
engaging culture for recruiting
and developing top talent

Our outstanding new business efforts with both
existing and new clients are another irrefutable sign that
Wunderman is making an impact. In 2015, Wunderman
added more than 100 new assignments from brands,
including Microsoft, T-Mobile, Coca-Cola, Amazon,
LEGO, IKEA, Legal & General, Shell, Isle of Capri Casinos
and the U.S. Navy. Additionally, Wunderman Health,
led by Becky Chidester, has boosted growth by 10% since
2014, delivering top-quality work for clients including

WPP ANNUAL REPORT 2015

How we’re doing
Advertising

GSK, UnitedHealthcare and BlueCross BlueShield –
a testament to the power of Wunderman’s proven
understanding of data, digital and content development.

Our continued efforts to build the Wunderman brand

through excellent creative work and talent has received
tremendous global recognition, with Wunderman offices in
Colombia, London and São Paulo taking home four Cannes
Lions, Wunderman China winning Campaign Agency of
the Year, Wunderman London winning The Drum DADI
Awards Grand Prix and Wunderman Phantasia winning
the 2015 ANDA Agency of the Year Award.

As a network of more than 7,000 people – including

2,200 creatives, 1,300 data scientists and over 3,000
business people and strategists – we recognize the
importance of leveraging our diverse strengths in order to
deliver the work our clients expect (and need) to succeed
in a competitive environment. Our wide range of expertise
has now been simplified as we aim to unite the Wunderman
network as a consistent brand with one very clear message.
As part of our efforts to integrate our creative and data
capabilities, we rebranded the KBM Group’s data-driven
engagement services under the Wunderman brand.

And to ensure that our strategy of focusing on creativity

and data translates into concrete work for our clients,
we developed Collision, a set of proprietary tools and
methodologies to enable our creative and analytics teams
to work more closely together throughout the entire creative
process. This exciting program has already increased our
ability to collaborate and significantly improved our
efficiency and accuracy across disciplines and throughout
our global network.

We have also committed to building a more dynamic

and engaging culture for recruiting and developing top
talent. Recent hires and promotions are already having
an impact: Mel Edwards (CEO, EMEA), Jamie Gutfreund
(global CMO), Ian Haworth (ECD, UK/EMEA), Judy
Jackson (global chief talent officer), John Lynn (CEO,
LatAm) and Seth Solomons (CEO, North America) – all
are focusing on driving business growth and creativity in
their respective markets.

Partnerships with digital leaders have empowered our

people across the network to become more connected
advocates for our brand. Wunderman was the first digital
agency partner to participate in LinkedIn’s pilot program,

Elevate. Through Elevate, Wunderman content has
achieved significant visibility in key markets. We’ve also
established a partnership with Uber, another first in our
industry that has greatly benefited our culture and offering.
For Wunderman, 2015 was the start of a promising
new direction that has paved the way for many exciting
accomplishments with our business results and our culture.
By continuing to focus on acquiring top talent, building the
Wunderman brand and developing data-inspired creative
work that inspires action, we are confident Wunderman
will see success for many years to come.

Burson-Marsteller
Report by Donald A. Baer
Worldwide chair and chief executive officer

n 2015, we continued our fast-forward progress along
the leading edge of communications, modernizing
and energizing our creativity, our offerings and the
talent that makes it all happen. Around the globe,
Burson-Marsteller teams are delivering on our promise to
combine the most creative new integrated communications
capabilities with the world-class strategic counsel our

New growth-generating
services include the launch
of our Cuba Specialty Team
… focused on economic
development and tourism

clients have trusted for 63 years. During the year, we
brought to market innovative offerings tapping into the
technology, content and distribution opportunities that
are dramatically changing our sector. Even as we changed,
we stayed true to our enduring commitment to deliver
excellence to our clients and were honored as 2015 Agency
of the Year by industry-leading publication The Holmes
Report in Africa, Latin America and the Middle East.

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How we’re doing
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Among our innovations, we introduced Burson-
Marsteller StudioB, our integrated communications
approach to providing real-time insight- and data-driven
creativity, content production and distribution. With
StudioB, we are cutting across practice groups to give our
clients full-service strategic communications results, driven
by compelling messages and conveyed through traditional
and social media channels.

Other new growth-generating services include the
launch of our Cuba Specialty Team, which is part of a
capability focused on economic development and tourism.
We also strengthened our cyber security communications
and preparedness capabilities through a strategic alliance
with Ridge Global, led by former U.S. Secretary of
Homeland Security Tom Ridge.

Our relentless commitment to exceed expectations
yielded major new clients in 2015, including The Egyptian
Ministry of Tourism, FedEx, Oracle, Pitney Bowes and
Zebra Technologies. As we delivered significant business
results for our clients, we had a 30% year-over-year
increase in awards for our work. All of this progress
demonstrated we are continuing to play a crucial role
in the future of communications.

Kraft Heinz Company, S&P Global (formerly McGraw
Hill Financial), Marriott International and Raytheon.

In 2015, Landor released The Agility Paradox, a global

research study validating our point of view that today’s
most successful brands are agile brands. We found that
to thrive today, brand managers must embrace seemingly
opposing strategies for their brands: staying true to their
core while constantly evolving to keep pace. Consumers –
particularly millennials – expect and prefer brands to
exhibit these contradictory qualities. This ‘agility paradox’
demands a new brand management model that abandons
some of the long-held axioms of brand governance and
replaces them with six key behaviors of agility.

Landor has long believed in holistic brand expression.
Our new experience-mapping tool helps us address not only
how brands look but also how they feel, behave, talk, and
even dream. With that in mind, we broadened our offer this
past year with two acquisitions. In January we purchased
NorthandSouth, an innovation firm in Asia Pacific.
In November, Landor acquired a majority stake in
ManvsMachine, a multi-award-winning motion design
studio based in London. Together, these two acquisitions
expand Landor’s depth of offerings, providing the latest
in innovation and digital technologies.

Landor
Report by Lois Jacobs
Chief executive officer

n 2015, many Landor offices enjoyed strong growth
across the network. This was particularly true in
EMEA, under the direction of regional president
Jane Geraghty. New clients in the region included
Bayer MaterialScience (now Covestro), Experian, Turkish
Airlines, Nike and Union Bank of Nigeria. A highlight for
EMEA was the rebrand of Etihad Airways, with Etihad
being named Airline of the Year by Air Transport World
and Best Airline Livery of 2015 by DesignAir.

We also saw good performance from our Mumbai
and Tokyo offices, and in Mexico we enjoyed our sixth
consecutive year of strong growth. Our US restructuring
is showing positive results, with new projects being
undertaken for Alcoa, Cracker Barrel Old Country Store,

Our new experience-mapping
tool helps us address not only
how brands look but also how
they feel, behave, talk, and
even dream

Creativity remains top of our agenda, and we were
proud to be the most-awarded branding agency at Cannes
Lions International Festival of Creativity, winning a total
of 13 Lions across our network. We also added seven D&AD
pencils to our roster, including a much-coveted Black pencil,
making 2015 our strongest year yet for peer recognition.

WPP ANNUAL REPORT 2015

How we’re doing
Advertising

Sudler & Hennessey
Report by Jed Beitler
Chairman and chief executive officer worldwide

Bravo
Report by Eric Hoyt
President and chief executive officer

015 was focused on ‘connecting the dots’ across
all aspects of our geographies and divisions to
strengthen our position as one of the pre-eminent
global healthcare communications networks.

From our Global Managers’ meeting in New York to the
launch of Dr. Link, a proprietary web portal developed by
MDS/Sudler for physicians throughout China, S&H has
strived to bring meaningful ideas and insights to advance
our clients’ businesses.

Sudler introduced Kim
Kardashian West to this
year’s Cannes Lions

he US Hispanic market continues to
be growing and vibrant, but changing
demographics and consumer behaviors have
made the standards of success more complex.
Bravo’s integrated solutions that span brand-digital-retail
channels are helping our clients win by engaging their
customers all along their purchase-decision journey, with
creative activations that drive business and build brands.
Bravo’s client portfolio continues to be a testament to
our success and business-building value. Existing clients
like Wendy’s, Coca-Cola, Chevron and Pfizer continued
to grow and Bravo’s new business prowess won new clients
like Mazda, Purina, Radio Shack and US Foods.

Cohn & Wolfe
See report on page 71.

Digitally, we have been working across a number of
platforms and media, helping further patient education
(the award-winning, Procrit Health View app), accelerating
clinical trial recruitment (Apple Research Kit, in
collaboration with POSSIBLE), and developing clearer
and easier to understand Rx promotional standards
across all digital media (in partnership with Acquia).
Sudler introduced Kim Kardashian West to this year’s
Cannes Lions, connecting the dots via the virtual world,
by pioneering a new form of digital storytelling.

Our presence was strong this year at Cannes Lions
Health with Rob Rogers, co-CEO of the Americas, serving
as jury president and two writers from Sudler London
recognized during the Young Lions Health Competition.

We also co-chaired the inaugural Lions Health session

with Google on future trends in mobile marketing.

Always looking to expand our global educational
delivery, Sudler acquired UK-based System Analytic,
one of the world’s leading key opinion leader engagement
companies.

Important new business wins included GSK Vaccines,

Novo-Nordisk, Roche Diagnostics and AstraZeneca.

WPP ANNUAL REPORT 2015

How we’re doing
Advertising

Grey Group

Grey
Report by Jim Heekin
Chairman and chief executive officer

e ended 2015 by being named Global Agency
of the Year by Adweek, for the second time
in three years. The magazine wrote: “After
a dominant awards season and a slew of

multinational client wins, Grey is back in control.”

2015 marked our eighth year in a row of record financial

and creative performance. High-profile new business wins
included AT&T/DIRECTV, Emirates Airlines, Motorola,
Pandora Jewelry and Procter & Gamble’s Venus, Braun
and the Art of Shaving lines. Many of our current clients
awarded us significant assignments including Nestlé, GSK,
Eli Lilly, Vodafone, Volvo, Bausch & Lomb and Best Buy.
It proved to be a watershed year at Cannes. Our
creative reputation continued to soar with the win of
113 Lions from 18 countries in four regions. Grey won
in 20 categories from film, radio and outdoor to the
newest disciplines of mobile, creative data and pharma.
Notably, the agency took home a record four Grand
Prix, a remarkable feat. The work was powered by big,
non-traditional ideas that combined activation, public
relations, social and digital media, true to our ‘Famously
Effective’ mantra.

Our creative reputation
continued to soar

Grey’s forward momentum was reflected in the
performance of its flagship agencies in New York and
London. Grey received the 2015 Cannes North American
Network of the Year award and Grey EMEA was named
the 2015 Euro Effie Agency of the Year.

We continued to enhance our leadership ranks for
the future with the appointment and promotion of several
talented executives pivotal to our success. Michael Houston
was promoted to global president of Grey, an expanded
worldwide management role. Lucy Jameson was appointed
chief executive officer of Grey London and Nils Leonard,
chief creative officer, added the title of chairman of that

62 WPP ANNUAL REPORT 2015

office. Andreas Dahlqvist joined Grey New York as
chief creative officer. Finally, Diego Medvedocky was
promoted to vice president, regional creative director
of Grey Latin America.

Building on our strategic acquisitions of last year,

we acquired ArcTouch, a leading mobile design and
development agency in the US, and Grey nJ United, a
pacesetter advertising and digital agency in Thailand.
In addition, we expanded our existing resources in
digital, activation, shopper and healthcare marketing.
Each and every office of Grey has been integral to
our growth and success. Thanks to our people, and many
of the most forward-thinking clients in the world, we are
breaking new ground in brand experience across every
platform creating lasting consumer connections. As our
100th anniversary beckons in 2017, our future has never
been brighter.

Bates CHI&Partners

Report by David Mayo
Chief executive officer, Asia
and
Johnny Hornby
Chief executive officer

he Asia partnership was launched in 2013 with
nine offices in seven markets, built around the
principles of collaboration and open-source.
It is a joint venture between Bates, one of Asia’s

best-known advertising agencies, and The & Partnership,
one of the UK’s most respected independent agencies.
Our focus in 2015 was on growing new client

relationships, attracting talent with new skills, developing
new partnerships, developing our product and further
building our unique open-source positioning in the Asia
market. In 2015, we had successes across all of these areas.
In 2015, we began working with new clients such as

VW, Asia Breweries, Fiat, Standard Chartered, Kimberly-
Clark, Pearson and Sephora among many others, whilst
we deepened our relationships with Pizza Hut, AIA, Nestlé
and F&N.

Most of the people who joined us in 2015 came from
leading digital and creative agencies, bringing with them
new skills in social, content, media, programatic, data
and digital. Our annual ‘Employee Acid Test’ recorded
some of the highest loyalty scores in the region.

How we’re doing
Advertising

We launched partnerships with Google, Facebook,
LinkedIn, Squeem, King Content and Sparkline and, in
turn, drove deeper engagements between our clients and
their customers.

Creative highlights included work for Martell where
we worked with the client’s R&D team to put holograms
in bottles, Myanmar’s most famous advertising campaign
of 2015 for Ooredoo, and the Gold Effie-winning campaign
for Taiwan Noodle, which stole the heart of the nation.

We also forged new relationships with SMU, Miami
Ad School, Falmouth UK, AMEs and Lasalle. In Myanmar
we partnered with Phandeeyar and Facebook to bring new
skills to this breakout market. We continued our work
with The Marketing Society, Warc, Cannes Lions, IAS
and Portfolio Night.

In 2015, we published a collection of six original
essays, The 6 Pillars of Collaboration, aimed at driving
the industry debate on collaboration and this formed the
basis of our first ever WPP Atticus thought leadership
submission, which was developed and submitted from
our office in Jakarta, Indonesia.

Most of the people who
joined us in 2015 came from
leading digital and creative
agencies, bringing with them
new skills in social, content,
media, programatic, data
and digital

In 2016, we will continue to drive the industry

discussion in Asia about horizontality and collaboration.
From this we hope to build our reputation, our product
and our portfolio of skills as we continue to deliver our
Five Year Plan.

Commarco

Report by Christian Tiedemann
Joint chief executive officer

n 2015, our top creative brand Scholz & Friends was
rewarded as Agency of the Decade in Germany (Neptun
Award), launched the new worldwide Astra campaign
for its top client Opel and achieved a strong new
business performance, winning otelo (Vodafone), WDR
(the largest broadcasting station in Germany), additional
Siemens business and various government accounts.
Our joint venture investment in digital media/
performance marketing is rapidly growing and will
in future combine with WPP specialists to deliver value
for our clients.

With the newly-established ‘Partnerboard’, Scholz &
Friends strengthened its entrepreneurial partnerships and
implemented a new management system. The Board of
Partners is now the top strategic and executive decision-
making body of the Scholz & Friends Group.

Our digital brands deepblue networks and KKLD*
increased our digital share of business by collaborating
with other Commarco agencies as well as contributing
digital expertise to WPP in Germany. deepblue developed
a highly-successful app for Migros in Switzerland, and
KKLD* maintained its status as the international lead
agency in social media for MINI.

gkk Dialog Group/iPS – our CRM and Dialogmarketing

Group – successfully retained the BMW Customer
Interaction Center business until 2020. Major clients
Samsung, ING-Diba, Payback, American Express and
other blue-chips led gkk/iPS to its highest revenue level
in company history.

United Visions – our moving media and creative content

producer with a strong footprint in automotive – began
its expansion in the US (in Los Angeles), collaborating with
WPP companies and top local creative producers.

Commarco also acquired a majority stake in Nicole
Weber Communications (NWC), a full-service PR agency
specialist at lifestyle, fashion, beauty and automotive. In
Hamburg and Berlin, NWC is handling Opel, Olympus,
Cadillac and other strong local brands.

WPP ANNUAL REPORT 2015

How we’re doing

GroupM

Report by Irwin Gotlieb
Global chairman
and
Dominic Proctor
Global president

roupM has always delivered the advantages of scale
in the ever-mutable media marketplace. Bargaining
power is an enduring value, but it’s not all about
our size. As market leader, it’s our responsibility
to see further and more keenly into markets, even across
walled gardens, to give our clients an edge.

Our business is hyper-competitive and we continue
evolving. In 2015, we clarified our advantages for clients,
our people and WPP’s stakeholders with new positioning
underscoring the inextricable role of data and technology
in media. We continued investing in the agency platform of
the future to be ready for a world where all media is digital
and where all audiences can be targeted using data – data
we’re uniquely positioned to harness through our position
in WPP.

Our acquisitions of The Exchange Lab and its global
programmatic platform and Medialets’ mobile ad serving
and measurement technologies are significant in this path,
as is the addition of Essence which, until joining us, was
the world’s largest independent buyer of digital media.
This largest independent has now joined the world’s largest
media group, furthering our objective to create a peerless
digital team enabled by the most connected technology.

It’s our responsibility to see
further and more keenly into
markets, even across walled
gardens, to give our clients
an edge

We’re not just readying for the digital future, we’re
embracing our responsibility to shape it, leveraging client
influence to drive integrity – demanding accountability
in viewability, sensible and third party-verified audience
measures, fraud remedies and assurances of brand safety.
And, with our TV ad targeting unit Modi Media leading

WPP ANNUAL REPORT 2015

the US advanced television space, we’re impacting the
digital future of television too.

Our agencies’ reports that follow describe new successes
in 2015. Our figures show we’ve grown share globally – and
very significantly in North America. This was achieved via
the extraordinary dedication of our 27,500 people, whose
inquisitiveness about media, consumers and marketing is
never satisfied.

Xaxis

Report by Brian Gleason
Global chief executive officer

axis had one billion reasons to smile in 2015
as we passed 10 figures in billings.

Through new products, new locations,

strategic acquisitions and the efforts of our talented
team working in 45 markets around the world, we continued
to extend our dominance of the programmatic space.

Audiences and data remain
at the heart of everything
we do

And the industry has taken notice. MediaPost named

Xaxis as its Media Supplier of the Year citing our
“dominant market position.” AdExchanger has called our
and WPP’s investment in technology “exceptional.”

Technology investment continues to be a key element
of our success. The acquisition of mobile ad-tech start-up
ActionX helped us to nearly triple our mobile revenues
while providing clients with a new suite of proprietary
solutions. To capture a slice of the fast-growing performance
advertising market we launched Light Reaction, an entirely
new business unit with a unique pay-for-performance model
offering guaranteed consumer outcomes.

We’ve taken our data expertise into the creative realm
with an expanding focus on programmatic creative or, as
we call it, self-assembling ads. In Asia, we debuted in several
new markets while launching the region’s first product to
guarantee 100% viewability. And in the US we’re tackling the
upcoming 2016 Presidential Election with Xaxis Politics, the
first ever product to use offline voter data for digital targeting.

How we’re doing
Media Investment Management

Audiences and data remain at the heart of everything

we do. In 2016, we’re poised to make great strides in
personalization, creativity and performance as we continue
to advance the capabilities of the industry while fulfilling
our mission of making advertising welcome.

Maxus

Report by Lindsay Pattison
Worldwide chief executive officer

ur industry is undergoing massive transformational
change. In 2015, Maxus carried out a study in
partnership with the Financial Times into what
change means to business leaders. We discovered

that whilst 90% are experiencing transformational,
technologically-driven change, only 24% feel prepared.

We continued to secure
outstanding new talent,
embracing fiercely smart
strategy and tech leaders

This sharpened Maxus’ proposition: we lead clients

through change to deliver meaningful business results. In 2015,
we achieved this through a mix of smart organic growth and
a steadfast focus on strengthening existing client relationships.
We expanded specialist services for clients like NBCU, Valeant,
Church & Dwight, BT, Huawei and Aldi to name but a few.
Key to our evolution is the launch of a new planning
approach – Change Planning – which starts with the simple
question; “Where are you today… where do you want to
be tomorrow?” and results in a plan that informs strategic
change. To embed this, we trained 180 senior client leaders,
developing skills of resilience, curiosity and presence.
We continue to pioneer in high-growth regions,

launching Maxus Mesh in Asia as a marketing command
centre to leverage the combined power of big data, content
and advanced analytics to drive accountability in real, or
close to real-time.

In the US, we saw super-strong performance with huge

five effectiveness awards at AMES APAC and Digital &
Social Agency of the Year locally.

Our ‘East out’ strategy for new business triumphed,
as we welcomed the $200 million Huawei account into
a global remit, having held the business locally in China.
And we continued to secure outstanding new talent,
embracing fiercely smart strategy and tech leaders to our
global exco and charismatic leaders in key markets.

2015 has been a stellar year for Maxus; through our
behaviours, attitude, work and results we are leading change
and I’m really excited to build on this momentum in 2016.

MediaCom

Report by Stephen Allan
Worldwide chairman and chief executive officer

his time last year, I reported that we had
stopped calling ourselves a media agency;
instead we reinvented MediaCom as The
Content + Connections Agency, reflecting

the enormous changes that have occurred in technology,
consumer behaviour and, consequently, in the services
our clients demand.

Underpinning this is our ‘Systems Thinking’ philosophy
– understanding and optimising the total system of content
and connections, and not just the individual channels
within it. We bring Systems Thinking to life in every aspect
of our business…

Firstly, it means we focus on interrelationships. In fact,
we’ve collaborated more than ever with our sister companies
in 2015, working across pitches and clients with the likes
of Grey, Geometry, Hogarth, Johannes Leonardo, Salmon,
Wunderman and its KBM Group and, of course, Kantar
and GroupM.

Secondly, it means we plan for outcomes. Working more

closely with our sister companies has helped us unlock our
ability to target consumers individually at scale, enabling
us to deliver highly-targeted, outcomes-based campaigns
for our clients.

And thirdly, it means our people are Systems Thinkers.

With all the complex levels of data at our disposal today,
it’s our people who turn it into insights and strategies,
which ultimately translates into the growth we’re delivering
for our clients – and for ourselves.

topline growth under Steve Williams’s leadership, and we
were delighted to win an Effie for our work on NBC Sports.
India continues to be our most-awarded market, winning

Last year, we saw strong growth from existing clients
across new geographies including AB-Inbev, GSK-Novartis,
Mars, P&G, Subway, The Coca-Cola Company and, most

WPP ANNUAL REPORT 2015

How we’re doing
Media Investment Management

recently, Sony, which included the new PlayStation
business. Additional new business included Actavis, Agoda,
American Airlines, Bank of China, JG Wentworth, Pernod
Ricard, Tempur Sealy and Tesco. Altogether, this growth
totalled $2.6 billion in annualised billings, which means
we now work with a third of the world’s top 30 advertisers
in 20+ markets.

We’ve collaborated more
than ever with our sister
companies in 2015, working
across pitches and clients

Our repositioning has led to further industry
recognition, notably being named in June 2015 as the
world’s No.1 media network in RECMA’s Network
Diagnostics Report, which evaluates overall agency quality.
Additionally, we won over 290 awards, including Global
Agency of the Year at the M&M awards. We were the
most-awarded media network at the Cannes International
Festival of Creativity, and earned the Grand Prix at the
International Content Marketing Awards.

Our mission, as ever, remains the same: to grow our
clients’ businesses. But to continue achieving this, we’ve
had to change. As more and more brands continue to look
to marketing to drive their topline growth, we think our
transformation into The Content + Connections Agency
means we’re well placed to continue to do just that.

MEC

Report by Charles Courtier
Chief executive officer

015 has been a very strong year for us. We delivered
double-digit growth across all regions, with the
US leading the way as the best performer. We
joined the WPP Billion Dollar Club (one of only
nine companies) and in October we moved up to become
RECMA’s No.3 Most Dynamic Agency Network.

It was an infamously big year for media pitches. We
battled hard and the highs certainly outweighed the lows.
Game changing wins like L’Oréal in the US, Lloyds Banking

66 WPP ANNUAL REPORT 2015

Group in the UK, AT&T in Mexico and GoDaddy.com
globally were all hugely important.

The dramatic shift of our business to digital and data

continues to drive growth and reshape our operations.
Digital and data revenues now represent 53% of the total,
and that’s a 60% increase since 2013. It’s a similar story
on the profile of our people.

Digital businesses obviously have a huge impact on our
development. Clients like Netflix, Uber, Vodafone, AT&T,
Flipkart in India, BGL (Comparethemarket.com) are all
fast-growing businesses that also influence and challenge
our structure and future direction.

Some key moves will play a big role for us in 2016.
We named Stuart Bowden as global chief strategy officer,
responsible for designing, integrating and championing
MEC’s strategic product. We also appointed Pele Cortizo-
Burgess as global chief creative officer; a new role and one
that recognises how much our creative leadership has
become an essential part of the agency’s future globally.

Shortly, we will launch a new division globally, MEC

Wavemaker, which brings together our content,
partnerships, social and search capabilities; built around
the growing importance that content plays in our business.
It starts life as a $100 million division with 700 people.

It was an infamously big year
for media pitches. We battled
hard and the highs certainly
outweighed the lows

These are clearly interesting times. And MEC is

positioned firmly at the crossroads where data, technology
and creativity merge.

Mindshare

Report by Nick Emery
Global chief executive officer

e set out with some big ambitions for 2015 across
new business, product innovation, our creative
output and driving automation and invention
across the network. We met those ambitions.

How we’re doing
Media Investment Management

Unilever, General Mills, Facebook and booking.com
voted for us as their global media agency of record – all
progressive and visionary clients and from very different
businesses, testifying to our breadth and diversity. These
global wins were complemented by significant national
wins from Indofood in Indonesia, Leroy Merlin in Russia,
Foxtel in Australia and Kang Shi Fu in China.

This year will be more of the same but faster.
Our biggest challenge is to marry brand marketing
and outcome-based media and to fuse both aggregated
channel planning with individual and addressable
audience planning and trading. We are developing
new approaches with our proprietary technology stack
and making dynamic addressable marketing a reality.

We are developing new
approaches with our
proprietary technology
stack and making dynamic
addressable marketing
a reality

Our product innovation continued with the roll-out

of our data-infused Loop rooms, discovering real-time
insights that drive real-time actions, across 40 offices. We
have reinvented communications planning for an adaptive
age with ‘Planning for Agility’, creating ideas that move at
the speed of culture and we have delivered outcome-focused
solutions through FAST (Future Adaptive Specialist Team)
units in global hubs, pulling together programmatic,
search, social and digital display into one performance-
focused delivery unit that works across markets. Content+
now creates dynamic real-time content for a programmatic
age and, together with Kantar, we have developed Growth,
a toolkit to drive sales and growth across markets. Shop+
and Life+ are our future-facing units dedicated to driving
media as digital retail shelf space, and wearables and
Internet of Things services respectively.

On the creative front, we enjoyed huge success, winning
the Cannes International Festival of Creativity Media Lions
Grand Prix with Vodafone Team Red and multiple other
Lions for Nike and Unilever. We won two of the three global
Effies with Jaguar Land Rover and Nike and 38 Effies in total
across the world. We were named the MMA Global Mobile
Agency of the Year, Global Cristal Awards Media Agency of
the Year, Mediapost’s Social Agency of the Year, Campaign’s
Network of the Year in Asia and national Agency of the Year
in Singapore, China, the Netherlands, Sweden, Turkey and
India – with over 170 awards in India alone in 2015.

Essence

Report by Christian Juhl
Global chief executive officer

dvertising Age was prophetic in naming us an
‘Agency to Watch’ last year. In 2015, we grew our
existing clients by 30%, started new relationships
with global brands like HP and Intuit, opened
three new offices and hired 100+ teammates.
To make it even more exciting, we culminated the year by
joining GroupM, following 10 years of independence.

At Essence, our mission is to ‘make advertising more
valuable to the world’. In 2015, we accomplished this more
than ever before by solving some of the world’s toughest
digital marketing challenges with the world’s very best
talent. We continue to advance the industry in analytics,
data science, technology and content – all leading to our
vision of Essence being recognized as the world’s most
advanced digital marketing agency.

We continue to advance
the industry in analytics,
data science, technology
and content

On the financial front, this year marked our fifth

sequential year of double-digit growth, with global revenue
from business development up 240% year-on-year. In
addition to the aforementioned new client wins, we won
valuable assignments from GrubHub, Visa and Viber.
And of course, our role as Google’s global digital media
agency of record continues to thrive. Also, it was the first
year our ad tech practice made a meaningful contribution
to our total revenue. This enabled us to increase our

WPP ANNUAL REPORT 2015

How we’re doing
Media Investment Management

investment in technology, bringing our engineering team
to roughly 20% of our total staff.

We’ll continue to invent, analyze and experiment in

2016. We’re currently in the process of creating a new
approach to talent acquisition and development. Our
people are our greatest asset and at Essence we recruit,
hire and retain only the very best. And it’s only by
keeping them as our center that we can continue to lead
and push the boundaries of digital media and marketing.

tenthavenue

Report by Rupert Day
Chief executive officer

ur objectives for 2015 were two-fold: the continuous
development of our existing services to clients
through the application of data and technology; and
the creation of new products and services focused

around increasing the efficiency of clients’ marketing.

Application of data and technology
Reaching audiences with precision when they are outside their
home is critical to some clients and creates opportunities for
tenthavenue to plan and execute media and content in unison.
Growth of digital screens in the out-of-home (OOH)
environment and new distribution technologies create the
potential to build near- to real-time content optimization
and enables the innovative use of mobile data to understand
geo-located OOH audiences. Our development of new
planning techniques joins up audiences across locations,
devices and screens. This is especially true in retail. Our
recent successes include:

Kinetic China being awarded the full service media
assignment for Swatch in China; covering all of television,
print, OOH and online.

Poster Conseil/Kinetic in France is starting to
revolutionize OOH planning and measurement by
utilizing mobile data from Spafax Networks.

Increasing client efficiency
The opportunity to tenthavenue lies in the area of content
creation, management and distribution.

1. Build once for all screens
Combining content management and digital production
capabilities from agencies such as Forward and Candyspace
allows us to design content, then build the core asset once
only and allow for screen and market adaptation. This
drives savings for clients, true transparency on cost of asset
creation and aligns content across all publishers. Clients
have realised that getting ad networks to build creative
execution is expedient but far from best practice.
2. Manage and distribute
tenthavenue is developing technology solutions in the
management and distribution of content to catch up to the
efficiencies already seen in online digital. Specifically, where
inefficiencies still pervade or unique market circumstance
exist, i.e.:

Out of home screens in all markets; and
Developing markets where mobile handsets are the
primary screens – and where functionality is lower and
data costs are higher.

Our development of new
planning techniques joins up
audiences across locations,
devices and screens

As ever, many thanks to all our clients, partners and

people for their support in 2015.

WPP ANNUAL REPORT 2015

How we’re doing

Kantar

Report by Eric Salama
Chairman and chief executive officer

ur clients are fixated by the need to differentiate and
be relevant. It is that relevant differentiation which
allows them to charge price premiums, maintain
margins, secure distribution on acceptable terms

and have customers remain loyal to them and try new
products and services.

We have teamed with other
WPP companies to ensure
that our insights are widely
used and embedded to
improve the effectiveness
and efficiency of creative
and media campaigns

We are equally fixated by the need to be relevant and

differentiated in the eyes of our clients, for many of the
same reasons. Against that background we were delighted
with the highest-ever increase in our preference scores in
2015 (by an unprecedented eight percentage points) – the
measure of differentiation used by our clients to assess
our relationship and work. We are not just talking about
relevant differentiation – clients are experiencing it. It is
testimony to the focus we have put on making our work
contemporary and relevant to the issues our clients are
facing and to the thought leadership, innovation and quality
of talent which we have brought to market during the year.

Relevant thought leadership
We have delivered world-class thought leadership around
the issues of greatest importance to our clients. Issues such
as how to build strong brands, compete effectively at a local
level, succeed in e-commerce, charge and maintain premium
prices. We have continued to publish studies that have been
read, discussed and absorbed by top management around
the world. Examples have been Millward Brown BrandZ
rankings globally and in China, India, Indonesia and

LatAm, Kantar Worldpanel’s Brand Footprint which focuses
on the issue of penetration, Added Value’s cultural insight
and premiumisation work and The Futures Company
Millennials, Centennials and Polycultural publications, as
well as Kantar Retail publications about e-commerce and
their retail PoweRankings. Many of the benchmarks we
have created (e.g. strength of retail brands, penetration,
brand differentiation) have been adopted as KPIs for senior
management in a host of client organisations and have led
to clients commissioning new work.

As clients have sought to restructure and reorient their

marketing and insight departments, Vermeer’s work on
Marketing 2020 and Insights 2020 has been published
in Harvard Business Review, discussed in CMO forums
around the world and used by clients to benchmark the
degree to which they are positioned to use marketing,
insights and analytics to grow.

Relevant innovation
We have focused on the issues which are the biggest pain
points for our clients. To these ends we have piloted, launched
and rolled out a number of new approaches, notably:

Making our work more impactful and predictive

Building our consulting capability. We have 1000+
consultants working within Kantar on marketing strategies
which span sectors such as retail and healthcare to issues such
as structure, market access and embedding insights. Their
impact has been felt by our clients ever more widely this year.
Socially infused tracking. TNS now incorporates social

media data in its tracking product for clients such as
SABMiller, making the results more real-time and predictive.
Programmatic segmentation. Clients such as IHG
have benefited from our ability to take our consumer
segmentation work for them, map profiles on to larger
databases and deliver these to a media agency to plan
and buy media in a way which has a proven uplift.

Using profiles. Through our Ignite and Lightspeed
platforms, and working cooperatively with GroupM and
Wunderman, we have built rich profiles on millions of
people across multiple markets – profiles that can be used
to enhance media planning and buying and which we can
use to target surveys on the basis of people’s behaviours
and attitudes.

Working horizontally. On many clients as diverse as
Indofoods in Indonesia, Pfizer globally and L’Oréal in the US,
we have teamed with other WPP companies to ensure that
our insights are widely used and embedded to improve the
effectiveness and efficiency of creative and media campaigns.

WPP ANNUAL REPORT 2015

How we’re doing
Data Investment Management

Transforming creative deliverables. In expanding our

Optimising marketing spend

creative capability through the acquisition of Graphic
(previously Guardian Digital Agency) and in putting more
internal emphasis on our creativity, clients as diverse as EY
and MundiPharma have rewarded us with more work on
the back of impactful creative ways of delivering insights.
And brands such as Kantar Health have built a reputation
for delivering complex medical conclusions through
interactive compelling dashboards.

Helping society through our public affairs work. Insight

and polling work for governments and NGOs has an
impact of a different order. IMRB’s work for the Indian
Department of AIDS control and TNS’s work for the
Kenyan Government on digital tax collection go to the
heart of policy making, while the polling we do around
the world informs the public debate.

Our best work often comes from
multi-brand multi-skill teams
putting aside agendas

How digital is transforming brand building

Measuring content. A key starting point is Kantar
Media’s ability to measure content on all devices and
platforms. The Netherlands became the first market in the
world to roll out cross-media measurement and we were
thrilled to be chosen as the industry’s partner to do so.
In the UK, we are measuring and reporting content which
is viewed time shifted and/or through various players on
tablets and smartphones. In Spain, we have built on our
partnership with comScore to launch an integrated TV
and digital service. We are currently looking at how we
can export real-time ratings (the only market in the world
where these are available being LatAm, through Kantar
IBOPE Media) to other markets. And we will continue
to roll out our Twitter ratings service which helps clients
understand the relationship between TV viewing and
Twitter activity and its impact on engagement.

Measuring digital brand building. Millward Brown’s
Digital Behaviour Analytics gives clients an understanding
of the digital path to purchase while our AdReaction and
Link for Digital products give clients a way of measuring
the impact that advertising and other content is having on
brands. Our partnership with comScore has resulted in a
more global, digitally-centred brand lift service.

70 WPP ANNUAL REPORT 2015

A key focus has been in helping clients understand and
optimize the impact of trade action. Kantar Retail XTEL’s
award-winning promotion optimization software has been
adopted by clients such as Kellogg’s and L’Oréal globally;
Kantar Retail Virtual Reality has been adopted after fierce
pitches by clients such as Unilever and Sam’s Club to help
optimize supply chain issues.

Similarly, we are focused on relating media consumption

to purchase behaviour. PowerPurchase was launched by
Millward Brown and Kantar Worldpanel to link brand
equity with purchase behaviour, the first client being JBS
in Brazil. In many markets we have linked digital tags to
Kantar Worldpanel panelists to enable us to relate TV,
Twitter and Facebook campaigns to purchase behaviour,
and to report for clients a measure of direct short-term ROI.
We have done the same in LatAm and the US to link TV and
purchase – in LatAm linking panels and, in the US, linking
big data sets of comScore, Rentrak and Kantar Shopcom.

Quality of talent
Even more important than technology is the quality of
talent we have across Kantar and our culture of innovation
and constant improvement. We have seen innovation in
everything from finance, HR and operations to marketing
and client service. And we have seen in reviews for clients
such as Unilever, Treasury Wines and Yildiz that our best
work often comes from multi-brand multi-skill teams
putting aside agendas and delivering unique sets of
actionable insights and strategies.

We have continued to emphasise the importance of
diversity in our hiring and have expanded our women’s
mentoring program. We have seen a growing number of units
awarded an externally assessed ‘best place to work’ award
– including Kantar Health by The Sunday Times in the UK
and Kantar Worldpanel by a host of organisations in France,
the UK, Spain, Ireland, China, Taiwan, Brazil and Mexico.

Kantar into 2016
Our recently-introduced Kantar First program will enable
better collaboration between our operating brands to better
serve client needs by eliminating internal profit silos; by
encouraging the sharing of data across brands; and by
facilitating better co-operation at a local level around
which, increasingly, many important and profitable clients
are organising themselves. Kantar First will enable us to
bring the best of Kantar to many more of our clients across
the world, while keeping the brands and specialisms which
they have come to trust.

How we’re doing

Hill+Knowlton Strategies

Report by Jack Martin
Chief executive officer and chairman

n 2016, our 90th year in business, Hill+Knowlton
Strategies is renowned as a global source of wisdom,
led by accomplished executives who can deploy
an innovative portfolio of communication services

delivered by award-winning creative talent. H+K has
adapted to the evolving environment involving the
democratization of communications, and in 2015 had
our third year of notable growth.

recently Hill+Knowlton Strategies US received
WorldatWork’s ‘Work-Life 2016 Seal of Distinction.’

We continue to be gratified by the confidence in our

work shown by a growing number of world-class clients.
We are especially proud to have worked with the RFU for
the 2015 Rugby World Cup. The great campaigns built
with such long-term partners as adidas, Ford, Intel and
P&G give us a chance to do some of our most strategic and
creative work. And we’re excited by the new relationship
with the dynamic brand Huawei.

2016 will be a year of accelerating growth and
increasing momentum for this iconic firm with a grand
legacy for original thinking, service innovations and
creative solutions for complex problems.

Our comprehensive content
offering went from strength
to strength in 2015

Cohn & Wolfe

Report by Donna Imperato
Chief executive officer

Five years ago, we made a big bet on digital, content
creation and social media, and now we are seeing a return
on those investments, beginning with the Centre of Creative
Strategy in London led by Richard Millar, which has
developed a common H+K ideology and is kick-starting our
own creative movement. Here we have developed an arsenal
of proprietary intellectual property to help our clients
develop winning brand narratives.

Our comprehensive content offering went from strength

to strength in 2015. With chief global strategist Alex
Jutkowitz at the helm, our content expert Group SJR
continues to pay dividends, from awards for the GE Tumblr
site and Txchnologist to the launch of the content marketing
unit Colloquial, a joint venture in Australia combining
J. Walter Thompson’s well-known marketing brand with
the publishing and audience development experience of SJR,
the 2014 Global Content Marketer of the Year. In Brazil,
we acquired Ideal, a public relations, advertising, digital and
content firm with 170 professionals, more than doubling
the size of H+K’s Latin American operations.

Our continued success is underpinned by great
talent and a commitment to a culture where that talent
is nurtured. In 2015, the Great Place to Work® Institute
again named Hill+Knowlton Strategies Canada one of the
Best Workplaces in Canada. Last summer, we launched
our global HER program (Helping Executives Rise), and

t was another year of double-digit growth as Cohn &
Wolfe reached new heights in our quest to become the
best integrated communications agency in the public
relations industry. We have advanced well beyond the

vision we set five years ago.

Our new business and organic growth were fueled by

our ability to deliver the big ideas that clients want and
bring those ideas to life through our growing capabilities
across mobile, digital, paid and content marketing. This
year, we leveraged M.E.-24, our mobile engagement unit,
to launch the world’s first mobile signature analysis tool for
Colgate’s Irish Spring Signature line of products. We defied
category norms with ‘Unbreakable Valor,’ a limited-edition,
interactive comic book series that transformed Panasonic’s
Toughpad® tablet into an unlikely B-to-B superhero. And
we introduced Mission 31, an underwater exploration with
Jacques Cousteau’s grandson filmed entirely on Microsoft’s
Nokia Lumia 1020.

These award-winning campaigns were fueled by
initiatives that optimized the quality and consistency of
our insight-driven work worldwide. This year, we globally
embedded our proprietary DDIM™ (Dig Deeper. Imagine
More.) programming process and enhanced our global
knowledge-sharing tools.

I am incredibly grateful to our talented people around

the world for a stellar 2015. They have been the force
behind a number of prestigious industry honors, including

WPP ANNUAL REPORT 2015

How we’re doing
Public Relations & Public Affairs

Large PR Firm of the Year (PR News), multiple Best Large
Place to Work awards (Holmes, PRWeek, PR News) and
two nods for Southeast Asia Agency of the Year (Holmes,
Campaign Asia). Our people have also enabled Cohn &
Wolfe to add or expand great clients, including Alcon,
Barclaycard, Colgate-Palmolive, Danone, Global Blue,
InterContinental Hotels Group, Pandora Jewelry and
Treasury Wine Estates.

Finsbury

Report by Roland Rudd
Chairman
and
Michael Gross
Chief executive officer

Our new business and organic
growth were fueled by our
ability to deliver the big ideas
that clients want

Cohn & Wolfe expanded in India, Brazil and China.
With majority-stake acquisitions in India’s Six Degrees
PR and content development and marketing subsidiary,
Alphabet Consulting, as well as Brazil’s renowned Grupo
Máquina, we welcomed hundreds of talented new
professionals across Delhi, Mumbai, Bangalore, São
Paulo, Rio de Janeiro and Brasília. We also added our
twelfth office in Asia, in Guangzhou, to meet growing
client demands across China. Our global specialty
companies, GCI Health (see page 77) and AxiCom,
also performed well with significant new wins and
strong organic growth.

I expect to see Cohn & Wolfe deliver another year
of excellent growth in 2016, as we further leverage our
position as an integrated marketing leader and continue
to recruit and retain the industry’s best talent.

insbury is continuing to expand its influence as
a globally-integrated strategic communications
consultancy. It specialises in managing complex
assignments in corporate reputation, financial and

transaction communications, public affairs and crisis
management. Finsbury has offices in the UK, the US,
mainland Europe, the Middle East and Asia. It provides
expert strategic advice and execution to many of the
world’s most successful companies. In 2015, Finsbury
added significant new assignments for Hutchison, Foxconn,
Bank of China, EY and IE Singapore, among others, to
complement its existing work for major clients including
Toyota, UnitedHealth Group, Starbucks, Marks & Spencer,
Deutsche Bank and Ahold.

Revenues increased as we managed a number of

high-profile cross-border deals. We represented SABMiller
in its $107 billion acquisition by Anheuser-Busch InBev,
Royal Dutch Shell in its $70 billion acquisition of BG
Group, UnitedHealth Group in its $12.8 billion acquisition
of Catamaran and Walgreens Boots Alliance in its
$9.4 billion acquisition of RiteAid. The company also
supported Worldpay’s initial public offering, managed
major safety and environmental crisis situations for
Duke Energy and Toyota, and was appointed as Canada
Pension Plan Investment Board’s first agency in Asia.

Revenues increased as we
managed a number of high-
profile cross-border deals

In May, The Holmes Report named Finsbury the North

America Financial Agency of the Year. This reflects the
increasing success of our M&A and financial communications
capabilities in the US.

72 WPP ANNUAL REPORT 2015

HERING SCHUPPENER

Report by Ralf Hering
Principal partner and chief executive officer

n 2015, we celebrated our 20th anniversary with
new records, both in revenues and results. In addition,
we remained No.1 in the Mergermarket rankings for
M&A transactions in Germany – for 12 years now –
and ranked in the top 10 in Europe and globally. We also
boosted our business with many high-profile assignments,
advising clients on communication policies and regulatory
issues in large IPOs, CEO transitions, restructurings and
global corporate crises.

Our lead position in the strategic communications
consultancy market in Germany has never been stronger.
We are trusted advisors to more than 150 corporations
from Germany, Europe and internationally, across all
major industries.

Our pioneering digital corporate & transformation
practice helps our clients to manage the communication
challenges of ‘Industry 4.0’. This key initiative for 2016

Our lead position in the
strategic communications
consultancy market in
Germany has never been
stronger

started successfully at the end of last year and is already
becoming another competitive advantage for our firm.

How we’re doing
Public Relations & Public Affairs

WPP ANNUAL REPORT 2015

How we’re doing

Landor
See report by Lois Jacobs, chief executive officer,
on page 60.

Group XP

Report by Simon Bolton
Group chief executive officer

s this report goes to press, I am delighted
to announce the formation of Group XP.

This group provides an experiential branding

capability to clients ready to challenge their
marketing conventions. Comprising Brand

Union, FITCH and newly-acquired SET – which will also
continue to operate individually – the group constitutes one
of the world’s largest brand experience consulting groups,
featuring a thousand smart minds across a network of 40
offices and spanning five continents.

Below are the reports for the three businesses for 2015.

Brand Union
Report by Toby Southgate
Worldwide chief executive officer

015 was a year of change as we took further steps
to deliver our belief: ‘the experience of the brand
is the brand’. This belief captures the shift in the
wider world of marketing, a shift that requires
new capabilities and approaches. In July 2015, as one of
the architects of this belief, I succeeded Simon Bolton as
worldwide CEO to lead this charge.

businesses, promoting Mat Weiss to MD in Africa, a
market in which we work closely with Ogilvy. In APAC,
where our Ogilvy-shared venture is a source of pride and
potential, the business is maturing under the leadership
of Monica Lee (Asia North) and Graham Hitchmough
(Asia South).

We won new client relationships, including KPMG,
Tencent, Dell, Liberty Mutual, Simply Health and Telekom
Malaysia. Our long-standing Key Client program remains
vital, especially in the context of broader horizontal
partnerships across WPP, including Vodafone, GSK,
Bank of America, IHG and CBRE. We triumphed at
Asia’s Transform Awards, with eight wins, including
the Grand Prix for Pizza Hut.

We carry momentum and energy into 2016 and
are excited by the opportunities that Group XP brings.

FITCH
Report by Simon Bolton
Worldwide chief executive officer

esigning the Future’ remains our mission
at FITCH and I’m happy to report that we
are delivering. We use our rich retail heritage
and understanding of the customer journey to
evolve unique, responsive physical and digital experiences.
I’m pleased to report that it has been a year of strong
business growth, particularly in North America. We have
won some significant projects; notably, we are working
with Ford to define new customer experiences in the world
of automobiles and mobility.

Other major client wins include Samsung, Mars,

Supervalu, Butlin’s and Edrington.

We believe that the broadcast model of brand building

Hamleys ‘Worlds of Play’ opened in Moscow in

is inefficient. Control now sits with users, consumers,
audiences and stakeholders of all kinds, empowered with
unlimited information and the gift of immediate
gratification. These new dynamics are core to our advisory
skillset. We are working further upstream than ever,
helping businesses navigate their futures, building more
relevant, sustainable strategies for growth and engagement.
This approach is now embedded around our network.
John Shaw, our chief product officer, continues to develop a
team that embodies this commitment. This year, Iain Ellwood
joined us as worldwide strategic growth director. Iain brings
deep, global experience rooted in quantitative rigour.

Our new approach delivered growth overall and was

March 2015 and has been recognised at several retail
design awards, including Store Design of the Year at the
World Retail Awards. FITCH has also been recognised as
Design Firm of the Year for a remarkable fifth consecutive
year in the US. FITCH won its first Silver and Bronze
Cannes Lions for Formation, our book that pays tribute
to the craft of the adidas World Cup identity.

We began 2015 by consolidating our global studios
into three regions overseen by regional CEOs. Hermann
Behrens joined us in March to lead the business in North
America. David Blair, previously MD for EMEA, expanded
his role to build the business in India, which he originally
established in 2007.

particularly strong in New York, Singapore, Madrid,
Paris and Hong Kong. We re-set our German and African

Our growth in 2015 came in spite of an increase in
caution on the part of many brands and retailers in more

74 WPP ANNUAL REPORT 2015

How we’re doing
Branding & Identity

mature markets. I look forward to working closely with the
global team to build FITCH’s opportunities in new markets
and in the new offer created by Group XP.

All five companies in The Partnership delivered

strong performances in 2015.

SET
Report by Sabina Teshler
Founder and chief executive officer

ET, a world-class brand experience agency, joined
WPP in June 2015. We design and curate great
customer experiences in retail, trade and live
event environments.

Operating from our US base in Portland, Oregon, SET
was originally established to support major leisure apparel
brands such as Nike, Oakley and Arc’teryx. In North
America, SET also has offices in Long Beach, California
and New York and this has led to the diversification of
our offer to win major assignments from Google, TCCC,
Christian Dior, Beats, Spotify and Microsoft.

2015 was a significant year as SET began our

international expansion through the acquisition of live events
agency Flourish in London. The founders, Catherine Smee
and Guy Tremlett, joined the global management board and
will look to expand their imaginative expertise into new
markets. We also established a presence in Amsterdam.

2015’s high points included NBA All Stars for Nike,
Michael Jordan Paris at Palais Tokyo and the Bentayga
launch for Bentley at the Geneva motor show. In 2016, we
look forward to playing a significant role in Group XP.

The Partnership

Report by Jim Prior
Chief executive officer, The Partnership

s a group of five distinct but closely-
collaborative companies operating from
20 offices around the world, The Partnership
combines all the benefits of a global brand
and design network with those of boutique,

specialist agencies. Each company is a reputational leader
in its field and is committed to a relentlessly high standard
of work delivered through individually-tailored client
relationships led by senior practitioners.

Addison Group
Under the leadership of CEO Tom Robinson, the company
strengthened its reputation as a leader in corporate content
and communication, most notably with clients such as
British Land and Essentra. Digital capabilities form a
significant part of the offer and were instrumental in
securing several new client wins.

Lambie-Nairn
Specialists in the creation and management of dynamic
brands, Lambie-Nairn’s offer proved compelling to
clients across the world in 2015. The company’s Brand
Optimisation offer – a systemised way to manage multi-
market, multi-brand, multi-agency brand coherence –
and its outstanding capabilities in motion graphic design
helped the company perform strongly.

Peclers Paris
CEO Eric Duchamp oversaw a successful year. The
company’s highly-influential trend books sold well globally
and its consulting business grew substantially in China,
the US and Europe. With long-established strength in
the fashion and beauty sectors, Peclers continues to gain
traction as a general trend and futures expert with value
to a wide-reaching portfolio of clients.

The Partners
The Partners saw excellent growth across all of its three
offices – London, New York and Singapore. The company’s
reputation for a balanced combination of strategic and
creative excellence was furthered by its Brand Value
Growth study, produced in conjunction with BrandZ
and Millward Brown, and by numerous creative award
successes around the world.

VBAT
From its base in the Netherlands, VBAT’s influence
extended far and wide in 2015, for example with major
programs of work for Woolworths in Australia and Pemex
in Mexico. Under the leadership of CEO Eugene Bay, and
with capabilities in retail, packaging and corporate brand
design, VBAT is a leading light in the Dutch market and
a global force.

WPP ANNUAL REPORT 2015

How we’re doing

Ogilvy CommonHealth
Worldwide

Report by Matt Giegerich
Chairman and chief executive officer

espite hastening challenge and change in the global
healthcare marketplace, Ogilvy CommonHealth
Worldwide (OCHWW) delivered yet another
year of growth and expansion in 2015. In moves

consistent with our five-year plan, we’ve continued driving
the agency forward with a focus on streamlining our
global network, collaborating across Ogilvy and WPP,
relentlessly pursuing creativity and innovation in healthcare
communications, and further diversifying our client base.

Our collaborations within
the Ogilvy network and
across WPP have allowed
us to expand our breadth
of services while creating
better global efficiencies

Over the past year we streamlined the OCHWW
network to better align with our clients’ global footprints,
ensuring wherever a marketplace need or opportunity
arises, we have both the physical presence and required
health expertise in place. Our collaborations within the
Ogilvy network and across WPP have allowed us to
expand our breadth of services while creating better global
efficiencies. Examples include our emphasis on success with
Team clients, our collaboration with Sudler & Hennessey
to combine offices in Spain, as well as our providing full
financial system and back-office support for WPP’s largest
US healthcare agencies.

In this rapidly evolving environment, innovation –
new skills, new services, new technologies – is vital to
OCHWW’s long-term success. This year, along with
numerous other advances, we launched a comprehensive
electronic health records offering to enable contextual
messaging within the normal course of a physician’s digital
workflow, pioneered the application of social media within

76 WPP ANNUAL REPORT 2015

the highly-regulated healthcare environment, and developed
unique expertise in data design and health behavior change,
making it easier for all audiences to more fully comprehend
and act upon health information.

With 41 new assignments from 25 clients in the US
alone, we continued to expand our business in traditional
biopharmaceuticals. But with ongoing industry
consolidation and financial pressures mounting, we
broadened our focus well beyond pharma, pushing further
into the health and wellness marketplace and converting
new work around the globe in OTCs, medical diagnostics,
nutrition and health service brands. To this end, we
launched Ogilvy CommonHealth Wellbeing, focused
on helping transform the individual health state based
on fundamental human biology, beliefs and behavior.

And our relentless march forward will continue in 2016
and beyond as we continue to envision and drive the inherently
important future of health-oriented communication.

ghg | greyhealth group

Report by Lynn Vos
Chief executive officer

n 2015, ghg had its best year ever, achieving significant
top-line and double-digit profit growth, fueled by
breakthrough, multichannel agency launch campaigns,

innovative medical education and healthcare-access
programs. ghg significantly expanded its client base,
launched several new products in oncology, rare diseases
and diagnostics, and has engaged with exciting start-ups
in the health IT sector.

It is a ‘never before’ moment in healthcare, where the
trends are working in favor of positive change: a shift from
products to outcomes, the growing personalization of
health content, technology-enabled care, and a national
will to stomp out chronic disease. Demonstrating its spirit
of innovation and role as a change agent, ghg became IBM
Watson’s first health-agency partner, making it possible
to bring cognitive computing to healthcare brands. ghg
acquired The Lathe, a mobile-first agency pioneering
m-health programs that connect patients, caregivers and
professionals. In addition, ghg expanded its new point-of-
care offerings, investing in OptimizeRx Corporation, a
software company whose content-delivery platform enables
pharmaceutical companies to provide on-demand patient-
care services, and PARx Solutions, which specializes in
expediting the prior-authorization process.

How we’re doing
Healthcare Communications

With the growing use of digital and cognitive technology,

healthcare industry marketers have a golden opportunity to
deliver behavioral insight-based messaging and tools to drive
better health outcomes. ghg’s thought leadership and original
research in these areas led to the coining of the phrase ‘Chief
Health Officer,’ or CHO, the individual (usually female) who
makes healthcare decisions for herself and her family, as
well as the creation of the seminal white paper, The Gulf
Between Them: The New Customer and Her Healthcare
Partners. ghg believes that Communication is the Cure™
to improving health and wellness, and the CHO will be
an effective, even revolutionary, healthcare advocate.

Demonstrating its spirit of
innovation and role as a
change agent, ghg became
IBM Watson’s first health-
agency partner

ghg’s philanthropic work with the Jed Foundation
continues to be highly rewarding, as major progress is
underway to address the emotional health challenges
of young adults on campuses nationwide.

GCI Health

Report by Wendy Lund
Chief executive officer

CI Health, WPP’s global specialty healthcare
communications and PR agency, is continually
recognized for our ability to integrate across
marketing disciplines and within PR to identify

the most appropriate channels and platforms that
maximize the impact of our clients’ messages, specifically
leveraging our sought-after traditional, social media and
advocacy capabilities.

GCI Health has garnered an enormous amount of
recognition in 2015, being named both Global and North
American Healthcare Agency of the Year by The Holmes
Report, and Bulldog Reporter’s Healthcare Agency of the
Year. Our creative and breakthrough programming was
honored with a SABRE Award for RX Campaign of the
Year, Global SABRE for PR Campaign of the Year,
PRWeek’s Global Breakthrough Campaign of the
Year and multiple digital and multicultural awards.
Our thought leadership in today’s multi-channel
landscape has allowed us to continue our record growth,
bringing on 30 new accounts in innovative, emerging
areas and ones with a critical unmet need, like biosimilars,
oncology, ALS, spinal cord injury, medical device and
top-notch healthcare providers.

Our thought leadership
in today’s multi-channel
landscape has allowed
us to continue our record
growth

In 2016, GCI Health will continue to help our clients
embrace the changing healthcare landscape, ‘do something
different’ in this heavily-regulated environment and put
patients at the center of everything we do.

WPP ANNUAL REPORT 2015

How we’re doing

AKQA

Report by Ajaz Ahmed
Chief executive officer

Ideas that move the world

n 2015, AKQA’s collaboration with our clients delivered
a continuous stream of imaginative, breathtaking work.
Highlights include ‘Your Year directed by Nike+’, ‘The
Last Shot’ for Jordan and ‘Don’t Look Away’ for Usher.

Momentum
We were appointed by 14 new organisations while
increasing our responsibilities and expanding relationships
with existing clients.

Recognition
Breaking all previous records, we won more than 125
major awards – including 12 Cannes Lions and four D&AD
– making it our most successful awards year to date.

Team
The credit for these awards goes to our team – around
2,000 people across 17 offices. We opened a new office in
Gothenburg, expanded our spaces in New York and Tokyo,
and welcomed 200 employees in Italy with the addition of
H-ART to our family.

Thought
As part of our AKQA Insight series, we have hosted
speakers from billionaire tech CEOs to visionary
astronomers, each sharing their illuminating thoughts with
our team and clients. And as a follow-up to our bestselling
title Velocity, Penguin Random House published Limitless:
Leadership That Endures. All proceeds from Limitless are
donated to five charities voted for by our people.

The limitless generation
We celebrated 10 years of AKQA Future Lions, the official
student competition we pioneered at Cannes. Future Lions
challenges young innovators to create an idea not possible
three years ago. Attracting more than 2,000 entries from
60 countries, Future Lions is the most popular category at
the Cannes Lions Festival. By providing the next generation
with a platform to share their imagination and drive,
Future Lions has helped to kick-start hundreds of careers
in our industry.

78 WPP ANNUAL REPORT 2015

The future inspires us. We work to inspire
2015 has been momentous year for the work, our people
and clients. And now, more than ever, we’re excited about
creating what’s next.

Geometry Global

Report by Steve Harding
Global chief executive officer

n 2015, we made robust efforts to build capabilities
while expanding our key global client relationships and
creating award-winning, effective work. I’m pleased
to report that these measures bore fruit – we achieved an
excellent performance, we are operationally more efficient
and well-positioned to leverage the tremendous growth
opportunities that lay before us.

Much of this momentum was sparked early in the year

when we articulated our guiding purpose for Geometry’s
future – We inspire people to buy well – and voiced a
belief system that all our people could embrace. In addition,
leaders from across our network united their ambitions
and charted a practical roadmap for success underpinned
by Pivotal Ideas – our creative approach, and Leonardo
– our strategic methodology.

With a renewed vigor in our offering, we significantly
broadened the global scope and scale of our relationships
with Coca-Cola, Unilever and GSK in 2015. Simultaneously,
we expanded our footprint in important markets such as
Mexico, with the acquisition of Cacto Arte e Ideas S.A.
De C.V. (Cacto). In India, we merged with Encompass to
form the Geometry Global-Encompass Network, becoming
the largest experiential marketing entity in the region.

These strides are large but the one we are most proud
of is that we raised the bar on the quality of our client work,
winning more than 300 global and regional awards including
19 Lions at Cannes and 48 Effies. This speaks to our
extremely talented team whose creativity and intellect have
enabled us to be counted among the best in the business.

2016 promises to be action-packed as we uncover new
opportunities in continued collaboration with our valued
WPP partners. We look forward to a steady march towards
incremental growth as we continue to make a measurable
impact on our clients’ business.

How we’re doing

Report by Mary-Ellen Howe
Chief operating officer, Specialist Communications,
North America
and
Laurence Mellman
Chief operating officer, International Specialist
Communications

PP’s Specialist Communications division
comprises individual business units with
separate and distinct marketing expertise
by industry, audience segment, or medium.

Our clients benefit from the depth of knowledge and
strategic focus of these specialists; the Group benefits
through the flexibility these companies offer as partners
for sister WPP companies when serving clients’ integrated
marketing needs. Our role in managing this portfolio
is to help these companies grow on their own terms and
to support co-operation opportunities across the Group.
Momentum going into 2016 remains positive with

continuing growth expected.

WPP Scangroup is listed on the Nairobi Securities

Exchange, operating a multi-agency model as WPP’s
partner across multiple disciplines in sub-Saharan Africa,
with majority-owned offices in Ghana, Kenya, Nigeria,
Rwanda, South Africa, Tanzania, Uganda, Zambia and
minority-owned operations in Burkina Faso, Cameroon,
Gabon, Ivory Coast, Namibia, Senegal and Zimbabwe.
The group also has affiliate partners in Botswana, DRC,
Congo-Brazzaville, Madagascar, Malawi, Mauritius,
Mozambique, Niger, Reunion and Sierra Leone.

2015 saw the first full-year benefit of new offices in
Uganda (J. Walter Thompson) and Zambia (Ogilvy &
Mather), and H+K Strategies in Nigeria was launched.
The media agencies also became more closely aligned
with the GroupM network.

The company’s agencies continued to win numerous

experienced strong growth from its long-time client Capital
One, with major assignments for Capital One Home Loans
and the repositioning of the Capital One Bank.

Seattle-based Cole & Weber increased revenue by 80%

after winning new business from Harmonix (makers of
the Rock Band video game), Trident Seafoods (America’s
largest seafood producer) and DeVry University among
others. Clients appreciate the nimbleness of a medium-size
agency that combines the creativity of a boutique with the
strategic rigour of a business consultancy and the digital
prowess of a stand-alone digital shop.

Sra. Rushmore in Madrid worked to consolidate the
Vodafone account in 2015 with a win of the digital business
and the launch of Vodafone One and Vodafone TV. In
addition, the agency was named as one of three global
agencies to work on the Coca-Cola global brand – a
tremendous achievement.

awards across the region.

The Farm Group had another year of significant activity

Alongside collaboration with sister agencies, acquisition

opportunities continue to be assessed to broaden service
and geographical offerings.

In 2015, Berlin Cameron made a strategic move to

focus the growth engine of the business on strategic
planning and consulting. The agency partnered with BAV
Consulting and, after several successful collaborations for
US clients Comcast, Vimeo and the GILT Group, landed its
first major global project: the repositioning assignment for
Toyota Motor Corporation’s Lexus brand. While consulting
will continue to be a lead focus in 2016, the agency

in 2015, providing post production solutions for producers
and broadcasters in the UK and US. The London facilities
remain highly utilized on prime-time projects (such as
Downton Abbey) for ITV, BBC, Channel 4, and UKTV.
A new, state-of-the-art facility is being built in London.
Activity in 2016 will include coverage of the Rio Summer
Olympic Games.

US-based corporate events company MJM created

inspiration and impact for top-tier clients, including
Deloitte, NAPA, Discover, Unilever and Pfizer. MJM took
talent development and corporate assembly to the next

WPP ANNUAL REPORT 2015

How we’re doing
Specialist Communications/WPP Digital

level with creative strategy and production for their clients’
most significant internal-facing events.

Metro Broadcast continued to invest in game-changing

event technologies and creative skills, combining both
to deliver complex, live events in the UK and around the
world. Clients from a range of sectors including banking,
professional services, pharmaceuticals, energy and
government rely on Metro’s creative and technical strengths
to find new and exciting ways to engage audiences through
live or broadcast communications.

Mando continued to solidify its position as the world’s
No.1 promotional risk management company with another
record-breaking year. Investment in France, Spain, Australia,
Italy and Germany has enabled key clients such as Nutella,
McDonald’s, Coca-Cola and E.Leclerc to construct some
of the most innovative promotions worldwide.

Pace, under new leadership, expanded its reach to
include real estate projects throughout the New York
metropolitan area as well as the Boston and Ohio markets.
The Green Division continues to expand beyond real estate
with additional assignments in the Education sector.

The Food Group has continued to build its food and

beverage marketing business with core clients such as
Mondelēz, Kraft, Heinz and The McIlhenny Co., and the
addition of Mars, Regal Springs Trusthouse and Ventura
Foods to its client roster.

Specialist UK CRM agency, EWA, continued to build

on new services around political polling, surveys and
telephone contact with voters, working on local and
European elections, and the UK General Election. Core
services focused on improving relationships between clients
and their customers through the delivery of promotions,
campaign response and customer experience solutions,
generating new business from JET, Linden Homes and
Wiltshire Farm Foods.

BDG architecture + design continued to strengthen
its position as a leader in the development and design of
dynamic and agile working environments. Its work in
the UK included the completion of Ogilvy & Mather and
MEC’s new location at Sea Containers House (which
will accommodate over 2,000 staff) as well as Cannington
Court – a highly-sustainable training campus within a
Grade 1-listed priory in Somerset – for EDF Energy.
Significant client wins through the year included Sky,
Palantir and IO Oil and Gas. 2015 also saw the studio
increase its international portfolio, the most notable being
the three-year co-location project for WPP Madrid.

Report by Mark Read
Chief executive officer
and
Mark Povey
Chief operating officer

PP Digital is a group of companies whose
capabilities lie at the forefront of digital
marketing, experience development and
organizational transformation. In 2015,

with a focus on five key areas – mobile, commerce, data
and technology, content development and social media
marketing, WPP Digital companies continued to win
new business, build capability, and receive awards and
recognition from partner and industry organisations.
POSSIBLE, a global digital agency, reinforced its
position as an innovative, results-oriented agency. The
agency introduced the industry to its winning philosophy
with the publication of the best-selling book, Does It
Work? POSSIBLE garnered two Cannes Lions awards
for its work on Microsoft’s The Collective Project and
was ranked by Advertising Age as one of the industry’s
best places to work for the second consecutive year.

Digital innovation agency Rockfish experienced growth

across new and existing clients and evolved its innovation
offerings in retail, omnichannel marketing, business
marketing and digital design. The agency was recognised
with a win at the TechCrunch Disrupt Ford Hackathon and
was named the innovation agency for Southwest Airlines.
CMO Dave Knox was named to Advertising Age’s 40
Under 40 and CEO Kenny Tomlin was named a 2015
Tech Titan by Austin Business Journal.

Blue State Digital strengthened its position as one
of the world’s top creative and technology agencies for
purpose-driven brands. BSD helped raise hundreds of
millions of dollars and launched new platforms for high
profile organisations including The Global Fund, United
Way Worldwide, Google Re:Work, The Barack Obama
Foundation, The Nation magazine, the Natural History
Museum in London, and the Massachusetts Institute of
Technology. For the second year, the agency was honoured
with the Digital Campaign of the Year in the Healthcare
Marketing IMPACT Awards for its work with the Coalition
to Protect America’s Health Care. BSD also won several
Webbys for its work with Google, the British Labour Party
and EMILY’s List.

Johannes Leonardo, a creative-led agency, continued
to treat the consumer as the most potent medium which

WPP ANNUAL REPORT 2015

How we’re doing
WPP Digital

led to continued success in 2015. JL grew via expanded
relationships with key clients including Google, Mondelēz
and adidas Originals, and new business wins including the
launch of PlayStation Vue, the company’s new streaming
TV service.

Digital agency F.biz had an excellent year. New business

wins included America Móvil, Nestlé Purina, Nescafé
Dolce Gusto and all Luxxotica brands. The agency
launched a marketing tech consulting business unit and
was recognised for its creative capabilities with two Lions
at Cannes for its work with Saraiva and Singulares, as
well as an Effie Award for its work with Motorola.
Hogarth, a marketing implementation agency,
strengthened its position via new business wins in the
Middle East, APAC and Latin America, and expanded
geographically with the opening of a new office in Istanbul.
The agency won and delivered significant new business
due to the increase in demand for global digital production
efficiency. Hogarth enjoyed particular success in
commercial production, engaging globally with some
key new clients.

By continuing to acquire,
invest in and partner with the
most innovative companies
in the world, WPP Digital
improves the Group’s and our
clients’ understanding of the
digital media and technology
landscape

Marketing technology and systems integration

consultancy Acceleration had another strong year in 2015.
The company won the Data Story Telling Award for Best
Data Integration and was listed by Ventana Research as
a 2015 Leader in Business Intelligence based on digital
transformation work undertaken with SABMiller.
Acceleration also won digital and data transformation
initiatives with Standard Bank and T-Mobile.

Global digital commerce consultancy Salmon delivered

market-changing commerce solutions for leading brands

including Audi, Sainsbury’s and Selfridges. Salmon
delivered a new global B2B web platform for Premier
Farnell in 50 language variants and 20+ currencies, and
a new commerce platform for Domestic and General.
In recognition of its work, Salmon was awarded Best
eCommerce Agency at the RAR Digital Awards while
Salmon’s client DFS won Best Digital Experience and Best
Omni-channel Experience at the UK Digital Experience
Awards. Salmon also extended its commerce offering via
a partnership with Magento.

Cognifide, an experience management consultancy
that specialises in content management and digital asset
management had a record year of growth in 2015. The
company built on new WPP relationships by embedding
global clients such as Ford and HSBC. Other new business
wins included recruitment giant Robert Walters, Penguin
Random House and GSK.

WPP entities entered into key partnerships that will

benefit WPP companies and their clients. The Data
Alliance, a horizontal team that helps WPP companies
access and leverage data, made significant progress in
2015. This group signed partnerships with RAC, Global
Webindex, Statista, Facebook and Amazon that will
provide access to valuable insights. Newly-established
China-based commerce company Kuvera entered into a
partnership with Paipai, China’s leading social commerce
platform, that names Kuvera as Paipai’s strategic partner
for developing mobile social commerce platform in China
for global brands.

Our investments contributed meaningfully to
performance in 2015. In April, we made a strategic
investment in Refinery29, a leading privately-held fashion
and lifestyle media company that provides content,
shopping solutions and social networking opportunities
targeted toward millennial women. In 2016, we will
continue to explore investment opportunities in line with
our strategic priorities to expand our offering.

We are pleased with our progress in 2015 and, looking

ahead to 2016, see significant opportunity for growth.
By continuing to acquire, invest in and partner with the
most innovative companies in the world, WPP Digital
improves the Group’s and our clients’ understanding of
the digital media and technology landscape and gives
them the resources and connections they need to thrive
in an increasingly digital world.

WPP ANNUAL REPORT 2015

How we’re doing

Report by George Rogers
and
Satish Korde

PP has created 45 individual Global Client
Teams, representing over a third of WPP’s
revenue. Each is led by a single Leader who is
focused solely on the client, quality of the work

and talent of the team.

Teams are custom-built around a client’s specific needs
and challenges, with an integrated strategy from the get-go
– our commitment to horizontality makes that seamless.
By extending beyond the verticals, WPP can deliver global
scale, extraordinary local insight and an unrivalled ability
for expansion in the faster-growing economies.

The key to the success of the Team approach is our
people. We have diversified our talent this year and our
priority is to continue to develop our leaders through
a myriad of training programs.

We live and breathe
horizontality in our quest to
deliver the most competitive
and innovative solutions for
our clients

We are obsessive about continuous improvement and
learning, achieved by sharing best practice through open
forums, bringing together our local Regional, Sub-Regional
and Country Managers and our global Team Leaders, and
ensuring that our clients have a seamless connection
through to WPP innovation and our latest acquisitions.

We live and breathe horizontality in our quest to deliver

the most competitive and innovative solutions for our
clients. We collaborate to compete, and work hard to fuse
our extraordinary creativity with our intellectual firepower
– an unbeatable combination that contributed to WPP
being named Holding Company of the Year at the
Cannes Lions International Festival of Creativity for
five years running, the Effies’ Most Effective Holding
Company for the last four and the world’s best parent
company by Warc for the second consecutive year.

WPP ANNUAL REPORT 2015

33 34 35

Satish Korde

1 George Rogers
2 Alina Kessell
3 Christian Schroeder
4
5 Gowthaman Ragothaman
6 Rose Wangen-Jones
7 Carolyn Oddo
8 Carl Hartman
9 Michael Buttlar
10 Anthony Wong
11 Stephen Forcione
12 Heather MacPherson
13 Günther Schumacher
14 Joe Rivas
15 Rafael Esteve
16 Iggy Diez
17 John Seifert
18 Jennifer Graham Clary
19 Gloria Gibbons
20 Erin Byrne
21 Malia Supe
22 Lorri Esnard
23 Ida Rezvani

24 John Lynn
25 Michelle Harrison
26 Phil Lancaster
27 Jon Cook
28 Deborah Kerr
29 Chris Hunton
30 David Chapman
31 Kim Brink
32 Daniel Goldberg
33 Peter Dart
34 Ian Rotherham
35 Serene Wong
36 Danny Josephs
37 Joseph Petyan
38 Susannah Outfin
39 John McDonald
40 Anders Kinberg
41 Jane Wagner
42 Jamie Copas
43 Shane Atchison
44 Stephanos Klimathianos
45 Mike Hudnall

g
n
i
r
r
e
H

t
t

a
M

How we’re doing

g
n
i
r
r
e
H

t
t

a
M

WPP ANNUAL REPORT 2015

2
3

Geoff Wild AM (Australia
& New Zealand)
Shenan Chuang (Greater China)
Andrew Scott (UK &
Continental Europe)

4 Bessie Lee (Greater China)
5 Pierre Conte (France)
6 JP Donnelly (Ireland)
7 Ranjana Singh (Indonesia & Vietnam)
8 Demet Ikiler (Turkey)
9 Massimo Costa (Italy)
10 Ruslan Tagiev (Russia)
11 Polo Garza (Mexico)
12 Roy Haddad (Middle East &

North Africa)

13 Roberto Coimbra (Andina region)
14 Sung Lee (South Korea)
15 TB Song (Greater China)
16 Ranjan Kapur (India)
17 Manuel Maltez (Portugal)

* More regional heads of our operating
brands at wpp.com/annualreport2015

What we think

The case for sticking
your neck out

WPP CEO Sir Martin Sorrell reports

hen President Obama began
the long and difficult process
of normalising US relations
with Cuba, he took a significant
political risk. Half a century
of hostility is not easily brought

to an end, and many people remain bitterly
opposed to any rapprochement with Raúl
Castro’s administration.

Politicians, perhaps unfairly, are often

accused of not sticking their necks out, for fear
of being decapitated by the electorate. Obama,
approaching the end of his second term, has
no such concerns, but the restoration of ties
with Cuba (alongside the nuclear deal with
Iran) will shape his legacy and the ongoing
identity of the Democratic Party. It is, in other
words, a courageous step and, as overseas
investors rush to strike deals in Havana, one
that is already delivering progress.

If political leaders are wary of risk-taking,

the appetite for it in the corporate world is
smaller still. Since the collapse of Lehman
Brothers in 2008 and the economic crisis and
recession that followed, boardrooms have
become ultra-conservative in their decision-
making. In a world of zero-based budgeting,
activist investors and ubiquitous disruption
by tech start-ups, there is little encouragement
to be bold.

WPP ANNUAL REPORT 2015

What we think
The case for sticking your neck out

his is a regrettable, if understandable,
fact of contemporary corporate life.
It is both a reflection of our low-
inflation, low-pricing power, low-
growth world, and one of the reasons
it is proving so hard to break out of it.
Calculated risks are necessary for the long-term health of
a business, because without them innovation, development
and renewal are impossible.

The danger of losing your head notwithstanding, at
WPP we are very much in favour of sticking your neck out.
Establishing an office in Havana, the day after Washington
announced the reopening of the US Embassy last July, no
doubt caused palpitations in the internal audit department
and red lights to flash all over the risk dashboard. We
did much the same in Myanmar three years earlier
when sanctions were lifted. It is not beyond the realms
of possibility that Iran will become our 113th country
of operation in the course of the next year or so.

WPP was the first in our industry to publish a corporate

responsibility report. Twenty-two years ago we launched
the Atticus Awards and Atticus Journal to celebrate the
best original thinking published by people within the
Group, and it remains unique to our business. We were
the first (and, still, only) parent company to introduce
a graduate recruitment scheme, the Fellowship, which
is harder to get into than Harvard Business School.

We were the first to invest in applied technology, and
we are the only group with its own data business, Kantar.
We have the industry’s only tech ‘unconference’, Stream,
described by WIRED magazine as one of the best in the
world. We pioneered the ‘Team’ model of global account
service, breaking down the barriers between our individual
agency networks and disciplines in order to offer clients
the best talent and capabilities, no matter where they
sit within the Group. And we are alone in making a
focus on data, technology and content central to our
competitive positioning.

For some these are risky moves. We see them as

The point is that building a business for the long-term,

market leadership.

It is all too easy to construct an argument for holding

your current position. It is much harder to step out of
line or do something unexpected. WPP has never had a
motto, and ‘30 years of sticking our neck out’ would be
a deeply unwise temptation to Fate. But it has been a
solid guiding principle.

as we have tried to do at WPP, requires differentiation,
innovation and, more often than not, a degree of risk.

The same can be said of brands. Differentiation through

advertising and marketing services is the single most
powerful means of driving a brand’s growth. A short-term,
risk-averse approach based primarily on cost management
will harm a brand just as surely as wise investment in
marketing will ensure its enduring success.

It is all too easy to construct
an argument for holding your
current position. It is much
harder to step out of line or
do something unexpected

From WPP’s entrepreneurial beginnings, with two
people in one room and a stake in a manufacturer of
wire baskets and teapots, to the acquisition of J. Walter
Thompson and Ogilvy & Mather, to the consolidation
of media buying under Mindshare and later GroupM,
the identification of the digital and data revolutions to
come, and our unique, cross-Group, ‘horizontal’ approach
to serving clients, the Company’s story has been one of
doing things differently.

WPP ANNUAL REPORT 2015

Leader of the resistance

The good news is that corporate short-termism is facing
increasingly organised opposition, led by the world’s most
powerful investor.

At the beginning of the year Larry Fink, the chief

executive of BlackRock, once again wrote to every company
in the S&P 500, along with major European corporations,
encouraging them to take a longer-term
view of their businesses. The letter began as follows:

“Over the past several years, I have written to the

CEOs of leading companies urging resistance to the
powerful forces of short-termism afflicting corporate
behavior. Reducing these pressures and working instead
to invest in long-term growth remains an issue of
paramount importance for BlackRock’s clients…
as well as for the entire global economy.”

An end to earnings hysteria?

Fink is particularly critical of “today’s culture of quarterly
earnings hysteria”, which he describes as “totally contrary
to the long-term approach we need”:

In our own reporting we have
always tried to provide the
bigger picture – to set out the
market context in which we
operate and a clear sense of
where we are heading

“CEOs should be more focused… on demonstrating

progress against their strategic plans than a one-penny
deviation from their EPS targets or analyst consensus
estimates.”

This is music to the ears of every CEO who, sitting in
front of analysts and media four times a year, has despaired
of the lunacy of extrapolating from one quarter’s numbers
a definitive conclusion about the performance, health and
future prospects of a company.

According to Fink, it is far more important that a business

articulates a long-term strategic narrative, and quarterly
earnings reports should be primarily a means of measuring
how that business is performing against long-term goals.

In our own reporting we have always tried to provide
the bigger picture – to set out the market context in which
we operate and a clear sense of where we are heading.

More than half of a typical
company’s value is created by
activities that will take place
in three or more years’ time

In today’s frantic world of instant reaction and instant

judgement, however, no company can expect analysts
or journalists to thank them for providing a longer
‘Outlook’ section in their results announcement. Filing

What we think
The case for sticking your neck out

a story or putting out a note in the next five minutes is more
important than where the company will be in five years.
Fink also sits on the advisory board of an initiative

launched in 2013 by McKinsey & Company and the Canada
Pension Plan Investment Board, called Focusing Capital on
the Long Term. Its argument is that “when companies forgo
profitable investments to meet quarterly earnings expectations,
investors and savers lose potential future returns. And all of us
miss out on the benefits of long-term economic growth.”

It highlights research that lays bare the extent of the
problem. One survey found that over three-quarters of
executives would “take actions to improve quarterly
earnings at the expense of long-term value creation.”
Another showed that “companies that expressly seek to
manage short-term earnings in order to narrowly beat
consensus also underperform peers after two years.” Given
that more than half of a typical company’s value is created
by activities that will take place in three or more years’
time, such short-term focus seems wholly perverse.

To counter this destructive trend, Focusing Capital
on the Long Term argues for structures and measures that
encourage longer-term behaviour, both in the investment
community and in companies’ boardrooms. It is a project
WPP (alongside organisations like the Wellcome Trust,
Unilever, Barclays, Harvard Business School and Dow
Chemical) is happy to support.

WPP ANNUAL REPORT 2015

What we think
The case for sticking your neck out

BrandZ™ Portfolio* vs S&P 500 and MSCI World Index 2006-2015

o BrandZ™ Strong
Brands Portfolio
o S&P 500
o MSCI

100

-20

-40

-60

102.6%

63%

30.3%

April
2006

April
2007

April
2008

April
2009

April
2010

April
2011

April
2012

April
2013

April
2014

April
2015

October
2015

* The BrandZ™ Strong Brands Portfolio is a subset of the BrandZ™ Top 100 Most Valuable Global Brands.

How to beat the market

If I were an independent financial advisor – which, for the
sake of clarity (and legality), I should say I am not – I would
advise you first to buy shares in WPP, and second to buy
shares in those companies with a history of sustained
investment in their own brand.

It is abundantly clear, both from
external analysis and our own
proprietary BrandZ survey, that
investing in brands works

The world’s most successful investor, Warren Buffett,
has consistently backed stocks in the biggest global brands,
from IBM to Coca-Cola to American Express. As he said in
Berkshire Hathaway’s 2011 Letter to Shareholders: “‘Buy
commodities, sell brands’ has long been a formula for
business success. It has produced enormous and sustained
profits for Coca-Cola since 1886 and Wrigley since 1891.”

Investing in competitive differentiation through
marketing communications – as Jeremy Bullmore so
eloquently put it, “polishing the apples” – is a prerequisite
for a company’s success, especially if it wants to be successful
over a long period of time. To quote Jeremy again: “No
competitive enterprise, in whatever field of endeavour,
can leave its apples unpolished and still expect to win.”

According to The Economist, brands “are the most valuable
thing that companies as diverse as Apple and McDonald’s own,
often worth much more than property and machinery”. WPP’s
Millward Brown estimates that brands account for more than
30% of the stock market value of companies in the S&P 500.
It is abundantly clear, both from external analysis and
our own proprietary BrandZ survey, that investing in brands
works. In the last 10 years, a measurement of the strongest
brands from the BrandZ Top 100 as a stock portfolio shows
their share price has risen over three times more than the
MSCI World Index, a weighted index of global stocks, and
substantially outperformed the S&P 500 too.

WPP ANNUAL REPORT 2015

What we think
The case for sticking your neck out

Worldwide communications services expenditure 2015 $m

North America
Latin America
Europe
Asia Pacific
Africa & Middle East
Total

Advertising
182,847
32,261
102,915
161,856
17,531
497,410

Market
research
19,200
1,960
16,400
6,400
750
44,710

Public
relations
4,210
440
2,600
4,700
151
12,101

Direct & specialist
communications
104,105
35,548
111,722
59,213
2,082
312,670

Sponsorship
21,400
4,300
15,300
14,000
2,500
57,500

Total
331,762
74,509
248,937
246,169
23,014
924,391

Source: GroupM
Note: Healthcare communications ($4.8 billion) is distributed pro-rata in Direct & specialist communications.

Worldwide communications expenditure 2011-2016f

o Media and
marketing

total $m

o Global nominal
GDP % change

600,000

550,000

500,000

450,000

400,000

2011

2012

2013

2014

2015f

2016f

Source: GroupM
f: Forecast.

Polishing WPP’s apples

The agnostic ad tech alternative

WPP is, of course, itself a brand, and it is important that
we continue to differentiate ourselves too – in the eyes of
our clients, investors, current and future people and other
stakeholders.

In the advertising and marketing services business the
traditional points of difference have been talent and price
(and their twins, creative effectiveness and efficiency). They
remain critical, but we are also increasingly focused on
three areas that help WPP and our operating companies to
stand apart from our peers: technology, data and content.
For the record, and to pre-empt the howls of protest
from traditionalists everywhere: this absolutely does not
mean that creativity, in all its forms, is not important
anymore (more on that later). It is simply a reflection of the
changing nature of our business, of media owners and of
the behaviour of the consumers we help brands to reach.

West Coast giants such as Google and Facebook like to
describe themselves as tech companies, when in reality
they are media owners. For all their eye-catching side
projects, such as driverless cars and flying to the moon,
their core business is monetising inventory, just like any
other media owner.

If anyone doubts that, look at the numbers. The leading
recipient of our media spend on behalf of clients is Google,
at around US$4 billion in 2015. 21st Century Fox, News
Corp and Sky between them amount to US$2.5 billion.
Facebook is US$1 billion.

Where the ‘tech’ companies differ from other media

owners, though, is in their desire for clients and
intermediaries to use their proprietary platforms – principally
Google’s DoubleClick and Facebook’s Atlas – to determine
where media spend is allocated. Given that they are in
business to monetise inventory, they are hardly neutral. You
wouldn’t hand your media plan to Rupert Murdoch or Bob
Iger, so why hand it to Larry and Sergei or Mark and Sheryl?

WPP ANNUAL REPORT 2015

What we think
The case for sticking your neck out

We provide an agnostic alternative. Xaxis is WPP’s

global digital media platform that programmatically
connects advertisers to audiences across all addressable
channels. Towards the end of 2014 we injected part of
Xaxis (its publisher ad server platform, XFP) into the
world’s largest independent ad tech provider, AppNexus.
At the same time, we invested $25 million in AppNexus.

As a result, we cemented our leadership position in ad

tech and programmatic targeting, while supporting an
independent ad tech ecosystem that is of considerably more
value to clients than one dominated by the ‘walled garden’
solutions offered by the tech/media behemoths.

In fact, WPP’s focus on ad tech is nothing new – we
have long been a leader in the application of technology
to marketing. In 2007, WPP was the first company in the
sector to invest in applied technology with the acquisition
of 24/7 Real Media, which was to become the base on
which Xaxis was built. Other companies, like Acceleration
(the marketing technology consultancy), Cognifide (which
provides content management technology), Salmon
(ecommerce agencies) and Hogarth (digital production)
are all applying technology to marketing to help clients
transact and build relationships with their customers.
We have investments in a number of innovative
technology services companies, such as Globant and
Mutual Mobile, and in advertising technology companies
including eCommera, DOMO, Percolate and Say Media.
We were also investors in Buddy Media, Jumptap and
Omniture. During the course of the last year we acquired
the world’s largest independent media buyer, Essence,
and programmatic marketing solutions company The
Exchange Lab.

WPP’s focus on ad tech is
nothing new – we have long
been a leader in the application
of technology to marketing

The context for all these changes is, of course, the
continued growth of digital channels and advertising.
GroupM, our Media Investment Management arm,
forecasts net global advertising growth in 2016 of
$22 billion, 90% of which will be from digital. This
is despite the fact that digital media investment growth
in 2016 is expected to be 14%, compared to 17% in 2015,
the first deceleration in the post-Lehman recovery. WPP’s

92 WPP ANNUAL REPORT 2015

digital revenues stand at 37.5% of total turnover and, in
line with one of our four strategic objectives, we expect this
to grow to between 40% and 45% over the next five years.
With greater digital scale comes greater scrutiny as clients

demand more certain guarantees from media owners about
the effectiveness of their digital marketing spend. There are
increasing concerns, for example, about viewability, fraud
and brand safety. In this case WPP acts not only as a neutral
intermediary but also as an agent for change in the industry.

GroupM has led the way in championing more stringent

standards, based on the hardly unreasonable principle
that “our clients should only pay for an ad that is seen
by a real human who is in our target in an appropriate
editorial environment.”

Data: big, getting bigger

A focus on data and more measurable marketing services is
another of our four main strategic priorities. What we once
called market research or consumer insight we now describe
as Data Investment Management. Contrary to what the
resulting acronym might suggest, we think this is not so dim.
This sector of our business has always been about
gathering and interpreting information, but the internet
has created a new, ever-expanding universe of data, the
sheer volume and complexity of which demands ever more
sophisticated approaches, tools and techniques.

It also demands a fundamental shift in how we think about

the business itself, hence the new definition. Managing clients’
investment in data – in a fragmented, complicated world – is
what we do, just as we manage their investment in media.
These two areas are increasingly linked within our Group, as
we integrate data and media to provide clients with the most
telling insights and the best return on their investment.

Some dislike the new terminology (and not only for the
admittedly unfortunate abbreviation), because they believe
it relegates the role of insight. Not so. Data collection and
analysis is nothing, unless it produces actionable insights.

Unearthing and communicating valuable insights remains

the core purpose, and the traditional disciplines of market
research remain very important in doing that. However, as
digital technologies change the world, we need to be at the
forefront of new developments. As TNS puts it, “Advances in
social media analytics, data flows from connected, ‘internet
of things’ devices and many other technological innovations
mean that the toolkit the researcher can use to find insights
has expanded way beyond the survey.”

One manifestation of this new reality is Kantar’s
partnership with Twitter to provide real-time social TV

Growth of media in major markets 2011-2016 %

Internet

North America
Latin America
Western Europe
Central & Eastern Europe
Asia Pacific (all)
North Asia1
ASEAN2
Middle East & Africa
World

2012 2013 2014 2015f 2016f
9.8 12.1 11.5

2011
8.0
12.3 10.3
64.2 33.6 30.9 n/a3 54.2 25.4
10.9 11.4 10.0 10.7 11.1 10.6
29.1 29.3 21.9 11.7
6.1
25.8 27.3 28.7 27.8 27.2 23.3
48.1 39.7 40.0 35.0 33.2 28.1
7.3 59.8 57.1 55.6 50.4 41.3
7.0
6.5 33.2
5.2 57.6
15.8 16.0 15.6 16.6 17.2 14.4

8.4

7.6

Television
North America
Latin America
Western Europe
Central & Eastern Europe 10.5
8.0
Asia Pacific (all)
North Asia1
11.0
ASEAN2
14.5 13.8 16.5 11.1
2.5
Middle East & Africa
3.2
World

2012 2013 2014 2015f 2016f
2011
2.2
3.5
3.6
0.9
3.9
-0.1
5.7
8.6
6.7 11.5 14.1
6.3
3.6
2.6
3.5
0.8 -5.7 -0.2
4.0
3.1 -3.4
3.1
2.3
1.4 -0.3
4.5
5.9
0.4
-1.8 -3.5 -4.0
3.0
5.8
9.0
9.1
5.3
4.8
2.3
0.9

5.8 13.7
4.1
5.1

7.2
3.4

Outdoor
North America
Latin America
Western Europe
Central & Eastern Europe
Asia Pacific (all)
North Asia1
ASEAN2
Middle East & Africa
World

Magazines

North America
Latin America
Western Europe
Central & Eastern Europe
Asia Pacific (all)
North Asia1
ASEAN2
Middle East & Africa
World

2012 2013 2014 2015f 2016f
2011
2.0
0.1
2.8
3.7
3.2
5.7
-7.2
10.9 19.3
4.5
-1.8 -0.4
-2.3
-1.9
2.6
2.7 -0.6 -12.8
3.1
7.8
4.7
6.4
5.1
11.3 12.6
5.4
8.4
6.0
23.6 18.4
-1.8
6.0
9.3 17.8
-3.1
3.3
1.6 -0.5
46.8 24.1
3.1
3.4
2.6
7.8

1.8
4.3
2.0
0.9
3.4
3.4
4.0
5.0
2.9

7.1

-8.9

2012 2013 2014 2015f 2016f
1.9
3.0 -6.5

2011
0.0 -4.3 -3.2 -0.3
-0.1
-9.1 -3.8
10.9
-2.6 -10.7 -8.5 -5.5 -8.0 -3.6
0.7 -4.1 -11.6 -10.4 -19.5 -6.7
1.5
-5.9
-1.7 -12.5 -16.8 -13.3
13.2
-7.7
4.4
2.5
2.2 -12.3
-1.8
-0.1

0.3 -2.5 -8.2
4.9
-1.9 -5.7 -10.0 -10.5
7.7 -4.7 -0.3
-1.6 -2.6 -5.3 -5.4

-9.3

What we think
The case for sticking your neck out

Radio
North America
Latin America
Western Europe
Central & Eastern Europe
Asia Pacific (all)
North Asia1
ASEAN2
Middle East & Africa
World

2012 2013 2014 2015f 2016f
2011
0.1 -3.5 -2.0
4.4
2.3
6.2
6.6
2.3
17.5 -0.6
2.9
-2.9
1.1 -3.6
1.6
2.0 -5.6
8.2
5.7
2.4
0.0
3.5
5.3 -2.5
3.4
-2.8
2.2
7.4
8.5
1.7
5.1
6.6
9.6 -26.3
1.8
1.6
2.4
4.7
13.9 36.8
0.1
0.7
3.9 -0.6
4.0

0.5
2.7
1.2
2.8
1.8
0.2
5.8
1.4
1.3

Cinema
North America
Latin America
Western Europe
Central & Eastern Europe
Asia Pacific (all)
North Asia1
ASEAN2
Middle East & Africa
World

0.4

2012 2013 2014 2015f 2016f
4.5

9.6
3.8 -11.0
9.5 10.3 -2.5 -3.6

2011
4.8
4.3 -16.7 15.0 -5.0
7.5 -0.5 15.2 18.7 19.9 13.2
0.7
-0.9
11.4
4.2
-1.0 11.9 12.2
2.4 11.2 -8.0
0.0
4.0
0.0
4.2
0.0
3.9
7.0 11.1
-9.3
15.6 10.4 -25.9
2.3 24.3 -0.8 10.1
1.0
37.8
5.6
3.3 10.0
5.0 -5.6
2.9

Newspapers

North America
Latin America
Western Europe
Central & Eastern Europe
Asia Pacific (all)
North Asia1
ASEAN2
Middle East & Africa
World

2011
-6.6 -4.8 -4.0
-6.9
3.7 16.6
-9.8 -10.0 -5.4
-2.3
1.8
-1.2 -8.8
0.2 -2.6
3.7 -5.2
5.9
1.4
-1.6 -4.8
-2.5 -4.6 -5.4 -6.5

2012 2013 2014 2015f 2016f
-5.9
-7.3 -6.5
-3.7 -0.3 -3.6
-7.3 -5.6
-9.0 -8.2 -4.5
-6.1
-2.9 -8.3 -10.4
-5.1 -15.2 -22.8 -19.3
8.2
-1.5
-7.3 -6.2
0.2 -6.7 -8.0 -2.0
-7.9 -5.7

Source: GroupM
f: Forecast.
1 China, Hong Kong, South Korea, Taiwan.
2 Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam.
3 2014 Latin America growth figure affected by method change and therefore

not shown.

(Figures rounded up.)

WPP ANNUAL REPORT 2015

What we think
The case for sticking your neck out

data, since expanded to a broader collaboration on new
research products in the areas of advertising effectiveness,
consumer insight, brand equity, customer satisfaction and
media measurement. Others include the sophisticated social
media analysis engine behind TNS’s social products, and
our partnerships and investments with both comScore
(known primarily for its web measurement capabilities)
and Rentrak (the leader in TV set-top box data), which
have now come together.

WPP supported the comScore-Rentrak merger and now

holds 18.6% of the combined entity. With the growth of
out-of-home and multiscreen viewing, and the changes in
millennial and centennial media consumption habits, clients
and media owners want better measurement. The industry
is crying out for a stronger currency and comScore and
Rentrak will help to provide it.

Time spent per adult user per day with
digital media USA 2008 vs 2015

o Mobile
o Desktop/laptop
o Other connected
devices

y
a
d
r
e
p
s
r
u
o
H

Source: KPCB

5.6

2.7

0.3

2.2

0.2

12% of total

79% of total

9% of total

2.8

51% of total

2.4

0.4

42% of total

7% of total

2008

2015

My crown is call’d content

I imagine there are still people in our industry whose
LinkedIn profiles don’t include the word ‘content’ but they
are surely becoming a minority. The term may be faddish
and frequently abused (see the subheading above), but its
ubiquity does reflect a very important trend.

The public has always had a huge appetite for quality

content, and digital platforms have only intensified that
hunger. At the same time, the changing dynamics of the
market mean that the traditional producers of such content
have been joined by many other kinds of producer –
from consumers themselves to web start-ups, advertisers
and agencies.

WPP has placed itself at the centre of these changes,

not only through the diversified services offered by our
operating companies but also through strategic investments
in exciting content businesses.

WPP ANNUAL REPORT 2015

Five years ago, for example, we invested $36 million in

Vice Media, the global youth media brand. Today our stake
is worth some $300 million as the digitally-led Vice brand
attracts readers, viewers, advertisers and investors in ever
greater numbers.

The public has always had a
huge appetite for quality content,
and digital platforms have only
intensified that hunger

Our other content investments include Media Rights
Capital (producer of Netflix smash hit House of Cards);
Refinery29 (the fashion and lifestyle site aimed at millennial
women, and one of the fastest growing media companies in
the US); Fullscreen (the multiplatform youth network with
more than 600 million subscribers and five billion monthly
views); China Media Capital (China’s first sovereign private
equity fund dedicated to media and entertainment sector
investment); Indigenous Media (the next-generation digital
content studio founded by acclaimed film-makers Jon Avnet,
Rodrigo Garcia and Jake Avnet); The Weinstein Company
(the studio behind The Hateful Eight, Django Unchained and
The King’s Speech); Imagine Entertainment (headed by Brian
Grazer and Ron Howard, the producers behind A Beautiful
Mind and Empire); and a joint venture with award-winning
producer, songwriter and director Alex Da Kid.

We have also focused on the rapidly-growing sector of
sports content and sports marketing. In 2015, WPP led a
syndicate investing US$250 million in Bruin Sports Capital,
a global sports marketing firm launched by George Pyne,
the former president of IMG Worldwide’s global sports and
entertainment business. And at the beginning of this year
we backed an investment by Bruin in Courtside Ventures,
a venture capital fund that specialises in sports-related,
early-stage technology and media companies.

In addition, during the last year GroupM launched ESP
Properties, a commercial and creative advisor to sports and
entertainment rights holders, which counts iconic
organisations such as the All Blacks and Cleveland Cavaliers
among its growing client list. They join the large number
of premium sports organisations and properties already
working with WPP operating companies, such as the IOC,
UEFA, Premier League, La Liga, F1, Manchester United,
City Football Group, NASCAR, NBA, PAC-12, the NFL
and Brazilian football legends Ronaldo and Pelé.

What we think
The case for sticking your neck out

A team of all the talents?

On page 50 of this report is a wonderful piece of art
by Peter Blake, featuring our own Ronaldos and Pelés
– the team of stars who run WPP’s global operating
company networks.

It underlines the fact that WPP is an organisation driven

by talent. David Ogilvy’s famous remark about his agency
that “the assets go up and down the elevator every day”
is just as true today of WPP. To describe us as a “people
business” is no empty cliché: our biggest investment is in
people – over $10 billion a year, or 54% of total revenues.
Our long-standing mission statement is: “To develop

and manage talent; to apply that talent, throughout the
world, for the benefit of clients; to do so in partnership; to
do so with profit.” This philosophy applies at every level
within WPP and its operating companies. As exalted as
they are, the 67 executives shown in the centrefold are
merely the representatives of the great army of talented,
creative people responsible for our collective success.

As in many sectors, women
continue to be under-represented
in the top jobs in our industry

Our commitment to developing that talent, laid out in
detail in our Sustainability Report, is broad and deep, but it
would be remiss of me not to acknowledge one area where
we still have work to do.

As brilliant as it is, the Blake artwork has a flaw, and
that is the lack of diversity on display – both in terms of
gender and national and ethnic background. As the
fast-growth markets of Asia Pacific, Latin America, Africa,
the Middle East and Central and Eastern Europe become a
larger part of our business, I would expect the make-up of
our senior management team to change accordingly over
time. This inevitable geographic shift clearly won’t provide
all of the solution (again, our Sustainability Report covers
our approach in detail), but it will be part of it. The gender
question may be more difficult.

As in many sectors, women continue to be under-
represented in the top jobs in our industry, and WPP is
no exception. In some ways it’s going to get harder still,
because marketing services are becoming more influenced

by digital, data and technology – fields in which achieving
gender balance has been even tougher.

Below the very highest level, the picture is a little
brighter: women now make up 33% of executive leaders
within our operating companies and 47% of senior
managers. But there’s clearly a long way to go.

Within our companies we operate various schemes to help
the development of female leaders, including training, raising
awareness of unconscious bias, networking, sponsorship
and mentoring programs. Examples include Team Detroit’s
recently launched ‘Returnship’ program, which gives women
the chance to restart their careers and is designed to increase
the number of women in leadership positions.

Companies with greater gender
balance in their leadership
teams outperform their peers

There are also many external-facing initiatives, such
as J. Walter Thompson’s Female Tribes, a new, proprietary
study about women around the world, and an associated
documentary the agency co-produced for the BBC called
Her Story: The Female Revolution.

At Group level we have schemes such as The X Factor,

a mentoring and development program for senior women
run by Charlotte Beers, the former CEO of Ogilvy &
Mather and chairman of J. Walter Thompson. This
has recently been supplemented by Women In Leadership
Lessons, again led by Charlotte, for those currently in
mid-level management roles.

In the UK, WPP Stella is a network that supports efforts
to achieve gender balance and encourages the sharing of best
practice between our companies. We aim to roll it out in
other markets soon. WPP also supports Women On Boards,
which encourages women to take on non-executive board
roles across a range of private and public organisations.

The business imperative for improving our record is
crystal clear: companies with greater gender balance in
their leadership teams outperform their peers. We will
renew our efforts in this critical area over the coming year,
particularly given recent events.

WPP ANNUAL REPORT 2015

What we think
The case for sticking your neck out

Staying creative, effective and relevant

Clients under pressure

For the last five years WPP has been named the world’s most
creative holding company at the Cannes Lions International
Festival of Creativity. Just as importantly, perhaps more
so, we have also won the Effie for most effective holding
company in each of the last four years. And this year,
for the second time in a row, WPP was named the top-
performing parent company in the highly regarded Warc
100 ranking, which reflects our agencies’ success in
strategy and effectiveness competitions around the world.

Those clients are under increasing pressure as the global
economy faces what former US Treasury Secretary Larry
Summers and the International Monetary Fund have
described as “secular stagnation”, a long-term slump in the
growth of economic output. Mega mergers such as DuPont
and Dow, or AB InBev and SABMiller, reflect this, as
companies find top-line growth elusive and instead look
to efficiencies of scale.

Boards are being squeezed by a triumvirate consisting

Together this trio of awards is the perfect endorsement of
our people’s collective abilities, and the perfect encapsulation
of what we deliver for clients: creative effectiveness.

of zero-based budgeters like 3G, Valeant and Endo, activist
investors like Nelson Peltz, Bill Ackman and Dan Loeb, and
disruptors like Airbnb and Uber.

But every company and every industry needs to develop

At the same time, the slowdown in the BRICs and other

fast-growth countries has dented confidence across the
world’s markets, which had a rocky start to 2016, to say
the least. However, certainly in the context of our business,
I expect these markets to bounce back over the medium- to
long-term as the explosion in the number of lower-middle-
and middle-class consumers continues unabated.

Although China will continue to be volatile, I remain
a raging Chinese bull over the long term. India is currently
the jewel in the fast-growth crown and markets like
Vietnam, the Philippines, Indonesia and Colombia continue
to prosper. Increasing the proportion of our revenues from
faster-developing markets to 40-45% of the total over the
next five years remains one of our core strategic priorities.
Nonetheless, it seems highly unlikely that global GDP
growth will escape the doldrums any time soon. We may
be stuck with a slower-growth world for a while yet.

Shape of global recovery
% change

o Advertising
o Global nominal
GDP

-5

-10

Source: GroupM
f: Forecast.

02 03

06 07 08 09 10 11 12 13 14 15f 16f

constantly to maintain success. Cannes has recognised
this and, responding to the stark fact that, very recently,
only 3% of creative directors were women, has made
gender diversity a key theme of its annual event.
From whichever angle you look at it, it’s an

unacceptable statistic. It’s also one that runs counter to
our own commercial interests. Women account for 60%
of university graduates and are responsible for 80% of
consumer purchasing decisions, so it damages our access
to both talent and markets.

If the advertising and marketing services business
wants to remain relevant, and to carry on producing the
best, most creative and most effective work for clients, it
needs to prioritise tackling these issues and support the
efforts of organisations like Cannes.

BrandZ™ top 10 most valuable Chinese brands 2016

Rank Brand
1
2
3
4
5
6

Tencent
China Mobile
Alibaba
ICBC
Baidu
China
Construction
Bank
Huawei
Agricultural
Bank of China
Ping An

9
10 China Life

7
8

Category Brand value
2016 $m
82,107
57,157
47,605
34,276
26,849

Technology
Telecoms
Retail
Banks
Technology

Year-on-year
change
24%
2%
-20%
-1%
-13%

Banks
Technology

Banks
Insurance
Insurance

19,270
18,501

16,239
15,624
15,504

-6%
NEW

5%
41%
53%

Source: BrandZ/Millward Brown

96 WPP ANNUAL REPORT 2015

What we think
The case for sticking your neck out

China

7,101

India
1,157

Vietnam
310

Australia
428

Contributions to 2016 media growth by countryf $m

UK
1,731

Germany
261

4,728

Source: GroupM
f: Forecast.

Brazil

1,174

Contributions to 2016 media growth by countryf

Asia Pacific (all)
NORTH ASIA
China
NORTH AMERICA
US
WESTERN EUROPE
LATIN AMERICA
UK
Brazil
India
ASEAN
Japan
MIDDLE EAST & AFRICA
Philippines
Australia
CENTRAL & EASTERN EUROPE
Vietnam
GCC and Pan Arab*
Spain
Germany
Mexico
Greece
Colombia
South Korea

Contribution
$m
11,536
7,563
7,101
4,767
4,728
3,121
1,914
1,731
1,174
1,157
1,119
1,110
650
507
428
375
310
297
280
261
221
217
207
197

Contribution
%
51.6
33.8
31.8
21.3
21.1
14.0
8.6
7.7
5.2
5.2
5.0
5.0
2.9
2.3
1.9
1.7
1.4
1.3
1.3
1.2
1.0
1.0
0.9
0.9

Nominal GDP projections 2015-2017f
% change

o 2015f
o 2016f
o 2017f

World
output

China

Japan

Germany

France

India

Italy

Canada

Brazil

* Gulf Cooperation Council/Bahrain, Egypt, Jordan, Kuwait, Lebanon,
Morocco, Oman, Qatar, Saudi Arabia, Tunisia and UAE.

Source: GroupM
f: Forecast.

WPP ANNUAL REPORT 2015

What we think
The case for sticking your neck out

A prescription for global ills

The united nations of WPP

Last year, under the auspices of the Turkish G20
presidency, a new business group was established to support
the G20’s efforts to build confidence in the global economy.
The B20 (Business 20) International Business Advisory
Council, chaired by Coca-Cola’s Muhtar Kent and backed
by a range of companies including WPP, was set up to
enhance dialogue between the corporate world and
governments. It made four recommendations.

The first was that governments should ratify and

implement the World Trade Organization’s Trade Facilitation
Agreement to remove red tape and delays when moving
goods across borders. The second priority was to improve
access to finance for SMEs, which are disproportionately
affected by adverse credit market conditions.

The third was to ask the G20 to commit to a
comprehensive strategy to boost youth and female
participation in the workforce, not least through better
public-private collaboration on national skills strategies
and education plans. Finally, the B20 said that the world’s
leading economies must articulate coherent national
strategies to attract the huge levels of private investment
needed to plug the global spending gap on infrastructure.

To the B20’s four I would also add a fifth: collaboration

between businesses, and between businesses and
governments, to support the United Nations’ Sustainable
Development Goals (SDGs), the ambitious targets “to end
poverty, protect the planet, and ensure prosperity for all.”
WPP has been working with the UN to support the SDGs,
with a focus on fostering such partnerships, and this will
be a key project for the Group in 2016.

In WPP’s early days I doubt even the UN could have
persuaded our companies to put down their cudgels and
work together, but happily they have now discovered that
peaceful co-existence and cooperation is not only possible,
but very fruitful.

Getting our 190,000 people (including associates) to

collaborate as seamlessly as possible across company,
functional and national boundaries for the benefit of clients
is our fourth and final core strategic priority. We call this
‘horizontality’ – an ugly word for an increasingly effective
way of working.

Peaceful co-existence and
cooperation is not only
possible, but very fruitful

We have been pursuing this strategy for some time,
largely in response to demand from clients. Our biggest
client, Ford, has been served through a dedicated cross-
Group team since 2006. We now have 45 such teams,
responsible for over a third of WPP’s revenues and involving
nearly 40,000 of our people, working for clients as diverse
as American Express, Unilever, Coca-Cola, IBM and
News Corp. Team wins in the last year included Emirates,
General Mills and Bayer.

For the first time our Annual Report has a section
devoted to our Global Client Teams, featuring a collage
of all their leaders (almost half of whom, it is encouraging
to note, are women).

WPP ANNUAL REPORT 2015

As well as the client teams we have 17 Country
Regional and Sub-Regional Managers, covering 51 out
of the 112 countries in which we operate. Their job is to
encourage horizontality to deliver the best resources to
clients, identify acquisition opportunities and help recruit
the best talent locally.

At least one of WPP’s global competitors has finally
woken up to this approach, announcing, late last year amidst
a broader reorganisation, the creation of ‘chief client officers’.
It also signalled its intention to bring together its media
agencies to leverage their collective scale, something WPP did
under GroupM more than a decade ago. Flattery, indeed.

Back to politics, and risk

In geopolitics, togetherness is harder to find. In the coming
year, deeply divisive political events will dominate news
coverage in our two biggest markets.

In the US the ‘reality TV’ Presidential election is rocking

the Establishment, on both sides of the party divide. In the
UK, against the backdrop of the ongoing migrant crisis, the
electorate will decide whether or not the country should
remain in the European Union. Both could have a
significant economic impact.

In each case, voters face a choice between a riskier and

a safer option. Brexit will bring uncertainty for business
and, potentially, real damage to the UK economy. Populism
and protectionism in the White House is not a recipe for
economic success. For once, a cautious approach may be no
bad thing.

The interests of our people,
clients and investors are best
served when we embrace
calculated risk-taking

At WPP, however, we hold to the view that the interests
of our people, clients and investors are best served when we
embrace calculated risk-taking. We will continue to stick
our neck out on their behalf.

What we think
The case for sticking your neck out

WPP ANNUAL REPORT 2015

What we think
The case for sticking your neck out

10 key trends

Global GDP 1820-2014
USA vs Europe vs China vs India vs Latin America %

o USA
o Europe
o China
o India
o Latin America

17%
16%
16%

9%
7%

0
1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Source: Angus Maddison, University of Groningen, OECD, data post 1980 based on IMF data (GDP adjusted for purchasing power parity); KPCB

1. Power is shifting South, East and South-East
New York is still the centre of the world, but power
(economic, political and social) is becoming more widely
distributed, marching South, East and South-East: to Latin
America, India, China, Russia, Africa & Middle East and
Central & Eastern Europe. Although growth rates in these
markets have slowed, the underlying trends persist as
economic development lifts millions into lives of greater
prosperity, aspiration and consumption.

2. Supply exceeds demand – except in talent
Despite the global financial crisis, manufacturing
production still generally outstrips consumer demand.
This is good news for marketing companies, because
manufacturers need to invest in branding in order
to differentiate their products from the competition.
Meanwhile, the war for talent, particularly in
traditional Western companies, has only just begun.
The squeeze is coming from two directions: declining
birth rates, smaller family sizes and urban concentration;
and the relentless rise of the web and associated digital
technologies. Simply, there will be fewer entrants to the
jobs market and, when they do enter it, young people
expect to work for tech-focused, more networked, less
bureaucratic companies. It is hard to recruit the right
talent now; it will be harder in 20 years.

Economic development
lifts millions into lives of
greater prosperity, aspiration
and consumption

3. Changing dynamics in retail
For the last 20 years or so the big retailers like Walmart,
Tesco and Carrefour have had a lot more power than
manufacturers, because they deal directly with consumers
at the point of sale and who have been accustomed to
visiting their often big box stores. This won’t change
overnight, but manufacturers can now have direct
relationships with consumers via the web and e-commerce
platforms in particular, at the same time as city dwellers
(already 50% of the population, soon to be 70%), demand
proximity retailing – smaller, more convenient stores.
However, unless manufacturers move quickly, there is
a danger that Amazon or Alibaba or Flipkart will become
the new Walmart or Tesco.

100 WPP ANNUAL REPORT 2015

What we think
The case for sticking your neck out

4. Internal communications has grown up
Once an unloved adjunct to the HR department,
internal communications has moved up the food chain
and enlightened leaders now see it as critical to business
success. One of the biggest challenges facing any chairman
or CEO is how to communicate strategic and structural
change within their own organisations. The prestige has
traditionally been attached to external communications,
but aligning internal constituencies is at least as important,
and arguably more than half of our business.

Unless manufacturers move
quickly, there is a danger that
Amazon or Alibaba or Flipkart
will become the new Walmart
or Tesco

5. Disintermediation
An ugly word, with even uglier consequences for those
who fail to manage it. It’s the name of the game for web
giants like Apple, Google, Amazon and Alibaba, which
have removed large chunks of the supply chain (think music
retailers, business directories and bookshops) in order to
deliver goods and services to consumers more simply and
at lower cost.

Take our ‘frienemy’ Google: our biggest media trading
partner at $4 billion out of $73 billion of billings in 2015
and, at the same time, one of our main rivals, too. Xaxis
and AppNexus face off against Google and DoubleClick.
It’s a formidable competitor that has grown very big indeed
by – some say – eating everyone else’s lunch, but marketing
services businesses have a crucial advantage.

Google (like Facebook, Twitter, LinkedIn and others)

is not a neutral intermediary, but a media owner. It sells
its own inventory on its own platform. We, however, are
independent, meaning we can give disinterested, platform-
agnostic advice to clients. You wouldn’t hand your media
plan to News Corporation or Viacom and let them tell you
where to spend your advertising dollars and pounds, so why
hand it to Google, Facebook and co?

Global public internet companies’ market capitalisation 1995 vs 2015
$bn

PSINet
Netcom On-Line
IAC/Interactive
Copart

Company
Netscape
1
Apple
2
Axel Springer
3
4
RentPath
5 Web.com
6
7
8
9
10 Wavo Corporation
iStar Internet
11
Firefox Communications
12
Storage Computer Corp.
13
Live Microsystems
14
iLive
15
Total market cap of top 15

Country
USA
USA
Germany
USA
USA
USA
USA
USA
USA
USA
Canada
USA
USA
USA
USA

Market
cap
$bn
5,415
3,918
2,317
1,555
982
742
399
326
325
203
174
158
95
86
57
$16,752

Company
Apple
1
Google
2
Alibaba
3
Facebook
4
Amazon.com
5
Tencent
6
eBay
7
Baidu
8
Priceline Group
9
Salesforce.com
10
JD.com
11
12
Yahoo!
13 Netflix
14
15

LinkedIn
Twitter
Total market cap of top 15

Source: Morgan Stanley, Capital IQ, Bloomberg; KPCB
Note: Market capitalisations are as of 31 December 1995 and 22 May 2015, respectively.

Country
USA
USA
China
USA
USA
China
USA
China
USA
USA
China
USA
USA
USA
USA

Market
cap
$bn
763,567
373,437
232,755
226,009
199,139
190,110
72,549
71,581
62,645
49,173
47,711
40,808
37,700
24,718
23,965
$2,415,867

WPP ANNUAL REPORT 2015

101

What we think
The case for sticking your neck out

6. Global and local up, regional down
The way our clients structure and organise their businesses
is changing. Globalisation continues apace, making the
need for a strong corporate centre even more important.
Increasingly, though, what CEOs want is a nimble,
much more networked centre, with direct connections
to local markets – how can the centre know what is really
going on in more than 100 or 200 countries? This also
hands greater responsibility and accountability to local
managers, and puts pressure on regional management
layers that act as a buffer, preventing information from
flowing upwards or downwards and stopping things
from happening. After all, our local people know who
are the good people, the growing companies and the best
acquisitions and investments.

What CEOs want is a nimble,
much more networked centre,
with direct connections
to local markets

7. Number-crunchers have too much clout
Some companies seem to think they can cost-cut their
way to growth. This misconception is increasingly a
post-Lehman phenomenon: corporates still bear the mental
scars of the crash, and conservatism rules. But there’s
hope: finance will only hold sway over the chief marketing
officers in the short term. There’s a limit to how much
you can cut, but top-line growth (driven by investment
in marketing) is infinite, at least until you reach 100%
market share.

Finance will only hold sway
over the chief marketing
officers in the short term

8. Bigger government
Governments are becoming ever more important – as
regulators, investors and clients. Following the global
financial crisis and ensuing recession, governments have
had to step in and assert themselves – just as they did
during and after the Great Depression in the 1930s and
1940s. And they are not going to retreat any time soon.

Administrations need to communicate public policy
to citizens, drive health initiatives, recruit people, promote
their countries abroad, encourage tourism and foreign
investment, and build their digital government capabilities.
All of which require the services of our industry.

9. Sustainability is no longer ‘soft’
The days when companies regarded sustainability as a bit of
window-dressing (or, worse, a profit-sapping distraction) are
long gone. Today’s business leaders understand that social
responsibility goes hand-in-hand with sustained growth and
profitability. Doing good is good business. Business needs
permission from society to operate, and virtually every
CEO recognises that you ignore stakeholders at your peril
– if you’re trying to build brands for the long term.

10. Industry consolidation
As a result of all this, we expect consolidation to continue
– among clients, media owners and marketing services
agencies. This consolidation takes many forms, including
the Bolloré model, which consolidates ownership of
telecommunications and media with an agency. Bigger
companies will have the advantages of scale, technology
and investment, while those that remain small will have
flexibility and a more entrepreneurial spirit on their side.
In this low-growth, low-inflation, low-pricing power world,
where top-line expansion is hard to come by, boards and
investors increasingly turn to mergers and acquisitions.
In this environment the activist investors like Nelson Peltz,
Bill Ackman and Dan Loeb seem to have had remarkable
success in 2015 (e.g. Dow and Dupont, AB InBev and
SABMiller). At WPP, we’ll continue to play our part by
focusing on small- and medium-sized strategic acquisitions
and investments (52 of them in all in 2015).

102 WPP ANNUAL REPORT 2015

What we think

Sorry to Disappoint You – But the Business
We’re in is Unusually Low in Risk
(Which is why experiment and adventure can be so
confidently explored)

By Jeremy Bullmore

f all the expenditure decisions that major
companies make, decisions on advertising
expenditure are surely thought to be some
of the most perilous.

In last year’s Annual Report, we picked
over that apocryphal saying, “I know that

half the money I spend on advertising is wasted. My only
problem is that I don’t know which half.” And although
there’s no hard evidence that anyone of authority ever said
it, the old adage clearly still strikes an instinctive chord
with many. Apocryphal though it may be, it evidently gives
voice to an underlying unease about advertising: that there’s
some elusive, immeasurable element about advertising
decision-making that’s mercifully absent from other major
investment decisions.

It’s true that the sums involved are huge. It’s true
that decisions have to be made about advertising content
that, unnervingly, may rely at least as much on informed
experience and subjective judgement as on empirical
evidence. It’s true that there seem to be no universally
accepted rules. When authorising an equivalent sum
on capital expenditure, for example, there will be many
reassuring metrics. By contrast, when authorising advertising
and promotional expenditure, there will be disturbingly few.
Advertising agencies seem to enjoy this sense of living
dangerously. They constantly encourage their clients to be
brave. And when an advertising campaign has been shown
to be unusually effective, they publicly praise their clients for
the courage they displayed in accepting it. So if the approval
of advertising demands courage, it surely follows that the
approval of advertising must demand risk? If risk were low or
non-existent, surely the need for courage would be minimal?

WPP ANNUAL REPORT 2015

103

What we think
Sorry to Disappoint You – But the Business We’re in is Unusually Low in Risk

Simply through association, the annual Cannes Lions
International Festival of Creativity emphasises the showbiz
aspects of advertising; and everybody knows just how
hazardous and unpredictable the funding and making
of movies can be. Remember Heaven’s Gate? Hollywood
does. It cost $44 million to make, took $3.5 million at
the box office and brought its studio, United Artists,
to the brink of bankruptcy.

And yet, and yet: if approving advertising were as
risk-laden as approving the making of a motion picture,
wouldn’t common sense suggest that there would be at least
a few notorious examples of major marketing companies
being brought to their knees by high-risk, ill-advised
advertising campaigns?

Surprisingly, there are none.
I exclude from that claim stunts and promotional
campaigns. If you inadvertently print too many winning
numbers on your bottle tops, you can easily find yourself
paying for a million five-star vacations in Las Vegas rather
than the 200 you allowed for in your budget. I’m talking
only about conventional, main-media advertising campaigns.
And search as rigorously as you may, you will find no single
example of a purely media campaign inflicting Heaven’s
Gate-type injury on its sponsoring company.

There are, of course, countless examples of advertising

campaigns failing to meet the extravagantly high hopes
that were held out for them. They may even constitute
the majority. And there have been all too many expensive
product failures. But in the 150-year history of mass media
advertising, there is no single recorded instance of an
advertiser being brought to the brink of bankruptcy solely
because of a misguided advertising campaign.

There is, I believe, at least one main reason for this curious

fact – and it’s one that doesn’t get much attention because
of the nature and structure of the advertising business.

In most consumer markets, a comfortable brand leader
can appropriate generic market benefits and expect to reap
the most reward. In the agency world, there’s never been
such an agency; so no one has ever put the generic case for
advertising. Agencies, entirely reasonably, assume that their
clients or potential clients have already accepted the need
to advertise and are concerned only with how much to spend,
in which media, and on what creative content. So agencies
compete with each other at the margins – each claiming that
how they allocate the clients’ funds is what will make the
crucial difference. And of course, that’s true. But what gets
neglected is a reminder of the generic benefits that advertising
– yes, just about any advertising – bestow on the advertiser.

In the 150-year history of mass
media advertising, there is no
single recorded instance of an
advertiser being brought to the
brink of bankruptcy solely
because of a misguided
advertising campaign

Reluctant though the advertising trade may be to
admit it, the reason that advertising catastrophes are so
rare as to be non-existent is that just about any advertising,
as long as it follows a couple of primitive rules, will have
some value.

This, then, is the first and most basic truth about

From the beginning, the advertising agency market has

advertising:

always been fragmented. Because of advertisers’ concerns
about confidentiality, the need to avoid client conflict has
restricted agencies’ ability to grow. The result has been a
great many competing agencies – but with even the biggest
seldom enjoying a market share into double figures.

If the medium you’ve chosen reaches the people you
want to reach, and if your medium clearly carries the name
of your brand, your money will not have been wasted.
I am not, please note, suggesting that anyone should
consciously adopt, or indeed settle for, such an unambitious
approach. But it’s a fundamental, reassuring fact – and one
to savour.

104 WPP ANNUAL REPORT 2015

Billboard advertising carrying a poster design
invisible to the human eye is money wholly wasted.
Online advertising that reaches only robots is money
wholly wasted. But for an established, repeat-purchase
brand, if the right people are aware that the brand
is being advertised, it is impossible for money to be
wholly wasted.

Recent understanding of how much advertising works
lends power to this belief. The late Andrew Ehrenberg long
argued that the role for advertising for established brands
was much more to do with publicity than persuasion:
people don’t need to be talked into buying brands with
which they’re already familiar. But brand values fade
and need to be refreshed and brand equity needs to be
replenished. It’s more and more widely accepted that
maintaining salience, topping up fame, providing brand
sustenance – simply being out there – may be the principal
contribution that mass advertising makes to mass brands.
By far the most important decision that an advertiser makes
is the decision to advertise.

The purpose of disinterring this truth about
advertising’s most basic function is not to encourage
marketing complacency; not to stop advertisers striving
for excellence. Indeed, it’s the absolute opposite.

To be reminded just how unlikely we are to make a
catastrophic error is to be liberated: liberated to be less of
a slave to caution; liberated to experiment, both in content
and in levels of expenditure; liberated to test the waters, to
try things out, to suck it and see. The penalties for getting
it wrong will be barely measurable. The rewards for getting
it right can be heady.

Let me return to this basic truth: If the medium you’ve

chosen reaches the people you want to reach, and if your
medium clearly carries the name of your brand, your
money will not have been wasted.

What we think
Sorry to Disappoint You – But the Business We’re in is Unusually Low in Risk

Given this under-recognised and deeply reassuring
comfort blanket, we can return to more familiar territory
– the role of something called creativity; or to be precise,
advertising creativity. Advertising creativity may borrow
the tools of the fine arts – the words, the sounds, the images
– but in all other respects it is different. It exists not for
its own sake but in order to have a defined and calculated
effect – on people’s opinions, feelings or behaviour.

To be reminded just how unlikely
we are to make a catastrophic
error is to be liberated

There are some who, puzzlingly, still talk of creativity

and effectiveness as though they were disconnected
outcomes; as though advertising can be highly creative
while failing to achieve its functional objectives. That’s like
honouring a bridge for its aesthetic beauty while closing
it to traffic for safety reasons. In advertising, creativity
is never an end in itself – its sole purpose is to make
commercial communication more telling, more evocative,
more compelling, more moving, more rewarding, more
likeable, more readily understood – than any unadorned
brand name could ever achieve.

At its most basic, creativity in advertising exists for just

one purpose: to make an advertiser’s money go further.
And at its best, as any number of well-documented cases
celebrate, it can do so in multiple increments.

But the conscientious analysis of a thousand case
histories will never guarantee the emergence of another.
Trying to do something that’s never been done before
doesn’t just run the risk of risk: it knowingly invites
it. And that’s why the basic truth about advertising,
however unheroic it may sound, should be far more
openly acknowledged; and indeed celebrated.

It should be the commonplace truth that frees

us all to search for the exceptional.

WPP ANNUAL REPORT 2015

105

Who runs WPP

Members of the Advisory Board

Jeremy Bullmore
John Jackson
Bud Morten
Koichiro Naganuma
John Quelch
Richard Rivers
Guiseppe Sala
Cuneyd Zapsu

Company Secretary

Marie Capes

Board of Directors
Non-executive chairman

Roberto Quarta
Chairman of the Nomination and Governance Committee
Member of the Compensation Committee

Executive directors

Sir Martin Sorrell
Chief executive
Paul Richardson
Finance director
Chairman of the Sustainability Committee

Non-executive directors

Jacques Aigrain
Chairman of the Audit Committee
Member of the Compensation Committee
Charlene Begley
Member of the Audit Committee and
Nomination and Governance Committee
Sir John Hood
Chairman of the Compensation Committee
Ruigang Li
Member of the Nomination and Governance Committee
Daniela Riccardi
Member of the Nomination and Governance Committee
Nicole Seligman
Senior independent director
Hugo Shong
Member of the Nomination and Governance Committee
Timothy Shriver
Member of the Compensation Committee
Sally Susman
Member of the Nomination and Governance Committee
Sol Trujillo
Member of the Audit Committee

WPP ANNUAL REPORT 2015

107

Who runs WPP
Board of Directors

Board of Directors

Jacques Aigrain Non-executive director Age 61

Roberto Quarta Non-executive chairman Age 66

Roberto Quarta was appointed as a director with effect
from 1 January 2015 and became Chairman of WPP
in June 2015. He is Chairman of Smith & Nephew plc,
a FTSE 100 listed global medical devices company and
Partner of Clayton, Dubilier & Rice and Chairman of
Clayton, Dubilier & Rice Europe, a private equity firm.
Previously, he was Chief Executive and then Chairman
of BBA Group plc, Chairman of Rexel SA and IMI plc
and a Non-Executive Director at BAE Systems plc,
Equant NV, Foster Wheeler AG and PowerGen plc.

Sir Martin Sorrell Chief executive Age 71

Sir Martin Sorrell joined WPP in 1986 as a director,
becoming Group chief executive in the same year. He is
a non-executive director of Formula One and Alcoa Inc.

sirmartinsorrell@wpp.com

Paul Richardson Finance director Age 58

Paul Richardson became Group finance director of WPP
in 1996 after four years with the Company as director
of treasury. He is responsible for the Group’s worldwide
functions in finance, information technology, procurement,
property, treasury, taxation, internal audit and
sustainability. He is a chartered accountant and fellow
of the Association of Corporate Treasurers.

paul.richardson@wpp.com

108 WPP ANNUAL REPORT 2015

Jacques Aigrain was appointed a non-executive director
of WPP on 13 May 2013. He is currently a partner at
Warburg Pincus LLP. He was on the Executive Committee
of Swiss Re AG from 2001 to 2009 including CEO from
2006, and prior to that, he spent 20 years with JPMorgan
Chase in New York, London and Paris. In addition, he is
a non-executive director of London Stock Exchange Group
Plc and a Supervisory Board Member of LyondellBassell
NV and Swiss International Airlines AG. He was Chairman
of LCH Clearnet Group Ltd from 2010 to March 2015,
and also was a Director of the Qatar Financial Center
Authorities until March 2015 and Supervisory Board
Member of Lufthansa AG until April 2015. He is a dual
French and Swiss citizen. He holds a PhD in Economics
from Sorbonne University, and a MA degree in Economics
from Paris Dauphine University.

Charlene Begley Non-executive director Age 49

Charlene T Begley was appointed a non-executive director
of WPP on 1 December 2013. Most recently, Ms Begley
served as a Senior Vice President of General Electric
Company and the Chief Executive Officer and President
of GE Home & Business Solutions at General Electric
Company. In this role, she had responsibility for $9 billion
of revenue with the GE Appliances, Lighting and Intelligent
Platforms businesses, as well as served as the company’s
Chief Information Officer and led the Sourcing Council
and Corporate Leadership Staff. As CIO, she managed
a budget of $3.7 billion and led 10,000 IT professionals
with a strong focus on business process excellence,
simplification, collaboration and security and compliance.
Over her career at GE, she served as President and Chief
Executive Officer of GE Enterprise Solutions, GE Plastics,
and GE Transportation. In addition, she led GE’s Corporate
Audit Staff and served as the Chief Financial Officer for
GE Transportation and GE Plastics Europe and India.
Ms Begley currently serves as a non-executive director
and member of the Audit Committee of NASDAQ OMX
and non-executive director and member of the Audit and
Nominating Committees of Red Hat. Ms Begley was a
director of Morpho Detection, Inc. and GE Fanuc JV. She
was recognized as a Young Global leader on the World
Economic Forum and Fortune’s “Most Powerful Women
in Business”. Ms Begley graduated Magna Cum Laude
from the University of Vermont in 1988 with a BS Degree
in Business Administration.

Who runs WPP
Board of Directors

Sir John Hood Non-executive director Age 64

Daniela Riccardi Non-executive director Age 56

Sir John Hood was appointed a director on 1 January 2014.
An international education and business leader, he was
formerly Vice-Chancellor of the University of Oxford and
of the University of Auckland. In his native New Zealand,
he served as Chairman of Tonkin & Taylor Ltd and as
non-executive director of Fonterra Co-operative Group,
ASB Bank Ltd, and other companies. Sir John currently
serves as President & CEO of the Robertson Foundation,
and as Chairman of Study Group Limited and BMT Group.
He also serves as Chair of the Rhodes Trust and Teach
For All. Sir John earned his PhD in Civil Engineering
from the University of Auckland and then won a Rhodes
Scholarship to Oxford, where he was awarded an MPhil
in Management Studies. Sir John has been appointed a
Knight Companion to the New Zealand Order of Merit.

Ruigang Li Non-executive director Age 46

Ruigang Li was appointed a director of WPP in October
2010. He is the Founding Chairman of CMC Capital
Partners and CMC Holdings (CMC), China’s most
prestigious platforms for media and entertainment
investment and operation with an extensive coverage
across the entire spectrum of traditional and internet
space. Ruigang Li has led CMC to create a number
of champions and emerging leaders in key sub-sectors
including television, film, animation, sports, music,
location-based entertainment, financial media, financial
and media data services, advertising, e-commerce,
ticketing, mobile video social network, game and
education. Ruigang Li was the Chairman and President
of SMG (Shanghai Media Group) for more than 10 years
and successfully transformed SMG from a Shanghai-
based provincial broadcaster into China’s leading media
conglomerate with the most diversified business scope.

Daniela Riccardi was appointed a director on 12 September
2013. A prominent FMCG, retail-and-fashion products
executive, she is Chief Executive Officer of Baccarat, the
international luxury goods company, and was Chief
Executive Officer of Diesel Group, the innovative fashion
business. She was an executive at Procter & Gamble for 25
years, including service as President of Procter & Gamble
Greater China, with 7,000 employees, and Vice President-
General Manager for Eastern Europe & Russia. Ms
Riccardi also sits on the Board of Kering. Ms Riccardi
is a Magna Cum Laude graduate in Political Science and
International Studies at Sapienza University of Rome and
completed a Fellowship in Marketing at Yale University.

Nicole Seligman Non-executive director Age 59

Nicole Seligman was appointed a director on 1 January
2014. Most recently, Ms Seligman served as President of
Sony Entertainment, Inc. and Sony Corporation of America
and Sony Group Senior Legal Counsel. Until 2014, she was
Executive Vice President and General Counsel of Sony
Corporation. Previously, as a partner in the Washington
law firm of Williams & Connolly, she counselled a wide
range of clients, including major media companies, on
complex litigation and commercial matters. She was a law
clerk for US Supreme Court Justice Thurgood Marshall and
was associate editorial page editor for the Asian Wall Street
Journal. She was a Magna Cum Laude graduate of both
Harvard College and Harvard Law School.

Hugo Shong Non-executive director Age 60

Hugo Shong was appointed a director on 13 May 2013.
He is the Founding General Partner of IDG Capital
Partners and president of IDG Asia/China. He joined IDG
in 1991 as an associate to IDG’s founder and chairman,
Patrick J. McGovern, for Asian business development
after working for three years as a reporter and editor
at Electronic Business and Electronic Business Asia
magazine, where he launched over 40 magazines and
newspapers in Asian countries, such as PC World Vietnam,
the Chinese editions of NetworkWorld, Electronic
Products, Cosmopolitan, Harper’s Bazaar, National
Geographic, FHM and Men’s Health. In 1993, he helped
IDG to set up China’s first technology venture fund,
IDG Capital Partners, which now has $5 billion under
management and an investment portfolio including Baidu,

WPP ANNUAL REPORT 2015

109

Who runs WPP
Board of Directors

Tencent (QQ), Sohu, Ctrip, Soufun and Xiaomi. He
currently serves on the boards of China Jiuhao Health
Industry Corp, which focuses on health maintenance and
retirement community projects in China, and Mei Ah
Entertainment Group, an entertainment company with
interests in television, film and theatre listed on the Hong
Kong Stock Exchange. Hugo has been a member of the
board of trustees of Boston University since 2005. After
completing his undergraduate studies at Hunan University,
he attended the Chinese Academy of Social Sciences and
earned a Master of Science from Boston University in 1987.
He conducted graduate studies at the Fletcher School of
Law and Diplomacy and has also completed the Advanced
Management Program at Harvard Business School.

Timothy P. Shriver Non-executive director Age 56

Tim Shriver was appointed a director of WPP in August
2007. He is Chairman of Special Olympics and in that
capacity, he happily serves together with over 4 million
Special Olympics athletes in 170 countries, all working
to promote health, education, and a more unified world
through the joy of sports. Before joining Special Olympics
in 1996, Shriver was and remains a leading educator
focusing on the social and emotional factors in learning.
He co-founded and currently chairs the Collaborative for
Academic, Social, and Emotional Learning (CASEL), the
leading school reform organization in the field of social
and emotional learning. He is a member of the Council on
Foreign Relations. Shriver earned his undergraduate degree
from Yale University, a Master’s degree from The Catholic
University of America, and a Doctorate in Education from
the University of Connecticut. He has produced four films,
written for dozens of newspapers and magazines, founded
an ice cream company, and been rewarded with degrees
and honors which he didn’t deserve but happily accepted
on behalf of others.

Sally Susman Non-executive director Age 54

Sally Susman was appointed a director on 13 May 2013. She
is currently executive vice president, Corporate Affairs for
Pfizer, the world’s largest biopharmaceutical company. Sally
also heads the firm’s corporate responsibility group and plays
a key role in shaping policy initiatives. Before joining Pfizer
in 2007, she was EVP of Global Communications at Estée
Lauder, where she directed global corporate affairs strategy
and served as a member of the Executive Committee. She
also held several senior corporate affairs posts at American
Express, working in both London and the US. She started
her career in government service focused on international
trade issues and her positions included Deputy Assistant
Secretary for Legislative and Intergovernmental Affairs in
the US Department of Commerce. She serves on the board
of the International Rescue Committee and is a Trustee at
the Library of Congress. Sally holds a BA in Government
from Connecticut College in the US and has studied at the
London School of Economics.

Sol Trujillo Non-executive director Age 64

Solomon D. (Sol) Trujillo was appointed a director of WPP
in October 2010. He is an international business executive
with three decades’ experience as CEO of high-cap global
companies in the US, EMEA and Asia-Pac. A digital
pioneer and long-time practitioner of market-based
management, Sol was an early champion of high-speed
broadband and the mobile internet to stimulate
productivity and innovation across all sectors of the
economy. Sol currently sits on corporate boards in the US,
EU, and China and has managed operations in more than
25 countries around the world – including developed as
well as emerging markets from the EU and North America
to China, Australasia, Africa and the Middle East.

110

WPP ANNUAL REPORT 2015

How we behave
and how we’re
rewarded

Directors’ report

Report by Roberto Quarta
Chairman of the Company
and chairman of the Nomination
and Governance Committee

Dear share owner

his is my first letter as chairman of
your Company, having taken up the
role last June.

I have run companies in sectors as
diverse as manufacturing, engineering,
distribution and electronics so, while

One of the differences between our business and
many others is that its principal assets are not plant
and machinery, but human. Senior staff retention is strong.
The business was built in part through acquisition and
many founders of acquired companies are still with us
long after their earn-outs have ended.

my background is not in advertising and marketing
services, I would like to think that this degree of separation
from the business, and the breadth of my own experience,
lend both independence and perspective – two qualities
essential for any chairman.

Over the years people have asked me: what is the
chairman’s agenda? That’s easy. There is none. There is
only the agenda of our stakeholders: whether they are our
people, clients, share owners or the broader communities
with whom we have relationships.

With that in mind, here are some notes from a relative

newcomer after what has been yet another record year
for WPP.

First, reasons to celebrate. We have an excellent
business. It is well run. It produces stellar results year in,
year out and enjoys – on balance – contented investors.

Speaking of entrepreneurs, it hardly needs me to say
that your Company’s founder has made an extraordinary
contribution to this business as CEO. The accolades Sir
Martin receives on a regular basis say it better than I ever
could. In the last year alone he was named the world’s fifth
best performing CEO by the Harvard Business Review,
and voted the joint most impressive business person in
the UK in the Ipsos MORI Captains of Industry survey.
This recognition matters, because it adds to the
reputation of your Company and all the operating
businesses within it. Sir Martin’s public profile, as one
of the world’s most successful CEOs and a leading
commentator on global economic affairs, is of enormous
material value to WPP, bringing prestige, talent and new
business to the Group.

WPP ANNUAL REPORT 2015

113

How we behave and how we’re rewarded
Directors’ report

Second, some reflections. Times are always changing.

WPP’s succession planning, as my distinguished
predecessor Ambassador Philip Lader said last year,
is “steadily more rigorous and comprehensive.”

Third, some predictions. This may be my first year as
your chairman, but I am aware of the rhythms and rituals
of the Company calendar.

In the lead-up to our AGM there will be debate about

We are obliged to consider succession from two angles:

compensation.

first, as an orderly, planned process; and second, as
something potentially more sudden as recent tragic events
have shown. As Philip said, “Sir Martin, like all of us,
is not immune from being hit by the proverbial bus.”
At some point we all leave our jobs. The question

is when. Whether, in Sir Martin’s case, that happens
tomorrow, in one, two, three, four or five years, or even
over a longer period, we have already begun to identify
internal and external candidates who should be considered.

Since joining your Board, I have seen first-hand a
rigorous and comprehensive process, where independent
members of the Board and the chairman regularly meet
not just those who report directly to Sir Martin, but also
the senior tier below.

Seeing people regularly, gives your Board insight into

individual businesses and helps us get to know senior
management and consider whether they have the attributes
for a future chief executive of this Group.

Do they understand the Group or just their own

business? Familiarity with clients, familiarity with strategy
are key. What would they do if they became chief
executive?

Before and since my appointment, the Board has had a
very productive session in which all members shared views
on who, specifically, might or could succeed Sir Martin
now or in the more distant future. The list of candidates
discussed must be constantly refined and reconsidered and
I and the other independent members of the Board will
continue to focus on this in 2016 and beyond.

Share owners should have no doubt that we already
have a strong pool of internal and external candidates to
draw from.

The record performances that form executive pay mean
that share owners have been handsomely rewarded over the
years as their investments increase in value substantially.
But there are critics.

The first thing to remember about compensation

schemes is that they don’t happen overnight. The headlines
we will inevitably read concern obligations and agreements
put in place several years ago for our executives.

The Board must assess whether pay is aligned with
share owner interest. That’s not about quantum. It’s about
alignment. Was the pay plan approved by a majority of
share owners? The answer is yes. The plan was laid out;
the results are laid out. The performance is there; the
metrics are there. This is a matter of record, contract and
history. It is not the future.

Other changes are on the horizon. This year we have

instituted an externally-facilitated Board review by a
leading expert in this field.

I promised share owners that we would appoint a
well-known, respected professional to review our Board
composition and effectiveness and that we would report
in due course on the outcome.

The review has evaluated Board processes, Board
discipline, composition, dynamics and effectiveness.
Our expert has attended Board and committee meetings
as an observer and held one-to-one discussions with each
director and the Company Secretary.

The full report will be considered by the Board at the

end of April and will help us to be a more effective and
efficient Board, whose agenda reflects the needs of the
Board, and the Company’s stakeholders. This is my job
and one I aim to do with fresh eyes and ears.

114

WPP ANNUAL REPORT 2015

How we behave and how we’re rewarded
Directors’ report

As part of the Board evaluation process, we are
identifying its strengths and weaknesses. Perspective
is vital. My idea of a great Board is a group of diverse
people sitting round the table who bring informed, well
thought-out, experienced perspectives and who, when
combined, add value to the business.

While the proportion of women on our Board, for
example, is in line with internal targets of 30%, there
is always room for further improvement.

Fourth, a thank you and a sad farewell. As I complete my
first letter to share owners, I would like to thank Philip Lader
for his outstanding 14 years as your chairman. His ready wit,
fine style and tremendous scope of vision are well known.
On behalf of every Board member I wish him the
very best for the future and register our deep gratitude
for his service.

I would also like to remember and honour the wisdom

and service of Roger Agnelli, a non-executive director since
2013 who died tragically in March this year.

Finally, in conclusion, a pledge. I am well aware that
I can only claim the status of newcomer for so long, and
that I have a window of opportunity to deliver the things
I have described. I do not intend to delay.

Whatever issues we identify collectively will not be

solved by revolution – they’ll be solved by evolution.
Logical steps, clearly understood by all, taken in the
interests of everyone with a stake in the future of this
remarkable Company.

Roberto Quarta
15 April 2016

WPP ANNUAL REPORT 2015

115

How we behave and how we’re rewarded
Directors’ report

Review of the Company’s
governance and the Nomination
and Governance Committee

Report by Roberto Quarta
Chairman of the Nomination and
Governance Committee

Nomination and Governance Committee members

Attendance at 4
meetings in 2015
3
2
4
2
1
1
2
4
3
3

Roberto Quarta (Chairman)1
Philip Lader2
Charlene Begley
Roger Agnelli3,5
Ruigang Li
Daniela Riccardi4
Jeffrey Rosen2
Hugo Shong
Tim Shriver3
Sally Susman

1 Appointed to the committee on 9 February 2015.
2 Retired from the committee on 9 June 2015.
3 Retired from the committee on 10 October 2015.
4 Appointed to the committee on 10 October 2015.
5 Roger Agnelli tragically died on 19 March 2016.

Dear share owner

Committee responsibilities and how they were
discharged in 2015

he principal focus of the four meetings
of the Nomination and Governance
committee in 2015 were:

succession planning for the CEO

and senior management;

Board and committee composition;

the appointment of a new senior independent

director and chairman of the Audit Committee;

Board evaluation; and
share ownership guidelines for non-executive directors.

Succession planning

As the new chairman and chairman of the Nomination
and Governance Committee, I have had extensive
discussions with share owners on the issue of succession
and understand their request for greater transparency of
reporting and to integrate the Board evaluation process
with succession planning. The committee and the full
Board fully appreciates that strategic, thoughtful and
practical succession planning is critical to the long-term
success of the Company.

The Board has for some time had a strategy in place

for an agreed or foreseen departure of the senior
management team including the CEO and CFO and also
in the event of sudden emergencies, where an individual
cannot continue working.

During 2015, the Board has held three detailed senior
management and CEO succession planning reviews and
has met with the senior management teams of all of the
major operating companies within the Group and in
many cases the tier of managers below to develop their
understanding of the diversity of the pipeline of internal
candidates and continually reassess the succession plans.
The committee has also considered the attributes for
future non-executive director appointments in the context
of the strategic development of the Group, which include
business-specific and digital or data analytics expertise,
back office integration and UK governance experience.

New senior independent director

The Board announced the appointment of Nicole Seligman
as senior independent director on 4 April 2016, following
the recommendation of the committee and succeeding
Jeffrey Rosen who retired at the 2015 AGM. Ms Seligman
was appointed to the Board in January 2014 and has served
on the Compensation Committee and attended the other
committee meetings at the invitation of the chairmen
of those committees.

116 WPP ANNUAL REPORT 2015

How we behave and how we’re rewarded
Directors’ report

Committee composition

Jacques Aigrain succeeded Colin Day as chairman of the
Audit Committee with effect from the close of the 2015
AGM following the recommendation of this committee.
Jacques Aigrain has been a member of the committee since
joining the Board in May 2013 and is considered as the
committee’s financial expert for Sarbanes-Oxley Act (SOX)
purposes and together with Charlene Begley as having
recent and relevant financial experience for the purposes
of the UK Corporate Governance Code.

The committee reviewed the composition of each of
the Board Committees and the Board agreed following
that review to realign and reduce committee memberships
in October 2015, to reflect the skills and interests of
respective directors. Subject to their appointment and
reappointment at the AGM, the amended composition of
our three main committees will continue to be as follows:

Committee
composition 2016
Roberto Quarta
Jacques Aigrain
Charlene Begley
Sir John Hood
Ruigang Li
Daniela Riccardi
Nicole Seligman
Hugo Shong
Tim Shriver
Sally Susman
Sol Trujillo

Audit
Committee

Compensation
Committee

Chair l

Nomination and
Governance
Committee

Chair l

Board and committee evaluation

The annual evaluation of the Board’s and all committees’
effectiveness was commenced at the end of 2015 following
the appointment of the new chairman and the realignment
of the committee memberships. The evaluation process is
being externally facilitated by Dr Tracy Long of Boardroom
Review Limited who has no other connection with the
Group. Dr Long has attended Board and committee
meetings as an observer and has held one-to-one
discussions with each director and the Company Secretary.
Dr Long’s observations from these discussions and meetings
are being reviewed by the Board with proposals being made
to the full Board as to improving Board effectiveness.

The results of the evaluation will be considered in the 2015
Sustainability Report to be published in June 2016 and
discussed as part of the ongoing dialogue with share owners.

UK Corporate Governance Code

During the year, the Board was briefed on regulatory
and corporate governance developments. This principally
included the anticipated impact of the new UK and EU
rules on auditing market reform and the changes to the
UK Corporate Governance Code. The briefing focused
especially on the changes related to remuneration, ongoing
risk management and internal control and the requirement
for directors to provide a longer term viability statement in
respect of the financial year ended 2015 taking into account
the Group’s current position and principal risks.

Share Ownership Guidelines

The committee reviewed the guidelines for non-executive
director share ownership considering practices in the
UK and the US and investor guidance. The committee
recommended and the Board approved that non-executive
directors should accumulate shares with a value equivalent
to one year’s fees on a post-tax basis during their tenure,
to align the interests more fully with share owners.

Sustainability

Paul Richardson, chairman of the Company’s Sustainability
Committee, presented a comprehensive assessment of the
Group’s sustainability performance and risks to the
committee for 2015. A more detailed review of our
sustainability performance and activities can be read on
pages 155 to 161 and in our 2015/2016 Sustainability
Report and Pro bono book to be published in June 2016.

Terms of reference

The committee’s terms of reference, which are reviewed
with the Board annually and most recently in April 2015,
are on the Company’s website at wpp.com/investor.

Roberto Quarta
15 April 2016

WPP ANNUAL REPORT 2015

117

How we behave and how we’re rewarded
Directors’ report

Review of the Audit Committee

Report by Jacques Aigrain
Chairman of the Audit Committee

Audit Committee members

Jacques Aigrain (Chairman)
Colin Day1
Sol Trujillo
Jeffrey Rosen1
Roger Agnelli3
Charlene Begley
Hugo Shong2

Attendance at 8
meetings in 2015
8
5
7
5
8
8
5

1 Colin Day and Jeffrey Rosen retired from the committee on 9 June 2015.
2 Hugo Shong retired from the committee on 10 October 2015.
3 Roger Agnelli tragically died on 19 March 2016.

Dear share owner

e held eight meetings during the year,
which were attended by Deloitte LLP, the
Company’s external auditor, the Company’s
chairman, the Group finance director, the
director of internal audit, the Group chief
counsel, the Group chief accountant and

the Company Secretary.

Committee responsibilities and how they were
discharged in 2015

The main matters we dealt with during 2015 were as follows:
monitoring the integrity of the Company’s financial
statements and reviewing significant financial reporting
judgements;

reviewing internal controls and internal audit activities;
assisting the Board in meeting its responsibilities in respect

of carrying out a robust assessment of the principal risks
affecting the Group and reviewing and reporting on the systems
and key elements of risk management as they affect the Group;
reviewing the Group Treasury policy with particular

focus on debtors, funding foreign exchange and cash
management and the continued ability of the Group to adopt
the going concern basis in preparing financial statements;

reviewing reports on any material litigation or

regulatory reviews involving Group companies;

118

WPP ANNUAL REPORT 2015

reviewing the Group’s mergers and acquisitions strategy,

any significant acquisitions, the earnout payments profile
review and integration processes and the debt financing by
the Group;

reviewing GroupM’s trading model and its risk

assessment processes;

reviewing the Group’s tax strategy;
monitoring the accounting and legal reporting

requirements, including all relevant regulations of the UK
Listing Authority, the SEC and NASDAQ and the Jersey
Financial Services Commission and changes to the UK
Corporate Governance Code;

overseeing continued compliance with Section 404
of SOX, through regular status reports submitted by the
internal and external auditors;

reviewing the Group’s IT transformation project and

integration initiatives; and

reviewing issues raised on our Right to Speak helpline

and the actions taken in response to those calls.

Fair, balanced and understandable

A sub-committee of the Board including two members
of this committee examined whether the Annual Report and
Accounts for 2015 was fair, balanced and understandable and
provided the information necessary for share owners to assess
the Group’s position, performance, business model and
strategy. The sub-committee received an early final draft of
the report for review and comment, as well as a report from
the Disclosure Committee as to the governance relating to
compilation of the report. The Board subsequently considered
the report as a whole and discussed the report’s tone, balance
and language for compliance with these standards. The
Board’s statement on the report is on page 169.

Financial reporting and significant financial
judgements

The management team make key decisions and judgements
in the process of applying the Group’s accounting policies.
These key judgements were detailed in reports to the
committee in respect of 2015 which were then examined
by the committee and discussed with management.
Deloitte also reported to and discussed with the
committee whether suitable accounting policies had been
adopted in the financial statements for the year ended 2015
and whether management had made appropriate estimates
and judgements. The areas of significant judgement
considered by the committee and how these were addressed

How we behave and how we’re rewarded
Directors’ report

are set out below and reflect a number of the principal risk
areas identified by the Board on pages 44 to 47:

the assessments made for goodwill impairment. The
committee confirmed, based on management’s expectations
of future performance of certain businesses, the level of
goodwill impairment charges required in 2015;

supported management’s assumptions in both these areas
and believe the current level of provisions is reasonable; and
the going concern assessment and viability statement
and key forecast assumptions. The committee concur with
management’s going concern assumptions as set out on
page 47.

the restructuring charges incurred as part of a

restructuring program in 2015 relating to Kantar, GroupM
and IBOPE and whether these are exceptional. The
committee supported management’s analysis of the nature
of the restructuring charges;

the judgements made in determining the gains on
investments made in 2015 on the comScore, eRewards
and Chime transactions. The committee agreed that
the approach adopted by management is appropriate;

the judgements made in respect of the recoverability
of other media income and revenue recognition, particularly
as these relate to media volume income and media trading
income. The committee received briefings from Deloitte and
management on the appropriateness of the policies adopted
and the controls in place and challenged management to
demonstrate the effectiveness of such controls;

the valuations of non-controlled investments, which

are based on local management forecasts, recent third-
party investment and other supporting information such
as industry valuation multiples. The committee examined
the valuations with management and considered the sample
testing of the investments performed by Deloitte and agreed
that the valuations were appropriate;

the accuracy of forecasting the potential future
payments due under earnout agreements in respect
of acquired businesses. The committee considered the
forecasting with management and the testing undertaken
by Deloitte and agreed that earnouts have been accounted
for on a consistent basis to previous periods;

the approach taken by management to accounting for
exceptional expenses incurred in relation to the ongoing IT
Transformation project, which the committee considered
was appropriate;

the valuation of year-end provisions in respect of
working capital. The committee received briefings on the
approach taken by management in assessing the level of
exposure across the Group and agreed it was consistent
and appropriate;

accounting for the judgemental elements of remuneration,

including pensions, bonus accruals, severances and share-
based payments. The committee agreed that the assumptions
applied by management are reasonable;

the judgements made in respect of tax, in particular

the level of central tax provisioning. The committee

External audit

Deloitte have been WPP’s auditors since 2002. The lead
partner rotates every five years and the latest rotation
took effect during 2015. In 2015, the effectiveness of the
audit process was evaluated through a committee review
of the audit planning process and discussions with key
members of the Group’s finance function. The 2015
evaluations concluded that there continued to be a good
quality audit process and constructive challenge where
necessary to ensure balanced reporting. The committee
held private meetings with the external auditors and the
committee chair met privately with the external auditors
before meetings. The committee continues to be satisfied
with the performance of Deloitte and confirmed that
Deloitte continues to be objective and independent and
noted the principal findings of the FRC 2014 Audit Quality
Review on Deloitte. The committee recommends the
reappointment of Deloitte at the AGM on 8 June 2016.
The committee considered the Group’s position on its

audit services contract in the context of the regulations
concerning the audit market. Although there is no immediate
intention to tender the audit contract, the Company will
re-tender at the latest by the 2022 year end in compliance
with the transitional arrangements for competitive tender that
require mandatory rotation after the 2023 fiscal year-end.

The Company confirms that it has complied with the

Competition and Markets Authority final order on
mandatory tendering and audit committee responsibilities.

Internal audit

The annual internal audit plan is approved by the committee
at the beginning of the financial year. Progress against the
plan is monitored through the year and any changes require
committee approval. Significant issues identified within audit
reports are considered in detail along with the mitigation
plans to resolve those issues. The committee also considers
the level of internal audit resource to ensure it is appropriate
to provide the right level of assurance over the principal risks
and controls throughout the Group.

WPP ANNUAL REPORT 2015

119

How we behave and how we’re rewarded
Directors’ report

Non-audit fees

Committee membership

This is my first report as chairman of the committee and
I would like to thank Colin Day for his hard work over
many years as a member of and subsequently chairman
of the committee. We will greatly miss Roger Agnelli
from the committee – his commitment and wisdom were
appreciated by all of us who were privileged to work
with him.

Jacques Aigrain
15 April 2016

The committee has established a policy regarding non-audit
services that may be provided by Deloitte, which prohibits
certain categories of work in line with relevant guidance
on independence, such as ethical standards issued by the
Auditing Practices Board and SEC. The policy was reviewed
by the committee in 2014 and advice on remuneration was
included in the prohibited category with effect from the
beginning of 2015 allowing for a transition period. Other
categories of work may be provided by the auditors if
appropriate and if pre-approved by the committee, either as
individual assignments or as aggregate amounts for specified
categories of services. All fees are summarised periodically
for the committee to assess the aggregate value of non-audit
fees against audit fees. The level of fees for 2015 is shown in
note 3 on page 189.

Committee Evaluation

The committee and its members were formally assessed
by the Nomination and Governance Committee as part
of the review of committee composition in 2015 and as
part of the evaluation process described on page 117
for their technical suitability to be members and also for its
overall effectiveness. The Board has designated me as the
committee’s financial expert for Sarbanes-Oxley Act (SOX)
purposes and together with Charlene Begley as having recent
and relevant financial experience for the purposes of the UK
Corporate Governance Code. The members of the committee
have financial and/or financial services experience as set out
in their biographies on pages 108 to 110.

Terms of reference

The committee’s terms of reference, are reviewed annually
and most recently in April 2015 and can be viewed on the
Company’s website at wpp.com/investor.

120 WPP ANNUAL REPORT 2015

How we behave and how we’re rewarded

Letter from the chairman of
the Compensation Committee

Dear share owner

s Chairman of the Compensation
Committee, I am pleased to present this
report on directors’ compensation for the
year ended 31 December 2015. This report
sets out how we have implemented the
compensation policy that you as share

owners approved in 2014, and for your convenience,
provides a reminder of the details of that policy. I would
also like to take this opportunity to describe the key topics
that have been considered in 2015.

During the year, the Nomination and Governance
Committee reviewed the composition of each of the Board
committees, including the Compensation Committee.
Following this review, it was agreed to reduce directors’
committee membership, to most effectively align their
skills and interests with the needs of each of the Board
committees. The result of this review is that the
Compensation Committee now comprises myself as
Chairman, Roberto Quarta, Jacques Aigrain and
Tim Shriver.

At the 2015 AGM, 80% of share owners voted in
support of the 2014 Compensation Committee Report.
The committee carefully reviewed the reasons why 20% of
share owners felt they needed to abstain or vote against the
report and considered what was necessary to address their
concerns. The primary reason for their vote related to the
2014 total compensation for the CEO. This ‘single figure’
was largely driven by the vesting of a five-year long-term
incentive award that was granted under a plan approved
by share owners in 2009 (‘LEAP III’), based on a plan first
approved in 1999 (‘Original LEAP’). Of this ‘single figure’,
84% of the value realised resulted from the vesting of this
long-term incentive award, with a further 8% being
awarded to reflect short-term performance. The committee,
while aware of the concerns, needs to remind share owners
that the LEAP stock awards are contractual and it is not
possible to reduce awards if the targets have been achieved.
The committee was and remains comfortable that the value
realised under LEAP aligned with very strong returns in
terms of share price growth and strong dividend payments.
It also reflected excellent annual and multi-year operating
performance, with 2014 being another record-breaking
year for the Group. The secondary reason for some share
owners abstaining or voting against the report was the
provision of a spousal travel benefit to the CEO.
As a result, this benefit was removed, with the CEO’s

agreement, as of 2015. Furthermore, Sir Martin Sorrell
decided to repay the sum he received for spousal travel
disclosed in last year’s report.

2015 was yet another record-breaking year for the

Group with many performance highlights, including
EBITDA exceeding £2 billion for the first time. Against this
backdrop of excellent sustained long-term performance, the
committee again expects share owner and media focus in
2016 to be on the total compensation for Sir Martin Sorrell.
I will explain this in more detail in the sections below, but
again, it is driven by the outstanding performance of the
Company over the last five years relative to our peers and
the market-leading returns delivered to share owners.

Pay for performance in 2015

A focus on performance and an ownership mindset are
central to the culture at WPP, and the committee firmly
believes the compensation programs are an important part
of this principle. WPP incentivises its Executive Directors
and other senior executives to deliver and drive sustainable
share owner returns, with plans that measure performance
over the short- and long-term. The annual performance of
the Company is measured and rewarded under the short-
term incentive plan. In 2015, performance against our key
measures of like-for-like PBT growth of 9.3%, like-for-like
net sales growth of 3.3% and constant currency net sales
margin improvement of 0.4% were all excellent. For the
financial component of the short-term incentive plan,
this resulted in awards of 162% of target. The individual
component for each Executive Director was based on areas
of strategic importance to the Group, for which they are
directly accountable. Details are set out later in the report,
but in general performance was equally strong.

Since 2013, WPP has granted long-term incentive

awards under a new plan: the Executive Performance Share
Plan (EPSP). The design of this plan was strongly informed
by share owner feedback, including the removal of the
upside of five times the executives’ investment, potentially
available under LEAP, and the incorporation of additional
performance metrics. The historic long-term incentive plan,
LEAP, under which the 2011 award was made, was a
co-investment plan that required executives to pledge
shares that would be matched at the end of the five-year
performance period depending on the TSR performance
of the Company relative to our peer group.

WPP ANNUAL REPORT 2015

121

Performance targets for 2016

As part of the Committee’s normal practice, in preparation
for the 2016 EPSP awards, we have reviewed the ranges
applied to the ROE and EPS measures and have concluded
they remain appropriate, stretching and aligned to the
guidance issued to share owners. The short-term incentive
plan financial measures will remain the same as used
in 2015.

Consultation with share owners

Our Executive Remuneration Policy will be re-presented
to share owners for approval at the AGM in 2017. We plan
to consult with our major share owners and representative
bodies during 2016 to present our thoughts and seek
their views.

Sir John Hood
Chairman of the Compensation Committee
15 April 2016

How we behave and how we’re rewarded
Letter from the chairman of the Compensation Committee

The 2011 awards, which vested in full on 14 March
2016, were based on performance over the five financial
years to 31 December 2015. Over this period WPP achieved
TSR of 134.9%, out-performing our peers and broader
market indices in Europe and the US. This was
underpinned by strong financial performance. The key
performance highlights over the five-year performance
period were:

More than doubling of market capitalisation to £20.2bn,

represented by a 14.6% compound annual increase in
share price

a 31.1% increase in revenue
a 44.4% increase in headline PBIT
a compound annual growth in the dividend of 20.2%
TSR that out-performed our most direct competitors,
Omnicom and Publicis, as well as 95% of the FTSE 100,
weighted by market capitalisation

An increase in permanent employees of 23% to 124,930

While the value of Sir Martin Sorrell’s award is very
large, it was the result of an outstanding set of returns to
share owners.

Pay policy and implementation

At the end of January 2015, Mark Read stood down from
the Board to take up the role of CEO of Wunderman. We
have pro-rated his compensation and benefits to reflect his
time on the Board, as outlined in the report that follows.

During the year, the committee reviewed the base salary

of the Chief Executive and Chief Financial Officer. The
committee decided that in light of other pay and incentive
rewards, no change to the level of base salary would be
made. This means there haven’t been any changes
to the Executive Directors’ base salaries since January 2013
for Sir Martin Sorrell, when his salary was reduced to its
current level, and July 2013 for Paul Richardson.

Finally, in accordance with commitments made last
year, we have implemented clawback arrangements to the
cash bonus and EPSP awards. These arrangements take
effect for 2016 and subsequent awards and permit a
clawback of incentives for a period of up to three years
after payment in the case of a prescribed event occurring.
This amendment will work in tandem with the pre-existing
malus clauses in the incentive plans.

122 WPP ANNUAL REPORT 2015

How we behave and how we’re rewarded
Letter from the chairman of the Compensation Committee

At a glance

How we performed in 2015

Group financial performance measures:

Headline PBT growth

Growth in net sales

Headline net sales
margin improvement

9.3%

5.0%

o Target

o Actual

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

3.3%

o Target

o Actual

3.0%

3.4%

3.3%

3.2%

3.1%

3.0%

2.9%

2.8%

0.5%

0.4%

0.3%

0.2%

0.1%

0.0%

0.4%

0.3%

o Target

o Actual

Long-term total shareholder return performance1

WPP Total Shareholder Return (‘TSR’)

Change in value of a £100 investment
in WPP over 20 years relative to indices

10,000

9,258%

1,400
1,200
1,000
800
600
400
200
0

1,272%

221%

135%

Since
inception

Twenty
years

Ten
years

Five
years

FTSE 100 253%
423%
S&P 500

70%
137%

37%
101%

18%

One
year

-2%
6%

1600

1400

1200

1000

800

600

400

200

£1,425

£536
£395
£345

Jan
96

Jan
98

Jan
00

Jan
02

Jan
04

Jan
06

Jan
08

Jan
10

Jan
12

Jan
14

Jan
16

o WPP
o S&P 500

o FTSE100
o CAC40

Source Datastream. TSR calculated up until 31 December 2015.

Source Datastream. TSR calculated up until 31 March 2016.

Change in value of a £100 investment in WPP over 20 years relative to a composite index of peers

1800
1600
1400
1200
1000
800
600
400
200
0

£1,425

£768

Jan 96

Jan 98

Jan 00

Jan 02

Jan 04

Jan 06

Jan 08

Jan 10

Jan 12

Jan 14

Jan 16

o WPP o Peer Composite

Source: Datastream. TSR calculated up until 31 March 2016. “Peer Composite” comprises Havas, IPG, Omnicom and Publicis, and from its date of listing
in 2001; Dentsu. All data has been converted on a daily basis into GBP. It is assumed that an investment is made on a market-cap weighted basis across
all companies, redistributed at the end of each day.

1 TSR calculated using an averaging period of one-month (one-year TSR) or six months (longer-term TSR) in common currency.

WPP ANNUAL REPORT 2015

123

How we behave and how we’re rewarded
Letter from the chairman of the Compensation Committee

How much the executive directors earned in 2015 (£000)

Sir Martin Sorrell

Paul Richardson

70,416

89%

o Fixed Remuneration

o Short-term incentives

o Long-term incentives

3,355

4,278

62,783

14%

o Fixed Remuneration

o Short-term incentives

o Long-term incentives

1,016

1,648

8,859

11,523

77%

How we will implement our compensation policy in 2016

Key measures of five-year performance

Policy

Implementation1

Base salary and fees • 24-month review period
Short-term incentives • 70% financial and

2016
No change
No change

30% personal strategic
• One-year performance
• 50% cash, 50% deferred WPP

Sir Martin Sorrell
£1,150,000
Opportunity: 0% – 435%
Target: 217.5%

Paul Richardson
$945,000 + £100,000
Opportunity: 0% – 300%
Target: 200%

shares (two years)
Long-term incentives • TSR, EPS and ROE

• Five-year performance
• 100% WPP shares

No change

Opportunity: 0% – 975%

Opportunity: 0% – 400%

1 Opportunity and target expressed as a percentage of base salary and fees.

124 WPP ANNUAL REPORT 2015

Implementation report

This section of the Compensation Committee report
contains details of how the Company’s Executive
Remuneration Policy was implemented in 2015.
We start by setting out the details of the Compensation
Committee – those setting and implementing the Executive
Remuneration Policy. We then present a summary of
the 2015 executive remuneration together with a summary
of pay across the Group.

Governance in relation to compensation

Compensation Committee members

Attendance at 5
meetings in 2015

Committee effective 10 October 2015
Sir John Hood (Chairman)
Jacques Aigrain
Roberto Quarta1
Tim Shriver
Pre-October committee members
Roger Agnelli2,3
Colin Day4
Ruigang Li2
Daniela Riccardi2
Jeffrey Rosen4
Nicole Seligman2
Hugo Shong2
Sol Trujillo2

5
5
5
5

4
4
3
3
4
4
4
4

1 Appointed to the Compensation Committee at the WPP Board meeting

held on 9 February 2015.

2 Retired from the Compensation Committee on 10 October 2015.
3 Roger Agnelli tragically died on 19 March 2016.
4 Retired from the WPP Board on 9 June 2015, following the AGM.

During 2015, the Nomination and Governance Committee
reviewed the composition of each of the Board committees
and the Board agreed, following that review, to realign and
reduce committee memberships in October 2015. The goal
was to reflect the skills and interests of the respective
directors, matching these with the needs of the Board.
Therefore the Compensation Committee membership was
amended as detailed in the table above.

During 2015, the Compensation Committee met five

times on a formal basis, with additional meetings held
as needed.

The committee members have no personal financial
interest (other than as a share owner as disclosed on page
136) in the matters to be decided by the committee, potential
conflicts of interest arising from cross-directorships or

How we behave and how we’re rewarded

day-to-day involvement in running the Group’s businesses.
The terms of reference for the Compensation Committee
are available on the Company’s website wpp.com/wpp/
about/howwebehave/governance, and will be on display
at the AGM, as set out in the Notice of AGM.

Advisors to the Compensation Committee

The Compensation Committee regularly consults with
Group executives. In particular, the Committee invites
certain individuals to attend meetings, including the Group
chief executive (who is not present when matters relating
to his own compensation or contracts are discussed and
decided), the company secretary, the chief talent officer and
the worldwide compensation & benefits director.

The latter two individuals provide a perspective on
information reviewed by the Committee and are a conduit
for requests for information and analysis from the
Company’s external advisors.

External advisors

The committee retains Willis Towers Watson to act as
independent advisors. Willis Towers Watson is engaged
to provide advice to the Compensation Committee and to
work with management on matters related to our Executive
Remuneration Policy and Practices. Willis Towers Watson
is a member of the Remuneration Consultants Group and
has signed the code of conduct relating to the provision of
advice in the UK. In light of this, and the level and nature
of the service received, the committee remains satisfied that
the advice is objective and independent.

Willis Towers Watson provides limited other services
at a Group level, however some of the operating companies
may engage advisors, including Willis Towers Watson,
at a local level.

In 2015, Willis Towers Watson received fees of £87,190

in relation to the provision of advice to the Committee.
The Committee receives external legal advice, where
required, to assist it in carrying out its duties.

WPP ANNUAL REPORT 2015

125

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Implementation report

Statement of share owner voting

In 2015, a number of share owners expressed concern at the overall level of pay for the Executive Directors. The
compensation levels were driven by the maturing of a five-year LEAP award and the increase in the Company’s share
price. The Committee acknowledges these concerns, but also recognises that the majority of share owners supported the
remuneration resolution last year (see below). The Committee is content that the LEAP program has performed as
intended and in the manner approved, with very strong share returns and share price performance delivering significant
value to both share owners and management.

Resolution
To approve the Implementation
report of the Compensation
Committee

Votes for

Number

Votes against

Votes cast Votes withheld

Number

757,414,100

79.97

189,727,858

20.03

947,141,958

26,502,257

The Compensation Committee reinforced the existing malus provisions by implementing clawback. This will allow, in
respect of performance year 2016 onwards, recovery of performance-related remuneration should it be determined that
fraud, breach of fiduciary duty or a material misstatement caused determination of the amounts of performance-related
remuneration paid or vested to be incorrect. Clawback will apply for three years post payment or vesting of an incentive
award. As noted in the committee Chairman’s letter, the policy will be resubmitted to share owners in 2017 for approval.
Major share owners and representative bodies will be consulted in advance of the new policy being submitted for approval.

Executive directors’ total remuneration received (audited)

Single total figure of remuneration in 2015 and 2014

Sir Martin Sorrell1

Paul Richardson1,2

Mark Read3

Base salary

and fees Benefits4
£000
200
179
82
67
2
8

£000
1,150
1,150
718
674
37
440

DEPs5 Pension
£000
£000
460
1,545
456
1,288
216
–
202
–
5
–
63
–

Short-term
incentives6
£000
4,278
3,590
1,648
1,542
–
737

Long-term
incentives7
£000
62,783
36,041
8,859
8,734
2,175
2,187

Total annual
remuneration
£000
70,416
42,704
11,523
11,219
2,219
3,435

2015
2014
2015
2014
2015
2014

1 Any US dollar amounts received in 2015 have been converted into sterling at an exchange rate of $1.5288 to £1.
2 Paul Richardson’s base salary figure is denominated in US dollars other than his fee for directorship of WPP plc which amounts to £100,000. There has been no

change in base salary over 2014 and differences to the 2014 value are due to a change in exchange rates.

3 Mark Read’s remuneration figures have been pro-rated to align with the time spent as an Executive Director of WPP. The long-term incentive figure has been

pro-rated to reflect the 4 years and 1 month of the 5-year performance period in which Mark Read served as a member of the WPP Board. There was no
short-term incentive entitlement in relation to his time on the Board in 2015. Mark Read stepped down from the WPP Board on 27 January 2015.

4 Details of benefits are set out on page 127. The 2014 benefits figure for Sir Martin Sorrell has been adjusted to reflect his personal decision to repay a sum

of £274,000 in respect of spousal travel costs.

5 Sir Martin Sorrell receives payments in accordance with the approval granted by share owners of amounts equal to the dividends that would be payable during
2015 totaling £1,545,340, £1,288,191 during 2014, in respect of the shares reflected in the UK and US Deferred Stock Units Awards Agreements, these agreements
that now comprise the awards granted under the Capital Investment Plan in 1995.

6 This is the aggregate amount awarded for the 2015, and 2014, financial years’ performance. The awards are delivered equally in a deferred share bonus in the

form of an ESA which vests two years from the date of grant subject to continued employment and cash.

7 This is the value of the 2011, and 2010, LEAP awards which vested in 2016, and 2015, following the end of the five-year performance period on 31 December 2015,

and 31 December 2014.

126 WPP ANNUAL REPORT 2015

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Implementation report

Fixed elements of remuneration (audited)

Base salary and fees

Sir Martin Sorrell
Paul Richardson
Mark Read1

Effective/
last review date
1 January 2015
1 July 2015
1 July 2013

Contractual salary and
fees
000
£1,150
$945 and £100
£440

Base salary and fees
received in 2015
000
£1,150
$945 and £100
£37

1 Mark Read’s base salary and fees value represent the pro-rated amount up to his retirement from the Board on 27 January 2015.

Each Executive Director receives a fee of £100,000 for their directorship of WPP plc, included above. The base salary and
fees for the Executive Directors are reviewed, but not necessarily changed, every 24 months.

Benefits, dividend equivalent payments and pension

Sir Martin Sorrell
Paul Richardson
Mark Read1

2015 Benefits
£000
200
82
2

2015 DEPs
£000
1,545
–
–

The benefits shown are those provided to the executive directors that are deemed taxable in the UK, or those that would
be taxable if Paul Richardson were resident in the UK. The value of benefits received that are detailed in the numbers
above include car and/or car allowance, healthcare, life assurance, long-term disability allowance and a per diem housing
allowance paid when the executive uses their own accommodation when travelling outside of their home country. The
table above also includes share owner-approved dividend equivalent payments of £1,545,340, £1,288,191 during 2014,
which are due on certain of Sir Martin Sorrell’s deferred share awards. The following table provides a breakdown of the
key taxable benefits for 2015:

Sir Martin Sorrell
Paul Richardson
Mark Read1

Car benefits
£000
37
24
–

Healthcare
£000
54
12
0.2

Accommodation
allowance
£000
47
23
–

Contractual pension
(% of base salary and fees)
40%
30%
15%

Other expenses
£000
62
23
2

2015 Pension
£000
460
216
5

1 Mark Read’s benefit and pension values represent the pro-rated amount up to his retirement from the Board on 27 January 2015.

All pension benefits for the executive directors are provided on either a defined contribution or a cash allowance basis.
Only the aggregate of base salary and fees is pensionable. No changes have been made to pension contribution rates
in the last year.

WPP ANNUAL REPORT 2015

127

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Implementation report

Variable elements of pay (audited)

Short-term incentive

This section summarises the Compensation Committee’s assessment of the Executive Directors’ performance during 2015
under the short-term incentive plan. Mark Read was ineligible for a short-term incentive in respect of his Executive
Director role from 1 January 2015 to 27 January 2015.

2015 short-term incentive plan outcome (percentages expressed relative to base salary and fees)

Sir Martin Sorrell
Paul Richardson

Actual short-term
incentive received
372%
230%

Attributed to
financial objectives
247%
184%

Attributed to
personal objectives
125%
46%

Total 2015
short-term incentives
£000
4,278
1,648

According to our policy, 50% of the 2015 short-term incentive will be delivered in the form of shares as an Executive
Share Award (ESA) with a two-year deferral requirement. ESAs are subject to malus provisions.

Performance against financial objectives

Performance against all financial objectives is calculated on a pro forma (‘like-for-like’) basis other than Net Sales margin
that is calculated on a constant currency basis. The key financial short-term incentive plan objectives for all the Executive
Directors are consistent with 2014 and provide a robust basis for assessing financial achievement.

As illustrated below, the 2015 financial performance of the Group was very strong. For the Group CEO and CFO,
strong PBT and net sales margin improvement produced performance well above target, achieving 93% and 90% of the
maximum award respectively. The net sales growth achieved an above target performance equivalent to 82% of the very
ambitious maximum.

Group performance (CEO and CFO)

2015 ﬁnancial objectives (70% of the award)

Threshold

Target

Maximum

Vesting
(% of maximum)

o Like-for-like headline PBT growth (1/3)

o Constant currency headline net sales

margin improvement (1/3)

o Like-for-like growth in net sales (1/3)

2.5%

2.0%

9.3%

10.0%

0.4%

0.5%

3.3%

4.0%

93%

90%

82%

128 WPP ANNUAL REPORT 2015

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Implementation report

Performance against individual strategic objectives (30% of the award)

Executive director

Sir Martin Sorrell

Personal measure 2015 Clarification of measures
Leadership
planning

Strategic planning
& execution

Paul Richardson Working capital

management
WPP IT
transformation

Financial control

Actively managing the process of strengthening the Group’s
senior leadership teams through internal development,
promotions, transfers and external hires.
Key focus areas include maintaining creative excellence;
driving strategy in the digital, data, analytics and new
markets; improving the effectiveness of the WPP horizontality
approach to enhance client service delivery.
Improving year-on-year rolling average net working capital
as a percentage of the annual revenue trend.
Implementing a transformational program of outsourcing
IT services to produce enhanced service and cost savings
in future years.
Demonstrating measures taken to improve operating
company balance sheet control and management.

Maximum
potential
(% of base
salary
and fees)

Award
received
(% of
maximum)

131%1

95%

90%2

51%

1 Figure relates to 30% of the 435% maximum bonus potential for Sir Martin Sorrell.
2 Figure relates to 30% of the 300% maximum bonus potential for Paul Richardson.

2015 short-term incentive plan awards

Based on the performance set out above, the short-term incentive award for each executive was:

Sir Martin Sorrell
Paul Richardson

Base salary
and fees
000
£1,150
$945 + £100

Target bonus % of
base salary and fees
217.5%
200%

Maximum bonus % of
base salary and fees
435%
300%

2015 award %
against target/
maximum
171%/86%
115%/77%

Total 2015 short-term
incentive award
000
£4,278
£1,648

As noted above, 50% of the 2015 bonus is delivered in the form of WPP shares as an Executive Share Award (ESA). These
shares are granted post determination of the annual bonus achievement and will vest, subject to continued employment, two
years later.

Short-term incentive weightings and measures for 2016

The Committee has reviewed the performance objectives and weightings for 2016 to ensure continued alignment with the
Company’s strategies. The weighting of financial objectives (70%) and individual strategic objectives (30%) will remain
unchanged as will the Group financial measures of headline PBT growth, net sales margin improvement and net sales growth.

As stated in the Executive Remuneration Policy, the committee is of the view that the targets for the STIP are

commercially sensitive and it would be detrimental to the Company to disclose them in advance of or during the relevant
performance period. To the extent targets are no longer commercially sensitive they will be disclosed at the end of the
relevant performance period in that year’s Annual Report.

WPP ANNUAL REPORT 2015

129

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Implementation report

Long-term incentives (audited)

2011 – 2015 LEAP III awards vesting

The 2011 awards were granted under LEAP III, the long-term incentive plan which in 2013 was replaced by the EPSP.
Vesting of LEAP awards was solely dependent on WPP’s relative TSR performance measured in common currency, against
a custom group of WPP’s comparators (Aegis, Arbitron, Dentsu, GfK, Havas, Interpublic, Ipsos, Omnicom and Publicis)
weighted by their respective market capitalisation.

Over the five-year investment and performance period, WPP out-performed 93% of the weighted peer group including
both Omnicom and Publicis, WPP’s largest and most comparable multi-line competitors. Over the period, WPP delivered
TSR of 135% which means that a shareholding of £100 at the start of the period would be worth £235 at the end. On a
relative basis, underlying financial and operational performance was also strong over the five-year period, consistent with
the TSR outcome.

Aegis and Arbitron, two of the comparator companies, were taken over during the investment and performance
period by Dentsu and Nielsen, respectively. In line with the guidelines previously established by the committee, the
two companies remained in the comparator group as they were both listed for more than 40% of the investment and
performance period. Their TSR performance was calculated assuming reinvestment into a synthetic stock of the remaining
comparators. This was with effect from the date immediately before which it was independently determined that the share
price was affected by either a takeover premium or speculation.

WPP’s TSR performance relative to the comparator group resulted in a match to the executive directors pledged shares

of 500%, equating to the maximum award.

Sir Martin Sorrell
Paul Richardson
Mark Read1

Number of shares
vesting
3,982,605
561,940
137,959

Share price
on vesting
£
15.76435
15.76435
15.76435

Value of match at grant
price of £6.6475
£000
23,637
3,335
819

Value added due to
share price
appreciation and
dividends
£000
39,146
5,524
1,356

2015 Long term
incentives
£000
62,783
8,859
2,175

1 Mark Read was an executive director of WPP plc until 27 January 2015. Accordingly, his LEAP award shown in the table represents the pro-rated amount of his

total award.

130 WPP ANNUAL REPORT 2015

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Implementation report

2015 EPSP awards granted

In 2015, the executive directors, along with a select number of senior executives within the Group, were granted awards
under the Executive Performance Share Plan (EPSP). The 2015 awards are subject to three equally weighted independent
performance conditions, being relative TSR, EPS and ROE. Performance is measured over the five financial years starting
in 2015 as follows:

Measure

Weight

Nature

Performance zone
(threshold to maximum)

Payout

Total Shareholder Return (TSR)

Earnings Per Share (EPS)

Return On Equity (ROE)

One-third

Relative to peers

One-third

WPP growth

One-third

WPP absolute

Median to upper decile

7% – 14% compound annual growth

15% – 18% annual average1

Below threshold: 0% of element vests
Threshold: 20% of element vests
Maximum or above: 100% of element vests
Straight-line vesting between threshold and maximum

Performance period

Five-years ending on 31 December 2019

1 The ROE measure for EPSP awards issued in 2013 and 2014 was a 10% to 14% average return.

As in previous years, WPP’s TSR performance is compared to companies representing our most relevant, listed global
competitors, weighted by market capitalisation. In 2015, the comparator group comprised Dentsu, GfK, Havas,
Interpublic, Ipsos, Nielsen, Omnicom and Publicis. TSR performance will be calculated on a market capitalisation-
weighted basis in both common and local currency (weighted equally). Using a dual basis ensures that the interests
of both local and international investors are reflected in the performance measures.

The following interests were awarded on 9 June 2015 at the preceding five-day average share price of £15.172

(ordinary shares) or $115.88 (ADRs).

Sir Martin Sorrell
Paul Richardson
Mark Read

Basis and level of award
(% of salary and fees)
974%
400%
200%

Award over
Ordinary Shares
ADRs
Ordinary Shares

Number of interests
awarded
738,267
37,970
65,910

Face value at date of grant
000
£11,201
$4,400
£1,000

EPSP measures and targets for 2016 – 2020

Following review, the committee agreed that the EPSP measures and targets that will be applied to awards made in 2016
will be the same as used in 2015 and detailed above.

WPP ANNUAL REPORT 2015

131

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Implementation report

Aligning pay and performance

As set out in the Executive Remuneration Policy, the Committee seeks to align variable remuneration with the key
strategic priorities of WPP, maximising the dynamic between pay and performance.

This dynamic is contingent upon the Committee setting challenging targets each year. The following graph and table

demonstrate the relationship between pay and performance over the last seven years for the Group chief executive.

Historical TSR performance1 Value of hypothetical £100 holding

o WPP

o FTSE 100

500

450

400

350

300

250

200

150

100

Value of a
hypothetical
£100 investment

£497

£187

2008

2009

2010

2011

2012

2013

2014

2015

Financial year 31st December
CEO total remuneration (£000)2
Year-on-year change in CEO total
remuneration
Short-term incentive award
against maximum
Long-term incentive award
against maximum
Change in annual TSR3
Change in five-year TSR4

2009
7,199

63%

32%

50%
66%
10%

2010
11,597

2011
11,941

2012
17,543

2013
29,846

2014
42,704

2015
70,416

61%

95%

83%
32%
37%

77%

46%
-13%
13%

47%

62%

86%
38%
45%

70%

82%

87%
56%
241%

43%

72%

100%
3%
172%

65%

86%

100%
18%
135%

1 Growth in the value of a hypothetical £100 holding of WPP ordinary shares over seven years against an equivalent holding in the FTSE 100 (the broad market

equity index of which WPP is a constituent) based on one-month average of trading day values. Source: DataStream.

2 Calculated using the single figure methodology.
3 TSR calculated using a one-month trading day average, consistent with the data shown in the graph.
4 TSR calculated using a six-month averaging period, consistent with the calculation methodology under LEAP/EPSP.

Relative importance of spend on pay

The following table sets out the percentage change in total staff costs, headcount, dividends and share buy-backs.

Total staff costs
Headcount – average over the year
Dividends and share buy-backs

2015
£6,652.6m
124,930
£1,133.4m

2014
£6,440.5m
121,397
£970.8m

% change
+3.29%
+2.91%
+16.75%

132 WPP ANNUAL REPORT 2015

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Implementation report

Relative change in pay for the Group chief executive

The following table summarises the change in the Group chief executive’s base salary and fees, taxable benefits and annual
bonus, compared to that of all full-time employees within the Group.

Group chief executive
All employees

Base salary and fees
0.0%
+3.3%

Taxable benefits1,2
+11.7%
+4.2%

Annual bonus3
+19.2%
+8.5%

1 Taking into account the worldwide structure and size of the Group, and given the need to calculate benefits on the basis that an individual is resident in the
UK for tax purposes, collating data on all employees was not practicable. As a result, the population for the taxable benefits consists of UK employees only.
2 The taxable benefits percentage figure for the Group chief executive is calculated using the figure post his election to repay a sum of £274,000 in respect of

spousal travel costs incurred in 2014.

3 The annual bonus data for the Group chief executive uses the short-term incentive figures set out on page 126.

Non-executive directors’ fees

The fees due to non-executive directors, last reviewed on 1 July 2013, are set out below (£000).

Chairman
Non-executive director
Senior independent director
Chairmanship of Audit or Compensation Committee
Chairmanship of Nomination and Governance Committee
Member of Audit or Compensation Committee
Member of Nomination and Governance Committee

475
70
20
40
15
20
10

WPP ANNUAL REPORT 2015

133

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Non-executive directors’ total remuneration received (audited)

The single total figure of remuneration table below details fee payments received by the non-executive directors while they
held a position on the Board. During both 2014 and 2015, the Company met the cost (including national insurance and
income tax, where relevant) of expenses incurred by the non-executive directors in performing their duties of office, in
accordance with the policy set out on page 152.

In 2015, the disclosable value of the expenses that would be chargeable to UK income tax totalled £148,276 (including

£50,735 of national insurance and income tax, where relevant).

Philip Lader1
Roberto Quarta2
Roger Agnelli3
Jacques Aigrain
Charlene Begley
Colin Day1
Sir John Hood
Ruigang Li
Daniela Riccardi
Jeffrey Rosen1
Nicole Seligman
Hugo Shong
Timothy Shriver
Sally Susman
Sol Trujillo

2015
211
305
114
121
100
58
110
96
88
62
86
112
106
80
106

Fees
£000
2014
475
–
120
110
96
130
100
100
90
150
90
120
119
80
110

1 Retired from the WPP Board following the 2015 AGM (9 June 2015).
2 Received no fees in 2014.
3 Roger Agnelli tragically died on 19 March 2016.

No compensation for loss of office was paid to non-executive directors who stepped down during the year.

Past directors

During 2015, payments were made to past directors who continued to provide advisory services to the Company.
Payments were made to Stanley (Bud) Morten and John Quelch both having stepped down from the Board in June 2013.
A payment of £83,726 was made to Mr Morten in respect of advisory services provided to the WPP Group. A payment of
£18,176 was made to Mr Quelch in respect of educational presentations he gave to companies within the WPP Group and
also in respect of advisory services provided to the WPP Group. A payment of £30,000 was made to John Jackson in
respect of his advisory role to WPP, which enables the Company to benefit from his considerable knowledge and
experience in the communications and marketing services sector.

134 WPP ANNUAL REPORT 2015

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Executive directors’ interests (audited)

Executive directors’ interests in the Company’s ordinary share capital are shown in the following table. Other than as
disclosed in this table and in the Compensation Committee report, no executive director had any interest in any contract
of significance with the Group during the year. Each executive director has a technical interest as an employee and
potential beneficiary in shares in the Company held under the ESOPs. More specifically, the executive directors have
potential interests in shares related to the outstanding awards under LEAP III and the EPSP in addition to outstanding
ESAs. As at 31 December 2015, the Company’s ESOPs (which are entirely independent of the Company and have waived
their rights to receive dividends) held in total 17,154,359 shares in the Company (17,861,766 in 2014).

Outstanding scheme interests

Total share
interests
(including
charitable
foundation)
22,394,954
24,547,301
920,265
1,000,265
120,713
120,713

Total beneficial
interests and
deferred
awards1
18,869,018
21,021,365
920,265
1,000,265
120,713
120,713

Deferred awards
(without
performance
conditions-
vested but
unexercised,
included in

Total beneficial)2

8,773,456
8,773,456
–
–
–
–

Shares without
performance
conditions
(unvested)3,4
273,0383
113,3474
113,9353
49,0854
54,3093
23,2634

Shares with
performance
conditions
(unvested)5,6
8,349,5285
4,793,7336
1,544,2605
1,042,5406
479,6495
328,8196

Total
unvested
shares
8,622,566
4,907,080
1,658,195
1,091,625
533,958
352,082

Director
Sir Martin Sorrell7 At 31 Dec 2015
At 15 Apr 2016
Paul Richardson At 31 Dec 2015
At 15 Apr 2016
At 31 Dec 2015
At 15 Apr 2016

Mark Read

1 Shares held outright together with shares due pursuant to awards that have vested but receipt of which have been deferred with share owner approval

(see footnote 2).

2 Shares (1) pursuant to the vesting of awards under Renewed LEAP (namely the 2004 and 2005 awards, part of the 2006 award, the 2007 award the UK portion
of the 2009 Award) and (2) which originally formed part of the Capital Investment Plan (an award made in 1995, which vested in 1999, in respect of 4,691,392
shares in total, some of which have been received by Sir Martin Sorrell) and which now comprise the share owner-approved UK and US Deferred Stock Units
Awards Agreements. The receipt of all of these awards has been deferred until November 2017 in accordance with share owner approval. Dividend shares
will be due on the exercise of these options.

3 Shares due pursuant to the 2013 and 2014 Executive Stock Awards, full details of which can be found on page 137. Additional dividend shares will be due

on vesting.

4 Shares due pursuant to the 2014 Executive Stock Awards, full details of which can be found on page 137. Additional dividend shares will be due on vesting.
5 Maximum number of shares due on vesting pursuant to the outstanding LEAP III and EPSP awards, full details of which can be found on page 138. Additional

dividend shares will be due on vesting.

6 As noted at footnote 5 above, less the maximum due under the 2011 LEAP III Award, which vested on 14 March 2016 (full details can be found on page 130).
7 The JMCMRJ Sorrell Charitable Foundation is interested in 3,525,936 ordinary shares. Sir Martin Sorrell has no beneficial interest in these shares.

Share ownership guidelines

As detailed in the Executive Remuneration Policy, the executive directors are required to achieve a minimum level of share
ownership of WPP shares. The Group chief executive and Group finance director are required to hold shares to the value
of 600% and 300% of base salary and fees respectively.

At the end of 2015, and at the date of this Compensation Committee report, all executive directors exceeded their

respective share ownership guidelines by a substantial margin.

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Non-executive directors’ interests (audited)

Non-executive directors’ interests in the Company’s ordinary share capital are shown in the following table. Except as
disclosed in this table and in the Compensation Committee report, no non-executive director had any interest in any
contract of significance with the Group during the year.

Non-executive director
Philip Lader1
Roberto Quarta
Roger Agnelli2
Jacques Aigrain
Charlene Begley
Colin Day1
Sir John Hood
Ruigang Li
Daniela Riccardi
Jeffrey Rosen1
Nicole Seligman
Hugo Shong
Timothy Shriver
Sally Susman
Sol Trujillo

Total interests at
31 December 2015 or Board
retirement date, if earlier
11,950
19,000
–
9,000
1,000
15,240
–
4,000
–
12,000
3,750
–
10,070
–
10,000

Total interests at 15 April 2016
n/a
21,800
–
9,000
2,140
n/a
–
4,000
–
n/a
3,750
–
10,070
–
10,000

1 Retired from the WPP Board following the 2015 AGM (9 June 2015), share interests pre-retirement.
2 Roger Agnelli tragically died on 19 March 2016.

136 WPP ANNUAL REPORT 2015

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Outstanding share-based awards

Executive Share Awards (ESAs) held by executive directors

All Executive Share Awards granted under the Restricted Stock Plan are made on the basis of satisfaction of previous
performance conditions and are subject to continuous employment until the vesting date. The table does not include the
2015 ESAs as these will not be granted until after publication of this Annual Report. Unless otherwise noted, awards
are made in the form of WPP ordinary shares.

Sir Martin Sorrell 2012 ESA
2013 ESA
2014 ESA
Paul Richardson1 2012 ESA
2013 ESA
2014 ESA
2012 ESA
2013 ESA
2014 ESA

Mark Read

Grant
date

Share/ADR
price on
grant date
30.05.13 £11.6450
27.05.14 £12.8850
27.05.15 £15.8350
30.05.13 $88.3100
27.05.14 $108.100
27.05.15 $121.720
30.05.13 £11.6450
27.05.14 £12.8850
27.05.15 £15.8350

No. of
Shares/
ADRs
granted2
132,139
159,691
113,347
12,575
12,970
9,817
24,452
31,046
23,263

Face
value
on grant
date
000
£1,539
£2,058
£1,795
$1,110
$1,402
$1,195
£285
£400
£368

Additional
shares
granted in
lieu of
dividends
7,095
–
–
664
–
–
1,312
–
–

Total
shares
vesting
139,234
–
–
13,239
–
–
25,764
–
–

Shares /
ADR price
Vesting
on vesting
date
£15.6105
09.03.15
–
06.03.16
06.03.17
–
09.03.15 $117.3730
–
06.03.16
06.03.17
–
£15.6105
09.03.15
–
06.03.16
–
06.03.17

Value on
vesting
000
£2,174
–
–
$1,554
–
–
£402
–
–

1 Paul Richardson’s ESAs were granted in respect of ADRs.
2 Dividend shares will be due on these awards.

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Long-term incentive plans – Leadership Equity Acquisition Plan III

The following table summarises all of the awards outstanding under LEAP III.

Investment
and performance
period

Number of
investment
shares/ADRs

Share/
ADR price
on grant
date

Maximum
number of
matching
units at
1 Jan 20152

Granted/
(Lapsed)
units

Additional
dividend
shares

During 2015
Vested or
deferred
shares

Maximum
number of
matching
units at
31 Dec 2015

Share/
ADR price
on vesting

Value on
vest/
deferral
date
000

Award
date

Name
Sir Martin Sorrell

24.11.10 01.01.10 – 31.12.14
07.12.11 01.01.11 – 31.12.15
10.12.12 01.01.12 – 31.12.16

416,666 £7.2475 2,083,330
711,159 £6.6475 3,555,795
431,034 £8.5975 2,155,170

Paul Richardson

24.11.10 01.01.10 – 31.12.14
07.12.11 01.01.11 – 31.12.15
10.12.121 01.01.12 – 31.12.16

100,968 £7.2475
100,344 £6.6475
15,517 $69.2500

504,840
501,720
77,585

Mark Read

24.11.10 01.01.10 – 31.12.14
07.12.11 01.01.11 – 31.12.15
10.12.12 01.01.12 – 31.12.16

25,281 £7.2475
30,166 £6.6475
23,276 £8.5975

126,405
150,830
116,380

1 Paul Richardson’s 2012 LEAP award was granted in respect of ADRs.
2 Dividend shares will be due on these awards.

(0) 243,615 2,326,945
–
–
–
–

– 3,555,795
– 2,155,170

– £15.4887 £36,041
–
–
–
–

(0)
–
–

59,030 563,870
–
–

–
–

– £15.4887
–
–

501,720
77,585

£8,734
–
–

14,780
–
–

141,185
–
–

– £15.4887
–
–

150,830
116,380

£2,187
–
–

Long-term incentive plans – Executive Performance Share Plan

The following table summarises all of the awards outstanding under Executive Performance Share Plan.

Sir Martin Sorrell

Paul Richardson1

Mark Read

Grant
date
28.06.13
04.06.14
09.06.15
28.06.13
04.06.14
09.06.15
28.06.13
04.06.14
09.06.15

Performance period
01.01.13-31.12.17
01.01.14-31.12.18
01.01.15-31.12.19
01.01.13-31.12.17
01.01.14-31.12.18
01.01.15-31.12.19
01.01.13-31.12.17
01.01.14-31.12.18
01.01.15-31.12.19

Maximum
number of nil
cost options over
shares/ADRs
awarded2

Share/ADR
price on
grant date
1,032,540 £10.8480
867,756 £12.9080
738,267 £15.1720
52,026 $83.4186
40,927 $107.9960
37,970 $115.8800
78,355 £10.8480
68,174 £12.9080
65,910 £15.1720

During 2015
Options
exercised
or
deferred
–
–
–
–
–
–
–
–
–

Additional
dividend
shares
–
–
–
–
–
–
–
–
–

Options
vested/
(lapsed)
–
–
–
–
–
–
–
–
–

Maximum number of
nil cost options over
shares/ADRs at
31 Dec 2015
1,032,540
867,756
738,267
52,026
40,927
37,970
78,355
68,174
65,910

1 Paul Richardson’s EPSP awards were granted in respect of ADRs.
2 Dividend shares will be due on these awards.

Full details of the 2015 EPSP award, including performance measures and targets, can be found on page 131.

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How we behave and how we’re rewarded

Implementation of reward policy
for management outside the Board

As noted on pages 146 and 147, the Company uses
share-based compensation across the workforce to
incentivise, retain and recruit talent and to encourage
a strong ownership culture among employees. The use
of the main share plans in 2015 is described below.

The Restricted Stock Plan

Share incentive dilution for 2005 to 2015

The share incentive dilution level, measured on a 10-year
rolling basis, was at 2.9% at 31 December 2015 (2014:
2.7%). It is intended that awards under all plans, other than
share options, will all be satisfied with purchased shares
held either in the ESOPs or in treasury.

Sir John Hood
Chairman of the Compensation Committee
on behalf of the Board of Directors of WPP plc
15 April 2016

The WPP Leaders, Partners and High Potential program
provided awards to approximately 1,700 of our key
executives in 2015. Awards will vest three-years after
grant, provided the participant is still employed within
the Group. Awards are subject to malus conditions and
for awards granted in 2016 onwards, clawback conditions
will also apply.

WPP Share Option Plan 2015

At the 2015 AGM share owners approved the WPP
Share Option Plan 2015 as the replacement for the
Executive Stock-Option Plan and Worldwide
Ownership Plan.

During 2015, the WPP Share Option Plan 2015
was used to make awards to over 48,000 employees.
By 31 December 2015, options under this plan, and its
predecessor plan, the Worldwide Ownership Plan, had
been granted to approximately 147,000 employees over
72.9 million shares since March 1997.

During 2015, approximately 20,000 WPP employees
who had received awards under the Worldwide Ownership
Plan, took advantage of the rising share price and exercised
their options.

While the WPP Share Option Plan 2015 provides the
authority to make executive option awards in addition to
all-employee awards, no executive option awards were
granted in 2015.

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How we behave and how we’re rewarded

Executive Remuneration Policy

The Compensation Committee would like to present the Executive Remuneration Policy. This is the policy that was
approved by share owners at the 2014 AGM. It is the intention of the committee that this policy will be maintained
for three years from approval. In 2015, the Policy was amended to remove references that were specific to Mark Read who
retired from the Board on 27 January, include references to clawback provisions being included in the incentive plans; and
inclusion of share ownership guidelines for non-executive directors. The policy is subject to periodic reviews during
its operation. The committee believes that this policy continues to align with the Company’s mission statement and
business objectives and no changes are being put to share owners for consideration at this year’s AGM.

WPP’s compensation philosophy

Our mission statement and our six business objectives shape our compensation philosophy. Broadly, our Executive
Remuneration Policy is determined by three guiding principles:

performance-driven reward;
competitiveness; and
alignment with share owner interests.
Specifically, our six business objectives (as set out on page 35) are reflected in the design of our compensation plans as

set out below:

WPP’s six business objectives
Continue to improve operating margins on net sales Short-term incentive measure for the Group chief executive

Alignment with compensation structure

and Group finance director

Increase ﬂexibility in the cost structure

Short-term incentive measure for the Group finance director

Use free cash ﬂow to enhance share owner value
and improve return on capital employed

TSR, EPS growth and average ROE are long-term incentive
measures for the executive directors

Continue to develop the value added by the parent
company

Short-term incentive measures (parent company-led
efficiency projects) for the Group finance director

Emphasise revenue and net sales growth more
as margins improve

Short-term incentive measures for the Group chief executive
and Group finance director

Improve still further the creative capabilities
and reputation of all our businesses

Short-term incentive measure for the Group chief executive

The Executive Remuneration Policy is designed to attract and retain the best-in-class talent. The policy looks to incentivise the
directors to develop the skills of the Group’s employees in order to consistently exceed our clients’ expectations. The policy’s
objective is to drive and reward sustainable and exceptional performance, thereby producing long-term value for share owners.
In applying this policy, the committee takes into account the pay and conditions elsewhere in the Group, which in turn are
informed by general market conditions and internal factors such as the performance of the Group or relevant business unit.

Considerations taken into account when setting our Executive Remuneration Policy

Employment conditions at WPP

When reviewing changes to the compensation levels for the directors, the committee considers any changes in light
of the increases awarded across the Group over a relevant period of time, in conjunction with the other factors set out
in the policy table. The committee did not consult employees when drawing up this Executive Remuneration Policy.

140 WPP ANNUAL REPORT 2015

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Executive Remuneration Policy

Share owner views

WPP continues to engage openly with share owners and institutional investors to discuss matters relating to compensation.
The feedback received during these conversations is valuable and is among the factors that inform the decisions made by
the committee.

During 2013, the committee consulted with share owners on the design of the EPSP. The selection of performance
measures took account of the feedback received. More generally, formal and informal share owner feedback was used
by the committee when drafting this Executive Remuneration Policy.

Glossary

The following are acronyms used throughout the policy:

Acronym
DEPs
DSUs
EPSP
ESA
ExSOP
Good Leaver

LEAP

RSP
STIP

Definition
Dividend Equivalent Payments
Deferred Stock Units
Executive Performance Share Plan – long-term incentive plan introduced in 2013
Executive Share Award – the part of the STIP that is deferred into shares
Executive Stock Option Plan
Broadly, when an individual is dismissed other than for cause (the particular meaning applicable
to each share plan can be found in the relevant rules)
Leadership Equity Acquisition Plan – long-term incentive plan used to grant awards until the end
of 2012
Restricted Stock Plan
Short-term Incentive Plan – the annual incentive plan comprising a cash bonus and an ESA

Executive Remuneration Policy table – executive directors

The following table sets out details of the ongoing compensation elements for WPP’s executive directors.

Component and purpose

Operation

Fixed elements of compensation

Performance

Maximum annual
opportunity

Base salary and fees
To maintain package
competitiveness and
reflect skills and
experience.

Base salary and fee levels are reviewed
every two years or following a significant
change in the scope of a role.

Levels are determined by taking a
number of relevant factors into account
including individual and business
performance, level of experience, scope
of responsibility, compensation practices
across the Group and the competitiveness
of total compensation against both our
competitors and companies of a similar
size and complexity.

Company and personal
performance will be taken
into account during the
review process.

Under normal
circumstances base salary
and fees will increase by
no more than the local
rate of inflation over the
period since last review.

In the event of a promotion
or a significant change
in the scope of the role,
or changes in sector
competitive pay or the
need to counter a
competitive external
offer, the committee
may exceed this limit.

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Executive Remuneration Policy

Component and purpose

Operation

Performance

Maximum annual
opportunity

Short-term incentives (details of how performance measures and targets are set are included in the notes to this table on
pages 146 and 147)

Cash bonus, Executive
Share Awards (ESA)
To drive the achievement
of business priorities for the
financial year and to
motivate, retain and
reward executives over
the medium term, while
maximising alignment
with share owner interests.

Overview
The committee may invite executives
to participate in the STIP under which
a bonus can be made subject to
performance measured over the financial
year. Bonus opportunity is determined
as a percentage of salary and fees.

Performance measures and targets are
reviewed and set annually to ensure
continuing strategic alignment.
Achievement levels are determined
following year-end by the committee,
based on performance against targets.

Executive directors’ bonuses are delivered
in the form of a cash award and a deferred
share award (ESA), the latter constituting
at least 50% of the total bonus achieved.
The ESA will vest after a minimum of two
years subject to continued employment,
together with additional shares in respect
of accrued dividends.

Judgement
The committee will use its judgement
to set the performance measures and
targets annually.

Group chief executive:
435% of base salary
and fees.

Other executive directors:
300% of base salary
and fees.

The value of any accrued
dividends will vary
depending on the size
of the ESA awarded,
dividends declared
and share price over
the deferral period.

70% subject to financial
performance, either at a Group
and/or divisional level depending
on the role.

30% subject to personal objectives
linked to the strategy of WPP or
the relevant business area.

The committee will use its
judgement in assessing
performance relative to targets
and expectations communicated
at the start of the year and will
consider unforeseen factors that
may have impacted performance
during the period.

Vesting schedule
The following table sets out the
level of bonus payable for
threshold and target performance
as a percentage of maximum.
Vesting operates on a straight-line
basis between these points.

Target (as
percentage
of maximum)

Threshold

50%

67%

Malus provisions (ESA)
The committee has the ability to reduce any
unvested ESA in certain situations, including
when fraud or a material misstatement has
affected the level of any performance-
related remuneration.

Sir Martin
Sorrell
Other
executive
directors

Clawback provisions
The committee has the ability to clawback
cash bonus, earned in respect of the
performance year 2016 or after, in the
three years post payment in certain
situations, including when fraud, breach
of fiduciary duty or a material misstatement
has affected the level of any performance-
related remuneration.

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Component and purpose

Operation

Performance

Maximum annual
opportunity

Long-term incentives (details of how performance measures and targets are set are included in the notes to this table on
pages 146 and 147)

Executive Performance
Share Plan (EPSP)
To incentivise long-term
performance and to focus
on long-term retention and
strategic priorities, while
maximising alignment
with share owner interests.

One-third relative TSR.
One-third headline EPS growth.
One-third average ROE.

Conditional awards:
Plan maximum: 9.75 times
base salary and fees.

Group chief executive:
9.75 times base salary
and fees.

Other directors: four times
base salary and fees.

The value of accrued
dividends will vary
depending on the level
of vesting, dividends
declared and share
price over the
performance period.

All measures are assessed
independently of each other.

TSR is measured on a market-
capitalisation weighted basis
against a peer group of business
competitors that are selected
according to size and relevance.
This peer group is reviewed
annually at the start of each
cycle to ensure it remains robust,
appropriate and relevant in light
of WPP’s business mix. Half of the
TSR element is measured on a
local currency basis, half on a
common currency basis.

EPS is defined as WPP’s headline,
fully diluted, earnings per share.
The EPS performance is calculated
by taking the aggregate EPS over
the performance period and
calculating the compound annual
growth from the financial year
preceding the start of the period.

ROE is calculated as fully diluted
EPS divided by the average
balance sheet per share value
of share owners’ equity during
the year.

Vesting schedule
Awards will vest on a straight-line
basis from 20% for threshold
performance and 100% for
maximum performance.

Overview
Executives may receive an annual conditional
award expressed as a percentage of base
salary and fees. Executives may also receive
an award in respect of the number of
reinvested dividends proportionate to the
amount of the award vesting, the dividends
declared during the performance period
and the share price at the time the dividend
is declared. Awards will vest subject to
performance, measured over a period
of five consecutive financial years.

In respect of merger and acquisition activity
within the peer group, the committee has
an established and operated policy that TSR
outcomes should not be impacted by the
speculation or actuality of takeovers of peer
group companies (including WPP). This policy
includes a minimum listing requirement, an
approach for the reinvestment of proceeds
from shares of companies that delist during
the performance period and parameters
for companies subject to bid speculation.
Details of how this policy is implemented
will be disclosed each year in the relevant
Annual Report.

Discretions
In accordance with the EPSP rules that were
approved by share owners at the 2013 AGM,
if the committee considers that there has
been an exceptional event or that there
have been exceptional circumstances during
a performance period that have made it
materially easier or harder for the Company
to achieve a performance measure, the
committee may adjust the extent to which
an award vests to mitigate the effect of the
exceptional event or circumstances.

Malus provisions
The committee has the ability to reduce
any unvested EPSP award in certain
situations, including when fraud or a material
misstatement has affected the level of any
performance-related remuneration.

Clawback provisions
The committee has the ability to clawback the
amount net of tax received by an executive
from the proceeds of the vesting of an award
granted in 2016 or later years, in the three years
post payment, in certain situations, including
when fraud, breach of fiduciary duty or a
material misstatement has affected the level
of any performance-related remuneration.

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Executive Remuneration Policy

Component and purpose

Operation

Performance

Long-term incentives (legacy plans with unvested awards)

Leadership Equity
Acquisition Plan III
(LEAP III)
To incentivise long-term
performance and to focus
on long-term retention and
strategic priorities, while
maximising alignment
with share owner interests.

100% relative TSR measured on
a market-capitalisation weighted,
common currency basis.

Vesting schedule
The following table sets out the
level of award that will vest for
threshold and target performance
as a percentage of maximum.

All
executive
directors

Threshold Maximum

30%

100%

To achieve threshold vesting WPP
must outperform at least 50% of
the market-cap weighted peer
group; to achieve maximum
vesting WPP must outperform
at least 90% of the market-cap
weighted peer group.

Overview
Executives were invited to participate in
the plan annually by the committee. In
order to participate, individuals must have
committed to hold an investment level
in WPP shares which is determined by
the committee, subject to an overall
maximum, and must be held for the full
five-year performance period. Investment
levels were determined by the committee,
subject to an overall maximum. A final
number of matching shares will be
awarded, proportionate to the investment,
dependent on the performance of WPP.
Executives may also receive an award
in respect of the number of reinvested
dividends proportionate to the amount
of the award vesting, the dividends
declared during the performance period
and the share price at the time the
dividend is declared. The Plan was
closed to the grant of new awards at
31 December 2012.

Discretions
Following the end of the performance
period, the committee undertakes a
‘fairness review’ to determine whether any
exceptional events have impacted the
outcome and that the resulting match is in
line with financial performance relative to
the comparator group and the underlying
financial performance of the Group. Merger
and acquisition activity will be treated in
accordance with the policy set out under
the EPSP above.

Malus provisions
The committee has the ability to reduce any
unvested LEAP III award in certain
situations, including when fraud or a
material misstatement has affected
the level of any performance-related
remuneration.

Maximum annual
opportunity

The following maximum
levels applied at the
time of grant. No further
awards can be granted
under LEAP III, and none
have been made since
2012.

Investment: one times
an executive director’s
total target earnings
(base salary and fees
plus target bonus).

Award: Five times
an executive director’s
investment.

The value of accrued
dividends will vary
depending on the level
of vesting, dividends
declared and share price
over the investment and
performance period.

144 WPP ANNUAL REPORT 2015

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Component and purpose

Operation

Performance

Other items in the nature of compensation

Dividend Equivalent
Payments (DEPs)
on the DSUs
To ensure that Sir Martin
Sorrell receives an amount
equal to the dividends
that would be payable
if he had taken receipt of
and retained the shares
underlying the DSUs.

Benefits
To enable the executives
to undertake their role by
ensuring their well-being
and security.

The Company has previously received share
owner approval to allow Sir Martin Sorrell to
defer receipt of the DSUs. The Company
makes a cash payment to Sir Martin Sorrell
of an amount equal to the dividends that
would have been due on the shares
comprising the DSUs.

No longer subject to a
performance requirement
as this was assessed at
the point of vesting in 1999.

Not applicable.

The following benefits are payable in
relation to travel and the dual headquarter
split between the UK and the US to some/all
of the executive directors. The provision of
these benefits reflects external competitive
practice, the complex nature of the Group
and the significant amount of time spent
travelling by the executives.

The typical benefits that executive directors
receive may include a car and/or car
allowance plus the use of a driver as
required; medical, life and disability
insurance; accommodation allowance
in lieu of hotel expenses; tax and legal
advice; home office support; club
memberships deemed necessary
for the role; and spousal travel.

Other benefits, such as those linked to the
relocation of an executive, may be provided
depending on the prevailing circumstances.

Pension
To enable provision for
personal and dependant
retirement benefits.

Pension is provided by way of contribution
to a defined contribution arrangement,
or a cash allowance, determined as a
percentage of base salary and fees.

Not applicable.

Maximum annual
opportunity

The value of any accrued
dividends will vary
depending on the
dividends declared during
the deferral period.

Set at a level that the
committee feels is required
in order for the executive
to carry out their role. The
maximum payable will
not significantly exceed
the payments made
in 2013, although the
committee may pay
more than this if the cost
of providing the same
benefits increases, or if
the executive relocates.

Group chief executive:
40% of base salary
and fees.

Other executive directors:
30% of base salary
and fees.

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Notes to the policy table

Plan rules

Copies of the various plan rules are available for inspection
at the Company’s registered office and head office. The
Executive Remuneration Policy table provides a summary
of the key provisions relating to their ongoing operation.
The committee has the authority to ensure that any

awards being granted, vested or lapsed are treated in
accordance with the plan rules which are more extensive
than the summary set out in the table.

Selection of performance measures

STIP
Performance measures are selected by the committee on the
basis of their alignment to Group strategy and are the key
measures to oversee the operation of the business. Measures
are reviewed annually by the committee taking into account
business performance and priorities.

EPSP
EPS growth is a measure that is important for both
management and our share owners, capturing growth in
revenue and earnings. ROE is similarly important, and
provides a positive counterbalance and risk management
mechanism through the focus on both growth and capital
efficiencies. With the inclusion of relative TSR, the plan
also takes account of share owner views of how WPP has
performed relative to the companies in the peer group.

Calibration of performance targets

STIP
The performance targets for the STIP are set to incentivise
year-on-year growth and to reward strong, sustainable
performance. Strategic targets are based upon the annual
business priorities. The committee is of the view that the
targets for the STIP are commercially sensitive and it would
be detrimental to the Company to disclose them in advance
of or during the relevant performance period. The
committee will disclose those targets at the end of the
relevant performance period in that year’s Annual Report,
if those targets are no longer commercially sensitive.

EPSP
Operational targets under the EPSP are set taking into
account a combination of factors, but primarily internal
forecasts, analysts’ expectations (albeit, the period over
which analysts’ forecast is generally shorter than the
five-year performance period) and historical performance
relative to budgets.

Relative TSR targets are set to ensure they are more
stretching than UK norms and require out-performance
of our peers at median before any reward is triggered.

Cascade to WPP Group pay policy

As well as setting the policy for the executive directors,
the Compensation Committee is also responsible for
reviewing the policy for the most senior people at WPP
outside the Board.

Compensation packages for these individuals are
normally reviewed every 18 – 24 months. As with the
Executive Remuneration Policy, the WPP Group pay policy
ensures a clear and direct link between the performance of
the Group or relevant operating company and compensation.
Substantial use of performance-driven compensation not
only ensures the continued alignment of the interests of share
owners and senior individuals within the Group, but also
enables the Group to attract, retain and motivate the talented
people upon whom our success depends.

WPP is committed to encouraging strong performance
through a reward system that aligns management’s interests
with those of share owners.

From a compensation perspective, this is encouraged

in a number of ways:

senior executives participate in the same long-term
incentive plan as the executive directors, which is designed
to incentivise growth, capital efficiency and share price
appreciation; and

share ownership is encouraged for the WPP Leaders
(approximately the top 300 executives), all of whom have
stretching ownership goals.

Across the workforce more broadly, many employees
participate in bonus and commission plans based on the
performance of their employing company. In addition, where
locally competitive, employees are provided with company-
sponsored pension plans and life assurance plans and a range
of other benefits. In addition to these compensation elements,
the Company also uses share-based compensation across
the workforce to incentivise, retain and recruit talent which
encourages a strong ownership culture among employees.
The main share plans are described on the following page.

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Restricted Stock Plan
The RSP is used to satisfy awards under the short-term
incentive plans (including ESAs) as well as to grant awards
to management under the WPP Leaders, Partners and
High Potential program. In the program, awards are made
to participants that vest three years after grant, provided
the participant is still employed within the Group.

Executive directors are eligible to receive ESAs under
the RSP, but ineligible to participate in any other aspect
of the management share award program.

Executive Stock Option Plan
The ExSOP is used to make special grants of options in
order to attract or retain key talent. Awards are made
infrequently and executive directors are ineligible to
participate, other than in a recruitment situation (see
page 149). This plan expired in 2015 and was replaced
by the WPP Share Option Plan 2015.

Share Option Plan 2015
The WPP Share Option Plan 2015 is an all-employee plan
that makes annual grants of stock options to employees
with two years of service who work in wholly-owned
subsidiaries. This plan replaced the legacy Worldwide
Ownership Plan.

The WPP Share Option Plan 2015 also has
the capability to make grants of executive options in
order to attract or retain key talent. Such awards are
made infrequently.

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How do these pay policies affect potential compensation packages?

These graphs seek to demonstrate how pay varies with performance. The graphs are reflective of the pay policy at approval
by share owners at the 2013 AGM. There have been no changes to figures since the approval of the policy by share
owners, except benefits and DEPs. For consistency we have used the benefits and DEP figure from the year of approval
by share owners (2013).

Sir Martin Sorrell £000

Fixed and variable pay mix

Minimum

£3,061

On-plan

Maximum

£7,802

Minimum

On-plan

39%

32%

£19,264

Maximum

16%

26%

100%

29%

58%

5,000

10,000

15,000

20,000

20%

40%

60%

80%

100%

Paul Richardson £000

Fixed and variable pay mix

Minimum

£1,022

On-plan

Maximum

£2,993

Minimum

On-plan

100%

34%

47%

19%

£5,950

Maximum

17%

36%

47%

1,000

2,000

3,000

4,000

5,000

6,000

20%

40%

60%

80%

100%

o Fixed o Short-term incentives o Long-term incentives

The graphs are informed by three performance scenarios and these, along with the assumptions used, are summarised below.

Fixed elements

Short-term
incentives

Long-term
incentives

Base salary & fees
1,150
704

Consists of base salary and fees, benefits (including DEPs) and pension
Base salary and fees reflect current levels (which are unchanged from FY2013)
Benefits and DEPs are consistent with the single figure table for FY2013
Pension reflects current levels (which are unchanged from FY2013)
£000
Sir Martin Sorrell
Paul Richardson
On-plan scenario assumes target bonus is paid
Maximum scenario assumes the full bonus is paid
Below threshold
% of salary and fees
0%
Sir Martin Sorrell
Paul Richardson
0%
On-plan scenario assumes threshold vesting of an award at the current policy level
Maximum scenario assumes full vesting of an award at the current policy level
% of salary and fees
Sir Martin Sorrell
Paul Richardson

Benefits (inc. DEPs)
1,451
107

Below threshold
0%
0%

On-plan
195%
80%

On-plan
217.5%
200%

Pension
40%
30%

Total fixed
3,061
1,022

Maximum
435%
300%

Maximum
974%
400%

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Other executive director policies

Legacy share awards and obligations

Under the Executive Remuneration Policy, outstanding
awards under LEAP III, the long-term incentive plan that
pre-dated the EPSP, and Sir Martin Sorrell’s deferred
awards will be paid in accordance with the terms agreed at
the time and set out in previous Compensation Committee
reports. The key terms of Sir Martin’s deferred awards are
summarised below.

Deferred awards (Sir Martin Sorrell only)

The Company has previously received share owner approval
to allow Sir Martin Sorrell to defer receipt of his UK and
US 2004, 2005 and 2007 LEAP awards and the UK part
of his 2006 and 2009 LEAP awards. The UK awards are
options that can be exercised at any time until November
2017. The US awards will vest on the earlier of the end of
Sir Martin’s employment with the Company, a change in
control of the Company and 30 November 2017. Additional
shares will continue to accrue in respect of dividends paid
up to the point of exercise (UK) or vesting (US).

The Company has also previously received share owner
approval to allow Sir Martin Sorrell to defer receipt of the
UK and the US Deferred Stock Units Awards Agreements
(DSUs). These are the awards that originally vested in 1999,
having been granted in 1995 under the Capital Investment
Plan. The UK DSU is an option that can be exercised at
any time until November 2017. The US DSU will vest on
the earlier of the end of Sir Martin’s employment with
the Company, a change in control of the Company and
30 November 2017. In accordance with share owner
approval, Sir Martin Sorrell receives cash dividend
equivalent payments (DEPs) in respect of these deferred
awards as noted in the policy table.

Share ownership guidelines

With effect from 2013/4, executive directors and other
members of the senior management team were subject to
share ownership guidelines. The implementation of these
guidelines seeks to reinforce the WPP principle of alignment
of management’s interests with those of share owners.
The following levels of ownership are required to

be achieved by the executive directors:

Group chief executive
Group finance director
Minimum for any other
new executive appointed
to the Board

% of base salary & fees
600%
300%

200%

Executive directors will be permitted a period of seven
years from the date of their appointment to achieve the
guideline level.

In the event that an executive director fails to achieve
the required levels of share ownership, the committee will
decide what remedial action or penalty is appropriate. This
may involve a reduction in future share awards or requiring
the director to purchase shares in the market to meet the
ownership guidelines.

Appointments to the Board

This section sets out details with respect to the appointment
of a new executive director to the Board of WPP, whether it
is an external or internal appointment.

Fixed compensation
Base salary and fees will be set taking into account a range
of factors, including the profile and prior experience of the
candidate, internal relativities, cost and external market
data. If base salary and fees are set at a lower initial level
contingent on individual performance, the committee retains
the discretion to realign the base salary and fees over a
phased period of one to three years following appointment,
which may result in an exceptional rate of annualised
increase in excess of that set out in the policy table.

Other elements of fixed pay will be set in accordance
with the policy table, and a new appointment may require
the committee to rely on the authorised discretion (as set
out on page 145) to make payments related to relocation,
for example, in order to facilitate the appointment.

Ongoing variable compensation
The committee will seek to pay only that level of reward
necessary to recruit the exceptional talent needed to lead
such a complex global group. The actual level of incentive
offered will be dependent on the role and existing package
of the candidate. The aggregate maximum face value for
annual short- and long-term variable compensation will
be 10 times base salary and fees, which is materially lower
than the current Group chief executive maximum level.
The committee retains the discretion to make awards

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Executive Remuneration Policy

on recruitment, within the policy limits, to provide an
immediate alignment of interest with the interests of
share owners.

Buy-out awards
The committee may consider buying-out remuneration
entitlements that the individual has had to forfeit by
accepting the appointment. The structure and value of the
awards will be informed by the structure and value of those
entitlements being forfeited, and the performance targets,
time horizon and vehicle will be set in an appropriate
manner at the discretion of the committee. The intention of
the committee is that any award will take the form of WPP
shares and will be subject to performance as far as possible.

An announcement of the director’s appointment,
detailing the incumbent’s compensation will be made on
a timely basis through a regulatory information service
and posted on the Company’s website.

Service contracts
The following terms will apply for any new executive role
appointed to the Board in the future.

Executives will normally be appointed on a notice
period of up to 12 months, although the committee retains
the discretion to appoint an external candidate on a notice
period of up to 24 months reducing on a rolling basis to
12 months (such that after 12 months’ service the notice
period would have reverted to the standard 12 months).
At the committee’s discretion, any payment in lieu
of notice will be restricted to base salary, fees, benefits
and pension.

On termination there will be no entitlements when
classified as a bad leaver (defined within the incentive plans).
Otherwise base salary, fees, benefits and pension allowance
are payable as per the notice period and the committee will
have the power to make phased payments that would be
reduced or stopped if alternative employment is taken up.

Terms specific to internal appointments
The committee can honour any pre-existing commitments
if an internal candidate is appointed to the Board.

Service contracts

The Company’s policy on executive directors’ service
contracts is that they should be on a rolling basis without
a specific end date.

The effective dates and notice periods under the current
executive directors’ service contracts are summarised below:

Sir Martin
Sorrell
Paul
Richardson

Effective from

Notice period

19 November 2008

‘At will’

19 November 2008

12 months

Sir Martin Sorrell’s service contract may be terminated by
either the Company or Sir Martin without any notice, and
without any payment in lieu of notice.

The executive directors’ service contracts are available for
inspection at the Company’s registered office and head office.

Loss of office provisions

Fixed compensation elements
As noted above, the service contract of Paul Richardson
provide for notice to be given on termination.

The fixed compensation elements of the contract will
continue to be paid in respect of any notice period. There
are no provisions relating to payment in lieu of notice. If an
executive director is placed on garden leave, the committee
retains the discretion to settle benefits in the form of cash.
The executive directors are entitled to compensation for
any accrued and unused holiday although, to the extent
it is possible and in share owner interests, the committee
will encourage executive directors to use their leave
entitlements, prior to the end of their notice period.

Except in respect of any remaining notice period, no
aspect of any executive director’s fixed compensation is
payable on termination of employment. Sir Martin Sorrell’s
service contract contains an indemnity, subject to certain
conditions relating to previously deferred awards, from
WPP in respect of any US tax which is charged under
section 280G as a result of a termination linked to a change
in control of WPP. Further details are on page 151.

Short- and long-term compensation elements
If the executive director is dismissed for cause, there is not
an entitlement to a STIP award, and any unvested share-
based awards will lapse. Otherwise, the table on page 151
summarises the relevant provisions from the directors’
service contracts (cash bonus) and the plan rules (RSP,
EPSP and LEAP III), which apply in other leaver scenarios.
As noted on page 146, the committee has the authority to
ensure that any awards that vest or lapse are treated in
accordance with the plan rules, which are more extensive
than the summary set out in the table on page 151.

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Cash bonus

The executive directors are entitled to receive their bonus for any particular year provided they are employed on
the last date of the performance period.

ESA

EPSP

Provided the executive director is a Good Leaver, unvested awards will be reduced on a time pro-rata basis and
paid on the vesting date.

• The award will lapse if the executive leaves during the first year of a performance period.
• Provided the executive director is a Good Leaver, awards will vest subject to performance at the end of the

performance period and time pro-rating. Awards will be paid on the normal date.

• In exceptional circumstances, the Compensation Committee may determine that an award will vest on a

different basis.

• Generally, in the event of death, the performance conditions are to be assessed as at the date of death.

However, the committee retains the discretion to deal with an award due to a deceased executive on any
other basis that it considers appropriate.

• Awards will vest immediately on a change-of-control subject to performance and time pro-rating unless it

is agreed by the committee and the relevant executive director that the outstanding awards are exchanged
for equivalent new awards.

LEAP III

• Awards will vest subject to performance at the end of the performance period and time pro-rating.
• In the event of death or serious illness, the performance conditions are to be assessed as at the date

of cessation of employment.

• Awards will vest immediately on a change in control subject to performance and time pro-rating unless

the committee decides that awards are to be exchanged for equivalent new awards.

• In the event of a merger, the committee can require participants to release any outstanding award in

consideration of the grant of an equivalent award by the newly-formed entity.

Other pre-existing terms that apply to Sir Martin Sorrell

Sir Martin Sorrell’s deferred LEAP awards and his DSUs (as set out on page 149) will be paid out unconditionally on
termination of employment. The performance requirements in respect of these awards have already been met, the awards
have vested and are therefore no longer subject to any leaver provisions.

In the event any payments due to Sir Martin would be treated as ‘deferred compensation’ in accordance with US
legislation and subject to section 409A requirements, those payments will be delayed. If those payments are delayed, an
amount in respect of interest as a result of the delay will be due from the Company to Sir Martin.

In the event of a change of control of WPP, the Company has agreed to indemnify Sir Martin, with the prior approval
of share owners, with respect to any related personal US tax liability under the provisions of section 280G. This indemnity
is subject to certain limitations that exempt the Company from liability for any tax related to the share-owner approved
deferrals of certain awards. Based on the most recent review by the committee in December 2013 of the potential impact
of this clause, it is unlikely that any 280G payment would be due from the Company based on an analysis, using standard
assumptions. This was reviewed by independent counsel.

Other committee discretions not set out above

Leaver status: the committee has the discretion to determine an executive’s leaver classification in light of the guidance

set out within the relevant plan rules, except with respect to Sir Martin Sorrell. Unless Sir Martin Sorrell is terminated
for cause, he will be treated as having retired on leaving the Company and therefore be treated in accordance with the
plan rules as a Good Leaver.

Compromise agreements: the committee is authorised to reach compromise agreements with departing executives,

informed by the default position set out above.

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External appointments

Executive directors are permitted to serve as non-executives on the boards of other organisations. If the Company is a
share owner in that organisation, non-executive fees for those roles are waived. However, if the Company is not a share
owner in that organisation, any non-executive fees can be retained by the office holder.

Executive Remuneration Policy table – chairman and non-executive directors

The following table sets out details of the ongoing compensation elements for WPP’s chairman and non-executive
directors. No element of pay is performance-linked.

Component and purpose Operation

Base fees
To reflect the skills and
experience and time
required to undertake
the role.

Fees are reviewed at least every two years and take into account the skills,
experience and time required to undertake the role, as well as fee levels in
similarly-sized UK companies.

The chairman and non-executive directors receive a ‘base fee’ in connection
with their appointment to the Board.

Additional fees
To reflect the additional
time required in any
additional duties for
the Company.

Non-executive directors are eligible to receive additional fees in respect
of serving as:

• Senior independent director
• Chairman of a Board Committee
• Member of a Board Committee
• Consultancy fees in respect of other work that falls outside the remit

of their role for the Company.

Benefits and
allowances
To enable the chairman
and non-executive
directors to undertake
their roles.

The Company will reimburse the chairman and non-executive directors for all
reasonable and properly documented expenses incurred in performing their
duties of office.

In the event that the reimbursement of these expenses gives rise to a personal
tax liability for the chairman or non-executive director, the Company retains
the discretion to meet this cost (including, where appropriate, costs in relation
to tax advice and filing).

While not currently offered, the Company retains the discretion to pay additional
benefits to the chairman including, but not limited to, use of car, office space and
secretarial support.

Maximum annual opportunity

An overall cap on
all non-executive fees,
excluding consultancy fees,
will apply consistent with
the prevailing and share
owner-approved limit in
the Articles of Association
(which, due to share owner
approval at the 2014 AGM,
is £3m).

An overall cap on all
non-executive fees,
excluding consultancy fees,
will apply consistent with
the prevailing and share
owner-approved limit in
the Articles of Association
(which, due to share owner
approval at the 2014 AGM,
is £3m).

Consultancy fees will be set
on a discretionary basis,
taking account of the nature
of the role and time required.

Benefits and allowances for
the chairman will be set at
a level that the committee
feels is required for the
performance of the role.

152 WPP ANNUAL REPORT 2015

Other chairman and non-executive
director policies

Letters of appointment for the chairman and
non-executive directors

Letters of appointment have a two-month notice period
and there are no payments due on loss of office.

Appointments to the Board

Letters of appointment will be consistent with the current
terms as set out in this Annual Report. The chairman
and non-executive directors are not eligible to receive any
variable pay. Fees for any new non-executive directors
will be consistent with the operating policy at their time
of appointment. In respect of the appointment of a new
chairman, the committee has the discretion to set fees
taking into account a range of factors including the profile
and prior experience of the candidate, cost and external
market data.

Share ownership guidelines

Non-executive directors are required to accumulate shares
with a value equivalent to one-year’s fees on a post-tax
basis during their tenure.

Payments in exceptional circumstances

In truly unforeseen and exceptional circumstances, the
committee retains the discretion to make emergency
payments which might not otherwise be covered by this
policy. The committee will not use this power to exceed the
recruitment policy limit, nor will awards be made in excess
of the limits set out in the Executive Remuneration Policy
table. An example of such an exceptional circumstance
could be the untimely death of a director, requiring another
director to take on an interim role until a permanent
replacement is found.

How we behave and how we’re rewarded
Executive Remuneration Policy

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153

Sustainability review

Sustainability issues are increasingly important to our
stakeholders and clients. A growing number of our clients
are reshaping their businesses to prepare for the impact of
global social and environmental trends. They need the best
marketing and communications services to help them make
this change and want to select suppliers who share their
outlook on the world.

At WPP we strive to develop our expertise on

sustainability issues and to improve our own social and
environmental performance. This enables us to better
serve our clients, to align with changing stakeholder
expectations, to reduce business risks and to achieve
our business objectives.

Sustainability and our business

Enabling our strategy today

Our business strategy is focused on four strategic priorities
(see pages 16 and 17): horizontality, new markets, new
media, technology, data & content. Our work on
sustainability enables our strategy in three main ways:

Improving access to skills – Our employment practices
and reputation for sustainability help us to recruit, retain and
engage the best creative talent in our industry. By recruiting
from a diverse talent pool and investing in training and
development we can ensure we have the right people to serve
our clients in all disciplines across our locations, including
new markets where our industry is less well established.
Supporting access to new business – Clients are
prioritising sustainability, looking to integrate improved
social and environmental performance into their products,
communications and operations. They need a marketing
services provider with the right expertise and who shares
their values. By managing our own sustainability
performance and developing our knowledge on social and
environmental change we can access this business and meet
the standards required by the growing number of client
procurement processes which include sustainability criteria.
Improving efficiency, reducing risk and protecting
our reputation – Managing our social and environmental
performance and selecting suppliers who meet standards
consistent with our own, helps us to operate more
efficiently, to reduce costs and risks to the business and
to enhance our reputation with clients, our people, share
owners and other stakeholders.

How we behave and how we’re rewarded

Fit for the long term

The next decade presents unprecedented opportunities
and risks for today’s leading brands. On the one hand,
the continued rise of the global middle class represents a
huge new market for consumer goods and services. On
the other, climate change, ecosystem decline, water scarcity,
the obesity epidemic and a growing global population
present major challenges.

These changes will disrupt old business models, alter
supply chains and give rise to new products, services and
businesses. Successful companies will find opportunity
in this change, identifying new ways to do more with less,
adopting circular and sharing economy models to avoid
resource scarcity, rising prices and disruption to supply
chains. They will look to generate shared value through
their products and services, helping to improve quality
of life as they grow their businesses.

Expectations of what business can and should contribute

to society are also rising. Increasingly, business is expected
to play a significant role in tackling the world’s challenges
alongside governments, while technology and social media
enable people to hold brands to account for their social and
environmental performance, from anywhere in the world.
In this environment, brands will need the best insight,
research and communications services and they will seek a
marketing services provider who understands the changing
landscape and shares their values.

Our companies are already working with many pioneers

of sustainable business. As our clients increasingly feel the
impact of these longer-term trends, their significance will
grow for WPP too. Our work on sustainability today will
help ensure our business is fit for the future.

Performance 2015

Access to skills

We are a people business. Adopting leading employment
practices enables us to deliver the creative and effective
work our clients need across disciplines and in all markets.

Inclusion and diversity

We believe a workforce with diversity of outlook and
experience is more creative and effective. Diversity is
particularly important in marketing because our work must

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How we behave and how we’re rewarded
Sustainability review

engage consumers in every market and sector. We aim to
recruit talented people from all backgrounds and provide
inspiring and inclusive workplaces where they can thrive.
Achieving a gender-balanced workforce at all levels of
the business is a particular priority for WPP. We run ‘The
X Factor’, a senior mentoring and development program
for women led by Charlotte Beers, the former global CEO
of Ogilvy & Mather and chairman of J. Walter Thompson,
which prepares senior and high potential WPP female
leaders for the next level of leadership. By the end of 2015,
97 women had completed the program. Charlotte Beers
also helped to inspire ‘WILL: Women in Leadership
Lessons’ – programs targeted at enhancing the professional
development of the group’s high potential women. WILL
programs have run in the UK and US, with 140 women
leaders from 50 WPP agencies attending up to 2015.
Our WPP Stella Leadership group aims to enable
women in our companies to maximize their potential, to
address barriers that could prevent women progressing their
careers to senior levels and to facilitate sharing of good
practices between our companies. It has three workstreams,
focusing on: visibility and networking for senior women in
our companies; progression training for senior women; and
policy development in areas such as maternity and paternity
leave and flexible working. The group began in the UK
and is now being extended to our businesses in the US.
At an operating company level, our businesses focus

on internships and apprenticeships for diverse candidates,
flexible working options, employee resource networks,
mentoring programs, diversity and unconscious bias training
and partnerships with specialist minority recruitment firms.

Gender diversity 2011-2015

WPP Board
Executive
leaders
Senior
managers
Total employees
(full-time
equivalent)

2015
29%

33%

47%

2014
24%

2013
29%

% women
2011
19%

2012
19%

31%

32%

31%

46%

47%

54%

As at 31 December 2015, women comprised 29% of the WPP
Board, 33% of non-executive directors, 33% of directors and
executive leaders in our operating companies, 47% of senior
managers and 54% of total employees.

We measure ethnic diversity in our businesses in the
UK and the US using national definitions of ethnic/racial

minorities (the Equality and Human Rights Commission
in the UK and the Equal Opportunity Commission in the
US). In 2015, 26% of full-time employees in these countries
were from ethnic minorities (2014: 26%).

Training, development and education

Through training and development we can engage our
people and equip them with the knowledge they need to
serve the changing needs of our clients around the world.
We invested £41.1 million on training in 2015 (2014:
£38.2 million). In previous years we reported a combined
figure for training and welfare spend. We now report
training spend only (course fees and training-related travel,
accommodation and subsistence costs). This will make it
easier to monitor investment in training. We have restated
our data for previous years to reflect our new approach.

Our Group training programs are designed to help us

deliver our strategic objectives. For example, Maestro:
Orchestrating Client Value, is our week-long program for
senior client leaders held in 27 countries, that helps us to
achieve horizontality in our ways of working. There have
been 3,822 participants from 133 WPP companies since
its inception in 2003.

We also support marketing and communications
education outside WPP, to help develop the skills our
industry needs and support a future pipeline of talent for
our businesses, particularly in newer markets for WPP.
We launched the WPP Africa Academy in February 2016
to provide high-quality training and talent development in
sub-Saharan Africa. We also continue to support the WPP
School of Communications and Marketing in Shanghai
and the ISDI WPP School of Communication in Mumbai.
Internships and apprenticeships enable young people
to gain experience in our industry, while supporting youth
employment and helping us identify talented new recruits.
We offered 5,378 paid internships and apprenticeships at our
companies during 2015. It is WPP’s policy that all internships
and apprenticeships should be paid positions. This ensures
they are accessible to a diverse range of candidates.

The WPP Fellowship program for graduates, provides

experience and training across a range of marketing
disciplines. Since 1995, 170 Fellows have completed or
are participating in this global multidisciplinary initiative.

Reward

We offer attractive compensation packages, which are
benchmarked against other companies in our markets and

156 WPP ANNUAL REPORT 2015

How we behave and how we’re rewarded
Sustainability review

sectors. As well as competitive remuneration, our people
have access to a range of benefits, including pensions and
private health insurance, in accordance with local practice.
Many of our people participate in performance-related

incentive plans on top of base pay. Senior employees may
participate in share-based compensation plans.

Our Worldwide Ownership Plan and WPP Share Option
Plan 2015 have operated from 1997 and, to date, have granted
share option awards to more than 147,000 of our people. In
2015, under the WPP Share Option Plan 2015, over 48,000
eligible employees received awards in 71 countries.

Employee external appointments

We recognise that our companies’ executives may be
invited to become non-executive directors of other
companies, and that such experience may be beneficial
to the Group. Consequently, executives are allowed to
accept non-executive appointments with non-competing
companies, subject to obtaining the approval of the
Group finance director in the case of senior executives.

Access to new business

Our focus on sustainability helps us to be a provider of
choice to the growing number of leading businesses who
are prioritising sustainability and to meet the sustainability
requirements in their procurement processes.

Together, clients that asked about our approach to
sustainability or engaged with us on sustainability issues
were worth at least £1.29 billion in 2015, 11% of revenues
(2014: £1.35 billion).

Sustainability services

Our companies are working with clients on a growing
number of sustainability-related commissions across a
range of disciplines from research and insight to branding,
and consumer, employee and stakeholder communications.
Examples of recent campaigns are included in our annual
Sustainability Report and Pro bono book.

Privacy and data security

Consumer data is used extensively in developing,
implementing and monitoring marketing campaigns and
is particularly important to the services provided by our
digital marketing and insight businesses. When collecting,
using and storing consumer data, it is critical that we
protect consumer privacy and implement rigorous data
protection and security procedures.

All WPP companies must implement the WPP Data
Code of Conduct, which provides a clear framework for
implementing privacy best practice as well as our global
IT security, privacy and social media policies. Our WPP
Client Contract Toolkit helps WPP companies understand
how privacy and data protection criteria should be
integrated into client contracts.

We bring our Code and policies to life for our people
through Group-wide ethics training. In 2015, we launched
mandatory global online Privacy and Data Security
Awareness training. Over 20,000 employees completed
the training in the first two months following launch.

We also launched Safer Data in 2015, a privacy and
security awareness campaign and online platform with
information and guidance for employees on the importance
of privacy risk and data security. It is intended that Safer
Data becomes the platform for know-how on privacy risk
and data security at WPP. It includes a ‘SaveMyData’
reporting tool, to allow our people to raise concerns and
questions they have about data issues direct with our
in-house legal teams.

We used our Data Health Checker in 2015 for the

third year running to review privacy risks and data
security practices in our businesses. The results showed us
that the majority of our companies have strong mitigation
measures that match or exceed their level of privacy risk,
with the average score being 3.9 out of 5, where 5 is the
maximum score possible. Of those companies surveyed,
74% have a dedicated privacy lead and 51% have trained
all of their people on data security and privacy in addition
to Group training.

Many of our companies have established specialist

Efficiency, risk and reputation

sustainability offerings and social marketing units.
These include: J. Walter Thompson ethos, Ogilvy Social
Change, OgilvyEarth, P&G’s S-Team, Young & Rubicam
Group companies’ INSPIRE collaboration, Hill+Knowlton
Strategies’ CR + Sustainability Communications, Kinetic
Future and TNS Political and Social.

Operating responsibly improves efficiency, reduces costs and
lessens operational, legal, reputational and financial risks to
our business. It enables us to maintain positive relationships
with our people, clients and other stakeholders.

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How we behave and how we’re rewarded
Sustainability review

We focus on implementing high ethical standards,
respecting human rights and reducing our environmental
impact and we aim to work with suppliers who adopt
standards consistent with our own.

Our investment in pro bono work and community

projects helps to enhance the reputation and creative
standing of WPP agencies.

Our ethical standards

The WPP Code of Business Conduct provides the
framework for how we operate. It establishes the values and
ethical standards that all our companies must implement.
Senior managers in all our companies and our business
partners and suppliers are asked to sign a copy of the WPP
Code of Business Conduct each year to confirm they will
comply with its principles.

Our ethics training, ‘How we behave’, is compulsory
for all employees. It covers topics such as diversity, privacy,
human rights and avoiding misleading work. Our online
training on anti-bribery and corruption covers the Foreign
Corrupt Practices Act and UK Bribery Act on issues such
as hospitality and gifts, facilitation payments and the use
of third-party advisors. Training is updated every 2-3 years
and employees are required to repeat the training following
each update. Over 200,000 employees have completed our
anti-bribery and corruption training and almost 200,000
have completed our ethics training since the last update in
2013. These figures are higher than our current number of
employees as they include some employees who have since
left the business. The training will be updated again in 2016.
We expect associate companies (those in which we
hold a minority stake) and affiliate companies (preferred
partners to whom we may refer business) to adopt ethical
standards that are consistent with our own.

We have a Group-level committee that meets regularly
to discuss ethical and compliance issues and new risk areas.
Committee members include the Group chief counsel, deputy
general counsel, litigation and compliance, Group finance
director, the head of talent and the head of sustainability.
Employees can report concerns or suspected cases

of misconduct in confidence through our third party-
managed Right to Speak facility, overseen by our internal
audit department.

Human rights

Respect for human rights is a fundamental principle for
WPP and we take steps to prevent, identify and address
any negative human rights impacts associated with our
business. That includes the human rights of employees
and workers in our supply chain as well as issues associated
with human rights and marketing. We also look for
opportunities to positively promote and support human
rights, including through our pro bono work.

We published a Human Rights Policy Statement
during 2015 to explain our approach to human rights.
This reflects international standards and principles,
including the International Bill of Human Rights, the
UN’s Guiding Principles on Business and Human Rights,
the International Labour Organization’s Declaration
on Fundamental Principles and Rights at Work and the
Children’s Rights and Business Principles. We are reviewing
our other policies to confirm that they align with our
position on human rights and we have added a number
of scenarios to our online ethics training that cover human
rights related issues. We joined the United Nations Global
Compact during 2015 to reflect our commitment to human
rights and responsible business practices.

We will publish a statement in relation to the UK’s
Modern Slavery Act during 2016, explaining how we assess
and manage risks relating to slavery in our operations and
supply chain.

Living wage

We support the principle that full-time workers should
be paid enough to provide a decent standard of living.
This principle is known as the ‘living wage’. In the UK,
the Living Wage Foundation, a not-for-profit organisation,
has calculated a voluntary living wage rate which exceeds
the UK’s current statutory national minimum wage.

As a professional services firm, the vast majority of our
people already earn significantly above the living wage rate.
However, wage rates in our supply chain may be lower.
We clarified our position on this issue in the UK during
2015. WPP, the parent company, pays the living wage for
all parent company employees and all on-site contractors
such as cleaning, security and catering staff in the UK.
Our UK agencies are working towards paying the living
wage for all employees and on-site contractors within
three years and several already do so.

158 WPP ANNUAL REPORT 2015

Ethical decisions in our work

WPP companies have a review and referral process for
work that may present an ethical risk. Before accepting
potentially-sensitive work, employees are required to elevate
the decision to the most senior person in the relevant office
and then to the most senior executive of the WPP company
in the country concerned, who will decide if further referral
to a WPP executive is required. Employees are trained on
this referral process during our ethics training.

Supply chain

We aim to work with suppliers who meet high standards
in areas such as ethical conduct, workplace standards and
environmental management. This reduces risks for WPP
and our clients. By improving oversight of our supply
base we can also identify opportunities to consolidate
procurement and reduce costs.

We evaluate potential new suppliers on factors including

assurance of supply, quality, service, cost, innovation and
sustainability. Once selected, business partners and suppliers
are asked to sign a copy of the WPP Code of Business
Conduct to confirm they will comply with our standards.

We have identified two areas of our supply chain where

breaches of our Code could have a potentially significant
impact on WPP’s reputation or that of our clients –
advertising production and data collection. We are working
more closely with suppliers in these areas to identify and
manage risks, using Sedex (the sustainability supply chain
platform). Over the last three years (2013-2015) we have
assessed 218 suppliers covering £200 million in annual
spend or approximately 12% of our total spend on
advertising production and data collection. More details
are available in our Sustainability Report.

Environment

We aim for WPP to be a low-carbon and resource-efficient
Group. This improves efficiency and reduces costs,
enhances our credibility as advisors to clients, enables us
to meet the environmental requirements included in many
client tender processes and supports employee engagement.

By 2020, we aim to reduce carbon emissions
to 1.8 tonnes of CO2e per employee, a 47% reduction

How we behave and how we’re rewarded
Sustainability review

from 2006. Each of our operating companies has its own
individual reduction target. Our strategy focuses on:

Office energy use: Improving the energy efficiency of
our buildings and IT systems. 16% of our total floor space
is now certified to advanced green building standards,
such as LEED and BREEAM.

Air travel: Reducing non-essential flights by promoting

video conferencing. We offset the equivalent of 100%
of emissions from our business air travel, by supporting
renewable energy generation projects in fast-growing
economies. Our video conferencing network now
incorporates more than 700 units in over 160 cities.

Renewable energy: Around 21% of the total electricity

we purchase is generated from renewable sources.

Our progress in 2015:
Our footprint per employee was 2.07 tonnes of CO2e,

down 9% on 2014 and 39% lower than 2006.

Our footprint per £million of revenue was 21.64 tonnes

of CO2e, down 11% on 2014 and 53% lower than 2006.
Our absolute carbon footprint was 264,774 tonnes

CO2e (2014: 281,389 tonnes CO2e).

Carbon intensity 2006-2015
Tonnes CO2e

45.56

3.39

2.07

21.64

e
e
y
o
p
m
e
r
e
p
s
e
n
n
o
T

1.80

e
u
n
e
v
e
r

m
£
r
e
p
s
e
n
n
o
T

0
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

o Headcount intensity – tonnes per employee
Target headcount intensity
o Revenue intensity – tonnes per £m revenue

Carbon footprint in 2015
%

Stationary fuel combustion
Purchased electricity

Business air travel
Other estimated impacts

3%
47%

37%
13%

WPP ANNUAL REPORT 2015

159

How we behave and how we’re rewarded
Sustainability review

WPP’s carbon emissions breakdown (tonnes of CO2e)

Scope 1 – Fuel used to heat WPP offices
Scope 2 – Total purchased electricity
Scope 3 – Air travel and other estimated impacts
Total gross (excluding carbon reduction of renewable
electricity)
Carbon reduction of purchased renewable electricity
Total net (including carbon reduction of renewable
electricity)
Percentage change from 2006 (net)

2015
8,135
153,798
133,420

295,354
30,580

264,774
(2%)

2014
9,748
159,540
133,293

302,581
21,192

281,389
5%

2013
11,305
157,471
132,382

301,158
21,299

279,859
4%

2012
9,840
164,212
133,034

307,086
23,765

283,321
5%

WPP’s carbon intensity (tonnes of CO2e)

Tonnes per employee (net)
Percentage change from 2006
Tonnes per £m of revenue (net)
Percentage change from 2006

2015
2.07
(39%)
21.64
(53%)

2014
2.28
(33%)
24.41
(46%)

2013
2.35
(31%)
25.40
(44%)

2012
2.45
(28%)
27.31
(40%)

2006
2,628
149,728
116,825

269,181
–

2006
3.39
–
45.56
–

Our carbon data covers the year ended 31 December 2015 in line with the Group’s financial reporting period. Data has been prepared in accordance with the
World Resource Institute (WRI) and World Business Council for Sustainable Development (WBCSD) Greenhouse Gas Protocol: A Corporate Accounting and Reporting
Standard, Revised Edition (the GHG Protocol).
All greenhouse gases emissions figures are in metric tonnes of carbon dioxide equivalents (CO2e). They include three of the six greenhouse gases covered by the
Kyoto Protocol – carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O). Perfluorocarbons (PFCs), hydrofluorocarbons (HFCs) and sulphur hexafluoride (SF6)
emissions have been omitted from our reporting as they are not a material source of greenhouse gases for WPP.
Emissions data is included for all operations for which WPP and its subsidiaries have operational control. Associate companies are excluded.
When calculating our carbon footprint, we rate purchased renewable electricity as zero emissions. For full transparency, we also disclose total electricity purchased
at grid average carbon intensity.
Our carbon data is reviewed and assured by Bureau Veritas, an independent assurance provider. Read the full carbon emissions statement 2015 in our
Sustainability Report.

As well as managing our direct greenhouse gas emissions
we can also have an influence on indirect emissions
associated with our business activities – our value chain
emissions. Our analysis shows that the main sources of
carbon emissions in our value chain are associated with:
advertisements we place for clients; goods and services
we buy; and day-to-day activities (our direct emissions).
GroupM, our Media Investment Management business,
is exploring how we can work with clients to reduce the
carbon footprint of media campaigns. We are also
integrating the analysis into procurement tools to help
us identify lower carbon procurement options.

Social investment

Our agencies have a positive impact on issues such as
human rights, health, education and conservation through
our pro bono work – marketing services provided to NGOs

and voluntary groups for little or no fee. Our companies
also negotiate free media space on behalf of charities and
support their work through donations and volunteering.

In 2015, our social investment was worth £19.4 million

(2014: £21.8 million). This is equivalent to 1.3% of
reported profit before tax. It includes cash donations to
charities of £5.9 million and £13.5 million worth of pro
bono work based on fees the organisations would have paid
for our work. In addition, WPP media agencies negotiated
free media space worth £24.4 million on behalf of pro bono
clients (2014: £25.1 million), making the total social
contribution £43.8 million (2014: £46.9 million).

Our business in India has established the WPP India
CSR Foundation in line with local regulatory requirements.
This will be investing US$5 million in projects supporting
education, life skills and vocational training for children
aged 11-18.

160 WPP ANNUAL REPORT 2015

How we behave and how we’re rewarded
Sustainability review

Total social contribution
£m

o Free media space
o Charitable donations
o Pro bono

£43.8m

50
45
40
35
30
25
20
15
10
5
0

46.9

43.8

39.4

27.7

30.5

Sustainability management

Paul Richardson, WPP’s Group finance director, is the
Board director responsible for corporate sustainability.
Our Sustainability Committee, chaired by Paul
Richardson, is made up of senior representatives from
Group functions. The committee meets annually to review
progress on a variety of sustainability issues. Our central
sustainability function develops strategy and coordinates
data collection. It communicates on sustainability matters
on behalf of the Group and works with Group functions
(such as our talent team, legal, real estate, IT and
procurement). The head of sustainability reports directly
to the Group finance director.

Reflecting our decentralised structure, our strategic
direction and policy frameworks are established at Group
level with the practical work of implementation devolved
to our operating companies.

Risk and opportunity

Sustainability risks – including social, environmental,
human rights and ethical risks – are integrated into the
Group’s robust assessment of principal risks which are
discussed in detail in the Strategic Report.

Materiality and stakeholder engagement

Stakeholder views and insights, including from clients,
investors and our people, help us to improve how we work and
to identify new sustainability-related risks and opportunities
for our business. We aim to keep our stakeholders updated
on our progress through regular communication.

We carry out a formal materiality assessment, through

which we seek feedback on our approach and priorities.
We use this to identify which issues should be covered
in our reporting and/or require further action. Our most
recent analysis is available in our Sustainability Report.

We engaged with a number of investors, rating agencies

and benchmarking organisations on sustainability during
2015. These included BNP Paribas, Corporate Knights,
Dow Jones Sustainability Index, Sustainalyitics,
FTSE4Good, MSCI, Oekom, Trucost, Vigeo. To raise
investor awareness of our activities, we submit this section
of our Annual Report for share owner voting at our AGM.
We are included in the DJSI World and Europe Indices
and the FTSE4Good Index. We participate in the Carbon
Disclosure Project (CDP) and received a score of 97B in 2015.

Data and reporting

WPP companies report their sustainability data to the
parent company quarterly through our Group financial
reporting system. Data in this section covers the period
from 1 January 2015 to 31 December 2015. We will publish
our 14th Sustainability Report in June 2016. In line with
best practice, selected environmental and employment data
will be externally assured by Bureau Veritas, a leading
independent assurance provider.

We received the Ethical Corporation Responsible
Business Award 2015 for Best Sustainability Report.

Read more
Our 2015/2016 Sustainability Report and showcase
of pro bono work will be published in June 2016.
See wpp.com/sustainability

WPP ANNUAL REPORT 2015

161

How we
comply

Corporate governance:
How the Company is
governed, including
risk management and
activities of the Board

Statements of compliance

UK Corporate Governance Code compliance

The Board considers that WPP complied in all material
respects throughout 2015 with the provisions of the
UK Corporate Governance Code.

Internal control

WPP operates a system of internal control, which is
maintained and reviewed in accordance with the UK
Corporate Governance Code and the FRC guidance
on risk management and internal control.

WPP ANNUAL REPORT 2015

163

How we comply
Corporate governance

How we comply

We have structured this section around the main principles of the UK Corporate Governance Code to enable share owners
to evaluate how the principles have been applied.

Leadership

The role of the Board
The Board is collectively responsible for promoting the success of the Company by directing and supervising the
Company’s policy and strategy and is responsible to share owners for the Group’s financial and operational performance
and risk management. Responsibility for the development and implementation of Group policy and strategy and for
day-to-day management issues is delegated by the Board to the Group chief executive and Group finance director.
The list of matters reserved to the Board can be downloaded from the website wpp.com/wpp/investor.

During 2015, the Board met six times formally and held 17 committee meetings throughout the year.

Attendance of directors at meetings
Roberto Quarta (Chairman)1,4
Sir Martin Sorrell
Paul Richardson
Philip Lader1,3
Roger Agnelli2,6,7
Jacques Aigrain
Charlene Begley
Colin Day3
Ruigang Li6
Nicole Seligman6
Daniela Riccardi2,6
Jeffrey Rosen3
Hugo Shong5,6
Sir John Hood
Tim Shriver2
Sally Susman
Sol Trujillo6

Board
6
6
6
3
6
6
6
3
4
6
5
3
6
6
5
6
6

Audit Committee
8
–
8
5
8
8
8
5
–
–
–
5
5
–
–
–
7

Compensation
Committee
4
–
–
–
4
5
–
4
3
5
3
4
4
5
5
–
4

Nomination and
Governance Committee
3
–
–
2
2
–
4
–
1
–
1
2
4
–
3
3
–

1 By invitation, and whilst chairman, Philip Lader and then Roberto Quarta attended all of the Audit Committee meetings.
2 Roger Agnelli and Tim Shriver retired from and Daniela Riccardi was appointed to the Nomination & Governance Committee on 10 October 2015.
3 Philip Lader, Colin Day and Jeffrey Rosen retired on 9 June 2015.
4 The chairman was appointed to the Compensation Committee and the Nomination and Governance Committee on 9 February 2015.
5 Hugo Shong retired from the Audit Committee on 10 October 2015.
6 Roger Agnelli, Ruigang Li, Daniela Riccardi, Hugo Shong, Nicole Seligman and Sol Trujillo retired from the Compensation Committee on 10 October 2015.
7 Roger Agnelli tragically died on 19 March 2016.

164 WPP ANNUAL REPORT 2015

How we comply
Corporate governance

The role of the chairman
The Board is chaired by Roberto Quarta, who chairs the
Nomination and Governance Committee and is a member
of the Compensation Committee and attended all meetings
of the Audit Committee at the invitation of its chairman.
The chairman provides the leadership of the Board and is
the main point of contact between the Board and the CEO.
The chairman represents the Board in discussions with share
owners and investor bodies, ensures that systems are in place
to provide directors with timely and accurate information,
represents the Company in external gatherings, and is also
responsible for the Board governance principles. He has
led the Board evaluation process, restructuring of the
committee membership, and the ongoing emphasis on
management development and CEO and senior management
succession planning.

The role of the senior independent director
The senior independent director is Nicole Seligman who is
available to share owners and acts as a sounding board for
the chairman and as an intermediary for the other directors
with the chairman, when necessary. The senior independent
director’s role includes responsibility for the chairman’s
appraisal and succession. The Board announced the
appointment of Nicole Seligman as senior independent
director on 4 April 2016, following the recommendation of
the Nomination and Governance Committee and succeeding
Jeffrey Rosen who retired at the 2015 AGM. Nicole
Seligman was appointed to the Board in January 2014 and
has served on the Compensation Committee and attends the
other committee meetings at the invitation of the chairmen
of those committees.

Non-executive directors
The non-executive directors have a diverse range of skills,
experience and backgrounds. As detailed in their biographies
on pages 108 to 110, the non-executive directors work across
the globe in media and advertising, investment banking and
investment management, pharmaceuticals, logistics and
bioenergy, airlines, FMCG, international management
consulting, private equity and angel investing, business
education, manufacturing, consumer products and retail
management, internet start-ups, government and non-profit
organisations. They provide constructive challenge and
assistance to the Group chief executive in developing the
Group’s strategy. All directors have access to the services
of the Company Secretary and may take independent
professional advice at the Company’s expense in conducting

their duties. The Company provides insurance cover for its
directors and officers.

Effectiveness

The composition of the Board
The Board is composed of 13 directors. Two current
members are executive directors and 11, including the
chairman, are non-executive directors. The independence
of each non-executive director is assessed annually
by the Board. The Board has confirmed that all of the
non-executives standing for re-election at the 2016
AGM continue to demonstrate the characteristics
of independence.

Succession: Board and committee membership
The following changes to the Board’s roles and
composition took place during 2015 and early 2016:
Nicole Seligman has succeeded Jeffrey Rosen

as the senior independent director.

Jacques Aigrain has succeeded Colin Day as chairman

of the Audit Committee. Jacques Aigrain has been a
member of the Audit Committee since joining the Board
in May 2013.

Roberto Quarta succeeded Philip Lader as chairman

of the Group and as chairman of the Nomination and
Governance Committee.

Roger Agnelli, who was a member of the Audit

Committee, tragically died on 19 March 2016.

Time commitment
Letters of appointment for non-executive directors do not
set out a fixed time commitment for Board attendance and
duties but give an indication of the likely time required. It is
anticipated that the time required by directors will fluctuate
depending on the demands of the business and other events.

Development
On joining WPP, non-executive directors are given
an induction which includes one-to-one meetings with
management and the external auditors, briefings on the
duties of directors of a Jersey company, the Share Dealing
Code, WPP Code of Conduct and the UK Corporate
Governance Code. The induction also covers the Board
committees that a director will join. All directors are fully
briefed on important developments in the various business
activities which the Group carries out worldwide and
regularly receive extensive information concerning the

WPP ANNUAL REPORT 2015

165

How we comply
Corporate governance

Group’s operations, finances, risk factors and its people,
enabling them to fulfil their duties and obligations as
directors. The directors are also frequently advised on
regulatory and best practice requirements which affect
the Group’s businesses on a global basis. One Board
meeting a year is held in a location other than London
or New York. In 2015, the Board met in Beijing, where it
received briefings from all the heads of the Group’s Asia
Pacific operations. In 2016, in Berlin, the Board will
review the Group’s European operations.

Evaluation
WPP undertakes an annual review of the Board, its
committees and individual directors. The annual evaluation
of the Board’s and all committees’ effectiveness was
commenced at the end of 2015 following the appointment
of the new chairman and the realignment of the committee
memberships. As outlined in the Nomination and
Governance Committee report on page 117, an evaluation
process is being externally facilitated. Our expert’s
observations from these discussions and meetings are
being reviewed by the Board with proposals being made
to the full Board as to improving Board effectiveness.
The results of the evaluation will be considered in the 2015
Sustainability Report to be published shortly and discussed
as part of the ongoing dialogue with share owners.

Re-election
The directors submit themselves for annual re-election
at each AGM, if they wish to continue serving and are
considered by the Board to be eligible. Directors may be
appointed by share owners by ordinary resolution or by
the Board on the recommendation of the Nomination and
Governance Committee and must then stand for re-election
at the next AGM, where they may be re-elected by ordinary
resolution of the share owners.

With only specific exceptions to ensure Board
continuity, non-executive directors shall not stand for
re-election after they have served for the period of their
independence, as determined by applicable UK and US
standards and which is nine years.

Diversity
WPP recognises the importance of diversity, including
gender, at all levels of the Group as well as the Board.

WPP is committed to increasing diversity across its
subsidiaries and supports the development and promotion
of all talented individuals. As at 31 December 2015,
women comprised 29% of the WPP Board and 33%

166 WPP ANNUAL REPORT 2015

of non-executive directors, 31% of Board members
and executive leaders in the subsidiaries, 46% of senior
managers and 54% of total employees. As at the date
of this report, women comprised 31% of the WPP Board
and 36% of non-executive directors.

Directors’ conflicts of interest
The Company’s Articles of Association permit the Board
to consider and, if it sees fit, to authorise situations where
a director has an interest that conflicts, or may possibly
conflict, with the interests of the Company (Situational
Conflicts). The Board has a formal system in place for
directors to declare Situational Conflicts to be considered
for authorisation by those directors who have no interest
in the matter being considered. In deciding whether
to authorise a Situational Conflict, the non-conflicted
directors must act honestly and in good faith with a
view to the best interests of the Company and they may
impose limits or conditions when giving the authorisation,
or subsequently, if they think this is appropriate.
Any Situational Conflicts considered, and any

authorisations given, are recorded in the relevant minutes.
The prescribed procedures have been followed in deciding
whether, and on what terms, to authorise Situational
Conflicts and the Board believes that the systems it has in
place for reporting and considering Situational Conflicts
continue to operate effectively.

Remuneration

Non-executive directors do not participate in the
Company’s pension, share option or other incentive plans.
The Board considers that the non-executive directors’
remuneration conforms with the requirements of the UK
Corporate Governance Code.

The fees payable to non-executive directors represent

compensation in connection with Board and Board
committee meetings and where appropriate for devoting
additional time and expertise for the benefit of the Group
in a wider capacity.

Details of directors’ remuneration and service contracts

form part of the report of the Compensation Committee
which commences on page 121.

Relations with share owners

Dialogue with share owners
The relationship with share owners, potential share
owners and investment analysts is given high priority
by the Company.

The Company has a well-developed and continuous
program to address the needs of share owners, investment
institutions and analysts for a regular flow of information
about the Company, its strategy, performance and
competitive position. Given the wide geographic distribution
of the Company’s current and potential share owners, this
program includes regular visits to investors, particularly
by the Group chief executive, the Group finance director,
the deputy Group finance director and the head of investor
relations, in the UK, Continental Europe and the major
financial centres in North America and also in Asia Pacific
and Latin America. The Company’s chairman meets with
investors and regularly consults with investors’ governance
representatives and advisory bodies. The Company provides
a preliminary announcement, an interim management
statement at the end of the first and third quarters that
includes a trading update, an interim report at half year
and a trading update and presentation at the AGM.

The Company ensures that it has a proper dialogue
with share owners and their representative bodies through
executive and non-executive directors in relation to
remuneration and corporate governance matters. In 2015,
the chairman held extensive rounds of discussions with
share owners and advisory groups regarding senior
executive compensation, and CEO and Board succession
planning. The chairman and senior independent director
provide thorough feedback to the Board on issues raised
with them by share owners.

WPP’s website, wpp.com, provides current and
historical financial information, including trading
statements, news releases and presentations and the
Company’s statement of its corporate governance practices.

The Annual General Meeting
The 2016 AGM will be held on Wednesday 8 June 2016
at 12 noon at Pullman Hotel London St Pancras,
100-110 Euston Road, London NW1 2AJ. A separate
notice convening the meeting is distributed to share
owners and will be published on WPP’s website,
wpp.com. All resolutions for which notice has been
given will be decided on a poll.

How we comply
Corporate governance

WPP ANNUAL REPORT 2015

167

Other statutory information

Substantial share ownership

Articles of Association

As at 15 April 2016, the Company is aware of the following
interests of 3% or more in the issued ordinary share capital:

There are no restrictions on amending the Articles of
Association of the Company other than the need to pass
a special resolution of the share owners.

Share capital

The Company’s authorised share capital consists solely of
1,750,000,000 ordinary 10 pence shares. The Company
operates an American Depositary Receipt program. The
rights and obligations relating to the ordinary share capital
are outlined in the Articles of Association; there are no
restrictions on transfer, no restrictions on voting rights
and no securities carry special voting rights with regard
to control of the Company.

At the AGM on 9 June 2015, share owners passed
resolutions authorising the Company, in accordance with
its Articles of Association, to allot shares up to a maximum
nominal amount of £87,271,076 of which £6,551,882
could be allotted for cash free of statutory pre-emption
rights. In the year under review no shares were issued for
cash free from pre-emption rights. Details of share capital
movements are given in note 26 on pages 211 to 213.

Authority for purchase of own shares

At the AGM on 9 June 2015, share owners passed a special
resolution authorising the Company, in accordance with
its Articles of Association, to purchase up to 131,037,653
of its own shares in the market. In the year under review,
39,607,954 ordinary shares of 10 pence each were
purchased at an average price of £14.84 per share.

Auditors

The directors will propose a resolution at the AGM to
re-appoint Deloitte LLP as auditors.

MFS
BlackRock Inc

6.6%
5.1%

The disclosed interests refer to the respective combined

holdings of the entity and to interests associated with it.
The Company has not been notified of any other

holdings of ordinary share capital of 3% or more.

Profits and dividends

The profit before tax for the year was £1,492.6 million
(2014: £1,451.9 million). The directors declared a final
dividend of 28.78p (2014: 26.58p) per share to be paid
on 4 July 2016 to share owners on the register at 10 June
2016 which, together with the interim ordinary dividend
of 15.91p (2014: 11.62p) per share paid on 9 November
2015, makes a total of 44.69p for the year (2014: 38.20p).

Change of control

All of our bonds contain provisions which are triggered
on a change of control of the Company. The holders of such
bonds have the right to repayment at par except for holders
of our US$ bonds. The holders here have the right to
redeem the bonds at 101% of par, if the Company is
non-investment grade at the time of the change of control
or becomes non-investment grade within 120 days of the
announcement of the change of control.

In addition, the Group has a Revolving Credit Facility
in the amount of $2,500 million due July 2020, the terms
of which require the consent of the majority of the lenders
if a proposed merger or consolidation of the Company
would alter its legal personality or identity.

In general terms, awards granted under WPP’s
incentive plans will usually vest on a change of control,
albeit on a pro-rated basis. Where awards are subject to
performance conditions, those conditions will still need
to be met, also on a pro-rated basis. Certain incentive plans
allow the Compensation Committee to require outstanding
awards to be exchanged for equivalent awards in the
acquiring company.

168 WPP ANNUAL REPORT 2015

How we comply
Other statutory information

Statement of directors’ responsibilities
in respect of the preparation of
financial statements

The directors are responsible for preparing the financial
statements in accordance with applicable law and
regulations. The directors have elected to prepare financial
statements for the Group in accordance with International
Financial Reporting Standards as adopted by the European
Union (IFRS) and have also elected to prepare financial
statements for the Company in accordance with UK
accounting standards. Company law requires the directors
to prepare such financial statements in accordance with
the Companies (Jersey) Law 1991.

International Accounting Standard 1 requires that
financial statements present fairly for each financial year
the Company’s financial position, financial performance
and cash flows. This requires the faithful representation
of the effects of transactions, other events and conditions
in accordance with the definitions and recognition criteria
for assets, liabilities, income and expenses set out in the
International Accounting Standards Board’s ‘Framework for
the Preparation and Presentation of Financial Statements’.

In virtually all circumstances, a fair presentation will be
achieved by compliance with all applicable IFRSs. Directors
are also required to:

properly select and apply accounting policies;
present information, including accounting policies,
in a manner that provides relevant, reliable, comparable
and understandable information;

provide additional disclosures, when compliance with
the specific requirements in IFRSs is insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the entity’s financial
position and financial performance; and

make an assessment of the Company’s ability to

continue as a going concern.

The directors are responsible for keeping proper
accounting records, which disclose with reasonable
accuracy at any time the financial position of the Company,
for safeguarding the assets, for taking reasonable steps
for the prevention and detection of fraud and other
irregularities and for the preparation of a Directors’
report and directors’ remuneration report.

The directors are responsible for the maintenance
and integrity of the Company website. Jersey legislation
and UK regulation governing the preparation and
dissemination of financial statements differs from
legislation in other jurisdictions.

The directors confirm that so far as they are aware,

there is no relevant audit information of which the
Company’s auditors are unaware. Each director has
taken all the steps that he or she ought to have taken,
as a director, in order to make himself or herself aware
of any relevant audit information and to establish that
the Company’s auditors are aware of that information.

In accordance with the principles of the UK Corporate
Governance Code, the Board has established arrangements
to evaluate whether the information presented in the
Annual Report is fair, balanced and understandable;
these are described on page 117.

The Board considers the Annual Report and financial

statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for share owners to assess the Company’s position,
performance, business model and strategy.

The letters from the chairmen of the Nomination and

Governance, Audit and Compensation Committees, the
statements regarding directors’ responsibilities and statement
of going concern set out above and the directors’ remuneration
and interests in the share capital of the Company set out
on pages 113 to 153, are included in the Directors’ report,
which also includes the sections ‘Strategic report to share
owners’, ‘What we think’ and ‘Who runs WPP’.

By Order of the Board:

Marie Capes
Company Secretary
15 April 2016

WPP ANNUAL REPORT 2015

169

Our 2015
financial
statements

Accounting policies

he consolidated financial statements of
WPP plc and its subsidiaries (the Group)
for the year ended 31 December 2015
have been prepared in accordance
with International Financial Reporting
Standards (IFRS) as adopted by the

European Union as they apply to the financial statements
of the Group for the year ended 31 December 2015.
The Group’s financial statements have also been
prepared in accordance with International Financial
Reporting Standards as issued by the International
Accounting Standards Board.

Basis of preparation

The consolidated financial statements have been prepared
under the historical cost convention, except for the
revaluation of certain financial instruments. The principal
accounting policies are set out below.

Basis of consolidation

The consolidated financial statements include the results
of the Company and all its subsidiary undertakings made
up to the same accounting date. All intra-Group balances,
transactions, income and expenses are eliminated in full
on consolidation. The results of subsidiary undertakings
acquired or disposed of during the period are included
or excluded from the consolidated income statement
from the effective date of acquisition or disposal.

WPP ANNUAL REPORT 2015

171

Our 2015 financial statements
Accounting policies

Goodwill and other intangible assets

Contingent consideration

Intangible assets comprise goodwill, certain acquired
separable corporate brand names, acquired customer
relationships, acquired proprietary tools and capitalised
computer software not integral to a related item
of hardware.

Goodwill represents the excess of fair value attributed

to investments in businesses or subsidiary undertakings
over the fair value of the underlying net assets, including
intangible assets, at the date of their acquisition.

Goodwill impairment reviews are undertaken annually

or more frequently if events or changes in circumstances
indicate a potential impairment. The carrying value of
goodwill is compared to the net present value of future cash
flows derived from the underlying assets using a projection
period of up to five years for each cash-generating unit. After
the projection period a steady growth rate representing an
appropriate long-term growth rate for the industry is applied.
Any impairment is recognised immediately as an expense
and is not subsequently reversed.

Corporate brand names, customer relationships and

proprietary tools acquired as part of acquisitions of
businesses are capitalised separately from goodwill as
intangible assets if their value can be measured reliably
on initial recognition and it is probable that the expected
future economic benefits that are attributable to the asset
will flow to the Group.

Certain corporate brands of the Group are considered

to have an indefinite economic life because of the
institutional nature of the corporate brand names, their
proven ability to maintain market leadership and profitable
operations over long periods of time and the Group’s
commitment to develop and enhance their value. The
carrying value of these intangible assets is reviewed at least
annually for impairment and adjusted to the recoverable
amount if required.

Amortisation is provided at rates calculated to write
off the cost less estimated residual value of each asset on a
straight-line basis over its estimated useful life as follows:

Brand names (with finite lives) – 10-20 years.
Customer-related intangibles – 3-10 years.
Other proprietary tools – 3-10 years.
Other (including capitalised computer software)

– 3-5 years.

Contingent consideration is accounted for in accordance
with IFRS 3 Business Combinations. Contingent
consideration only applies to situations where contingent
payments are not dependent on future employment of
vendors and any such payments are expensed when they
relate to future employment.

Future anticipated payments to vendors in respect of
contingent consideration (earnout agreements) are initially
recorded at fair value which is the present value of the
expected cash outflows of the obligations. The obligations
are dependent on the future financial performance of the
interests acquired (typically over a four- to five-year period
following the year of acquisition) and assume the operating
companies improve profits in line with directors’ estimates.
The directors derive their estimates from internal business
plans together with financial due diligence performed in
connection with the acquisition.

Subsequent adjustments to the fair value are recorded
in the consolidated income statement within revaluation
of financial instruments.

Property, plant and equipment

Property, plant and equipment are shown at cost less
accumulated depreciation and any provision for impairment
with the exception of freehold land which is not depreciated.
The Group assesses the carrying value of its property, plant
and equipment to determine if any impairment has occurred.
Where this indicates that an asset may be impaired, the
Group applies the requirements of IAS 36 Impairment of
Assets in assessing the carrying amount of the asset. This
process includes comparing its recoverable amount with its
carrying value. Depreciation is provided at rates calculated
to write off the cost less estimated residual value of each
asset on a straight-line basis over its estimated useful life,
as follows:

Freehold buildings – 50 years.
Leasehold land and buildings – over the term

of the lease or life of the asset, if shorter.

Fixtures, fittings and equipment – 3-10 years.
Computer equipment – 3-5 years.

172 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Accounting policies

Interests in associates and joint ventures

Trade receivables

An associate is an entity over which the Group has
significant influence. In certain circumstances, significant
influence may be represented by factors other than
ownership and voting rights, such as representation
on the Board of Directors.

The Group’s share of the profits less losses of associate

undertakings net of tax, interest and non-controlling
interests is included in the consolidated income statement
and the Group’s share of net assets is shown within interests
in associates in the consolidated balance sheet. The Group’s
share of the profits less losses and net assets is based on
current information produced by the undertakings, adjusted
to conform with the accounting policies of the Group.

The Group assesses the carrying value of its associate
undertakings to determine if any impairment has occurred.
Where this indicates that an investment may be impaired,
the Group applies the requirements of IAS 36 in assessing
the carrying amount of the investment. This process includes
comparing its recoverable amount with its carrying value.

The Group accounts for joint venture investments under

the equity method which is consistent with the Group’s
treatment of associates.

Other investments

Other investments are designated as ‘available for sale’
and are shown at fair value with any movements in fair
value taken to equity.

On disposal the cumulative gain or loss previously

recognised in equity is included in the profit or loss for the year.

Inventory and work in progress

Work in progress is valued at cost, which includes outlays
incurred on behalf of clients and an appropriate proportion
of directly attributable costs and overheads on incomplete
assignments. Provision is made for irrecoverable costs
where appropriate. Inventory is stated at the lower of cost
and net realisable value.

Trade receivables are stated net of provisions for bad and
doubtful debts.

Foreign currency and interest rate hedging

The Group’s policy on interest rate and foreign exchange
rate management sets out the instruments and methods
available to hedge interest and currency risk exposures
and the control procedures in place to ensure effectiveness.
The Group uses derivative financial instruments to
reduce exposure to foreign exchange risk and interest rate
movements. The Group does not hold or issue derivative
financial instruments for speculative purposes.

Derivatives are initially recognised at fair value at

the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each balance
sheet date. The resulting gain or loss is recognised in profit
or loss immediately unless the derivative is designated and
effective as a hedging instrument, in which event the timing
of the recognition in profit or loss depends on the nature
of the hedge relationship.

At the inception of the hedge relationship the entity
documents the relationship between the hedging instrument
and hedged item, along with its risk management objectives
and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an
ongoing basis, the Group documents whether the hedging
instrument that is used in a hedging relationship is highly
effective in offsetting changes in fair values or cash flows
of the hedged item.

Note 25 contains details of the fair values of the

derivative instruments used for hedging purposes.

Changes in the fair value of derivatives that are designated

and qualify as fair value hedges are recorded in profit or loss
immediately, together with any changes in the fair value
of the hedged item that is attributable to the hedged risk.
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow
or net investment hedges is deferred in equity. The gain
or loss relating to the ineffective portion is recognised
immediately in profit or loss. Amounts deferred in equity
are recycled in profit or loss in the periods when the
hedged item is recognised in profit or loss. However,
when the forecast transaction that is hedged results in
the recognition of a non-financial asset or a non-financial

WPP ANNUAL REPORT 2015

173

Our 2015 financial statements
Accounting policies

liability, the gains and losses previously deferred in equity
are transferred from equity and included in the initial
measurement of the cost of the asset or liability.

Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated, or exercised,
or no longer qualifies for hedge accounting. At that time,
any cumulative gain or loss on the hedging instrument
recognised in equity is retained in equity until the forecast
transaction occurs. If a hedged transaction is no longer
expected to occur, the net cumulative gain or loss
recognised in equity is transferred to net profit or loss
for the period.

Derivatives embedded in other financial instruments
or other host contracts are treated as separate derivatives
when their risks and characteristics are not closely related
to those of host contracts and the host contracts are not
carried at fair value with unrealised gains or losses reported
in the consolidated income statement.

Convertible debt

Convertible debt is assessed according to the substance of
the contractual arrangements and is classified into liability
and equity elements on the basis of the initial fair value of
the liability element. The difference between this figure and
the cash received is classified as equity.

The consolidated income statement charge for the

finance cost is spread evenly over the term of the convertible
debt so that at redemption the liability equals the
redemption value.

Other debt

Other interest-bearing debt is recorded at the proceeds
received, net of direct issue costs.

Liabilities in respect of option agreements

Option agreements that allow the Group’s equity partners
to require the Group to purchase a non-controlling interest
are treated as derivatives over equity instruments and are
recorded in the consolidated balance sheet initially at the
present value of the redemption amount in accordance
with IAS 32 Financial Instruments: Presentation and
subsequently measured at fair value in accordance with IAS
39 Financial Instruments: Recognition and Measurement.
The movement in the fair value is recognised as income or
expense within revaluation of financial instruments in the
consolidated income statement.

Borrowing costs

Finance costs of borrowing are recognised in the consolidated
income statement over the term of those borrowings.

Revenue recognition

Revenue comprises commission and fees earned in respect
of amounts billed. Direct costs include fees paid to external
suppliers where they are retained to perform part or all of
a specific project for a client and the resulting expenditure
is directly attributable to the revenue earned. Revenue is
stated exclusive of VAT, sales taxes and trade discounts.

Derecognition of financial liabilities

In accordance with IAS 39 Financial Instruments:
Recognition and Measurement, a financial liability of the
Group is only released to the consolidated income statement
when the underlying legal obligation is extinguished.

174 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Accounting policies

Advertising and Media Investment Management

Data Investment Management

Revenue is typically derived from commissions on media
placements and fees for advertising services. Revenue may
consist of various arrangements involving commissions,
fees, incentive-based revenue or a combination of the three,
as agreed upon with each client.

Revenue is recognised when the service is performed, in
accordance with the terms of the contractual arrangement.
The amount of revenue recognised depends on whether we
act as an agent or as a principal in an arrangement with a
client. Where we act as an agent, the revenue recorded is the
net amount retained when the fee or commission is earned.
Although the Group may bear credit risk in respect of these
activities, the arrangements with our clients are such that
we consider that we are acting as an agent on their behalf.
In such cases, costs incurred with external suppliers (such
as media suppliers) are excluded from our revenue. Where
the Group acts as a principal and contracts directly with
suppliers for media payments and production costs, the
revenue recorded is the gross amount billed.

Incentive-based revenue typically comprises both

quantitative and qualitative elements; on the element related
to quantitative targets, revenue is recognised when the
quantitative targets have been achieved; on the element
related to qualitative targets, revenue is recognised when
the incentive is received or receivable.

The Group receives volume rebates from certain
suppliers for transactions entered into on behalf of clients
that, based on the terms of the relevant contracts and local
law, are either remitted to clients or retained by the Group.
If amounts are passed on to clients they are recorded as
liabilities until settled or, if retained by the Group, are
recorded as revenue when earned.

Revenue recognised in proportion to the level of service
performed for market research contracts is based on
proportional performance. In assessing contract
performance, both input and output criteria are reviewed.
Costs incurred are used as an objective input measure of
performance. The primary input of all work performed
under these arrangements is labour. As a result of the
relationship between labour and cost, there is normally
a direct relationship between costs incurred and the
proportion of the contract performed to date. Costs
incurred as a proportion of expected total costs is used
as an initial proportional performance measure. This
indicative proportional performance measure is
subsequently validated against other more subjective
criteria (i.e. relevant output measures) such as the
percentage of interviews completed, percentage of reports
delivered to a client and the achievement of any project
milestones stipulated in the contract. In the event of
divergence between the objective and more subjective
measures, the more subjective measures take precedence
since these are output measures.

While most of the studies provided in connection
with the Group’s market research contracts are undertaken
in response to an individual client’s or group of clients’
specifications, in certain instances a study may be
developed as an off-the-shelf product offering sold to
a broad client base. For these transactions, revenue is
recognised when the product is delivered. Where the
terms of transaction provide for licensing the product
on a subscription basis, revenue is recognised over the
subscription period on a straight-line basis or, if applicable,
based on usage.

Substantially all services are provided on a fixed price
basis. Pricing may also include a provision for a surcharge
where the actual labour hours incurred in completing a
project are significantly above the labour hours quoted in
the project proposal. In instances where this occurs, the
surcharge will be included in the total revenue base on
which to measure proportional performance when the
actual threshold is reached provided that collectability
is reasonably assured.

WPP ANNUAL REPORT 2015

175

Our 2015 financial statements
Accounting policies

Public Relations & Public Affairs and Branding
& Identity, Healthcare and Specialist
Communications

Revenue is typically derived from retainer fees and services
to be performed subject to specific agreement. Revenue is
recognised when the service is performed, in accordance
with the terms of the contractual arrangement. Revenue is
recognised on long-term contracts, if the final outcome can
be assessed with reasonable certainty, by including in the
consolidated income statement revenue and related costs
as contract activity progresses.

Taxation

Corporate taxes are payable on taxable profits at current
rates. The tax expense represents the sum of the tax
currently payable and deferred tax.

The Group is subject to corporate taxes in a number

of different jurisdictions and judgement is required in
determining the appropriate provision for transactions
where the ultimate tax determination is uncertain. In such
circumstances, the Group recognises liabilities for anticipated
taxes based on the best information available and where
the anticipated liability is both probable and estimable,
liabilities are classified as current. Any interest and penalties
accrued are included in corporate income taxes both in the
consolidated income statement and balance sheet. Where
the final outcome of such matters differs from the amount
recorded, any differences may impact the income tax and
deferred tax provisions in the period in which the final
determination is made.

The tax laws that apply to the Group’s subsidiaries may

be amended by the relevant tax authorities. Such potential
amendments are regularly monitored and adjustments are
made to the Group’s tax liabilities and deferred tax assets
and liabilities where necessary.

The tax currently payable is based on taxable profit for

the year. Taxable profit differs from net profit as reported
in the consolidated income statement because it excludes
items of income or expense that are taxable or deductible
in other years and it further excludes items that are never
taxable or deductible. The Group’s liability for current tax
is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.

The Group has revised its tax accounting policy to

classify all income tax creditors as current liabilities.
The Group believes this provides a more relevant

176 WPP ANNUAL REPORT 2015

presentation, whilst having no impact on the timing
of expected cash flows. Accordingly, the consolidated
balance sheets at 31 December 2014 and 31 December
2013 have been restated to reclassify £441.2 million
and £362.6 million respectively of corporate income tax
payable from non-current liabilities to current liabilities.
Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying amounts
of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are recognised for all
taxable temporary differences unless specifically excepted
by IAS 12 Income Taxes. Deferred tax is charged or
credited in the consolidated income statement, except
when it relates to items charged or credited to other
comprehensive income or directly to equity, in which case
the deferred tax is also dealt with in other comprehensive
income or equity. Deferred tax assets are recognised to
the extent that it is probable that taxable profits will be
available against which deductible temporary differences
can be utilised, which can require the use of accounting
estimation and the exercise of judgement. Such assets and
liabilities are not recognised if the temporary difference
arises from the initial recognition of goodwill or other
assets and liabilities (other than in a business combination)
in a transaction that affects neither the taxable profit nor
the accounting profit.

The carrying amount of deferred tax assets is reviewed
at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax liabilities are recognised for taxable

temporary differences arising on investments in subsidiaries
and associates, and interests in joint ventures, except where
the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference
will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there

is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to
income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities
on a net basis.

Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is settled
or the asset is realised based on enacted or substantively
enacted legislation.

Our 2015 financial statements
Accounting policies

Retirement benefit costs

Operating leases

The Group accounts for retirement benefit costs in
accordance with IAS 19 Employee Benefits.

For defined contribution plans, contributions are
charged to the consolidated income statement as payable
in respect of the accounting period.

For defined benefit plans the amounts charged to
operating profit are the current service costs, past service
costs, administrative expenses and gains and losses on
settlements and curtailments. They are included as part
of staff costs. Past service costs are recognised immediately
in the consolidated income statement when the related
plan amendment occurs. Net interest expense is calculated
by applying the discount rate to the recognised overall
surplus or deficit in the plan.

Actuarial gains and losses are recognised immediately

in the consolidated statement of comprehensive income.
Where defined benefit plans are funded, the assets
of the plan are held separately from those of the Group,
in separate independently managed funds. Pension plan
assets are measured at fair value and liabilities are
measured on an actuarial basis using the projected unit
method and discounted at a rate equivalent to the current
rate of return on a high-quality corporate bond of
equivalent currency and term to the plan liabilities.
The actuarial valuations are obtained at least triennially
and are updated at each balance sheet date.

Recognition of a surplus in a defined benefit plan
is limited based on the economic gain the Company is
expected to benefit from in the future by means of a
refund or reduction in future contributions to the plan,
in accordance with IAS 19.

Finance leases

Assets held under finance leases are recognised as assets of
the Group at the inception of the lease at the lower of their
fair value and the present value of the minimum lease
payments. Depreciation on leased assets is charged to the
consolidated income statement on the same basis as owned
assets. Leasing payments are treated as consisting of capital
and interest elements and the interest is charged to the
consolidated income statement as it is incurred.

Operating lease rentals are charged to the consolidated
income statement on a straight-line basis over the lease
term. Any premium or discount on the acquisition of a lease
is spread over the life of the lease on a straight-line basis.

Translation of foreign currencies

Foreign currency transactions arising from normal trading
activities are recorded at the rates in effect at the date of the
transaction. Monetary assets and liabilities denominated
in foreign currencies at the year end are translated at the
year-end exchange rate. Foreign currency gains and losses
are credited or charged to the consolidated income
statement as they arise.

The income statements of overseas subsidiary
undertakings are translated into pounds sterling at
average exchange rates and the year-end net assets of these
companies are translated at year-end exchange rates.

Exchange differences arising from retranslation of the

opening net assets and on foreign currency borrowings
(to the extent that they hedge the Group’s investment in
such operations) are reported in the consolidated statement
of comprehensive income.

Goodwill and fair value adjustments arising on the
acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the
closing rate.

Share-based payments

The Group issues equity-settled share-based payments
(including share options) to certain employees and accounts
for these awards in accordance with IFRS 2 Share-Based
Payment. Equity-settled share-based payments are
measured at fair value (excluding the effect of non-market-
based vesting conditions) at the date of grant. Details
regarding the fair value of equity settled share-based
transactions are set out in notes 22 and 26.

The fair value determined at the grant date is recognised

in the consolidated income statement as an expense on a
straight-line basis over the relevant vesting period, based
on the Group’s estimate of the number of shares that will
ultimately vest and adjusted for the effect of non-market-
based vesting conditions.

WPP ANNUAL REPORT 2015

177

Our 2015 financial statements
Accounting policies

New IFRS accounting pronouncements

At the date of authorisation of these financial statements,
the following Standards, which have not been applied in
these financial statements, were in issue but not yet effective:

IFRS 9: Financial Instruments;
IFRS 14: Regulatory Deferral Accounts;
IFRS 15: Revenue from Contracts with Customers; and
IFRS 16: Leases
With the exception of IFRS 15 and IFRS 16, the
Group does not consider that these Standards will have
a significant impact on the financial statements of the
Group except for additional disclosures when the relevant
standards come into effect.

The directors expect that the adoption of IFRS 15 may
have an impact on revenue recognition and related disclosures
and IFRS 16 will impact the accounting for those leases
currently classified as operating leases. It is not practicable
to provide a reasonable estimate of the effect of IFRS 15
and IFRS 16 until a detailed review has been completed.

Critical judgements and estimation
uncertainty in applying accounting policies

Management is required to make key decisions and
judgements whilst acknowledging there is estimation
uncertainty in the process of applying the Group’s
accounting policies. The most significant areas where such
judgements and estimation uncertainty apply are revenue
recognition, goodwill and other intangibles, payments
due to vendors (earnout agreements), liabilities in respect
of put option agreement with vendors, acquisition reserves,
taxation and accounting for pension liabilities. Where
judgement has been applied or estimation uncertainty
exists, the key factors taken into consideration are disclosed
in the accounting policies and the appropriate note in these
financial statements.

Directors’ responsibility statement

We confirm that to the best of our knowledge:

the financial statements, prepared in accordance with

the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
the Strategic report includes a fair review of the
development and performance of the business and the
position of the Company and the undertakings included
in the consolidation taken as a whole, together with
a description of the principal risks and uncertainties
they face.

Sir Martin Sorrell
Group chief executive Group finance director
15 April 2016

Paul Richardson

178 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Accounting policies

The numbers in full …

WPP ANNUAL REPORT 2015

179

Our 2015 financial statements

Consolidated income statement

For the year ended 31 December 2015

Billings1

Revenue
Direct costs
Net sales
Operating costs
Operating profit
Share of results of associates
Profit before interest and taxation
Finance income
Finance costs
Revaluation of financial instruments
Profit before taxation
Taxation
Profit for the year

Attributable to:
Equity holders of the parent
Non-controlling interests

Headline PBIT
Net sales margin
Headline PBT

Earnings per share
Basic earnings per ordinary share
Diluted earnings per ordinary share

Notes

2015
£m
47,631.9

2014
£m
46,186.3

2013
£m
46,209.3

2015
$m2
72,766.7

2014
$m2
75,943.6

2013
$m2
72,344.5

2
3

6
6
6

31
31
31

9
9

12,235.2
(1,710.9)
10,524.3
(8,892.3)
1,632.0
47.0
1,679.0
72.4
(224.1)
(34.7)
1,492.6
(247.5)
1,245.1

11,528.9
(1,464.1)
10,064.8
(8,557.5)
1,507.3
61.9
1,569.2
94.7
(262.7)
50.7
1,451.9
(300.4)
1,151.5

11,019.4
(943.3)
10,076.1
(8,665.8)
1,410.3
68.1
1,478.4
64.3
(267.9)
21.0
1,295.8
(283.7)
1,012.1

18,693.2
(2,614.3)
16,078.9
(13,585.1)
2,493.8
71.2
2,565.0
110.9
(342.6)
(53.2)
2,280.1
(378.4)
1,901.7

18,956.0
(2,407.0)
16,549.0
(14,097.4)
2,451.6
101.8
2,553.4
154.0
(430.9)
82.1
2,358.6
(487.2)
1,871.4

17,251.5
(1,477.0)
15,774.5
(13,547.9)
2,226.6
107.8
2,334.4
101.2
(418.7)
34.4
2,051.3
(448.1)
1,603.2

1,160.2
84.9
1,245.1

1,774.0
16.9%
1,622.3

1,077.2
74.3
1,151.5

1,680.6
16.7%
1,512.6

936.5
75.6
1,012.1

1,661.6
16.5%
1,458.0

1,771.6
130.1
1,901.7

2,704.3
16.8%
2,472.6

1,749.4
122.0
1,871.4

2,739.8
16.6%
2,462.9

1,485.1
118.1
1,603.2

2,620.1
16.6%
2,302.6

90.0p
88.4p

82.4p
80.5p

72.4p
69.6p

137.5¢
134.9¢

133.8¢
130.8¢

114.8¢
110.4¢

Notes
The accompanying notes form an integral part of this consolidated income statement.
1 Billings is defined on page 228.
2 The consolidated income statement above is also expressed in US dollars for information purposes only and is unaudited. It has been prepared assuming the US dollar is the

reporting currency of the Group, whereby local currency results are translated into US dollars at actual monthly average exchange rates in the period presented. Among other
currencies, this includes an average exchange rate of US$1.5288 to the pound sterling for the year 2015 (2014: US$1.6475, 2013: US$1.5646).

180 WPP ANNUAL REPORT 2015

Consolidated statement of comprehensive income

Our 2015 financial statements

For the year ended 31 December 2015

Profit for the year
Items that may be reclassified subsequently to profit or loss:
Exchange adjustments on foreign currency net investments
Gain on revaluation of available for sale investments

Items that will not be reclassified subsequently to profit or loss:
Actuarial gain/(loss) on defined benefit pension plans
Deferred tax on defined benefit pension plans

Other comprehensive loss for the year
Total comprehensive income for the year

Attributable to:
Equity holders of the parent
Non-controlling interests

Note
The accompanying notes form an integral part of this consolidated statement of comprehensive income.

2015
£m
1,245.1

2014
£m
1,151.5

2013
£m
1,012.1

(275.9)
206.0
(69.9)

33.5
(5.2)
28.3
(41.6)
1,203.5

(221.2)
64.6
(156.6)

(86.6)
62.1
(24.5)
(181.1)
970.4

(372.6)
72.0
(300.6)

76.2
(1.2)
75.0
(225.6)
786.5

1,121.6
81.9
1,203.5

893.0
77.4
970.4

727.0
59.5
786.5

WPP ANNUAL REPORT 2015

181

Our 2015 financial statements

Consolidated cash flow statement

For the year ended 31 December 2015

Net cash inflow from operating activities
Investing activities
Acquisitions and disposals
Purchases of property, plant and equipment
Purchases of other intangible assets (including capitalised computer software)
Proceeds on disposal of property, plant and equipment
Net cash outflow from investing activities
Financing activities
Share option proceeds
Cash consideration for non-controlling interests
Share repurchases and buy-backs
Net increase in borrowings
Financing and share issue costs
Equity dividends paid
Dividends paid to non-controlling interests in subsidiary undertakings
Net cash outflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Translation differences
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Reconciliation of net cash flow to movement in net debt:
Net (decrease)/increase in cash and cash equivalents
Cash inflow from increase in debt financing
Conversion of bond to equity
Other movements
Translation differences
Movement of net debt in the year
Net debt at beginning of year
Net debt at end of year

Note
The accompanying notes form an integral part of this consolidated cash flow statement.

Notes
11

11
11
11

2015
£m
1,359.9

2014
£m
1,703.7

2013
£m
1,374.2

(669.5)
(210.3)
(36.1)
13.4
(902.5)

27.6
(23.6)
(587.6)
492.0
(11.4)
(545.8)
(55.2)
(704.0)
(246.6)
(54.4)
2,247.6
1,946.6

(489.1)
(177.9)
(36.5)
5.9
(697.6)

25.0
(5.6)
(510.8)
465.2
(27.5)
(460.0)
(57.7)
(571.4)
434.7
(70.3)
1,883.2
2,247.6

(201.4)
(240.7)
(43.8)
7.3
(478.6)

42.4
(19.6)
(197.0)
436.8
(19.1)
(397.3)
(53.2)
(207.0)
688.6
(164.7)
1,359.3
1,883.2

(246.6)
(480.5)
–
(124.0)
(84.3)
(935.4)
(2,275.4)
(3,210.8)

434.7
(437.7)
–
23.8
(55.8)
(35.0)
(2,240.4)
(2,275.4)

688.6
(418.1)
449.9
21.0
(160.6)
580.8
(2,821.2)
(2,240.4)

182 WPP ANNUAL REPORT 2015

Consolidated balance sheet

At 31 December 2015

Non-current assets
Intangible assets:

Goodwill
Other

Property, plant and equipment
Interests in associates and joint ventures
Other investments
Deferred tax assets1
Trade and other receivables

Current assets
Inventory and work in progress
Corporate income tax recoverable
Trade and other receivables
Cash and short-term deposits

Current liabilities
Trade and other payables
Corporate income tax payable2
Bank overdrafts and loans

Net current liabilities
Total assets less current liabilities
Non-current liabilities
Bonds and bank loans
Trade and other payables
Deferred tax liabilities1
Provision for post-employment benefits
Provisions for liabilities and charges

Net assets
Equity
Called-up share capital
Share premium account
Shares to be issued
Other reserves
Own shares
Retained earnings
Equity share owners’ funds
Non-controlling interests
Total equity

Our 2015 financial statements

Notes

2015
£m

2014
£m

2013
£m

12
12
13
14
14
15
17

10,670.6
1,715.4
797.7
758.6
1,158.7
94.1
178.7
15,373.8

329.0
168.6
10,495.4
2,382.4
13,375.4

9,979.4
1,668.9
772.5
759.9
669.2
108.8
148.6
14,107.3

327.3
145.6
9,530.0
2,512.7
12,515.6

9,472.8
1,667.8
773.3
792.8
270.6
89.5
158.5
13,225.3

304.5
136.0
9,088.1
2,221.6
11,750.2

18 (12,685.0)
(598.5)
(932.0)
(14,215.5)
(840.1)
14,533.7

(11,784.0)
(599.8)
(653.2)
(13,037.0)
(521.4)
13,585.9

(10,710.7)
(482.7)
(941.4)
(12,134.8)
(384.6)
12,840.7

20
19
15
23
21

(4,661.2)
(891.5)
(552.3)
(229.3)
(183.6)
(6,517.9)
8,015.8

132.9
535.3
–
(9.7)
(719.6)
7,698.5
7,637.4
378.4
8,015.8

(4,134.9)
(624.9)
(536.7)
(296.2)
(166.4)
(5,759.1)
7,826.8

132.6
508.0
0.3
36.2
(283.7)
7,106.7
7,500.1
326.7
7,826.8

(3,520.6)
(457.6)
(620.8)
(247.5)
(147.7)
(4,994.2)
7,846.5

134.9
483.4
0.5
317.3
(253.0)
6,903.7
7,586.8
259.7
7,846.5

The financial statements were approved by the Board of
Directors and authorised for issue on 15 April 2016.
Signed on behalf of the Board:

Sir Martin Sorrell
Group chief executive

Paul Richardson
Group finance director

Notes
The accompanying notes form an integral part of this consolidated balance sheet.
1 As described in note 15, prior year balance sheets have been restated to reduce
both deferred tax assets and deferred tax liabilities, by a corresponding amount.
2 As described in the Group’s accounting policy on taxation, prior year balance
sheets have been restated to reclassify all income tax creditors from non-current
liabilities to current liabilities.

WPP ANNUAL REPORT 2015

183

Our 2015 financial statements

Consolidated statement of changes in equity

For the year ended 31 December 2015

Balance at 1 January 2015
Ordinary shares issued
Treasury share additions
Treasury share allocations
Net profit for the year
Exchange adjustments on foreign
currency net investments
Gain on revaluation of available
for sale investments
Actuarial gain on defined benefit
pension plans
Deferred tax on defined benefit
pension plans
Comprehensive (loss)/income
Dividends paid
Non-cash share-based incentive plans
(including share options)
Tax adjustment on share-based
payments
Net movement in own shares held
by ESOP Trusts
Recognition/remeasurement
of financial instruments
Share purchases – close period
commitments
Acquisition of subsidiaries2
Balance at 31 December 2015

Called-up
share
capital
£m
132.6
0.3
–
–
–

Share
premium
account
£m
508.0
27.3
–
–
–

Shares to
be issued
£m
0.3
(0.3)
–
–
–

–

–
–
–

–

–
–
–

–

–
–
132.9

–
–
535.3

–

–
–
–

–

–
–
–

Other
reserves1
£m
36.2
–
–
–
–

(272.9)

206.0

–

–
(66.9)
–

–

Own
shares
£m

Retained
earnings
£m

Total
equity
share
owners’
funds
£m
(283.7) 7,106.7 7,500.1
0.2
27.5
–
(406.0)
–
(3.6)
– 1,160.2 1,160.2

–
(406.0)
3.6

Non-
controlling
interests
£m

Total
£m
326.7 7,826.8
27.5
(406.0)
–
84.9 1,245.1

–
–
–

(272.9)

(3.0)

(275.9)

–

206.0

33.5

(5.2)
–
– 1,188.5
(545.8)
–

(5.2)
1,121.6
(545.8)

–

(5.2)
81.9 1,203.5
(601.0)
(55.2)

–

99.0

18.0

(33.5)

(148.1)

(181.6)

–

206.0

33.5

–

99.0

18.0

(181.6)

(59.7)

(59.0)

–

(0.7)

(59.7)

80.0
–
(9.7)

–
–

82.9
2.9
(18.6)
(18.6)
(719.6) 7,698.5 7,637.4

–
25.0

82.9
6.4
378.4 8,015.8

Notes
The accompanying notes form an integral part of this consolidated statement of changes in equity.
1 Other reserves are analysed in note 27.
2 Acquisition of subsidiaries represents movements in retained earnings and non-controlling interests arising from changes in ownership of existing subsidiaries and recognition

of non-controlling interests on new acquisitions.

184 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Consolidated statement of changes in equity

Own
shares
£m

Retained
earnings
£m

Total
equity
share
owners’
funds
£m
(253.0) 6,903.7 7,586.8
25.0
(412.5)
–
–
– 1,077.2 1,077.2

0.2
–
(0.6)
(332.5)

–
(412.5)
0.6
332.5

Non-
controlling
interests
£m

Total
£m
259.7 7,846.5
25.0
(412.5)
–
–
1,151.5

–
–
–
–
74.3

(224.3)

3.1

(221.2)

–

64.6

(86.6)

–

–
62.1
– 1,052.7
(460.0)
–

62.1
893.0
(460.0)

–
77.4
(57.7)

Other
reserves1
£m
317.3
–
–
–
2.7
–

(224.3)

64.6

–

–
(159.7)
–

–

102.2

(0.6)

48.7

(147.0)

(98.3)

(44.1)

–

(4.1)

(48.2)

–

64.6

(86.6)

62.1
970.4
(517.7)

102.2

(0.6)

(98.3)

(48.2)

For the year ended 31 December 2014

Called-up
share
capital
£m
134.9
0.4
–
–
(2.7)
–

Share
premium
account
£m
483.4
24.6
–
–
–
–

Shares to
be issued
£m
0.5
(0.2)
–
–
–
–

–

–
–
–

–

–
–
–

–

–
–
–

–

Balance at 1 January 2014
Ordinary shares issued
Treasury share additions
Treasury share allocations
Treasury share cancellations
Net profit for the year
Exchange adjustments on foreign
currency net investments
Gain on revaluation of available for sale
investments
Actuarial loss on defined benefit
pension plans
Deferred tax on defined benefit
pension plans
Comprehensive (loss)/income
Dividends paid
Non-cash share-based incentive plans
(including share options)
Tax adjustment on share-based
payments
Net movement in own shares held by
ESOP Trusts
Recognition/remeasurement of financial
instruments
Share purchases – close period
commitments
Acquisition of subsidiaries2
Balance at 31 December 2014

–
–
132.6

–
–
508.0

–
–
0.3

(80.0)
–
36.2

–
–

(83.9)
(3.4)
(283.7) 7,106.7 7,500.1

(3.9)
(3.4)

–
47.3

(83.9)
43.9
326.7 7,826.8

non-controlling interests on new acquisitions.

WPP ANNUAL REPORT 2015

185

Our 2015 financial statements

Notes to the consolidated financial statements

For the year ended 31 December 2015

1. General information
WPP plc is a company incorporated in Jersey. The address of the registered office is Queensway House, Hilgrove Street, St Helier, Jersey, JE1 1ES and
the address of the principal executive office is 27 Farm Street, London, United Kingdom, W1J 5RJ. The nature of the Group’s operations and its principal
activities are set out in note 2. These consolidated financial statements are presented in pounds sterling.

2. Segment information
The Group is a leading worldwide communications services organisation offering national and multinational clients a comprehensive range of
communications services.

The Group is organised into four reportable segments – Advertising and Media Investment Management; Data Investment Management; Public
Relations & Public Affairs; and Branding & Identity, Healthcare and Specialist Communications. This last reportable segment includes WPP Digital
and direct, digital, promotional & relationship marketing.

IFRS 8 Operating Segments requires operating segments to be identified on the same basis as is used internally for the review of performance and
allocation of resources by the Group chief executive. Provided certain quantitative and qualitative criteria are fulfilled, IFRS 8 permits the aggregation
of these components into reportable segments for the purposes of disclosure in the Group’s financial statements. In assessing the Group’s reportable
segments, the directors have had regard to the similar economic characteristics of certain operating segments, their shared client base, the similar
nature of their products or services and their long-term margins, amongst other factors.

Operating sectors
Reported contributions were as follows:

Income statement
2015
Advertising and Media Investment Management
Data Investment Management
Public Relations & Public Affairs
Branding & Identity, Healthcare and Specialist Communications

2014
Advertising and Media Investment Management
Data Investment Management
Public Relations & Public Affairs
Branding & Identity, Healthcare and Specialist Communications

2013
Advertising and Media Investment Management
Data Investment Management
Public Relations & Public Affairs
Branding & Identity, Healthcare and Specialist Communications

Revenue1

£m

Net sales
£m

Headline

PBIT2
£m

Net sales
margin3

5,552.8
2,425.9
945.8
3,310.7
12,235.2

5,134.3
2,429.3
891.9
3,073.4
11,528.9

4,578.8
2,549.7
920.7
2,970.2
11,019.4

4,652.0
1,768.1
929.7
3,174.5
10,524.3

4,502.0
1,748.9
880.4
2,933.5
10,064.8

4,463.6
1,843.7
907.5
2,861.3
10,076.1

855.6
286.1
155.4
476.9
1,774.0

836.2
272.7
139.2
432.5
1,680.6

824.4
263.8
133.8
439.6
1,661.6

18.4
16.2
16.7
15.0
16.9

18.6
15.6
15.8
14.7
16.7

18.5
14.3
14.7
15.4
16.5

Notes
1 Intersegment sales have not been separately disclosed as they are not material.
2 A reconciliation from reported profit before interest and taxation to headline PBIT is provided in note 31. Reported profit before interest and taxation is reconciled to reported profit

before taxation in the consolidated income statement.

3 Net sales margin is defined in note 31.

186 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Notes to the consolidated financial statements

Other information
2015
Advertising and Media Investment Management
Data Investment Management
Public Relations & Public Affairs
Branding & Identity, Healthcare and Specialist
Communications

2014
Advertising and Media Investment Management
Data Investment Management
Public Relations & Public Affairs
Branding & Identity, Healthcare and Specialist
Communications

2013
Advertising and Media Investment Management
Data Investment Management
Public Relations & Public Affairs
Branding & Identity, Healthcare and Specialist
Communications

Share-based
payments
£m

Capital
additions1

£m

55.4
13.7
6.7

23.2
99.0

48.6
18.8
7.9

26.9
102.2

55.5
19.2
5.9

24.8
105.4

119.7
58.1
9.1

59.5
246.4

91.0
48.1
7.4

67.9
214.4

127.2
62.8
14.2

70.2
274.4

Depreciation
and
amortisation2

£m

96.9
51.8
9.8

69.9
228.4

102.6
50.9
12.6

62.8
228.9

102.2
53.7
15.3

63.5
234.7

Goodwill
impairment
£m

Share of
results of
associates
£m

Interests in
associates and
joint ventures
£m

15.1
–
–

–
15.1

16.9
–
–

–
16.9

–
–
12.0

11.3
23.3

26.8
0.8
2.3

17.1
47.0

25.1
18.4
3.9

14.5
61.9

35.0
20.2
1.5

11.4
68.1

377.0
86.4
92.0

203.2
758.6

395.5
119.3
60.1

185.0
759.9

486.3
105.5
45.3

155.7
792.8

Notes
1 Capital additions include purchases of property, plant and equipment and other intangible assets (including capitalised computer software).
2 Depreciation of property, plant and equipment and amortisation of other intangible assets.

Balance sheet
2015
Advertising and Media Investment Management
Data Investment Management
Public Relations & Public Affairs
Branding & Identity, Healthcare and Specialist
Communications

2014
Advertising and Media Investment Management
Data Investment Management
Public Relations & Public Affairs
Branding & Identity, Healthcare and Specialist
Communications

2013
Advertising and Media Investment Management
Data Investment Management
Public Relations & Public Affairs
Branding & Identity, Healthcare and Specialist
Communications

Segment
assets
£m

Unallocated
corporate

assets1,2
£m

Assets
Consolidated
total
assets
£m

Segment
liabilities
£m

Unallocated
corporate
liabilities1,2

£m

Liabilities
Consolidated
total
liabilities
£m

12,911.4
3,713.3
1,839.2

7,640.2
26,104.1

12,250.5
3,427.1
1,744.7

6,433.5
23,855.8

11,787.6
3,330.2
1,693.7

5,716.9
22,528.4

(10,506.9)
(1,067.0)
(425.1)

(1,990.4)
(13,989.4)

(9,803.5)
(1,045.7)
(400.0)

(1,622.3)
(12,871.5)

(8,919.1)
(960.0)
(350.6)

(1,333.8)
(11,563.5)

2,645.1

28,749.2

2,767.1

26,622.9

2,447.1

24,975.5

(6,744.0)

(20,733.4)

(5,924.6)

(18,796.1)

(5,565.5)

(17,129.0)

Notes
1 Included in unallocated corporate assets and liabilities are corporate income tax, deferred tax and net interest-bearing debt.
2 As described in note 15, prior year balance sheets have been restated to reduce both deferred tax assets and deferred tax liabilities, by a corresponding amount.

WPP ANNUAL REPORT 2015

187

Our 2015 financial statements
Notes to the consolidated financial statements

Contributions by geographical area were as follows:

Revenue1
North America2
UK
Western
Continental Europe
Asia Pacific, Latin
America, Africa &
Middle East and
Central & Eastern
Europe

Net sales
North America2
UK
Western
Continental Europe
Asia Pacific, Latin
America, Africa &
Middle East and
Central & Eastern
Europe

Headline PBIT3
North America2
UK
Western
Continental Europe
Asia Pacific, Latin
America, Africa &
Middle East and
Central & Eastern
Europe

Net sales margin4
North America2
UK
Western
Continental Europe
Asia Pacific, Latin
America, Africa &
Middle East and
Central & Eastern
Europe

2015
£m

4,491.2
1,777.4

2,425.6

2014
£m

3,899.9
1,640.3

2013
£m

3,744.7
1,414.0

2,568.8

2,592.6

Non-current assets1
North America2
UK
Western
Continental Europe
Asia Pacific, Latin America, Africa & Middle
East and Central & Eastern Europe

Notes
1 Non-current assets excluding financial instruments and deferred tax.
2 North America includes the US with non-current assets of £5,202.6 million

(2014: £5,101.0 million).

3. Operating costs

3,541.0
12,235.2

3,419.9
11,528.9

3,268.1
11,019.4

3,882.3
1,504.5

2,016.2

3,471.7
1,396.0

3,547.0
1,303.9

2,142.6

2,217.8

3,121.3
10,524.3

3,054.5
10,064.8

3,007.4
10,076.1

728.2
243.1

277.2

621.8
221.2

277.2

616.5
204.7

272.0

525.5
1,774.0

560.4
1,680.6

568.4
1,661.6

Margin

18.8%
16.2%

13.7%

16.8%
16.9%

17.9%
15.8%

12.9%

18.3%
16.7%

17.4%
15.7%

18.9%
16.5%

Staff costs (note 5)
Establishment costs
Other operating costs (net)
Total operating costs
Operating costs include:
Goodwill impairment (note 12)
Investment write-downs
Restructuring costs
IT asset write-downs
Amortisation and impairment of acquired
intangible assets (note 12)
Amortisation of other intangible assets
(note 12)
Depreciation of property, plant and
equipment
Losses/(gains) on sale of property, plant
and equipment
Gains on disposal of investments
and subsidiaries
Gains on remeasurement of equity interest
on acquisition of controlling interest
Net foreign exchange gains
Operating lease rentals:
Land and buildings
Sublease income

2015
£m

2014
£m

6,225.3 5,686.9
2,106.4 1,793.9

3,558.6 3,463.8

3,349.7 3,012.0
15,240.0 13,956.6

2014
£m

2015
£m

2013
£m
6,652.6 6,440.5 6,477.1
711.3
727.4
1,513.4 1,405.7 1,461.3
8,892.3 8,557.5 8,665.8

726.3

15.1
78.7
106.2
29.1

16.9
7.3
127.6
–

23.3
0.4
5.0
–

140.1

147.5

179.8

33.7

31.6

32.7

190.0

191.7

195.5

1.1

(0.8)

(0.4)

(131.0)

(186.3)

(6.0)

(165.0)
(10.7)

(9.2)
(2.5)

(30.0)
(1.1)

476.6
(11.3)
465.3
18.3
483.6

466.1
(11.2)
454.9
19.9
474.8

483.0
(13.2)
469.8
21.1
490.9

12.3%

Plant and machinery

In 2015, operating profit includes credits totalling £31.6 million (2014:
£24.9 million, 2013: £19.9 million) relating to the release of excess
provisions and other balances established in respect of acquisitions
completed prior to 2014. Further details of the Group’s approach to
acquisition reserves, as required by IFRS 3 Business Combinations,
are given in note 28.

Investment write-downs of £78.7 million (2014: £7.3 million, 2013:
£0.4 million) relate to certain non-core minority investments in the
US where forecast financial performance and/or liquidity issues indicate
a permanent decline in the recoverability of the Group’s investment.

Notes
1 Intersegment sales have not been separately disclosed as they are not material.
2 North America includes the US with revenue of £4,257.4 million

(2014: £3,664.9 million, 2013: £3,498.1 million), net sales of £3,674.3 million
(2014: £3,254.2 million, 2013: £3,310.8 million) and headline PBIT of £697.3 million
(2014: £588.2 million, 2013: £582.6 million).

3 Headline PBIT is defined in note 31.
4 Net sales margin is defined in note 31.

188 WPP ANNUAL REPORT 2015

In 2015, restructuring costs of £106.2 million (2014: £127.6 million, 2013:
£5.0 million) comprise £69.5 million (2014: £88.7 million, 2013: £nil) of costs
(including £52.0 million of severance costs) arising from a structural
reassessment of certain of the Group’s operations, primarily in the mature
markets of Western Europe and £36.7 million (2014: £38.9 million, 2013:
£5.0 million) of costs resulting from the project to transform and rationalise
the Group’s IT services and infrastructure. In 2015, IT asset write-downs
comprise £29.1 million of accelerated depreciation of IT assets in Asia
and Europe.

Gains on disposal of investments and subsidiaries of £131.0 million
(2014: £186.3 million, 2013: £6.0 million) include £43.6 million of gains
arising on the sale of certain Kantar internet measurement businesses
to comScore Inc in consideration for newly issued equity in the buyer;
£29.7 million of gains arising on the sale of the Group’s minority stake
in e-Rewards; and £30.6 million of gains arising on the Group’s equity
interest in Chime Communications plc following its acquisition by
Providence Equity Partners in conjunction with WPP.

Gains on remeasurement of equity interest on acquisition of controlling
interest in 2015 primarily comprise gains of £131.7 million in relation to
the acquisition of a majority stake in IBOPE in Latin America.

All of the operating costs of the Group are related to administrative expenses.

Auditors’ remuneration:

Fees payable to the Company’s auditors for
the audit of the Company’s annual accounts
The audit of the Company’s subsidiaries
pursuant to legislation

Other services pursuant to legislation
Fees payable to the auditors pursuant to
legislation
Tax advisory services
Tax compliance services

Corporate finance services
Other services1
Total non-audit fees
Total fees

2015
£m

2014
£m

2013
£m

1.5

1.4

16.2
17.7
3.3

21.0
1.8
1.0
2.8
0.2
6.5
9.5
30.5

14.5
15.9
3.1

19.0
2.1
1.0
3.1
0.3
5.4
8.8
27.8

15.1
16.5
3.1

19.6
2.3
1.2
3.5
0.2
4.8
8.5
28.1

Note
1 Other services include audits for earnout purposes and services for expatriate

employees.

Minimum committed annual rentals
Amounts payable in 2016 under leases will be as follows:

In respect of operating
leases which expire:
– within one year
– within two to five

years

– after five years

Plant and machinery
2014
2015
£m
£m

2016
£m

Land and buildings
2014
2015
2016
£m
£m
£m

4.3

5.3

4.1

57.6

66.7

26.3

9.7
0.3
14.3

10.8
0.1
16.2

13.1
0.1
17.3

240.3 223.9 195.2
163.1 139.4 139.7
461.0 430.0 361.2

Our 2015 financial statements
Notes to the consolidated financial statements

Future minimum annual amounts payable under all lease commitments
in existence at 31 December 2015 are as follows:

Year ending 31 December
2016
2017
2018
2019
2020
Later years

4. Share of results of associates
Share of results of associates include:

Share of profit before interest and taxation
Share of exceptional losses
Share of interest and non-controlling
interests
Share of taxation

Minimum
rental
payments
£m

Less
sub-let
rentals
£m

Net
payment
£m

475.3
353.8
321.2
287.9
242.7
1,655.9
3,336.8

467.2
(8.1)
348.3
(5.5)
316.7
(4.5)
284.3
(3.6)
(3.1)
239.6
(7.7) 1,648.2
(32.5) 3,304.3

2015
£m
95.2
(21.8)

(1.7)
(24.7)
47.0

2014
£m
101.8
(7.6)

(3.1)
(29.2)
61.9

2013
£m
111.0
(10.7)

(4.6)
(27.6)
68.1

5. Our people
Our staff numbers averaged 124,930 for the year ended 31 December 2015
against 121,397 in 2014 and 117,115 in 2013. Their geographical distribution
was as follows:

North America
UK
Western Continental Europe
Asia Pacific, Latin America, Africa &
Middle East and Central & Eastern Europe

2014

2015

2013
26,224 26,809 28,093
13,401 12,838 11,925
23,506 23,376 23,559

61,799 58,374 53,538
124,930 121,397 117,115

Their operating sector distribution was as follows:

Advertising and Media Investment
Management
Data Investment Management
Public Relations & Public Affairs
Branding & Identity, Healthcare and
Specialist Communications

2015

2014

2013

53,227 52,329 49,505
28,395 28,240 29,586
8,298
8,392

8,492

34,816 32,436 29,726
124,930 121,397 117,115

At the end of 2015 staff numbers were 128,123 (2014: 123,621, 2013: 119,116).
Including all employees of associated undertakings, this figure was
approximately 190,000 at 31 December 2015 (2014: 179,000, 2013: 175,000).

WPP ANNUAL REPORT 2015

189

Our 2015 financial statements
Notes to the consolidated financial statements

Staff costs include:

Wages and salaries
Cash-based incentive plans
Share-based incentive plans (note 22)
Social security costs
Pension costs (note 23)
Severance
Other staff costs1

Staff cost to net sales ratio

2014
£m

2015
£m

2013
£m
4,578.4 4,467.8 4,481.4
222.2
210.7
105.4
102.2
577.3
567.8
151.3
148.9
37.4
26.9
912.6
905.7
6,652.6 6,440.5 6,477.1
63.2% 64.0% 64.3%

231.8
99.0
578.4
160.0
24.0
981.0

Average borrowings under the Revolving Credit Facilities (note 10) amounted
to the equivalent of $45 million at an average interest rate of 0.76%.

Average borrowings under the US Commercial Paper Program for 2015
amounted to $372 million at an average interest rate of 0.51% inclusive
of margin.

7. Taxation
The headline tax rate was 19.0% (2014: 20.0%, 2013: 20.2%). The tax rate
on reported PBT was 16.6% (2014: 20.7%, 2013: 21.9%). The reported tax
rate is lower than the headline tax rate and is due to most of the gains
on disposals of investments and subsidiaries and the gains on
remeasurement of equity interests not being taxable. The cash tax rate
on headline PBT was 18.6% (2014: 19.2%, 2013: 18.7%).

Note
1 Freelance and temporary staff costs are included in other staff costs.

The tax charge comprises:

Included above are charges of £16.7 million (2014: £16.9 million,
2013: £16.9 million) for share-based incentive plans in respect of key
management personnel (who comprise the directors of the Group).
Further details of compensation for key management personnel are
disclosed on pages 121 to 153.

6. Finance income, finance costs and revaluation of financial
instruments
Finance income includes:

Income from available for sale investments
Interest income

Finance costs include:

Net interest expense on pension plans
(note 23)
Interest on other long-term employee
benefits
Interest payable and similar charges1

Revaluation of financial instruments2 include:

Movements in fair value of treasury
instruments
Movements in fair value of other
derivatives
Revaluation of put options over
non-controlling interests
Revaluation of payments due to vendors
(earnout agreements)

2015
£m
18.9
53.5
72.4

2014
£m
26.0
68.7
94.7

2013
£m
10.1
54.2
64.3

2015
£m

2014
£m

2013
£m

7.3

8.0

11.4

2.5
214.3
224.1

1.9
252.8
262.7

1.7
254.8
267.9

2015
£m

2014
£m

2013
£m

(3.7)

31.3

6.3

15.9

15.0

–

(11.3)

(8.8)

(1.1)

(35.6)
(34.7)

13.2
50.7

15.8
21.0

Notes
1 Interest payable and similar charges are payable on bank overdrafts, bonds and

bank loans held at amortised cost.

2 Financial instruments are held at fair value through profit and loss.

The majority of the Group’s long-term debt is represented by
$2,862 million of US dollar bonds at an average interest rate of 4.48%,
€3,450 million of Eurobonds at an average interest rate of 2.54%
and £600 million of Sterling bonds at an average interest rate of 6.13%.

190 WPP ANNUAL REPORT 2015

Corporation tax
Current year
Prior years

Deferred tax
Current year
Prior years

Tax charge

2015
£m

2014
£m

2013
£m

403.0
(108.4)
294.6

394.9
4.4
399.3

(35.8)
(11.3)
(47.1)
247.5

(93.2)
(5.7)
(98.9)
300.4

359.1
(48.1)
311.0

(19.6)
(7.7)
(27.3)
283.7

The corporation tax credit for prior years in 2015, and also 2013, mainly
comprises the release of a number of separate provisions following the
resolution of tax matters in various countries. In 2014 the deferred tax
credit primarily related to the recognition of temporary differences that
were previously unrecognised.
The tax charge for the year can be reconciled to profit before taxation in
the consolidated income statement as follows:

Profit before taxation
Tax at the corporation tax rate of 20.25%1
Tax effect of share of results of associates
Irrecoverable withholding taxes
Items that are not deductible/(taxable)
in determining taxable profit
Effect of different tax rates of subsidiaries
operating in other jurisdictions
Origination and reversal of unrecognised
temporary differences
Tax losses not recognised or utilised
in the year
Utilisation of tax losses not previously
recognised
Recognition of temporary differences
not previously recognised
Net release of prior-year provisions
in relation to acquired businesses
Other prior-year adjustments
Tax charge
Effective tax rate on profit before tax

2014
£m

2015
£m

2013
£m
1,492.6 1,451.9 1,295.8
301.3
312.2
(15.8)
(13.3)
30.7
24.2

302.3
(9.5)
25.7

25.4

14.2

(27.3)

49.9

12.9

17.6

0.4

4.0

10.6

35.5

52.1

40.6

(10.4)

(42.2)

(28.3)

(20.6)

(69.0)

(14.8)

(11.6)
(17.4)
(22.9)
(44.2)
16.1
(96.8)
283.7
300.4
247.5
16.6% 20.7% 21.9%

Note
1 The parent company of the Group is tax resident in the UK. As such, the tax rate
in the tax reconciliation for 2015 is the blended UK corporation tax rate of 20.25%
(2014: 21.5%, 2013: 23.25%).

The calculation of the headline tax rate is as follows:

Headline PBT1
Tax charge
Tax charge relating to gains on disposal
of investments and subsidiaries
Tax credit relating to restructuring costs
Deferred tax relating to gains on disposal
of investments and subsidiaries
Deferred tax impact of the amortisation
of acquired intangible assets and other
goodwill items
Headline tax charge
Headline tax rate

Note
1 Headline PBT is defined in note 31.

2014
£m

2015
£m

2013
£m
1,622.3 1,512.6 1,458.0
283.7
300.4

247.5

(1.1)
26.5

(21.4)
14.1

–

(13.8)

–
–

–

10.6
23.2
35.4
294.3
302.5
308.3
19.0% 20.0% 20.2%

Factors affecting the tax charge in future years
Factors that may affect the Group’s future tax charge include the
levels and mix of profits in the many countries in which we operate,
the prevailing tax rates in each of those countries and also the foreign
exchange rates that apply to those profits. The tax charge may also
be affected by the impact of acquisitions, disposals and other corporate
restructurings, the resolution of open tax issues, future planning, and the
ability to use brought forward tax losses. Furthermore, changes in local
or international tax rules, for example prompted by the OECD’s emerging
recommendations on Base Erosion and Profit Shifting (a global initiative
to improve the fairness and integrity of tax systems), or new challenges
by tax or competition authorities, may expose us to significant additional
tax liabilities or impact the carrying value of our deferred tax assets,
which would affect the future tax charge.

The Group has a number of open tax returns and is subject to various
ongoing tax audits in respect of which it has recognised potential liabilities,
none of which are individually material. The Group does not currently
expect any material additional charges, or credits, to arise in respect of
these matters, beyond the amounts already provided. Liabilities relating to
these open and judgemental matters are based upon estimates of whether
additional taxes will be due after taking into account external advice
where appropriate. Where the final tax outcome of these matters is different
from the amounts which were initially recorded then such differences will
impact the current and deferred income tax assets and liabilities in the
period in which such determination is made.

Tax risk management
We maintain constructive engagement with the tax authorities and
relevant government representatives, as well as active engagement with
a wide range of international companies and business organisations with
similar issues. We engage advisors and legal counsel to obtain opinions
on tax legislation and principles. We have a Tax Risk Management
Strategy in place which sets out the controls established and our
assessment procedures for decision-making and how we monitor tax
risk. We monitor proposed changes in taxation legislation and ensure
these are taken into account when we consider our future business plans.
Our directors are informed by management of any tax law changes,
the nature and status of any significant ongoing tax audits, and other
developments that could materially affect the Group’s tax position.

Our 2015 financial statements
Notes to the consolidated financial statements

8. Ordinary dividends
Amounts recognised as distributions to equity holders in the year:

Per share
2014 Final
dividend
2015 Interim
dividend

Per ADR1
2014 Final
dividend
2015 Interim
dividend

2015

2014

2013

Pence per share

2015
£m

2014
£m

2013
£m

26.58p 23.65p 19.71p

343.2

309.5

258.0

15.91p 11.62p 10.56p
42.49p 35.27p 30.27p

202.6
545.8

150.5
460.0

139.3
397.3

2015

2014

2013

Cents per share

2015
$m

2014
$m

2013
$m

218.95¢ 185.01¢ 156.22¢

565.5

484.1

409.0

121.62¢ 95.72¢ 82.61¢
340.57¢ 280.73¢ 238.83¢

309.7
875.2

248.0
732.1

218.0
627.0

Proposed final dividend for the year ended 31 December 2015:

Per share
Final dividend

Per ADR1
Final dividend

2015

2014

2013

Pence per share
28.78p 26.58p 23.65p

2015

2014

2013

Cents per ADR
219.99¢ 218.95¢ 185.01¢

Note
1 These figures have been translated for convenience purposes only, using the

approximate average rate for the year shown on page 180. This conversion should
not be construed as a representation that the pound sterling amounts actually
represent, or could be converted into, US dollars at the rates indicated.

The payment of dividends will not have any tax consequences for
the Group.

9. Earnings per share

Basic EPS
The calculation of basic reported and headline EPS is as follows:
2013
2014
1,160.2 1,077.2
936.5
1,229.1 1,135.8 1,088.1

2015

Reported earnings1 (£m)
Headline earnings (£m) (note 31)
Average shares used in basic EPS
calculation (m)
Reported EPS
Headline EPS

1,288.5 1,307.4 1,293.8
72.4p
82.4p
84.1p
86.9p

90.0p
95.4p

Note
1 Reported earnings is equivalent to profit for the year attributable to equity holders

of the parent.

Diluted EPS
The calculation of diluted reported and headline EPS is as follows:

Diluted reported earnings (£m)
Diluted headline earnings (£m)
Average shares used in diluted EPS
calculation (m)
Diluted reported EPS
Diluted headline EPS

2015

2013
2014
1,160.2 1,077.2
947.1
1,229.1 1,135.8 1,098.7

1,313.0 1,337.5 1,360.3
69.6p
80.5p
80.8p
84.9p

88.4p
93.6p

WPP ANNUAL REPORT 2015

191

Our 2015 financial statements
Notes to the consolidated financial statements

Diluted EPS has been calculated based on the diluted reported and diluted
headline earnings amounts above. On 19 May 2009 the Group issued
£450 million 5.75% convertible bonds due May 2014. During the year
ended 31 December 2013, these bonds were converted into 76.5 million
shares. For the year ended 31 December 2013 these convertible bonds
were dilutive and earnings were consequently increased by £10.6 million
for the purpose of the calculation of diluted earnings. At 31 December 2015,
options to purchase 7.0 million ordinary shares (2014: 10.7 million, 2013:
6.0 million) were outstanding, but were excluded from the computation
of diluted earnings per share because the exercise prices of these options
were greater than the average market price of the Group’s shares and,
therefore, their inclusion would have been accretive.

A reconciliation between the shares used in calculating basic and
diluted EPS is as follows:

2015
m

2014
m

2013
m

Average shares used in basic EPS
calculation
Dilutive share options outstanding
Other potentially issuable shares
£450 million 5.75% convertible bonds
Shares used in diluted EPS calculation

1,288.5 1,307.4 1,293.8
6.8
30.8
28.9
1,313.0 1,337.5 1,360.3

4.8
25.3
–

3.5
21.0
–

At 31 December 2015 there were 1,329,366,024 (2014: 1,325,747,724,
2013: 1,348,733,317) ordinary shares in issue.

10. Sources of finance
The following table summarises the equity and debt financing of the
Group, and changes during the year:

Analysis of changes in financing
Beginning of year
Ordinary shares issued
Treasury share cancellations
Net increase in drawings on
bank loans and corporate bonds
Amortisation of financing costs
included in net debt
Other movements
Exchange adjustments
End of year

Shares
2014
£m

2015
£m

Debt
2014
£m

640.6
27.6
–

618.3
25.0
(2.7)

4,523.0 4,123.6
–
–

–
–

–

492.0

465.2

–
–
–
668.2

–
–
–
640.6

7.5
105.0
29.9

6.5
(57.8)
(14.5)
5,157.4 4,523.0

Note
The table above excludes bank overdrafts which fall within cash and cash equivalents
for the purposes of the consolidated cash flow statement.

Shares
At 31 December 2015, the Company’s share base was entirely composed
of ordinary equity share capital and share premium of £668.2 million
(2014: £640.6 million), further details of which are disclosed in note 26.

Debt
US$ bonds The Group has in issue $812 million of 4.75% bonds due
November 2021, $500 million of 3.625% bonds due September 2022,
$750 million of 3.75% bonds due September 2024, $300 million of
5.125% bonds due September 2042 and $500 million of 5.625% bonds
due November 2043.

192 WPP ANNUAL REPORT 2015

Eurobonds In March 2015, the Group issued €252 million of 0.43% bonds
due March 2018 in exchange for €252 million of the 6.65% bonds due
May 2016. Consequently the amount in issue of the 6.625% bonds due
May 2016 has reduced to €498 million. In March 2015, the Group issued
€600 million of 1.625% bonds due March 2030 and in November 2015
issued €600 million of 0.75% bonds due November 2019.

The Group also has in issue €750 million of 3% bonds due November 2023
and €750 million of 2.25% bonds due September 2026.

Sterling bonds The Group has in issue £400 million of 6% bonds due
April 2017 and £200 million of 6.375% bonds due November 2020.

Revolving Credit Facility The Group has a five-year Revolving Credit
Facility of $2.5 billion due July 2020. The Group’s borrowing under
these facilities, which are drawn down predominantly in US dollars
and pounds sterling, averaged the equivalent of $45 million in 2015.
The Group had available undrawn committed credit facilities of
£1,696.8 million at December 2015 (2014: £1,604.5 million).

Borrowings under the Revolving Credit Facility are governed by
certain financial covenants based on the results and financial position
of the Group.

US Commercial Paper Program
The Group operates a commercial paper program using its Revolving
Credit Facility as a backstop. The average commercial paper outstanding
in 2015 was $372 million. There was no US Commercial Paper outstanding
at 31 December 2015.

The following table is an analysis of future anticipated cash flows in
relation to the Group’s debt, on an undiscounted basis which, therefore,
differs from the fair value and carrying value:

Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
Over five years
Debt financing (including interest) under the
Revolving Credit Facility and in relation to
unsecured loan notes
Short-term overdrafts – within one year
Future anticipated cash flows
Effect of discounting/financing rates
Debt financing
Cash and short-term deposits
Net debt

2015
£m
(541.7)
(548.2)
(325.4)
(581.6)
(335.0)
(4,459.5)

2014
£m
(578.4)
(748.4)
(533.7)
(125.7)
(125.7)
(4,192.3)

(6,791.4)
(435.8)
(7,227.2)
1,634.0
(5,593.2)
2,382.4
(3,210.8)

(6,304.2)
(265.1)
(6,569.3)
1,781.2
(4,788.1)
2,512.7
(2,275.4)

Our 2015 financial statements
Notes to the consolidated financial statements

Analysis of fixed and floating rate debt by currency including the effect of
interest rate and cross-currency swaps:

11. Analysis of cash flows
The following tables analyse the items included within the main cash
flow headings on page 182.

2015
Currency
$

€
Other

– fixed
– floating
– fixed
– floating
– fixed

2014
Currency
$

€

Other

– fixed
– floating
– fixed
– floating
– fixed
– floating

Fixed
rate1
4.62%
n/a
6.19%
n/a
2.54%
n/a

Floating
basis
n/a
LIBOR
n/a
LIBOR
n/a
n/a

Period
(months)1
224
n/a
37
n/a
90
n/a

Fixed
rate1
4.56%
n/a
6.19%
n/a
3.96%

Floating
basis
n/a
LIBOR
n/a
LIBOR
n/a
n/a EURIBOR
n/a
n/a

Period
(months)1
234
n/a
58
n/a
89
n/a
n/a

£m
1,052.0
890.7
400.0
200.0
2,544.4
70.3
5,157.4

£m
1,547.2
753.2
400.0
200.0
1,747.7
1.4
(126.5)
4,523.0

Note
1 Weighted average. These rates do not include the effect of gains on interest rate swap

terminations that are written to income over the life of the original instrument.

The following table is an analysis of future anticipated cash flows in
relation to the Group’s financial derivatives, which include interest rate
swaps, cash flow hedges and other foreign exchange swaps:

2015
Within one year
Between one and two
years
Between two and three
years
Between three and four
years
Between four and five
years
Over five years

2014
Within one year
Between one and two
years
Between two and three
years
Between three and four
years
Between four and five
years
Over five years

Financial liabilities
Receivable
£m
50.6

Payable
£m
55.2

Financial assets
Receivable
£m
102.7

Payable
£m
72.4

40.7

17.4

18.4

20.3
834.1
986.1

39.4

277.1

298.1

17.6

19.1

52.8

55.6

56.7

20.8
834.2
981.7

58.1
1,393.6
1,909.6

56.7
1,387.2
1,958.1

Financial liabilities
Receivable
£m
498.5

Payable
£m
632.6

Financial assets
Receivable
£m
642.6

Payable
£m
569.0

1.1

26.1

–

–
–
659.8

0.4

22.0

37.9

25.4

250.2

262.2

–

25.3

24.8

–
–
524.3

26.4
576.4
1,469.3

24.8
570.9
1,563.2

Net cash from operating activities:

Profit for the year
Taxation
Revaluation of financial instruments
Finance costs
Finance income
Share of results of associates
Operating profit
Adjustments for:
Non-cash share-based incentive plans
(including share options)
Depreciation of property, plant and
equipment
Impairment of goodwill
Amortisation and impairment of acquired
intangible assets
Amortisation of other intangible assets
Investment write-downs
Gains on disposal of investments
and subsidiaries
Gains on remeasurement of equity interest
on acquisition of controlling interest
Losses/(gains) on sale of property, plant
and equipment
Operating cash flow before movements in
working capital and provisions
Decrease/(increase) in inventories and
work in progress
Increase in receivables
Increase in payables – short-term
Increase in payables – long-term
Decrease in provisions
Cash generated by operations
Corporation and overseas tax paid
Interest and similar charges paid
Interest received
Investment income
Dividends from associates
Net cash inflow from operating activities

Acquisitions and disposals:

Initial cash consideration
Cash and cash equivalents acquired (net)
Earnout payments
Purchase of other investments (including
associates)
Proceeds on disposal of investments
Acquisitions and disposals
Cash consideration for non-controlling
interests
Net cash outflow

2014
£m

2015
£m

2013
£m
1,245.1 1,151.5 1,012.1
283.7
300.4
(21.0)
(50.7)
267.9
262.7
(64.3)
(94.7)
(68.1)
(61.9)
1,632.0 1,507.3 1,410.3

247.5
34.7
224.1
(72.4)
(47.0)

99.0

102.2

105.4

194.7
15.1

140.1
33.7
78.7

197.3
16.9

147.5
31.6
7.3

202.0
23.3

179.8
32.7
0.4

(131.0)

(186.3)

(6.0)

(165.0)

(9.2)

(30.0)

1.1

(0.8)

(0.4)

1,898.4 1,813.8 1,917.5

(9.7)
(84.0)
390.9
36.5
(38.7)

7.8
(921.7)
787.9
24.2
(62.3)

36.7
(253.3)
67.2
28.3
(12.3)
1,734.3 2,108.8 1,784.1
(273.3)
(289.9)
(301.2)
(254.7)
(249.1)
(212.0)
51.3
69.8
61.3
11.9
10.1
4.9
56.7
52.2
72.6
1,359.9 1,703.7 1,374.2

2015
£m
(463.5)
57.7
(43.9)

2014
£m
(382.7)
74.4
(34.3)

2013
£m
(165.1)
25.0
(27.7)

(283.2)
63.4
(669.5)

(188.8)
42.3
(489.1)

(45.6)
12.0
(201.4)

(23.6)
(693.1)

(5.6)
(494.7)

(19.6)
(221.0)

WPP ANNUAL REPORT 2015

193

Our 2015 financial statements
Notes to the consolidated financial statements

Share repurchases and buy-backs:

12. Intangible assets

Goodwill
The movements in 2015 and 2014 were as follows:

Cost:
1 January 2014
Additions1
Revision of earnout estimates
Exchange adjustments
31 December 2014
Additions1
Revision of earnout estimates
Exchange adjustments
31 December 2015

Accumulated impairment losses and write-downs:
1 January 2014
Impairment losses for the year
Exchange adjustments
31 December 2014
Impairment losses for the year
Exchange adjustments
31 December 2015

Net book value:
31 December 2015
31 December 2014
1 January 2014

£m

10,065.8
514.0
26.4
(23.2)
10,583.0
763.6
19.9
(72.3)
11,294.2

593.0
8.1
2.5
603.6
15.1
4.9
623.6

10,670.6
9,979.4
9,472.8

Note
1 Additions represent goodwill arising on the acquisition of subsidiary undertakings

including the effect of any revisions to fair value adjustments that had been
determined provisionally at the immediately preceding balance sheet date, as
permitted by IFRS 3 Business Combinations. The effect of such revisions was not
material in either year presented. Goodwill arising on the acquisition of associate
undertakings is shown within interests in associates and joint ventures in note 14.

Cash-generating units with significant goodwill as at 31 December are:

GroupM
Kantar
Wunderman
Y&R Advertising
Burson-Marsteller
Other
Total goodwill

2015
£m

2014
£m
2,390.7 2,124.5
2,223.4 1,965.0
1,083.3 1,081.0
978.1
473.2
3,543.7 3,357.6
10,670.6 9,979.4

946.9
482.6

Other goodwill represents goodwill on a large number of cash-generating
units, none of which is individually significant in comparison to the total
carrying value of goodwill.

Purchase of own shares by ESOP Trusts
Shares purchased into treasury
Net cash outflow

Net increase in borrowings:

Proceeds from issue of €600 million bonds
Repayment of €500 million bonds
Premium on exchange of €252 million bonds
Repayment of $369 million bonds
Repayment of $600 million bonds
Repayment of $25 million TNS
private placements
Proceeds from issue of €750 million bonds
Proceeds from issue of $750 million bonds
Proceeds from issue of $500 million bonds
Repayment of €600 million bonds
Repayment of convertible bonds
Increase in drawings on bank loans
Net cash inflow

2015
£m
(181.6)
(406.0)
(587.6)

2014
£m
(98.3)
(412.5)
(510.8)

2013
£m
(179.4)
(17.6)
(197.0)

2015
£m
858.7
(481.9)
(13.7)
–
–

–
–
–
–
–
–
128.9
492.0

2014
£m
–
–
–
(235.3)
(333.7)

(14.6)
588.7
460.1
–
–
–
–
465.2

2013
£m
–
–
–
–
–

–
624.8
–
314.2
(502.1)
(0.1)
–
436.8

Cash and cash equivalents:

Cash at bank and in hand
Short-term bank deposits
Overdrafts1

2014
£m

2015
£m

2013
£m
2,227.8 1,967.0 2,099.1
122.5
545.7
154.6
(338.4)
(265.1)
(435.8)
1,946.6 2,247.6 1,883.2

Note
1 Bank overdrafts are included in cash and cash equivalents because they form an

integral part of the Group’s cash management.

The Group considers that the carrying amount of cash and cash
equivalents approximates their fair value.

194 WPP ANNUAL REPORT 2015

Other intangible assets
The movements in 2015 and 2014 were as follows:

Brands
with an
indefinite
useful life
£m

Acquired
intan-
gibles
£m

Cost:
1 January 2014
Additions
Disposals
New acquisitions
Other movements1
Exchange adjustments
31 December 2014
Additions
Disposals
New acquisitions
Other movements1
Exchange adjustments
31 December 2015

–
–
–
–
11.4

957.9 1,666.4
–
(33.2)
136.3
12.0
2.7
969.3 1,784.2
–
–
230.7
6.7
(14.5)
968.1 2,007.1

–
–
–
–
(1.2)

Other
£m

Total
£m

36.5
(16.2)
2.7
4.0
1.8

284.2 2,908.5
36.5
(49.4)
139.0
16.0
15.9
313.0 3,066.5
36.1
36.1
(19.2)
(19.2)
233.1
2.4
2.6
(4.1)
(12.9)
2.8
331.0 3,306.2

Amortisation and impairment:
1 January 2014
Charge for the year
Disposals
Other movements
Exchange adjustments
31 December 2014
Charge for the year
Disposals
IT asset write-downs
Other movements
Exchange adjustments
31 December 2015

Net book value:
31 December 2015
31 December 2014
1 January 2014

– 1,052.8
144.7
–
(26.9)
–
–
–
–
16.7
– 1,187.3
135.7
–
–
–
–
–
–
–
–
16.5
– 1,339.5

187.9 1,240.7
176.3
31.6
(42.3)
(15.4)
2.2
2.2
20.7
4.0
210.3 1,397.6
169.4
33.7
(18.3)
(18.3)
29.1
29.1
(7.3)
(7.3)
20.3
3.8
251.3 1,590.8

968.1
969.3
957.9

667.6
596.9
613.6

79.7 1,715.4
102.7 1,668.9
96.3 1,667.8

Note
1 Other movements in acquired intangibles include revisions to fair value adjustments

arising on the acquisition of subsidiary undertakings that had been determined
provisionally at the immediately preceding balance sheet date, as permitted by
IFRS 3 Business Combinations.

Brands with an indefinite life are carried at historical cost in accordance
with the Group’s accounting policy for intangible assets. The carrying
values of the separately identifiable brands are not individually
significant in comparison with the total carrying value of brands with
an indefinite useful life.

Acquired intangible assets at net book value at 31 December 2015
include brand names of £401.0 million (2014: £393.0 million), customer-
related intangibles of £239.9 million (2014: £197.8 million), and other
assets (including proprietary tools) of £26.7 million (2014: £6.1 million).

The total amortisation and impairment of acquired intangible
assets of £140.1 million (2014: £147.5 million) includes £4.4 million
(2014: £2.8 million) in relation to associates.

Our 2015 financial statements
Notes to the consolidated financial statements

In accordance with the Group’s accounting policy, the carrying values
of goodwill and intangible assets with indefinite useful lives are reviewed
for impairment annually or more frequently if events or changes in
circumstances indicate that the asset might be impaired.

The carrying values of brands with an indefinite useful life are assessed
for impairment purposes by using the royalty and loyalty methods of
valuation, both of which utilise the net present value of future cash flows
associated with the brands.

The goodwill impairment review is undertaken annually on 30 September.
The review assessed whether the carrying value of goodwill was
supported by the net present value of future cash flows, using a pre-tax
discount rate of 8.5% (2014: 9.0%) and management forecasts for a
projection period of up to five years, followed by an assumed annual
long-term growth rate of 3.0% (2014: 3.0%) and no assumed improvement
in operating margin. Management have made the judgement that this
long-term growth rate does not exceed the long-term average growth rate
for the industry.

The goodwill impairment charge of £15.1 million (2014: £16.9 million)
relates to a number of under-performing businesses in the Group, of
which £nil (2014: £8.8 million) is in relation to associates. In certain
markets, the impact of local economic conditions and trading
circumstances on these businesses was sufficiently severe to indicate
impairment to the carrying value of goodwill.

Under IFRS, an impairment charge is required for both goodwill and
other indefinite-lived assets when the carrying amount exceeds the
‘recoverable amount’, defined as the higher of fair value less costs to
sell and value in use.

Our approach in determining the recoverable amount utilises a
discounted cash flow methodology, which necessarily involves making
numerous estimates and assumptions regarding revenue growth,
operating margins, appropriate discount rates and working capital
requirements. The key assumptions used for estimating cash flow
projections in the Group’s impairment testing are those relating to revenue
growth and operating margin. The key assumptions take account of the
businesses’ expectations for the projection period. These expectations
consider the macroeconomic environment, industry and market
conditions, the unit’s historical performance and any other circumstances
particular to the unit, such as business strategy and client mix.

These estimates will likely differ from future actual results of operations
and cash flows, and it is possible that these differences could be material.
In addition, judgements are applied in determining the level of
cash-generating unit identified for impairment testing and the criteria
used to determine which assets should be aggregated. A difference in
testing levels could affect whether an impairment is recorded and the
extent of impairment loss. Changes in our business activities or structure
may also result in changes to the level of testing in future periods.
Further, future events could cause the Group to conclude that impairment
indicators exist and that the asset values associated with a given
operation have become impaired. Any resulting impairment loss could
have a material impact on the Group’s financial condition and results
of operations.

Historically our impairment losses have resulted from a specific event,
condition or circumstance in one of our companies, such as the loss of a
significant client. As a result, changes in the assumptions used in our
impairment model have not had a significant effect on the impairment
charges recognised and a reasonably possible change in assumptions
would not lead to a significant impairment. The carrying value of
goodwill and other intangible assets will continue to be reviewed at
least annually for impairment and adjusted to the recoverable amount
if required.

WPP ANNUAL REPORT 2015

195

Our 2015 financial statements
Notes to the consolidated financial statements

13. Property, plant and equipment
The movements in 2015 and 2014 were as follows:

14. Interests in associates, joint ventures and other investments
The movements in 2015 and 2014 were as follows:

Free-
hold
build-
ings
£m

Lease-
hold
buildings
£m

Fixtures,
fittings
and
equip-
ment
£m

Com-
puter
equip-
ment
£m

Total
£m

105.8
0.7
0.1
(0.5)

4.2
110.3
0.4
1.2
(12.6)

741.3
61.9
4.0
(43.1)

20.6
784.7
107.2
2.2
(68.2)

325.8
39.0
9.8
(30.8)

(9.1)
334.7
39.4
13.3
(37.7)

605.8 1,815.8
177.9
20.6
(155.9)

76.3
6.7
(81.5)

(8.9)

6.8
598.4 1,865.2
210.3
21.1
(174.4)

63.3
4.4
(55.9)

2.9
102.2

11.5
837.4

(11.4)
338.3

(7.3)

(4.3)
602.9 1,917.9

19.8
4.5
(1.0)

(0.8)
22.5
5.2
(7.7)

372.9
68.9
(40.3)

10.9
412.4
70.5
(64.8)

191.7
41.1
(26.6)

458.1 1,042.5
197.3
(148.3)

82.8
(80.4)

(2.8)
203.4
40.9
(29.5)

(6.1)

1.2
454.4 1,092.7
194.7
(156.5)

78.1
(54.5)

(0.8)
19.2

5.1
423.2

(5.9)
208.9

(9.1)

(10.7)
468.9 1,120.2

Land
£m

37.1
–
–
–

–
37.1
–
–
–

–
37.1

–
–
–

–
–
–
–

–
–

37.1
37.1
37.1

83.0
87.8
86.0

414.2
372.3
368.4

129.4
131.3
134.1

134.0
144.0
147.7

797.7
772.5
773.3

Cost:
1 January 2014
Additions
New acquisitions
Disposals
Exchange
adjustments
31 December 2014
Additions
New acquisitions
Disposals
Exchange
adjustments
31 December 2015

Depreciation:
1 January 2014
Charge for the year
Disposals
Exchange
adjustments
31 December 2014
Charge for the year
Disposals
Exchange
adjustments
31 December 2015

Net book value:
31 December 2015
31 December 2014
1 January 2014

At the end of the year, capital commitments contracted, but not
provided for in respect of property, plant and equipment were
£61.3 million (2014: £60.9 million).

196 WPP ANNUAL REPORT 2015

Goodwill
and other
intang-
ibles of
associates
and joint
ventures
£m
397.4
–

Net
assets of
associates
and joint
ventures
£m
395.4
70.1

Total
associates
and joint
ventures
£m
792.8
70.1

Other
invest-
ments
£m
270.6
340.0

–

61.9
(52.2)
9.7
(9.1)
(0.2)

0.2

–
–
3.9
(1.5)
(0.1)

0.2

–

61.9
(52.2)
13.6
(10.6)
(0.3)

–
–
10.6
5.9
(15.2)

(56.4)

(47.6)

(104.0)

–

64.6

–
–
–
419.2
(18.7)

(2.8)
(8.8)
–
340.7
–

(2.8)
(8.8)
–
759.9
(18.7)

–
–
(7.3)
669.2
357.1

–

124.8

–

47.0
(75.1)
5.1
(7.9)
(46.7)

–
–
5.7
(5.8)
(1.6)

47.0
(75.1)
10.8
(13.7)
(48.3)

–
–
–
18.9
(13.8)

11.2

(34.9)

(23.7)

–

206.0

–
–
334.1

(4.4)
–
424.5

(4.4)
–
758.6

–
(78.7)
1,158.7

1 January 2014
Additions
Goodwill arising on
acquisition of new
associates
Share of results of associate
undertakings (note 4)
Dividends
Other movements
Exchange adjustments
Disposals
Reclassification to
subsidiaries
Revaluation of other
investments
Amortisation of other
intangible assets
Goodwill impairment
Write-downs
31 December 2014
Additions
Goodwill arising on
acquisition of new
associates
Share of results of associate
undertakings (note 4)
Dividends
Other movements
Exchange adjustments
Disposals
Reclassification from/(to)
subsidiaries
Revaluation of other
investments
Amortisation of other
intangible assets
Write-downs
31 December 2015

The investments included above as ‘other investments’ represent
investments in equity securities that present the Group with opportunity
for return through dividend income and trading gains. They have no
fixed maturity or coupon rate. The fair values of the listed securities are
based on quoted market prices. For unlisted securities, where market
value is not available, the Group has estimated relevant fair values on
the basis of publicly available information from outside sources or on
the basis of discounted cash flow models where appropriate.

The carrying values of the Group’s associates and joint ventures
are reviewed for impairment in accordance with the Group’s
accounting policies.

The Group’s principal associates and joint ventures at 31 December 2015
included:

Asatsu-DK Inc.
Barrows Design and Manufacturing (Pty)
Limited
Chime Communications Ltd
CTR Market Research Company Limited
CVSC Sofres Media Co Limited
GIIR Inc
Globant S.A.1
Grass Roots Group plc
Haworth Marketing & Media Company
High Co SA
Marktest Investimentos SGPS S.A.
Nanjing Yindu Advertising Agency
Singleton, Ogilvy & Mather (Holdings) Pty
Limited
Smollan Holdings (Pty) Ltd
STW Communications Group Limited2

%
owned
24.6

Country of
incorporation
Japan

35.0
27.8
46.0
40.0
30.0
19.8
44.8
49.0
34.1
43.1
49.0

33.3
25.4
23.5

South Africa
UK
China
China
Korea
Argentina
UK
USA
France
Portugal
China

Australia
South Africa
Australia

Notes
1 Although the Group holds less than 20% of Globant S.A, it is considered to be an

associate as the Group exercises significant influence over the entity.

2 STW Communications Group Limited merged with the Australian and New Zealand
businesses of WPP following STW shareholder approval at an Extraordinary General
Meeting held on 4 April 2016. As a result of this transaction, WPP will have a
majority shareholding.

The market value of the Group’s shares in its principal listed associate
undertakings at 31 December 2015 was as follows: Asatsu-DK Inc:
£171.6 million, GIIR Inc: £25.2 million, Globant SA: £170.3 million,
High Co SA: £27.2 million and STW Communications Group Limited:
£40.0 million (2014: Asatsu-DK Inc: £160.9 million, GIIR Inc: £22.4 million,
Globant SA: £104.5 million, High Co SA: £13.6 million and STW
Communications Group Limited: £40.3 million).

The carrying value (including goodwill and other intangibles) of
these equity interests in the Group’s consolidated balance sheet at
31 December 2015 was as follows: Asatsu-DK Inc: £120.1 million, GIIR
Inc: £30.4 million, Globant SA: £61.9 million, High Co SA: £28.6 million and
STW Communications Group Limited: £70.4 million (2014: Asatsu-DK Inc:
£140.4 million, GIIR Inc: £30.0 million, Globant SA: £57.4 million, High Co
SA: £28.9 million and STW Communications Group Limited: £71.4 million).

Where the market value of the Group’s listed associates is less than
the carrying value, an impairment review is performed utilising the
discounted cash flow methodology discussed in note 12.

The Group’s investments in its principal associate undertakings are
represented by ordinary shares.

Our 2015 financial statements
Notes to the consolidated financial statements

Summarised financial information
The following tables present a summary of the aggregate financial
performance and net asset position of the Group’s associate undertakings
and joint ventures. These have been estimated and converted, where
appropriate, to an IFRS presentation based on information provided by
the relevant companies at 31 December 2015.

Income statement
Revenue
Operating profit
Profit before taxation
Profit for the year

Balance sheet
Assets
Liabilities
Net assets

2015
£m

2014
£m

2013
£m

2,049.5 2,246.5 2,366.7
274.8
280.6
261.5
267.0
188.8
183.0

283.7
236.5
162.0

2015
£m

2014
£m

2013
£m

3,912.4 4,380.3
(1,906.2) (1,823.9)
2,006.2 2,556.4

5,027.4
(2,411.9)
2,615.5

The application of equity accounting is ordinarily discontinued when
the investment is reduced to zero and additional losses are not provided
for unless the Group has guaranteed obligations of the investee or is
otherwise committed to provide further financial support for the investee.

At the end of the year, capital commitments contracted, but not
provided for in respect of interests in associates and other investments
were £93.1 million (2014: £42.4 million).

15. Deferred tax
The Group’s deferred tax assets and liabilities are measured at the end
of each period in accordance with IAS 12 Income taxes. The recognition
of deferred tax assets is determined by reference to the Group’s estimate
of recoverability, using models where appropriate to forecast future
taxable profits.

Deferred tax assets have only been recognised for territories where the
Group considers that it is probable there would be sufficient taxable profits
for the future deductions to be utilised.

Based on available evidence, both positive and negative, we determine
whether it is probable that all or a portion of the deferred tax assets will
be realised. The main factors that we consider include:

– the future earnings potential determined through the use of internal

forecasts;

– the cumulative losses in recent years;
– the various jurisdictions in which the potential deferred tax assets arise;
– the history of losses carried forward and other tax assets expiring;
– the timing of future reversal of taxable temporary differences;
– the expiry period associated with the deferred tax assets; and
– the nature of the income that can be used to realise the deferred

tax asset.

If it is probable that some portion of these assets will not be realised, then
no asset is recognised in relation to that portion.

If market conditions improve and future results of operations exceed our
current expectations, our existing recognised deferred tax assets may be
adjusted, resulting in future tax benefits. Alternatively, if market conditions
deteriorate further or future results of operations are less than expected,
future assessments may result in a determination that some or all of the
deferred tax assets are not realisable. As a result, all or a portion of the
deferred tax assets may need to be reversed.

WPP ANNUAL REPORT 2015

197

Our 2015 financial statements
Notes to the consolidated financial statements

Certain deferred tax assets and liabilities have been offset as they relate to the same tax group. The following is the analysis of the deferred tax
balances for financial reporting purposes:

Deferred tax assets
Deferred tax liabilities

Gross
2015
£m
410.7
(868.9)
(458.2)

Offset
2015
£m
(316.6)
316.6
–

As
reported
2015
£m
94.1
(552.3)
(458.2)

Gross
2014
£m
406.8
(834.7)
(427.9)

Offset
2014
£m
(298.0)
298.0
–

As
reported
2014
£m
108.8
(536.7)
(427.9)

Gross
2013
£m
224.3
(755.6)
(531.3)

Offset
2013
£m
(134.8)
134.8
–

As
reported
2013
£m
89.5
(620.8)
(531.3)

The Group has restated the consolidated balance sheets at 31 December 2014 and 31 December 2013 to reduce both the deferred tax assets and
the deferred tax liabilities shown in each year by £130.9 million and £29.9 million respectively. This restatement offsets certain deferred tax assets
and liabilities relating to the same tax group. There was no impact on the Group’s net income or net assets.

The following are the major gross deferred tax assets recognised by the Group and movements thereon in 2015 and 2014:

Deferred
compensation
£m
1.1

Accounting
provisions
& accruals
£m
45.8

Retirement
benefit
obligations
£m
19.0

Property,
plant &
equipment
£m
31.3

Tax losses
& credits
£m
34.0

Share-based
payments
£m
86.3

Restructuring
provisions
£m
–

Other
temporary
differences
£m
6.8

Total
£m
224.3

44.5

–
–
(0.1)
45.5

(5.8)

–
–
2.2

–
41.9

9.2

–
–
(3.5)
51.5

(2.9)

–
–
0.9

–
49.5

18.0

62.1
–
7.3
106.4

(12.0)

(5.2)
–
1.8

–
91.0

8.7

–
–
1.4
41.4

2.1

–
–
1.2

–
44.7

12.3

–
–
1.8
48.1

20.4

–
–
2.8

–
71.3

(1.2)

–
(17.1)
3.5
71.5

(3.3)

–
6.4
4.2

–
78.8

19.3

–
–
1.1
20.4

11.2

–
–
(0.5)

(14.2)
16.9

14.6

125.4

–
–
0.6
22.0

62.1
(17.1)
12.1
406.8

(5.1)

4.6

–
–
(0.3)

(5.2)
6.4
12.3

–
16.6

(14.2)
410.7

1 January 2014
Credit/(charge) to
income
Credit to other
comprehensive income
Charge to equity
Exchange differences
31 December 2014
(Charge)/credit to
income
Charge to
comprehensive income
Credit to equity
Exchange differences
Transfer to current tax
creditor
31 December 2015

Other temporary differences comprise a number of items including tax deductible goodwill, none of which is individually significant to the Group’s
consolidated balance sheet.

In addition the Group has recognised the following gross deferred tax liabilities and movements thereon in 2015 and 2014:

1 January 2014
Acquisition of subsidiaries
(Credit)/charge to income
Exchange adjustments
31 December 2014
Acquisition of subsidiaries
(Credit)/charge to income
Exchange differences
31 December 2015

Brands
and other
intangibles
£m
564.6
36.0
(44.6)
2.2
558.2
73.4
(44.2)
(10.3)
577.1

Associate
earnings
£m
21.5
–
(1.7)
(0.2)
19.6
–
2.7
0.2
22.5

Goodwill
£m
135.5
–
19.0
9.2
163.7
–
4.7
8.3
176.7

Property,
plant &
equipment
£m
29.6
–
(0.7)
1.9
30.8
–
(1.6)
1.7
30.9

Financial
instruments
£m
–
–
47.0
2.7
49.7
–
(1.8)
2.8
50.7

Other
temporary
differences
£m
4.4
–
7.5
0.8
12.7
0.4
(2.4)
0.3
11.0

Total
£m
755.6
36.0
26.5
16.6
834.7
73.8
(42.6)
3.0
868.9

198 WPP ANNUAL REPORT 2015

At the balance sheet date, the Group has gross tax losses and other
temporary differences of £4,581.9 million (2014: £4,840.6 million) available
for offset against future profits. Deferred tax assets have been recognised
in respect of the tax benefit of £1,186.3 million (2014: £1,262.1 million) of
such tax losses and other temporary differences. No deferred tax asset
has been recognised in respect of the remaining £3,395.6 million (2014:
£3,578.5 million) of losses and other temporary differences as the Group
considers that there will not be enough taxable profits in the entities
concerned such that any additional asset could be considered
recoverable. Included in the total unrecognised temporary differences
are losses of £42.3 million that will expire within 1–10 years, and
£3,067.7 million of losses that may be carried forward indefinitely.

At the balance sheet date, the aggregate amount of the temporary
differences in relation to the investment in subsidiaries for which deferred
tax liabilities have not been recognised was £2,311.7 million. No liability
has been recognised in respect of these differences because the Group
is in a position to control the timing of the reversal of the temporary
differences and the Group considers that it is probable that such
differences will not reverse in the foreseeable future.

16. Inventory and work in progress
The following are included in the net book value of inventory and work
in progress:

Work in progress
Inventory

17. Trade and other receivables
The following are included in trade and other receivables:

Amounts falling due within one year:

2015
£m
315.1
13.9
329.0

2014
£m
313.7
13.6
327.3

Trade receivables (net of bad debt provision)
VAT and sales taxes recoverable
Prepayments
Accrued income
Fair value of derivatives
Other debtors

2015
£m

154.9
235.0

2014
£m
6,799.4 6,337.6
116.0
222.1
2,853.8 2,401.5
11.4
441.4
10,495.4 9,530.0

4.6
447.7

Our 2015 financial statements
Notes to the consolidated financial statements

The ageing of trade receivables and other financial assets is as follows:

Carrying
amount
at 31
December
2015
£m

Neither
past
due nor
impaired
£m

0-30
days
£m

31-90
days
£m

91-180
days
£m

181
days-
1 year
£m

Greater
than 1
year
£m

6,799.4 4,290.7 1,704.0 631.9 133.0

35.4

4.4

453.5

5.1
7,252.9 4,556.4 1,811.6 655.7 138.1

265.7

107.6

23.8

19.1
54.5

32.2
36.6

Carrying
amount
at 31
December
2014
£m

Neither
past
due nor
impaired
£m

0-30
days
£m

31-90
days
£m

91-180
days
£m

181
days-
1 year
£m

Greater
than
1 year
£m

6,337.6 4,069.0 1,457.3 659.3 120.6

30.8

0.6

440.3
6,777.9

310.0

8.8
4,379.0 1,533.2 673.7 129.4

14.4

75.9

13.8
44.6

17.4
18.0

2015
Trade
receivables
Other
financial
assets

2014
Trade
receivables
Other
financial
assets

Other financial assets are included in other debtors.

Past due amounts are not impaired where collection is considered likely.

Amounts falling due after more than one year:

Prepayments
Accrued income
Other debtors
Fair value of derivatives

Movements on bad debt provisions were as follows:

Balance at beginning of year
New acquisitions
Charged to operating costs
Exchange adjustments
Utilisations and other movements
Balance at end of year

2015
£m
1.5
5.8
131.7
39.7
178.7

2015
£m
85.3
1.0
21.6
0.2
(22.7)
85.4

2014
£m
1.9
7.0
97.8
41.9
148.6

2014
£m
92.8
3.2
18.9
0.3
(29.9)
85.3

The allowance for bad and doubtful debts is equivalent to 1.2%
(2014: 1.3%) of gross trade accounts receivables.

The Group considers that the carrying amount of trade and other
receivables approximates their fair value.

WPP ANNUAL REPORT 2015

199

As of 31 December 2015, the potential undiscounted amount of future
payments that could be required under the earnout agreements for
acquisitions completed in the current year and for all earnout agreements
range from £nil to £378 million (2014: £nil to £362 million) and £nil to
£1,645 million (2014: £nil to £1,329 million), respectively. The increase
in the maximum potential undiscounted amount of future payments
for all earnout agreements is due to earnout arrangements related to
new acquisitions partially offset by earnout arrangements that have
completed and payments made on active arrangements during the year.

20. Bank overdrafts, bonds and bank loans
Amounts falling due within one year:

Bank overdrafts
Corporate bonds and bank loans

2015
£m
435.8
496.2
932.0

2014
£m
265.1
388.1
653.2

The Group considers that the carrying amount of bank overdrafts
approximates their fair value.

Amounts falling due after more than one year:

Corporate bonds and bank loans

2015
£m

2014
£m
4,661.2 4,134.9

The Group estimates that the fair value of corporate bonds is £5,207.4 million
at 31 December 2015 (2014: £4,944.8 million). The Group considers that the
carrying amount of bank loans approximates their fair value. The fair
values of the corporate bonds are based on quoted market prices.

The corporate bonds, bank loans and overdrafts included within liabilities
fall due for repayment as follows:

Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
Over five years

2015
£m
932.0
413.6
174.7
440.6
194.2

2014
£m
653.2
581.9
413.9
–
–
3,438.1 3,139.1
5,593.2 4,788.1

Our 2015 financial statements
Notes to the consolidated financial statements

18. Trade and other payables: amounts falling due within one year
The following are included in trade and other payables falling due within
one year:

Trade payables
Payments due to vendors (earnout agreements)
Liabilities in respect of put option agreements
with vendors
Deferred income
Fair value of derivatives
Share purchases – close period commitments
Other creditors and accruals

2015
£m
8,538.3
126.0

2014
£m
7,846.3
67.1

51.1
1,081.0
0.7
–

27.7
990.4
75.0
78.8
2,887.9 2,698.7
12,685.0 11,784.0

The Group considers that the carrying amount of trade and other
payables approximates their fair value.

19. Trade and other payables: amounts falling due after more than
one year
The following are included in trade and other payables falling due after
more than one year:

Payments due to vendors (earnout agreements)
Liabilities in respect of put option agreements
with vendors
Fair value of derivatives
Other creditors and accruals

2015
£m
455.3

183.3
2.3
250.6
891.5

2014
£m
244.3

157.2
2.1
221.3
624.9

The Group considers that the carrying amount of trade and other
payables approximates their fair value.

The following tables set out payments due to vendors, comprising
deferred consideration and the directors’ best estimates of future
earnout-related obligations:

Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
Over five years

At the beginning of the year
Earnouts paid (note 11)
New acquisitions
Revision of estimates taken to goodwill (note 12)
Revaluation of payments due to vendors (note 6)
Exchange adjustments
At the end of the year

2015
£m
126.0
104.9
105.1
110.9
122.5
11.9
581.3

2015
£m
311.4
(43.9)
262.2
19.9
35.6
(3.9)
581.3

2014
£m
67.1
67.4
65.1
34.6
51.9
25.3
311.4

2014
£m
193.5
(34.3)
136.0
26.4
(13.2)
3.0
311.4

200 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Notes to the consolidated financial statements

21. Provisions for liabilities and charges
The movements in 2015 and 2014 were as follows:

1 January 2014
Charged to the income statement
Acquisitions1
Utilised
Released to the income statement
Transfers
Exchange adjustments
31 December 2014
Charged to the income statement
Acquisitions1
Utilised
Released to the income statement
Transfers
Exchange adjustments
31 December 2015

Property
£m
37.3
16.4
2.1
(6.0)
(5.4)
0.1
–
44.5
9.2
13.3
(7.2)
(2.8)
(3.0)
(1.3)
52.7

Other
£m
110.4
15.5
7.7
(9.2)
(6.7)
0.4
3.8
121.9
15.6
11.2
(11.4)
(10.9)
2.5
2.0
130.9

Total
£m
147.7
31.9
9.8
(15.2)
(12.1)
0.5
3.8
166.4
24.8
24.5
(18.6)
(13.7)
(0.5)
0.7
183.6

Note
1 Acquisitions include £13.5 million (2014: £0.5 million) of provisions arising from

revisions to fair value adjustments related to the acquisition of subsidiary
undertakings that had been determined provisionally at the immediately preceding
balance sheet date, as permitted by IFRS 3 Business Combinations.

Provisions comprise liabilities where there is uncertainty about the timing
of settlement, but where a reliable estimate can be made of the amount.
These include provisions for vacant space, sub-let losses and other
property-related liabilities. Also included are other provisions, such as
certain long-term employee benefits and legal claims, where the
likelihood of settlement is considered probable.

The Company and various of its subsidiaries are, from time to time,
parties to legal proceedings and claims which arise in the ordinary
course of business. The directors do not anticipate that the outcome
of these proceedings and claims will have a material adverse effect
on the Group’s financial position or on the results of its operations.

22. Share-based payments
Charges for share-based incentive plans were as follows:
2015
£m
99.0

Share-based payments (note 5)

2014
£m
102.2

2013
£m
105.4

Share-based payments comprise charges for stock options and restricted
stock awards to employees of the Group.

As of 31 December 2015, there was £162.0 million (2014: £156.8 million)
of total unrecognised compensation cost related to the Group’s restricted
stock plans. That cost is expected to be recognised over an average
period of one to two years.

Further information on stock options is provided in note 26.

Restricted stock plans
The Group operates a number of equity-settled share incentive schemes,
in most cases satisfied by the delivery of stock from one of the Group’s
ESOP Trusts. The most significant current schemes are as follows:

Leadership Equity Acquisition Plan III (LEAP III)
Under LEAP III, the most senior executives of the Group, including certain
executive directors, commit WPP shares (‘investment shares’) in order to
have the opportunity to earn additional WPP shares (‘matching shares’).
The number of matching shares which a participant can receive at the
end of the fixed performance period of five years is dependent on the

performance (based on the Total Shareholder Return (TSR)) of the
Company over that period against a comparator group of other listed
communications services companies. The maximum possible number
of matching shares for each of the 2012 and 2011 grants is five shares for
each investment share. The 2011 LEAP III plan vested in March 2016 at
a match of 5.0 shares for each investment share. The last LEAP III award
was granted in 2012 and no further awards will be made following the
introduction of the EPSP.

Executive Performance Share Plan (EPSP)
The first grant of restricted stock under the EPSP was made in 2013. This
scheme is intended to reward and incentivise the most senior executives
of the Group and has effectively replaced LEAP III. The performance
period is five complete financial years, commencing with the financial
year in which the award is granted. Grant date will usually be in the first
half of the first performance year, with vest date in the March following
the end of the five-year performance period. Vesting is conditional on
continued employment throughout the vesting period.

There are three performance criteria, each constituting one-third of
the vesting value, and each measured over this five-year period:
(i) TSR against a comparator group of companies. Threshold performance
(equating to ranking in the 50th percentile of the comparator group)
will result in 20% vesting of the part of the award dependent on TSR.
The maximum vest of 100% will arise if performance ranks in the 90th
percentile, with a sliding scale of vesting for performance between
threshold and maximum.
(ii) Headline diluted earnings per share. Threshold performance (7%
compound annual growth) will again result in a 20% vest. Maximum
performance of 14% compound annual growth will give rise to a 100%
vest, with a sliding vesting scale for performance between threshold
and maximum.
(iii) Return on equity (ROE). Average annual ROE defined as headline
diluted EPS divided by the balance sheet value per share of share owners’
equity. Threshold performance of 10% average annual ROE and
maximum performance of 14%, with a sliding scale in between.
Threshold again gives rise to a 20% vest, with 100% for maximum.

Performance Share Awards (PSA)
Grants of restricted stock under PSA are dependent upon annual
performance targets, typically based on one or more of: operating profit,
profit before taxation and operating margin. Grants are made in the year
following the year of performance measurement, and vest two years after
grant date provided the individual concerned is continually employed by
the Group throughout this time.

Leaders, Partners and High Potential Group
This scheme provides annual grants of restricted stock to well over
1,000 key executives of the Group. Vesting is conditional on continued
employment over the three-year vesting period.

Valuation methodology
For all of these schemes, the valuation methodology is based upon fair
value on grant date, which is determined by the market price on that
date or the application of a Black-Scholes model, depending upon the
characteristics of the scheme concerned. The assumptions underlying the
Black-Scholes model are detailed in note 26, including details of assumed
dividend yields. Market price on any given day is obtained from external,
publicly available sources.

Market/non-market conditions
Most share-based plans are subject to non-market performance conditions,
such as margin or growth targets, as well as continued employment.
LEAP III and EPSP schemes are subject to a number of performance
conditions, including TSR, a market-based condition.

For schemes without market-based performance conditions, the valuation
methodology above is applied and, at each year end, the relevant accrual
for each grant is revised, if appropriate, to take account of any changes in
estimate of the likely number of shares expected to vest.

WPP ANNUAL REPORT 2015

201

Our 2015 financial statements
Notes to the consolidated financial statements

For schemes with market-based performance conditions, the probability
of satisfying these conditions is assessed at grant date through a statistical
model (such as the Monte Carlo Model) and applied to the fair value.
This initial valuation remains fixed throughout the life of the relevant plan,
irrespective of the actual outcome in terms of performance. Where a lapse
occurs due to cessation of employment, the cumulative charge taken to
date is reversed.

Movement on ordinary shares granted for significant restricted stock plans:

Non-
vested
1 January
2015
number
m
3.0

4.8

3.2

Granted
number
m
4.2

Lapsed
number
m
–

Vested
number
m
(5.1)

1.9

–

0.4

(0.2)

(1.7)

6.9

2.0

(0.5)

(2.7)

Non-
vested 31
December
2015
number
m
2.1

6.7

1.7

5.7

LEAP III1
Executive
Performance
Share Plan (EPSP)
Performance
Share Awards
(PSA)
Leaders, Partners
and High
Potential Group

788p

Weighted average fair value
(pence per share):
LEAP III1
Executive
Performance
Share Plan (EPSP)
Performance
Share Awards
(PSA)
Leaders, Partners
and High
Potential Group

1,140p

1,189p

1,170p

728p

1,472p

–

728p

749p

–

1,271p

1,252p

1,247p

1,011p

1,343p

1,386p

1,149p

778p

1,401p

Note
1 The number of shares granted represents the matched shares awarded on vest date
for the 2010 LEAP III plan which vested in March 2015. The actual number of shares
that vest for each LEAP III plan is dependent on the extent to which the relevant
performance criteria are satisfied.

The total fair value of shares vested for all the Group’s restricted stock
plans during the year ended 31 December 2015 was £111.7 million
(2014: £107.2 million, 2013: £87.1 million).

23. Provision for post-employment benefits
Companies within the Group operate a large number of pension plans,
the forms and benefits of which vary with conditions and practices in the
countries concerned. The Group’s pension costs are analysed as follows:

Defined contribution plans
Defined benefit plans charge to
operating profit
Pension costs (note 5)
Net interest expense on pension plans
(note 6)

2015
£m
135.0

2014
£m
129.8

2013
£m
124.4

25.0
160.0

7.3
167.3

19.1
148.9

8.0
156.9

26.9
151.3

11.4
162.7

202 WPP ANNUAL REPORT 2015

Defined benefit plans
The pension costs are assessed in accordance with the advice of local
independent qualified actuaries. The latest full actuarial valuations for
the various pension plans were carried out at various dates in the last
three years. These valuations have been updated by the local actuaries
to 31 December 2015.

The Group’s policy is to close existing defined benefit plans to new
members. This has been implemented across a significant number
of the pension plans.

Contributions to funded plans are determined in line with local conditions
and practices. Contributions in respect of unfunded plans are paid as they
fall due. The total contributions (for funded plans) and benefit payments
(for unfunded plans) paid for 2015 amounted to £70.9 million (2014:
£68.2 million, 2013: £47.8 million). Employer contributions and benefit
payments in 2016 are expected to be approximately £70 million.

(a) Assumptions
There are a number of areas in pension accounting that involve
judgments made by management based on advice of qualified advisors.
These include establishing the discount rates, rates of increase in salaries
and pensions in payment, inflation, and mortality assumptions. The
main weighted average assumptions used for the actuarial valuations
at 31 December are shown in the following table:

2015
% pa

2014
% pa

2013
% pa

2012
% pa

UK
Discount rate1
Rate of increase in salaries
Rate of increase in pensions in payment
Inflation
North America
Discount rate1
Rate of increase in salaries
Inflation
Western Continental Europe
Discount rate1
Rate of increase in salaries
Rate of increase in pensions in payment
Inflation
Asia Pacific, Latin America, Africa &
Middle East and Central & Eastern Europe
Discount rate1
Rate of increase in salaries
Inflation

3.7
3.1
3.9
2.4

4.0
3.0
2.5

2.5
2.3
1.6
2.0

4.2
5.8
4.0

3.4
3.1
3.9
2.4

3.7
3.0
2.5

2.1
2.2
2.0
2.0

4.2
6.1
3.9

4.5
3.6
4.2
2.9

4.5
3.0
2.5

3.7
2.4
2.0
2.0

4.4
5.9
4.5

4.2
2.9
3.9
2.4

3.5
3.0
2.5

3.6
2.4
2.0
2.0

4.1
6.1
4.7

Note
1 Discount rates are based on high-quality corporate bond yields. In countries where
there is no deep market in corporate bonds, the discount rate assumption has been
set with regard to the yield on long-term government bonds.

For the Group’s pension plans, the plans’ assets are invested with the
objective of being able to meet current and future benefit payment
needs, while controlling balance sheet volatility and future contributions.
Pension plan assets are invested with a number of investment managers,
and assets are diversified among equities, bonds, insured annuities,
property and cash or other liquid investments. The primary use of bonds
as an investment class is to match the anticipated cash flows from the
plans to pay pensions. The Group is invested in high-quality corporate
and government bonds which share similar risk characteristics and are
of equivalent currency and term to the plan liabilities. Various insurance
policies have also been bought historically to provide a more exact
match for the cash flows, including a match for the actual mortality
of specific plan members. These insurance policies effectively provide
protection against both investment fluctuations and longevity risks.
The strategic target allocation varies among the individual plans.

Our 2015 financial statements
Notes to the consolidated financial statements

Management considers the types of investment classes in which the
pension plan assets are invested. The types of investment classes are
determined by economic and market conditions and in consideration
of specific asset class risk.

The following table provides information on the weighted average
duration of the defined benefit pension obligations and the distribution
of the timing of benefit payments for the next 10 years. The duration
corresponds to the weighted average length of the underlying cash flows.

Management periodically commissions detailed asset and liability
studies performed by third-party professional investment advisors and
actuaries that generate probability-adjusted expected future returns
on those assets. These studies also project the estimated future pension
payments and evaluate the efficiency of the allocation of the pension
plan assets into various investment categories.

At 31 December 2015, the life expectancies underlying the value of the
accrued liabilities for the main defined benefit pension plans operated
by the Group were as follows:

All
plans

North
America

Western
Conti-
nental
Europe

Other1

22.9

23.2

23.5

21.0

19.6

24.7

24.9

24.7

24.2

24.8

24.7

25.5

23.6

19.6

Years life expectancy
after age 65
– current pensioners
(at age 65) – male
– current pensioners
(at age 65) – female

– future pensioners
(current age 45)
– male

– future pensioners
(current age 45)
– female

Weighted average
duration of the defined
benefit obligation (years)
Expected benefit
payments over the next
10 years (£m)
Benefits expected to be
paid within 12 months
Benefits expected to be
paid in 2017
Benefits expected to be
paid in 2018
Benefits expected to be
paid in 2019
Benefits expected to be
paid in 2020
Benefits expected to be
paid in the next five years

All
plans

North
America

Western
Conti-
nental
Europe

Other1

12.0

9.1

13.2

16.7

8.5

72.9

46.5

17.1

56.7

31.3

17.1

56.9

30.0

17.9

57.7

29.4

18.0

56.6

28.2

18.5

6.9

6.8

7.0

7.3

7.6

2.4

1.5

2.0

3.0

2.3

292.1

133.9

98.7

42.8

16.7

26.7

26.5

26.9

26.6

24.8

Note
1 Includes Asia Pacific, Latin America, Africa & Middle East and Central &

Eastern Europe.

The life expectancies after age 65 at 31 December 2014 were 23.1 years
and 24.9 years for male and female current pensioners (at age 65)
respectively, and 25.0 years and 26.8 years for male and female future
pensioners (current age 45), respectively.

In the determination of mortality assumptions, management uses the
most up-to-date mortality tables available in each country.

Eastern Europe.

The following table presents a sensitivity analysis for each significant
actuarial assumption showing how the defined benefit obligation would
have been affected by changes in the relevant actuarial assumption
that were reasonably possible at the balance sheet date. This sensitivity
analysis applies to the defined benefit obligation only and not to the net
defined benefit pension liability in its entirety, the measurement of which
is driven by a number of factors including, in addition to the assumptions
below, the fair value of plan assets.

WPP ANNUAL REPORT 2015

203

(b) Assets and liabilities
At 31 December, the fair value of the assets in the pension plans, and the
assessed present value of the liabilities in the pension plans are shown in
the following table:

Equities
Bonds
Insured annuities
Property
Cash
Other
Total fair value
of assets
Present value
of liabilities
Deficit in the plans
Irrecoverable surplus
Net liability1
Plans in surplus
Plans in deficit

2015
£m
132.5
479.5
60.5
1.5
65.1
75.1

%
16.3
58.9
7.4
0.2
8.0
9.2

2014
£m
151.1
496.2
68.0
1.4
52.2
80.6

%
17.8
58.4
8.0
0.2
6.1
9.5

2013
£m
147.7
405.8
68.7
1.0
37.0
66.0

%
20.3
55.9
9.5
0.1
5.1
9.1

814.2 100.0

849.5

100.0

726.2

100.0

(1,039.9)
(225.7)
(3.6)
(229.3)
31.4
(260.7)

(1,144.8)
(295.3)
(0.9)
(296.2)
17.2
(313.4)

(972.8)
(246.6)
(0.9)
(247.5)
17.7
(265.2)

Note
1 The related deferred tax asset is discussed in note 15.

All plan assets have quoted prices in active markets with the exception
of insured annuities and other assets.

Surplus/(deficit) in plans by region
UK
North America
Western Continental Europe
Asia Pacific, Latin America, Africa &
Middle East and Central & Eastern Europe
Deficit in the plans

2015
£m
30.9
(123.4)
(97.4)

2014
£m
11.4
(150.1)
(126.2)

2013
£m
11.3
(136.7)
(96.0)

(35.8)
(225.7)

(30.4)
(295.3)

(25.2)
(246.6)

Some of the Group’s defined benefit plans are unfunded (or largely
unfunded) by common custom and practice in certain jurisdictions.
In the case of these unfunded plans, the benefit payments are made
as and when they fall due. Pre-funding of these plans would not be
typical business practice.

Our 2015 financial statements
Notes to the consolidated financial statements

The sensitivity analyses are based on a change in one assumption
while holding all other assumptions constant so that interdependencies
between the assumptions are excluded. The methodology applied is
consistent with that used to determine the recognised defined benefit
obligation. The sensitivity analysis for inflation is not shown as it is an
underlying assumption to build the pension and salary increase
assumptions. Changing the inflation assumption on its own without
changing the salary or pension assumptions will not result in a significant
change in pension liabilities.

Sensitivity analysis of significant
actuarial assumptions
Discount rate
Increase by 25 basis points

UK
North America
Western Continental Europe
Other1

Decrease by 25 basis points

UK
North America
Western Continental Europe
Other1

Rate of increase in salaries
Increase by 25 basis points

UK
North America
Western Continental Europe
Other1

Decrease by 25 basis points

UK
North America
Western Continental Europe
Other1

Rate of increase in pensions in payment
Increase by 25 basis points

UK
Western Continental Europe

Decrease by 25 basis points

UK
Western Continental Europe

Life expectancy
Increase in longevity by one additional year

UK
North America
Western Continental Europe
Other1

Increase/(decrease)
in benefit obligation
2014
£m

2015
£m

(10.9)
(9.4)
(7.8)
(0.5)

11.5
9.7
8.2
0.5

0.2
0.1
1.3
0.5

(0.1)
–
(1.3)
(0.5)

2.1
5.3

(2.0)
(5.0)

13.3
5.1
5.6
–

(12.8)
(10.8)
(10.3)
(0.6)

13.6
11.0
11.2
0.5

0.2
0.1
1.6
0.5

(0.2)
(0.1)
(1.5)
(0.6)

2.9
7.5

(2.3)
(6.9)

14.4
5.4
7.3
–

Note
1 Includes Asia Pacific, Latin America, Africa & Middle East and Central &

Eastern Europe.

204 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Notes to the consolidated financial statements

(c) Pension expense
The following table shows the breakdown of the pension expense
between amounts charged to operating profit, amounts charged to
finance costs and amounts recognised in the consolidated statement
of comprehensive income (OCI):

Service cost1
Administrative expenses
Charge to operating profit
Net interest expense on pension plans
Charge to profit before taxation for defined
benefit plans

Return on plan assets (excluding interest
income)
Changes in demographic assumptions
underlying the present value of the
plan liabilities
Changes in financial assumptions
underlying the present value of the
plan liabilities
Experience (loss)/gain arising on the
plan liabilities
Change in irrecoverable surplus
Actuarial gain/(loss) recognised in OCI

2015
£m
23.0
2.0
25.0
7.3

2014
£m
17.3
1.8
19.1
8.0

2013
£m
24.8
2.1
26.9
11.4

32.3

27.1

38.3

(31.7)

68.9

3.2

13.8

(12.3)

13.5

55.4

(141.4)

58.9

(1.3)
(2.7)
33.5

(1.8)
–
(86.6)

0.4
0.2
76.2

The following table shows the split of the deficit at 31 December between
funded and unfunded pension plans.

2015
Surplus/
(deficit)
£m

2015
Present
value of
liabilities
£m

2014
Surplus/
(deficit)
£m

2014
Present
value of
liabilities
£m

2013
Surplus/
(deficit)
£m

2013
Present
value of
liabilities
£m

30.9
(45.5)

(352.6)
(364.5)

11.4
(70.6)

(385.8)
(402.5)

11.3
(68.8)

(346.4)
(334.2)

(42.3)

(143.9)

(67.8)

(178.4)

(41.6)

(135.4)

(4.9)

(15.0)

(5.4)

(15.2)

(5.0)

(14.3)

(61.8)

(876.0)

(132.4)

(981.9)

(104.1)

(830.3)

–
(77.9)

–
(79.5)

–
(67.9)

Funded plans
by region
UK
North America
Western
Continental
Europe
Asia Pacific, Latin
America, Africa &
Middle East and
Central & Eastern
Europe
Deficit/liabilities
in the funded
plans

Unfunded plans
by region
UK
North America
Western
Continental
Europe
Asia Pacific, Latin
America, Africa &
Middle East and
Central & Eastern
Europe
Deficit/liabilities
in the unfunded
plans

Deficit/liabilities
in the plans

(55.1)

(58.4)

(54.4)

Note
1 Includes current service cost, past service costs related to plan amendments and

(gain)/loss on settlements and curtailments.

(30.9)

(25.0)

(20.2)

(163.9)

(162.9)

(142.5)

(225.7) (1,039.9)

(295.3) (1,144.8)

(246.6)

(972.8)

In accordance with IAS 19, plans that are wholly or partially funded are
considered funded plans.

WPP ANNUAL REPORT 2015

205

Our 2015 financial statements
Notes to the consolidated financial statements

(d) Movement in plan liabilities
The following table shows an analysis of the movement in the pension
plan liabilities for each accounting period:

Plan liabilities at beginning of year
Service cost1
Interest cost
Actuarial (gain)/loss

Effect of changes in demographic
assumptions
Effect of changes in financial
assumptions
Effect of experience adjustments

Benefits paid
Loss/(gain) due to exchange rate
movements
Settlement payments
Other2
Plan liabilities at end of year

2015
£m
1,144.8
23.0
34.6

2014
£m

2013
£m
972.8 1,044.1
24.8
39.7

17.3
40.7

(13.8)

12.3

(13.5)

(55.4)
1.3
(112.6)

141.4
1.8
(57.7)

13.4
–
4.6

14.8
–
1.4
1,039.9 1,144.8

(58.9)
(0.4)
(54.5)

(5.0)
(2.9)
(0.6)
972.8

Notes
1 Includes current service cost, past service costs related to plan amendments and

(gain)/loss on settlements and curtailments.

2 Other includes acquisitions, disposals, plan participants’ contributions and

reclassifications. The reclassifications represent certain of the Group’s defined benefit
plans which are included in this note for the first time in the periods presented.

(e) Movement in plan assets
The following table shows an analysis of the movement in the pension
plan assets for each accounting period:

Fair value of plan assets at beginning
of year
Interest income on plan assets
Return on plan assets
(excluding interest income)
Employer contributions
Benefits paid
Gain/(loss) due to exchange rate
movements
Settlement payments
Administrative expenses
Other1
Fair value of plan assets at end of year
Actual return on plan assets

2015
£m

2014
£m

2013
£m

849.5
27.3

726.2
32.7

709.8
28.3

(31.7)
70.9
(112.6)

12.4
–
(2.0)
0.4
814.2
(4.4)

68.9
68.2
(57.7)

12.6
–
(1.8)
0.4
849.5
101.6

3.2
47.8
(54.5)

(4.8)
(2.9)
(2.1)
1.4
726.2
31.5

Note
1 Other includes acquisitions, disposals, plan participants’ contributions and

reclassifications. The reclassifications represent certain of the Group’s defined benefit
plans which are included in this note for the first time in the periods presented.

206 WPP ANNUAL REPORT 2015

24. Risk management policies

Foreign currency risk
The Group’s results in pounds sterling are subject to fluctuation as a result
of exchange rate movements. The Group does not hedge this translation
exposure to its earnings but does hedge the currency element of its net
assets using foreign currency borrowings, cross-currency swaps and
forward foreign exchange contracts.

The Group effects these currency net asset hedges by borrowing in the
same currencies as the operating (or ‘functional’) currencies of its main
operating units. The majority of the Group’s debt is therefore denominated
in US dollars, pounds sterling and euros. The Group’s borrowings at
31 December 2015 were primarily made up of $2,862 million, £600 million
and €3,450 million. The Group’s average gross debt during the course of
2015 was $3,317 million, £613 million and €2,789 million.

The Group’s operations conduct the majority of their activities in their
own local currency and consequently the Group has no significant
transactional foreign exchange exposures arising from its operations.
Any significant cross-border trading exposures are hedged by the use
of forward foreign-exchange contracts. No speculative foreign exchange
trading is undertaken.

Interest rate risk
The Group is exposed to interest rate risk on both interest-bearing
assets and interest-bearing liabilities. The Group has a policy of actively
managing its interest rate risk exposure while recognising that fixing rates
on all its debt eliminates the possibility of benefiting from rate reductions
and similarly, having all its debt at floating rates unduly exposes the
Group to increases in rates.

Including the effect of interest rate and cross-currency swaps, 54.2% of the
year-end US dollar debt is at fixed rates averaging 4.62% for an average
period of 224 months; 66.7% of the sterling debt is at a fixed rate of 6.19%
for an average period of 37 months; and 100% of the euro debt is at fixed
rates averaging 2.54% for an average period of 90 months.

Other than fixed rate debt, the Group’s other fixed rates are achieved
principally through interest rate swaps with the Group’s bankers. The
Group also uses forward rate agreements and interest rate caps to
manage exposure to interest rate changes. At 31 December 2015 no
forward rate agreements or interest rate caps were in place. These
interest rate derivatives are used only to hedge exposures to interest
rate movements arising from the Group’s borrowings and surplus cash
balances arising from its commercial activities and are not traded
independently. Payments made under these instruments are accounted
for on an accruals basis.

Going concern and liquidity risk
In considering going concern and liquidity risk, the directors have
reviewed the Group’s future cash requirements and earnings projections.
The directors believe these forecasts have been prepared on a prudent
basis and have also considered the impact of a range of potential
changes to trading performance. The directors have concluded that the
Group should be able to operate within its current facilities and comply
with its banking covenants for the foreseeable future and therefore
believe it is appropriate to prepare the financial statements of the Group
on a going concern basis.

Our 2015 financial statements
Notes to the consolidated financial statements

At 31 December 2015, the Group has access to £6.8 billion of committed facilities with maturity dates spread over the years 2016 to 2043 as
illustrated below:

US bond $500m (5.625% ’43)
US bond $300m (5.125% ’42)
Eurobonds €600m (1.625% ’30)
Eurobonds €750m (2.25% ’26)
US bond $750m (3.75% ’24)
Eurobonds €750m (3.0% ’23)
US bond $500m (3.625% ’22)
US bond $812m (4.75% ’21)
£ bonds £200m (6.375% ’20)
Bank revolver ($2,500m)
Eurobonds €600m (0.75% ’19)
Eurobonds €252m (0.43% ’18)
£ bonds £400m (6.0% ’17)
Eurobonds €498m (6.625% ’16)

Total committed facilities available
Drawn down facilities at 31 December 2015
Undrawn committed credit facilities

Drawn down facilities at 31 December 2015
Net cash at 31 December 2015
Other adjustments
Net debt at 31 December 2015

2016
£m

2017
£m

2018
£m

2019
£m

2020+
£m
339.4
203.6
442.5
553.1
509.0
553.1
339.4
551.4
200.0
1,696.8

442.5

185.9

400.0

367.3

367.3
367.3

400.0
400.0

185.9
185.9

442.5
442.5

5,388.3
3,691.5

£m
339.4
203.6
442.5
553.1
509.0
553.1
339.4
551.4
200.0
1,696.8
442.5
185.9
400.0
367.3

6,784.0
5,087.2
1,696.8

5,087.2
(1,946.6)
70.2
3,210.8

Given the strong cash generation of the business, its debt maturity profile
and available facilities, the directors believe the Group has sufficient
liquidity to match its requirements for the foreseeable future.

Treasury activities
Treasury activity is managed centrally from London, New York and
Hong Kong, and is principally concerned with the monitoring of working
capital, managing external and internal funding requirements and the
monitoring and management of financial market risks, in particular
interest rate and foreign exchange exposures.

The treasury operation is not a profit centre and its activities are carried
out in accordance with policies approved by the Board of Directors and
subject to regular review and audit.

The Group manages liquidity risk by ensuring continuity and flexibility
of funding even in difficult market conditions. Undrawn committed
borrowing facilities are maintained in excess of peak net-borrowing levels
and debt maturities are closely monitored. Targets for average net debt
are set on an annual basis and, to assist in meeting this, working capital
targets are set for all the Group’s major operations.

Capital risk management
The Group manages its capital to ensure that entities in the Group will
be able to continue as a going concern while maximising the return to
stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, which includes the
borrowings disclosed in note 10, cash and cash equivalents and equity
attributable to equity holders of the parent, comprising issued capital,
reserves and retained earnings as disclosed in the consolidated statement
of changes in equity and in notes 26 and 27.

Credit risk
The Group’s principal financial assets are cash and short-term deposits,
trade and other receivables and investments, the carrying values of
which represent the Group’s maximum exposure to credit risk in relation
to financial assets, as shown in note 25.

The Group’s credit risk is primarily attributable to its trade receivables.
The majority of the Group’s trade receivables are due from large national
or multinational companies where the risk of default is considered low.
The amounts presented in the consolidated balance sheet are net
of allowances for doubtful receivables, estimated by the Group’s
management based on prior experience and their assessment of the
current economic environment. A relatively small number of clients
make up a significant percentage of the Group’s debtors, but no
single client represents more than 5% of total trade receivables as
at 31 December 2015.

The credit risk on liquid funds and derivative financial instruments is
limited because the counterparties are banks with high credit ratings
assigned by international credit-rating agencies or banks that have
been financed by their government.

A relatively small number of clients contribute a significant percentage of
the Group’s consolidated revenues. The Group’s clients generally are able
to reduce advertising and marketing spending or cancel projects at any
time for any reason. There can be no assurance that any of the Group’s
clients will continue to utilise the Group’s services to the same extent, or
at all, in the future. A significant reduction in advertising and marketing
spending by, or the loss of one or more of, the Group’s largest clients, if not
replaced by new client accounts or an increase in business from existing
clients, would adversely affect the Group’s prospects, business, financial
condition and results of operations.

WPP ANNUAL REPORT 2015

207

Our 2015 financial statements
Notes to the consolidated financial statements

Sensitivity analysis
The following sensitivity analysis addresses the effect of currency and
interest rate risks on the Group’s financial instruments. The analysis
assumes that all hedges are highly effective.

Currency risk
A 10% weakening of sterling against the Group’s major currencies would
result in the following losses, which would be posted directly to equity.
These losses would arise on the retranslation of foreign currency
denominated borrowings and derivatives designated as effective net
investment hedges of overseas net assets. These losses would be partially
offset in equity by a corresponding gain arising on the retranslation of
the related hedged foreign currency net assets. A 10% strengthening of
sterling would have an equal and opposite effect. There are no other
material foreign exchange exposures which would create gains or losses
to the functional reporting currencies of individual entities in the Group.

US dollar
Euro

2015
£m
–
40.8

2014
£m
51.5
21.7

Interest rate risk
A one percentage point increase in market interest rates for all currencies
in which the Group had cash and borrowings at 31 December 2015
would increase profit before tax by approximately £7.9 million (2014:
£14.2 million). A one percentage decrease in market interest rates would
have an equal and opposite effect. This has been calculated by applying
the interest rate change to the Group’s variable rate cash and borrowings.

25. Financial instruments

Currency derivatives
The Group utilises currency derivatives to hedge significant future
transactions and cash flows and the exchange risk arising on translation
of the Group’s investments in foreign operations. The Group is a party
to a variety of foreign currency derivatives in the management of its
exchange rate exposures. The instruments purchased are primarily
denominated in the currencies of the Group’s principal markets.

At 31 December 2015, the fair value of the Group’s currency derivatives
is estimated to be a net liability of approximately £nil (2014: £72.7 million).
These amounts are based on market values of equivalent instruments at
the balance sheet date, comprising £nil (2014: £nil) assets included in trade
and other receivables and £nil (2014: £72.7 million) liabilities included in
trade and other payables. The amounts taken to and deferred in equity
during the year for currency derivatives that are designated and effective
hedges was a charge of £nil (2014: charge of £26.4 million) for net
investment hedges and a charge of £73.5 million (2014: £60.6 million)
for cash flow hedges.

Changes in the fair value relating to the ineffective portion of the
currency derivatives amounted to a gain of £3.2 million (2014: gain
of £23.0 million, 2013: gain of £12.9 million) which is included in the
revaluation of financial instruments for the year. This gain resulted
from a £76.7 million gain on hedging instruments and a £73.5 million
loss on hedged items.

The Group currently designates its foreign currency-denominated debt
and cross-currency swaps as hedging instruments against the currency
risk associated with the translation of its foreign operations.

At the balance sheet date, the total nominal amount of outstanding
forward foreign exchange contracts not designated as hedges was
£86.5 million (2014: £197.2 million). The Group estimates the fair value
of these contracts to be a net asset of £3.9 million (2014: net liability
of £0.1 million).

These arrangements are designed to address significant exchange
exposure and are renewed on a revolving basis as required.

Interest rate swaps
The Group uses interest rate swaps as hedging instruments in fair
value hedges to manage its exposure to interest rate movements on its
borrowings. Contracts with a nominal value of $500 million have fixed
interest receipts of 3.63% until September 2022 and have floating interest
payments averaging LIBOR plus 1.52%. Contracts with a nominal value
of $812 million have fixed interest receipts of 4.75% until November 2021
and have floating rate payments averaging LIBOR plus 2.17%. Contracts
with a nominal value of £200 million have fixed interest receipts of 6.00%
up until April 2017 and have floating rate payments averaging LIBOR
plus 0.64%.

The fair value of interest rate swaps entered into at 31 December 2015
is estimated to be a net asset of approximately £37.4 million (2014:
£49.0 million). These amounts are based on market values of equivalent
instruments at the balance sheet date, comprising £39.7 million
(2014: £51.1 million) assets included in trade and other receivables
and £2.3 million (2014: £2.1 million) liabilities included in trade and
other payables.

Changes in the fair value relating to the ineffective portion of interest
rate swaps amounted to a loss of £6.8 million (2014: gain of £5.3 million,
2013: loss of £2.4 million) which is included in the revaluation of financial
instruments for the year. This loss resulted from a £3.9 million loss on
hedging instruments and a £2.9 million loss on hedged items.

208 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Notes to the consolidated financial statements

An analysis of the Group’s financial assets and liabilities by accounting classification is set out below:

2015
Other investments
Cash and short-term deposits
Bank overdrafts and loans
Bonds and bank loans
Trade and other receivables: amounts falling due within one year
Trade and other receivables: amounts falling due after more than one year
Trade and other payables: amounts falling due within one year
Trade and other payables: amounts falling due after more than one year
Derivative assets
Derivative liabilities
Payments due to vendors (earnout agreements) (note 19)
Liabilities in respect of put options

2014
Other investments
Cash and short-term deposits
Bank overdrafts and loans
Bonds and bank loans
Trade and other receivables: amounts falling due within one year
Trade and other receivables: amounts falling due after more than one year
Trade and other payables: amounts falling due within one year
Trade and other payables: amounts falling due after more than one year
Derivative assets
Derivative liabilities
Share purchases – close period commitments
Payments due to vendors (earnout agreements) (note 19)
Liabilities in respect of put options

Derivatives in
designated
hedge
relationships
£m

Held for
trading
£m

Loans &
receiv-
ables
£m

Available
for sale
£m

Amortised
cost
£m

Carrying
value
£m

–
–
–
–
–
–
–
–
39.7
(2.3)
–
–
37.4

–
–
–
–
–
–
–
–
4.6
(0.7)
(581.3)
(234.4)
(811.8)

–
2,382.4
–
–
7,184.4
68.5
–
–
–
–
–
–
9,635.3

1,158.7
–
–
–
–
–
–
–
–
–
–
–

–
–
(932.0)
(4,661.2)
–
–
(8,595.5)
(5.3)
–
–
–
–
1,158.7 (14,194.0)

1,158.7
2,382.4
(932.0)
(4,661.2)
7,184.4
68.5
(8,595.5)
(5.3)
44.3
(3.0)
(581.3)
(234.4)
(4,174.4)

Derivatives in
designated
hedge
relationships
£m

Held for
trading
£m

Loans &
receiv-
ables
£m

Available
for sale
£m

Amortised
cost
£m

Carrying
value
£m

–
–
–
–
–
–
–
–
51.1
(74.8)
–
–
–
(23.7)

–
–
–
–
–
–
–
–
2.2
(2.3)
(78.8)
(311.4)
(184.9)
(575.2)

–
2,512.7
–
–
6,706.6
71.3
–
–
–
–
–
–
–
9,290.6

669.2
–
–
–
–
–
–
–
–
–
–
–
–

–
–
(653.2)
(4,134.9)
–
–
(7,886.5)
(5.4)
–
–
–
–
–
669.2 (12,680.0)

669.2
2,512.7
(653.2)
(4,134.9)
6,706.6
71.3
(7,886.5)
(5.4)
53.3
(77.1)
(78.8)
(311.4)
(184.9)
(3,319.1)

WPP ANNUAL REPORT 2015

209

Our 2015 financial statements
Notes to the consolidated financial statements

The following table provides an analysis of financial instruments that are
measured subsequent to initial recognition at fair value, grouped into
levels 1 to 3 based on the degree to which the fair value is observable:

Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities;

Level 2 fair value measurements are those derived from inputs other than
quoted prices included within level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not
based on observable market data (unobservable inputs).

2015
Derivatives in designated hedge
relationships
Derivative assets
Derivative liabilities
Held for trading
Derivative assets
Derivative liabilities
Payments due to vendors (earnout
agreements) (note 19)
Liabilities in respect of put options
Available for sale
Other investments

2014
Derivatives in designated hedge
relationships
Derivative assets
Derivative liabilities
Held for trading
Derivative assets
Derivative liabilities
Share purchases – close period
commitments
Payments due to vendors (earnout
agreements) (note 19)
Liabilities in respect of put options
Available for sale
Other investments

Level 1
£m

Level 2
£m

Level 3
£m

–
–

311.4

39.7
(2.3)

4.6
(0.7)

–
–

–

(581.3)
(234.4)

847.3

Level 1
£m

Level 2
£m

Level 3
£m

–
–

51.1
(74.8)

2.2
(2.3)

(78.8)

–
–

134.8

–

–
–

–

–
–

–

(311.4)
(184.9)

534.4

210 WPP ANNUAL REPORT 2015

Reconciliation of level 3 fair value measurements1:

1 January 2014
Losses recognised in the income statement
Gain recognised in other comprehensive
income
Exchange adjustments
Additions
Disposals
Reclassification to subsidiaries
Settlements
31 December 2014
Losses recognised in the income statement
Gain recognised in other comprehensive
income
Exchange adjustments
Additions
Disposals
Cancellations
Settlements
31 December 2015

Liabilities in
respect of
put options
£m
(139.1)
(8.8)

Other
investments
£m
247.6
(7.3)

–
6.5
(46.0)
–
–
2.5
(184.9)
(11.3)

–
21.4
(86.8)
–
25.3
1.9
(234.4)

96.5
4.3
206.6
(10.7)
(2.6)
–
534.4
(2.2)

196.4
13.3
113.5
(8.1)
–
–
847.3

Note
1 The reconciliation of payments due to vendors (earnout agreements) is presented

in note 19.

The fair values of financial assets and liabilities are based on quoted
market prices where available. Where the market value is not available,
the Group has estimated relevant fair values on the basis of publicly
available information from outside sources or on the basis of discounted
cash flow models where appropriate.

Payments due to vendors and liabilities in respect of put options
Future anticipated payments due to vendors in respect of contingent
consideration (earnout agreements) are recorded at fair value, which
is the present value of the expected cash outflows of the obligations.
Liabilities in respect of put option agreements are initially recorded at the
present value of the redemption amount in accordance with IAS 32 and
subsequently measured at fair value in accordance with IAS 39. Both
types of obligations are dependent on the future financial performance
of the entity and it is assumed that future profits are in line with directors’
estimates. The directors derive their estimates from internal business plans
together with financial due diligence performed in connection with the
acquisition. At 31 December 2015, the weighted average growth rate in
estimating future financial performance was 20.3% (2014: 19.8%), which
reflects the prevalence of recent acquisitions in the faster-growing markets
and new media sectors. The risk adjusted discount rate applied to these
obligations at 31 December 2015 was 1.7% (2014: 2.0%).

A one percentage point increase or decrease in the growth rate in
estimated future financial performance would increase or decrease
the combined liabilities due to earnout agreements and put options
by approximately £11.9 million (2014: £6.6 million) and £19.0 million
(2014: £11.7 million), respectively. A 0.5 percentage point increase
or decrease in the risk adjusted discount rate would decrease or
increase the combined liabilities by approximately £11.6 million
(2014: £6.5 million) and £11.9 million (2014: £6.7 million), respectively.
An increase in the liability would result in a loss in the revaluation
of financial instruments, while a decrease would result in a gain.

Other investments
The fair value of other investments included in level 1 are based on
quoted market prices. Other investments included in level 3 are unlisted
securities, where market value is not readily available. The Group
has estimated relevant fair values on the basis of publicly available
information from outside sources or on the basis of discounted cash flow
models where appropriate. The sensitivity to changes in unobservable
inputs is specific to each individual investment.

26. Authorised and issued share capital

Authorised
1 January 2014
31 December 2014
31 December 2015

Issued and fully paid
1 January 2014
Exercise of share options
Treasury share cancellations
31 December 2014
Exercise of share options
31 December 2015

Equity
ordinary
shares

Nominal
value
£m

1,750,000,000
1,750,000,000
1,750,000,000

1,348,733,317
3,914,407
(26,900,000)
1,325,747,724
3,618,300
1,329,366,024

175.0
175.0
175.0

134.9
0.4
(2.7)
132.6
0.3
132.9

Company’s own shares
The Company’s holdings of own shares are stated at cost and represent
shares held in treasury and purchases by the Employee Share Ownership
Plan (‘ESOP’) trusts of shares in WPP plc for the purpose of funding certain
of the Group’s share-based incentive plans, details of which are disclosed
in the Compensation Committee report on pages 121 to 153.

The trustees of the ESOP purchase the Company’s ordinary shares in the
open market using funds provided by the Company. The Company also
has an obligation to make regular contributions to the ESOP to enable it
to meet its administrative costs. The number and market value of the
ordinary shares of the Company held by the ESOP at 31 December 2015
was 17,154,359 (2014: 17,861,766), and £268.1 million (2014: £240.2 million)
respectively. The number and market value of ordinary shares held in
treasury at 31 December 2015 was 34,619,468 (2014: 7,526,560) and
£541.1 million (2014: £101.2 million) respectively.

Our 2015 financial statements
Notes to the consolidated financial statements

Share options

WPP Executive Share Option Scheme
As at 31 December 2015, unexercised options over ordinary shares of
14,183 and unexercised options over ADRs of 1,658 have been granted
under the WPP Executive Share Option Scheme as follows:
Number of ordinary
shares under option
4,268
3,174
3,696
3,045

Exercise price
per share (£)
5.903
7.723
8.333
10.595

Exercise
dates
2011-2018
2010-2017
2015-2022
2016-2023

Number of ADRs
under option
844
156
658

Exercise price
per ADR ($)
59.170
63.900
75.940

Exercise
dates
2011-2018
2009-2020
2010-2017

WPP ANNUAL REPORT 2015

211

Our 2015 financial statements
Notes to the consolidated financial statements

WPP Worldwide Share Ownership Program
As at 31 December 2015, unexercised options over ordinary shares of
7,433,812 and unexercised options over ADRs of 889,581 have been
granted under the WPP Worldwide Share Ownership Program as follows:

WPP Share Option Plan 2015
As at 31 December 2015, unexercised options over ordinary shares of
3,675,550 and unexercised options over ADRs of 400,585 have been
granted under the WPP Worldwide Share Ownership Program as follows:

Number of ordinary
shares under option
136,625
3,496,300
42,625

Exercise price
per share (£)
15.150
15.150
15.150

Number of ADRs
under option
400,585

Exercise price
per ADR ($)
115.940

Exercise
dates
2018-2022
2018-2025
2019-2025

Exercise
dates
2018-2025

24/7 Real Media, Inc. 2002 Stock Incentive Plan
As at 31 December 2015, unexercised options over ADRs of 1,884 have
been granted under the 24/7 Real Media, Inc. 2002 Stock Incentive Plan
as follows:

Number of ADRs
under option
157
314
157
574
157
393
54
78

Exercise price
per ADR ($)
53.480
55.260
56.270
56.720
58.940
60.020
64.650
65.540

Exercise
dates
2007-2017
2007-2016
2007-2016
2007-2016
2007-2016
2007-2016
2007-2016
2007-2016

The aggregate status of the WPP Share Option Plans during 2015 was
as follows:

Movements on options granted (represented in ordinary shares)

1 January

Outstanding
31
December
2015
22,473

Exercisable
31
December
2015
Lapsed
2015 Granted Exercised
–
19,428
–
(92,145)
– (3,428,681) (2,943,959) 11,881,717 3,337,468
–
9,420
–
18,488,529 5,807,975 (3,618,300) (3,086,119) 17,592,085 3,366,316

– 5,807,975
–
–

5,678,475
9,420
–

(129,500)
(12,660)
–

–
(40,620)
(56,854)

WPP
114,618
WWOP 18,254,357
WSOP
24/7
TNS

62,700
56,854

Number of ordinary
shares under option
4,125
1,125
79,700
125
36,625
5,375
4,625
4,800
1,875
43,925
13,625
307,750
117,110
125
1,375
8,325
2,500
1,125
186,625
62,750
2,625
6,250
33,950
912,233
93,947
2,933,043
5,625
2,483,946
78,583

Number of ADRs
under option
28,935
68,935
43,765
19,215
4,910
118,205
15,795
326,462
263,359

Exercise price
per share (£)
4.819
5.483
5.483
5.483
5.483
5.483
5.608
5.913
5.917
6.028
6.268
6.268
6.268
6.668
6.740
6.938
7.005
7.113
7.113
7.113
7.478
7.543
7.718
8.458
13.145
13.145
13.145
13.505
13.505

Exercise price
per ADR ($)
44.560
49.230
56.560
59.500
60.690
67.490
75.760
102.670
110.760

Exercise
dates
2011-2018
2012-2016
2012-2019
2012-2020
2013-2019
2012-2019
2012-2019
2011-2018
2011-2018
2011-2018
2014-2018
2014-2021
2015-2021
2009-2017
2009-2016
2009-2016
2010-2017
2013-2017
2013-2020
2014-2020
2011-2017
2014-2020
2010-2017
2015-2022
2017-2021
2017-2024
2018-2024
2016-2023
2017-2023

Exercise
dates
2012-2019
2014-2021
2013-2020
2011-2018
2009-2016
2015-2022
2010-2017
2017-2024
2016-2023

212 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Notes to the consolidated financial statements

Weighted-average exercise price for options over

1 January

2015 Granted Exercised

Lapsed

Outstanding
31
December
2015

Exercisable
31
December
2015

The weighted average share price of the Group for the year ended
31 December 2015 was £14.74 (2014: £12.65, 2013: £11.63) and the
weighted average ADR price for the same period was $112.88 (2014:
$104.21, 2013: $91.22).

6.969
11.020
–
1.730

Ordinary shares (£)
WPP
WWOP
WSOP
TNS
ADRs ($)
WPP
WWOP
WSOP
24/7

59.455
85.999
–
42.865

–
–
15.150
–

6.630
7.688
–
1.730

–
11.789
15.150
–

–
–
115.940
–

58.346
60.398
–
40.650

–
94.412
115.940
38.980

7.950
11.859
15.150
–

66.270
90.449
115.940
57.635

7.228
7.442
–
–

66.270
59.294
–
57.635

Options over ordinary shares
Outstanding

Range of
exercise prices
£
4.819 – 15.150

Weighted average
exercise price
£
12.941

Weighted average
contractual life
Months
102

Options over ADRs
Outstanding

Range of
exercise prices
$
44.56 – 115.94

Weighted average
exercise price
$
98.263

Weighted average
contractual life
Months
99

As at 31 December 2015 there was £10.4 million (2014: £10.5 million) of
total unrecognised compensation cost related to share options. That cost
is expected to be recognised over a weighted average period of 20
months (2014: 20 months).

Share options are satisfied out of newly issued shares.

The weighted average fair value of options granted in the year
calculated using the Black-Scholes model was as follows:

Fair value of UK options (shares)
Fair value of US options (ADRs)
Weighted average assumptions:

UK Risk-free interest rate
US Risk-free interest rate
Expected life (months)
Expected volatility
Dividend yield

2014

2015

2013
144.0p 155.0p 160.0p
$11.34 $12.23 $12.92

1.04% 1.12% 1.20%
1.45% 1.28% 0.95%
48
20%
2.8%

48
20%
2.8%

48
17%
2.8%

Options are issued at an exercise price equal to market value on the date
of grant.

Expected volatility is sourced from external market data and represents
the historic volatility in the Group’s share price over a period equivalent
to the expected option life.

Expected life is based on a review of historic exercise behaviour in the
context of the contractual terms of the options, as described in more
detail below.

Terms of share option plans
During the year the Group introduced the Share Option Plan 2015
to replace both the ‘all-employee’ Worldwide Share Ownership Plan
and the discretionary Executive Stock Option Plan. Two kinds of options
over ordinary shares can be granted, both with a market value exercise
price. Firstly, options can be granted to employees who have worked
at a company owned by WPP plc for at least two years which are not
subject to performance conditions. Secondly, options may be granted on
a discretionary basis subject to the satisfaction of performance conditions.

The Worldwide Share Ownership Program was open for participation to
employees with at least two years’ employment in the Group. It was not
available to those participating in other share-based incentive programs
or to executive directors. The vesting period for each grant is three years
and there are no performance conditions other than continued
employment with the Group.

The Executive Stock Option Plan has historically been open for
participation to WPP Group Leaders, Partners and High Potential Group.
It is not currently offered to parent company executive directors. The
vesting period is three years and performance conditions include
achievement of various TSR (Total Shareholder Return) and EPS (Earnings
Per Share) objectives, as well as continued employment.

The Group grants stock options with a life of 10 years, including the vesting
period. The terms of stock options with performance conditions are such
that if, after nine years and eight months, the performance conditions
have not been met, then the stock option will vest automatically.

WPP ANNUAL REPORT 2015

213

Our 2015 financial statements
Notes to the consolidated financial statements

27. Other reserves
Other reserves comprise the following:

1 January 2014
Exchange adjustments on foreign currency net investments
Gain on revaluation of available for sale investments
Recognition and remeasurement of financial instruments
Treasury share cancellations
Share purchases – close period commitments
31 December 2014
Exchange adjustments on foreign currency net investments
Gain on revaluation of available for sale investments
Recognition and remeasurement of financial instruments
Share purchases – close period commitments
31 December 2015

Capital
redemption
reserve
£m
–
–
–
–
2.7
–
2.7
–
–
–
–
2.7

Equity
reserve
£m
(122.1)
–
–
(44.1)
–
(80.0)
(246.2)
–
–
(59.0)
80.0
(225.2)

Revaluation
reserve
£m
93.8
–
64.6
–
–
–
158.4
–
206.0
–
–
364.4

Translation
reserve
£m
345.6
(224.3)
–
–
–
–
121.3
(272.9)
–
–
–
(151.6)

Total
other
reserves
£m
317.3
(224.3)
64.6
(44.1)
2.7
(80.0)
36.2
(272.9)
206.0
(59.0)
80.0
(9.7)

28. Acquisitions
The Group accounts for acquisitions in accordance with IFRS 3 Business Combinations. IFRS 3 requires the acquiree’s identifiable assets, liabilities and
contingent liabilities (other than non-current assets or disposal groups held for sale) to be recognised at fair value at acquisition date. In assessing fair
value at acquisition date, management make their best estimate of the likely outcome where the fair value of an asset or liability may be contingent
on a future event. In certain instances, the underlying transaction giving rise to an estimate may not be resolved until some years after the acquisition
date. IFRS 3 requires the release to profit of any acquisition reserves which subsequently become excess in the same way as any excess costs over
those provided at acquisition date are charged to profit. At each period end management assess provisions and other balances established in respect
of acquisitions for their continued probability of occurrence and amend the relevant value accordingly through the consolidated income statement or
as an adjustment to goodwill as appropriate under IFRS 3.

The Group acquired a number of subsidiaries in the year. The following table sets out the book values of the identifiable assets and liabilities acquired and
their fair value to the Group. The fair value adjustments for certain acquisitions have been determined provisionally at the balance sheet date.

Intangible assets
Property, plant and equipment
Cash
Trade receivables due within one year
Other current assets
Total assets
Current liabilities
Trade and other payables due after one year
Deferred tax liabilities
Provisions
Total liabilities
Net assets
Non-controlling interests
Fair value of equity stake in associate undertakings before acquisition of controlling interest
Goodwill
Consideration
Consideration satisfied by:
Cash
Payments due to vendors

Book
value at
acquisition
£m
2.4
21.1
57.7
115.4
75.1
271.7
(207.9)
(16.8)
–
(3.3)
(228.0)
43.7

Fair
value
adjustments
£m
230.7
–
–
–
–
230.7
–
(49.5)
(70.3)
(7.7)
(127.5)
103.2

Fair
value to
Group
£m
233.1
21.1
57.7
115.4
75.1
502.4
(207.9)
(66.3)
(70.3)
(11.0)
(355.5)
146.9
(47.2)
(208.6)
778.9
670.0

411.6
258.4

214 WPP ANNUAL REPORT 2015

Goodwill arising from acquisitions represents the value of synergies with
our existing portfolio of businesses and skilled staff to deliver services to
our clients. Goodwill that is expected to be deductible for tax purposes is
£27.8 million.

Non-controlling interests in acquired companies are measured at the
non-controlling interests’ proportionate share of the acquiree’s identifiable
net assets.

The contribution to revenue and operating profit of acquisitions completed
in the year was not material. There were no material acquisitions
completed between 31 December 2015 and the date the financial
statements have been authorised for issue.

29. Principal subsidiary undertakings
The principal subsidiary undertakings of the Group are:

Grey Global Group LLC
J. Walter Thompson Company LLC
GroupM Worldwide LLC
The Ogilvy Group LLC
Young & Rubicam, Inc
TNS Group Holdings Ltd

Country of incorporation
US
US
US
US
US
UK

All of these subsidiaries are operating companies and are 100% owned
by the Group.

A more detailed listing of the operating subsidiary undertakings is
given on pages 12 and 13. The Company directly or indirectly holds
controlling interests in the issued share capital of these undertakings
with the exception of those specifically identified.

30. Related party transactions
From time to time the Group enters into transactions with its associate
undertakings. These transactions were not material for any of the
years presented.

31. Reconciliation to non-GAAP measures of performance
The non-GAAP measures of performance shown below have been
included to provide the users of the financial statements with a better
understanding of the key performance indicators of the business.

Reconciliation of profit before interest and taxation to headline PBIT:

Profit before interest and taxation
Amortisation and impairment of
acquired intangible assets
Goodwill impairment
Gains on disposal of investments
and subsidiaries
Gains on remeasurement of equity
on acquisition of controlling interest
Investment write-downs
Restructuring costs
IT asset write-downs
Share of exceptional losses of associates
Headline PBIT
Finance income
Finance costs

Interest cover on headline PBIT

2015
£m

2013
£m
1,679.0 1,569.2 1,478.4

2014
£m

140.1
15.1

147.5
16.9

179.8
23.3

(131.0)

(186.3)

(6.0)

(9.2)
7.3
127.6
–
7.6

(165.0)
78.7
106.2
29.1
21.8

(30.0)
0.4
5.0
–
10.7
1,774.0 1,680.6 1,661.6
64.3
(267.9)
(203.6)
8.2
times

72.4
(224.1)
(151.7)
11.7
times

94.7
(262.7)
(168.0)
10.0
times

Our 2015 financial statements
Notes to the consolidated financial statements

Reconciliation of profit before taxation to headline PBT and
headline earnings:

Profit before taxation
Amortisation and impairment of
acquired intangible assets
Goodwill impairment
Gains on disposal of investments
and subsidiaries
Gains on remeasurement of equity
on acquisition of controlling interest
Investment write-downs
Restructuring costs
IT asset write-downs
Share of exceptional losses of associates
Revaluation of financial instruments
Headline PBT
Headline tax charge
Non-controlling interests
Headline earnings
Ordinary dividends paid

Dividend cover on headline earnings

Calculation of headline EBITDA:

Headline PBIT (as above)
Depreciation of property, plant and
equipment
Amortisation of other intangible assets
Headline EBITDA

2015
£m

2013
£m
1,492.6 1,451.9 1,295.8

2014
£m

140.1
15.1

147.5
16.9

179.8
23.3

(131.0)

(186.3)

(6.0)

(9.2)
7.3
127.6
–
7.6
(50.7)

(165.0)
78.7
106.2
29.1
21.8
34.7

(30.0)
0.4
5.0
–
10.7
(21.0)
1,622.3 1,512.6 1,458.0
(294.3)
(302.5)
(308.3)
(75.6)
(74.3)
(84.9)
1,229.1 1,135.8 1,088.1
397.3
460.0
2.7
2.5
times
times

545.8
2.3
times

2015
£m

2013
£m
1,774.0 1,680.6 1,661.6

2014
£m

194.7
33.7

202.0
32.7
2,002.4 1,909.5 1,896.3

197.3
31.6

Net sales margin before and after share of results of associates:
Margin
%

Margin
%

2015
£m
10,524.3
16.9% 1,774.0

2014
£m
10,064.8
16.7% 1,680.6

2013
£m
10,076.1
16.5% 1,661.6

Net sales
Headline PBIT
Share of results
of associates
(excluding
exceptional
gains/losses)
Headline
operating profit

(68.8)

(69.5)

(78.8)

16.2% 1,705.2

16.0% 1,611.1

15.7% 1,582.8

WPP ANNUAL REPORT 2015

215

Our 2015 financial statements
Notes to the consolidated financial statements

Headline diluted earnings per ordinary share:

Headline earnings (£m)
Earnings adjustment:
Dilutive effect of
convertible bonds (£m)

Diluted headline earnings (£m)
Weighted average number
of ordinary shares (m)
Headline diluted earnings per
ordinary share

Reconciliation of free cash flow:

2015
1,229.1

2014
1,135.8

2013
1,088.1

–
1,229.1

–
1,135.8

10.6
1,098.7

1,313.0

1,337.5

1,360.3

93.6p

84.9p

80.8p

2015
£m

2013
£m
1,734.3 2,108.8 1,784.1

2014
£m

61.3
4.9
72.6
27.6

13.4

69.8
11.9
52.2
25.0

51.3
10.1
56.7
42.4

5.9

7.3

164.1

(295.0)

133.4

(212.0)

(249.1)

(254.7)

(210.3)

(177.9)

(240.7)

(36.1)
(301.2)

(36.5)
(289.9)

(43.8)
(273.3)

(55.2)

(53.2)
1,263.4 1,167.5 1,219.6

(57.7)

Cash generated by operations
Plus:
Interest received
Investment income
Dividends from associates
Share option proceeds
Proceeds on disposal of property,
plant and equipment
Movement in working capital and
provisions
Less:
Interest and similar charges paid
Purchases of property, plant and
equipment
Purchases of other intangible assets
(including capitalised computer software)
Corporation and overseas tax paid
Dividends paid to non-controlling interests
in subsidiary undertakings
Free cash flow

216 WPP ANNUAL REPORT 2015

Company profit and loss account

For the year ended 31 December 2015

Turnover
Operating income
Operating profit
Interest receivable and similar income
Interest payable and similar charges
Revaluation of financial instruments
Loss on ordinary activities before taxation
Taxation on profit on ordinary activities
Loss for the year

Note
The accompanying notes form an integral part of this profit and loss account.

All results are derived from continuing activities.

Our 2015 financial statements

Notes

33
34

2015
£m
–
10.6
10.6
1.2
(146.1)
(4.0)
(138.3)
–
(138.3)

2014
£m
–
9.9
9.9
2.4
(94.2)
14.5
(67.4)
–
(67.4)

Company statement of comprehensive income

Loss for the year
Exchange adjustments of foreign currency net investments
Total comprehensive loss for the year

Note
The accompanying notes form an integral part of this statement of comprehensive income.

2015
£m
(138.3)
–
(138.3)

2014
£m
(67.4)
(10.0)
(77.4)

WPP ANNUAL REPORT 2015

217

Our 2015 financial statements

Company balance sheet

As at 31 December 2015

Fixed assets
Investments

Current assets
Debtors

– due within one year
– due after one year

Cash at bank and in hand

Current liabilities
Creditors: amounts falling due within one year
Net current liabilities
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Net assets

Capital and reserves
Called-up share capital
Share premium account
Shares to be issued
Other reserves
Capital redemption reserve
Own shares
Profit and loss account
Equity share owners’ funds

Notes

2015
£m

2014
£m

12,863.8
12,863.8

12,764.8
12,764.8

37
38

1,686.1
19.1
83.8
1,789.0

1,612.6
27.7
429.3
2,069.6

(3,855.7)
(2,066.7)
10,797.1
(1,012.3)
9,784.8

(2,424.9)
(355.3)
12,409.5
(1,744.0)
10,665.5

132.9
535.3
–
(10.0)
2.7
(496.1)
9,620.0
9,784.8

132.6
508.0
0.3
(90.0)
2.7
(93.7)
10,205.6
10,665.5

Note
The accompanying notes form an integral part of this balance sheet.

The financial statements were approved by the Board of Directors and authorised for issue on 15 April 2016.

Sir Martin Sorrell
Group chief executive

Paul Richardson
Group finance director

Registered Company Number: 111714

218 WPP ANNUAL REPORT 2015

Company statement of changes in equity

Our 2015 financial statements

For the year ended 31 December 2015

1 January 2014
Ordinary shares issues
Treasury share additions
Treasury share allocations
Treasury share cancellations
Net loss for the year
Dividends paid
Non-cash share-based incentive
plans (including share options)
Exchange adjustments of foreign
currency net investments
Share purchases – close period
adjustments
31 December 2014
Ordinary shares issues
Treasury share additions
Treasury share allocations
Net loss for the year
Dividends paid
Non-cash share-based incentive
plans (including share options)
Share purchases – close period
adjustments
31 December 2015

Ordinary
share
capital £m
134.9
0.4
–
–
(2.7)
–
–

Share
premium
£m
483.4
24.6
–
–
–
–
–

Shares to
be issued
£m
0.5
(0.2)
–
–
–
–
–

Other
reserves1
£m
–
–
–
–
–
–
–

Capital
redemption
reserve
£m
–
–
–
–
2.7
–
–

–

–
132.6
0.3
–
–
–
–

–

–
508.0
27.3
–
–
–
–

–

–
132.9

–
535.3

–

–
0.3
(0.3)
–
–
–
–

–

–
–

–

(10.0)

(80.0)
(90.0)

–
–
–
–
–

–

80.0
(10.0)

–

–
2.7
–
–
–
–
–

–

–
2.7

Notes
The accompanying notes form an integral part of this statement of changes in equity.
1 Other reserves are analysed in note 41.

Own
shares
£m
(14.3)

–

(412.5)
0.6
332.5
–
–

Profit and
loss account
£m
10,967.6
0.2
–
(0.6)
(332.5)
(67.4)
(460.0)

Total equity
share
owners’
funds
£m
11,572.1
25.0
(412.5)

–
–
(67.4)
(460.0)

–

102.2

–

(10.0)

(3.9)

(83.9)

–

(93.7) 10,205.6 10,665.5
27.5
0.2
–
(406.0)
(3.6)
(138.3)
(545.8)

(406.0)
3.6
–
–

(138.3)
(545.8)

–

(496.1)

99.0

2.9
9,620.0

82.9
9,784.8

WPP ANNUAL REPORT 2015

219

Our 2015 financial statements

Notes to the Company financial statements

addition to fixed asset investments of the aggregate amount of these
contributions of £99.0 million in 2015 (2014: £102.2 million), with a
credit to equity for the same amount.

f) Foreign currency and interest rate hedging
The Company’s policy on interest rate and foreign exchange rate
management sets out the instruments and methods available to hedge
interest and currency risk exposures and the control procedures in place
to ensure effectiveness.

The Company uses derivative financial instruments to reduce exposure
to foreign exchange risk and interest rate movements. The Company does
not hold or issue derivative financial instruments for speculative purposes.
Derivatives are initially recognised at fair value at the date a derivative
contract is entered into and are subsequently remeasured to their fair
value at each balance sheet date. The resulting gain or loss is recognised
in profit or loss immediately unless the derivative is designated and
effective as a hedging instrument, in which event the timing of the
recognition in profit or loss depends on the nature of the hedge relationship.

At the inception of the hedge relationship the entity documents the
relationship between the hedging instrument and hedged item, along
with its risk management objectives and its strategy for undertaking
various hedge transactions. Furthermore, at the inception of the hedge
and on an ongoing basis, the Company documents whether the hedging
instrument that is used in a hedging relationship is highly effective in
offsetting changes in fair values or cash flows of the hedged item.

Changes in the fair value of derivatives that are designated and qualify
as fair value hedges are recorded in profit or loss immediately, together
with any changes in the fair value of the hedged item that is attributable
to the hedged risk.

The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow or net investment hedges is deferred
in equity. The gain or loss relating to the ineffective portion is recognised
immediately in profit or loss. Amounts deferred in equity are recycled in
profit or loss in the periods when the hedged item is recognised in profit
or loss. However, when the forecast transaction that is hedged results in
the recognition of a non-financial asset or a non-financial liability, the
gains and losses previously deferred in equity are transferred from equity
and included in the initial measurement of the cost of the asset or liability.
Hedge accounting is discontinued when the hedging instrument expires
or is sold, terminated, or exercised, or no longer qualifies for hedge
accounting. At that time, any cumulative gain or loss on the hedging
instrument recognised in equity is retained in equity until the forecast
transaction occurs. If a hedged transaction is no longer expected to
occur, the net cumulative gain or loss recognised in equity is transferred
to net profit or loss for the period.

Derivatives embedded in other financial instruments or other host
contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of host contracts and
the host contracts are not carried at fair value with unrealised gains
or losses reported in the consolidated income statement.

33. Interest receivable and similar income

Interest receivable from subsidiary undertakings
Interest receivable on financial instruments

2015
£m
0.6
0.6
1.2

2014
£m
2.1
0.3
2.4

32. Accounting policies
The principal accounting policies of WPP plc (the Company) are
summarised below. These accounting policies have all been applied
consistently throughout the year and preceding year.

a) Basis of accounting
The separate financial statements of the Company are prepared under
the historical cost convention in accordance with the Companies (Jersey)
Law 1991. The company meets the definition of a qualifying entity under
FRS 100 (Financial Reporting Standard 100) issued by the Financial
Reporting Council. Accordingly, in the year ended 31 December 2015
the Company has changed its accounting framework from UK GAAP to
FRS 101 as issued by the Financial Reporting Council. This transition is
not considered to have had a material effect on the financial statements.

These financial statements were prepared in accordance with Financial
Reporting Standard 101 Reduced Disclosure Framework. As permitted by
FRS 101, the Company has taken advantage of the disclosure exemptions
available under that standard in relation to share-based payment,
financial instruments, capital management, presentation of a cash-flow
statement and certain related party transactions.

Where required, equivalent disclosures are given in the consolidated
financial statements. The financial statements are prepared on a going
concern basis, further details of which are in the Directors’ report on
page 47.

b) Translation of foreign currency
Foreign currency transactions arising from operating activities are
translated from local currency into pounds sterling at the exchange rates
prevailing at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the period end are translated at the
period-end exchange rate. Foreign currency gains or losses are credited
or charged to the profit and loss account as they arise.

c) Investments
Fixed asset investments are stated at cost less provision for impairment.

d) Taxation
Current tax is provided at amounts expected to be paid (or recovered)
using the tax rates and laws that have been enacted or substantively
enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the
computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are recognised for all
taxable temporary differences unless specifically excepted by IAS 12
Income Taxes. Deferred tax is charged or credited in the consolidated
income statement, except when it relates to items charged or credited
to other comprehensive income or directly to equity, in which case the
deferred tax is also dealt with in other comprehensive income or equity.
Deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised
if the temporary difference arises from the initial recognition of goodwill
or other assets and liabilities (other than in a business combination) in
a transaction that affects neither the tax profit nor the accounting profit.

e) Group and treasury share transactions
Where a parent entity grants rights to its equity instruments to employees
of a subsidiary, and such share-based compensation is accounted for as
equity-settled in the consolidated financial statements of the parent, IFRS
2 (share-based payment) requires the subsidiary to record an expense
for such compensation with a corresponding increase recognised in
equity as a contribution from the parent. Consequently, in the financial
statements of the parent (WPP plc), the Company has recognised an

220 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Notes to the Company financial statements

39. Creditors: amounts falling due within one year
The following are included in creditors falling due within one year:

Bank overdrafts
Corporate bonds
Amounts due to subsidiary undertakings
Interest payable on corporate bonds
Share purchases – close period commitments
Other creditors and accruals

2015
£m

2014
£m
1,010.3 1,411.9
–
888.0
45.1
78.8
1.1
3,855.7 2,424.9

367.2
2,436.5
33.4
–
8.3

Corporate bonds include €498 million of 6.625% bonds due May 2016.
In March 2015 this was reduced from €750 million as part of a bond
exchange. Further details are given in note 10.

40. Creditors: amounts falling due after more than one year
The following are included in creditors falling due after more than
one year:

34. Interest payable and similar charges

Interest payable on corporate bonds
Bank and other interest payable
Interest payable to subsidiary undertakings

2015
£m
65.1
8.9
72.1
146.1

2014
£m
64.8
16.2
13.2
94.2

35. Taxation on loss on ordinary activities
The tax assessed for the year differs from that resulting from applying
the blended rate of corporation tax in the UK of 20.25% (2014: 21.5%).
The differences are explained below:

Loss on ordinary activities before tax
Tax at the blended rate of 20.25% thereon
Factors affecting tax charge for the year:
Revaluation of financial instruments
Unrecognised losses carried forward
Current tax charge for the year

2015
£m
(138.3)
28.0

(0.8)
(27.2)
–

2014
£m
(67.4)
14.5

3.1
(17.6)
–

36. Fixed asset investments
The following are included in the net book value of fixed asset investments:

Corporate bonds
Amounts due to subsidiary undertakings

1 January 2015
Additions
31 December 2015

Subsidiary
undertakings
£m
12,764.8
99.0
12,863.8

Corporate bonds include £400 million of 6% bonds due April 2017.

Total borrowings are repayable as follows:

Fixed asset investments primarily represent 100% of the issued share
capital of WPP Jubilee Limited, a company incorporated in Great Britain.
Fixed asset investments were purchased in a share-for-share exchange.
At 31 December 2015 cost and net book value were the same. Details of
indirect subsidiaries are given in note 29.

Within one year
Between one and five years
Over five years

2015
£m

2014
£m
411.8 1,002.1
741.9
600.5
1,012.3 1,744.0

2015
£m

2014
£m
3,855.7 2,424.9
411.8 1,047.9
696.1
600.5
4,868.0 4,168.9

37. Debtors: amounts falling due within the year
The following are included in debtors falling due within one year:
2015
£m

Amounts owed by subsidiary undertakings
Other debtors

2014
£m
1,685.4 1,612.1
0.5
1,686.1 1,612.6

0.7

38. Debtors: amounts falling due after one year
The following are included in debtors falling due after more than one year:
2014
£m
27.7

Fair value of derivatives

2015
£m
19.1

41. Equity share owners’ funds
Other reserves at 31 December 2015 comprise an equity reserve of
£nil (2014: £80.0 million) and a translation reserve of £10.0 million
(2014: £10.0 million).

At 31 December 2015 the Company’s distributable reserves amounted to
£9,310.3 million (2014: £10,001.7 million). Further details of the Company’s
share capital are shown in note 26.

WPP ANNUAL REPORT 2015

221

Our 2015 financial statements

Independent auditors’ report

Opinion on financial statements of WPP plc

In our opinion:

the financial statements give a true and fair view of the

state of the Group’s and of the Parent Company’s affairs
as at 31 December 2015 and of the Group’s and the Parent
Company’s profit for the year then ended;

the Group financial statements have been properly

prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the
European Union;

the Parent company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice, including
FRS 101 “Reduced Disclosure Framework”; and

Going concern and the directors’ assessment
of the principal risks that would threaten the
solvency or liquidity of the group

We have reviewed the directors’ statement regarding the
appropriateness of the going concern basis of accounting
on page 47 to the financial statements and the directors’
statement on the longer-term viability of the Group
contained within the strategic report.

We have nothing material to add or draw attention to

in relation to:

the directors’ confirmation on page 44 that they have
carried out a robust assessment of the principal risks facing
the Group, including those that would threaten its business
model, future performance, solvency or liquidity;

the financial statements have been properly prepared in

the disclosures 44 to 47 that describe those risks and

accordance with the requirements of the Companies (Jersey)
Law 1991.

The financial statements comprise the accounting
policies, the consolidated income statement (excluding
the US Dollar information), the consolidated statement of
comprehensive income, the consolidated cash flow statement,
the consolidated balance sheet, the consolidated statement
of changes in equity, the Parent Company profit and loss
account and balance sheet and the related notes 1 to 41.
The financial reporting framework that has been applied
in the preparation of the Group financial statements is
applicable law and IFRSs as adopted by the European Union.
The financial reporting framework that has been applied in
the preparation of the Parent Company financial statements
is applicable law and United Kingdom Accounting Standards
(United Kingdom Generally Accepted Accounting Practice),
including FRS 101 “Reduced Disclosure Framework”.

Separate opinion in relation to IFRSs
as issued by the IASB

As explained in the accounting policies to the Group
financial statements, in addition to applying IFRSs as
adopted by the European Union, the group has also applied
IFRSs as issued by the International Accounting Standards
Board (IASB).

In our opinion the Group financial statements comply

with IFRSs as issued by the IASB.

explain how they are being managed or mitigated;

the directors’ statement on page 169 to the financial
statements about whether they considered it appropriate
to adopt the going concern basis of accounting in preparing
them and their identification of any material uncertainties
to the Group’s ability to continue to do so over a period
of at least twelve months from the date of approval of the
financial statements;

the director’s explanation on page 47 as to how they
have assessed the prospects of the Group, over what period
they have done so and why they consider that period to be
appropriate, and their statement as to whether they have
a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall
due over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.

We agreed with the directors’ adoption of the going
concern basis of accounting and we did not identify any
such material uncertainties. However, because not all
future events or conditions can be predicted, this statement
is not a guarantee as to the Group’s ability to continue as
a going concern.

Independence

We are required to comply with the Financial Reporting
Council’s Ethical Standards for Auditors and we confirm
that we are independent of the Group and we have fulfilled
our other ethical responsibilities in accordance with those
standards. We also confirm we have not provided any of the
prohibited non-audit services referred to in those standards.

222 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Independent auditors’ report

Our assessment of risks of material misstatement

The assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy,
the allocation of resources in the audit and directing the efforts of the engagement team. As part of our risk assessment
procedures we obtained an understanding of and tested the design, implementation and operating effectiveness of internal
controls (at Group level and at each of the full scope audit components) that respond to the identified risks, in addition to
performing the substantive audit procedures detailed below.

The Audit Committee has requested that while not required under International Standards on Auditing (UK and Ireland),

we include in our report any significant key observations in respect of these assessed risks of material misstatement.

Risk description

How the scope of our audit responded to the risk

Key observations

Revenue recognition – accounting for media
volume income

Assessing the timing of recognition and valuation
of media volume income earned from media
owners is an area of complexity and judgement
due to the need for management to determine at
what point persuasive evidence of agreement
with the media owner exists and to interpret the
variety of language used in the underlying
contractual terms with media owners.

Assessing the valuation of media volume income
is also an area of complexity with regards to
whether the media volume income is required to
be passed back to the client and on what basis to
calculate such passback. Given the complexity
and judgement involved the timing of recognition
and the valuation of media income are
considered to be key audit risks.

Refer to page 118 (Review of the Audit
Committee) and page 174 (accounting policy).

We have:

• Checked that management could demonstrate that

persuasive evidence exists in respect of the arrangement
with the media owner at the time media volume income is
recorded, and viewed this evidence on a sample basis.

• Challenged the timing of recognition and valuation of
media volume income earned from media owners by
understanding the rationale for income recognised in the
current year in respect of media investment activity in prior
periods and verifying the accounting for arrangements that
are non-coterminous with the Group’s year end.

• Assessed management’s interpretation of contractual terms

with media owners and clients in determining the valuation
of media volume income and determined whether
consistent judgement has been applied year on year.

• Assessed the ageing of balance sheet provisions for the pass
back of media volume income to clients and challenged
management where brought forward provisions had been
released.

• Analysed and understood the trend of media volume

income recognised against prior year activity.

Goodwill

We have:

Given the magnitude of the goodwill balance
and the continued economic uncertainty in
certain regions, it is important to ensure that the
goodwill impairment review is approached in a
robust manner to identify potential impairments,
where necessary.

• Challenged the key assumptions used in the impairment
model for goodwill, including specifically the operating
cash flow projections, discount rates, and long term growth
rates. The key assumptions used for estimating cash flow
projections in the Group’s impairment testing are those
relating to revenue growth and operating margin.

Determining whether the carrying value of
goodwill is recoverable requires management
to make significant estimates concerning the
estimated future cash flows and associated
discount rates and growth rates based on
management’s view of future business prospects.
The Group is highly acquisitive. As such, given
the magnitude of the goodwill balance (2015:
£10,671 million, 2014: £9,979 million), and the
relative sensitivity to certain inputs to the
impairment testing process, in particular the
discount rate, the valuation of goodwill is
considered a key audit risk.

Refer to page 118 (Review of the Audit
Committee), page 172 (accounting policy)
and page 194 (financial disclosures).

• Compared these assumptions to externally derived data

(where applicable) as well as forming our own assessment.

• Our internal fair value specialists assisted in computing
an independent assessment of the discount rates used
and assessing the methodology used in preparing the
impairment testing model.

• Tested the integrity and mathematical accuracy of the

impairment model.

• Considered the sensitivity of the impairment testing model

to changes in key assumptions.

We also considered the adequacy of the Group’s disclosures
in respect of its goodwill impairment testing and whether
disclosures about the sensitivity of the outcome of the impairment
assessment to reasonably possible changes in key assumptions
properly reflected the risks inherent in such assumptions.

The results of our testing
were satisfactory. We
consider the timing and
valuation of media
volume income
recognised in the year
to be reasonable.

The results of our testing
were satisfactory and
we concur that the
assumptions used in
the impairment model,
including the discount
rate, and level of
goodwill impairment
booked in the year
are appropriate.

WPP ANNUAL REPORT 2015

223

Our 2015 financial statements
Independent auditors’ report

Risk description

Taxation reserves

There is uncertainty in respect of resolving
matters with tax authorities around the world.
The highly disaggregated nature of the Group
coupled with its acquisitive nature means that
there are a number of different tax jurisdictions
in which the Group could be liable to pay tax,
making potential tax exposures a key audit risk.
Therefore assessing the Group’s exposure to
significant tax risks and the level of provisions
recognised is an area of judgement.

Refer to page 118 (Review of the Audit
Committee), page 176 (accounting policy)
and page 190 (financial disclosures).

How the scope of our audit responded to the risk

Key observations

We have:

• Discussed and considered all significant taxation exposures

with Group management including their tax specialists.

• Together with our internal taxation specialists we

challenged the estimates and judgements made by
management when calculating the income tax payable
in each territory and the associated provisions held.

We reviewed correspondence with taxation authorities in
significant locations where available, as well as reviewing the
support or opinions received from external counsel and other
advisors where management has utilised such opinions to
make assumptions on the level of taxation payable.

The results of our testing
were satisfactory.
There were no material
exceptions noted
when corroborating
Management’s
judgement to the
correspondence and
support reviewed
for those significant
tax reserves.

Last year our report included one other risk which is not included in our report this year: Restructuring costs and IT
transformation (there has been no significant restructuring programme and the IT transformation costs have not been
as significant during the year).

The description of risks above should be read in conjunction with the significant issues considered by the Audit

Committee discussed on page 118.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our

opinion thereon, and we do not provide a separate opinion on these matters.

Our application of materiality

We define materiality as the magnitude of misstatement
in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person
would be changed or influenced. We use materiality both
in planning the scope of our audit work and in evaluating
the results of our work.

We have determined that the critical benchmark for the
Group was pre-tax profit because we consider this measure
to be what the shareholders believe to be a key performance
indicator for the Group. We determined materiality for the
Group to be £76.6 million (2014: £62.2 million), which,
as in 2014, is 5% of pre-tax profit. We also considered
this measure to be suitable having compared to another
benchmark: our materiality is below 1% of equity (2014:
below 1%). Materiality is higher than for the year ended
31 December 2014 primarily as a result of higher pre-tax
profit achieved in 2015.

We agreed with the Audit Committee that we would
report to the Committee all audit differences in excess of
£0.75 million (2014: £0.5 million) that affected the

consolidated income statement. Where differences only
impacted the consolidated balance sheet, we reported on
differences over £1.0 million (2014: £1.0 million). This is
shown in the graph below. We also reported differences
below that threshold that, in our view, warranted reporting
on qualitative grounds, together with disclosure matters
that we identified when assessing the overall presentation
of the financial statements.

Proﬁt before tax
£1,493 million

Financial Statements
Materiality
£76.6 million
Threshold for reporting
aggregated consolidated
balance sheet misstatements
to the Audit Committee
£1.0 million
Threshold for reporting
consolidated income
statement misstatements
to the Audit Committee
£0.75 million

224 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Independent auditors’ report

An overview of the scope of our audit

As a result of the highly disaggregated nature of the Group,
with operations in 112 countries and more than 3,000
offices among more than 150 companies within the Group,
a significant portion of audit planning time is spent so that
the scope of our work is appropriate to address the Group’s
identified risks of material misstatement. In selecting the
components that are in scope each year, we refresh and
update our understanding of the Group and its environment,
including obtaining an understanding of the Group’s system
of internal controls, and assessing the risks of material
misstatement at the Group level, in order to check that the
units selected provide an appropriate basis on which to
undertake audit work to address the identified risks of
material misstatement. Such audit work represents a
combination of procedures, all of which are designed to
target the Group’s identified risks of material misstatement
in the most effective manner possible. Those entities subject
to audit provide for coverage of 83% of the Group’s
consolidated revenue (2014: 83%); achieved through a
combination of direct testing and specified audit procedures
(including substantive analytical review procedures)
performed by the Group auditor and/or component auditors
across the world. Our audit work at the components is
executed at levels of materiality appropriate for such
components, which in all instances are lower than Group
materiality. In order to support our conclusion that there
were no significant risks of material misstatement of the
aggregated financial information of the remaining
components not subject to audit, we tested the consolidation
process and carried out analytical procedures at the parent
entity level using our bespoke data analytics tool.

How we work closely with component
auditors

The Group audit team plans its visits to component auditors
based on a carefully designed programme, which considers
a variety of factors including size of entity and number of
significant risks; this programme is put in place to check
that appropriate oversight and guidance is provided to the
component auditors through a combination of:

upfront team briefings to all component teams;
site visits;
central review of documentation; and
risk assessment discussions and detailed

workpaper reviews.

These are designed so that the Senior Statutory
Auditor visits all key locations across the Group on a
regular basis. In addition we assess the competence of
our component auditors.

In years when we do not visit a key location we will:
include the component audit partner in our team briefing;
discuss their risk assessment; and
review documentation of the findings from their work.
We also hold quarterly meetings with management

at a regional and global level in order to update our
understanding of the Group and its environment on
an on-going basis.

Opinion on other matters prescribed
by our engagement letter

In our opinion:

the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with the
UK Companies Act 2006 as if that Act had applied to the
Company; and

the information given in the Strategic Report and the

Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements.

Matters on which we are required to report
by exception

Adequacy of explanations received and
accounting records

Under the Companies (Jersey) Law 1991 we are required to
report to you if, in our opinion:

we have not received all the information and

explanations we require for our audit; or

proper accounting records have not been kept by the
Parent Company, or proper returns adequate for our audit
have not been received from branches not visited by us; or
the financial statements are not in agreement with the

accounting records and returns.

We have nothing to report in respect of these matters.

WPP ANNUAL REPORT 2015

225

Our 2015 financial statements
Independent auditors’ report

Directors’ remuneration

Under our engagement letter we are required to report if in
our opinion certain disclosures of directors’ remuneration
that would be required by the UK Companies Act 2006
have not been made or the part of the Directors’
Remuneration Report to be audited is not in agreement
with the accounting records and returns. We have nothing
to report arising from these matters.

Corporate Governance Statement

Under the UK Listing Rules we are also required to review
part of the Corporate Governance Statement relating to the
company’s compliance with certain provisions of the UK
Corporate Governance Code. We have nothing to report
arising from our review.

Our duty to read other information in the Annual Report

Under International Standards on Auditing (UK and
Ireland), we are required to report to you if, in our opinion,
information in the annual report is:

materially inconsistent with the information in the

audited financial statements; or

apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Group acquired in
the course of performing our audit; or

otherwise misleading.
In particular, we are required to consider whether we
have identified any inconsistencies between our knowledge
acquired during the audit and the directors’ statement that
they consider the annual report is fair, balanced and
understandable and whether the annual report
appropriately discloses those matters that we
communicated to the audit committee which we consider
should have been disclosed. We confirm that we have not
identified any such inconsistencies or misleading statements.

Respective responsibilities of directors
and auditor

As explained more fully in the Directors’ Responsibilities
Statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they
give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in
accordance with applicable law and International Standards

226 WPP ANNUAL REPORT 2015

on Auditing (UK and Ireland). We also comply with
International Standard on Quality Control 1 (UK and
Ireland). Our audit methodology and tools aim to ensure
that our quality control procedures are effective,
understood and applied. Our quality controls and systems
include our dedicated professional standards review team
and independent partner reviews.

This report is made solely to the company’s members,

as a body, in accordance with Article 113A of the
Companies (Jersey) Law 1991. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to them
in an auditor’s report and/or those further matters we have
expressly agreed to report to them on in our engagement
letter and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report,
or for the opinions we have formed.

Scope of the audit of the financial
statements

An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the
accounting policies are appropriate to the Group’s and
the Parent Company’s circumstances and have been
consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made
by the directors; and the overall presentation of the
financial statements. In addition, we read all the financial
and non-financial information in the annual report to
identify material inconsistencies with the audited financial
statements and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the
course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies
we consider the implications for our report.

Richard Muschamp
for and on behalf of Deloitte LLP
Chartered Accountants and Recognised Auditor
London, United Kingdom
15 April 2016

Five-year summary

Income statement
Billings1
Revenue
Net sales1
Operating profit
Headline EBITDA2
Headline PBIT2
Profit before taxation
Headline PBT2
Profit for the year

Net sales margin2

Balance sheet
Non-current assets3
Net current liabilities4
Net assets
Net debt
Average net debt

Our people
Revenue per employee (£000)
Net sales per employee (£000)
Staff cost per employee (£000)
Average headcount
Share information
Headline5 – basic earnings per share

– diluted earnings per share

Reported – basic earnings per share

– diluted earnings per share

Dividends per share6
Dividend pay-out ratio on headline diluted earnings per share
Share price – high

– low

Market capitalisation at year-end (£m)

Our 2015 financial statements

2015
£m

2014
£m

2013
£m

2012
£m

2011
£m

47,631.9
12,235.2
10,524.3
1,632.0
2,002.4
1,774.0
1,492.6
1,622.3
1,245.1

46,186.3
11,528.9
10,064.8
1,507.3
1,909.5
1,680.6
1,451.9
1,512.6
1,151.5

46,209.3
11,019.4
10,076.1
1,410.3
1,896.3
1,661.6
1,295.8
1,458.0
1,012.1

44,405.3
10,373.1
9,514.8
1,241.1
1,755.7
1,531.0
1,091.9
1,317.1
894.7

44,791.8
10,021.8
9,238.5
1,192.2
1,640.5
1,429.0
1,008.4
1,229.1
916.5

16.9%

16.7%

16.5%

16.1%

15.5%

15,373.8
(840.1)
8,015.8
(3,210.8)
(3,562.3)

14,107.3
(521.4)
7,826.8
(2,275.4)
(3,000.8)

13,225.3
(384.6)
7,846.5
(2,240.4)
(2,988.7)

13,452.9
(1,047.2)
7,060.6
(2,821.2)
(3,202.5)

13,406.2
(1,250.0)
6,894.3
(2,464.8)
(2,811.0)

2015

2014

2013

2012

2011

97.9
84.2
53.3
124,930

95.4p
93.6p
90.0p
88.4p
44.69p
48%
1,611.0p
1,304.0p
20,236.9

95.0
82.9
53.1
121,397

86.9p
84.9p
82.4p
80.5p
38.20p
45%
1,383.0p
1,117.0p
17,831.3

94.1
86.0
55.3
117,115

84.1p
80.8p
72.4p
69.6p
34.21p
42%
1,383.0p
905.5p
18,612.5

90.6
83.1
53.3
114,490

77.7p
73.4p
66.2p
62.8p
28.51p
39%
894.5p
669.0p
11,236.8

91.1
84.0
53.4
109,971

71.0p
67.7p
67.6p
64.5p
24.60p
36%
846.5p
578.0p
8,554.4

Notes
1 Billings and net sales are defined on page 228.
2 The calculation of ‘headline’ measures of performance (including headline EBITDA, headline PBIT, net sales margin and headline PBT)

is set out in note 31 of the financial statements.

3 As described in note 15, prior year balance sheets have been restated to reduce both the deferred tax assets and deferred tax liabilities,

by a corresponding amount. No restatement was required in 2012 and 2011.

4 The Group has restated prior year balance sheets to reclassify all income tax creditors from non-current liabilities to current liabilities.
5 Headline earnings per share for 2015, 2014 and 2013 is set out in note 9 of the financial statements.
6 Dividends per share represents the dividends declared in respect of each year.

The information on this page is unaudited.

WPP ANNUAL REPORT 2015

227

Our 2015 financial statements

Financial glossary

Term used in Annual Report

US equivalent or brief description

Issued

American Depositary Receipts/American Depositary Shares. The Group uses
the terms ADR and ADS interchangeably. One ADR/ADS represents five
ordinary shares

Average net debt is calculated as the average daily net borrowings of the
Group. Net debt at a period end is calculated as the sum of the net borrowings
of the Group, derived from the cash ledgers and accounts in the balance sheet

Billings comprise the gross amounts billed to clients in respect of commission-
based/fee-based income together with the total of other fees earned

Ordinary shares, issued and fully paid

The Group uses US dollar-based, constant currency models to measure
performance. These are calculated by applying budgeted 2015 exchange
rates to local currency reported results for the current and prior year. This gives
a US dollar-denominated income statement which exclude any variances
attributable to foreign exchange rate movements

Employee share ownership plan

Net new billings represent the estimated annualised impact on billings of new
business gained from both existing and new clients, net of existing client
business lost. The estimated impact is based upon initial assessments of the
clients’ marketing budgets, which may not necessarily result in actual billings
of the same amount

The euro area inter-bank offered rate for euro deposits

Capital lease

Free cash flow is calculated as headline operating profit before non-cash
charges for share-based incentive plans, depreciation of property, plant and
equipment and amortisation of other intangible assets, including dividends
received from associates, interest received, investment income received,
proceeds from the issue of shares, and proceeds from the disposal of property,
plant and equipment, less corporation and overseas tax paid, interest and
similar charges paid, dividends paid to non-controlling interests in subsidiary
undertakings, purchases of property, plant and equipment and purchases of
other intangible assets

Ownership with absolute rights in perpetuity

Headline PBT less taxation (excluding tax charge/deferred tax relating to
gains on disposals of investments and subsidiaries, deferred tax impact of
the amortisation of acquired intangible assets and other goodwill items and
tax credit relating to restructuring costs)

Profit before finance income/costs and revaluation of financial instruments,
taxation, investment gains/losses and write-downs, goodwill impairment and
other goodwill write-downs, amortisation and impairment of intangible assets, IT
asset write-downs, share of exceptional losses/gains of associates, depreciation of
property, plant and equipment, losses/gains on remeasurement of equity interest
on acquisition of controlling interest and Group restructuring costs

PBIT excluding share of results of associates before investment gains/losses
and write-downs, goodwill impairment and other goodwill write-downs,
amortisation and impairment of acquired intangible assets, gains/losses on
remeasurement of equity interest on acquisition of controlling interest, IT asset
write-downs and Group restructuring costs

Allotted

ADRs/ADSs

Average net debt and net debt

Billings

Called-up share capital

Constant currency

ESOP

Estimated net new billings

EURIBOR

Finance lease

Free cash flow

Freehold

Headline earnings

Headline EBITDA

Headline operating profit

228 WPP ANNUAL REPORT 2015

Our 2015 financial statements
Financial glossary

Term used in Annual Report

Headline PBIT

Headline PBT

IFRS/IAS

LIBOR

Net sales/Net sales margin

OCI

Operating margin

Profit

Profit attributable to equity holders of the parent

Pro forma (‘like-for-like’)

Sarbanes-Oxley Act

Share capital

Share premium account

Shares in issue

UK Corporate Governance Code

US equivalent or brief description

Profit before finance income/costs and revaluation of financial instruments,
taxation, gains/losses on disposal of investments and subsidiaries, investment
write-downs, goodwill impairment and other goodwill write-downs,
amortisation and impairment of acquired intangible assets, Group
restructuring costs, IT asset write-downs, share of exceptional gains/losses of
associates and gains/losses on remeasurement of equity interest on acquisition
of controlling interest

Profit before taxation, gains/losses on disposal of investments and subsidiaries,
investment write-downs, goodwill impairment and other goodwill write-
downs, amortisation and impairment of acquired intangible assets, Group
restructuring costs, IT asset write-downs, share of exceptional gains/losses of
associates, gains/losses arising from the revaluation of financial instruments,
and gains/losses on remeasurement of equity interest on acquisition of
controlling interest

International Financial Reporting Standard/International Accounting Standard

The London inter-bank offered rate

Net sales are revenue less direct costs. Net sales margin is calculated as
headline PBIT (defined above) as a percentage of net sales. The Group has
previously used the terms gross margin and gross profit to refer to net sales.

Consolidated statement of comprehensive income

Headline PBIT as a percentage of net sales

Income

Net income

Pro forma comparisons are calculated as follows: current year, constant
currency actual results (which include acquisitions from the relevant date of
completion) are compared with prior year, constant currency actual results,
adjusted to include the results of acquisitions for the commensurate period
in the prior year. The Group uses the terms ‘pro forma’ and ‘like-for-like’
interchangeably

An Act passed in the US to protect investors by improving the accuracy and
reliability of corporate disclosures made pursuant to the securities laws, and for
other purposes

Ordinary shares, capital stock or common stock issued and fully paid

Additional paid-in capital or paid-in surplus (not distributable)

Shares outstanding

The UK Corporate Governance Code published by the Financial Reporting
Council dated September 2014

WPP ANNUAL REPORT 2015

229

About share ownership

Information for share owners

Share owners’ register

A register of share owners’ interests is kept at the Company’s registrar’s office in Jersey and is available for inspection
on request. The register includes information on nominee accounts and their beneficial owners.

Analysis of shareholdings at 31 December 2015

Issued share capital as at 31 December 2015: 1,329,366,024 ordinary shares.

Number of shares held
1-100
101-250
251-500
501-1,000
1,001-5,000
5,001-10,000
10,001-25,000
25,001-50,000
50,001-100,000
100,001-500,000
500,001-1,000,000
1,000,001-2,000,000
2,000,001-3,000,000
3,000,001-4,000,000
4,000,001 and above
Total

Number of holders
2,364
1,644
2,105
2,103
2,490
729
934
749
720
1,143
243
110
43
24
45
15,446

% owners
15.3
10.6
13.6
13.6
16.1
4.7
6.0
4.8
4.7
7.4
1.6
0.7
0.3
0.2
0.4
100%

Shareholdings
80,808
299,681
797,953
1,564,693
5,740,105
5,300,413
15,258,664
27,062,073
52,570,409
254,509,512
170,103,410
149,287,371
105,862,725
80,581,597
460,346,610
1,329,366,024

% outstanding*
0.0
0.0
0.1
0.1
0.4
0.4
1.1
2.0
4.0
19.1
12.8
11.2
8.0
6.1
34.7
100%

* All calculations are based on the percentage outstanding on the share register as of 31 December 2015.

Share owners by geography
UK
US
Rest of world
Total

%
32
36
32
100

Share owners by type
Institutional investors
Employees
Other individuals
Total

%
93
3
4
100

Share owners by geography %

Share owners by type %

o UK
o US
o Rest of world

32
36
32

o Institutional investors
o Employees
o Other individuals

93
3
4

* In addition 1.3% of the Company’s

share capital (excluding treasury shares)
is under option to employees.

WPP ANNUAL REPORT 2015

231

About share ownership
Information for share owners

Dividends

Ordinary share owners have received the following dividends in respect of each financial year:

Interim or first interim dividend per ordinary share
Final or second interim dividend per ordinary share
Total

2015
15.91p
28.78p
44.69p

2014
11.62p
26.58p
38.20p

2013
10.56p
23.65p
34.21p

2012
8.80p
19.71p
28.51p

2011
7.46p
17.14p
24.60p

Financial calendar

Access numbers/Ticker symbols

The 2015 final dividend will be paid on 4 July 2016

to share owners on the register at 10 June 2016.

Interim statements for the half-year ending 30 June

are issued in August.

Quarterly trading announcements are issued in April

and October.

Interim dividends are paid in November.
Preliminary announcements of results for the financial

year ending 31 December are issued in the first quarter.
Annual Reports are posted to share owners in April.
Annual General Meetings are held in London in June.

Share price

The closing price of the shares at 31 December was as follows:

At 14
April 2016

2015

2014

2013

2012

2011

Ordinary
10p shares 1,656.0p 1,563.0p 1,345.0p 1,380.0p 888.0p 675.5p

Share price information is also available online at
wpp.com/investor.

Online information

WPP’s public website, wpp.com, provides current and
historical financial information, news releases, trading reports
and share price information. Go to wpp.com/investor.

Ordinary shares
American
Depositary Shares

NASDAQ
–

Reuters
Bloomberg
WPP.L WPP LN

WPPGY WPPGY.O WPPGY US

Registrar and transfer office

Computershare Investor Services (Jersey) Limited
Queensway House
Hilgrove Street
St Helier
Jersey
JE1 1ES
Enquiry number: 0870 707 1411

American Depositary Receipts (ADRs) office

Citibank N.A.
PO Box 43077
Providence
RI 02940-3077

Telephone enquiries: within the US +1 877 248 4237
Telephone enquiries: outside the US +1 781 575 4555
E-mail enquiries: citibank@shareholders-online.com

WPP registered office

Queensway House
Hilgrove Street
St Helier
Jersey
JE1 1ES

232 WPP ANNUAL REPORT 2015

The Company’s registered number is 111714.

About share ownership
Information for share owners

American Depositary Receipts (ADRs)

Tax information

Each ADR represents five ordinary shares.

ADR holders receive the annual and interim reports

UK taxation

issued by WPP plc.

WPP plc is subject to the informational requirements of
the US securities laws applicable to foreign companies and
files an annual report on Form 20-F and other information
with the US Securities and Exchange Commission. These
documents are available at the Commission’s website,
sec.gov. Our reports on Form 20-F are also available from
our Investor Relations department in New York.

ADR dividends

ADR holders are eligible for all stock dividends or other
entitlements accruing on the underlying WPP plc shares and
receive all cash dividends in US dollars. These are normally
paid twice a year.

Dividend cheques are mailed directly to the ADR holder
on the payment date if ADRs are registered with WPP’s US
depositary. Dividends on ADRs that are registered with
brokers are sent to the brokers, who forward them to ADR
holders. WPP’s US depositary is Citibank N.A. (address on
page 232).

Dividends per ADR in respect of each financial year are

set out below.

In £ sterling
Interim1
Final2
Total

In US dollars3
Interim1
Final2
Total

2015

2014

2013

2012

2011

79.55p 58.10p 52.80p 44.00p 37.30p
143.90p 132.90p 118.25p 98.55p 85.70p
223.45p 191.00p 171.05p 142.55p 123.00p

95.72¢

59.80¢
82.61¢
121.62¢
219.99¢ 218.95¢ 185.01¢ 156.22¢ 137.39¢
341.61¢ 314.67¢ 267.62¢ 225.97¢ 197.19¢

69.75¢

1 Prior to 2013, first interim dividend.
2 Prior to 2012, second interim dividend.
3 These figures have been translated for convenience purposes only, using the
approximate average rate for the year shown on page 180. This conversion
should not be construed as a representation that the pound sterling amounts
actually represent, or could be converted into, US dollars at the rates indicated.

Dollar amounts paid to ADR holders depend on the
sterling/dollar exchange rate at the time of payment.

No withholding tax is imposed on dividends paid to ADR

holders and there will be no entitlement to offset any part
of the notional UK taxation credit against any US taxation
liability. The dividends received will be subject to US taxation.

Dividends received on or before 5 April 2016
Cash dividends received from WPP plc by individual share
owners resident in the UK will generally be subject to UK
income tax on the gross amount of any dividends paid by
WPP with a tax credit equal to one-ninth of the dividend
received; tax credits are not repayable to UK holders with
no tax liability.

Individuals whose income is within the basic tax rate

band are liable to tax at 10% on the dividend income
and the tax credit will satisfy their income tax liability
on UK dividends. For higher tax rate payers the rate of
tax on dividend income for dividends is 32.5% whilst for
individuals with income of £150,000 or more, the rate
is 37.5%, with relief available for the tax credit referred
to above. The gross amount of the cash dividend will be
regarded as the top slice of the WPP share owner’s income
and will be subject to UK income tax as set out above.

Dividends received from 6 April 2016
From 6 April 2016, the dividend tax credit previously
available to UK resident individuals is replaced by a
Dividend Allowance in the form of a 0% tax rate on the
first £5,000 of dividend income received each tax year.
Any dividends received over the £5,000 allowance are
taxed at a rate of 7.5% on dividend income for individuals
in the basic rate band, 32.5% for higher rate tax payers and
at 38.1% for individuals with income of £150,000 or more.

Capital gains tax
The market value of an ordinary share at 31 March 1982
was 39p. Since that date rights issues have occurred in
September 1986, August 1987 and April 1993. For capital
gains tax purposes the acquisition cost of ordinary shares
is adjusted to take account of such rights issues. Since any
adjustments will depend on individual circumstances, share
owners are advised to consult their professional advisors.

Capital gains
As liability to capital gains tax on a disposal of WPP shares
will depend on individual circumstances, share owners are
advised to consult their professional advisors.

WPP ANNUAL REPORT 2015

233

About the artists

The island whose art is finding a place in the sun

Natica Betares
Colourful mural (front cover)
Photograph by Patricio Molina Vargas

or the past 10 years, WPP’s Annual Reports
have drawn visual inspiration from different
geographical markets important to our clients
and our companies. Since 2005, we have looked to
artists from India, China, Africa, Brazil, the US, Eastern
Europe, the UK, Indonesia, Mexico and last year,
Africa again, for our visual cue.

This year we focus on Cuba, having become

the first major international communications services
group with a presence on the island.

WPP is looking to deliver all its communications

and marketing services according to the specifics
of the Cuban market and seeks to contribute to the
economic development of the island.

234 WPP ANNUAL REPORT 2015

WPP, and our global network of agencies, are

working to provide our international clients with
strategic counsel on the institutional and economic
environment in Cuba, as well as advice and guidance
in planning for eventual Cuba market entry and
brand visibility on the island nation. In these areas,
the Group will deliver its services in collaboration
with front-rank local companies as well as promoting
foreign projection of the products and services
generated from Cuba.

About the artists
The island whose art is finding a place in the sun

Towards the end of the 20th century, in post-

revolutionary Cuba, home-grown and often self-taught art
asserted itself. Folk, naïve and primitive styles developed.
These densely patterned and coloured works, often
depicting enjoyment of life despite hardship, are usually
devoid of classically taught perspective and scale.

One of the best known folk art collectives to emerge

around this time was the Grupo Bayate, founded in 1994
by Luis Rodríguez Arias (b.1942).

During the late 20th century, the Cuban avant garde

moved towards Hyperrealism, and artists including
Manuel Mendive (b.1944) started working in conceptual
art. Mendive is considered Cuba’s foremost living artist
and has exhibited worldwide. His works, which include
performance and soft sculpture, draw on Cuba’s
African heritage.

Cuban art can be found throughout the US. There are

dedicated spaces in the Cuban Foundation Museum in
Florida, which controversially houses the collection of the
former dictator General Fulgencio Batista, overthrown by
Fidel Castro in 1959. The Bronx Museum of the Arts in
New York has a continuing collaboration with the Museo
Nacional de Bellas Artes.

The market in Cuban art is burgeoning, as contemporary

and established Cuban names draw collectors and art
lovers from around the globe. The fame of these artists can
only grow.

s Cuba’s relations with the US thaw,
the Caribbean island’s art is also
coming in from the cold.

There are said to be more artists in

Cuba per head of population than in any other
country. Vibrant work spills out everywhere
and anywhere: it’s on walls and pavements,
in homes and warehouses.

In Cuba’s state and private galleries, professionals from

long-established and highly-regarded academies rub
shoulders with self-taught artists. The highly-esteemed
contemporary scene is showcased at the Havana Biennale,
and the main historic movements are represented in
Havana’s Museo Nacional de Bellas Artes.

Early works include costumbrismo paintings, a genre

introduced from colonial Spain that spread throughout
Latin America in the early 19th century. At the time,
costumbrismo seemed to herald a new realism by
concentrating on the details of ordinary life, although in
truth it was highly idealised. Today the genre has come to
embrace the peasant life and folkloric themes typified by
Oscar García Rivera (1916-1971).

By the 1920s, Cuba had its own avant garde movement,
the Vanguardia, in which European Cubism, Surrealism and
Primitivism were blended with Cuban art: a Cuban Cubism.
Leading artists, particularly graduates of the elite

Academy of San Alejandro, sought inspiration from
Europe’s cultural centres, particularly Madrid and Paris.
This produced some of Cuba’s most celebrated artists,
including Eduardo Abela (1889-1965), who was influenced
by Chagall and Mexican murals.

WPP ANNUAL REPORT 2015

235

About the artists
The island whose art is finding a place in the sun

1 page 230

2 page 9

3 page 86

4 page 170

5 page 112

236 WPP ANNUAL REPORT 2015

About the artists
The island whose art is finding a place in the sun

1 Eduardo Abela

Guajiros (Peasants)
Courtesy of El Museo Nacional
de Bellas Artes, La Habana, Cuba

2 Yanelys Saavedra
From My Balcony
Courtesy of Gallery of
International Naïve Art, Tel Aviv

3 Manuel Mendive

Oshun
Courtesy of Pan American
Art Projects, Miami, Florida

4 Javier Gonzalez Gallosa

Pescando (Fishing)
Courtesy of Indigo Arts Gallery,
Philadelphia

5 Mario Sánchez

Twins in Conch Town Garden
Courtesy of The Gallery On Greene,
Florida

6 Luis Joaquin Rodriguez Arias

Ramón
Courtesy of Gallery of
International Naïve Art, Tel Aviv

7 Nicola Heindl

Artwork from the CD,
Putumayo Presents Cuba

8 Alberto Peña

Despertar (Awaking)
Courtesy of Cernuda Arte,
Coral Gables, Florida

9 Oscar García Rivera

Vendedores Callejeros en la Habana
Vieja (Street Vendors in Old Havana)
Courtesy of Cernuda Arte, Coral
Gables, Florida

6 page 162

7 page 106

8 page 15

9 page 20, page 154

WPP ANNUAL REPORT 2015

237

Awards for recent WPP Annual Reports

2011

2012

2013

2014

LACP Vision Awards

Two Gold Awards,
and ranked in Top 100
Annual Reports
Worldwide and Top 50
Annual Reports EMEA.

Galaxy Awards

Honours, Design.

Communicate
magazine’s Corporate
and Financial Awards
Silver for Best Online
Annual Report.

PwC Building
Public Trust Awards
Highly Commended,
People Reporting.

Gold Award and
ranked in the Top 50
Annual Reports EMEA.

International

ARC Awards
Gold Award.

Galaxy Awards

Gold Award.

Communicate
magazine’s Corporate
and Financial Awards
Gold for Best Printed
Report, Silver for Best
Online Report.

PwC Building
Public Trust Awards
Winner.

Astrid Awards (for
design communications)
Bronze Award.

LACP Vision Awards
Ranked 5 out of Top 100
Annual Reports
Worldwide.
Ranked 3 out of Top 80
Annual Reports EMEA.

LACP Vision Awards
Ranked 1 out of Top 100
Annual Reports
Worldwide.
Ranked 1 out of Top 50
Annual Reports EMEA.

LACP Vision Awards

Four Platinum Awards:

LACP Vision Awards
Three Platinum Awards:

• Industry Excellence,

Print.

• Industry Excellence,

Online.

• Best Annual Report

Narrative, Worldwide.

• Best Annual Report
Narrative, EMEA.

• Industry Excellence.
• Best Agency, Worldwide.
• Best Agency, EMEA.

Digital Impact Awards
Gold, Best Online Annual
Report.

International

ARC Awards
Gold and Silver.

Galaxy Awards

Silver, Print and Honours,
Design.

238 WPP ANNUAL REPORT 2015

WPP news and updates

You can sign up to receive WPP’s
public monthly online news bulletin at
wpp.com/subscriptions

Become a fan on Facebook
facebook.com/wpp

Watch us on YouTube
youtube.com/wpp

Connect with us on LinkedIn
linkedin.com/company/wpp

Join the WPP Circle on Google+
plus.google.com/+wpp

For information in a mobile format
please visit m.wpp.com

WPP ANNUAL REPORT 2015

239

Where to find us

Parent company centres

Contact points

Business development

Investor relations
Paul Richardson
Group finance director
Tel +1 (212) 632 2200
paul.richardson@wpp.com

Chris Sweetland
Deputy Group finance director
Tel +44 (0)20 7408 2204
chris.sweetland@wpp.com

Fran Butera
Investor relations director
Tel +1 (212) 632 2235
fran.butera@wpp.com

Investor information
Investor relations material and our
financial statements are available
online at wpp.com/investor.

Corporate communications
and media relations
Feona McEwan
Group communications director
Tel +44 (0)20 7408 2204
feona.mcewan@wpp.com

North America
Kevin McCormack
Tel +1 (212) 632 2239
kevin.mccormack@wpp.com

Asia Pacific
Juliana Yeh
Tel +852 2280 3790
juliana.yeh@wpp.com

EMEA
Chris Wade
Tel +44 (0)20 7408 2204
chris.wade@wpp.com

Sustainability
Vanessa Edwards
Head of sustainability
Tel +44 (0)20 7408 2204
vanessa.edwards@wpp.com

WPP New York
100 Park Avenue
New York NY 10017
Tel +1 (212) 632 2200

WPP London
27 Farm Street
London W1J 5RJ
Tel +44 (0)20 7408 2204

WPP Asia Pacific
Yebisu Garden Place Tower, 25/F
4-20-3 Ebisu
Shibuya-ku
Tokyo 150-6025
Tel +813 3280 9506

WPP China
WPP Campus: Room 1504B
399 Heng Feng Road
Shanghai
Tel +8621 2287 7788

Group information

If you would like further general
information about WPP, its companies
or any of the programs, publications
or initiatives mentioned in this
Annual Report, please visit our website,
wpp.com, or email
enquiries@wpp.com

Parent company
regional contacts

WPP Asia Pacific
Scott Spirit
Chief strategy officer and
chief digital officer
scott.spirit@wpp.com

WPP Latin America
Ann Newman
ann.newman@wpp.com

WPP Japan
Stuart Neish
stuart.neish@wpp.com

240 WPP ANNUAL REPORT 2015

For more about WPP companies’
professional services, please contact:
George Rogers
george.rogers@wpp.com

Gyve Safavi
gyve.safavi@wpp.com

WPP Regional, Sub-Regional
and Country Managers

Andina region (Bolivia,
Colombia, Ecuador & Peru):
Roberto Coimbra
Australia & New Zealand:
Geoff Wild
France:
Pierre Conte
Greater China:
TB Song
Bessie Lee
Shenan Chuang
India:
Ranjan Kapur
Indonesia & Vietnam:
Ranjana Singh
Ireland:
JP Donnelly
Italy:
Massimo Costa
Mexico:
Polo Garza
Middle East & North Africa:
Roy Haddad
Portugal:
Manuel Maltez
Russia:
Ruslan Tagiev
South Korea:
Sung Lee
Turkey:
Demet Ikiler
UK & Continental Europe:
Andrew Scott

Visit us online

Annual Report
wpp.com/annualreport2015

Sustainability Report*
wpp.com/sustainabilityreport2015-16

Pro bono work 2015*
wpp.com/probonoreport2015-16

*June 2016

This Annual Report is printed on Amadeus 50 Silk, Munken Polar
Rough and Colorplan Mist. All three papers are FSC® certified.
The Amadeus Silk contains 50% recovered fibre which is Elemental
Chlorine Free (ECF) bleached. Printed in the UK using vegetable
based inks throughout. Pureprint is a CarbonNeutral® company.
Both the manufacturing mill and the printer are registered to
Environmental Management System ISO14001 and are
Forest Stewardship Council (FSC) chain-of-custody certified.

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