WPP IS THE
TRANSFORMATION
COMPANY
ANNUAL REPORT
& ACCOUNTS 2022
CONTENTS
WHAT YOU WILL FIND IN THIS REPORT
STRATEGIC REPORT
CORPORATE GOVERNANCE
ADDITIONAL INFORMATION
2
4
6
12
14
16
18
22
24
26
28
32
36
40
44
48
52
56
61
66
86
Chairman’s letter
Governance at a glance
Our Board
Our Executive Committee
How our Board engages with stakeholders
Division of responsibilities
Board activities
Composition, succession and evaluation
Nomination and Governance
Committee report
Audit Committee report
Sustainability Committee report
Compensation Committee report
Statement of Directors’ responsibilities
FINANCIAL STATEMENTS
Accounting policies
Consolidated financial statements
100
103
104
107
109
112
114
115
118
122
128
130
157
160
166
Notes to the consolidated financial statements 171
Company financial statements
203
Notes to the Company financial statements
206
Independent auditor’s report
Reconciliation to non-GAAP
measures of performance
208
216
Task Force on Climate-Related
Financial Disclosures statement
Other statutory information
Shareholder information
Five-year summary
Glossary
Where to find us
220
227
228
231
232
234
This report provides an update on
our strategic progress, financial
performance and sustainability activities
for the year ended 31 December 2022
To learn more see wpp.com
This icon denotes more information
within the report
These metrics were subject to
independent limited assurance
procedures by
PricewaterhouseCoopers LLP (‘PwC’)
for the year ended 31 December
2022. For the results of PwC’s 2022
Limited Assurance report and the
‘WPP Sustainability Reporting
Criteria 2022’, see our 2022
Sustainability Report
About us
Highlights
Chief Executive’s statement
Key events of the year
Our business model
Our agencies
Where we are
Stakeholder engagement
Investment case
The market in 2022
Creativity
Data and technology
People
Clients
Companies
Countries
Key performance indicators
Chief Financial Officer’s statement
Financial review
Sustainability
Assessing and managing our risks
QR CODES
Wherever you see a QR code
throughout this report, you
can scan to access further
content online
OUR AGENCIES WERE
RESPONSIBLE FOR SOME
OF THE MOST INNOVATIVE
AND IMPACTFUL WORK
OF 2022”
Mark Read
Chief Executive Officer
CREATIVE
TRANSFORMATION
Creativity is the powerhouse of WPP.
It’s what makes us different. Drives us forward.
And delivers exceptional results for our clients
NIKE: NEVER DONE EVOLVING
Harnessing the power of AI to showcase the brilliance
of Serena Williams through the years
10
FORD: VERY GAY RAPTOR
How a homophobic comment ignited a mission
to redefine Ford’s Ranger Raptor truck
20
SHEBA: HOPE REEF
To highlight its commitment to source sustainable ingredients
for its products, Sheba regenerated a coral reef
30
SKY: GIGAFAST WITH SKY BROADBAND
A race through the metaverse to showcase
Sky’s newest broadband offer
34
JOHANNITER: ANTI-LOOK QR CODE
The life-saving QR code design that stops
bystanders gawking at accident sites
46
BURGER KING: BURGER GLITCH
Glitches in the gaming world are annoying.
Until you get rewarded for finding them
WPP ANNUAL REPORT 2022
60
1
STRATEGIC REPORT ABOUT US
ABOUT US
OUR
VISION
To be the most creative
company in the world
OUR
PURPOSE
We use the power of creativity to
build better futures for our people,
planet, clients and communities
Read more on pages 4 and 68
OUR OFFER
WPP provides a modern, integrated offer of communications,
experience, commerce and technology services through our global
integrated media and creative agencies, world-class public relations
firms and specialist communications companies
Read more on pages 14 to 17
EXPERIENCE
COMMS
COMMERCE
TECH
OUR STRATEGIC APPROACH
We continue to enhance WPP’s proposition by investing in talented people and leveraging our industry-leading
global media platform, technological capabilities and strategic global partnerships
CREATIVITY
DATA & TECHNOLOGY
PEOPLE & CULTURE
An ongoing commitment
to creativity, WPP’s most
important competitive
advantage
Harnessing our capabilities in data
and technology and our unique
partnerships with leading
technology firms
Investing in our people,
culture and values to ensure
WPP is the natural home for
the best and brightest talent
Read more on pages 28 to 29
Read more on pages 32 to 33
Read more on pages 36 and 70
Central to our strategy is our goal of reducing complexity and delivering a simpler structure for the benefit
of our clients, across our companies and within our individual markets
CLIENTS
COMPANIES
COUNTRIES
We are a client-centric
organisation in order to
deliver the best of WPP
We now have fewer,
more integrated companies
equipped to adapt to a
changing market
We integrate at a country
level to serve clients locally,
leverage local scale and
attract talent
Read more on pages 40 to 41
Read more on pages 44 to 45
Read more on pages 48 to 49
2
WPP ANNUAL REPORT 2022
STRATEGIC REPORT
TOXIC
INFLUENCE
Taking action to make social
media a more positive place
OFFER
COMMUNICATIONS,
TECHNOLOGY
AGENCY
OGILVY, UK
CLIENT
DOVE (UNILEVER)
Two in every three girls spend more than an
hour a day on social media – more time than
they spend with their friends.1 The harmful
beauty trends, hacks and products they are
exposed to are increasingly linked to a rise
in depression and teen suicide.
The algorithms that feed young girls toxic
beauty advice show parents completely
different content on the same platforms.
As part of Dove’s Self-Esteem Project, Ogilvy
was tasked with spotlighting the issue of
toxic advice for parents who are unaware
of what their daughters see online.
The creative idea was to use deepfake
technology to put the words of toxic
influencers – words heard every day
by teenage girls – into the mouth of the
one person they trust most in the world:
their mother.
The agency tracked 50 toxic trends in
real-time across multiple social platforms,
building fake transcripts based on the
most popular phrases of hundreds of toxic
influencers. These words were then ‘spoken’
by deepfake versions of their mother in an
eye-opening shareable film that rolled out
across 18 markets – bringing the issue to
light across the world and igniting millions
of conversations between parents and
their daughters.
99%
positive campaign
sentiment
3.1bn
earned impressions
115.5m
organic views
Awards
2022 Cannes Gold Lion,
Entertainment
1 Dove Toxic Beauty Report, 2022
WPP ANNUAL REPORT 2022
3
STRATEGIC REPORT BUSINESS HIGHLIGHTS
BUSINESS HIGHLIGHTS
WPP is the creative transformation company. Our purpose is to build better
futures for our people, planet, clients and communities, and we made strong
progress towards our goals in 2022
BUILDING BETTER
FUTURES FOR
OUR PEOPLE
Investing in our
people's futures
115,000
40%
people employed in over 100
countries across the globe
(2021: 109,000)
women in executive
leadership roles1
(2021: 39%)
33,000+
technology partner
accreditations and
certifications awarded
to our people
(2021: 30,000+)
BUILDING BETTER
FUTURES FOR
OUR PLANET
Including our industry-leading
commitment to reduce carbon
emissions from our own
operations to net zero by
2025, and across our supply
chain by 2030
BUILDING BETTER
FUTURES FOR
OUR CLIENTS
Delivering transformational
results for our clients
BUILDING BETTER
FUTURES FOR OUR
COMMUNITIES
Helping to bring about
change for the better
in society
KEY
0.22 tCO₂e
carbon emissions
per person2 from direct
operations (Scope 1 and 2)
(2021: 0.32 tCO2e)
83%
A-
electricity purchased
from renewable sources
(2021: 74%)
CDP scorecard, ranking WPP
highly on climate change
(2021: A-)
307
of the Fortune Global 500
are WPP clients, reflecting
demand for our services
among the world's leading
companies
Leader
in the Bloomberg
Gender-Equality Index
Creative Company of the Year,
2022 (second year in a row)
$5.9bn
net new billings3
(2021: $8.7bn)
100%
in the Human Rights Campaign
Foundation Corporate Equality
Index for LGBTQ+ communities
(2021: 100%)
$16.2m
committed to racial equity
and inclusion programmes
since 2020 as part of our
commitment to invest $30m
over three years4
These metrics were subject to independent limited assurance procedures by
PricewaterhouseCoopers LLP (‘PwC’) for the year ended 31 December 2022. For the results
of PwC’s 2022 Limited Assurance report and the ‘WPP Sustainability Reporting Criteria 2022’,
see our 2022 Sustainability Report
1 Executive leadership roles are defined by WPP as the agency board and executive leadership
population as reported through WPP’s financial reporting system
2 Full-time equivalent (FTE) employee
3 Billings as defined in the Glossary on page 232
4 Figure excludes 2022 investments
4
WPP ANNUAL REPORT 2022
FINANCIAL HIGHLIGHTS
STRATEGIC REPORT
FINANCIAL HIGHLIGHTS
Over the course of 2022 we were able to grow our business, improve
profitability, maintain a strong balance sheet and reward shareholders
CONTINUED STRONG
REVENUE GROWTH
We are on track to achieve
our goal of 3-4% growth in
revenue less pass-through
costs over the medium term
£14.4bn
revenue
(2021: £12.8bn)
£11.8bn
revenue less
pass-through costs
(2021: £10.4bn)
IMPROVING
PROFITABILITY
We are on track to meet
our goal of headline
15.5-16.0% operating
margin over the
medium term
14.8%
headline operating
margin2
(2021: 14.4%)
£375m
transformation programme
gross savings since 2019
(2021: £245m)
MAINTAINING LOW
LEVELS OF NET DEBT
We remain in line with our
leverage target of 1.5-1.7x
average adjusted net debt/
headline EBITDA3
£2.5bn
adjusted net debt
at year end
(2021: £0.9bn)
1.5x
ratio of adjusted net debt
to headline EBITDA
(2021: 0.9x)
39.4p
dividends per share
(2021: 31.2p)
£807m
returned to shareholders
through share buybacks
(2021: £729m)
REWARDING
SHAREHOLDERS
Our dividends per share grew
26% over the last year and
represent 40% of our headline
EPS, which is in line with our
target pay-out policy. We also
bought back some of our
shares to provide additional
value to shareholders
1 Like-for-like growth as defined in the Glossary on page 232
2 Headline operating profit of £1,742m, as a percentage of revenue less pass-through
costs of £11,799m. Reported profit before tax was £1,160m (2021: £951m)
3 See definitions in the Glossary on page 232
REVENUE LESS PASS-THROUGH
COSTS GROWTH1
%
2022
2021
2020
-8.2
+12.1
HEADLINE OPERATING MARGIN2
%
2022
2021
2020
14.8
14.4
12.9
AVERAGE ADJUSTED NET
DEBT/HEADLINE EBITDA
(x)
2022
2021
2020
0.9
1.5
1.6
DIVIDENDS PER SHARE
(p)
2022
2021
2020
39.4
31.2
24.0
WPP ANNUAL REPORT 2022
5
+6.9REVENUE LESS PASS-THROUGH COSTS GROWTH1 %2022+6.9HEADLINE OPERATING MARGIN2 %2021202014.8202120201.5AVERAGE ADJUSTED NET DEBT/HEADLINE EBITDA(x)2021202039.4DIVIDENDS PER SHARE(p)
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
CHIEF EXECUTIVE’S
STATEMENT
Leading companies turn to us not just for
support in building their brands and selling
their products, but also in understanding
and leveraging their data, harnessing the
potential of new technologies like AI, and
transforming their businesses for the future.
Our performance in 2022 reflected the
success of our own transformation, as we
saw like-for-like organic growth across all
our major creative, media, public relations
and specialist agencies.
Since 2019 our like-for-like revenue less
pass-through costs has grown by 10%,
headline operating profit is 15% higher and
headline EPS is up 26%. Our adjusted net
debt has been reduced to sustainable levels,
while over £3.4 billion has been returned
to shareholders.
The reshaping of our Company over the
last four years means we now provide
every service required for success in
contemporary marketing, fully integrated
and at a global scale.
Our future-facing offer demonstrated its
power as we won net new billings of $5.9
billion in 2022, including new assignments
with a range of major brands from Audible,
Danone and SC Johnson to Nationwide and
Verizon. We grew relationships with existing
clients and our unprecedented global
partnership with The Coca-Cola Company
continued to expand.
EXTRAORDINARY WORK
The quality of our work and the talent of
our people were recognised not only by
our clients, but by the industry as a whole.
At the Cannes Lions Festival WPP was named
Creative Company of the Year for the second
year running while Ogilvy was recognised
as Network of the Year, an award it last won
in 2016.
Our agencies were responsible for some
of the most innovative and impactful work
of 2022. As with so much of what we do
today, that work often challenged
traditional expectations of our industry’s
output and services.
It was a year of strong demand for our
services and strong growth for WPP and
our agencies
Investing in communications, customer
experience, commerce, data and technology
remained a priority for our clients in 2022.
As a result, it was a year of strong demand
for our services and strong growth for WPP
and our agencies – despite global economic
turbulence and uncertainty.
Some might see this growth as
counterintuitive given the economic
situation. However, the marketing world
is fast-changing and increasingly complex,
with new platforms like TikTok emerging,
and existing platforms like Netflix taking
advertising for the first time. Clients need
modern, trusted partners such as WPP to
help them navigate this new landscape.
6
WPP ANNUAL REPORT 2022
CHIEF EXECUTIVE’S STATEMENT
STRATEGIC REPORT
IN 2022 WE
CONTINUED
TO INVEST IN
ATTRACTING,
ENGAGING AND
DEVELOPING
THE BEST IN
OUR INDUSTRY”
Mark Read
Chief Executive Officer
EssenceMediacom, as part of our WPP
Open X team for The Coca-Cola Company,
launched a global music platform for Sprite
which included livestreaming festivals to
nearly 10 million people.
Ogilvy helped Sainsbury’s launch the
SmartShop app, which enables customers
to shop, scan and checkout autonomously.
To mark Nike’s 50th anniversary AKQA used
machine learning to stage a virtual showdown
between the Serena Williams who won her
first Grand Slam in 1999, and the Serena who
won her last in 2017.
Wunderman Thompson built an AI system for
global paint manufacturer Sherwin-Williams
that allowed customers to produce unique
colour palettes based on the spoken word.
AI was also at the heart of a collaboration
between Microsoft and WPP for Haleon
(with Grey leading the creative execution)
that helps blind and low-vision people
access information on healthcare packaging.
VMLY&R, Hill+Knowlton Strategies and
Makerhouse helped Ford to tackle
homophobia by giving the new Raptor a
‘very gay’ digital paint job, while the brilliant
Reality Flag campaign (also from VMLY&R,
plus BCW, Wavemaker and Hogarth)
highlighted the freedoms denied to LGBTQ+
people in 29 American states.
Mindshare created the first sustainability-led,
ad-funded programme in the UK to raise
awareness of the scale of food waste, for
Unilever brand Hellmann’s.
And FGS Global helped Bayer inspire action
to address the global water crisis through
integrated stakeholder engagement, media
relations and digital campaigning.
There are more examples of our agencies’
genre-defying work throughout this report.
EXCEPTIONAL TALENT
The exceptionally talented people behind
this work are what sets us apart, and in
2022 we continued to invest in attracting,
engaging and developing the best in our
industry. Our Company is made up of the
world’s best media planners and buyers,
creatives, strategists, data scientists,
technologists, public relations professionals,
designers, client leaders and more. The
diversity of this talent and their ability to
co-operate to produce ideas is why clients
come to us.
In a rapidly changing industry, ongoing
personal development is critical, and in
September we launched the WPP Future
Readiness Academies, our first global
learning programme to help everyone
in the Company develop the skills and
knowledge needed to thrive in today’s
technology-driven world.
We know that an inclusive culture attracts
the best people and allows creativity to
blossom. This year we were named in the
Bloomberg Gender-Equality Index for the
fifth consecutive year. We received a top
score in the Human Rights Campaign’s
Corporate Equality Index, and were featured
among the best places to work for LGBTQ+
equality for the second time.
We also know that diversity is most lacking
at the most senior levels of our industry.
The proportion of our executive leaders
across the Company who are women was
40%
in 2022 (2021: 39%), and within this
the proportion of women on the Executive
Committee grew from 35% to 40%. In the
FTSE Women Leaders Review we climbed
from ninth to sixth in the FTSE 100.
In the United States, our largest market,
the proportion of our senior and executive
managers who are non-white has risen from
14% in 2019 to 22% in 2022.
These metrics were subject to independent limited assurance
procedures by PricewaterhouseCoopers LLP (‘PwC’) for
the year ended 31 December 2022. For the results of PwC’s
2022 Limited Assurance report and the ‘WPP Sustainability
Reporting Criteria 2022’, see our 2022 Sustainability Report
WPP ANNUAL REPORT 2022
7
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
JEREMY BULLMORE
We started 2023 with the sad news that
our dear friend and colleague Jeremy
Bullmore had passed away, aged 93.
Jeremy was one of the most admired and
cherished people in our industry. He
began his career at J. Walter Thompson
London in 1954 as a copywriter and left in
1987 as chairman, before serving on the
Board of WPP and in other roles with us
for another 30-plus years.
He not only helped to launch countless
brands and careers, he also elevated the
business of advertising as a whole with
his insight, forensic analysis and always-
original commentary.
No time spent with Jeremy was ever
wasted. Whenever you went to see him
in his office, he would make you think,
make you laugh, and make you
challenge whatever assumption you
had gone in with.
When Campaign magazine described
him as “adland’s greatest philosopher”,
it was no exaggeration. He was without
question among the most influential
figures in modern advertising, and his
passing is a loss to the entire industry.
We will miss him terribly.
Read the best of Jeremy’s work at:
www.bestofbullmore.com
8
WPP ANNUAL REPORT 2022
To meet client demand for more integrated
solutions and to continue to simplify our
own organisation, we announced the
creation of EssenceMediacom, which
combines Essence’s skills in performance,
data, analytics and creative technology
with MediaCom’s multichannel audience
planning and strategic media expertise.
Following the merger of Finsbury Glover
Hering and Sard Verbinnen at the end of
2021, the combined FGS Global business
had a very strong 2022, ending the year
at the top of the Mergermarket M&A tables.
Our industry-leading strategic partnerships
with established and emerging technology
companies enable us to build our own
expertise, gain unique insights and develop
differentiated services for clients.
During the year we launched new
partnerships with Epic Games, the company
behind Fortnite, and with Instacart, the
leading online grocery platform in North
America. Early in 2023 we announced
partnerships with payments solutions
vendor Stripe, and with BigCommerce,
a leading ecommerce platform.
These partnerships strengthen our existing
leadership position in key growth areas such
as digital commerce. Today we have over
13,500 commerce specialists within WPP,
and we manage more than $40 billion of
GMV (gross merchandise value) for clients.
FUTURE-FACING CAPABILITIES
During 2022 we enhanced our capabilities
through a number of acquisitions that
expanded our offer in experience, commerce
and technology, and built our presence in
strategically important regions.
These included influencer marketing agency
Village Marketing in North America; Latin
American ecommerce agency Corebiz;
Bower House Digital, a leading marketing
technology services provider in Australia;
Montreal-based commerce specialist Diff;
and New York digital transformation agency
Fēnom Digital.
We also invested organically to support
long-term growth opportunities, integrate
and accelerate our data capabilities, embed
AI into our workflows and drive innovation.
As the examples I shared earlier
demonstrate, WPP agencies are at the
forefront of pairing human creativity with
the growing suite of generative AI tools to
produce new content, experiences and
campaigns for our clients – all with greater
efficiency and speed.
Choreograph, our data company, continued
to develop its products and services while
delivering innovative work for clients
including Ford, Unilever and Bayer. Since
its inception in 2021 it has played a central
role in client growth and retention, as well
as assignment wins including The Coca-Cola
Company and Verizon.
In 2022 we launched GroupM Nexus as the
performance engine for our media agencies.
This brought together 9,000 practitioners in
addressable TV, AI, retail media and
commerce, programmatic, search and
social – a depth and breadth of expertise
in digital channels and platforms unrivalled
in our industry.
CHIEF EXECUTIVE’S STATEMENT
STRATEGIC REPORT
BEYOND BUSINESS
WPP’s purpose is to use the power of
creativity to build better futures for our
people, planet, clients and communities.
You can find detailed information in our
Sustainability Report on our progress in
each area, but I wanted to highlight some
of the ways in which our people and
agencies made a difference in 2022.
It was a year in which devastating events
in many parts of the world directly impacted
our people, their families and their
communities – from the war in Ukraine and
the terrible flooding in Pakistan to ongoing
racially motivated discrimination and violence
in the United States and beyond. This year,
of course, has brought the horrific aftermath
of the earthquakes in Turkey and Syria.
At WPP we try, whenever we can, to match
words with actions. In addition to direct
support for our people in Ukraine we formed
a partnership with UNHCR, the UN’s refugee
agency, and launched an employee match-
funding campaign that raised $1.34 million.
We have run similar campaigns with
UNHCR for the relief efforts in Pakistan,
Turkey and Syria.
We were the first in our industry to announce
our exit from Russia, and we supported the
Ukrainian government through a pro bono
initiative to encourage inward investment
and help revitalise the country’s economy.
As the three-year anniversary of the killing
of George Floyd approaches, one of the
cornerstones of WPP’s response, our Racial
Equity Programme, is delivering material
outcomes in communities across the world.
The programme funded a number of
initiatives in 2022. The Detroit Experience
Studio offered a free, 10-week immersive
experience for Black and Brown young
people to explore creative careers;
Health4Equity’s work included campaigns
to empower Black mothers and mothers-to-
be and to drive early prostate cancer
screening for Black men; and RGBlack helped
to mitigate the impacts of coded bias in
AI-powered tools to create more equitable
work. More details of these and other projects
can be found in our Sustainability Report.
The need to tackle climate change becomes
ever more urgent. Following our industry-
leading commitment in 2021 to reach net
zero across our value chain by 2030, GroupM
last year launched a global framework for
media decarbonisation, with the support
of a coalition of leading clients. Hogarth is
addressing the same challenge in production.
Our agencies have long been required to
follow rigorous standards of truthfulness,
fairness and accuracy in their work for
clients and the responsibility to meet those
standards – in a world where disinformation
is rife – has never been more important than
it is today.
In 2022 we launched a Green Claims Guide,
informed by guidance from regulators such
as the UK Competition & Markets Authority
and US Federal Trade Commission, and
underpinned by legal compliance advice.
The guide is designed to help our people
make honest, material environmental claims
on behalf of clients and to avoid content
that could be misleading in any way.
To bring greater structure to decision-making
at an operational level, and in line with our
commitment to acting ethically in all aspects
of our business, we established a revised
Assignment Acceptance Policy and
Framework to help our agencies review
new client work. The framework looks at all
sectors but we have developed a specific set
of principles for working with and assessing
new assignments from energy clients, given
their central role in the energy transition (see
page 31 of the 2022 Sustainability Report).
MAKING SPACE FOR OUR PEOPLE
Many of the events of 2022, as the world
emerged from the pandemic, placed
significant strain on our people and their
wellbeing. While they responded with
immense professionalism, resilience and
dedication to their colleagues and clients,
it was important that we did all we could
to support them.
We continued to expand our Mental Health
Allies programme with roll-outs in the United
States and Singapore, following its successful
pilot in the UK. We now have more than 550
trained Allies across our agencies whose role
is to encourage open conversations about
mental health in the workplace and to guide
colleagues to help and resources. We plan to
extend the programme into India and Brazil
in 2023.
We also launched an initiative called Making
Space, beginning with a global, Company-
wide two-day additional holiday to give
everyone the chance to refresh and recharge.
The initiative will continue through a range of
programmes and events designed to ensure
our people have the space to look after their
physical, mental and emotional wellbeing.
In closing, I would like to thank my leadership
team for their tremendous contribution to
our success, not least our Chief Financial
Officer John Rogers as he moves on to seek
new challenges. I have appreciated his
partnership during the last three years and
wish him all the best in his future endeavours.
Our people are the reason I have such
confidence in the future of WPP. Their skills
and talent are what make us tick, and their
curiosity and optimism are what keep us
at the forefront of change in our industry.
Technology and complexity were once seen
as a threat to companies like WPP; today
they make our services crucial for clients
as they reinvent their own businesses.
WPP’s performance ultimately relies on the
collective passion, creativity and commitment
of our people, and the trust our clients place
in us as a result. As ever, I am very grateful to
each and every one of them.
Mark Read
Chief Executive Officer
23 March 2023
WPP ANNUAL REPORT 2022
9
STRATEGIC REPORT
10
WPP ANNUAL REPORT 2022
STRATEGIC REPORT
NEVER DONE
EVOLVING
There’s only one Serena Williams.
But what if there were two?
OFFER
TECHNOLOGY, EXPERIENCE
AGENCY
AKQA
CLIENT
NIKE
Even as winner of the most Grand Slam
titles in tennis history, Serena Williams
always finds new ways to shatter
expectations. In celebration of its 50th
anniversary, Nike wanted to showcase
the power of her game and how it has
evolved over time.
Harnessing advanced AI, Nike and AKQA
created a match between 1999 Serena,
when she won her first Grand Slam title,
and the Serena who won the 2017 Australian
Open. Machine learning modelled each
era’s playing style: decision-making, shot
selection, reaction time, recovery and agility,
based on archive footage. Models were
brought to life by re-rendering them into an
entirely new scene and having them appear
to be playing and responding to each other.
The remarkable result was seeing both
Serenas play each other for 130,000 games
and 5,000 matches, enough to stream
for an entire year if played back-to-back.
The simulated games aren’t just a chance
to look back at historic accomplishments;
they exhibit Serena’s decade-after-decade
determination to never stop evolving.
1.7m
YouTube viewers watched
the grand final
WPP ANNUAL REPORT 2022
11
STRATEGIC REPORT
KEY EVENTS
OF THE YEAR
Investment in talent and new capabilities helped us
attract new business and win recognition in 20221
JANUARY
– WPP appoints Rose
Herceg as President
in Australia and
New Zealand
JANUARY
– WPP recognised
in Bloomberg
Gender-Equality Index
– WPP named among
best places to work for
LGBTQ+ equality by the
Human Rights Campaign
Foundation
1 Timeline includes events announced in 2022
APRIL
– WPP appoints Kyoko
Matsushita as Chief
Executive Officer in Japan
– MediaCom wins digital
Sky remit in the UK
FEBRUARY
– WPP acquires influencer
marketing agency Village
Marketing
– WPP and Instacart
partnership announced
– Dyson appoints Mindshare
China as its media agency
JUNE
– WPP wins industry’s Most
Creative Company at Cannes
Lions Festival
– Ogilvy named Network of
the Year and LATAM Regional
Network of the Year
MARCH
– WPP leads WARC
rankings of marketing
excellence
MAY
– Wavemaker wins Amazon's
Audible global media account
JUNE
– WPP appoints Michael
Houston as President
of its United States
business
– WPP discontinues
operations in Russia
– Ogilvy appointed Audi’s new
creative agency of record
– WPP and Epic Games partner
to accelerate innovation for
clients in the metaverse
– WPP announces
acquisition of marketing
technology leader
Bower House Digital
– Danone consolidates its
global media account
with Wavemaker
12
WPP ANNUAL REPORT 2022
KEY EVENTS OF THE YEAR
STRATEGIC REPORT
JULY
– GroupM introduces global
framework for media
decarbonisation
– WPP acquires leading
ecommerce agency
Corebiz
AUGUST
– WPP named a Leader
among Global Marketing
Service Providers by
Forrester
OCTOBER
– WPP acquires branding agency
Passport Brand Design
DECEMBER
– WPP acquires Diff, a
leading commerce
agency in Canada
– Ogilvy named lead
agency for Verizon's
B2B business
– WPP appoints Juan Pedro
Moreno as President of its
Spanish business
JULY
– WPP creates Design
Bridge and Partners
SEPTEMBER
– Devika Bulchandani becomes
CEO of Ogilvy and joins WPP
Executive Committee
NOVEMBER
– WPP announces appointment
of new CFO, Joanne Wilson
DECEMBER
– WPP maintains CDP
A- ESG rating
– GroupM publishes
This Year Next Year
global end-of-year
advertising forecasts
– WPP launches Making
Space wellbeing initiative
– Karen Blackett OBE
appointed President
of WPP in the UK
– Frank-Michael Schmidt
appointed President
of WPP in Germany
– The Financial Times
consolidates all its media
planning and buying
with Essence
– WPP acquires ecommerce
consultancy Newcraft
– SC Johnson consolidates
global creative account
with Ogilvy and VMLY&R
Commerce
– WPP acquires
Fēnom Digital, a
fast-growing digital
transformation agency
– WPP acquires leading
communications agency
JeffreyGroup
WPP ANNUAL REPORT 2022
13
STRATEGIC REPORT
OUR BUSINESS MODEL
WPP is the creative transformation company
OUR OFFER
Our offer to clients covers four areas that are critical to modern marketing:
communications, experience, commerce and technology
COMMUNICATIONS
EXPERIENCE
COMMERCE
TECHNOLOGY
We create powerful ideas based
on deep insights to connect
brands with audiences at the
right moment and in the right
channels. This includes paid
advertising campaigns and
public relations
We bring brands to life through
engaging, unexpected and
interactive experiences. This
includes customer-facing
platforms, such as websites,
applications and stores, as
well as broader touchpoints like
product design and packaging
We help our clients sell
wherever and however their
consumers want to buy.
We advise on, build, run and
activate ecommerce and
physical channels, from direct-
to-consumer websites and
stores to marketplaces and
social commerce
We build and optimise
technology and data solutions
to fit our clients’ needs. Services
include enterprise systems work
– architecture design, systems
implementation, managed
services and data analytics – and
platforms such as CRM, content
and experience management,
and data management
To support our future growth, during 2022 we invested in new strategic acquisitions and partnerships – and in our existing operations –
to further modernise our offer, strengthen the capabilities of our agencies and serve clients in new and better ways1
A
P
A
M
Village Marketing, an industry
leader in influencer marketing and
creator economy partnerships in
North America
A partnership with Epic Games, the
interactive entertainment company,
to help WPP agencies deliver a new
era of digital experiences for brands
in the metaverse
Corebiz, a Latin American
ecommerce agency specialising
in VTEX, one of the largest
enterprise digital commerce
platforms in the region
Finecast, Xaxis and GroupM Services
combined to form GroupM Nexus, the
world’s leading media performance
organisation
A
M
A
A
JeffreyGroup, one of the most
respected independent corporate
communications, public affairs and
marketing firms in Latin America
The merger of Design Bridge and
Superunion to create a single,
world-leading design company,
Design Bridge and Partners
Newcraft, a data-first European
ecommerce consultancy based
in the Netherlands
Bower House Digital, a marketing
technology services agency based
in Australia
A
A
A
Passport, a leading brand design
agency based in California
Diff, a commerce agency based
in Canada, providing tailor-made
commerce solutions
Fēnom Digital, one of the fastest-
growing digital transformation
agencies in North America
P
A partnership with Instacart in
North America, offering advertising
solutions and measurement tools
for CPG brands
KEY
A Acquisition
P Partnership
M Merger
1
In 2022, Village Marketing, Newcraft, Diff, and Fēnom Digital joined Wunderman Thompson;
Corebiz and Passport Brand Design joined VMLY&R; Bower House Digital joined Ogilvy; and
JeffreyGroup joined Hill+Knowlton Strategies
14
WPP ANNUAL REPORT 2022
OUR BUSINESS MODEL
STRATEGIC REPORT
OUR CAPABILITIES
Our success depends on strong talent across all marketing disciplines, dynamic client
relationships, the scale and breadth of our offer, and our data and technology skills
THE TALENT OF OUR PEOPLE
– Strong creative reputation reflected by industry
awards including Cannes Lions, WARC and
many others
– Excellence in media planning and buying
– Continuing to attract top talent to WPP and
our agencies
– Deep understanding of culture, consumers
and brands
115,000
people
OUR RELATIONSHIPS
WITH THE WORLD’S MOST
SUCCESSFUL COMPANIES
– Strong and enduring CEO, CMO and CIO relationships
– Global Client Leaders, providing easy access to the
breadth and depth of WPP's offer
– Unique partnerships with leading technology
companies, providing us with preferential access
to training, new product development and joint
go-to-market programmes
307
of the Fortune Global 500,
60 of the FTSE 100, and all
30 of the Dow Jones 30 are
our clients
HOME TO MANY OF
THE INDUSTRY’S MOST
POWERFUL AND RESPECTED
AGENCY BRANDS
– The number one global media buying organisation,
GroupM, and its industry-leading agencies
– Iconic creative brands: including AKQA, Ogilvy,
VMLY&R and Wunderman Thompson
– Leading public relations agencies, such as BCW,
Hill+Knowlton Strategies and FGS Global
– Integrated agency model, combined with global
reach and scale
$5.9bn
of net new billings in 20221
THE TECHNOLOGY AND DATA
SKILLS AND PLATFORMS
TO DELIVER MODERN
MARKETING SOLUTIONS
– Capability in modern marketing areas of commerce,
experience, data and technology, as well as
traditional communications
– Deep innovation capabilities: including WPP Open,
our common data and technology platform; GroupM
Nexus, our media performance organisation; and
Choreograph, our data company
13,500+
people delivering commerce
services globally
1 Billings as defined in the Glossary on page 232
WPP ANNUAL REPORT 2022
15
STRATEGIC REPORT OUR BUSINESS MODEL
OUR AGENCIES
We provide services to clients through integrated creative agencies,
media agencies, public relations agencies and specialist agencies¹
GLOBAL INTEGRATED AGENCIES
Our creative services include
advertising, marketing and brand
strategies and campaigns across all
media. We are increasing our share in
targeted fast-growth areas including
digital communications, healthcare,
ecommerce, experience, marketing
technology and production
Our media offer includes the full range
of media planning and buying services,
delivered primarily through GroupM,
the world’s leading media investment
company, and its agencies. Targeted
growth segments are digital media
(search, social and programmatic),
new business models such as GroupM
Nexus, and data and technology
PUBLIC RELATIONS AGENCIES
Our PR firms help clients communicate
with their stakeholders, from consumers
and investors to governments and NGOs.
Purpose, reputation, sustainability and digital
and social media are key growth areas
SPECIALIST AGENCIES
Our specialist agencies provide services
by region or type. Brand experience and
identity and specialist, targeted services
are the principal growth segments
KEY
Employees
16
WPP ANNUAL REPORT 2022
17,000
15,000
13,000
6,0002
5,000
42,000
(including the GroupM agencies below)3
10,000
7,000
10,0004
500
4,000
3,000
1,000
8505
1,000
1,000
1 These agencies represent 95% of WPP's revenue less pass-through costs and employees
2 Includes employees in AKQA and Grey
3 Includes employees in GroupM and its agencies: Mindshare, EssenceMediacom, Wavemaker, M/Six, and other smaller agencies not
listed here
4 In January 2023 the GroupM agencies Essence and MediaCom merged to form EssenceMediacom
5 In January 2023 Superunion and Design Bridge merged to form Design Bridge and Partners
OUR BUSINESS MODEL
STRATEGIC REPORT
OUR OPERATING MODEL
We meet our clients’ needs through collaboration on a global scale. This drives our revenue
while keeping costs down, funding further investment for the benefit of our agencies, clients,
people and shareholders
WPP
CLIENTS
The core WPP team supports
our agencies and the work they
do for our clients. It develops
and executes the strategy of the
Company, allocates capital to
best meet client needs and drive
our growth, and provides a range
of support functions in areas
such as finance, people, legal
and compliance, strategy,
communications, marketing and
growth, operations, sustainability
and technology
AGENCIES
Our agencies provide a broad
range of marketing communications
services. Our segments are: global
integrated agencies, covering media
planning and buying and creative
agencies, which represent 82% of
revenue less pass-through costs;
public relations agencies, which
account for 10%; and specialist
agencies, representing 8%
Read more on page 16
REVENUE
COSTS
PROFIT AND CASH
REINVESTMENT
PEOPLE
CAPABILITIES
PLATFORMS
DIVIDENDS
ACQUISITIONS
The work we do for clients helps them market their brands,
services and products across a range of digital and traditional
media channels. We assign Global Client Leaders to many of
our clients to ensure they have easy access to the breadth
and depth of WPP. Our client portfolio is highly diversified
and covers every business sector. Our top 30 clients
account for 30% of revenue less pass-through costs
Revenues are principally derived from fixed-fee contracts,
retainer agreements and commissions on media placements.
Some engagements include performance incentives linking
revenue to quantitative and qualitative goals. Our revenues
tend to vary with the economic environment and client
demand, but our broad geographic reach, diverse client
base and increased focus on high-growth areas of
experience, commerce and technology are driving
greater resilience in our business
Most of our costs are variable in nature. 65% of our total
headline costs are staff costs; 21% are pass-through costs;
10% are general and administrative costs; and 4% are
establishment costs.1 Pass-through costs comprise fees
paid to external suppliers where they are engaged to
perform part or all of a specific project and are charged
directly to clients. Pass-through costs are predominantly
media and data collection costs
Our profit and cash generation has historically been strong
and we expect this to continue, supported by our goal of
annual gross cost savings of around £600 million by 2025.
This in turn will enable us to continue to invest in our people,
technology infrastructure, campuses and standardised
systems for our people and clients. We intend to grow the
dividend annually and to pay out approximately 40% of
headline earnings per share
1 Total headline costs comprise costs of services and general and administrative costs
excluding losses/(gains) on disposal of investments and subsidiaries, goodwill
impairment, amortisation and impairment of acquired intangible assets, intangible
asset impairment, restructuring and transformation costs, restructuring costs in
relation to Covid-19, property-related costs, gains on remeasurement of equity
interests arising from a change in scope of ownership and litigation settlement
WPP ANNUAL REPORT 2022
17
STRATEGIC REPORT
WHERE WE ARE
COUNTRIES
WPP companies operate in more than
100 countries, providing unrivalled global
reach and scale
REVENUE BY REGION
(2022)
North America 38%
United Kingdom 14%
Western Continental
Europe 20%
ROW (AP, LA, AME,
CEE) 28%
NORTH AMERICA
UNITED KINGDOM
WESTERN
CONTINENTAL EUROPE
CENTRAL &
EASTERN EUROPE (CEE)
PEOPLE
REVENUE
PEOPLE
REVENUE
PEOPLE
REVENUE
PEOPLE
REVENUE
24,000
£5.5bn
13,000
£2.0bn
23,000
£2.9bn
4,000
£0.2bn
Our 20 largest markets1
USA
UK
Germany
Greater China2
India
Australia
Brazil
Canada
France
Italy
Spain
Singapore
Netherlands
Denmark
Dubai
South Africa
Belgium
Mexico
Japan
Poland
LATIN AMERICA (LA)
AFRICA & MIDDLE EAST (AME)
ASIA PACIFIC (AP)
PEOPLE
REVENUE
PEOPLE
REVENUE
PEOPLE
REVENUE
15,000
£0.7bn
5,000
£0.4bn
31,000
£2.7bn
1 Rank: revenue less pass-through costs
2 Including Hong Kong and Taiwan
18
WPP ANNUAL REPORT 2022
STRATEGIC REPORT
WHERE WE ARE
CAMPUSES
Campuses put into practice our commitment
to support people, planet, clients and
communities. They are also key to our
transformation programme, unlocking
considerable savings through the
consolidation of less efficient buildings.
WPP campuses bring our agencies together
in one inspiring, collaborative workspace.
They are designed to encourage flexible
and hybrid working, and to give clients
access to the breadth and depth of WPP
talent in one location.
Every campus is built to the highest
sustainability standards. Our Düsseldorf
Campus provides 34,000 square metres
of working space plus 3,700 square metres
of green space, and is powered by 100%
renewable electricity. It even has its own
beehives to supply WPP honey. As with
every WPP campus across the world,
its policy is not to provide single-use
plastic items.
In 2022 we added five new campuses:
Brussels, Düsseldorf, Santiago, Tokyo and
Toronto. In January 2023 we opened a new
campus in Guangzhou, China, taking the
total to 37, accommodating around half
our people. We plan to open additional
campuses including Atlanta, Paris and
Manchester later in 2023.
We remain on track to achieve our goal
to deliver a global network of at least 65
campus buildings, accommodating 85,000
people, by 2025, eventually replacing all our
smaller offices across the globe and reducing
our overall need for space by 15-20%.
Our new Toronto Campus brings together 2,000 people from different WPP agencies
BRINGING OUR PEOPLE
TOGETHER IN CAMPUSES
ALLOWS US TO BE MORE
SUSTAINABLE, MORE CREATIVE
AND MORE COLLABORATIVE.
THAT DRIVES BETTER RESULTS
FOR OUR CLIENTS”
Jennifer Remling
Chief People Officer, WPP
65+
campuses to be
completed by 2025
37
campuses opened
to date
Amsterdam
Beijing
Bogota
Brisbane
Brussels
Bucharest
Chicago
Detroit
Düsseldorf
Frankfurt
Guangzhou
Gurugram
Hamburg
Helsinki
Hong Kong
Jakarta
Kansas City
Lisbon
Madrid
Mexico City
Milan
Montevideo
Mumbai
NYC 200 5th
NYC 3CC
NYC 3WTC
London Rose Court
Prague
London Sea Containers
Rome
San Francisco
Santiago
Shanghai
Singapore
Tokyo
Toronto
Warsaw
WPP ANNUAL REPORT 2022
19
STRATEGIC REPORT
FORD: VERY
GAY RAPTOR
Redefining tough to drive out
discrimination
OFFER
COMMUNICATIONS
AGENCY
HILL+KNOWLTON STRATEGIES,
MAKERHOUSE, VMLY&R
CLIENT
FORD EUROPE
In summer 2021, Ford Europe celebrated
the 25th anniversary of Ford Pride, its
LGBTQIA+ Employee Resource Group.
At the same time, Ford launched its new
Ranger Raptor utility truck. So when a
homophobic comment from a Ford fan
describing its latest ‘badass truck’ as
‘very gay’ was spotted on Ford’s
YouTube channel, Ford couldn’t let
it go unchecked.
Instead of recommending a ‘typical’
brand response, Ford, in consultation
with Ford Pride members and WPP,
decided not only to call out the
comment, but to use it as a way to show
its support to its LGBTQIA+ employees
and customers – by re-editing the online
film to give the Ranger Raptor a new
digital rainbow paint job, and reposting
it across Ford’s social channels. “Very
Gay was a compliment, right?”
The response was phenomenal but
mixed – with some threatening to
boycott the brand but others calling for
Ford to make the Very Gay Raptor real.
Ford created a one-of-a-kind Very Gay
Raptor to act as a symbol of LGBTQIA+
allyship, a core pillar of its company
values, which was proudly unveiled at
the Christopher Street Day Pride parade
in Cologne.
#VeryGayRaptor became Ford Europe’s
most successful organic social media
post ever and ignited a mission to
redefine tough and drive out
discrimination.
92%
positive-neutral
social sentiment
10.6m
social media
impressions
96m
media reach
Awards
12 industry awards including
Cannes Lions Gold for Media
(Automotive)
20
WPP ANNUAL REPORT 2022
STRATEGIC REPORT
WPP ANNUAL REPORT 2022
21
STRATEGIC REPORT
STAKEHOLDER
ENGAGEMENT
We rely on active engagement
with our stakeholders to drive
a healthy business
We engage with openness,
optimism and a commitment
to extraordinary work
For more on how the Board engages with our
stakeholders, please see pages 109 to 111.1 And to find
out how we engage on sustainability, please see the
2022 Sustainability Report
1 As a Jersey incorporated company, WPP is not subject to UK legislation.
However, as a matter of good governance and in order to comply with the
provisions of the 2018 UK Corporate Governance Code, the Board considers
the matters described in Section 172 of the Companies Act 2006 in its
decision-making
22
WPP ANNUAL REPORT 2022
SHAREHOLDERS
Our shareholders provide the capital to invest in
the business and support the valuation and liquidity
of WPP shares. Shareholders benefit from the Board
acting in the best interests of the Company and
investing for long-term value generation
CLIENTS, PARTNERS AND SUPPLIERS
The work we do for clients provides our revenue and
helps them to grow their businesses, build
relationships with their customers, and ready
themselves for future success
We have global partnerships with 28 leading
technology companies
– We evaluate potential suppliers on a variety of factors, including
– We aim to support our clients in delivering lasting positive impact
workforce diversity, carbon reduction and human rights
through their brands. Against this background we were pleased to
Our suppliers range from small businesses to the
world’s largest technology partners. They provide us
with the products and services we need to meet our
clients’ needs
GOVERNMENTS AND REGULATORS
Governments receive the tax contributions we
make to public finances, enabling them to invest
in public services
Governments and regulators determine the policy
frameworks that affect us and our stakeholders
behalf of clients, including direct lobbying of public officials and
influencing public opinion
PEOPLE
We depend on the talent, creativity and technology
skills of our people. And we want our employees to
embrace our purpose, culture and values. In return,
our people receive salaries, pension contributions,
employee benefits, career development and training
THE PLANET
We are committed to responsible and sustainable
business practices. We take steps to optimise our own
environmental impact, but recognise that our greatest
contribution is through our work with clients, which can
shift attitudes and change behaviours to build a
sustainable future and a more inclusive society
COMMUNITIES
We can help boost the impact of charities and
non-governmental organisations by providing
marketing and creative services, often on a pro bono
basis, enabling them to raise awareness and funds,
recruit members, and achieve campaign objectives.
We believe, as do many of our stakeholders, that acting
responsibly is both the right thing to do and in our long-
term interests
HOW WE ENGAGE WITH STAKEHOLDERS
HOW WE REACT TO STAKEHOLDERS
SHAREHOLDERS
– We continued our series of webinars in 2022, providing investors
– We have an extensive investor relations programme, comprising
and analysts with deeper insight into individual agencies,
quarterly results presentations, investor days, the AGM, investor
products and services within WPP
and analyst meetings, webcasts and ongoing email exchanges
– The 2022 AGM was live-streamed via a webcast hosted by the
– We disclose relevant information to shareholders through
Chairman and Chief Executive, enabling shareholders to
our Annual Report, quarterly financial statements and Regulatory
participate remotely, if they chose
News Service announcements
– In 2022, total cash to shareholders through dividends and share
buybacks exceeded £1.1 billion (2021: £1.0 billion)
CLIENTS, PARTNERS AND SUPPLIERS
– Our technology partnership with Epic Games resulted in more
– We engage with our major clients through our central team
than 4,700 colleagues being trained in the bespoke Metaverse
of Global Client Leaders, our agency CEOs, and their teams
Academy, the first partnership and training programme of its kind
– Our people regularly engage with suppliers and key technology
– We established a revised Assignment Acceptance Policy and
partners in joint product development, skills development and
Framework to help our agencies review new client work. See page
joint go-to-market programmes
77 for details
achieve a Likelihood to Recommend score for Diversity, Equity and
Inclusion of 8.2 out of 10 from our clients in 2022
GOVERNMENTS AND REGULATORS
– In 2022, we contributed £1.5 billion in taxes to public finances
– We participate in company and industry meetings with
(2021: £1.4 billion)
governments and regulators to ensure policies are developed
– We participated in consultations associated with ESG disclosure
taking into account the interests of our clients and the industry
requirements and regulation, and supported efforts to increase
– Our public affairs agencies engage in public policy activity on
ESG standardisation and alignment
PEOPLE
– To help us better support our people, we relaunched our all-staff
– We regularly survey our staff about their experiences at work
survey in 2022, achieving our highest-ever engagement levels
– We have extensive internal communications programmes and
with 72,700 employees taking part. See page 36 for more details
platforms to keep staff informed, including a regular series of
– We continue to link our DE&I goals to leaders’ compensation and
CEO virtual townhalls with our people
performance reviews
– Employees' development needs are assessed during formal
– In 2022, we invested £31.3 million in learning and development
appraisal processes
opportunities for our people (2021: £29.7 million)
THE PLANET
– In 2022, GroupM created a client coalition of leading advertisers
– We engage with corporate, government and NGO clients on
– collectively representing $10 billion in global advertising
issues ranging from climate action to Covid-19 and human rights
investment – with a shared commitment to accelerate the
during the development of their campaigns
decarbonisation of the world’s media supply chain
– We regularly meet with investors, rating agencies and
– We launched a new Green Claims Guide, supported by training
benchmarking organisations on sustainability issues
sessions, to help equip our people with principles and practical
tips to make accurate, authentic and material environmental
claims and avoid misleading claims
COMMUNITIES
– In June 2020, we committed to invest $30 million over three
– We work closely with communities and NGO partners to increase
years in internal and external initiatives to advance racial equity.
our understanding, and amplify the impact, of their work
Since then, we have committed $16.2 million to inclusion
– We encourage our people to volunteer their time
programmes, excluding amounts invested in 2022 which we
– We contribute to early-career development through internships,
intend to report later in the year
apprenticeships and the WPP Foundation in India
– To support those affected by events in Ukraine, we formed
a partnership with UNHCR, including a staff match-funding
appeal that raised $1.34 million, and ran similar campaigns for
those impacted by floods in Pakistan and the earthquakes in
– Our total social contribution in 2022 was £35.5 million
Turkey and Syria
(2021: £41.0 million)1
STAKEHOLDER ENGAGEMENT
STRATEGIC REPORT
HOW WE ENGAGE WITH STAKEHOLDERS
HOW WE REACT TO STAKEHOLDERS
SHAREHOLDERS
– We have an extensive investor relations programme, comprising
quarterly results presentations, investor days, the AGM, investor
and analyst meetings, webcasts and ongoing email exchanges
– We disclose relevant information to shareholders through
our Annual Report, quarterly financial statements and Regulatory
News Service announcements
– We continued our series of webinars in 2022, providing investors
and analysts with deeper insight into individual agencies,
products and services within WPP
– The 2022 AGM was live-streamed via a webcast hosted by the
Chairman and Chief Executive, enabling shareholders to
participate remotely, if they chose
– In 2022, total cash to shareholders through dividends and share
buybacks exceeded £1.1 billion (2021: £1.0 billion)
CLIENTS, PARTNERS AND SUPPLIERS
– We engage with our major clients through our central team
of Global Client Leaders, our agency CEOs, and their teams
– Our people regularly engage with suppliers and key technology
partners in joint product development, skills development and
joint go-to-market programmes
– We evaluate potential suppliers on a variety of factors, including
workforce diversity, carbon reduction and human rights
– Our technology partnership with Epic Games resulted in more
than 4,700 colleagues being trained in the bespoke Metaverse
Academy, the first partnership and training programme of its kind
– We established a revised Assignment Acceptance Policy and
Framework to help our agencies review new client work. See page
77 for details
– We aim to support our clients in delivering lasting positive impact
through their brands. Against this background we were pleased to
achieve a Likelihood to Recommend score for Diversity, Equity and
Inclusion of 8.2 out of 10 from our clients in 2022
Governments and regulators determine the policy
frameworks that affect us and our stakeholders
behalf of clients, including direct lobbying of public officials and
influencing public opinion
GOVERNMENTS AND REGULATORS
– We participate in company and industry meetings with
– In 2022, we contributed £1.5 billion in taxes to public finances
(2021: £1.4 billion)
governments and regulators to ensure policies are developed
taking into account the interests of our clients and the industry
– Our public affairs agencies engage in public policy activity on
– We participated in consultations associated with ESG disclosure
requirements and regulation, and supported efforts to increase
ESG standardisation and alignment
PEOPLE
– We regularly survey our staff about their experiences at work
– We have extensive internal communications programmes and
platforms to keep staff informed, including a regular series of
CEO virtual townhalls with our people
– To help us better support our people, we relaunched our all-staff
survey in 2022, achieving our highest-ever engagement levels
with 72,700 employees taking part. See page 36 for more details
– We continue to link our DE&I goals to leaders’ compensation and
performance reviews
– Employees' development needs are assessed during formal
– In 2022, we invested £31.3 million in learning and development
appraisal processes
opportunities for our people (2021: £29.7 million)
THE PLANET
– We engage with corporate, government and NGO clients on
issues ranging from climate action to Covid-19 and human rights
during the development of their campaigns
– We regularly meet with investors, rating agencies and
benchmarking organisations on sustainability issues
– In 2022, GroupM created a client coalition of leading advertisers
– collectively representing $10 billion in global advertising
investment – with a shared commitment to accelerate the
decarbonisation of the world’s media supply chain
– We launched a new Green Claims Guide, supported by training
sessions, to help equip our people with principles and practical
tips to make accurate, authentic and material environmental
claims and avoid misleading claims
COMMUNITIES
– We work closely with communities and NGO partners to increase
our understanding, and amplify the impact, of their work
– We encourage our people to volunteer their time
– We contribute to early-career development through internships,
– In June 2020, we committed to invest $30 million over three
years in internal and external initiatives to advance racial equity.
Since then, we have committed $16.2 million to inclusion
programmes, excluding amounts invested in 2022 which we
intend to report later in the year
apprenticeships and the WPP Foundation in India
– To support those affected by events in Ukraine, we formed
a partnership with UNHCR, including a staff match-funding
appeal that raised $1.34 million, and ran similar campaigns for
those impacted by floods in Pakistan and the earthquakes in
Turkey and Syria
– Our total social contribution in 2022 was £35.5 million
(2021: £41.0 million)1
1
Including pro bono work for NGOs and charities; negotiating free media space on behalf of
pro bono clients; and cash donations to charities
WPP ANNUAL REPORT 2022
23
SHAREHOLDERS
Our shareholders provide the capital to invest in
the business and support the valuation and liquidity
of WPP shares. Shareholders benefit from the Board
acting in the best interests of the Company and
investing for long-term value generation
CLIENTS, PARTNERS AND SUPPLIERS
The work we do for clients provides our revenue and
helps them to grow their businesses, build
relationships with their customers, and ready
themselves for future success
We have global partnerships with 28 leading
technology companies
Our suppliers range from small businesses to the
world’s largest technology partners. They provide us
with the products and services we need to meet our
clients’ needs
GOVERNMENTS AND REGULATORS
Governments receive the tax contributions we
make to public finances, enabling them to invest
in public services
PEOPLE
We depend on the talent, creativity and technology
skills of our people. And we want our employees to
embrace our purpose, culture and values. In return,
our people receive salaries, pension contributions,
employee benefits, career development and training
THE PLANET
We are committed to responsible and sustainable
business practices. We take steps to optimise our own
environmental impact, but recognise that our greatest
contribution is through our work with clients, which can
shift attitudes and change behaviours to build a
sustainable future and a more inclusive society
COMMUNITIES
We can help boost the impact of charities and
non-governmental organisations by providing
marketing and creative services, often on a pro bono
basis, enabling them to raise awareness and funds,
recruit members, and achieve campaign objectives.
We believe, as do many of our stakeholders, that acting
responsibly is both the right thing to do and in our long-
term interests
STRATEGIC REPORT
INVESTMENT CASE
We benefit from global scale,
exposure to growth markets, a
deep understanding of clients’
needs, leading capabilities and
a strong financial foundation
WPP delivered strong growth in 2022,
reflecting the priority placed by our clients
on investing in communications, customer
experience, commerce, data and technology.
We are entering 2023 in a strong position,
with a compelling client offer and good
momentum from new business wins, and
a robust balance sheet.
We remain confident in our ability to deliver
our medium-term targets as a result of the
actions we have taken to broaden and
strengthen our services, to increase our
exposure to attractive industry segments
and to leverage our global scale.
FINANCIAL TARGETS AND PERFORMANCE
Revenue less
Headline
pass-through
operating
costs growth
margin¹
6.9%
14.8%
3-5% around 15.0%2
Average
adjusted
net debt/
EBITDA
1.46x
1.5-1.75x
3-4%
15.5-16.0%
1.5-1.75x
2022 actual
2023 targets
Medium-term
targets
Read more about our outlook
and guidance on page 65
1 See Glossary on page 232 for definitions
2 Excluding the impact of foreign exchange
24
WPP ANNUAL REPORT 2022
1
2
3
4
5
6
UNRIVALLED GLOBAL REACH
AND SCALE
ATTRACTIVE AND GROWING
ADDRESSABLE MARKETS
DEEP CLIENT RELATIONSHIPS WITH
LEADING GLOBAL BUSINESSES
STRENGTHS IN TECHNOLOGY
AND DATA
A STRONG FINANCIAL POSITION
A STRONG FINANCIAL POSITION
VALUE CREATION FROM
STRATEGIC PLANS TO
ACCELERATE GROWTH
UNRIVALLED GLOBAL REACH AND SCALE
– A global network of leading agencies, providing the broadest geographic reach
– Home to GroupM, the number one media buying operation worldwide, responsible for
over $60 billion of global media billings
– Present in countries worldwide, providing deep in-market expertise
100+
countries in our
global network
#1
home to GroupM, the
leading global media
investment company1
ATTRACTIVE AND GROWING ADDRESSABLE MARKETS
– Extended our offer in high-growth areas of experience, commerce and technology
– Repositioned traditional communications offer to faster-growth digital communications
– Well positioned to serve the faster-growth digital segments of retail media and
– Strong exposure to structurally faster-growth economies such as China, India and Brazil
8.4%
13.1%
estimated growth
estimated growth
in global digital
advertising spend
in 20222,3
in global retail media
advertising spend
in 20222,3
DEEP CLIENT RELATIONSHIPS WITH LEADING GLOBAL BUSINESSES
– Our clients are some of the world’s largest companies, including over 300 of the Fortune
– Strong and enduring CEO, CMO and CIO relationships
– Global Client Leaders provide easy access to the breadth and depth of WPP for our
90%
8.0
of our top 50 clients
average client
work with five or
satisfaction score
more of our agencies
(out of 10)
connected TV
Global 500
largest clients
SIGNIFICANT STRENGTHS IN TECHNOLOGY AND DATA
– Scaled global partnerships with 28 leading technology companies
– Deep specialisation in technical capabilities in advertising and marketing technology
– WPP Open, our common data and technology platform for sharing innovations across
WPP and its strategic technology partners, agencies and clients
– GroupM Nexus, our media performance organisation, the industry leader in digital
channels and platforms across search, social, programmatic, AI, cross-channel
optimisation, and data-driven technologies and software
– Choreograph, our data company, ranked a Strong Performer in Customer Data Strategy
and Activation Services by Forrester⁴
– Broad-based revenue across a wide geographic footprint and diverse client portfolio,
covering all business sectors, providing resilient revenue streams
– Predominantly variable cost structure, which protects profitability during a downturn
– Attractive margin, with scope to improve through our transformation programme
– Low ratio of net debt to EBITDA and over £4 billion of liquidity
VALUE CREATION FROM STRATEGIC PLANS TO ACCELERATE GROWTH
– Investment in acquisitions to enhance growth, by bringing in new capabilities, client
relationships and talent
– Transformation programme gross cost savings of around £375 million against a 2019
base, and on track to reach target of £600 million by 2025, to fund reinvestment of
£400 million into talent, technology and incentives to drive growth, and £200 million
benefit to profitability
– Intention to grow dividend annually with a pay-out ratio around 40% of headline EPS
1 COMvergence, 2021 data, September 2022
2 GroupM, This Year Next Year: Global End-Of-Year Forecasts, December 2022
3 Excluding US political advertising
4 Forrester Wave, Customer Data Strategy and Activation Services, Q2 2022
5 Forrester Wave, Global Marketing Services Providers, Q3 2022
6 See definitions in the Glossary on page 232
10,000+
data practitioners
8,000+
creative technologists
Leader
WPP is ranked a leader
among global marketing
services providers5
14.8%
1.5x
headline operating
average adjusted net
margin⁶
debt/headline EBITDA6
£375m
transformation
programme gross
savings since 2019
39.4p
dividends per share
(+26% on 2021)
INVESTMENT CASE
STRATEGIC REPORT
1
2
3
4
5
6
UNRIVALLED GLOBAL REACH
AND SCALE
ATTRACTIVE AND GROWING
ADDRESSABLE MARKETS
DEEP CLIENT RELATIONSHIPS WITH
LEADING GLOBAL BUSINESSES
STRENGTHS IN TECHNOLOGY
AND DATA
A STRONG FINANCIAL POSITION
VALUE CREATION FROM
STRATEGIC PLANS TO
ACCELERATE GROWTH
UNRIVALLED GLOBAL REACH AND SCALE
– A global network of leading agencies, providing the broadest geographic reach
– Home to GroupM, the number one media buying operation worldwide, responsible for
over $60 billion of global media billings
– Present in countries worldwide, providing deep in-market expertise
100+
countries in our
global network
#1
home to GroupM, the
leading global media
investment company1
ATTRACTIVE AND GROWING ADDRESSABLE MARKETS
– Extended our offer in high-growth areas of experience, commerce and technology
– Repositioned traditional communications offer to faster-growth digital communications
– Well positioned to serve the faster-growth digital segments of retail media and
connected TV
– Strong exposure to structurally faster-growth economies such as China, India and Brazil
8.4%
estimated growth
in global digital
advertising spend
in 20222,3
13.1%
estimated growth
in global retail media
advertising spend
in 20222,3
DEEP CLIENT RELATIONSHIPS WITH LEADING GLOBAL BUSINESSES
– Our clients are some of the world’s largest companies, including over 300 of the Fortune
Global 500
– Strong and enduring CEO, CMO and CIO relationships
– Global Client Leaders provide easy access to the breadth and depth of WPP for our
largest clients
90%
8.0
of our top 50 clients
work with five or
more of our agencies
average client
satisfaction score
(out of 10)
SIGNIFICANT STRENGTHS IN TECHNOLOGY AND DATA
– Scaled global partnerships with 28 leading technology companies
– Deep specialisation in technical capabilities in advertising and marketing technology
– WPP Open, our common data and technology platform for sharing innovations across
WPP and its strategic technology partners, agencies and clients
– GroupM Nexus, our media performance organisation, the industry leader in digital
channels and platforms across search, social, programmatic, AI, cross-channel
optimisation, and data-driven technologies and software
– Choreograph, our data company, ranked a Strong Performer in Customer Data Strategy
and Activation Services by Forrester⁴
10,000+
data practitioners
8,000+
creative technologists
Leader
WPP is ranked a leader
among global marketing
services providers5
A STRONG FINANCIAL POSITION
– Broad-based revenue across a wide geographic footprint and diverse client portfolio,
covering all business sectors, providing resilient revenue streams
– Predominantly variable cost structure, which protects profitability during a downturn
– Attractive margin, with scope to improve through our transformation programme
– Low ratio of net debt to EBITDA and over £4 billion of liquidity
14.8%
1.5x
headline operating
margin⁶
average adjusted net
debt/headline EBITDA6
VALUE CREATION FROM STRATEGIC PLANS TO ACCELERATE GROWTH
– Investment in acquisitions to enhance growth, by bringing in new capabilities, client
relationships and talent
– Transformation programme gross cost savings of around £375 million against a 2019
base, and on track to reach target of £600 million by 2025, to fund reinvestment of
£400 million into talent, technology and incentives to drive growth, and £200 million
benefit to profitability
– Intention to grow dividend annually with a pay-out ratio around 40% of headline EPS
£375m
transformation
programme gross
savings since 2019
39.4p
dividends per share
(+26% on 2021)
1 COMvergence, 2021 data, September 2022
2 GroupM, This Year Next Year: Global End-Of-Year Forecasts, December 2022
3 Excluding US political advertising
4 Forrester Wave, Customer Data Strategy and Activation Services, Q2 2022
5 Forrester Wave, Global Marketing Services Providers, Q3 2022
6 See definitions in the Glossary on page 232
WPP ANNUAL REPORT 2022
25
STRATEGIC REPORT
THE MARKET
IN 2022
Resilient, growing and complex
ADVERTISING MARKET
The global marketing and advertising
industry demonstrated great resilience as
brands continued to invest in marketing,
despite turbulence in the global economy.
According to GroupM estimates,1,2 global
advertising spend grew 6.5% in 2022. The
total market value was around $800 billion
and comprised three key media channels
that advertisers utilise to reach consumers
– digital channels (internet, video and digital
display), television, and other services
(out-of-home, audio, cinema and print).
DIGITAL
Digital advertising is the largest segment
of the industry, accounting for 67% of total
advertising spend in 2022. It was also one
of the fastest growing. GroupM estimated
that global digital ad spend grew by 9.3%
in 2022, following unprecedented 31.9%
growth in 2021 due to the pandemic. The
market has also become more complex as
the number of scaled advertising platforms
across social media and connected TV
increased, providing clients with more
choice, in turn requiring the advice and
expertise of agencies.
TELEVISION
TV continued its recovery to pre-pandemic
levels, as advertisers valued the medium’s
effectiveness in satisfying reach and
frequency goals, with an expected global
growth rate of 1.7% in 2022. The robustness
in TV spend reflects the growing demand
for connected TV services such as YouTube
and Netflix, offsetting declines in traditional
TV viewership.
OTHER SERVICES
Growth in out-of-home advertising (for
example on billboards) in 2022 was estimated
at 2.2%, or 18.1% excluding China, the largest
out-of-home market, which faced numerous
lockdowns due to Covid-19. Audio was
projected to grow 3.8% globally in 2022,
supported by double-digit growth in digital
audio channels. Demand for traditional print
services (newspapers and magazines) fell
7.4% in 2022, as publishers continued to
diversify their offerings and revenue streams.
COUNTRY TRENDS
By geography, 2022 saw healthy growth in
most major markets. The United States, the
world’s largest ad market representing 39%
of total spend, is estimated to have grown
7.1% in 2022, led by digital and connected
TV. China, the world’s second-largest market
(with 90% driven by digital spend), declined
0.6% due to Covid-related lockdowns. The
UK market remained robust, growing 8.9%,
driven by digital advertising. In the other
major mature countries of Germany, France
and Canada growth was strong with 5%,
7.6% and 5.8% respectively, supported by
nominal GDP growth, digital spend and
connected TV growth. In the less-mature
markets of Brazil and India, growth was 9%
and 15.8% respectively, again led by digital
advertising and strong real GDP growth.
67%
of the global ad market is digital1
GroupM, This Year Next Year, December 2022
1
2 Excluding United States political advertising
GLOBAL AD MARKET BY MEDIA CHANNEL
%
AD MARKET GROWTH BY MAJOR COUNTRY
(2022, %)
GLOBAL AD MARKET GROWTH
(2022, %)
16
22
62
15
20
65
14
19
67
8.9
7.1
5.0
5.8
9.0
7.6
-0.6
9.3
15.8
6.5
1.7
0.7
● Digital ● TV ● Other
US
UK
Germany
China
Canada
France Brazil
India
● Total ● Digital ● TV ● Other
26
WPP ANNUAL REPORT 2022
●GLOBAL AD MARKET BY MEDIA CHANNEL%202020212022202020212022GLOBAL AD MARKET GROWTH (2022, %)●AD MARKET GROWTH BY MAJOR COUNTRY (2022, %)
THE MARKET
STRATEGIC REPORT
MARKET OUTLOOK
5.9%
global advertising expenditure
predicted growth in 2023
GroupM forecasts global ad demand to
grow nearly 6% in 2023, driven by stronger
gains in connected TV, retail media and
fast-growing markets such as India. Beyond
this, demand is expected to expand by
6% annually until 2027, mainly driven by
continued growth in digital services
WPP is well exposed to the growth areas,
reflecting increased investment, both
organically and through acquisitions, in
experience, commerce and technology
services. Today these areas represent
around a quarter of our revenue less
pass-through costs
Growth driver
OUTLOOK
WHY WPP IS WELL POSITIONED
DIGITAL
According to GroupM, digital communications are expected to grow 8.4%
in 2023, rising to 73% of global ad spend by 2027. Retail media, which is
advertising revenue accruing to a retail-based company, is one of the fastest
growing segments, expected to grow 10% in 2023. This reflects shifts in
offline to online retail advertising, as well as budgets from other media
owners towards retail media networks
We see great potential for innovation and growth in connected TV as brands
increasingly focus more of their budgets on delivering cross-channel digital
performance, and traditional TV budgets continue to follow audiences on
to new platforms offering better addressability and measurement. GroupM
expects connected TV to grow 18% globally in 2023, and to account for
nearly a third of all United States TV advertising by 2027
– 48% of GroupM’s media billings are digital,
demonstrating our modern offer, up from
43% in 2021
– In April 2022, we launched GroupM Nexus,
bringing together 9,000 practitioners globally
in addressable TV (Finecast),3 AI, retail media
and commerce, programmatic (Xaxis), search
and social, across digital channels and platforms
EXPERIENCE
COMMERCE
Experience is a rapidly growing area driven by the increasing number of people
online and the hybrid blend of physical and digital channels. We believe that
customer experience sits at the heart of creative transformation and growth.
Our analysis shows brands that deliver superior customer experience have
five times the revenue growth of those that don’t4
– WPP named a Leader in the Forrester Wave
Global Digital Experience Services rankings5
– WPP named a Leader in IDC MarketScape
Worldwide Adobe Experience Cloud
Professional Service Providers, 2022
Growth in commerce demand is being driven by the shift to digital and
omnichannel commerce, including the adaptation of physical commerce
post Covid-19. Based on a study by Wunderman Thompson, 60% of shoppers
say they will increase their usage of digital shopping channels in the future,⁶
and according to GroupM, global ecommerce will make up 19% of global
retail sales in 2022, growing to 25% by 20277
– We manage over $40 billion of gross
merchandise value over WPP-built ecommerce
platforms for clients
– We acquired several leading commerce
businesses in 2022 to enhance our capabilities,
including Corebiz in Latin America and Diff in
Toronto. See page 14 for more details
TECHNOLOGY
Growth in technology services continues due to demand for data and
analytics, and managed services offerings with lengthier contracts. For
example, the global customer relationship management market is seeing
strong demand aimed at transforming customer engagement and business
outcomes, and is projected to grow from $64 billion in 2022 to $146 billion
by 2029, at a CAGR of 12.5%8
– We enhanced our capabilities with 33,000+
technology accreditations and certifications
from strategic partners
– We also announced new strategic technology
partnerships including Instacart, Stripe and
BigCommerce. See page 14 for more details
PURPOSE,
ENVIRONMENT
AND
REPUTATION
There are many issues we face as a society such as climate change, diversity,
racial equity, privacy and data ethics. Companies are responding accordingly,
and are increasingly focused on ensuring that the pledges they make in
relation to purpose and the environment translate into tangible change. For
example, 78% of our top 50 clients have set science-based climate reduction
targets. This has led to a growing focus on strategic communications and
reputational advice for clients
– Successful formation of FGS Global, a
powerhouse in strategic communications,
ranked number one in global M&A tables9
– GroupM, our media investment business,
launched a media decarbonisation framework
for measuring and reducing ad-based carbon
emissions, supported by a client coalition of
leading brands
1 GroupM, This Year Next Year, End-Of-Year Forecasts, December 2022
2 Excluding United States political advertising
3 The accuracy of Finecast’s reach-frequency audience calculations in the UK and our
processes for delivering addressable (targeted) advertising to those audiences has
been subject to independent verification by PwC
4 WPP, Winning the Future of Experience Playbook, January 2022
5 Forrester, Global Digital Experience Services, Q2 2022
6 Wunderman Thompson, The Future Shopper Report 2022
7 GroupM, This Year Next Year: Ecommerce & Retail Media Forecasts, September 2022
8 The CRM Forrester Wave™ Evaluations - And How To Use Them, August 2022
9 Mergermarket, January 2023
WPP ANNUAL REPORT 2022
27
STRATEGIC REPORT
CREATIVITY
WPP’s single biggest
competitive advantage
CREATIVITY HAS THE
POTENTIAL TO ADDRESS
THE BIGGEST CHALLENGES
OF OUR TIME”
Rob Reilly
Global Chief Creative Officer, WPP
Every day we are asked to engage hard-to-
reach audiences, enhance brand reputations
or increase sales. Our answer? Creativity. The
solution to both commercial problems and
some of society’s most complex challenges.
And creativity doesn’t just apply in our
creative agencies – it’s vital for our media
and public relations work too.
DIVERSITY MATTERS
Creativity flourishes when we invest in and
celebrate the diversity of our people, which
is why we introduced diverse candidate
slate policies in the UK, United States and
Asia-Pacific. We enrolled more women
on development programmes including
the Elevate sponsorship plan, designed to
support Black women in their career growth,
and launched free VisibleStart training in the
UK for women over 45 who want to enter or
rejoin the industry. We also nurtured
early-career talent via NextGen Leaders and
The Update, both of which aim to build a
diverse pipeline.
Read more about how we’re investing
in diversity on page 36
Creativity extends to our physical spaces
too. People need modern and dynamic
workspaces that encourage creative
collaboration on the next client pitch or
challenge. Our state-of-the-art campuses
will, by 2025, house 85,000 of our people –
in net zero buildings running on electricity
from renewable sources.
TALENT AND TEAMWORK
Our focus on hiring exceptional creative
talent resulted in some great wins in 2022.
Devika Bulchandani was promoted to Global
CEO of Ogilvy and drove the agency’s most
successful creative year yet: Ogilvy was
named Network of the Year at both the
Cannes Lions Festival and The One Show,
and by Campaign magazine. It also became
28
WPP ANNUAL REPORT 2022
the only agency to secure top rankings on
both WARC’s Creative 100 and Effective 100.
creating a virtual version of Los Angeles
under pressure of extreme weather events.
VMLY&R was recognised by Forrester as a
leader in Marketing Creative and Content
Services, while AKQA secured two Grand
Clio awards and Wunderman Thompson
won the inaugural Creative B2B Grand Prix
at Cannes. Liz Taylor, who returned to Ogilvy
in 2021, topped D&AD’s 2022 Chief Creative
Officer rankings.
Investing in key acquisitions also brings
fresh new ideas and highly rated creative
expertise to the WPP family. Our 2022
acquisition of Passport – a leading California-
based brand design agency that works
across a range of consumer categories and
global markets spanning Australia, Asia and
North America – will help us deliver
exceptional strategic positioning and creative
execution that will greatly benefit our clients.
TECH + CREATIVITY = INNOVATION
Our focus on ground-breaking technology
allows us to throw away the creative rule
book, sparking into life bold, innovative,
new ideas. In 2022 Speaking in Colour,
a voice-activated AI tool produced for paint
manufacturer Sherwin-Williams, changed the
way we visualise colour (see page 50).
Alongside Coca-Cola, ITC (one of India’s
foremost FMCG companies) and Wavemaker
created the first metaverse wedding, while
Burger King entered the gaming world with
Burger Glitch, playfully poking fun at in-game
glitches while achieving record numbers of
app downloads.
Apps including Instagram, Waze and TikTok
supported a data-rich Australian road safety
initiative encouraging young drivers to
take breaks on long road trips, resulting
in a 70% reduction in young driver claims.
And we helped Greenpeace press home
their message within Grand Theft Auto,
We also kept it real (world). Off the coast of
Sweden, Carlsberg’s underwater bar warned
boat drivers of the dangers of drinking and
driving. And alongside Ford, we created an
unashamedly Very Gay Raptor (see page 20).
Not everyone liked it. But Ford wanted
change, and we delivered it – creatively.
WPP’s purpose also helps us inspire
powerful social change. We created an
emotionally bold campaign with Amnesty
International in which Portuguese TV, radio
and cinema ads were interrupted with an air
raid siren every time a real one went off in
Ukraine. We created Morning After Island
in the sea near Honduras so women could
legally access the morning-after pill –
something they were forbidden to do within
the country’s jurisdiction. And in partnership
with Google Fonts, we imagined an entirely
new font to change the way the world reads,
helping 780 million people worldwide born
with dyslexia.
CREATIVE RECOGNITION
Changes brought about by Covid-19 meant
we had to think differently over the last two
years, and the creativity this has engendered
has been revolutionary – and widely
recognised by consumers and industry
alike. Awards are not why we do the work,
but we love it when our talented teams get
recognition for their ground-breaking ideas.
We were honoured to be awarded the
overall title of Most Creative Company of
the Year at the 2022 Cannes Lions Festival,
where WPP agencies collected a total of
176 Lions including one Titanium, four Grand
Prix, 36 Gold, 47 Silver and 88 Bronze, with
winners representing 40 different countries.
WPP also topped WARC’s 2023 global
agency rankings in all three categories:
Creative, Media and Effectiveness.
OUR STRATEGY
STRATEGIC REPORT
LEADING
THE FIELD
Our creative drive is to meet client needs
– we don’t do it for awards, but winning
them tells us we’re doing things right and
recognises the talent of our teams around
the world. Here are some 2022 highlights
Most Creative Company
of the Year
(second year in a row)
CREATIVE
NETWORK OF
THE YEAR
Cannes Lions
LEADER IN
MARKETING
CREATIVE AND
CONTENT SERVICES
Forrester
WORLD-CHANGING
IDEAS AWARD
Fast Company
INAUGURAL
CREATIVE B2B
GRAND PRIX
Cannes Lions
GOLD
Marketing Excellence
Awards
MEDIA
HOLDING COMPANY
OF THE YEAR
MediaPost
#1 MEDIA AGENCY
WARC
GLOBAL AGENCY OF
THE YEAR
Adweek
AGENCY NETWORK
OF THE YEAR
M&M Global
MOST INNOVATIVE
AGENCY OF
THE YEAR
Digiday
PR AND SPECIALIST AGENCIES
OUTSTANDING
AGENCY PRACTICE
PRWeek
UK AND MIDDLE EAST
CONSULTANCY OF
THE YEAR
PRovoke SABRE
Awards EMEA
#1 GLOBAL
M&A COMMUNICATIONS
ADVISOR
Mergermarket
BEST IN SHOW
Art Directors Club
of New York
22 GOLDS
Transform Awards
WPP ANNUAL REPORT 2022
29
STRATEGIC REPORT OUR STRATEGY
CREATIVITY
30
WPP ANNUAL REPORT 2022
OUR STRATEGY
STRATEGIC REPORT
SHEBA:
HOPE REEF
Fish are only sustainable if their
environment is too
OFFER
COMMUNICATIONS
AGENCY
ESSENCEMEDIACOM, GLOBAL
CLIENT
SHEBA (MARS PETCARE)
Over 50% of the world’s coral has been
lost since 1950, with 90% of reefs facing
extinction within just 20 years. As a
commitment to going beyond simply
sourcing sustainable ingredients for its
cat food, Sheba wanted to actively restore
ocean health.
Working with Mars Petcare and partners
including AMV BBDO, Google and Freuds,
EssenceMediacom helped develop the
Hope Reef campaign. Located off the coast
of Indonesia, Hope Reef restored a barren
site that had been blasted with explosives
by fishermen. Using the reef star system
to create the perfect environment for coral
to thrive, Sheba’s marine biologists regrew
the coral to form the word Hope, a living
testament to Sheba’s commitment to
sustainability.
EssenceMediacom’s high-impact paid
media campaign across 11 markets helped
showcase the visual of Hope Reef alongside
its coordinates, driving people to Google
Maps to view it for themselves and ‘swim it’
on underwater Streetview. Over one million
people explored the reef on Google Maps.
EssenceMediacom also invited the world to
play a part in reef restoration via a YouTube
video that gained 20 million views and raised
enough funds for a new crowdfunded reef.
Today Hope Reef is thriving, with 70% coral
coverage and a 300% increase in fish
abundance.
308%
return on investment
2.5bn
earned media
impressions
5
countries adopted
Sheba’s reef system
Awards
Cannes Lions Grand
Prix: Media, and
Industry Craft
WPP ANNUAL REPORT 2022
31
STRATEGIC REPORT OUR STRATEGY
DATA AND TECHNOLOGY
The backbone of our success
WPP harnesses the power of data and
technology to augment our creative, media
and public relations skills, and design
award-winning, ground-breaking digital
moments. Whether it’s how the work is
made, data and tech being the idea, or
deriving ideas from tech culture, technology
drives our creative success.
Our data and technology platforms have
been central to winning some of our most
exciting client mandates in recent years.
We built The Coca-Cola Company’s new
marketing operating system on WPP Open,
and also won the opportunity to build SC
Johnson’s marketing operating system and
deploy proprietary tools from WPP Open.
PARTNERSHIPS DRIVE RESULTS
We have key strategic partnerships
with 28 of the world’s largest technology
companies. At the heart of each partnership
is a joint business plan covering product
development, preferential access to data
and technology, training programmes and
joint go-to-market approaches.
In 2022 we partnered with Epic Games to
deliver a new era of digital experiences for
clients in the metaverse. This was brought to
life with the pioneering launch of the Give Me
The Future Experience with the band Bastille.
We also partnered with NVIDIA’s Omniverse
platform to reinvent the way content is made
and captured, replacing traditional location-
based production with virtual tech including
high-end CGI and 360° photography. Teams
around the world can now collaborate
effortlessly, producing more effective
work with lower investment, lower carbon
footprint and faster speed to market.
INSPIRING OUR PEOPLE
Over the past year our people achieved
more than 33,000 different technical
accreditations and certifications from our
technology partners, reflecting WPP’s
commitment to outstanding learning
opportunities and world-class technology
ACCELERATED STRATEGY
The last few years have brought evolving
client needs into sharp focus: in particular,
an increasing desire for expert guidance
on what data is valuable and accessible,
and where it fits into clients’ overall purpose.
In response we accelerated delivery of our
data and tech strategy, focusing on three
key areas: our platforms, partners and
people. This strategy revolves around a
forward-looking approach to data that
empowers clients, focuses on connection
not collection, prioritises consumer privacy,
and emphasises data’s ethical and purposeful
use to improve performance.
These are also the principles on which our
data company, Choreograph, was founded.
Industry analysts Forrester recognised this
approach, stating that Choreograph “has
a differentiated vision of a future where
personal information isn’t the only solution
for marketing and a thoughtful, above-par
roadmap.”1
INNOVATIVE PLATFORMS
We believe that the best technology
tools and solutions originate closest to
our clients, in our agencies – something we
call distributed innovation. To maximise the
impact of these innovations we integrate
them into WPP Open, a platform that shares
the best technology and data innovations
from across the Company, so that all clients
can access the best data and products from
anywhere in our business.
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WPP ANNUAL REPORT 2022
In addition, our partnership with Epic Games
resulted in more than 4,700 colleagues being
trained in the bespoke Metaverse Academy,
the first partnership and training programme
of its kind.
Nearly 3,000 colleagues achieved Meta’s
Blueprint Certification, a 67% increase over
2021, and more than 6,300 colleagues earned
TikTok Academy badges. We also launched
a Creative Technology Apprenticeship
scheme, which saw a diverse cohort of
young people begin an exacting, year-long
experience across a range of agencies.
LEADING THE INDUSTRY
This year WPP and its agencies were named
a Leader in three Forrester Waves: WPP
for Global Marketing Services and for Digital
Experience, and VMLY&R for Content and
Creativity Services. Choreograph was named
a Strong Performer in the Forrester Wave
for Customer Data Strategy and Activation
Services, while the International Data
Corporation (IDC) recognised WPP’s
leadership position in its Adobe Experience
Cloud Services MarketScape. WPP agencies
won a Grand Prix, 11 Gold, six Silver and eight
Bronze awards at the Digital Media Awards
(DMAs) this year – a testament to the
creativity that is being driven by data
and technology across our business.
For more information on our approach
to data ethics please see page 84
1 Source: Forrester Customer Data Strategy and
Activation Wave, Q2 2022
OUR STRATEGY
STRATEGIC REPORT
A NEW GLOBAL
PARTNERSHIP
WPP partners with the world’s leading tech
companies because we believe brands have a
unique opportunity to unlock unlimited creativity
within the spaces created by new technology
TECHNOLOGY
WPP works closely with Epic to
learn how to build next-generation
interactive experiences leveraging
Unreal Engine, an advanced real-time
3D creation tool used across a range
of industries including games, film,
architecture, fashion, automotive,
music and live events
In 2022 we announced our partnership
with Epic Games, the interactive
entertainment company and developer
of Fortnite and Unreal Engine, to help
WPP agencies with training and
resources to deliver a new era of digital
experiences for brands in the metaverse
JOINT SOLUTION
DEVELOPMENT
The Epic Games partnership has
already produced pioneering
work including the launch of the
Give Me The Future Experience
with the band, Bastille. Using
Epic Games’ Unreal Engine, we
created the world’s first hybrid
physical/virtual concert
SKILLS
DEVELOPMENT
Over 4,700 WPP creatives
and technologists have been
trained to create custom
brand experiences in Fortnite
and to use Unreal Engine
for real-time 3D creation and
virtual production
GO-TO-MARKET
INITIATIVES
The partnership inspired
WPP’s own metaverse incubator
programme, offering WPP clients
the opportunity to work with
agencies to build imaginative
worlds inside Fortnite, one of
the world’s most popular
online games
WPP ANNUAL REPORT 2022
33
STRATEGIC REPORT OUR STRATEGY
DATA & TECHNOLOGY
GIGAFAST
WITH SKY
BROADBAND
Launching Sky into the metaverse
OFFER
COMMUNICATIONS, EXPERIENCE
AGENCY
HOGARTH AND
ESSENCEMEDIACOM, UK
CLIENT
SKY
Fast, reliable internet has become an
essential utility in the modern world. Sky
wanted to drive awareness of its new
game-changing fibre optic broadband
product, Gigafast.
Partnering with SuperAwesome (an
Epic Games company), Hogarth and
EssenceMediacom proposed a takeover
of a new level in Fortnite, plus a virtual race
for gamers where the winner would have
the unique prize of racing a famous YouTuber
in the final. The agencies pushed every
creative element of the game, ensuring that
the Sky brand was accurately represented
and adding new features never seen before.
For it to resonate with gamers, it was crucial
that Sky’s involvement added real value
to the Fortnite community. The branded
integration provided a truly enhanced
speed experience in-game. To help keep
the experience authentic and credible,
the agencies partnered with top YouTuber,
Ali A, who amplified the challenge to 18m+
followers live across YouTube and TikTok.
Sky saw overall sales increase by 27%
throughout the campaign period, with
Gigafast sales increasing by 26% in the
first two weeks alone.
41%
over-delivery on
target reach
50k
likes on Twitter,
YouTube and TikTok
1.8m
views on YouTube
and TikTok
Awards
Digiday, Best Multi
Channel Distribution
Strategy Award
34
WPP ANNUAL REPORT 2022
OUR STRATEGY
STRATEGIC REPORT
WPP ANNUAL REPORT 2022
35
STRATEGIC REPORT OUR STRATEGY
PEOPLE
We’re a people business
We’re exceptionally proud of the talented
people at WPP – they are the key to our
creativity. That’s why we put bold initiatives
in place to attract, engage and develop the
best in the industry.
EMPLOYEE ENGAGEMENT
To unleash the creative potential of every
individual across WPP, we need to hear
what’s important to them. In 2022 we
launched the refreshed All In staff survey
to help us better support employees, hold
ourselves accountable, and create a culture
that is inclusive and empowering for all.
We achieved our highest-ever engagement
levels with 72,700 employees taking part,
a 65% increase in engagement from 2021.
The results revealed that people care most
about career growth, belonging and feeling
valued. We were pleased to see our
Company-wide eNPS score (for ‘how likely
are you to recommend WPP as a place to
work?’) increase 14 points from 2021.
FULFILLING CAREERS AND
GLOBAL EXPERIENCES
We want WPP to be the employer of choice,
an organisation where people have the
chance to grow their career. We offer a
number of ways for people to learn, develop
and go places they didn’t think possible.
In 2022 we invested £31.3 million into
learning and development opportunities
for our employees, a 5% increase from 2021.
We’re pleased to say that over the course
of 2022, WPP employees earned more than
33,000 accreditations and certifications from
leading technology partners including
Adobe, Meta, Microsoft and TikTok.
Career Explorer, our online jobs platform,
unlocks the value of being part of a global
network, showcasing open roles and
encouraging employees to discover growth
36
WPP ANNUAL REPORT 2022
and mobility opportunities across some of
the most exciting, creative agencies in the
world. On average 7,000 roles per month
were advertised to employees in 2022, and
network-wide mobility has increased 80%
since 2020.
In September we launched WPP’s Future
Readiness Academies, a first-of-its-kind,
global learning programme to help everyone
across the Company develop the skills and
knowledge needed to thrive in a digital
world. To date we’ve had over 12,000 people
sign up from across the globe (see page 39).
Our third series of NextGen Leaders, a
virtual learning experience for those starting
out or new to the industry, welcomed 2,663
participants across 71 countries (up from
800 participants in 54 countries at launch).
Ninety-two percent said they were likely
to join or continue their career at WPP.
DIVERSE LEADERSHIP
Creativity thrives in a diverse culture.
That’s why we make it our business to
encourage and inspire a diversity of
talent throughout WPP.
In 2022 we continued to invest in
programmes such as Walk the Talk and
Fast Forward, propelling women to
leadership positions. We also expanded
Elevate, the United States-based sponsorship
programme for mid-level Black women,
into the UK, providing tools to support
their career growth, personal development
and wellbeing.
And we appointed a new Chief Talent and
Inclusion Officer, LJ Louis, who will oversee
global initiatives to foster a workplace
grounded in inclusion, equity, belonging and
growth. LJ will also act as an advisor on
global DE&I strategy to WPP’s leadership
team. For more on employee diversity,
please see the 2022 Sustainability Report.
The proportion of women in executive
leadership roles globally was 40%
(2021: 39%), while 54% of senior management
positions were occupied by women
(2021: 52%). This year, we were named in
the Bloomberg Gender-Equality Index for the
fifth year in a row, and 18 leaders across WPP
were named in INvolve and Yahoo Finance’s
Heroes Women Role Model lists for their
work in championing women in business
and nurturing a more gender-diverse and
inclusive workplace.
INCLUSION AND INSPIRATION
Inclusion is a passion at WPP. We embrace
all types of creative talent, which helps
us build strong teams and strengthen our
relationships with clients. Diverse and
vibrant employee spaces have been created
across WPP by individuals keen to make
a difference. For example, WPP Unite
celebrates our LGBTQ+ community, WPP
Stella inspires women across the Company
to maximise their potential, and WPP
Roots champions greater ethnic and
cultural diversity.
Since 2020, our Racial Equity Programme
has committed $16.2 million1 to a variety of
projects to help combat racial injustice and
support Black and ethnically marginalised
talent (for an example, see page 38). 22% of
our senior leaders and executive managers
in the United States, our largest market, are
non-white, which is an improvement on 2021
– but clearly we still have work to do to make
our business a more diverse workplace.
For more information on ethnic
diversity at WPP, please see our 2022
Sustainability Report
1 Excludes 2022 investments
OUR STRATEGY
STRATEGIC REPORT
DIVERSITY
54%
of senior managers across
WPP are women
PEOPLE COMMUNICATIONS
1.8 million
unique opens of CEO all-staff emails
EMPLOYEES BY GENDER
● Female 56%
● Male 44%
22%
of senior and executive managers
in the US, our largest market, are
non-white
5,900
average attendance at CEO
virtual townhalls
72,700
employees worldwide completed
refreshed All In staff survey
In 2022, WPP received a top score of 100 in
the Corporate Equality Index, and was again
named among the Best Places to Work for
LGBTQ+ equality.
Over the course of the year, we rolled out
our Mental Health Allies programme in the
United States and Singapore, building on a
successful pilot in the UK. We now have over
550 Allies who help to ensure colleagues
stay healthy, supported and safe by
encouraging open conversations about
mental health in the workplace and directing
them to resources and assistance when they
need it. We also introduced Making Space,
an initiative focused on giving people space
to look after their wellbeing.
Our new Guangzhou Campus is a creative hub that brings together over 500 people across different WPP agencies
And we have developed our benefits
programmes to make them more inclusive,
including enhanced fertility cover in the
United States, a suite of family and parental
policies in the UK, and improvements to
LGBTQ+ partner and spouse cover in China,
India, Philippines, Singapore and Thailand.
A NEW WAY OF WORKING
The last two-and-a-half years have
brought lasting changes to the way we
work at WPP. We’ve embraced greater
flexibility in how and where we do our
jobs, and found that can deliver better
outcomes for ourselves and our business.
These metrics were subject to independent limited assurance
procedures by PricewaterhouseCoopers LLP (‘PwC’) for the
year ended 31 December 2022. For the results of PwC’s 2022
Limited Assurance report and the ‘WPP Sustainability
Reporting Criteria 2022’, see our 2022 Sustainability Report
GREAT PLACES TO WORK
– AKQA was named as The Dots Best
Company to Work For in 2022 for
the third year in a row
– VMLY&R won Best Place to Work:
Network, and top Global Diversity
and Inclusion Initiative in Campaign’s
Global Agency of the Year awards
– CMI Media Group made the top 50
Ad Age Best Places to Work 2023
Our success continues to rely on
collaboration, culture and talent. Being
together, in person, helps us mentor and
develop the many people starting their
careers with us, build and maintain our
culture, do our best work for clients,
and find the right balance between our
personal and working lives. Our hybrid
approach – with time spent working in
our campuses and remotely – has been
adopted across the Company.
As the recovery from the pandemic
continues, the occupancy rate of our
campuses rose to over 40% in 2022, from
around 30% in 2021. We opened our third
state-of-the-art campus in Greater China,
in Guangzhou, at the start of 2023.
The Guangzhou Campus was built with
flexibility and collaboration in mind, and
is well placed to support and contribute
to China’s thriving start-up sector.
We also continued to exploit new ways
to connect. Our virtual global CEO
townhall series, in which Mark Read and
leaders from across WPP discuss topics
from sustainability to Super Bowl ads,
was well attended. An average of 5,900
participants joined each event, up
40% from 2021. CEO all-staff emails
accumulated over 1.8 million unique
opens over the year, a 64% increase,
while our global internal newsletter,
The Weekly, had over 1.8 million unique
opens, an increase of 34% year-on-year.
Finally, recognising the contribution
of our people during the challenges of
recent years, we invested in supporting
colleagues’ wellbeing through the
Making Space initiative, which kicked
off with a four-day weekend for all
employees to take time out to recharge,
reset and refresh.
WPP ANNUAL REPORT 2022
37
●
STRATEGIC REPORT OUR STRATEGY
PEOPLE
WE LOVE YOU
TO HEALTH
Advocating for better maternal
care for Black mothers
OFFER
COMMUNICATIONS
AGENCY
WUNDERMAN THOMPSON, USA
CLIENT
BLACK HEALTH MATTERS AND
CALIFORNIA BLACK HEALTH
NETWORK
At WPP, we believe in combatting racial
injustice and supporting Black and ethnically
marginalised talent.
That’s why in 2020, as part of our anti-racism
commitments, we launched a three-year Racial
Equity Programme with $30 million of funding.
As part of this, we invited our agencies to apply
for funding for innovative and impactful
campaigns to advance racial equity.
An initiative launched by Wunderman Thompson,
Health4Equity, prioritised three health inequities,
including Black maternal health. Its mission is
to use the combined power of data, human
insights, medical expertise, tech and creativity
to speed progress towards equity for all in the
health sector.
In 2022 Health4Equity delivered We Love You
to Health, a campaign aimed at reducing the
high rate of mortality among Black mothers.
To research the project, Wunderman Thompson
interviewed a range of Black mothers and
mothers-to-be, as well as doulas, nurses and
midwives. The findings indicated that the key
role of doulas could help protect maternal health.
The team launched a campaign on social
channels during Black Maternal Health Week,
focused on directly connecting Black mothers
with local doulas through the website
doulamatch.net. The campaign drove nearly
six times greater traffic to the doulamatch.net
site compared to other external sources,
successfully reaching the target audience.
3x
women of colour are
three times more likely
to die in childbirth
60%
of Black mothers’
deaths are preventable
800k
clickthroughs to
doulamatch.net
50%
impressions from
Black women in
target age range
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WPP ANNUAL REPORT 2022
OUR STRATEGY
STRATEGIC REPORT
FUTURE
READINESS
ACADEMIES
INVESTING IN
OUR PEOPLE
Industry-leading technology skills
for tomorrow’s digital world
Inspiring dynamic growth for brands takes
dynamic, skilled people to make it happen. That’s
why we encourage curiosity, self-development
and a thirst for learning throughout WPP.
We provide an extensive programme of learning
and development for our people worldwide in
subjects as diverse as commercial competence
and TikTok.
The Future Readiness Academies, the latest
phase of our industry-leading digital learning
programmes, launched in September 2022.
The Academies form a unique global learning
programme, based on the four pillars of WPP’s
offer – communications, experience, commerce
and technology – to help everyone across the
Company become confident and conversant
in the digital world of the future.
We kicked things off with Metaverse and More,
a 12-episode podcast featuring WPP expert
talent. Discussions ranged from the future of
media in Web3 to philosophical debates on
whether the metaverse exists or not. You can
listen to series one of Metaverse and More by
scanning the QR code below.
We are building out the Academies curriculum
through 2023 to offer our people in-depth
understanding of where the industry is moving,
across a broad range of digital subject areas.
12k+
enrolments
10k+
lessons completed
Scan to access
the Metaverse and
More podcast
WPP ANNUAL REPORT 2022
39
STRATEGIC REPORT OUR STRATEGY
STRATEGIC REPORT
CLIENTS
World-class creative ideas and
execution drive client growth
INDUSTRY SECTORS
Our broad client portfolio covers all major
industries. By sector, we saw continued
momentum from clients in the technology,
healthcare and pharma and consumer
packaged goods sectors, which together
represent 55% of our revenue less pass-
through costs. These sectors recorded
like-for-like growth of 8.6%, 7.0% and 11.9%
respectively.
NEW BUSINESS
We continued to win new clients and
assignments, with $5.9 billion of net new
business in 2022. Key wins included Audible,
Danone, Migros, SC Johnson, Nationwide
and Verizon. And we continued to retain key
clients, including leading companies such as
Sony Playstation, Tesco, Mars Wrigley and
MasterKong. However, we operate in a
competitive market, resulting in some
account losses including PepsiCo and
L’Oréal’s United States media account.
Following our success in the pitch for The
Coca-Cola Company account in 2021, this
global partnership of unprecedented scale
has been onboarded at pace, with
expectations for further growth in 2023.
AWARD-WINNING CLIENT WORK
Creative excellence remains central to our
client relationships, and we continue to do
our best work with our biggest clients: of
Unilever’s 18 Cannes Lions awards, 14 were
from WPP agencies. Our Grand Prix in the
Pharma category at Cannes Lions featured
two of our top clients – Dell and Intel – with
I Will Always Be Me, and our Titanium Grand
Prix was also for a top client – Mondelēz
International – with Shah Rukh Khan My Ad
for Cadbury Celebrations.
We believe in the power of big ideas and
brilliantly executed communications to
inspire our clients and grow their businesses.
Our creativity, media expertise, unrivalled
resources and integrated offer across all
marketing disciplines help us deliver
transformative outcomes for some of
the world’s best-known brands.
WORLDWIDE REACH
In 2022, our agencies worked with clients
including 307 of the Fortune Global 500,
all 30 of the Dow Jones 30 and 60 of the
FTSE 100. We saw widespread evidence
of clients investing in marketing for growth,
with 14 out of our top 30 clients in 2022
showing double-digit growth (versus
estimated global advertising industry
growth of 6.5%).1 This was despite the
macro challenges, reflecting the priority
placed by our clients on their investments
in communications, customer experience,
commerce, data and technology.
GLOBAL CLIENT LEADERS
It is becoming increasingly important for
our clients to be able to access numerous
different agencies and capabilities – 90%
of our top 50 clients now work with five or
more of our agencies. Key to making this
work is our talented team of 40 Global Client
Leaders, each a highly experienced industry
leader who supports our largest clients
with their most difficult challenges. Every
leader’s performance is measured on a
simple combination of metrics including
cross-WPP collaboration, creativity and
client satisfaction, alongside revenue.
In addition, Key Client Leaders provide a single
point of contact for the remainder of our top
100 clients, ensuring streamlined access to
talent across the WPP portfolio, connecting
the dots between agencies and workstreams,
and sharing insight from across WPP as we
seek to grow our clients’ businesses.
40
WPP ANNUAL REPORT 2022
CLIENT SATISFACTION
Client satisfaction, measured by our industry-
leading platform Vantage, held strong in
2022, with Likelihood to Recommend
consistently scoring 8 out of 10 over the last
year.2 Vantage also now features a key metric
on our ability to deliver world-class creativity
for clients. We analyse over 22,000 open-
ended verbatim comments from clients a
year, and 2022 saw a 15% increase in positive
sentiment towards creativity since 2020.
We also created two additional metrics that
align to our purpose as WPP:
– How well we support our clients’ diversity,
equity and inclusion goals – earning a
score of 8.2 out of 10 across 2022
– How well we support our clients’
sustainability goals – earning a score of
7.9 across the second half of 2022
We’re focused on ensuring every agency and
client leader across the WPP network uses
Vantage effectively to continually optimise
our client relationships. By the end of 2022,
agencies across 79 markets were reaping the
benefits, with use of our real-time reporting
dashboard increasing year-on-year to a high
of just over 80,000 visits in 2022.
1 GroupM, This Year Next Year: Global End of Year Forecasts,
December 2022
2 Includes Kantar, excludes Russia and Smollan
OUR STRATEGY
STRATEGIC REPORT
DELIVERING FOR
OUR CLIENTS
WPP works with many of the world's
most successful companies
TOP 20
CLIENTS
Among our top 20 clients, we have some
of the largest firms by market capitalisation
CONSUMER PACKAGED GOODS
TECHNOLOGY
AUTOMOTIVE
HEALTHCARE AND PHARMA
TELECOM, MEDIA & ENTERTAINMENT
NEW BUSINESS
WINS AND
RETENTIONS
2022 was another strong year for new business
wins and retentions across our media and
creative businesses
8.0
client satisfaction as
measured by Likelihood
to Recommend
score out of 10
$5.9bn
new business billings
(2021: $8.7bn)1
1 Billings as defined in the Glossary on page 232
WPP ANNUAL REPORT 2022
41
STRATEGIC REPORT OUR STRATEGY
CLIENTS
I WILL ALWAYS
BE ME
The book that banks your voice
OFFER
COMMUNICATIONS, TECHNOLOGY
AGENCY
VMLY&R, US
CLIENT
DELL TECHNOLOGIES, INTEL
Motor neurone disease (MND) is a terminal
illness. But before it takes your life, it takes
your voice.
Voice banking can help those with MND
create a digital copy of their voice, so they
can continue sounding like themselves after
losing the ability to speak. But voice banking
is a demanding task that involves reading a
long list of random words – often resulting
in a disappointingly robotic voice. Small
wonder only 12% of those with MND
ever used the technology.
Created by VMLY&R in partnership with Dell
Technologies, Intel, the Motor Neurone
Disease Association and Rolls-Royce, I Will
Always Be Me is a book reading experience
that can create a digital voice with just a
30-minute recording.
VMLY&R worked with best-selling author
Jill Twiss and illustrator Nicholas Stevenson
to create a story that contains every sound
and syllable needed to accurately bank
a person’s voice as they read. The story,
written in the form of a letter from a person
diagnosed with MND to their loved ones,
is a touching reminder that the person will
always be themselves on the inside, no
matter what changes the future may bring.
1.7bn
impressions from
PR and earned media
+50%
growth in people
banking their voice
in the three months
after launch
Awards
Cannes Lions Grand
Prix, Pharma
Cannes Lions Gold,
Brand Experience
and Activation
42
WPP ANNUAL REPORT 2022
OUR STRATEGY
OUR STRATEGY
STRATEGIC REPORT
WPP ANNUAL REPORT 2022
43
STRATEGIC REPORT OUR STRATEGY
COMPANIES
Making WPP easier to manage
and simpler to navigate
Following a series of mergers, business
combinations and disposals over the last
five years, and the creation of common
business platforms, we now have a strong,
dynamic portfolio of streamlined agencies
providing our clients with a full suite of
integrated marketing solutions. This makes
it easier for our leaders to manage our
operations, and simpler for our clients to
access the best of our services.
SIMPLIFYING OUR OFFER
We have taken significant steps to reduce
complexity and ensure our clients can access
the best resources from across the Company.
This includes simplifying 25 different agency
networks into five large, integrated networks
(GroupM, AKQA, Ogilvy, Wunderman
Thompson and VMLY&R), which between
them accounted for 80% of revenue less
pass-through costs in 2022 (compared to
70% in 2018). These integrated agency
models provide clients with simple solutions
not only in communications but also in
experience, health, ecommerce, data and
technology. As part of this process, we have
halved the number of individual brands
within WPP from over 500 in 2019.
RECENT BUSINESS COMBINATIONS
During 2022 we announced several business
combinations that became effective in early
2023, to further simplify our operations.
We formed EssenceMediacom by fusing
two strategically complementary agencies
– bringing together the digital and data-
driven capabilities of Essence with the
scaled multichannel audience planning
and strategic media expertise of MediaCom.
Clients can now leverage an expanded
global organisation of 10,000 employees
across 120 offices.
Finecast, Xaxis and GroupM Services
were brought together to form GroupM
Nexus, the world’s leading media
performance organisation. GroupM Nexus
is home to 9,000 talented people around
the globe, combining leading media skills,
digital services excellence, cutting-edge
AI technology and unique scaled
partnerships within a new cross-channel
performance organisation.
Mindshare’s 10,000 media specialists have
been integrated with 1,200 digital-first
experts at global performance agency
Neo, providing clients with a broader
range of transformative media services.
Finally, Design Bridge and Superunion have
been merged to create Design Bridge and
Partners, a world-leading design company.
STRENGTHENING OUR CAPABILITIES
During the year we acquired several new
companies to complement our existing
agencies and enhance our capabilities in
specific markets. These included commerce
agency Diff, to boost Wunderman
Thompson’s commerce and technology
ecosystem across North America, bringing
Shopify expertise to our roster of well-
established technology partnerships;
Corebiz, a leading ecommerce agency, to
strengthen the digital commerce capabilities
of VMLY&R Commerce in Latin America;
marketing technology services agency
Bower House Digital, to join Ogilvy’s global
network and further strengthen its ability to
deliver technology-driven marketing solutions
for clients; and Village Marketing, an industry
leader in influencer marketing and creator-
economy partnerships, to join the
Wunderman Thompson network.
CROSS-AGENCY WORKING AND
COMMON PLATFORMS
During 2022 we continued to enhance our
common business platforms, which provide
services to all our agencies.
Building on our appointment as The
Coca-Cola Company’s Global Marketing
Network Partner in 2021, we developed
WPP Open X in 2022, a bespoke internal
team dedicated to the client globally. WPP
Open X provides a new integrated agency
model, combining our various agencies and
capabilities into a single, custom-made entity
and point of contact in a simple partnership
format, for one of our largest clients.
And following our appointment as strategic
communications partner for Swiss retailer
Migros Fachmarkt AG, we created Team
Connect to bring together talent and
expertise from across our agencies in
Switzerland, including Ogilvy and
Wunderman Thompson. Team Connect
also leverages capabilities from other WPP
agencies, including integrated production
capabilities through Hogarth, retail expertise
from Scholz & Friends Commerce in Germany
and data specialists from Choreograph.
44
WPP ANNUAL REPORT 2022
OUR STRATEGY
STRATEGIC REPORT
CREATING A
SIMPLER OFFER
During 2022 we further simplified our media operations, building on the 2021 formation
of our data company, Choreograph, by creating the data-driven and scaled media agency
EssenceMediacom and the media performance organisation, GroupM Nexus
Wunderman Thompson
creative data specialists
GroupM media
data specialists
GroupM
Services
These three organisations form part
of GroupM, the world’s leading
media investment company,
responsible for more than $60 billion
in annual media investment
WPP ANNUAL REPORT 2022
45
STRATEGIC REPORT OUR STRATEGY
COMPANIES
ANTI-LOOK
QR CODE
The life-saving QR code design
that stops people gawking at
accident sites
OFFER
TECHNOLOGY, COMMUNICATIONS
AGENCY
SCHOLZ & FRIENDS (VMLY&R)
CLIENT
JOHANNITER-UNFALL-HILFE
In Germany, the standard is that an
ambulance should arrive within eight
minutes of an emergency call. But today,
every second emergency response in
Germany is delayed. The reason? People
filming with their smartphones.
With the omnipresence of digital devices,
onlookers have become a huge issue. These
‘civilian paparazzi’ take photos of victims and
impede life-saving rescue operations. Scholz
& Friends designed a campaign that turned
smartphones from problem into problem-
solvers – by developing an innovative digital
pattern that functions like a camouflaged
QR code.
Ambulances, paramedics’ uniforms and
equipment have been covered with the
digital pattern, with the QR code uniquely
adapted to each. When an onlooker tries
to capture a rescue operation with their
smartphone, a message will pop up on
the display – confronting the onlooker
with the impact of what they’re doing
and educating them about proper
behaviour at accident scenes.
Today, the design is in use throughout the
country via Johanniter-Unfall-Hilfe, one of
Germany’s largest rescue organisations,
with 65,000 employees and 750,000 rescue
missions per year. The innovative design
will soon be extended to other emergency
organisations throughout Europe.
68%
of people consider the
idea ‘very helpful’
x2
increase in job
applications at
Johanniter-Unfall-Hilfe
Awards
Epica Grand Prix, London
International Awards Grand
Prix, Cannes Lions Bronze
(Media), Effie Gold
46
WPP ANNUAL REPORT 2022
STRATEGIC REPORT
WPP ANNUAL REPORT 2022
47
STRATEGIC REPORT OUR STRATEGY
COUNTRIES
Global reach. Local expertise
We continue to strengthen our global
reach while leveraging our expertise in
local markets – investing in talent, skills and
capabilities to deliver transformational work
for clients.
GLOBAL STRENGTH
We currently operate in more than 100
countries globally. This gives us a significant
presence in the largest markets in the world,
such as the United States and the UK, as well
as in faster-growing economies such as India
and Brazil.
Our five largest markets account for nearly
two-thirds of revenue less pass-through
costs. During 2022, our overall revenue less
pass-through costs growth of 6.9% was
underpinned by strong performance in
four of these five – the United States, the
UK, Germany and India – offset by a slight
decline in China, where performance was
affected by several Covid-19 lockdowns
over the year.
This scale and reach is significant for our
large global clients such as The Coca-Cola
Company, for whom our work will span their
own 200-plus markets and nine geographical
operating units.
RUSSIA
After the invasion of Ukraine, we made
the decision to discontinue our
operations in Russia in March 2022.
Later in the year we transferred
ownership to local management,
providing continuity for our colleagues
in the country who had been valued
members of WPP.
COUNTRY LEADERS
Our broad global reach is complemented
by deep local market expertise. We have
19 Country Leaders worldwide, covering
the majority of our larger markets. Country
Leaders are responsible for landing WPP’s
strategy in their local markets, connecting
our agencies to deliver growth for clients.
In 2022, we were pleased to welcome five
new Country Leaders: Kyoko Matsushita
(Japan), Rose Herceg (Australia and New
Zealand), Michael Houston (United States),
Juan Pedro Moreno (Spain) and Frank-Michael
Schmidt (Germany).
CONNECTING RESOURCES
Country Leaders work collaboratively at
a local level and globally across the entire
WPP network.
In India, where 70% of our top 30 clients
work with more than three WPP agencies,
the Country Leader team plays a key role
in giving clients the best of WPP, not just
individual agency experiences. In 2022 the
team helped GroupM India to co-ordinate
110 technical creatives from across WPP
to develop close to 80 activations and
workshops – all in the metaverse.
For WPP’s work with multinational clients,
Country Leaders coordinate with both
Global Client Leaders and local agencies
to support delivery in the market.
CAMPUSES
Campuses are key to building our strengths
in individual markets, physically bringing
agencies together to facilitate collaboration,
fuel creativity, and give clients access to the
breadth and depth of WPP talent in one
inspiring location.
1 Please see Glossary on page 232 for definitions
48
WPP ANNUAL REPORT 2022
● US 37%
● UK 13%
● Germany 7%
● Greater China 5%
● India 3%
● Australia 3%
● Brazil 2%
● Canada 2%
● France 2%
● Italy 2%
● Other markets 24%
In 2022 we added five new campuses in
Brussels, Düsseldorf, Santiago, Tokyo and
Toronto. Early in 2023 we opened a further
campus in Guangzhou, China, taking the total
to 37. We plan to have opened more than
65 campuses by 2025.
We also announced the construction of our
first campus in São Paulo, Brazil, a state-of-
the-art space that connects WPP directly to
local communities and brings our agency
networks together under one roof.
DELIVERING FOR COMMUNITIES
Supporting local communities is central
to our purpose across the globe. In 2022,
the WPP India Foundation was announced
as CSR Foundation of the Year at the CSR
Impact Awards, having provided over 15,000
underprivileged local children with education,
training and social support since 2015. In
Australia, we joined the Reconciliation Action
Plan programme in support of Aboriginal and
Torres Strait Islander peoples, and were
named one of the most inclusive employers
in the country.
And in the UK, we partnered with the One
Club for Creativity to launch the One School,
designed to support Black British creatives
entering the industry with a free, 16-week
portfolio and mentoring programme.
REVENUE LESS PASS-THROUGH COSTS (2022)1●REVENUE LESS PASS-THROUGH COSTS(2022)1
OUR STRATEGY
STRATEGIC REPORT
COUNTRIES IN ACTION
We combine our global reach with local expertise
to drive growth for clients, while supporting our
people and the communities in which we operate
– below are some highlights from 2022
INDIA, AUSTRALIA
AND NEW ZEALAND
Commitment to inclusion
WPP Unite, which celebrates
our LGBTQ+ community,
expanded from the UK and US to
India, Australia and New Zealand
5
countries with Unite groups
BRAZIL
Strengthening our
commerce capabilities
We acquired Corebiz, a
leading Latin American
ecommerce agency
600
employees
PEOPLE
CAMPUSES
ACQUISITIONS
CLIENTS
GERMANY
Investing in our workspaces
We opened our campus in
Düsseldorf, encouraging closer
collaboration and creativity
2,500
people based in new campus
INDIA
Innovative AI solutions
Our data-driven campaign
for Cadbury (Mondelēz) with
Bollywood legend Shah Rukh
Khan won an ‘industry Oscar’
1
Titanium
Cannes Lion
WPP ANNUAL REPORT 2022
49
STRATEGIC REPORT OUR STRATEGY
COUNTRIES
SPEAKING
IN COLOUR
Unlock a world of colour using
only your voice
OFFER
EXPERIENCE, TECHNOLOGY
AGENCY
WUNDERMAN THOMPSON, USA
CLIENT
SHERWIN-WILLIAMS COIL
COATINGS
The human eye can detect over one
million colours, and yet colour is more
than what we see. Colour is informed
by our unique experiences and means
something different to everyone.
So how do you find that one colour
that’s as unique as you are, that you
and only you can see?
To answer this question, Wunderman
Thompson designed Speaking in Colour
– the first-ever AI voice-controlled tool
that produces colours based on human
inspiration. Users say a word or phrase
and Speaking in Colour instantly
analyses millions of images through a
search algorithm and optical recognition
to create a personalised colour palette.
For example, you can describe ‘crystal
clear Caribbean ocean’, and fine-tune
it to your custom colour palette by
inputting ‘more turquoise’ or ‘dappled
sun’ to find the hue that fits your vision.
The campaign is providing insights
into the cultural and geographical
influences of individual hues to create
the largest data set of colour attribution
in the world.
Awards
Cannes Grand Prix &
Silver, Creative B2B
50
WPP ANNUAL REPORT 2022
OUR STRATEGY
STRATEGIC REPORT
WPP ANNUAL REPORT 2022
51
STRATEGIC REPORT
KEY PERFORMANCE
INDICATORS
We track our performance against
strategic, operational, financial,
societal and environmental factors.
Each indicator allows our Board,
management and stakeholders to
compare our performance against
our goals
We have made good progress this year:
delivering for our clients, investing in
talent and capabilities, and reducing our
environmental impact. Our transformation
programme remains on track to drive
efficiency and free up funds for reinvestment,
supporting our future growth and profitability
ALIGNING PERFORMANCE MEASUREMENT WITH STRATEGY
Performance measurements are selected to align to our business strategy, and include a range of financial and non-financial metrics.
Non-financial metrics are measured in a scorecard with appropriate measures set based on role and accountabilities
STRATEGIC ELEMENTS
Vision
& offer
Creativity
Data &
technology
Simpler
structure
People
Operational
Client satisfaction score
Digital % of media billings (GroupM)
Share of revenue less pass-through
costs from experience,
commerce and technology
People
Proportion of women in
executive leadership roles1
Employees in shared campuses
Sustainability
Carbon emissions per person
from owned operations
Share of electricity purchased from
renewable sources
Financial
Like-for-like revenue less
pass-through costs growth2
Headline operating profit margin2
Like-for-like revenue less pass-through
costs growth versus competitors2
Dividends
1 Executive leadership roles are defined by WPP as the agency
board and executive leadership population as reported
through WPP's financial reporting system
2 For definitions see Glossary on page 232
52
WPP ANNUAL REPORT 2022
KEY PERFORMANCE INDICATORS
STRATEGIC REPORT
OPERATIONAL
Our operational KPIs measure
strategic progress towards a
dynamic, contemporary offer to
meet the needs of modern marketing
and our clients’ future success
We continue to develop our
operational KPIs. Accordingly, data
is not available for some periods, and
is shown for the years it is available
Read more on strategic progress
on pages 1 to 51
Includes Kantar
1
2 For a full description see Glossary on page 232
3 Share of global integrated agencies,
excluding GroupM
Client satisfaction score
(out of 10)
8.0
Digital % of media
billings (GroupM)
48
2022
2021
2020
8.0
8.1
8.1
2022
2021
2020
48
43
43
41
Description and rationale
This measures how satisfied our clients
are with our services, based on 29,000
clients’ Likelihood to Recommend score
out of ten. Our ability to retain satisfied
clients is a key driver of our revenue1
Description and rationale
Billings comprise our clients’ spend on
media, plus our fees.2 We measure the
digital mix as digital media accounts for
the majority of the media market (67%)
and to ensure we are staying relevant
to our clients
Targets and performance
In 2022 we scored 8 out 10 overall, with
Quality of Work at 8.1, and DE&I at 8.2,
maintaining the high levels achieved in
2021, and showing an improvement over
2018-2020. We aim to maintain top-
quartile performance
Targets and performance
GroupM’s digital billings increased to 48%
in 2021, compared with 43% in 2020,
driven by the rapid growth in demand
from clients for digital commerce
services, including connected TV and
retail media
Proportion of revenue less
pass‑through costs from
experience, commerce and
technology³ (%)
39
Gross annual savings
from our transformation
programme (£m)
375
2022
2021
2020
39
38
2022
2021
2020
Not available
375
245
Description and rationale
Experience, commerce and technology
are attractive faster-growth areas of the
market, where client spend is forecast to
grow at 5-15% annually, compared with
2-3% annually for traditional
communications
Targets and performance
Revenue less pass-through costs growth
in the areas of experience, commerce and
technology was an estimated 9% in 2022.
The share of these areas in the business
mix of our global integrated agencies,
excluding GroupM, increased to 39% in
2022. Our goal is to further increase the
proportion in these areas
Description and rationale
Our transformation programme is
designed to simplify WPP, build greater
collaboration, drive efficiency and free
up funds for reinvestment in growth.
Our goal is to achieve £600 million of
annual cost savings against a 2019 base
by 2025
Targets and performance
We remain on target to achieve our goal.
By the end of 2022 we delivered around
£375m of gross annual savings against a
2019 base, ahead of planned savings of
£300m, reflecting cost savings mostly
in property, procurement and ways of
working
WPP ANNUAL REPORT 2022
53
202120208.04320212020 48392021 2020 Not available2021 2020375
STRATEGIC REPORT KEY PERFORMANCE INDICATORS
PEOPLE
People KPIs assess progress against
our aims of ensuring every WPP
workplace is open, inclusive and
collaborative, in order to allow
our people to do their best work
Read more on: campuses on page 19 and
women in leadership on pages 36 and 70
SUSTAINABILITY
We have made a series of
commitments to be a sustainable
business and play our part in
protecting the planet. These
KPIs measure progress towards
reducing our environmental impact
Read more on our actions to tackle
the climate crisis on pages 74 to 76
1 Executive leadership roles are defined by WPP as the
agency board and executive leadership population as
reported through WPP's financial reporting system
2 Defined as employees and freelancers in campuses
These metrics were subject to independent limited
assurance procedures by PricewaterhouseCoopers LLP
(‘PwC’) for the year ended 31 December 2022. For the
results of PwC’s 2022 Limited Assurance report and the
‘WPP Sustainability Reporting Criteria 2022’, see our 2022
Sustainability Report
54
WPP ANNUAL REPORT 2022
Proportion of women
in executive leadership
roles1
(%)
40
Employees in
shared campuses2 54,500
2022
2021
2020
40
39
40
2022
2021
2020
54,500
47,500
34,200
Description and rationale
We believe that diversity powers our
creativity and growth as a business.
We continue to focus on driving greater
gender balance throughout the Company
and, in particular, at the most senior
levels. We aim to achieve equal
representation of women at the
Board and all other levels
Targets and performance
In 2022, the proportion of women in
executive leadership roles increased
to 40% (2021: 39%). Across the broader
workforce we increased the proportion
among senior management positions
to 54%, up from 52% in 2021
Description and rationale
Campuses are key to building our
strengths in individual markets, physically
bringing agencies together to make
collaboration easy and inspirational,
supporting flexible and hybrid working,
and giving clients access to the breadth
and depth of WPP talent in one location
Targets and performance
In 2022, 54,500 of our people were based
in campuses. We expect this to rise to
85,000 in at least 65 campuses by 2025,
providing an opportunity to replace all
our smaller offices and lower our
environmental footprint
Carbon emissions
per person from our
owned operations
(tCO2e, Scope 1 and 2)
0.22
Share of electricity
purchased from
renewable sources
(%)
2022
2021
2020
0.22
0.32
2022
2021
2020
0.52
83
83
74
65
Description and rationale
We support urgent action to tackle
the climate crisis through the Paris
Climate Agreement. We measure carbon
emissions per employee, as headcount
is closely linked to levels of business
activity, and this allows us to reflect
the impact of acquisitions and disposals
without needing to adjust our baseline
Targets and performance
We are committed to achieving net zero
emissions across our owned operations
by 2025 and across our supply chain
by 2030. In 2022 carbon emissions per
employee fell 32% compared with 2021
and by 73% since our 2019 baseline
Description and rationale
To support our carbon reduction targets
we are a member of RE100, a global
initiative bringing together businesses
committed to 100% renewable electricity
to accelerate change towards zero
carbon grids at scale
Targets and performance
During 2022, we purchased 83% of
our electricity from renewable sources
compared with 74% in 2021, reflecting
good progress towards our target of
100% by 2025
20212020402021202054,500202120200.222021202083
KEY PERFORMANCE INDICATORS
STRATEGIC REPORT
FINANCIAL
Our financial targets allow us to
track the health of WPP as a whole,
analysing our market performance
as well as setting remuneration
targets and financial guidance
for investors
Read more on our financial
performance on pages 56 to 65
1 Reconciliations from reported revenue to revenue
less pass-through costs and subsequently like-for-like
revenue less pass-through costs, and from reported
profit before tax to headline operating profit margin,
are included on pages 216 to 217. For a full description
see Glossary on page 232
2 Includes 0.5-1.0pt annually of M&A contributions
3 Organic revenue growth is defined as like-for-like
revenue less pass-through costs growth. Omnicom
data is based on revenue. This chart shows data
over the last 12 months. Competitor data sourced
from publicly disclosed results
4 For a full description see Glossary on page 232
Like‑for‑like revenue
less pass‑through
costs growth¹
(%)
6.9
Headline operating
profit margin¹
(%)
14.8
2022
2021
2020
-8.2
6.9
12.1
2022
2021
2020
14.8
14.4
12.9
Description and rationale
This is the main measure of our strategic
goal to return WPP to growth. Like-for-like
revenue growth excludes the impact of
currency and acquisitions. Pass-through
costs comprise fees paid to external
suppliers when they are engaged to
perform part or all of a specific project
and are charged directly to clients
Description and rationale
This is a key indicator of our profitability.
It comprises profit on trading activities,
excluding certain one-off or exceptional
items.4 These items are excluded because
their size and nature mask the true
underlying performance year-on-year
Targets and performance
We delivered strong growth across all key
WPP agencies, resulting in overall revenue
less pass-through costs growth of 6.9% in
2022. Looking ahead, our targets are 3-5%
growth in 2023, and 3-4%2 annual growth
over the medium-term
Targets and performance
In 2022, our headline operating margin
increased to 14.8% due to revenue growth
and cost savings from the transformation
programme. In 2023, we expect the
margin to improve to around 15% and to
reach 15.5-16.0% over the medium term
Organic revenue
growth versus
competitors3
(percentage points)
(0.5)
Dividends per share
(pence)
39.4
2022 -0.5
2021
2020
0.8
0.4
2022
2021
2020
31.2
24.0
Description and rationale
This measures our growth relative to our
main competitors. It compares organic
revenue growth for WPP against the
average of our global marketing services
peers – Dentsu, Havas, IPG, Omnicom
and Publicis
Targets and performance
In 2022, WPP’s growth rate was 0.5
percentage points below the average
of our main peers, reflecting our greater
exposure to the economic and lockdown-
related pressures in Europe and China.
Our goal is to grow at a faster rate than
the industry average
Description and rationale
Dividends are a key element of our returns
to shareholders. They are an annual share
of our profits and cash flow
Targets and performance
The Board aims to grow the dividend
annually and to pay out approximately
40% of headline earnings per share. The
Board is proposing a final dividend for
2022 of 24.4p which, together with the
interim dividend paid in 2022, gives a
full-year dividend of 39.4p, up 26%
WPP ANNUAL REPORT 2022
55
2021202014.820226.920212020202120202022-0.539.42021202039.4
STRATEGIC REPORT
CHIEF FINANCIAL
OFFICER’S STATEMENT
A business in good shape for the future
AS WE ENTER 2023
OUR FINANCIAL
POSITION IS
STRONG”
John Rogers
Chief Financial Officer
We delivered strong top-line growth in 2022,
with margin expansion, an increase in the
annual dividend of over 26%, and the return
of more than £800 million of excess capital to
shareholders in share buybacks.
2022 was another strong year for WPP, with
like-for-like revenue less pass-through costs
growth of 6.9%, against our original guidance
(set in February 2022) of around 5%. This
performance reflects the priority placed by
our clients on investing in marketing, despite
economic and geopolitical turbulence, and
the relevance of our offer across all our major
agencies, with each contributing towards
overall growth in the year.
We continued to make progress against our
strategic plan with improved profitability,
increasing our headline operating margin
by 0.4 points to 14.8%, supported by the
benefits of our transformation programme,
which I discuss in more detail below.
56
WPP ANNUAL REPORT 2022
In line with our capital allocation policy,
we continued to invest in our business during
2022, both organically and with targeted
M&A, and returned more than £800 million of
excess capital to shareholders via share
buybacks. As we enter 2023 our financial
position is strong, with an average adjusted
net debt to EBITDA ratio in the 12 months to
31 December 2022 of 1.46x, slightly below
our target range of 1.5-1.75x.
TRANSFORMATION PROGRAMME
The five-year transformation programme
announced in 2020 is designed to simplify
WPP, build greater collaboration, drive
efficiency and free up funds for reinvestment
in growth. We made further progress against
that plan in 2022, delivering around £375
million of gross annual savings against a 2019
base, ahead of the planned £300 million, with
savings across property, procurement and
our operating model.
The transformation of our property estate
continues, with a further five campuses
opened in 2022 (Brussels, Düsseldorf,
Santiago, Tokyo, Toronto) and another in
Guangzhou, China, in January, taking the
global total to 37. These campuses now
accommodate around half our people
around the world, and the programme has
driven significant savings. We plan to open
additional offices including Atlanta, Paris
and Manchester in 2023.
We continue to implement a new
procurement operating model leveraging
our global scale, aligned around categories
and consolidating suppliers. As part of this
programme we launched an initiative in 2022
to optimise our use of our freelance talent
across the Company.
The transformation of IT, finance and HR
made further progress as we consolidate
and modernise our use of IT in these areas.
In Enterprise Resource Planning, Workday
Financial Management is operational in
Wunderman Thompson North America after
some delays in implementation due to the
complexity of process and system design.
We are now in the process of refining the
capabilities of this core enterprise system
and how it aligns to optimised agency
processes. We successfully rolled out
Maconomy in several Asia Pacific markets,
and plan rollouts in Latin America in 2023.
CHIEF FINANCIAL OFFICER’S STATEMENT
STRATEGIC REPORT
FAREWELL
After three years in this role my decision to
move on to explore new career opportunities
outside WPP was announced in November.
Following the announcement of the
Company’s 2023 First Quarter Trading
Update, Joanne Wilson, who is currently the
CFO of Britvic plc, will take over as WPP’s
CFO. I will remain with WPP for a short time
thereafter to ensure a smooth transition.
I wish Joanne the greatest of success at
what is a wonderful, passionately creative
organisation, and I’m sure she will continue
to build on the substantial progress made
over the last three years.
John Rogers
Chief Financial Officer
23 March 2023
In the UK we rolled out the first instance of
Workday HCM, with plans for more rollouts
to come. We also established 24x7 IT service
capabilities for the Company, moving over
1,000 people from agency roles into WPP
and establishing global hubs in Bucharest,
Chennai, Kuala Lumpur and Mexico.
We remain comfortably on target to
achieve our goal of £600 million annual cost
efficiencies against a 2019 base by 2025.
SIMPLIFICATION
WPP benefits from having a number of
distinct and strong agency brands, but as we
look to simplify our organisation and respond
to our clients’ needs for integrated solutions,
we have taken the opportunity to bring
brands together to streamline and
strengthen our offer. During 2022 we
announced the merger of two GroupM
agencies, Essence and MediaCom, and the
formation of GroupM Nexus. In our specialist
design agencies we announced the merger
of Design Bridge and Superunion to create a
single leading design company, Design
Bridge and Partners.
TARGETED INVESTMENT
We continued to make organic investments
to drive significant long-term growth
opportunities, with a particular focus on
unifying and accelerating our data, digital
and AI capabilities. You can see several
examples of our work related to these areas
earlier in this report.
Choreograph, our data company, continues
to invest in its data offer, allowing brands to
predict relevance and drive deeper customer
connections, with recent innovative work for
Ford and Bayer. Choreograph continues to
play a central role in key client assignment
wins and retention.
In April 2022 we launched GroupM Nexus,
bringing together 9,000 practitioners
globally across addressable TV (Finecast),
AI, retail media and commerce, programmatic
(Xaxis), search and social to be the
performance engine for GroupM’s agencies.
Finecast added 150 new clients in 2022 and
grew strongly.
As part of our long-term strategy, we
continued to target acquisitions that will
bring new strengths and capabilities to our
agencies. In 2022 Wunderman Thompson
was joined by marketing agency Village
Marketing, commerce agencies Newcraft
and Diff, and digital agency Fēnom Digital.
VMLY&R enhanced its offering with the
addition of Corebiz and Passport Brand
Design, while Ogilvy was boosted by the
acquisition of Bower House Digital, a
marketing technology services agency.
Global revenue less pass-through costs from
experience, commerce and technology
grew 9%, in line with expected market
growth of 5-15%.
DIVIDENDS, EXCESS CAPITAL AND
LEVERAGE TARGET
We take a disciplined approach to capital
allocation based around the policy we set
out in December 2020. After making organic
investments, paying our regular dividend at
our target level of around 40% of headline
EPS, and completing targeted acquisitions,
we will continue to review our capital needs
relative to our leverage target of 1.5-1.75x
average adjusted net debt/EBITDA. When
we have excess capital, we will return it to
shareholders, typically via share buybacks.
For 2022, the Board proposes a final dividend
of 24.4p, which together with the interim
dividend of 15.0p paid in November 2022,
would represent a full-year dividend for
2022 of 39.4p, up 26%. In turn this would
represent around 40% of headline EPS, in
line with our policy.
Over £1.1 billion was returned to shareholders
in 2022, comprising £807 million of share
buybacks completed and £365 million of
dividends paid. Since 2019, over £3.4 billion
has been returned to shareholders (£1.5
billion in buybacks and the rest in dividends),
while our net debt has been reduced to
sustainable levels with leverage at the end
of 2022 just below the bottom end of our
leverage target.
WPP ANNUAL REPORT 2022
57
STRATEGIC REPORT
TRANSFORMATION
PROGRAMME
Our transformation programme aims to unlock cost savings,
creating a more efficient operating platform for our agencies
and enabling reinvestment in growth
We aim to achieve annual gross savings of around £600 million by 2025 by improving the effectiveness of our
support functions and shared services, generating efficiencies in procurement and real estate, and through
simplifying our operating model
APPROXIMATE PHASING OF GROSS COST SAVINGS TARGET
(£m)
Savings already achieved
375
450
245
600
525
2021
2022
2023
2024
2025
£600m
ANNUAL SAVINGS FROM 2025
By the end of 2022 we
delivered around £375m of
gross annual savings against
a 2019 base, ahead of planned
savings of £300m, driven
by efficiencies in property,
procurement and ways
of working
Efficiency savings enable us to reinvest £400m
and improve margins by £200m, for the benefit
of our people, clients and investors
£400m
REINVESTMENT
£200m
MARGIN IMPROVEMENT
PEOPLE
CLIENTS
INVESTORS
Improved and simplified day-to-day
experiences, consolidating and
modernising the tools used by our
people across WPP
Seamless working across agencies,
to provide a joined-up offer to clients
Efficiency savings reinvested to drive
growth, improve operating margin
and enhance shareholder returns
24x7
global IT hubs
in four markets
~50%
of employees are in
shared‑agency campuses
£375m
gross annual efficiency
savings to date
58
WPP ANNUAL REPORT 2022
STRATEGIC REPORT
WE REMAIN COMFORTABLY ON TARGET
TO ACHIEVE OUR GOAL OF £600 MILLION
ANNUAL COST EFFICIENCIES AGAINST A
2019 BASE BY 2025”
John Rogers
Chief Financial Officer
PROGRESS TO DATE
Improve effectiveness
in support functions
and shared services
• We are modernising the tools used by our people by consolidating
multiple financial systems into fewer, modern platforms
• Finance shared services are now live in 20 markets, providing efficient
scaled resources
• We have established 24x7 IT services through four global hubs in
Bucharest, Chennai, Mexico and Kuala Lumpur
Efficiencies in
procurement
and property
Simplifying our
operating model
• We continue to implement a new procurement operating model
leveraging our global scale, using a category-led model and
consolidating suppliers
• We launched an initiative in 2022 to optimise our use of freelance
talent across the Company
• A further five multiple-agency campuses opened in 2022 (Brussels,
Düsseldorf, Santiago, Tokyo and Toronto). In early January 2023,
we opened a campus in Guangzhou, China, taking the total
to 37, accommodating around half our people
• We have merged more of our businesses to simplify our organisation.
Within GroupM we announced the merger of Essence and MediaCom
to form EssenceMediacom, and the formation of GroupM Nexus which
brings together Finecast, Xaxis and GroupM Services to create the
world’s leading media performance organisation
• In our specialist design agencies we announced the merger of Design
Bridge and Superunion to create a single leading design company,
Design Bridge and Partners
WPP ANNUAL REPORT 2022
59
STRATEGIC REPORT
BURGER
GLITCH
Glitches in the gaming world are
annoying. Until you get rewarded
for finding them
OFFER
TECHNOLOGY, EXPERIENCE
AGENCY
DAVID (OGILVY), BRAZIL
CLIENT
BURGER KING
Gamers the world over agree there’s nothing
more annoying than glitches, when the game
does unexpected things due to coding
errors. But what happens if you embrace
glitches and turn them into something good?
That's what Burger King and DAVID did with
Burger Glitch.
To appeal to gamers, Burger King placed
glitches in its own app, inviting users to find
them, with a reward for doing so. The promise
of rewards for finding hidden glitches not
only compelled people to download the
chain’s mobile app, but also to explore and
familiarise themselves with its loyalty features.
The coupons gamified the reward experience,
pushing the user to make a purchase and
potentially encourage future app use.
Every face of Burger King’s social channels
was altered with Burger Glitch interactions
and buggy elements. Self-service kiosks in all
Burger King stores were ‘glitched’, as well as
outdoor advertising in several Brazilian cities.
To tie the real world to the virtual one,
Burger King produced ‘glitched’ versions
of its own burgers, for example with
too many patties or extra ingredients. These
‘glitched’ menu items were passed around
in stores and delivered to major Brazilian
game streamers.
The gaming world went crazy for the
concept, taking Burger King to a whole
new level.
144m
impressions
Awards
Cannes Gold Lion,
Brand Activation &
Retail
Cannes Gold Lion,
Retail & Mobile
60
WPP ANNUAL REPORT 2022
STRATEGIC REPORT
FINANCIAL
REVIEW
REVIEW OF RESULTS
Reported revenue was up 12.7% at £14.4
billion. Reported revenue on a constant
currency basis was up 7.0% compared with
last year. Net changes from acquisitions and
disposals had a positive impact of 0.3%
on growth.
Like-for-like revenue growth for 2022
excluding the impact of currency,
acquisitions and disposals, and the other
adjustments, was 6.7%.
Revenue less pass-through costs was up
13.5%, and up 7.6% on a constant currency
basis. Excluding the impact of acquisitions
and disposals and the other adjustments,
like-for-like growth was 6.9%. In the fourth
quarter, like-for-like revenue less pass-through
costs was up 6.4%.
The Group’s headline operating profit
margin¹ is after charging £44 million of
severance costs, compared with £42 million
in 2021 and £424 million of incentive²
payments, compared to £592 million in 2021.
The average number of people in the Group
in 2022 was 114,129 compared to 104,808
in 2021. The total number of people
at 31 December 2022 was 115,473 compared
to 109,382 at 31 December 2021.
Notes
1 Headline operating profit as a percentage of revenue less
pass-through costs
2 Short- and long-term incentives and the cost of share-based
incentives
OPERATING PROFITABILITY
Reported profit before tax was £1.2 billion,
compared to a profit of £1.0 billion in 2021,
reflecting the strong operating performance.
Reported profit after tax was £0.8 billion
compared to a profit in 2021 of £0.7 billion.
Headline EBITDA (including IFRS 16
depreciation) for 2022 was up 14.5% to
£2.0 billion, compared to £1.8 billion the
previous year. Headline operating profit
was up 16.6% to £1.7 billion. The significant
growth in profitability year-on-year reflects
revenue growth and the progress on our
transformation programme, with £375 million
of gross savings towards our 2025 annual run
rate target of £600 million.
Headline operating profit margin was up 40
basis points to 14.8%, and up 40 basis points
like-for-like. Staff costs pre-incentives were
a 240 basis points drag on margin, reflecting
the tight labour market and inflationary
backdrop. Personal costs were a 50 basis
points drag as travel and in-person meetings
recommenced. Offsetting tailwinds were
staff incentives (210 basis points),
establishment costs (50 basis points), IT
costs (30 basis points) and other operating
costs (40 basis points).
FINANCIAL HIGHLIGHTS 2022
£14.4bn
revenue
(2021: £12.8bn)
6.9%
like‑for‑like revenue less
pass‑through costs growth
(2021: 12.1%)
14.8%
headline operating margin
(2021: 14.4%)
This Strategic Report should be read in conjunction with the Corporate Governance report on pages 100 to 157 and pages 220 to 231. The Group’s key performance indicators are discussed on pages 52 to 55.
This Strategic Report includes figures and ratios that are not readily available from the Financial Statements. Management believes that these non-GAAP measures, including constant currency and
like-for-like growth, and headline profit measures, are both useful and necessary to better understand the Group’s results. Where required, details of how these have been arrived at are shown on pages
216 and 217 and are defined in the Glossary on pages 232 and 233.
WPP ANNUAL REPORT 2022
61
STRATEGIC REPORT FINANCIAL REVIEW
ADJUSTING ITEMS
The Group incurred a net loss from adjusting
items of £341 million in 2022. This comprises
the Group’s share of adjusting items from
associates (£134 million), restructuring and
transformation costs (£219 million) and other
net gains from adjusting items (£12 million).
Restructuring and transformation costs
mainly comprise severance and property-
related costs arising from the continuing
structural review of parts of the Group’s
operations, investments in IT and ERP
systems as part of our transformation
programme. This compares with a net loss
from adjusting items in 2021 of £270 million.
INTEREST AND TAXES
Net finance costs (excluding the revaluation
and retranslation of financial instruments)
were £214 million, a decrease of £1 million
year-on-year.
The reported tax charge was £384 million
(2021: £230 million). The headline tax rate
(measured on headline profit before tax,
including associate income) was 25.5%
(2021: 24.0%). Given the Group’s geographic
mix of profits and the changing international
tax environment, the tax rate is expected to
be around 27.0% in 2023, and to continue to
increase in the next few years.
EARNINGS AND DIVIDEND
Reported profit before tax was up 22.0% to
£1.2 billion. Headline profit before tax was
up 17.3% to £1.6 billion, and headline profit
attributable to share owners was £1.1 billion.
Reported diluted earnings per share were
61.2 pence, compared to 52.5 pence in the
prior period. Headline diluted earnings per
share were up 25.5% to 98.5 pence.
The Board is proposing a final dividend for
2022 of 24.4 pence per share, which
together with the interim dividend paid in
November 2022 gives a full-year dividend
of 39.4 pence per share. The record date for
the final dividend is 9 June 2023, and the
dividend will be payable on 7 July 2023.
BUSINESS SECTOR REVIEW
During 2022, we have reallocated a number
of businesses between Global Integrated
Agencies and Specialist Agencies. Prior year
figures have been re-presented to reflect
the reallocation.
Global Integrated Agencies reported
revenue was up 18.7% in the final quarter.
Like-for-like revenue less pass-through
costs was up 6.6% in the final quarter, and
up 9.8% on a three-year basis. GroupM,
which represented 37% of WPP’s revenue
less pass-through costs in the fourth
quarter, was up 8.8% like-for-like. The other
integrated agencies all recorded broadly
similar levels of growth. For the full year,
like-for-like revenue less pass-through costs
for the segment was up 6.9%, and up 9.5%
over three years.
REVENUE LESS PASS-THROUGH COSTS GROWTH VERSUS 2021
%
Like-for-like
Acquisitions
0.7
FX
Reported
6.9
5.9
13.5
62
WPP ANNUAL REPORT 2022
Like-for-like0.713.55.9
FINANCIAL REVIEW
STRATEGIC REPORT
Public Relations reported revenue was up
30.1% in the final quarter. Like-for-like revenue
less pass-through costs was up 6.5% in the
final quarter, and up 17.5% on a three-year
basis. All agencies continued to grow well,
with Hill+Knowlton Strategies growing
strongly. During the period we launched FGS
Global, the new name and branding for the
merger of Finsbury Glover Hering and Sard
Verbinnen. For the full year, like-for-like
revenue less pass-through costs for the
segment was up 8.2%, and up 15.9% over
three years.
Specialist Agencies reported revenue was
up 19.3% in the final quarter. Like-for-like
revenue less pass-through costs was up
4.4% in the final quarter, and up 8.7% on a
three-year basis. For the full year, like-for-like
revenue less pass-through costs for the
segment was up 5.6%, and up 13.8% over
three years.
REVENUE ANALYSIS
£ million
Global Integrated Agencies
Public Relations
Specialist Agencies
Total Group
REVENUE LESS PASS-THROUGH COSTS ANALYSIS
£ million
Global Integrated Agencies
Public Relations
Specialist Agencies
Total Group
HEADLINE OPERATING PROFIT ANALYSIS
£ million
Global Integrated Agencies
Public Relations
Specialist Agencies
Total Group
2022
12,191
1,228
1,010
14,429
2022
9,742
1,157
900
11,799
2022
1,432
191
119
1,742
2021
10,890
959
952
12,801
2021
8,683
910
804
10,397
+/(‑) %
reported
11.9
28.1
6.1
12.7
+/(‑) %
reported
12.2
27.1
11.9
13.5
+/(‑) %
LFL1
6.9
9.4
1.9
6.7
+/(‑) %
LFL
6.9
8.2
5.6
6.9
% margin*
14.7
16.5
13.2
14.8
2021
1,222
143
129
1,494
% margin*
14.1
15.7
16.0
14.4
* Headline operating profit as a percentage of revenue less pass-through costs
Note
1 Like-for-like growth at constant currency exchange rates and excluding the effects of acquisitions, disposals and other adjustments
REVENUE LESS PASS-THROUGH COSTS BY BUSINESS VERSUS 2021
%
Global Integrated Agencies
+12.2%
Public Relations
Specialist Agencies
Total
+11.9%
+13.5%
+27.1%
63
WPP ANNUAL REPORT 2022
Total+12.2%+27.1%+11.9%
STRATEGIC REPORT FINANCIAL REVIEW
REGIONAL REVIEW
North America reported revenue was up
30.6% in the final quarter. Like-for-like revenue
less pass-through costs was up 3.4% in the
final quarter, and up 8.6% on a three-year
basis. The United States continued to grow
at a high-single-digit rate, led by Ogilvy,
Hogarth and GroupM. On a full-year basis,
like-for-like revenue less pass-through costs
in North America was up 6.6%, and up 10.2%
over three years.
United Kingdom reported revenue was up
24.3% in the final quarter. Like-for-like revenue
less pass-through costs was up 12.0% in the
final quarter, and up 14.0% on a three-year
basis. GroupM and Hogarth were the
strongest performers. On a full-year basis,
like-for-like revenue less pass-through costs
was up 7.6%, and up 10.8% over three years.
Western Continental Europe reported
revenue was up 12.7% in the final quarter.
Like-for-like revenue less pass-through costs
was up 8.7% in the final quarter, and up
12.7% on a three-year basis. Spain was the
strongest performer in the quarter, up
38.6% driven by good growth from Ogilvy
and Wunderman Thompson. France declined
12.2% in the quarter and 18.7% over three
years, reflecting the full-year impact of client
losses in 2021. On a full-year basis, like-for-like
revenue less pass-through costs in the region
was up 5.5%, and up 11.0% over three years.
In Asia Pacific, Latin America, Africa & the
Middle East and Central & Eastern Europe,
reported revenue was up 10.4% in the
final quarter. Like-for-like revenue less
pass-through costs was up 5.9% in the final
quarter, and up 8.7% on a three-year basis.
64
WPP ANNUAL REPORT 2022
REVENUE ANALYSIS
£ million
N. America
United Kingdom
W. Cont. Europe
AP, LA, AME, CEE2
Total Group
REVENUE LESS PASS-THROUGH COSTS ANALYSIS
£ million
N. America
United Kingdom
W. Cont. Europe
AP, LA, AME, CEE
Total Group
HEADLINE OPERATING PROFIT ANALYSIS
£ million
N. America
United Kingdom
W. Cont. Europe
AP, LA, AME, CEE
Total Group
2022
5,550
2,004
2,876
3,999
14,429
2022
4,688
1,537
2,319
3,255
11,799
2022
771
187
301
483
1,742
2021
4,494
1,867
2,786
3,654
12,801
2021
3,849
1,414
2,226
2,908
10,397
+/(‑) %
reported
23.5
7.3
3.2
9.5
12.7
+/(‑) %
reported
21.8
8.7
4.2
11.9
13.5
+/(‑) %
LFL1
7.8
6.3
4.8
7.0
6.7
+/(‑) %
LFL
6.6
7.6
5.5
8.0
6.9
% margin*
16.4
12.3
13.0
14.8
14.8
2021
656
181
289
368
1,494
% margin*
17.0
12.8
13.0
12.7
14.4
* Headline operating profit as a percentage of revenue less pass-through costs
Notes
1
Like-for-like growth at constant currency exchange rates and excluding the effects of acquisitions and disposals and
other adjustments
2 Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe
REVENUE LESS PASS-THROUGH COSTS GROWTH BY REGION VERSUS 2021
%
North America
United Kingdom
Western Continental Europe
+4.2%
Asia Pacific, Latin America, Africa &
Middle East and Central & Eastern Europe
Total
+8.7%
+11.9%
13.5%
+21.8%
Total+11.9%+21.8%+8.7%+4.2%
FINANCIAL REVIEW
STRATEGIC REPORT
In Latin America growth benefited from a
strong performance in Brazil and very strong
growth in Argentina, while Asia Pacific
continued to be negatively impacted by
Covid-related restrictions in China. On a
full-year basis, like-for-like revenue less
pass-through costs was up 8.0%, and up
8.8% over three years.
The decline of like-for-like revenue less
pass-through costs in China in Q4 reflected
widespread Covid-related lockdowns
during the quarter. Policy changes and the
subsequent re-opening late in the quarter is
expected to benefit WPP later in 2023 with
media and programmatic business recovering
first, followed by creative activities.
CASH FLOW HIGHLIGHTS
In 2022, net cash outflow was £1,398 million,
compared to a £256 million outflow in 2021.
The main driver of the cash flow performance
year-on-year was the £328 million adverse
movement in trade working capital lapping
positive movement in the prior year, driven
by year-end mix and timing factors. The
£519 million adverse movement in other
receivables, payables and provisions was
driven by a reduction in staff incentives
payable, prepayments and year-end mix
and timing factors associated with VAT,
growth in the dividend and the increase
in the share buyback.
BALANCE SHEET HIGHLIGHTS
As at 31 December 2022 we had cash and
cash equivalents of £2.0 billion and total
liquidity, including undrawn credit facilities
of £4.1 billion. Average adjusted net debt
in 2022 was £2.9 billion, compared to
£1.6 billion in the prior period, at 2022
exchange rates. On 31 December 2022
adjusted net debt was £2.5 billion, against
£0.9 billion on 31 December 2021, an
increase of £1.4 billion at 2022 exchange
rates. The higher adjusted net debt figure
mainly reflects the £1,172 million returned to
shareholders in 2022 comprising £807 million
of share buybacks completed and £365 million
of dividends paid.
We spent £863 million on share purchases
during the year, of which £807 million related
to share buybacks.
Around £50 million of share repurchases
planned for 2023 are continuing to offset
dilution from share-based payments.
Our bond portfolio at 31 December 2022 had
an average maturity of 6.4 years.
The average adjusted net debt to EBITDA
ratio in the 12 months to 31 December 2022
is 1.46x, which excludes the impact of IFRS
16. This is slightly below our target range
of 1.5-1.75x average adjusted net debt
to EBITDA.
OUTLOOK
WPP is entering 2023 with a compelling
client offer, good momentum from new
business wins, and a robust balance sheet.
Our guidance for 2023 is as follows:
– Like-for-like revenue less pass-through
costs growth of 3-5%
– Further margin improvement reflecting
continued operating leverage to deliver a
headline margin of around 15% (excluding
the impact of FX)
– We also anticipate mergers and
acquisitions will add 0.5-1.0% to revenue
less pass-through costs growth
– Headline income from associates is
expected to be around £40 million*
– Effective tax rate (measured as headline
tax as a % of headline profit before tax) of
around 27.0%
– Capex £300 million
– Restructuring costs of around £180 million
– Trade working capital expected to be
broadly flat year-on-year with operational
improvement offsetting increased client
focus on cash management
– Average adjusted net debt/EBITDA within
the range of 1.5x-1.75x
MEDIUM-TERM GUIDANCE
We remain confident in our ability to deliver
annual revenue less pass-through costs
growth of 3-4% and headline operating profit
margin of 15.5-16%, as a result of the actions
we have taken to broaden and strengthen
our services, to increase our exposure to
attractive industry segments and to leverage
our global scale.
* Kantar associate income - In accordance with IAS 28:
Investments in Associates and Joint Ventures, once an
investment in an associate reaches zero carrying value, the
Group does not recognise any further losses, nor income, until
the cumulative share of income returns the carrying value to
above zero. At the end of 2022 WPP’s cumulative reported
share of losses in Kantar has reduced the carrying value of the
investment to zero. This means that we expect that around
£40-50 million of Kantar headline income will not be recognised
in our headline income from associates during 2023
ADJUSTED NET DEBT
£ million
4,017
2,479
1,540
696
901
2018
2019
2020
2021
2022
For more information on our
strategy see pages 1 to 55
WPP ANNUAL REPORT 2022
65
20222,479
STRATEGIC REPORT
SUSTAINABILITY
Creativity can address
some of the world’s
biggest issues
WPP’s purpose – to use
the power of creativity
to build better futures
for our people, planet,
clients and communities
– helps us focus on the
wider impact we have
on the world around us
Our industry connects with many of the most
urgent issues we face as a society – diversity,
racial equity, privacy, data ethics and, of
course, climate change. What we do and the
judgements we make are critically important.
Tackling these issues is no longer just a ‘nice
to have’. It is integral to how we do business.
As one of the major players in our industry,
we can use our scale to help bring about
change. That’s why we set strong, time-
bound targets to reach net zero both within
our organisation and throughout our supply
chain. It’s a big task, but we firmly believe
it’s possible.
It’s also why, in 2022, GroupM launched
its media decarbonisation programme,
advocating for standardised emissions
measurement across the industry (see
page 76). This is a vital first step to tackling
50% of our supply chain carbon footprint.
We aim to use our creativity for good,
delivering work that makes sustainable
lifestyles more desirable and seeks to solve
some of society’s most pressing issues. In
2022 we produced £9.6 million worth of pro
bono work for a variety of causes including
environmental issues, LGBTQ+ equality and
women’s rights.
We also explored the unprecedented
potential within AI and new technology to
produce never-before-seen solutions for
health and wellbeing, and to support
underrepresented communities.
By putting in place strong DE&I policies
and programmes that create spaces and
opportunities for people and communities
who are too often overlooked, we can create
engaged, diverse, vibrant workplaces to
attract the people who will help drive our
agenda forward.
Our campuses are built to high sustainability
standards, where everything from the type
of flooring materials used to encouraging
wildlife at each site is carefully considered.
That way, we can work together to create
the fairer, more sustainable future we all
want to see.
66
WPP ANNUAL REPORT 2022
SUSTAINABILITY
STRATEGIC REPORT
MORNING
AFTER
ISLAND
Fighting the clampdown
on women’s rights
OFFER
COMMUNICATIONS
AGENCY
OGILVY, HONDURAS
CLIENT
GRUPO ESTRATÉGICO PAE
Honduras is the only Latin American
country to ban the morning after pill:
any woman found taking it faces up to
six years in prison. Since the ban was
introduced in 2009, 350,000 underage
Honduran girls have given birth.
Women’s rights advocates Grupo
Estratégico PAE and Ogilvy Honduras
came together to create Morning
After Island, a floating safe space in
international waters outside Honduran
jurisdiction where women could access
the pill without fear of prosecution.
As weekly boat trips took women to the
island, Ogilvy created a video campaign
encouraging people to sign a petition
for change. It gained more than 800,000
signatures in less than six months.
Hundreds of media outlets across 14
countries covered it and, eventually,
Honduran President Xiomara Castro
invited Grupo Estratégico to a public
meeting. Castro called on congress to
draft legislation defending the sexual,
reproductive and civil rights of three
million Honduran women. This proposal
was eventually converted into law,
allowing for the legal use of the pill for
the first time in 13 years.
1
law changed
269m
organic impressions
2m
signatures to repeal
the ban
Awards
Cannes Lions Gold,
Health & Wellness
WPP ANNUAL REPORT 2022
67
STRATEGIC REPORT SUSTAINABILITY
SUSTAINABILITY AND OUR STRATEGY
Our sustainability strategy sets out how we use
the power of creativity to build better futures for
our people, planet, clients and communities
It supports all elements of our corporate strategy (see table, page 69).
Our sustainability commitments are not just
the right thing to do, they add meaning for
our people, who want to work for a company
that shares their values, and our clients, who
look to us to help them find and scale
solutions to achieve their own goals and
deliver positive impact.
WPP IS THE CREATIVE TRANSFORMATION COMPANY
COMMS
EXPERIENCE
COMMERCE
TECH
How we implement change to build better futures for our people, planet, clients and communities
DELIVERED THROUGH OUR SUSTAINABILITY STRATEGY
ENSURING TRUST,
FAIRNESS AND
GOVERNANCE
DRIVING DIVERSITY,
EQUITY AND
INCLUSION
ACCELERATING
THE SUSTAINABLE
ECONOMY
GOALS AND METRICS
PEOPLE
Become the employer of choice for all
A culture where everyone
is treated with dignity
and respect
Ensuring an inclusive
working environment with
fair representation
Growing sustainability skills
and knowledge across
our industry
– Proportion of women in senior leadership positions
– Proportion of non-white employees in senior leadership
positions
PLANET
Maximise our positive impact on the planet
Developing common carbon
metrics as we move to
integrated reporting
Building campuses which
make a positive contribution
to local communities
Reaching net zero across
our supply chain by 2030
CLIENTS
Enable our clients on their sustainability journeys
– Continued improvement of diversity data disclosure
– Employee participation in listening and engagement
programmes
– Number of participants in sustainability or DE&I training
programmes
– Sustainability strategy embedded in executive remuneration
– Progress towards net zero carbon emissions in our
operations by 2025 (Scope 1 and 2) and in our supply chain
by 2030 (Scope 3)
– Progress towards 100% renewable electricity
– Phase out single-use plastics in our offices
Ensuring fairness and high
privacy and data ethics
standards in our work
Ensuring our client work is
inclusive and accessible
Supporting our clients
to reduce their emissions
and deliver their
sustainability goals
– Roll out diversity evaluation scores to track progress in
inclusive marketing
– Building common standards to measure carbon emissions
in media and production
COMMUNITIES
Use the power of our creativity and voice to support healthy and vibrant communities
Buying responsibly and
building a diverse
supplier network
Advancing equity and
inclusion through our work,
external partnerships
and initiatives
Working with partners,
social enterprises and clients
to drive sustainability
– Investment in pro bono work and free media space
– Progress towards investing $30 million over three years
through our Racial Equity Programme
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WPP ANNUAL REPORT 2022
SUSTAINABILITY
STRATEGIC REPORT
Our sustainability strategy is aligned to all elements of our corporate strategy.
STRATEGIC ELEMENT
SUSTAINABILITY STRATEGY
VISION & OFFER
SUSTAINABILITY AT THE HEART OF OUR
OFFER FOR CLIENTS
A growing number of clients are embracing
inclusion, diversity and sustainability and looking
to articulate the purpose and impact of their
brands. They look for partners who share their
sustainability values and aspirations.
Our commitment to responsible and sustainable
business practices helps us to broaden and
deepen these partnerships, and to meet the
growing expectations and sustainability
requirements in client procurement processes.
Clients, see page 77
Transparency and
trust, see page 81
CREATIVITY
SOCIAL INVESTMENT
Our pro bono work can make a significant
difference to charities and NGOs, enabling our
partners to raise awareness and funds, recruit
members and achieve campaign objectives.
Pro bono work benefits our business too, providing
rewarding creative opportunities for our people
that often result in award-winning campaigns that
raise the profile of our agencies.
Communities,
see page 79
DIVERSE, EQUITABLE AND INCLUSIVE TEAMS
Diversity and difference power creativity. We
foster an inclusive culture across WPP: one that
is equitable and respectful of diverse thoughts
and individual expression.
We want all of our people to feel valued and able
to fulfil their potential, regardless of background,
lived experience, sex, gender, race and ethnicity,
thinking style, sexual orientation, age, religion,
disability, family status and so much more.
People, see pages
70-72
DATA ETHICS AND PRIVACY
Data – including consumer data – can play an
essential role in our work for clients. Data security
and privacy are increasingly high-profile topics for
regulators, consumers and our clients.
We have a responsibility to look after this data
carefully, to collect data only when needed and
with consent where required, and to store and
transfer data securely.
Data ethics, privacy,
and security, see
page 84
CAMPUSES
Our work to simplify our structure and consolidate
our office space is driving a positive impact on our
energy use and carbon footprint.
We continue to move employees into campuses,
closing multiple smaller sites and replacing them
with fewer, larger, more efficient buildings that
offer modern, world-class workspaces. By 2025,
we expect 85,000 of our people will work in at
least 65 net zero campuses powered by
renewable electricity.
Planet, see pages
74 and 75
DATA &
TECHNOLOGY
SIMPLER
STRUCTURE
PEOPLE & CULTURE
SHARED VALUES ACROSS OUR BUSINESS
AND SUPPLY CHAIN
Strong employment policies, investment in skills
and inclusive working practices help us recruit,
motivate and develop the talented people we
need to serve our clients in all disciplines across
our locations.
Selecting suppliers and partners who adopt
standards consistent with our own can reduce
costs, improve efficiency and protect our
reputation.
People, see pages
70-72
Supply network,
see page 83
WPP ANNUAL REPORT 2022
69
STRATEGIC REPORT SUSTAINABILITY
PEOPLE
We aim to create a stimulating place of work where
everyone feels supported, involved and encouraged
to be their best. People make WPP, and here’s why
HELPING OUR PEOPLE TO PLAY
THEIR PART
We know a growing number of employees
want to work for a company that is willing
to stand up for the issues they care about.
We have partnered with the UNHCR to run
employee match-funding appeals for disaster
relief. Our people have given generously to
support those impacted by the conflict in
Ukraine, the floods in Pakistan and, in
February 2023, the devastating earthquakes
in Turkey and Syria.
DIVERSITY, EQUITY AND INCLUSION
We strive to create fair, inclusive places to
work across WPP globally. We put in place
policies to prioritise fairness and equity, with
the aim of building a culture in which our
people have the opportunity to thrive and
differences are celebrated.
Our Code of Business Conduct sets out our
commitment to select and promote our
people without discrimination or concern
for factors such as sex, gender, race and
ethnicity, sexual orientation, age, religion,
disability or family status. This Code applies
to all our people.
GENDER BALANCE
We aim to reach gender parity at all levels
of our business. Over half (54%) of our senior
managers are women (2021: 52%). The
proportion of women in executive leadership
roles1 is 40% (2021: 39%). The proportion of
women on the Executive Committee
increased to 40%
, compared to 35% in the
previous year. At Board level, the proportion
of women is 38% (2021: 43%). When Joanne
Wilson succeeds John Rogers as CFO
following the announcement of the
Company’s 2023 First Quarter Trading
Update, the proportion of women on the
Board will be 46%. However, our ambition
for Board gender diversity remains to reach
parity. We are proud to have been named in
the Bloomberg Gender-Equality Index for the
fifth year in a row.
We are a committed signatory of the
Women’s Empowerment Principles, a guide
for businesses on how to empower women in
the workplace, marketplace and community.
To read about our work with UN Women,
see page 79
LGBTQ+
WPP Unite celebrates our Company-wide
LGBTQ+ community. In 2022 the community
launched in India, and Australia and New
Zealand. Unite advises on policies that
impact on LGBTQ+ talent across WPP and
our agencies to ensure diverse thinking and
creativity thrive within WPP’s workplaces
and within our work.
In 2022, Unite consulted on WPP’s Reality
Flag campaign with the Human Rights
Campaign, which was awarded the Most
Effective Integrated Marketing Campaign
at The Drum Awards. A cross-agency
collaboration between VMLY&R, BCW,
Wavemaker, Hogarth and Unite,
the campaign is designed to rally public
support for The Equality Act, landmark
federal legislation that would guarantee
explicit and consistent non-discrimination
protections for LGBTQ+ people in key
areas of life across the United States.
In 2022, WPP received a top score of 100 in
the Corporate Equality Index, and was again
named among the Best Places to Work for
LGBTQ+ equality.
ETHNICITY
As part of our commitments to advance
racial equity, we began publishing our
workforce diversity data in the United States
and UK in 2020.
For information on our workforce
diversity data, see our 2022
Sustainability Report
DISABILITY
With more than one billion people
worldwide estimated to experience
disability,2 designing for accessibility and
inclusion is not only the right thing to do, it
helps create better products for everyone.
WPP is a proud member of The Valuable 500,
a global business collective made up of 500
CEOs and their companies, innovating
together for disability inclusion. As part of
our commitment, we established a centre
of excellence for inclusive design to help
our clients make their customer experiences
disability-inclusive and accessible.
We recruit, select and promote our people
on the basis of their qualifications, relevant
experience and merit, without discrimination
or concern for disability. Candidates are
assessed objectively against the requirements
of the job, taking account of any reasonable
adjustments that may be required for
candidates with a disability. For people who
develop a disability during their employment,
we make adjustments to their working
environment or other employment
arrangements wherever possible, within a
reasonable time frame and in consultation
with the employee.
1 Executive leadership roles are defined by WPP as the agency
board and executive leadership population as reported
through WPP’s financial reporting system
2 World Bank, Disability Inclusion Overview, April 2022
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WPP ANNUAL REPORT 2022
SUSTAINABILITY
STRATEGIC REPORT
GENDER DIVERSITY
Board and executive
40% (1,432)
39% (1,552)
Senior managers
60% (2,121)
2022
61% (2,395)
2021
54% (11,401)
46% (9,781)
2022
52% (9,630)
48% (8,784)
2021
All other employees
57% (50,979)
43% (38,237)
2022
57% (49,104)
43% (36,730)
2021
Total employees
56% (63,812)
44% (50,138)
2022
56% (60,286)
44% (47,910)
2021
● Female
● Male
Gender diversity figures exclude a small proportion
where gender is unknown or undisclosed. In 2022,
this accounted for less than 1% of total headcount.
AGE DIVERSITY
● 19 or under <1%
● 20-29 34%
● 30-39 38%
● 40-49 19%
● 50-59 7%
● 60 and over 2%
Age diversity figures exclude a small proportion where
age is unknown or undisclosed. In 2022, this accounted
for 1% of total headcount.
These metrics were subject to independent limited assurance
procedures by PricewaterhouseCoopers LLP (‘PwC’) for
the year ended 31 December 2022. For the results of PwC’s
2022 Limited Assurance report and the ‘WPP Sustainability
Reporting Criteria 2022’, see our 2022 Sustainability Report
LISTENING AND ENGAGING
In 2022 we launched the refreshed All In
staff survey to help us listen to our people
and continue to create a culture that is
inclusive and empowering to all. Two-thirds
of employees took part, with ‘belonging’
and ‘feeling valued’ coming out as two of
the top reasons for working for WPP.
We continue to build on new ways to
connect. Our virtual global CEO townhall
series, where Mark Read and WPP leaders
discuss issues important to our colleagues,
had an average 5,900 participants tuning in,
up 40% from the year before. We kicked off
2023 with a sustainability-focused townhall
which attracted an audience of over 8,500.
A NEW WAY OF WORKING
The last two-and-a-half years have brought
lasting changes to the way we work at WPP.
We’ve embraced greater flexibility in how
and where we do our jobs, and found that
can deliver better outcomes for ourselves
and our business.
We continue to move our people into
modern, more energy-efficient and dynamic
workspaces that facilitate learning,
encourage creative collaboration, and give
clients access to the breadth and depth of
WPP talent in one inspiring location.
By 2025, we will have at least 65 net zero
campuses running on electricity from
renewable sources. Our strategy also focuses
on repurposing old, iconic buildings where
we reuse as much of the structure and fittings
as we can to retain embodied carbon and
limit impact.
We aim to select, design and run our
offices in a way that promotes sustainability
and wellbeing. In 2022, with our architecture
firm BDG, we created a new ESG building
assessment tool to help us identify
opportunities to support employees’
wellbeing needs and reduce energy
use, optimise resource use and create
opportunities for circular business models
in our materials use (for example, as we refit
offices to meet changing business needs).
SUSTAINABILITY ENGAGEMENT
So our employees can fully engage in our
commitment to reach net zero, in 2022 we:
– Launched a new Green Claims Guide and
associated training to help equip people
with principles and practical tips for
making effective environmental claims
and avoiding misleading the public
– Rolled out sustainability fundamentals
training in GroupM across the UK, which
in 2023 will be accessible to all employees
across WPP
– Delivered tailored sustainability reporting
training for finance and risk teams
– Partnered with Google Cloud to run
sustainability training for IT teams
– Rolled out targeted tools and resources
to eliminate single-use plastics across our
offices (see page 75)
And we continue to offer training through
programmes such as AdGreen, an initiative to
unite the advertising industry in eliminating
the negative environmental impacts of
production, and through the Change the
Brief Alliance, training creatives and
strategists to drive consumer behaviour
change and sustainability.
WPP ANNUAL REPORT 2022
71
GENDER DIVERSITY2022202220222022●61% (2,395)48% (8,784)43% (36,730)44% (47,910)60% (2,121)46% (9,781)43% (38,237)44% (50,138)AGE DIVERSITY
STRATEGIC REPORT SUSTAINABILITY
PEOPLE
Across our offices and agencies, a growing
network of ‘green teams’ are connecting
sustainability enthusiasts to embed
sustainability and drive change through
events, training, innovative initiatives and
employee activation.
In Sydney, we partnered with My Net Zero
to provide personalised sustainability plans
for our people. In Belgium and Prague, our
bike-to-work schemes are fostering health
and wellbeing alongside a low-emissions
commute. And in Paris and London, we
hosted vegan takeovers in campus cafés.
VMLY&R grew its active ‘green team’
network to more than 130 across North
America, Ogilvy hosted sustainability
deep-dives as part of its annual Learning Day,
Landor & Fitch continued to support
members of its 450+ strong ‘Good Squad’
in sustainable brand innovation, and
Wunderman Thompson launched a
sustainable travel guide for
global colleagues.
We will continue to inspire, equip and
empower our people to put sustainability
into practice in 2023.
HEALTH, SAFETY AND WELLBEING
Work-related stress is one of our main –
and growing – health and safety hazards.
We are committed to creating mentally
healthy workplaces. In 2022 we became a
founding member of the Global Business
Collaboration for Better Workplace Mental
Health, the first global business-led initiative
designed to advocate for – and accelerate –
positive change for mental health in the
workplace.
Over the course of the year, we expanded
our Mental Health Allies programme to the
United States and Singapore, building on a
successful pilot in the UK. We now have 550
Allies who work to ensure colleagues stay
healthy, supported and safe by encouraging
open conversations about mental health in
the workplace and guiding people to help
and resources.
We also introduced Making Space, an
initiative focused on giving people space
to look after their wellbeing and inspiring
creativity, which kicked off with a four-day
weekend for all employees to take time out
to recharge, reset and refresh.
Our Employee Assistance Programme
covers all our people around the world, and
is designed to help employees manage and
prevent challenges so they can stay healthy
in their work and personal life. The
programme is a 24/7 service for employees
and eligible family members that provides
access to free confidential counselling and
support, as well as resources on topics such
as managing stress, dealing with loss and
referrals to local financial or legal help.
DAYS LOST DUE TO SICKNESS
3.8
404,381
3.3
3.0
330,696
325,676
3.5
400,617
2019
2020
2021
2022
Days lost due to sickness
Days lost per person
LABOUR RELATIONS
We support the rights of our people to join
trade unions and to bargain collectively,
although trade union membership is not
particularly widespread in our industry.
In 2022, around 4% of our employees were
either members of a trade union or covered
by a collective bargaining agreement
(2021: 4%). We held 220 consultations with
works councils, mainly in Europe (2021: 268).
We have made around 3,300 redundancies,
largely as part of our transformation
programme and as we merged and
restructured some agencies. We consulted
with our employees as appropriate and
supported affected people through our
Employee Assistance Programme which
includes outplacement in appropriate cases.
Through our internal talent marketplace we
try to ensure any open roles are filled by
employees who have the right skills before
recruiting for those roles externally.
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WPP ANNUAL REPORT 2022
2022DAYS LOST DUE TO SICKNESS400,6173.5 SUSTAINABILITY
STRATEGIC REPORT
ZOTERIA
A digital solution that raises
awareness of LGBTQ+ hate crime
OFFER
TECHNOLOGY
AGENCY
POTATO (AKQA)
CLIENT
VODAFONE FOUNDATION
New research by Vodafone found that 68%
of LGBTQ+ respondents had been victims
of hate crime in the last year. Motivated by
this shocking statistic – and the fact that
three-quarters didn’t report it – Vodafone
Foundation, in partnership with Stonewall
and Galop, wanted to develop an app
to provide an easy and effective way to
report abusive incidents and offer support.
After in-depth research to hear the
community’s needs, Potato designed
a mobile app that’s fast, reassuring and
instantly connects victims with the
best support available, empowering
members of the community to safely
report hate crime.
Zoteria will also be able to provide a far
more accurate view of the extent of hate
crimes across the UK. Anonymised data
will be available to local authorities so they
can better understand the issue within
their region and put in place strategies
to address it.
Data will also help highlight the issues faced
by LGBTQ+ people from ethnic minorities,
with recent UK studies suggesting this
group faces specific, intersectional barriers
to equality.
The app provides access to other vital
support services, including LGBTQ+
advice, mental health and sexual health
services, and information on local LGBTQ+
events to help people stay connected
with their local communities.
Read Beyond the Rainbow,
WPP Unite and Choreograph’s
joint study into the future of
LGBTQ+ marketing
WPP ANNUAL REPORT 2022
73
STRATEGIC REPORT SUSTAINABILITY
PLANET
It is everyone’s responsibility to
help tackle the climate crisis
Our planet needs everyone, everywhere to
take the climate crisis seriously. The public
demands it, our clients demand it and we
demand it of ourselves. As one of the world’s
biggest marketing services companies, we
are committed to driving positive change
across the industry and beyond.
OUR CLIMATE STRATEGY
In 2021, we set near-term science-based
targets and committed to reach net zero
across our own operations (Scope 1 and 2)
by 2025, and our supply chain (Scope 3) by
2030. These targets include emissions from
media buying (more than half of our total
footprint) – an industry first. Read about our
2022 performance in the charts on page 75.
We are in the process of developing
detailed roadmaps to reduce Scope 1, 2
and 3 emissions, and we will publish our
first formal transition plan in 2023 aligned
to the recommendations of the Transition
Plan Taskforce.
Collaboration with clients and suppliers
is critical to delivering against our targets
and promoting low-carbon and regenerative
living at the scale needed to address the
climate crisis. Of our 50 largest clients,
78% have set or are committed to setting
science-based reduction targets through
the Science Based Targets initiative (SBTi),
up from 62% in 2021. These clients look to us
to help them find and scale solutions (for an
example, see page 78). Through GroupM,
we are working with industry trade bodies
to agree a consistent and transparent
methodology for calculating emissions from
media placement (see page 76 for more).
1 Data from 2019 baseline
These metrics were subject to independent limited assurance
procedures by PricewaterhouseCoopers LLP (‘PwC’) for the
year ended 31 December 2022. For the results of PwC’s 2022
Limited Assurance report and the ‘WPP Sustainability
Reporting Criteria 2022’, see our 2022 Sustainability Report
74
WPP ANNUAL REPORT 2022
In 2022 we launched a new Green Claims
Guide, supported by training sessions,
to help equip our people with principles
and practical tips for making fair and
accurate environmental claims and avoiding
misleading the public (see page 77).
REDUCING SCOPE 2 EMISSIONS
Scope 2 market-based emissions were
11,096 tCO2e
reduction from 2021. Scope 2 location-based
emissions were 50,867 tCO2e
(2021: 55,990
tCO2e), a 9% reduction from 2021.
(2021: 21,840 tCO2e), a 49%
REDUCING SCOPE 1 EMISSIONS
Our Scope 1 emissions for 2022 were
14,105 tCO2e (2021: 13,292 tCO2e), of which
a subtotal 10,051 tCO2e
(71% of our total
Scope 1 emissions footprint) has been
subject to independent limited assurance
procedures by PwC. The Scope 1 emissions
not subject to assurance procedures relate
to locally contracted company cars, for
which emissions have been estimated.
We continue to move our people into
modern, energy-efficient and dynamic
workspaces that facilitate learning,
encourage creative collaboration and
give clients access to the breadth and
depth of WPP talent in one location.
Our investment in campuses around the
world will, by 2025, bring 85,000 of our
people together in at least 65 net zero
campuses running on electricity from
renewable sources.
Company cars accounted for 64% of
our Scope 1 emissions. We aim to reduce
emissions by shifting company cars to electric
and hybrid vehicles in all markets where
infrastructure makes it feasible to do so.
In 2022, 30% of centrally leased company
cars were electric or hybrid vehicles,
compared to 24% in the prior year.
WPP is a member of RE100, the global
corporate renewable energy initiative, and
we have committed to sourcing 100% of our
electricity from renewable sources by 2025.
In 2022, we bought 83%
of our electricity
from renewable sources (2021: 74%).
REDUCING SCOPE 3 EMISSIONS
Our supply chain makes up the overwhelming
majority (98%) of our total emissions.1 We aim
to halve our Scope 3 emissions by 2030 (2019
baseline year).
MEDIA DECARBONISATION
With over $60 billion in advertising placed
annually on behalf of clients, WPP is the
world’s largest investor in media advertising.
As the first company to account for media
emissions (more than half our supply chain
emissions)1 in our science-based reduction
targets, WPP and GroupM are rapidly
identifying risks and opportunities to support
the industry and our clients to reduce
emissions in this highly complex space.
In 2022, GroupM developed and released
a methodology for calculating emissions
from media and launched a coalition of
leading advertisers – representing $10 billion
in global advertising investment – with a
commitment to advocate for shared industry
standards and accelerate the decarbonisation
of the world’s media supply chain. In
February 2023, we launched a new media
omnichannel carbon calculator for clients,
enabling clients for the first time to factor
channel-level carbon emissions data into
their media planning (see page 76).
SUSTAINABILITY
STRATEGIC REPORT
WPP IS A PROUD SIGNATORY TO BOTH THE UN GLOBAL
COMPACT’S BUSINESS AMBITION FOR 1.5°C, WHICH AIMS
TO GALVANISE BUSINESS SUPPORT FOR STRONG CLIMATE
ACTION, AND THE UNFCCC’S RACE TO ZERO CAMPAIGN
TARGETS AND COMMITMENTS
84%
50%
absolute Scope 1 and 2 greenhouse
gas (GHG) emissions reduction by
2025 from a 2019 base year2
absolute Scope 3 GHG emissions
reduction by 2030 from a 2019 base
year,2 including media buying – an
industry first
Net zero
across own operations (Scope 1
and 2) by 2025 and across entire
supply chain (Scope 3) by 2030
100%
electricity from renewable
sources by 2025
PRODUCTION
The carbon emissions generated by the
production of the films and other content
we create on behalf of clients are responsible
for 14% of our supply chain carbon footprint.1
Hogarth, our production agency, continues
to develop virtual production capabilities,
partnering with key industry innovators to
create a compelling alternative to traditional
production methods.
TECHNOLOGY
The technology we use – from data centres
to the emails we send – generates 6% of our
Scope 3 footprint.1 As we increase our use of
cloud infrastructure, powered by renewable
electricity, we will reduce our energy
consumption and our carbon emissions,
as well as drive down waste.
AIR TRAVEL
Business travel accounts for around 3%
of our supply chain carbon footprint.1 To
offset the resulting emissions, we have been
purchasing high-quality carbon credits since
2007, which are charged to each of our
agencies to create an internal carbon cost.
OFFSETTING
The first step to limiting emissions must
always be to reduce the total footprint of
any product or service as far as possible.
Our Environment Policy, introduced in 2022,
sets out how we manage the cost and
quality of the carbon credits we buy to
offset emissions we cannot avoid.
CIRCULAR ECONOMY
Moving from a ‘take-make-dispose’
economy to a circular economy where
waste is eliminated, resources are circulated
and nature is regenerated could create
$4.5 trillion in annual economic output by
2030. WPP can contribute to this transition
through the work we do for our clients
(see example on page 78).
We are working to include the portion of
unassured Scope 1 data relating to locally
managed company cars, and the proportion
of unassured locally managed air travel
emissions data, in scope for limited external
assurance in future years. As we refine our
methodologies and improve data quality, we
will apply these to prior years and restate
data if a material gap is identified.
From production to media investment,
we support the development of more
robust protocols to measure emissions
across the industry.
For more information, see the
planet section of our 2022
Sustainability Report
Within our own operations, we remain
committed to phasing out plastics that
cannot be reused, recycled or composted
across our campuses and offices worldwide.
In 2022, as office occupancy increased,
we redoubled our efforts. All campuses
completed a plastics audit, looking at what
they buy and how they dispose of plastics.
At year-end all campuses had plastic
recycling facilities in place. But we still have
work to do. In 2023, with sponsorship from
our agency Chief Finance Officers, we will
continue to drive progress beyond our
campuses and across all products purchased
by our agencies.
DATA QUALITY
A significant challenge for reducing carbon
emissions is being able to measure them with
confidence. We are working to improve the
quality and coverage of our emissions data.
2022 PERFORMANCE
MARKET BASED SCOPE 1 AND 2 CARBON
EMISSIONS PROGRESS
CARBON EMISSIONS FROM AIR TRAVEL
TONNES CO2e EMISSIONS
122,967
0.82
87,585
0.52
51,962
0.32
0.22
35,132
25,201
55,662
23,325
11,421
2019
2020
2021
2022
2019
2020
2021
2022
● Scope 1 and 2 (tCO2e)
Scope 1 and 2 per person (tCO2e/person)
Our Scope 1 and 2 market-based emissions for 2022
were 0.22 tCO₂e/person, a 32% reduction from 2021
and 73% reduction from our 2019 baseline.
Our carbon intensity per £1 million revenue was
1.75 tCO₂e, a 36% reduction since 2021
1 Data from 2019 baseline
2 Target verified by SBTi in line with ambition to limit climate
change to 1.5°C from pre-industrial levels
WPP ANNUAL REPORT 2022
75
2022MARKET BASED SCOPE 1 AND 2 CARBON EMISSIONS PROGRESS 0.2225,201CARBON EMISSIONS FROM AIR TRAVELTONNES CO2e EMISSIONS202255,662
STRATEGIC REPORT SUSTAINABILITY
PLANET
To push for the biggest change in the
shortest timeframe, GroupM formed a
client coalition to bring together leading
advertisers, collectively representing
$10 billion in global advertising investment.
The coalition will advocate for shared
industry standards and advance efforts to
reduce the amount of carbon created by
the placement of advertising.
In February 2023, GroupM launched an
omnichannel version of its carbon calculator,
enabling clients for the first time to factor
channel-level carbon emissions data into
their media planning.
Scan to access
the research
CALCULATING
MEDIA
EMISSIONS
GroupM is the world’s largest media buyer,
placing more than $60 billion each year on
behalf of clients. In line with WPP’s
commitment to halve supply chain carbon
emissions by 2030 (from a 2019 baseline),
in 2022 GroupM launched an ambitious and
bold new strategy to decarbonise media
advertising.
Working with independent carbon
measurement specialists, and with input from
clients, industry partners and third parties,
GroupM developed and launched a global
carbon measurement framework that makes
it possible, for the first time, to measure
carbon consistently across different media
channels. To help drive industry-wide
progress and work towards a common
measurement system for emissions from
media buying, GroupM made the framework
open source.
Decarbonising the media industry
WE INTRODUCED OUR
GLOBAL FRAMEWORK
WITH A GOAL OF UNITING
THE INDUSTRY. WE KNOW
WE CAN ACHIEVE MORE,
TOGETHER, THAN WE CAN
WITH SEPARATE AND
DISPARATE ACTION”
Christian Juhl
Chief Executive Officer, GroupM
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WPP ANNUAL REPORT 2022
SUSTAINABILITY
STRATEGIC REPORT
CLIENTS
From strategy and consulting to delivery and flawless
execution, we offer dynamic support and expertise to
help clients meet their sustainability and diversity,
equity and inclusion goals
WORK WITH IMPACT
Businesses and consumers alike are feeling
the effects of inflation, climate change,
geopolitical uncertainty and rising social
inequality. Businesses are looking for solutions
that unlock growth, while also addressing
their environmental and social impact.
As the creative transformation company,
we want to help our clients and society find
and scale these solutions through work that
is creative, credible and actionable.
Our Sustainability Playbook, updated
in 2022, showcases the diversity of our
sustainability capability and innovative
work (see the clients chapter in our 2022
Sustainability Report).
WPP is a founding member of the
#ChangeTheBrief Alliance, which scales an
initiative that originated at Mindshare and
aims to harness the creative power of our
industry to promote more sustainable
choices and behaviours.
AN OPEN AND INCLUSIVE FUTURE
People are complex and intersectional, and
so are their needs. How we communicate
with people depends upon how they
define themselves.
Our Inclusive Marketing Playbook and
resource library, updated in 2022, embeds
inclusive marketing principles in everything
we do, and our Diversity Review Panel
provides a forum to escalate and address
concerns around potentially offensive or
culturally insensitive work.
In 2022, we launched the Consumer Equality
Equation report, exploring the relationship
between ethnicity and the consumer
experience in the UK. And Unite, WPP’s
company-wide LGBTQ+ community,
partnered with Choreograph to publish
Beyond the Rainbow, a survey of over
7,500 people in the United States, UK and
Canada that provides data on how queer
communities view themselves as depicted
in advertising and marketing.
ACTING ETHICALLY AND
WITH INTEGRITY
Our work has the power to bring about
change – it regularly changes attitudes,
opinions and the way people behave. As it is
critical that these changes are for the better,
we are committed to acting ethically in all
aspects of our business, and to maintaining
the highest standards of honesty and integrity.
We will not undertake work that is intended
or designed to mislead or deceive. We work
hard to maintain strong compliance in areas
such as ethics, human rights, privacy and
data security. All of this is covered in our
Code of Business Conduct and in our
mandatory online ethics training.
We require that all work our agencies
produce for clients complies with all relevant
legal requirements, codes of practice and
marketing standards. Our agencies have
policies and processes to mitigate against
online advertising appearing on sites with
illegal, illicit or unsuitable content.
There are occasional complaints made about
campaigns we have worked on, and some
of these are upheld by marketing standards
authorities. Our agencies take action where
needed to prevent a recurrence.
ENVIRONMENTAL CLAIMS
Regulators and the general public are holding
environmental claims made by businesses
and brands to ever-higher standards of
fairness and objectivity. This means it is more
important than ever that any claims we make
on behalf of clients are authentic, material
and matched by real action.
In 2022 we launched a Green Claims Guide,
informed by guidance from regulators such
as the UK Competition & Markets Authority
and US Federal Trade Commission, and
underpinned by legal compliance advice.
The guide is designed to equip our people
with principles and practical tips for making
effective green claims that are not
misleading in any way.
ACCEPTING NEW ASSIGNMENTS
Each of our agencies has a global Risk
Committee, chaired by its respective
CEO, to ensure that leadership has a full
understanding of the risks across businesses
and markets (see Risk Governance
Framework on page 86).
During the year we put in place a revised
Assignment Acceptance Policy and
Framework that WPP subsidiaries need to
follow when taking on new business. This
applies to all client sectors and provides
guidance to our leaders and people about
how to conduct additional due diligence
in relation to clients and any work they
are asked to undertake. It requires various
categories of work to be considered by
our agencies’ risk committees or escalated
to WPP for review.
Our agencies have copy-checking and
clearance processes for the legal team
to review campaigns before publication.
These processes have strict requirements
in highly regulated sectors such as
pharmaceutical marketing.
For more information, see the
planet section of our 2022
Sustainability Report
WPP ANNUAL REPORT 2022
77
STRATEGIC REPORT SUSTAINABILITY
CLIENTS
500%
increase in traffic
to Hellmann’s website
3.4m
people tuned in to
watch Cook Clever,
Waste Less
40k+
recipe books
downloaded
32%
of viewers said they
would re-use leftovers
in future
HELLMANN’S:
COOK
CLEVER,
WASTE LESS
Say no to waste and yes to taste
OFFER
COMMUNICATIONS
AGENCY
MINDSHARE, UK
CLIENT
HELLMANN’S (UNILEVER)
If global food waste were considered a
country, it would be the third largest emitter
of greenhouse gases in the world. Hellmann’s
is on a mission to raise awareness of how UK
households are major contributors to the
food waste issue.
Mindshare and Hellmann’s co-created a
four-part TV series, Cook Clever, Waste Less,
featuring top UK cook and self-proclaimed
queen of leftovers, Prue Leith, and NHS
GP and food expert Dr Rupy Aujla. The
programme educated four households
on how to minimise food waste, sharing
practical tips and money-saving advice
such as the benefits of meal planning,
batch cooking and re-using leftovers.
To extend reach, Mindshare created and
promoted a host of digital assets across
social and online video throughout the
campaign period. The agency also promoted
a downloadable recipe book, created by
Hellmann’s, that meant people had a
long-lasting resource to help combat their
waste at home.
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WPP ANNUAL REPORT 2022
SUSTAINABILITY
STRATEGIC REPORT
COMMUNITIES
We aim to use the power of our creativity and voice
to support healthy and vibrant communities
The work we do with our clients and partners
has the power to inspire widespread social
change. Good communications are essential
to bring about the shift in attitudes and
behaviour needed to end extreme poverty,
inequality and climate change, contributing
towards the UN Sustainable Development
Goals (SDGs).
AMPLIFYING VOICES
We can help amplify the impact of charities
and non-governmental organisations by
providing marketing and creative services,
often on a pro bono basis (for little or no fee).
This work is mutually rewarding: it is often
worth more than an equivalent cash donation
for the beneficiary, helping to increase
donations, recruit members, change
behaviour and achieve campaign goals, while
also giving our colleagues the chance to
work on fulfilling, impactful and sometimes
award-winning campaigns that build their
skills and knowledge and raise the profile
of our agencies.
IMPACT THROUGH COLLABORATION
We can scale our impact through multi-
stakeholder alliances. Common Ground is a
collaboration between the world’s six largest
advertising groups and the United Nations,
created to support the SDGs. WPP’s
focus is on gender equality (SDG 5).
As a founding member of the Unstereotype
Alliance, we partner with UN Women to work
towards eradicating harmful stereotypes
from all advertising and media, and to drive
positive social change. In 2022 we engaged
locally in Australia, Brazil, India, Kenya, South
Africa, Turkey and the UK.
Read the Consumer
Equality Equation report
And we shared insights and data with the
global network on issues including body
autonomy and the Consumer Equality
Equation, a study into the relationship
between ethnicity and the consumer
experience in the UK.
ADVANCING RACIAL EQUITY
In June 2020, we committed to invest
$30 million over three years in initiatives
to advance racial equity. Since then, we
have committed $16.2 million to inclusion
programmes. This does not include amounts
invested in 2022, which we intend to report
later in the year.
We aim to fund initiatives that will deliver
immediate results while also laying the
foundation for meaningful and sustainable
change. We held two funding rounds in
2022. Applicants were assessed for their
commitment to advance racial equity,
measurable impact on a specified target
audience, and sustainable design.
ACTION IN LOCAL COMMUNITIES
We encourage our people to use their
creativity and expertise to support the
local causes they are passionate about, and
we have a long tradition of pro bono work
covering a range of issues from the arts to
conservation, health and human rights.
The WPP India Foundation was named CSR
Foundation of the Year, having supported
over 15,000 underprivileged children with
education, training and social support
since 2015. In Australia, we joined the
Reconciliation Action Plan programme
in support of Aboriginal and Torres Strait
Islander peoples, and were named one of
the most inclusive employers in the country.
And in the UK we partnered with the One
Club of Creativity to launch the One School,
designed to support Black British creatives
entering the industry.
EMPLOYEE GIVING
AND VOLUNTEERING
Our people around the world donated
$670,000, which WPP matched, to the
UNHCR appeal to support those forced
to flee their homes in Ukraine. We continue
to partner with the UNHCR to run employee
match-funding appeals for disaster relief.
We also encourage our people to volunteer
their time. In France we launched We Care
& We Act, a new volunteering programme
to match employee talent, skills and interests
with requests for volunteer support.
VMLY&R gave more than 13,000 employees
the opportunity to support causes and
non-profit organisations of their choice
when the agency closed its offices around
the world on 29 September to mark its
Foundation Day.
WHAT WE GAVE IN 2022
Our pro bono work was worth £9.6 million
(2021: £7.6 million) for clients including UN
Women. We also made cash donations to
charities of £5.2 million (2021: £4.8 million).
This resulted in a total social investment
of £14.8 million (2021: £12.4 million),
equivalent to 1.3% of headline profit
before tax (2021: 0.9%).
WPP media agencies negotiated free media
space worth £20.8 million on behalf of pro
bono clients (2021: £17.3 million). Our total
social contribution, taking into account cash
donations, inclusion programmes, pro bono
work, in kind contributions and free media
space, was £35.5 million (2021: £41.0 million).
For more information, see the
communities section of our 2022
Sustainability Report
WPP ANNUAL REPORT 2022
79
STRATEGIC REPORT SUSTAINABILITY
COMMUNITIES
THE KILLER
PACK
A pack that kills mosquito
larvae at source
OFFER
EXPERIENCE
AGENCY
VMLY&R, INDIA
CLIENT
MAXX FLASH
Life-threatening diseases such as dengue
and malaria were on the rise in certain areas
of India. Unusually, this wasn’t just in wet
season – even in dry season, cases were
climbing upwards.
While people were using mosquito
repellents to fight mosquitoes inside the
home, disease control authorities were
alarmed by new breeding grounds popping
up outside homes at rubbish collection
points. These dumps were providing optimal
conditions for mosquitoes to lay their eggs,
creating an explosion in numbers.
Maxx Flash, a mosquito coil brand that helps
fight mosquitoes inside homes, wanted to
stamp out the mosquito menace at these
breeding grounds. To answer the brief,
VMLY&R created The Killer Pack. The 100%
biodegradable packaging was lined and
printed with active ingredients that kill
mosquito larvae in the places they breed
most, such as garbage dumps, dustbins,
ponds, stagnant water or stormwater drains.
A clever but long-lasting solution to a
deadly issue.
61%
average reduction in
dengue-causing larvae
where distributed
Awards
Cannes Lion Grand Prix,
Health & Wellness
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WPP ANNUAL REPORT 2022
SUSTAINABILITY
STRATEGIC REPORT
TRANSPARENCY AND TRUST
We set clear standards, policies and
procedures to ensure high levels of
transparency and trust matching our values
throughout our business.
OUR CODE OF BUSINESS CONDUCT
Our policy framework and training set
clear ethical standards for our people and
agencies. We want to embed a culture of
integrity and transparency where our people
make the right decisions automatically
and instinctively.
The WPP Code of Business Conduct
applies to everyone at WPP. It sets out our
responsibilities to our people, partners and
shareholders to act ethically, legally and
with integrity.
It is underpinned by more detailed policies on
topics including anti-bribery and corruption
(ABC), hospitality and gifts, facilitation
payments, the use of third-party advisors,
human rights and sustainability. In January
2022, we updated the WPP Sustainability
Policy and introduced a new Environment
Policy to reflect our climate commitments.
Our people are required to take our online
ethics training promptly upon joining and
then on an annual basis thereafter. Topics
include diversity, human rights, conflicts of
interest and avoiding misleading work. For
the training period ending in 2022, more
than 130,000 employees, freelancers and
contractors completed the training.
Our online training on anti-bribery and
corruption covers the requirements of the
Foreign Corrupt Practices Act and UK Bribery
Act, including issues such as hospitality and
gifts, facilitation payments and the use of
third-party advisors.
Part of WPP’s Code of Business Conduct
is making sure that our people have the
confidence to speak up and know how to
raise concerns through various channels
without fear of retaliation. Our approach
to this is described under Whistleblowing
on page 88.
MANAGEMENT AND COMPLIANCE
Our Group Chief Counsel oversees our
approach to ethics and compliance. Senior
managers in all our agencies and our business
and supplier partners are asked to sign a
copy of the WPP Code of Business Conduct
each year to confirm they will comply with
its principles. Our Board-level Sustainability
Committee and our Executive Committee
provide additional oversight and guidance
on any ethical issues that may arise.
Our people can report concerns or suspected
cases of misconduct confidentially (and,
if they wish, anonymously) through our
independently managed Right to Speak
facility, which is overseen by our business
integrity team and is available via phone or
email in local languages. We publicise the
facility in induction packs, on our intranet
and external website, in offices, in the WPP
Policy Book and via our mandatory ethics
training. Our people can also speak directly
to our business integrity team who receive
reports through emails, calls, texts and
in-person appointments.
Every report received from a whistleblower
is investigated and reported into the Audit
Committee by WPP’s business integrity
function (see page 88). In general, there
has been a steady increase in the number
of reports received over the past few years,
though they fell year-on-year in 2022. In 2020
and 2021 there were particular spikes
reflecting concerns connected with Covid-19
and lockdowns. In 2022, a total of 372
reports were received from whistleblowers
(2021: 494; 2020: 408; 2019: 361), 328 of which
were through the Right to Speak hotline.
The most commonly raised concerns were
about respect in the workplace and
protection of WPP’s assets.
ASSOCIATES, AFFILIATES AND
ACQUISITIONS
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.
Our due diligence process for acquisitions
and expansion into new markets includes a
review of ethical risks including those relating
to bribery and corruption, human rights or
ethical issues associated with client work.
We identify any specific human rights
risks associated with different countries
of operation, using sources such as the
Transparency International Corruption Index,
Human Rights Watch country reports and
government guidance.
Acquired businesses must adopt our
policies and their people must undertake
our ethics training within a month of joining
WPP. This is agreed in an integration plan
before the acquisition is finalised, and we
monitor progress.
INSTITUTE OF BUSINESS ETHICS
WPP is a member of the Institute of Business
Ethics (IBE) and considers it an important
partner and support for the approach that
the Company takes to business integrity,
sustainability and ethics. As set out more
fully in the Risk Governance Framework on
page 86 and Business Integrity Programme
on page 87, we want to champion and
facilitate a culture where our people feel
that acting with honesty and integrity is an
expected metric for success and this is also
the IBE’s ethos.
The IBE shares knowledge and good practice
as well as advice on the development and
embedding of relevant policies through
networking events, regular publications and
training sessions, research and benchmarking
reports. The IBE is a registered charity
funded by corporate and individual donations.
WPP ANNUAL REPORT 2022
81
STRATEGIC REPORT SUSTAINABILITY
PUBLIC POLICY
Business can make a valuable contribution
to public policy debate. To protect the
public interest, it is important to conduct
all lobbying with integrity and transparency.
Most of our public policy activity is work
that our public affairs businesses carry out
for clients, including direct lobbying of
public officials and influencing public
opinion. On occasion, we also advocate
on issues that affect our business, people
and wider stakeholders.
Our companies engaged in public affairs
include BCW, FGS Global and Hill+Knowlton
Strategies. The majority of their work takes
place in the United States, the UK and the
EU, although many clients are multinational
businesses operating in many countries.
OUR STANDARDS
Our Code of Business Conduct and Political
Activities and Engagement Policy govern our
political activities, and both are available on
our website. These documents commit us to
acting ethically in all aspects of our business,
and to maintaining the highest standards of
honesty and integrity. Political activities in
particular should be conducted legally,
ethically and transparently and all related
communication should be honest, factual
and accurate. Our policies apply to all
agencies and employees at all levels.
Many of our agencies are members of
professional organisations and abide by
their codes of conduct. Examples include
the UK Association of Professional Political
Consultants (APPC) and the European Public
Affairs Consultancies’ Association (EPACA).
WPP agencies comply with all applicable
laws and regulations governing the disclosure
of public affairs activities. In the United States,
this includes the Lobby Disclosure Act and
the Foreign Agent Registration Act, which
are designed to achieve transparency on
client representation and require lobbying
firms to register the names of clients on
whose behalf they contact legislators or
executive branch personnel. A number
of our agencies are listed on the EU
Transparency Register of lobbying activities.
Our agencies in the United States whose sole
or primary business is lobbying have
representatives of both major political
parties among senior management.
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WPP ANNUAL REPORT 2022
We will not undertake work that is intended
to mislead, and always seek to identify the
underlying client before taking on work.
In 2022, we introduced the Assignment
Acceptance Policy and Framework and the
Green Claims Guide to provide further
guidance to our leaders and people about
how to conduct additional due diligence in
relation to clients and any work we are asked
to undertake.
Our Group Chief Counsel has responsibility
for developing and implementing our
political activity policy and public reporting
procedures. Agency CEOs and CFOs in each
country or region are responsible for
implementing the Political Activities and
Engagement Policy at the local level.
Any third parties conducting political
activities on behalf of WPP or its agencies
must comply with the policy. Third parties
are required to complete the WPP mandatory
ethics training or equivalent within their
own organisation.
LOBBYING AND POLITICAL ADVOCACY
We occasionally directly contribute to the
debate on public policy issues relevant to
our business, people and wider stakeholders.
For example, we are part of the Race to Zero
campaign managed by the United Nations
Framework Convention on Climate Change.
Karen Blackett OBE, WPP’s UK President,
served as a non-executive director of the
Board of the UK’s Cabinet Office from 2019
to 2022.
We also support clients’ advocacy on a
wide range of issues including LGBTQ+
rights, through both pro bono work
(including The Reality Flag with the Human
Rights Campaign and NYC Says Gay in
partnership with the Mayor of New York City)
and paid work.
Our agencies contribute to public policy
debate in areas where they have expertise
and a special interest, such as privacy, data
protection and AI issues.
WPP agencies must implement clear
procedures for employing serving or former
politicians, including a six-month ‘cooling-off’
period for people joining WPP from public
office or the public sector.
POLITICAL CONTRIBUTIONS
WPP agencies are not permitted to make
direct cash donations. Other political
donations can only be made with the prior
written approval of a WPP Executive Director.
Donations must be reported to WPP’s legal
function before they are made, to confirm
they comply with this policy and to obtain
the necessary approvals.
POLITICAL ACTION COMMITTEES
In countries where it is consistent with
applicable law, individuals working at WPP
agencies may make personal voluntary
political contributions directly to candidates
for office.
BCW and FGS Global also maintain political
action committees (PACs), which accept
voluntary donations from their people to
support political candidates. In 2022, these
PACs made disbursements worth $118,912
(data from fec.gov).
MEMBERSHIP OF TRADE ASSOCIATIONS
WPP and our agencies are members of
industry groups, business associations and
other membership organisations with robust
governance processes. We actively support
trade associations’ initiatives and projects
that align with our values and priorities such
as the Global DEI Census, Ad Net Zero and
the Global Alliance for Responsible
Marketing.
WPP agencies must nominate a senior
manager to manage and oversee trade
association relationships.
At a WPP level, our memberships include:
30% Club, the American Benefits Council,
Business Disability Forum, Business in the
Community, CBI, Champions of Change
Coalition, China Britain Business Council,
Institute of Business Ethics, RE100, UN
Global Compact, The Valuable 500,
Women on Boards, and Partnership for
Global LGBTIQ+ Equality.
In our markets, our agencies are often
members of local advertising, PR, public
affairs and market research industry
associations, as well as national chambers
of commerce and business councils.
SUSTAINABILITY
STRATEGIC REPORT
SUPPLY NETWORK
WPP is committed to creating an inclusive,
sustainable, ethical and diverse network of
business-enabling suppliers.
The wide range of services we offer and
our organisational structure means we
have a complex and dynamic supply chain
ecosystem to manage. We work with more
than 68,000 parent companies across our
supply network.
Our suppliers fall into two main categories:
those providing goods and services
used to run our agencies – such as IT,
telecommunications, travel, facilities
management, people services and real
estate; and those used in client work –
such as advertising and marketing services,
production and media.
RISK ASSESSMENT
We continually assess supply chain risk based
on country, industry sector, categories of
goods and services and individual suppliers.
This is combined with a pre-engagement
supplier due diligence questionnaire covering
governance, compliance, sustainability,
human rights and labour standards.
SUPPLIER SELECTION
We have established due diligence
processes to help us select suppliers that
meet our responsible sourcing standards.
Contracted suppliers are required to sign
WPP’s Business Code of Conduct – Supplier
Version, confirming they will comply with
our standards or adequately demonstrate
to WPP that they have the equivalent
standards in place within their own business.
These standards include requirements
relating to labour practices (such as
anti-harassment and discrimination, and
health and safety), human rights (including
modern slavery issues such as child, forced
or bonded labour), social impacts (such as
anti-bribery and corruption) and other
sustainability issues.
Our Code of Conduct requires suppliers
to apply similar standards to companies
within their own supply chains, including
evidencing diversity and social responsibility
in their cultures, behaviours and attitudes.
WPP also includes a right-to-audit provision
in the supplier documentation and/or
standard terms and conditions of contract.
SUPPLIER DIVERSITY
We are committed to including Certified
Diverse Suppliers (CDS) in our purchasing
lifecycle, both internally and for the benefit
of our clients.
In 2022 we expanded our responsible
procurement team, refreshed our supplier
diversity programme which encourages
WPP and our agencies to buy from CDS,
and partnered with a third party to provide
improved data for reporting.
Through the Global Supplier Diversity
Alliance, with memberships in Australia,
the UK and the United States, we have
access to global directories of CDS, so we
can actively search and include them in our
RFPs and client tender responses. Through
the UK chapter we sponsor the UK’s first
integrated supply chain accelerator
programme to help minority-owned
businesses become supply-chain ready.
GroupM’s media inclusion initiative aims to
direct investment in, and create opportunities
for, diverse media companies and content
creators with an initial focus on Black-owned
media in the United States.
HUMAN RIGHTS
Respect for human rights is a fundamental
principle for WPP. In our business activities
we aim to prevent, identify and address
negative impacts on human rights and
we look for opportunities to promote and
support human rights, including children’s
rights, through our business activities
and in areas such as our pro bono work.
WPP agencies must comply with our Human
Rights Policy Statement which reflects
international standards and principles,
including the International Bill of Human
Rights, the UN 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 a member of the United Nations
Global Compact and report progress against
its ten principles annually. We are also a
committed signatory of the Women’s
Empowerment Principles, a guide for
businesses on how to empower women in
the workplace, marketplace and community.
Our most direct impact on human rights
is as a major employer. We recognise the
rights of our people, including those
relating to freedom of association and
collective bargaining, and we do not tolerate
harassment or any form of forced, compulsory
or child labour. Human rights are included in
the mandatory ethics training completed on
joining and then annually by all employees.
We work with clients to manage any human
rights risks from marketing campaigns, for
example by protecting children’s rights in
relation to marketing. We will not undertake
work that is intended to mislead on human
rights or any other issue.
MODERN SLAVERY
We do not tolerate any form of modern
slavery or human trafficking in any part of
our business or supply chain.
WPP recognises the prevalence of modern
slavery across all countries. We aim to
implement appropriate measures to mitigate
the risk of it occurring, either in our own
operations or those of our partners.
Our global Supplier Agreement includes a
specific clause relating to modern slavery
compliance. WPP reserves the right to
terminate its contract with any supplier
found to breach or fail to comply with any
legislation relating to modern slavery.
Read more at wpp.com/sustainability/
policies-and-resources
1 We define Certified Diverse Suppliers as minority-owned,
women-owned, veteran-owned, LGBTQ-owned, service
disabled veteran-owned, historically underutilised businesses
and small businesses
WPP ANNUAL REPORT 2022
83
STRATEGIC REPORT SUSTAINABILITY
DATA ETHICS, PRIVACY AND SECURITY
INFORMING OUR PEOPLE
Data and artificial intelligence present huge
opportunities for the creative and marketing
industry, from content creation to developing
code to reducing production time.
The WPP data and AI hub provides practical
resources to help stay ahead of new
developments. This year we launched tips
and principles for the metaverse and
generative AI.
As technology evolves, we need to be
aware of the potential risks and ensure it is
being used and applied appropriately and
responsibly, both in our own agencies
and on behalf of our clients.
We are developing skilled, knowledgeable
teams who are inspired about the potential
of data and AI and proud of the extraordinary
capabilities that WPP has to offer our clients.
The WPP Demystifying Data & AI Academy
is designed to help anyone across WPP
understand the latest trends and technologies
in data and AI, and develop the skills and
knowledge they need to navigate them.
Our new Generative AI training, launched in
February 2023, explores how the technology
can be used and introduces principles to
identify and manage the key legal, ethical
and privacy risks.
To help business leaders develop the
knowledge and skills to lead in the age
of AI, we launched an executive diploma
in Artificial Intelligence in Business at the
University of Oxford Saïd Business School.
Thirty students participated in the
inaugural class.
From ethics to culture, see WPP’s latest
thinking on how organisations can
effectively and responsibly use data
and AI at wpp.com/data-and-ai
SUPPORTING CLIENTS
To help clients understand how best to
harness the power of AI as a force for good,
we have developed a framework of six types
of deployment. These are:
1. Task automation: new technologies have
allowed us to carry out tasks better and
faster and replace specific tasks with
simple algorithms
2. Content Generation: also known as
‘Generative AI ’, this category involves the
automatic generation of images, videos,
text, code and voice
3. Human representation: using
technologies such as avatars, deepfakes
and natural language models to mimic the
behaviour of humans
4. Extracting complex insights: machine
learning and advanced analytics to find
correlations that humans could not
5. Human performance enhancement: using
technology as an extension of ourselves
6. Complex decision making: using AI to
make better decisions through expert
systems, optimisation or decision trees
By considering technologies in this way,
we can identify strengths, ethical concerns,
weaknesses, frictions and opportunities.
This can help us solve problems better and
build a framework for a safe and ethical
future for AI.
In February 2023, WPP hosted Stream
Metaverse, a new one-day lite Stream event
format bringing together clients, partners
and WPP specialists to discuss a range of
topics including the future of Web3, virtual
reality, augmented reality, cryptocurrency,
and inclusivity in the metaverse.
DEVELOPING FUTURE TALENT
Data and AI will power almost every industry
of the future, but the UK faces a skills
shortage. To help close this gap, WPP
launched the Creative Data School to teach
essential technical skills to more than 6,000
people aged 10-25 across the UK.
The programme aims to inspire the next
generation and build their confidence in
data and AI, while equipping them with skills
including coding with Python, applications
of machine learning, and using data to inform
decision-making.
Eligible participants will be invited to apply
for work experience and internships at WPP,
opening pathways to careers in data and AI
in the creative industry and beyond.
PRIVACY AND SECURITY
Through our expertise, governance, policies and
direct engagement, we demonstrate that we are
a trusted partner for our clients, suppliers and
associates.
– The WPP Risk Subcommittee is responsible
for reviewing and monitoring the Group’s
data ethics, privacy and security risk, as well
as its approach to regulatory and legal
compliance in relation to these
– Our Group Chief Privacy Officer leads our
work on privacy, supported by our Global
Data Protection Officer. Together, they
provide practical guidance and support
to our agencies, promote best practices and
ensure that privacy risks are well understood
– The WPP Data Privacy and Security Charter
sets out core principles for responsible data
management through our Data Code of
Conduct, our technology, privacy and social
media policies, and our security standards
(based on ISO 27001)
– Choreograph, our data company, epitomises
our data philosophy: that clients should own
their own data to minimise risk, meet
consumer privacy expectations and
future-proof their businesses
– Through our active engagement in industry
– Safer Data training, which includes content
on data protection, security and privacy,
must be completed by all new and current
employees, as well as consultants.
Throughout the year, agency and subject
matter-specific training is provided across
the Group, and in 2022 included a focus on
new data privacy regulations such as the
California Privacy Rights Act
– Our privacy teams have established direct
relationships with their client counterparts
to ensure alignment and engagement
bodies including the Advertising Association
in the UK and the 4As and Network
Advertising Initiative in the United States,
we are able to monitor and influence the
changing regulatory landscape
– Our annual Data Health Checker provides us
with insight into how data is used, stored and
transferred and helps to identify any parts of
the business that need further support on
data practices. In 2022, the average risk
score was 1.6 out of five (2021: 1.6), where five
is the maximum score possible and indicates
maximum risk
84
WPP ANNUAL REPORT 2022
SUSTAINABILITY
STRATEGIC REPORT
OUR APPROACH TO SUSTAINABILITY
EMBEDDING SUSTAINABILITY
IN OUR AGENCIES
WPP sets sustainability policy, with every
agency responsible for implementation.
The Board is responsible for the overall
long-term success of WPP and for setting
the Company’s purpose, values and
culture and strategic direction, including
on sustainability.
The Sustainability Committee supports
the Board in its oversight of corporate
responsibility, sustainability, environmental,
social and governance (ESG) and related
reputational matters. It reviews and
monitors implementation of the Company’s
sustainability strategy and reviews policy
statements on environmental and social
matters. The Committee meets a minimum
of four times a year (see pages 128 and 129).
The WPP Executive Committee sets the
sustainability strategy and oversees the
approach across agencies in its
implementation, ensuring consistent
execution and embedding of the Company’s
culture and values. Our Chief Sustainability
Officer – a new role created in 2022 – has
operational responsibility for sustainability.
We have a clear policy framework through
our Code of Business Conduct, Sustainability
Policy (updated in January 2022 and
reviewed annually by the Sustainability
Committee of the Board), Supplier Code of
Conduct, Data Privacy and Security Charter,
Human Rights Policy Statement and other
policies included in the WPP Policy Book.
In 2022, we put in place revised Assignment
Acceptance Policy and Framework that
subsidiaries need to follow when taking on
new business (see page 77). Our agencies are
required to comply with our Sustainability
Policy, and report performance to WPP on
an annual basis.
Our sustainability team works to ensure
consistent implementation of our standards.
In 2022, this included a programme of
training covering ESG reporting and controls,
our Green Claims Guide, and capability
building across central functions and our
agencies relating to our net zero strategy.
STAKEHOLDER ENGAGEMENT
Dialogue with our stakeholders, including
our people, clients and shareholders,
provides valuable feedback and insight into
sustainability risks and opportunities, for
our Company and our clients.
Most stakeholder engagement takes place in
the course of doing business. We work with
clients on sustainability issues (see page 77).
Information on employee engagement,
including a global sustainability-focused
townhall hosted by CEO Mark Read, is on
page 71. During the year, WPP and agencies
including GroupM, H+K Strategies, Landor &
Fitch and Ogilvy Consulting developed
training and tools to equip our people with
knowledge on the science of climate change
and give them practical tools with which to
respond. This remains a priority in 2023.
INVESTOR ENGAGEMENT
We believe the more we behave in line
with our purpose, the better our business
will perform, thereby maximising
shareholder returns.
We regularly engage with investors on ESG
topics, and in 2022 we engaged with rating
agencies and benchmarking organisations
on sustainability, including: Bloomberg
Gender-Equality Index; Ecovadis; Ethibel;
Equileap; Vigeo Eiris; FTSE Russell; ISS;
Moody’s; MSCI Research Inc.; Tortoise
Responsibility 100; Sedex; and Sustainalytics.
We are included in the FTSE4Good Index
and participate in the CDP climate change
benchmark, receiving a rating of A- in 2022.
OUR MATERIALITY PROCESS
We use a materiality process to ensure our
sustainability strategy, investments and
reporting focus on the issues of greatest
importance and relevance to our business
and our stakeholders. Our most recent
assessment was completed in January 2023
(see our 2022 Sustainability Report).
UNITED NATIONS SUSTAINABLE
DEVELOPMENT GOALS (SDGS)
We support the UN SDGs as a framework
for government agencies, civil society, the
private sector and citizens to work together
to create a more sustainable future. We have
analysed the 17 Global Goals and the 169
targets that sit behind them to identify those
which are most relevant for our business
(see our 2022 Sustainability Report).
ABOUT OUR REPORTING
Sustainability data included in this Annual
Report is for the calendar year 2022 and
covers all subsidiaries of the Company. The
selected ESG performance metrics marked
with the symbol throughout this report
have been subject to independent limited
assurance procedures by
PricewaterhouseCoopers LLP (PwC) for
the year ending 31 December 2022 in
accordance with International Standard on
Assurance Engagements 3000 (revised) and
in respect of greenhouse gas emissions
data, International Standard on Assurance
Engagements 3410, issued by the International
Auditing and Assurance Standards Board.
A copy of PwC’s report and our methodology
is available at wpp.com/
sustainabilityreport2022.
The majority of our data is collected locally,
and a common challenge is reconciling
inconsistencies in calculations and data
capture. This prevented us from obtaining
independent limited assurance over certain
metrics including waste, and health and
safety data. We aim to include these in
scope for assurance in the future.
For further information on data quality,
see page 75
NON-FINANCIAL
INFORMATION STATEMENT
This section provides information required
by regulation in relation to:
– Environmental matters (pages 74 and 75)
and TCFD statement (pages 220 to 226)
– Our people (pages 36 and 37, and 70 to 72)
– Social matters (page 79)
– Human rights (page 83)
– Corruption and bribery (page 88)
In addition, other related information can be
found as follows:
– Business model (from page 14)
– Principal risks and how they are managed
(from page 91)
– Non-financial key performance indicators
(from page 52)
WPP ANNUAL REPORT 2022
85
STRATEGIC REPORT
ASSESSING AND
MANAGING OUR RISKS
The success of our strategic objectives
as discussed in this report depends to a
significant extent on how we identify and
address the current and emerging risks and
uncertainties we face as a business. The
Board, assisted by the Audit Committee,
has oversight and responsibility for our
approach to risk management which is
structured through our three lines of defence
model and driven by our risk governance
framework, business integrity programme,
culture based upon the principles set out
in our Code of Business Conduct and our
internal control framework.
The Board has reviewed the design and
effectiveness of this system during the year
and up to the date of this report, and carried
out a robust assessment of the principal risks
that could impact our business.
The system of controls described below
is designed to manage and mitigate, but
may not eliminate, the risk of failure to
achieve our strategic objectives and is not
an absolute assurance against material
misstatement or loss.
RISK GOVERNANCE FRAMEWORK
A key element of our risk governance
framework is our Risk Committees. Each
network has a global Risk Committee chaired
by the CEO and with key senior managers
participating to ensure that leadership is
proactively identifying (including through
risk assessments and horizon scanning) and
understanding the current, new, evolving
and emerging risks across businesses and
the remediation steps required from time to
time in certain markets. We also have a WPP
Risk Committee which has oversight of all
network Risk Committees and itself reports
into the Audit Committee. We also have two
sub-committees to focus on the detail of
risks relating to data privacy, security and
ethics and to controls at both WPP and
network levels.
The agenda of the Risk Committees is to
review, monitor and advise on: compliance
with laws, regulations, internal procedures,
and industry standards, including anti-bribery
and corruption matters; the implementation
of our compliance framework (including
setting clear standards and reporting lines
for the accurate and timely monitoring
of exposures and certain risk types of
importance); compliance policies and
practices; and risks that present themselves
throughout each network. This agenda is
framed by our business integrity programme
and internal control environment.
In order to carry out their duties
comprehensively, each Risk Committee has
secure access to an increasing central pool
of data from, or with the potential to affect,
their network. This data is crucial to their
ability to recognise and monitor a full risk
and compliance picture and the impact of
actions taken as a result; this includes
internal audit reports, internal controls over
financial reporting (ICFR) results, general
computing controls results, corroborated
information from whistleblowers, findings
from investigations, responses from our
annual risk mapping process and the results
of our annual assessment of business
integrity risks.
WPP’S RISK GOVERNANCE FRAMEWORK
BUSINESS INTEGRITY PROGRAMME
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INTERNAL AUDIT
FINDINGS AND SOX
TEST RESULTS
KEY RISK
INDICATOR (KRI)
DATA FEEDS
CERTIFICATIONS
AND
DISCLOSURES
WHISTLEBLOWERS
AND
INVESTIGATIONS
ENTERPRISE
RISK MAPS
BUSINESS
INTEGRITY RISK
ASSESSMENT
INTERNAL CONTROLS
86
WPP ANNUAL REPORT 2022
BUSINESS INTEGRITY RISK ASSESSMENTENTERPRISE RISK MAPSCERTIFICATIONS AND DISCLOSURESKEY RISK INDICATOR (KRI) DATA FEEDSINTERNAL AUDIT FINDINGS AND SOX TEST RESULTSWPP’S RISK GOVERNANCE FRAMEWORKBUSINESS INTEGRITY PROGRAMMEINTERNAL CONTROLSWHISTLEBLOWERS AND INVESTIGATIONS
ASSESSING AND MANAGING OUR RISKS
STRATEGIC REPORT
BUSINESS INTEGRITY PROGRAMME
Our business integrity programme is central
to ensuring that the policies, procedures
and control environment set by the Board
are understood and adhered to across all
geographies and markets. It is produced by
mapping resources, systems and processes
against WPP’s risk appetite (which the
business integrity team, sitting within WPP’s
legal function, helps the Board and WPP Risk
Committee to set), governance requirements
and regulator expectations and then crafting
actions from the results for both the business
integrity team and the Risk Committees.
Actions for the business integrity team focus
on tackling root causes of risk and include:
– In respect of resources, championing and
enhancing messages and examples from
global, regional and local leadership with
communications, training sessions,
townhalls and practical guidance,
knowhow and resources for our people
and providing ‘on the ground’ support for
day-to-day queries from our networks
– In respect of systems, advising on
the implementation of WPP’s policies,
procedures and controls (including around
internal reporting and approvals) and
providing a compliance lens for the design
and structure of our enterprise resource
planning (ERP) environment (including
promoting the leverage of its functionality
to restrict access to key transactions to
appropriate parties and to ensure adequate
segregation of duties and assets)
– In terms of processes, conducting an
annual assessment of business integrity
risks (which is constantly evolved in terms
of which risks are within scope, the nature
of assessment and the reporting and
recommendations that emanate from the
work), monitoring dynamic data feeds
(including our financials, internal audit
findings and ICFR results), proactive
management of self-certifications and
disclosures from our people, reviewing
and investigating whistleblowing reports
and tracking remediation efforts
WPP’S BUSINESS INTEGRITY PROGRAMME
OUR RISK APPETITE
GOVERNANCE REQUIREMENTS
REGULATOR EXPECTATIONS
RESOURCES
– Our people – everyone is accountable
– Leadership
– Communications, training and guidance
– ‘On the ground’ support
SYSTEMS
– ERP environment
– Policies and controls
– Financial reporting
– Internal reporting and approvals
PROCESSES
– Business integrity risk assessment
– Identifying and monitoring dynamic
data feeds
– Whistleblowing and investigations
– Internal and external due diligence
– Certifications and disclosures
– Remediation – and focus on root causes
– Disciplinary measures including impact
on compensation
– Enterprise risk maps
POLICIES, PROCEDURES AND CULTURE
The quality and competence of our people,
their integrity, ethics and behaviour, and the
culture embedded within our businesses are
all vital to our system of internal control, which
is maintained and reviewed in accordance
with the UK Corporate Governance Code,
FRC guidance on risk management and
internal controls, and the COSO framework.
In order to help our people make the right
decisions, we provide a number of tools.
The baseline reference of our policies and
procedures are set out in our Policy Book,
internal control bulletins, business integrity
booklets and accounting guidelines. To help
our people understand the ethical and
business objectives set out in the WPP Policy
Book, WPP has a mandatory online training
programme that all our people (including
freelancers working for more than four
weeks) are required to complete on an
annual basis. The programme comprises
five modules: How We Behave, Business
Integrity, Safer Data, Sustainability and
Belonging. In addition, WPP’s business
integrity team organises in-person and
video call training sessions throughout the
year on topics thought necessary or relevant
such as Ethics and Integrity, Respect in the
Workplace and The ABCs of ABC (anti-bribery
and corruption). This top-up programme is
designed and scheduled in response to data
collected and reviewed and scheduled by
WPP’s business integrity team, including
from concerns raised and corroborated
through investigations and our annual
assessment of business integrity risks.
It is underpinned with daily support on the
ground from our regional compliance and
ethics directors and managers.
The core of our Policy Book is our Code
of Business Conduct, which is regularly
reviewed by the Board and sets out the
principal obligations of all of our people.
As a company and as individuals we have
a collective responsibility to behave in the
right way, to live up to our values and to
conduct our business with integrity. Our
Code outlines the commitments we make
to each other, our business partners, and
others with a stake in what we do; equally
therefore it is mirrored in our Supplier Code
of Conduct, which all vendors are required
to sign up to before being onboarded.
WPP ANNUAL REPORT 2022
87
WPP’S BUSINESS INTEGRITY PROGRAMMEOUR RISK APPETITEGOVERNANCE REQUIREMENTSREGULATOR EXPECTATIONS
STRATEGIC REPORT ASSESSING AND MANAGING OUR RISKS
The principles of the Code are embedded in
our training courses and our senior managers
are required to certify compliance with the
Code on an annual basis. In 2023, WPP’s
business integrity team is working to fully
digitise the certification and disclosure
process around Code compliance, with a
particular focus on conflicts of interest and
related-party transactions.
Our Anti-Bribery and Corruption Policy
prohibits any form of bribery across WPP
and is supported by the Advisor Payment
Policy which restricts the use of advisors
and details the due diligence that must be
undertaken and approvals needed in the
limited cases where advisors may be used.
Our Gifts and Hospitality Policy sets limits
on values that may be given or received,
supported in each company by a gift
register. In 2023, WPP’s business integrity
team is undergoing a review of the
implementation of this policy and providing
recommendations including around the
policy itself, controls, training and related
practicalities to the Audit Committee.
As noted above, our Code of Conduct for
suppliers replicates all of these obligations
in our supply chain. Our Policy Book also
includes required practices in many
operational, tax, legal and human
resource areas.
The application of our policies and
procedures is monitored within each
company and by the internal audit, legal
(in particular, the business integrity team),
and risk and controls functions.
Breaches are investigated by our business
integrity team sitting within WPP’s legal
function and, where appropriate, external
advisors.
WPP’s business integrity team has a
mandate to make recommendations
to realign and support WPP’s networks
where required to manage and reduce risk.
Recommended remediation can include
disciplinary action, changes to systems,
controls, approvals or functions, monitoring
and training sessions. This approach is
formalised through WPP’s Whistleblowing
Protocol and Investigations Protocol.
WPP’s performance rewards continue to
support the risk management and internal
control systems, reinforced by the WPP Risk
Committee and the Compensation
Committee.
WHISTLEBLOWING
WPP’s Code of Business Conduct sets
out our responsibilities to our people,
partners and shareholders to act ethically
and legally. We want to encourage a culture
of integrity and transparency where our
people make the right decisions
automatically and instinctively.
Part of this culture is making sure that our
people have confidence and know how
to speak up and raise concerns with their
managers or supporting teams, through
their employee forums, WPP’s business
integrity team or by calling our Right to
Speak hotline (which is confidential and
allows for anonymity) if they experience
or hear about behaviour which is at odds
with the principles stated in our Code.
Every report received from a whistleblower
is investigated and reported into the Audit
Committee by WPP’s business integrity
function. In general, there has been a steady
increase in the number of reports received
over the past few years, though they fell
year-on-year in 2022. In 2020 and 2021 there
were particular spikes in numbers reflecting
concerns raised and connected with Covid-19
and lockdowns. In 2022, a total of 372 reports
were received from whistleblowers (2021: 494;
2020: 418; 2019: 361), 328 of which were through
the Right to Speak hotline. The most commonly
raised concerns were about respect in the
workplace and protection of WPP’s assets.
RISK IMPACT FROM WHISTLEBLOWER
REPORTS 2022
All whistleblower reports received by the
Group Chief Counsel and General Counsel,
Corporate Risk, which includes all Right
to Speak reports, are handled in line with
WPP’s Whistleblowing and Investigations
Protocols and logged, investigated and
tracked through to a conclusion including
any remediation or follow-up actions
that might be required. Recommended
remediation can include disciplinary action,
changes to systems, controls and processes
or wider review and monitoring for a
particular time period.
Reports are also analysed for risk impact
and root causes. Learnings generated
from this analysis are converted into
recommendations including for training
sessions and practical resources by WPP’s
business integrity team and implemented
together with the support and input of the
Risk Committees. WPP’s business integrity
team also merges these learnings with other
TOTAL NUMBER OF REPORTS
FROM WHISTLEBLOWERS
RISK IMPACT FROM WHISTLEBLOWER REPORTS
%
494
People
418
361
372
Legal and Regulatory
7.1%
82.0%
Financial
Clients
Operational
Data Privacy,
Security and Ethics
3.7%
2.8%
2.7%
1.7%
2019
2020
2021
2022
88
WPP ANNUAL REPORT 2022
2022372
ASSESSING AND MANAGING OUR RISKS
STRATEGIC REPORT
In addition, our companies must maintain
and update documentation on their internal
controls and processes. This documentation
incorporates an analysis of business risks,
detailed control activities and monitoring,
together with IT and financial controls and
controls over security of data and the
provision of timely and reliable information
to management.
The information collated feeds up to each
network’s Risk Committee which uses it to
assess and monitor current risk exposures,
identify new risk types and set future risk
strategy as well as to compile it into
reporting and insights for the WPP Risk
Committee and executive management.
2. EXECUTIVE MANAGEMENT REVIEWS
The network reviews are formally
communicated to executive management
in monthly reports and quarterly review
meetings and, in turn, to the Board. At
each Board meeting, the management team
presents a business review of each of the
operations, including an assessment of the
risks in each business and details of any
change in the risk profile since the last
Board meeting.
The business review includes: the possibility
of winning or losing major business;
succession and the addition or loss of a key
employee; regulatory changes; sustainability,
including risks relating to marketing ethics,
privacy, diversity and employment; political
instability; and changes in accounting or
corporate governance practice.
To add to this, the WPP Risk Committee,
supported by the business integrity team,
has evolved our enterprise-wide risk
management process through the design
and build of a risk analytics platform. This sits
over data feeds and alongside refreshed risk
appetite statements and tolerances, and
incorporates our internal risk management
framework including around policies,
controls and reporting (whether through
disclosures, monitoring, audit work,
investigation work or internal reporting
processes). The resulting dashboard analysis
allows risks to be monitored and tracked
across all businesses and markets and will
feed into the regular risk discussions of
executive management, the Audit
Committee and the Board.
In addition, the Risk and Controls Group
remains focused on driving continuous
improvement in WPP’s internal control
environment, looking at the design and
implementation of internal financial controls
as well as controls that support WPP’s risk
framework and transformation programmes.
3. INTERNAL AUDIT AND AUDIT
COMMITTEE OVERSIGHT
The internal audit function, with Audit
Committee oversight and external resource
as required, provides an independent review
of risk management and internal control via
internal audits and management of the
testing programme for ICFR.
data feeds (both internal such as revenue
source and breakdown or margin patterns,
and external such as Transparency
International’s Corruption Perception
Index) to identify and focus on potential
risk concerns.
The nature of each report, action taken and
outcome is reported to the Audit Committee
and the approach and process are reviewed
by the auditors. WPP is committed to
providing a safe and confidential way for
people with genuine concerns to raise them,
and to do so without fear of reprisals. WPP
does not tolerate any retaliatory behaviour
against individuals reporting concerns
and is equally committed to preserving
the anonymity of an individual who makes
a report and does not wish to have their
identity revealed.
The consequences of misconduct or
retaliation range from individual performance
management, training for a business or an
office and one-on-one training or coaching
for an individual through to staff relocation
and staff dismissal.
RISK MANAGEMENT
We use a ‘three lines of defence’ model in
relation to risk management.
1. COMPANY REVIEWS
Each network undertakes monthly and
quarterly procedures and day-to-day
management activities to review its
operations and business risks, supported
by our policies, training and guidance on
required internal controls over financial
reporting and monitoring controls and
reviews within its network.
LINES OF DEFENCE
FIRST LINE OF DEFENCE
Functions that own and manage risk
SECOND LINE OF DEFENCE
Functions that oversee or specialise in
risk management and business integrity
THIRD LINE OF DEFENCE
Functions that provide independent
assurance. Above all, internal audit
WPP ANNUAL REPORT 2022
89
GOING CONCERN
The Group’s business activities, together
with the factors likely to affect its future
development, performance and position
are set out in the Financial Review on pages
61-65 and Principal Risks and Uncertainties
on pages 91-97. The financial position of the
Group, its cash flows, liquidity position and
borrowing facilities are described in the
financial statements and the notes to the
financial statements include: the Company’s
objectives, policies and processes for
managing its capital; its financial risk
management objectives; details of its financial
instruments and hedging activities; and its
exposures to credit risk and liquidity risk.
The Company’s forecasts and projections,
taking account of (i) reasonably possible
declines in revenue less pass-through
costs and (ii) remote declines in revenue less
pass-through costs for stress-testing purposes
compared to 2022, considering the Group’s
bank covenant and liquidity headroom
taking into account the suspension of
share buybacks, dividends and acquisitions,
and cost mitigation actions which are and
which could be implemented, show that the
Company and the Group would be able to
operate with appropriate liquidity and within
its banking covenants and be able to meet
its liabilities as they fall due. The ongoing
impact of the Russian invasion of Ukraine has
been considered. The Company modelled
a range of revenue less pass-through cost
declines up to 28% compared with the year
ended 31 December 2022. The Directors
therefore have a reasonable expectation that
the Company and the Group have adequate
resources to continue in operational existence
for the foreseeable future. Thus they
continue to adopt the going concern basis
of accounting in preparing the financial
statements.
STRATEGIC REPORT ASSESSING AND MANAGING OUR RISKS
VIABILITY STATEMENT
RISK ASSESSMENT
ASSESSMENT OF PROSPECTS
An understanding of the Group’s business
model and strategy detailed on pages 14 and
28 is central to understanding its prospects.
– The changes taking place in our industry
– The long-term impact of technological
disruption
– The ongoing simplification of the Group
structure and improving integrated service
offering to clients
The Directors assess the Group’s prospects
on a regular basis through the financial
reporting and planning process, agency
reviews at each Board meeting, quarterly
reviews of the agencies by the executive
team and ongoing reviews of the Group’s
profitability, cash flows and funding
requirements. The Board reviews the
longer-term risks and opportunities for the
Group discussed in the Strategic Report
and considered these in greater depth at
a Board strategy session in 2022, which
covered changes in the macro-economic
environment, the potential impact of data,
commerce and AI upon clients’ marketing
activities, technological disruption and the
Group’s working culture, the impact of
climate change and increased regulation.
The Board has also considered the ongoing
economic and geopolitical impacts of the
Russian invasion of Ukraine.
VIABILITY STATEMENT
The Directors’ assessment of the Group’s
viability has been made over a three-year
period. This period has been chosen as it
aligns with the period in which we believe
our principal risks tend to develop, and is in
line with the structure of long-term
management incentives and the outputs
from the long-range business planning cycle.
The Directors’ assessment has been made
with reference to:
– The Company’s principal risks and how
these are managed and the impact of a
principal risk materialising
– The impact on the Group of epidemics
or pandemics including restrictions on
businesses, social activities and travel,
and the resulting impact on the economies
in which the Group operates, our clients
and demand for our services
– The ongoing reviews, short-term notice
periods or assignment nature of many
of the client engagements
– The volatility of global economic conditions
as a consequence of the ongoing
economic and geopolitical impacts of the
Russian invasion of Ukraine
– The Group’s current financial position,
prospects and strategy
– The ongoing transformation programme
updated in this report
In testing the viability of the Company,
we have undertaken a robust scenario
assessment of the principal risks which
could threaten the viability or existence
of the Company. The ongoing impact of
the Russian invasion of Ukraine has been
considered. In the scenario modelling of the
principal risks, we have stress-tested our
forecast cash flows to reflect the potential
impact of one or more of the Group’s principal
risks occurring and leading to client loss, loss
of reputation, contract breach, our inability
to win new business, and the impact of
revenue less pass-through costs decline.
The Company’s forecasts and projections
took account of (i) reasonably possible
declines in revenue less pass-through costs;
and (ii) remote declines in revenue less
pass-through costs for stress-testing
purposes; and considered the Group’s bank
covenants and liquidity headroom including
the suspension of share buybacks, dividends
and acquisitions.
The Company modelled a range of revenue
less pass-through cost declines up to a
decline of 28% compared with the year
ended 31 December 2022, followed by a
small rebound in growth for 2024 (1.9%
above plan) and at previously expected
levels from 2025 to 2026. In the most
extreme scenarios tested, the Directors have
considered the further actions that could be
taken to mitigate negative cash flow impact
and ensure additional liquidity, including
cost mitigations of 70% of the decline in net
sales and the suspension of share buybacks
and dividends. The Directors have assumed
that the Company will be able to refinance
existing bonds and, as a result, the Company
will continue to operate in accordance with
its bank covenants. However, the long-term
viability of the Company could be impacted
by other as yet unforeseen risks and the
mitigating actions that have been put in
place in respect of the principal risks could
turn out to be less effective than intended.
Having assessed the current position of the
Company, its prospects and principal risks
and taking into account the assumptions
above, the Board has determined that it has
a reasonable expectation that the Company
will be able to continue in operation and
meet its liabilities as they fall due over a
period of three years from 1 January 2023.
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PRINCIPAL RISKS AND
UNCERTAINTIES
KEY
Increased risk
No change from last year
Reduced risk
The Board has carried out a robust assessment of the principal risks and uncertainties affecting the Group and the
markets we operate in and strategic decisions taken by the Board as at 31 December 2022 and up to the date of this
report – including any adverse effects of the pandemic and the geopolitical situation following the Russian invasion
of Ukraine – which are described in the table on the following pages.
PRINCIPAL RISK
POTENTIAL IMPACT
HOW IT IS MANAGED AND REFLECTED
IN OUR STRATEGIC PRIORITIES
ECONOMIC RISK
Adverse economic conditions,
including those caused by the
pandemic, the conflict in Ukraine,
severe and sustained inflation in key
markets where we operate, supply
chain issues affecting the distribution
of our clients’ products and/or
disruption in credit markets, pose
a risk our clients may reduce,
suspend or cancel spend with us
or be unable to satisfy obligations.
GEOPOLITICAL RISK
Growing geopolitical tension and
conflicts continue to have a
destabilising effect in our markets
and across geographical regions.
This rise in geopolitical activity
continues to have an adverse
effect upon the economic
outlook, the general erosion of
trust and an increasing trend of
national ideology and regional
convergence over global
cooperation and integration.
Such factors and economic
conditions may be reflected in our
clients’ confidence in making
longer-term investments and
commitments in marketing spend.
PANDEMIC
The impact of a pandemic on our
business will depend on numerous
factors that we are not able to
accurately predict, including the
duration and scope of a pandemic,
any existing or new variants,
government actions to mitigate
the effects of a pandemic and the
continuing and long-term impact
of a pandemic on our clients’
spending plans.
Economic conditions, including inflation and
increasing interest rates, among others, have a direct
impact on our business, results of operations and
financial position.
In the past, clients have responded to weak
economic and financial conditions by reducing or
shifting their marketing budgets which are easier
to reduce in the short term than their other
operating expenses.
Our account teams work proactively with our clients to
understand the challenges they are facing, determine
general trends in marketing spend and develop plans in
advance to help us prepare, redeploy resources and
manage costs accordingly.
Our client portfolio is diverse, consisting of organisations
operating in different industry sectors and across a broad
geographical spread which further helps mitigate the
impact of any specific challenges individual clients or
markets might be facing.
Actual or threatened geopolitical tension and
conflicts lead to greater uncertainty, economic
instability and a general lack of confidence for many
of our clients who are inclined to scale back, delay or
cancel their marketing plans and budgets.
We work closely with our in-country teams, third-party
advisors, clients and other agencies in monitoring the level
and nature of geopolitical issues, events and developments
across all markets and regions.
Our primary focus is the safety and security of our
people, and for extreme events or periods of disruption
we have developed a series of crisis and response plans
with clear lines of escalation to the Board and Executive
Committee that focuses upon the wellbeing of our people
and their families.
We have detailed operational and financial plans,
developed through the consideration of a range of
potential scenarios and outcomes that are continuously
monitored and, if required, used to make interventions and
support decision making over our operations, investments
and advice to clients.
A pandemic and any new variants and the measures
to contain its spread may have an adverse effect on
our business, revenues, results of operations and
financial condition and prospects.
A strong balance sheet, supported further by action to
maintain liquidity including, if needed, the suspension of
share buybacks, dividends and acquisitions, cost reduction
and cash conservation measures, savings on property and
IT capex. Constant monitoring of working capital position.
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PRINCIPAL RISK
POTENTIAL IMPACT
HOW IT IS MANAGED AND REFLECTED
IN OUR STRATEGIC PRIORITIES
STRATEGIC PLAN
The failure to successfully
complete the strategic plan
updated in December 2020 to
simplify our structure, continue
to introduce market-leading
products and services, identify
cost savings and successfully
integrate acquisitions, may have
a material adverse effect on the
Group’s market share and its
business revenues, results of
operations, financial condition
or prospects.
IT TRANSFORMATION
We are undertaking a series of IT
transformation programmes to
support the Group’s strategic plan.
The programme has been devised
so that it prioritises the most critical
changes necessary to support
the overall strategic plan whilst
maintaining the operational
performance and security of
core systems.
The Group is reliant on third parties
for the performance of a significant
portion of our worldwide
information technology and
operations functions.
A failure to provide these functions
could have an adverse effect on our
business.
CLIENT LOSS
We compete for clients in a highly
competitive industry which has
been evolving and undergoing
structural change.
Client net loss to competitors
or as a consequence of client
consolidation, insolvency or a
reduction in marketing budgets
due to a geopolitical change or
shift in client spending would have
a material adverse effect on our
market share, business, revenues,
results of operations, financial
condition and prospects.
A failure or delay in implementing or realising the
benefits from the transformation plan and/or
returning the business to sustained growth may have
a material adverse effect on our market share and our
business, revenues, results of operations, financial
condition or prospects.
Any failure or delay in implementing the IT
transformation programmes may have a material
adverse effect upon the overall strategic plan and
the realisation of key targeted benefits and savings.
Disruption and unavailability of critical system
availability may lead to disruption in our operations
and client service delivery.
Board oversight of the implementation of the strategic
plan and regular briefings on the Group’s response to the
pandemic and the economic and geopolitical consequences
of the invasion of Ukraine by Russia.
The Executive Committee regularly reviews progress
against the strategic plan and actions required to deliver
against the plan and convenes regularly to discuss the
Group’s response to and implementation of the measures
highlighted above to mitigate the impact of the pandemic
and the economic and geopolitical consequences of the
invasion of Ukraine by Russia on the Group’s operations,
people, clients and financial condition.
The focus on managing cost and changes in ways of
working have accelerated aspects of the transformation
as we move faster towards a simplified company structure
and enhanced use of technology by our people as a
consequence of adapting to remote working.
The Board and management team provides oversight and
governance of the most important change transformation
initiatives the business is pursuing.
Detailed plans have been prepared for each major
transformation initiative and overall progress, challenges
and risks to the initiative are monitored as part of our
project management processes and discussed in dedicated
steering committees who also agree upon any corrective
action that may be required.
Progress reports are also completed as part of regular
briefings that the Board receives on the overall
implementation of the strategic plan.
The competitive landscape in our industry
is constantly evolving and the role of more
traditional services and operators in our sector who
have not successfully diversified is being challenged.
Competitors include multinational advertising and
marketing communication groups, marketing
services companies, database marketing information
and measurement and professional services and
consultants and consulting internet companies.
Client contracts can generally be terminated on
90 days’ notice or are on an assignment basis and
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 if we fail to react quickly enough
to changes in the market and to evolve our structure,
and by loss of reputation, and may be limited by
clients’ policies on conflicts of interest.
The transformation plan updated in December 2020
places emphasis on providing faster, more agile and more
effectively integrated solutions that are data and technology
led for our clients as part of a continuous improvement of
our creative capability and reputation of our businesses.
The plan is also delivering a simplification of our
organisational structure by reducing the number of legal
entities in the Group, the disposal of non-core minority
holdings and more collaborative working through the
launch of further campus co-locations including in Brazil
and Canada.
The Board is focused on the importance of a positive and
inclusive culture across our business to attract and retain
talent and clients. Work continues on diversity and inclusion
across the Group including focus from the work of the WPP
Global Inclusion Council.
Continuous improvement of our creative capability and
reputation of our businesses. The development and
implementation of senior leadership incentives to align
more closely with our strategy and performance.
Business review at every Board, management and Executive
Committee meeting to identify client loss. Monthly updates
to the management team on the status of the Group’s major
clients and upcoming pitches for potential new clients.
Continuous engagement with our clients and suppliers
through this period of uncertainty and reduction in
economic activity.
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HOW IT IS MANAGED AND REFLECTED
IN OUR STRATEGIC PRIORITIES
CLIENT CONCENTRATION
We receive a significant portion of
our revenues from a limited number
of large clients and the net loss of
one or more of these clients could
have a material adverse effect on
our prospects, business, financial
condition and results of operations.
REPUTATION
Increased reputational risk
associated with working on
client briefs perceived to be
environmentally detrimental
and/or misrepresenting
environmental claims.
A relatively small number of clients contribute a
significant percentage of our consolidated revenues.
Our ten largest clients accounted for 18% of revenue
less pass-through costs in the year ended 31
December 2022.
Clients can reduce their marketing spend, terminate
contracts or cancel projects on short notice. The
loss of one or more of our largest clients, if not
replaced by new accounts or an increase in business
from existing clients, would adversely affect our
financial condition.
As consumer consciousness around climate
change rises, our sector is seeing increased scrutiny
of its role in driving consumption. Our clients seek
expert partners who can give recommendations that
take into account stakeholder concerns around
climate change.
Additionally, WPP serves some clients whose
business models are under increased scrutiny,
for example, energy companies or associated
industry groups. This creates both a reputational and
related financial risk for WPP if we are not rigorous in
our content standards as we grow our sustainability-
related services.
Increased flexibility in the cost structure (including
incentives, consultants and freelancers).
Business review at every Board meeting and regular
engagement at executive level with our clients.
A monthly ‘new and existing business’ tracker is reviewed
by the Executive Committee on a monthly basis with
regular updates provided to the Board.
Our climate crisis training seeks to ensure that our people
recognise the importance of our sector’s role in addressing
the climate crisis. It is part of a broader sustainability
training programme being run in multiple markets with
localised content in key regions.
We have developed internal tools to help our people
identify environmentally harmful briefs. These tools embed
climate-related issues within existing content review
procedures across the organisation. The misrepresentation
of environmental issues is governed by our Code of
Conduct. We also ensure our policies reduce the risk that
any client brief undermines the implementation of the Paris
Agreement. In 2022, we introduced the revised Assignment
Acceptance Policy and Framework and the Green Claims
Guide to provide further guidance about how to conduct
additional due diligence in relation to clients and any work
we are asked to undertake.
PEOPLE, CULTURE AND SUCCESSION
Our performance could be
adversely affected if we do not
react quickly enough to changes
in our market and fail to attract,
develop and retain key creative,
commercial, technology and
management talent, or are unable
to retain and incentivise key and
diverse talent, or are unable to
adapt to new ways of working by
balancing home and office working.
We are highly dependent on the talent, creative
abilities and technical skills of our people as well
as their relationships with clients.
Our 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.
We are vulnerable to the loss of people to
competitors (traditional and emerging) and
clients, leading to disruption to the business.
We are working across the businesses to embed
collaboration and investing in training and development
to retain and attract talented people. The investment in
co-located campus properties is increasing the co-
operation across our companies and provides extremely
attractive and motivating working environments.
Focus on the mental health of our people by providing
access to wellbeing resources, the establishment of
support networks, funded events, discussion forums and
additional time off.
All In survey completed by two-thirds of our people in 2022,
providing an opportunity for the Board, Executive
Committee and senior leaders across the business to
understand the general sentiment, views, opinions and
concerns of employees.
Findings from the survey highlighted general and local
views on cultural, wellbeing and other matters, which have
formed the basis of people change projects and further
plans for remediation.
Succession planning for the Chief Executive Officer, the
Chief Financial Officer 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 is identified
in emergency and planned scenarios.
The Compensation Committee provides oversight for the
Group’s incentive plans and compensation.
Our real estate teams work closely with people teams
across the business to consider how space is being utilised
to support collaboration and innovation.
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PRINCIPAL RISK
POTENTIAL IMPACT
CYBER AND INFORMATION SECURITY
The Group has in the past and
may in the future experience a
cyber attack that leads to harm
or disruption to our operations,
systems or services.
Such an attack may also affect
suppliers and partners through the
unauthorised access, manipulation,
corruption or the destruction
of data.
We may be subject to investigative or enforcement
action or legal claims or incur fines, damages or
costs and client loss if we fail to adequately
protect data.
A system breakdown or intrusion could have a
material adverse effect on our business, revenues,
results of operations, financial condition or prospects
and have an impact on long-term reputation and lead
to client loss.
The imposition of sanctions following the ongoing
conflict in Ukraine has triggered an increase in cyber
attacks generally.
HOW IT IS MANAGED AND REFLECTED
IN OUR STRATEGIC PRIORITIES
We monitor and log our network and systems and keep
raising our people’s security awareness through our WPP
Safer Data training and mock phishing attacks.
Heightened focus on monitoring our network and systems
and raising awareness of the potential for phishing and
other cyber attacks during the period of remote working
and the geopolitical situation and an increased focus on
our control environment.
CREDIT RISK
We are subject to credit risk
through the default of a client or
other counterparty.
Challenging economic conditions,
heightened geopolitical issues,
shocks to consumer confidence,
disruption in credit markets and
challenges in the supply chain
disrupting our client operations can
lead to a worsening of the financial
strength and outlook for our clients
who may reduce, suspend or cancel
spend with us, request extended
payment terms beyond 60 days or
be unable to satisfy obligations.
We are generally paid in arrears for our services.
Invoices are typically payable within 30 to 60 days.
We commit to media and production purchases on
behalf of some of our 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 us to pay those
amounts and there could be an adverse effect on
our working capital and operating cash flow.
Evaluating and monitoring clients’ ongoing
creditworthiness and in some cases requiring credit
insurance or payments in advance.
We are working closely with our clients during this period
of economic uncertainty to ensure timely payment for
services in line with contractual commitments and with
vendors to maintain the settlement flow on media.
Our treasury position and compliance with lending
covenants is a recurring agenda item for the Audit
Committee and Board.
Increased management processes to manage working
capital and review cash outflows and receipts.
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POTENTIAL IMPACT
HOW IT IS MANAGED AND REFLECTED
IN OUR STRATEGIC PRIORITIES
INTERNAL CONTROLS
Our performance could be
adversely impacted if we failed to
ensure adequate internal control
procedures are in place.
We have previously identified
material weaknesses in our internal
control over financial reporting.
If we failed to properly remediate
these material weaknesses or new
material weaknesses are identified,
they could adversely affect our
results of operations, investor
confidence in the Group and the
market price of our ADSs and
ordinary shares.
Failure to ensure that our businesses have robust
control environments, or that the services we
provide and trading activities within the Group are
compliant with client obligations, could adversely
impact client relationships and business volumes
and revenues.
As previously disclosed, for the year ended 31
December 2020, we identified certain material
weaknesses in our internal control over financial
reporting. During 2021, we finished implementing
previously reported plans to remediate such material
weaknesses and concluded that as at 31 December
2021, such material weaknesses had been
remediated. We have also concluded that our
internal control over financial reporting is again
effective as of 31 December 2022, as disclosed in
our Form 20-F.
If the remedial measures were ultimately insufficient
to address the material weaknesses, or if additional
material weaknesses in internal control are
discovered or occur in the future, our ability to
accurately record, process and report financial
information and, consequently, our ability to prepare
financial statements within required time periods,
could be adversely affected.
In addition, the Group may be unable to maintain
compliance with the federal securities laws and NYSE
listing requirements regarding the timely filing of
periodic reports. Any of the foregoing could cause
investors to lose confidence in the reliability of our
financial reporting, which could have a negative
effect on the trading price of the Group’s ADSs and
ordinary shares.
Transparency and contract compliance are embedded
through the networks and reinforced by audits at a WPP
and network level.
Regular monitoring of key performance indicators for
trading are undertaken to identify trends and issues.
An authorisation matrix on inventory trading is agreed
with the Company and the Audit Committee.
In 2021, our then new controls function continued to review
and enhance controls across the Group, under the direction
of our Global Director of Risk and Controls. As part of this
effort, we significantly enhanced the staffing, capabilities
and resources of our technical accounting function,
which supported the retrospective review efforts and
will continue to provide ongoing support in regards to
complex accounting matters and judgment and changes
in accounting standards.
Management is committed to maintaining a strong internal
control environment, with appropriate oversight from our
Audit Committee. We have made significant enhancements
to our controls through the implementation of the
remediation and continue to evaluate further opportunities
to improve our control environment. We have engaged
an independent valuation specialist, on an ongoing basis
with oversight by management, to assist us as an integral
part of the discount rate and cash flow determination
process in the impairment assessment of intangible assets
and goodwill.
This has included such items as: updating our discount
determination methodology for a current market participant
approach; enhancing the level of review and controls
related to the selection of the variables underpinning the
discount rate calculation, the discount rate methodology
and annual refresh; and implementing additional validation
controls and additional reviews of the selection of cash
flow periods and net working capital assumptions.
In the case of complex accounting matters and hedging
arrangements, we performed a comprehensive
retrospective review of our controls and procedures
and implemented enhanced periodic controls into our
control framework and have engaged outside advisors
with specialist expertise in the respective subject matter
areas to assist with the performance of the comprehensive
retrospective review.
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PRINCIPAL RISK
DATA PRIVACY
We are subject to strict data
protection and privacy legislation
in the jurisdictions in which we
operate and rely extensively on
information technology systems.
We store, transmit and rely 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
– Data transfers between our
global operating companies,
clients or vendors may be
interrupted due to changes in
law (for example, EU adequacy
decisions, CJEU Schrems II
decision)
TAXATION
We may be subject to regulations
restricting our activities or effecting
changes in taxation.
POTENTIAL IMPACT
HOW IT IS MANAGED AND REFLECTED
IN OUR STRATEGIC PRIORITIES
We may be subject to investigative or enforcement
action or legal claims or incur fines, damages, or
costs and client loss if we fail to adequately protect
data or observe privacy legislation in every instance:
– The Group has in the past and may in the future
experience a system breakdown or intrusion that
could have a material adverse effect on our
business, revenues, results of operations, financial
condition or prospects
– Restrictions or limitations on international data
transfers could have an adverse effect on our
business and operations
We develop principles on privacy and data protection
and compliance with local laws. We also monitor pending
changes to regulations and identify changes to our
processes and policies that would need to be implemented.
In the case of data transfers, we also identify alternative
approaches, including using other permitted transfer
mechanisms, in order to limit any potential disruption
(for example, SCCs instead of Privacy Shield following
the CJEU Schrems II decision).
We implemented extensive training ahead of GDPR and
CPPA implementation and the roll-out of toolkits to assist
our people to prepare for implementation and will do the
same as new legislation is adopted in other markets.
A Chief Privacy Officer and Data Protection Officer are
appointed at the Company and Data Protection Officers
are in place at a number of our companies.
Our people must take Privacy & Data Security Awareness
training and understand the WPP Data Code of Conduct
and WPP policies on data privacy and security.
The Data Health Checker survey is performed annually
to understand the scale and breadth of data we collect
so the level of risk associated with this can be assessed.
Changes in local or international tax rules, for
example, as a consequence of the financial support
programmes implemented by governments during
the Covid-19 pandemic, the OECD/G20 Inclusive
Framework on Base Erosion and Profit Shifting, and
changes arising from the application of existing rules,
or 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.
We actively monitor any proposed regulatory or statutory
changes and consult with government agencies and
regulatory bodies where possible on such proposed
changes.
Biannual briefings to the Audit Committee of significant
changes in tax laws and their application and regular
briefings to executive management. We engage advisors
and legal counsel to obtain opinions on tax legislation
and principles.
REGULATORY
We are subject to strict anti-
corruption, anti-bribery and
anti-trust legislation and
enforcement in the countries
in which we operate.
We operate 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 culture opposed to
corruption or failing to instil business practices that
prevent corruption has previously and could expose
us to civil and criminal sanctions.
Online and in-country ethics, anti-bribery, anti-corruption
and anti-trust training on a Group-wide basis to raise
awareness and seek compliance with our Code of
Conduct and the Anti-Bribery & Corruption Policy.
A continuously evolving business integrity function to
ensure compliance with our codes and policies and
remediation of any breaches of policy.
Continuous communication of the Right to Speak
confidential, independently operated helpline for our
people and stakeholders to raise any potential breaches
of our Code and policies, which are investigated and
reported to the Audit Committee on a regular basis.
Due diligence on acquisitions and on selecting and
appointing suppliers and restrictions on the use of
third-party consultants in connection with any client
pitches. Rolling programme of creating shared financial
services in the markets in which we operate and the
creation of a new controls function in 2020.
Risk Committees are well established at WPP and across
the networks to monitor risk and compliance through all
of our businesses and the enhancement of our business
integrity programme across our markets.
Gift and hospitality register and approvals process.
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Failure to comply with these laws could expose us to
civil and criminal penalties including fines and the
imposition of economic sanctions against us and
reputational damage and withdrawal of banking
facilities which could materially impact our results.
PRINCIPAL RISK
SANCTIONS
We are subject to the laws of the
United States, the EU, the UK and
other jurisdictions that impose
sanctions and regulate the supply
of services to certain countries.
The Russian invasion of Ukraine
has caused the adoption of
comprehensive sanctions by,
among others, the EU, the United
States and the UK, which restrict
a wide range of trade and
financial dealings with Russia
and Russian persons.
ENVIRONMENT REGULATION AND REPORTING
The Group could be subject to
increased costs to comply with
the potential future changes in
environmental law and regulations.
We could be subject to increased costs to comply
with potential future changes in environmental laws
and regulations and increasing carbon offset pricing
to meet our net zero commitments.
Carbon emission accounting for marketing and
media is in its infancy and methodologies continue to
evolve. This is particularly the case for emissions
associated with digital media.
EMERGING RISKS
The Group’s operations could
be disrupted by an increased
frequency of extreme weather and
climate-related natural disasters.
This includes storms, flooding, wildfires and water
and heat stress which can damage our buildings,
jeopardise the safety and wellbeing of our people
and significantly disrupt our operations.
A failure to manage the complexity
in carbon emission accounting for
marketing and media or to consider
scope 3 emissions in new
technology and business model
innovation across the supply chain
could have an adverse effect on
our business and reputation.
Increased investment required in building renovation,
electrification and supplier engagement to meet
targets, including developing internal ESG capacity
and capabilities.
Offset prices would likely rise, increasing the overall
expenditure to meet our net zero commitments.
Online training to raise awareness and seek compliance
and updates for our companies on any new sanctions.
Regular briefings to the Audit Committee and constant
monitoring by the WPP legal team with assistance from
external advisors of the sanctions regimes. Executive
Committee briefed and working with the WPP legal team
to ensure compliance with escalating sanctions as a
consequence of the Russian invasion of Ukraine.
We have taken a number of actions as a consequence of
the invasion. We have announced the discontinuance of
our operations in Russia and ensured compliance with all
sanctions as they impact any clients, suppliers or financial
arrangements.
We are developing a net zero roadmap to deliver against
our net zero commitments and aim to disclose more details
of that roadmap in 2023.
As part of this plan and through our work to decarbonise
media and media supply chains, we are exploring
opportunities to improve accounting for emissions
from media.
As we seek to limit emissions, we need to reduce the
total footprint of any product or service as far as possible.
To manage the cost and quality of carbon credits
purchased to offset remaining emissions, WPP developed
a new offsetting policy and we are further developing our
offsetting strategy as part of our net zero roadmap.
Co-locating our people in fewer, higher-capacity
campus buildings means we can centralise emergency
preparedness procedures and deploy climate mitigation
measures more efficiently. Climate-related risk is considered
when we invest in new campus buildings. In 2023 we will
pilot a new ESG scorecard to assess building performance
across a number of climate-related metrics.
Our hybrid working approach, which incorporates new
ways of working adopted during the pandemic, provides
additional resilience by enabling fully remote working –
provided employees and their families are in safe locations
– during extreme weather events.
The Employee Assistance Programme is activated in
response to climate-related extreme weather events.
In 2023, we will publish our first net zero transition plan
which will outline further details on how we intend to
deliver against our net zero targets.
The Board Sustainability Committee was formed in 2019
to give increased focus on sustainability (see page 128).
In 2022, we updated our Sustainability Policy, and released
our first Environmental Policy which included policy
guidance around offsetting.
Environment, Social and Governance KPIs are included
as part of the scorecard that determines the short-term
incentive rewards for WPP’s CEO, CFO and some key
members of the Executive Committee. This includes
WPP’s performance against carbon reduction targets.
WPP ANNUAL REPORT 2022
97
CORPORATE
GOVERNANCE
Chairman’s letter
Governance at a glance
Our Board
Our Executive Committee
How our Board engages with stakeholders
Division of responsibilities
Board activities
Composition, succession and evaluation
Nomination and Governance
Committee report
Audit Committee report
Sustainability Committee report
Compensation Committee report
Statement of Directors’ responsibilities
100
103
104
107
109
112
114
115
118
122
128
130
157
98
WPP ANNUAL REPORT 2022
CORPORATE GOVERNANCE
WPP ANNUAL REPORT 2022
99
CORPORATE GOVERNANCE
CHAIRMAN’S
LETTER
As the role of technology, data and digital
communications grows and shifts rapidly,
and the adoption of AI in particular increases
exponentially, clients place a high value on
WPP’s expertise in helping brands and
organisations capture the opportunities.
Investment in high-growth sectors of the
Company’s proposition has paid dividends.
Ecommerce and commerce media have
been especially strong. GroupM’s
commerce billings, for example, increased
18% in 2022.
This growing demand for WPP’s capabilities
in developing areas sits alongside sustained
client spending on more traditional forms of
marketing communications, where WPP has
long been an industry leader.
The reshaping of WPP’s offer to drive growth
for the Company and its shareholders was a
principal theme of our Board strategy day
during 2022, which provided an opportunity
for the Board to hear from and engage with
leaders across WPP on the Company’s plans
for the future.
As well as looking at how data, commerce
and AI are revolutionising our clients’
marketing activities, the Board discussed
the ways in which technology will shape our
own business, including through our global
IT strategy. Other important topics were
client leadership, DE&I, our transformation
programme, growth plans for China, our
campus programme and – last but certainly
not least – our working culture.
IT IS CLEAR THAT
CLIENTS NOW SEE WPP
AND ITS AGENCIES AS
BUSINESS-CRITICAL
PARTNERS IN TODAY’S
COMPLEX MARKETING
ENVIRONMENT”
In 2022 the Company once again successfully
negotiated external challenges while
delivering growth for its people, clients
and shareholders.
The publication in February of WPP’s
full-year results for 2022 brought widespread
recognition of the progress the Company
has made in recent years, the resilience of
its business model and the successful
modernisation and diversification of its
offer to clients.
The executive team deserves great credit
for the turnaround in the Company’s
performance and reputation since 2018.
It is clear that clients now see WPP and its
agencies as business-critical partners in
today’s complex marketing environment.
100
WPP ANNUAL REPORT 2022
CHAIRMAN’S LETTER
CORPORATE GOVERNANCE
The Company is working to embed
sustainability at every level of its operating
model and across the organisation. This is
not primarily an exercise in compliance or
risk-mitigation, but an opportunity to create
value. Emphasising and acting in line with
our purpose helps to attract and retain talent
and develop our relationships with clients.
You can read more about our sustainability
strategy and commitments from page 68,
and in our 2022 Sustainability Report
MANAGING RISK
As well as supporting the Company as it
seeks to capture opportunities, the Board
also identifies, monitors and addresses risks.
During 2022 we continued to review the
structure and effectiveness of our risk
management model, and assess the principal
risks that could impact our business. More
information about our approach is available
from page 86.
Against the backdrop of challenging
macroeconomic conditions and disruptive
geopolitical events, the Board also worked
to ensure the Company was well prepared
both strategically and operationally for any
downturns in its major markets.
This included reviewing strategies for cost
reduction, pricing, supply chain finance
management, the ongoing simplification
of the Company’s organisational structure
and its transformation programme, cash
management and capital allocation, with
an overall focus on diligent and disciplined
management of the balance sheet.
A PEOPLE BUSINESS
One of the foundational pillars of the
Company’s strategy is a culture that prizes
wellbeing, inclusion and a sense of belonging
for all.
In my letter last year I said that our people
strategy would be a primary focus for the
Board and executive team in 2022. As Mark
notes in his introduction to the Annual Report,
WPP is a business that relies on its people
for its performance, and there is no greater
priority than ensuring our employees feel
welcomed, engaged, inspired, recognised
for their contribution and supported in
their development.
The Board was therefore pleased that WPP’s
2022 people survey showed significant
improvements year-on-year. The Company
achieved its highest ever engagement levels,
and its employee net promoter score
increased by 14 points. Inclusion, feeling
valued and career growth were areas
of particular strength.
The Company’s Making Space wellbeing
initiative, which drew a tremendous reaction
from our people, had the full support of
the Board, along with programmes such
as the growing community of WPP Mental
Health Allies.
Making sure the Company has a strong
leadership pipeline is one of the Board’s
most important responsibilities. In 2022 we
reviewed the Company’s plans for executive
development and succession, and for
building leadership behaviours.
For the pipeline and existing leadership
to be considered truly strong, it must be
diverse. Plenty of work remains to be done
to achieve parity at all levels of the business,
but we have made good progress. When
Joanne Wilson succeeds John Rogers as CFO
following the announcement of the Company’s
2023 First Quarter Trading Update, the
proportion of women on the Board will be
46% (2021: 43%). We exceed the targets set
by the Parker Review, with three Directors
from an ethnic minority background.
In the FTSE Women Leaders Review, WPP
moved up from ninth to sixth in the FTSE 100.
Forty-six percent of Executive Committee
members and their direct reports were
women in 2022, against a FTSE 100 average
of 34%.
To drive further change, WPP has linked
performance in this area to remuneration,
with diversity, equity and inclusion goals
included in senior executives’ incentive
plans since 2021.
The Company has also increased its
investment in leadership development
programmes for people of colour, as well
as in inclusive management training, in order
to work systematically towards a more
diverse leadership succession pipeline.
Looking to the year ahead, priorities will
include expanding succession planning to
the top 300 in the Company, launching a
self-ID campaign to augment our diversity
data, next steps for WPP’s Racial Equity
Programme, supporting and expanding
Employee Resource Groups and embedding
inclusion training for leaders.
You can read more about WPP’s people
strategy on pages 36 and 70
CREATING VALUE THROUGH
SUSTAINABILITY
Since being established in 2019, the Board’s
Sustainability Committee has played a key
role in supporting WPP’s pursuit of its ESG
objectives. As the sustainability agenda
grows in importance, the Committee’s
contribution has evolved accordingly. The
skillsets and experience of its members have
been invaluable as the Company considers a
range of complex and interconnected issues.
During 2022 there were deep dives into
topics on which WPP has taken leadership
positions such as media decarbonisation and
single-use plastics, regulatory developments
such as TCFD reporting, improved internal
processes such as the revised Assignment
Acceptance Policy and Framework and new
Green Claims Guide, and support for our
people and communities in response to
events such as the war in Ukraine.
WPP ANNUAL REPORT 2022
101
CORPORATE GOVERNANCE CHAIRMAN’S LETTER
The Company has continued to grow,
exploited the potential of new technologies,
transformed its offer and maintained strong
demand for its services from the world’s
leading organisations and brands.
It has also continued to attract outstandingly
talented people, drawn by the strong culture
of its agencies, its sense of purpose and its
ambition to become the most creative
company in the world.
Alongside the Company’s robust balance
sheet and compelling client offer, that talent
is the foundation of our positive outlook for
WPP. On behalf of the Board, I would like
to extend my thanks to all our people
worldwide for their commitment to their
work and our clients in 2022 and beyond.
Roberto Quarta
Chairman
23 March 2023
BOARD COMPOSITION AND
EFFECTIVENESS
We announced in November that our
Chief Financial Officer John Rogers would
step down from the Board to pursue
broader executive opportunities beyond
the Company.
John, who will step down as a Director
following the announcement of the
Company’s 2023 First Quarter Trading
Update, has made an important contribution
to WPP in his three years with us, including
helping the Company navigate the
pandemic and laying the foundations of
its transformation programme. He leaves
with our thanks and very best wishes for
the future.
John will be succeeded as Chief Financial
Officer by Joanne Wilson. Joanne is currently
Chief Financial Officer of Britvic plc, having
previously held the same role at dunnhumby,
a global leader in customer data science that
is part of the Tesco group. We look forward
to welcoming her to the Board when she
joins on 19 April 2023.
As I mentioned last year, Nicole Seligman,
our Senior Independent Director, has
completed a nine-year tenure on the Board
and will not stand for re-election at the 2023
Annual General Meeting. On behalf of my
Board colleagues, I would like to thank
Nicole for her dedicated service to WPP and
her exceptional contribution to the Board
during a period of profound change for the
Company. I am pleased that Angela Ahrendts
has agreed to be appointed as the new
Senior Independent Director. Angela will lead
succession planning for WPP’s next Chair.
Tarek Farahat will also not put himself
forward for re-election to the Board at
the 2023 AGM due to other commitments.
I would like to thank Tarek for his contribution
during his long service to the Board. WPP
has greatly benefited from his knowledge
and experience of global FMCG businesses
over the years and he has been a valued
member of the Audit Committee.
As always, we gave significant time to
succession planning and proactively
reviewing our non-executive membership
in 2022, to ensure the Board continues
to have the appropriate composition to
support the executive team and review
the Company’s strategy.
We also reviewed the governance
architecture of the Board’s Committees on
an ongoing basis, and made adjustments
as required. You can read the Committee
Chairs’ reports from page 118.
Nicole Seligman, as part of our continuous
assessment of Board effectiveness,
conducted an evaluation exercise to
review the performance of the Board and its
Committees. The results, which can be found
on page 116, confirmed that the Board and its
Committees continue to operate effectively.
A POSITIVE OUTLOOK
We move into 2023 with confidence in the
future growth prospects of WPP as it
continues to execute its strategy.
WPP, along with the wider marketing
services sector, has confounded the
expectations of some commentators in
recent years as concerns about structural
challenges facing the industry have receded.
102
WPP ANNUAL REPORT 2022
GOVERNANCE
AT A GLANCE
CORPORATE GOVERNANCE
COMPLIANCE WITH THE CODE
During the year ended 31 December 2022, the Company was compliant with the
provisions of good governance contained in the 2018 UK Corporate Governance
Code (‘the Code’), except for the fact that Provision 38 of the Code was met
part way through the year by the alignment of the CEO’s pension with the
wider workforce. For more detail see page 145. The table below shows where
shareholders can find further information on how the Company has applied the
principles of the Code. The Company’s American Depositary Shares are listed on
the New York Stock Exchange (NYSE) and the Company is therefore subject to the
rules of the NYSE as well as to the US securities laws and the rules of the Securities
and Exchange Commission (SEC) applicable to foreign private issuers. As the
Company follows UK corporate governance standards, differences from the
NYSE governance standards are summarised in the Company’s Form 20-F filing.
1. BOARD LEADERSHIP AND COMPANY PURPOSE
READ MORE
– Long-term value and sustainability
– Culture
– Shareholder and other stakeholder engagement
– Conflicts of interest
2. DIVISION OF RESPONSIBILITIES
– Role of the Chairman and Chief Executive Officer
– Non-Executive Directors
Exceeded Parker Review
diversity target
Discontinued
operations in Russia
in March 2022
HIGHLIGHTS
46%
female Board
representation following
the announcement of the
Company’s 2023 First
Quarter Trading
Update1
5th
consecutive year
recognised in
Bloomberg Gender-
Equality Index2
1
new Executive
Director appointment
announced in 2022
Top 10
FTSE Women Leaders
Review for gender
representation among
Executive Committee
and direct reports4
Named among best
places to work for
LGBTQ+ equality3
3. COMPOSITION, SUCCESSION AND EVALUATION
– Appointment and succession planning
– Skills and experience
– Evaluation
– Diversity
4. AUDIT, RISK AND INTERNAL CONTROL
– Integrity of financial statements
– Fair, balanced and understandable
– Internal controls and risk management
– External auditor
– Principal and emerging risks
5. REMUNERATION
– Policies and practices
Page 114
Page 114
Page 109
Page 120
Page 112
Page 112
Page 119
Page 115
Page 116
Page 116
Page 123
Page 123
Page 124
Page 125
Pages 91-97
Pages 130-156
1 Joanne Wilson will succeed John Rogers as CFO immediately following the
announcement of the Company’s 2023 First Quarter Trading Update
2 Bloomberg Gender-Equality Index 2023
3 Corporate Equality Index 2022, Human Rights Campaign
4 FTSE Women Leaders Review 2022
– Alignment with purpose, values and long-term strategy
Pages 130-156
– Independent judgement and discretion
Pages 130-156
WPP ANNUAL REPORT 2022
103
CORPORATE GOVERNANCE
OUR BOARD
ROBERTO QUARTA
CHAIRMAN
MARK READ
CHIEF EXECUTIVE OFFICER
JOHN ROGERS
CHIEF FINANCIAL OFFICER
Appointed: 1 January 2015 (Chairman 9 June 2015)
Nationality: Italian and American
Skills and experience:
Roberto has extensive experience in corporate governance and global commerce,
having served on the boards of a number of UK and international companies. His
career in private equity brings valuable experience to WPP, particularly when
evaluating acquisitions and new business opportunities.
Roberto is Chairman of Smith & Nephew plc, a Partner of Clayton, Dubilier & Rice,
and Chairman of Clayton, Dubilier & Rice Europe. He is an Independent
Non-Executive Director of Gulf Capital. Previously he was Chief Executive and
then Chairman of BBA Group plc, Chairman of Rexel SA, Chairman of IMI plc and
a Non-Executive Director at BAE Systems plc, Equant NV, Foster Wheeler AG and
PowerGen plc.
Appointed: 3 September 2018 Nationality: British
Skills and experience:
Mark has held multiple leadership positions at WPP since joining in 1989. As CEO of
WPP Digital he was responsible for WPP’s first moves into technology. In 2015, he
became Global CEO of Wunderman, which he transformed into one of the world’s
leading agencies. Mark was voted the industry’s Most Influential Person 2019 in
Econsultancy’s Top 100 Digital Agencies, and in 2022 was recognised as a Champion
of Women in Business for the fifth consecutive year. Mark was awarded a Fellowship
for outstanding services to the industry in the IPA’s 2021 New Year’s Honours.
Mark has an economics degree from Trinity College, Cambridge, was a Henry Fellow
at Harvard University, and has an MBA from INSEAD.
External appointments:
Chairman, Smith & Nephew plc;1 Partner,
Clayton, Dubilier & Rice; Chairman,
Clayton, Dubilier & Rice Europe;
Independent Non-Executive Director,
Gulf Capital.
1 Roberto will step down as Chairman of
Smith & Nephew plc in September 2023
External appointments:
Trustee, Natural History Museum.
Appointed: 3 February 2020, Chief Financial Officer from 1 May 20201
Nationality: British
Skills and experience:
John has extensive finance, strategy, digital, property and retail experience. He
joined WPP from J Sainsbury plc where he was CEO of Sainsbury’s Argos, and was
previously CFO of J Sainsbury plc, responsible for business strategy, new business
development, Sainsbury’s Online and Sainsbury’s Bank, in addition to its core
finance functions.
John is a member of The Prince’s Advisory Council for Accounting for Sustainability
and sits on the Retail Sector Council, which acts as a point of liaison between the UK
government and retail sector. John is an Independent Non-Executive Director of
Grab Holdings Limited, a technology company listed on NASDAQ.
External appointments:
Member, The Prince’s Advisory Council
for Accounting for Sustainability;
Member, Retail Sector Council;
Independent Non-Executive Director,
Grab Holdings Limited.
1
It was announced in November 2022 that
John Rogers would step down from the
Company and be succeeded by Joanne
Wilson, which will take effect immediately
following the announcement of the Company’s
2023 First Quarter Trading Update
INDEPENDENT NON-EXECUTIVE DIRECTOR
Appointed: 1 January 20141
Nationality: American
Skills and experience:
Nicole is a global business leader and an internationally recognised lawyer. She
brings to the Board analytical skills, in-depth knowledge of public company
corporate governance and a comprehensive understanding of media and business
issues. Nicole was previously President of Sony Entertainment, Inc. and global
General Counsel for Sony Corporation. Prior to that, as a partner at law firm Williams
& Connolly, Nicole represented key public figures and major media and other
companies in complex litigation.
She is a Magna Cum Laude graduate of both Harvard College and Harvard Law School.
NON-EXECUTIVE DIRECTOR TENURE
AS AT 31 DECEMBER 2022
External appointments:
Non-Executive Director, Paramount
Global; Non-Executive Director,
MeiraGTx Holdings plc; Non-Executive
Director, Far Peak Acquisition
Corporation; Vice Chair and Officer,
Schwarzman Animal Mexican Center.
1 Nicole will retire from the Board at the
2023 AGM
Director retirements during the year:
Jacques Aigrain retired from the Board
on 24 May 2022
Sally Susman retired from the Board
on 24 May 2022
NICOLE SELIGMAN
SENIOR INDEPENDENT DIRECTOR,
NON-EXECUTIVE DIRECTOR
COMMITTEE
MEMBERSHIP KEY
Audit
Compensation
Nomination and Governance
Sustainability
Committee Chair
0-3 years 5
3-6 years 3
6-9 years 3
9+ years 0
104
WPP ANNUAL REPORT 2022
OUR BOARD
CORPORATE GOVERNANCE
INDEPENDENT NON-EXECUTIVE DIRECTORS
Appointed: 1 July 2020
Nationality: British and American
Skills and experience:
Angela brings expertise as a leader of creative and technology-driven global
businesses. From 2014 until 2019, she was Senior Vice President, Retail, at Apple Inc.,
where she integrated and redesigned the physical and digital global consumer
experience. Angela was CEO of Burberry from 2006 to 2014, where she repositioned
the brand as a luxury high-growth company and created the Burberry Foundation.
Prior to Burberry, Angela was Executive Vice President at Liz Claiborne, Inc. and
President of Donna Karan International, Inc. Angela was a member of the UK Prime
Minister’s Business Advisory Council from 2010 to 2015.
External appointments:
Non-Executive Director, Ralph Lauren
Corporation and Airbnb, Inc.; Chair of
Save the Children International;
Non-Executive Director, Charity: water,
Imagine and The HOW Institute for
Society; Member of the Global
Leadership Council of the Oxford
University Saïd Business School and
BritishAmerican Business International
Advisory Board.
ANGELA AHRENDTS DBE
NON-EXECUTIVE DIRECTOR
Appointed: 31 January 2022
Nationality: British
Skills and experience:
Simon has extensive business, capital markets, corporate finance and governance
experience, and is currently a Senior Advisor at global investment firm The Carlyle
Group. He was previously CFO of GlaxoSmithKline plc. Prior to GSK, Simon worked
in investment banking at SG Warburg and then Goldman Sachs, where he was
Managing Director and Partner for 10 years as a leader of its European M&A business
and Head of UK Investment Banking. Simon is Chairman of Genomics plc and
previously served as Chairman of the Financial Reporting Council and as Chairman of
the 100 Group. Simon has a master’s degree in geography from Oxford University.
Appointed: 3 February 2020
Nationality: French
Skills and experience:
Sandrine brings substantial financial expertise gained in global companies and
strong strategic capability to the Board. Sandrine is currently CFO of UCB, a global
pharmaceutical company. Previously she was CFO of Proximus. She held a number
of leadership roles at Vivendi in France and the US across its entertainment and
telecommunications business, and has an enthusiasm for cultural, technological
and business transformation.
Sandrine began her career as a financial analyst at BNP and then Credit Agricole in
the telecoms sector. She has held other non-executive director roles, most recently
at Solocal Group.
Appointed: 11 October 20161
Nationality: Brazilian and Egyptian
Skills and experience:
Tarek has extensive leadership and brand-building experience gained in leading
businesses in the Americas, Europe, Middle East and Africa. He worked for Procter &
Gamble for over 26 years, where his last position was President of Procter & Gamble
Latin America and member of the Global Leadership Council. Tarek was previously
Chairman of JBS S.A. and a board member of Pilgrim’s Pride Corporation and
Alpargatas. Tarek is currently a strategic advisor, consultant and partner for
companies in the consumer goods, fintech and healthcare sectors.
Tarek is a graduate of the American University in Cairo, Faculty of Commerce
and Finance.
Appointed: 5 October 2020
Nationality: British
Skills and experience:
Tom brings a wealth of expertise as a technology entrepreneur and has extensive
experience of the UK technology sector. He is Chair of the Rugby Football Union
(RFU) and CEO of Crossword Cybersecurity plc. Tom was previously Managing
Director of Consumer Markets at Callcredit Information Group. Prior to Callcredit,
Tom founded and was CEO of Garlik, an identity protection company.
Tom has honorary doctorates from City, University of London, Coventry University,
Portsmouth University and the University of Wolverhampton, and is an Honorary
Fellow of both Jesus College and St Anne’s College, Oxford. In 2017 Tom topped the
Powerlist ranking of the most influential people of African or African Caribbean
heritage in the UK.
External appointments:
Chairman, Genomics plc; Senior Advisor,
The Carlyle Group.
External appointments:
Chief Financial Officer, UCB.
External appointments:
Chairman and Co-Founder, GoPublic
and Ponto-e.
1 Tarek will step down from the Board
following the conclusion of the Company’s
2023 Annual General Meeting
External appointments:
Founder and CEO, Crossword
Cybersecurity plc; Chair, Iternal Limited
(previously known as Deathio Ltd);
Founder and Chair, African Gifted
Foundation; Chair, The Rugby Football
Union (RFU).
SIMON DINGEMANS
NON-EXECUTIVE DIRECTOR
SANDRINE DUFOUR
NON-EXECUTIVE DIRECTOR
TAREK FARAHAT
NON-EXECUTIVE DIRECTOR
TOM ILUBE CBE
NON-EXECUTIVE DIRECTOR
WPP ANNUAL REPORT 2022
105
CORPORATE GOVERNANCE OUR BOARD
INDEPENDENT NON-EXECUTIVE DIRECTORS
CINDY ROSE OBE
NON-EXECUTIVE DIRECTOR
Appointed: 1 April 2019
Nationality: British and American
Skills and experience:
Cindy has extensive experience as a leader in the technology and media sectors,
and brings exceptional knowledge of the role technology plays in business
transformation. She was appointed Chief Operating Officer for Microsoft Global
Enterprise in March 2023. Prior to this, Cindy was President of Microsoft Western
Europe, and also CEO of Microsoft UK. She has also held the roles of Managing
Director of the UK consumer division at Vodafone and Executive Director of Digital
Entertainment at Virgin Media. She spent 15 years at The Walt Disney Company,
ultimately as Senior Vice President and Managing Director of Disney Interactive
Media Group.
Cindy is a graduate of Colombia University and New York Law School.
Appointed: 1 November 2019
Nationality: British
Skills and experience:
Keith has a wealth of experience as a marketing and digital leader, and a deep
understanding of the ways in which technology is transforming businesses. Keith
was previously Chief Marketing and Communications Officer at Unilever, a role that
included creating and leading Unilever’s sustainability programme. Keith was named
the World’s Most Influential Chief Marketing Officer by Forbes in 2017, 2018 and 2019,
and Global Marketer of the Year 2017 by the World Federation of Advertisers.
KEITH WEED CBE
NON-EXECUTIVE DIRECTOR
He received The Drum’s Lifetime Achievement Award in 2018 and was inducted into
the Marketing Hall of Fame in 2019. Keith is a Non-Executive Director of J Sainsbury plc.
Appointed: 1 September 2019
Nationality: British and Swiss
Skills and experience:
Jasmine’s experience spans marketing, technology, finance, media,
telecommunications, and not-for-profit organisations. Alongside this breadth of
perspective she brings knowledge of many of WPP’s client sectors to the Board.
Jasmine began her career in marketing in the technology sector, including with
Thomson Financial in the US. After completing the Stanford Executive Program,
Jasmine went on to hold leadership roles with Oxfam and Save the Children,
including as the first Chief Executive of Save the Children International from
2010 to 2015. She was CEO of London First from 2016 to 2021, and was
previously a Non-Executive Director of BT Group plc.
Appointed: 1 January 2021
Nationality: American
Skills and experience:
Ya-Qin is a world-renowned technologist, scientist and entrepreneur with a
particular understanding of the changing consumer technology landscape in China.
He was President of Baidu Inc., the global internet services and AI company,
between 2014 and 2019. Prior to joining Baidu, he held several positions during his
16-year tenure at Microsoft, both in the United States and China, including Corporate
Vice President and Chairman of Microsoft China. Ya-Qin is currently a Non-Executive
Director of AsiaInfo Technologies Limited and ChinaSoft International Limited. He is
also Chair Professor of AI Science at Tsinghua University and the founding Dean of
the Institute for AI Industry Research.
JASMINE WHITBREAD
NON-EXECUTIVE DIRECTOR
DR. YA-QIN ZHANG
NON-EXECUTIVE DIRECTOR
External appointments:
Chief Operating Officer, Microsoft
Global Enterprise; Advisory Board
Member, Imperial College Business
School in London and McLaren.
External appointments:
Non-Executive Director, J Sainsbury plc;
Trustee Director, Business in the
Community; Board Trustee, Grange
Park Opera; President, Royal
Horticultural Society; Board Trustee,
Leverhulme Trust; Senior Advisor, Bain
Capital, Alix Partners; Advisory Board
Member, i-Genie and McLaren.
External appointments:
Chair of the Board, Travis Perkins plc;
Non-Executive Director, Standard
Chartered plc;1 Non-Executive Director,
Compagnie Financière Richemont SA;
Visiting Fellow, Oxford University.
1 Jasmine will step down as Non-Executive
Director of Standard Chartered plc at its
2023 AGM
External appointments:
Non-Executive Director, AsiaInfo
Technologies Limited and ChinaSoft
International Limited; Chair Professor,
AI Science and Founding Dean, Institute
for AI Industry Research, Tsinghua
University.
Appointed: 27 April 2020
Skills and experience:
Balbir has significant governance experience across various roles in listed
companies, most recently as Company Secretary of William Hill plc. Prior to joining
William Hill, Balbir was Director of Investor Relations at GlaxoSmithKline plc (GSK),
leading on engagement with ESG-focused investors, and before that held company
secretarial roles at GSK, Lastminute.com, Royal & Sun Alliance and Segro plc.
External appointments:
None.
BALBIR KELLY-BISLA
COMPANY SECRETARY
DIRECTOR APPOINTMENT ANNOUNCED IN 2022
Appointment: 19 April 20231 Nationality: Irish
Skills and experience:
Joanne has extensive experience both in the UK and internationally in a variety of
financial and commercial roles. She joins WPP from Britvic where she is currently
Chief Financial Officer. Prior to this, Joanne had a successful career at Tesco where,
at the time of leaving, she held the position of Chief Financial Officer of dunnhumby,
a global leader in customer data science.
Joanne began her career at KPMG, where she qualified as a Chartered Accountant
and spent three years in Hong Kong.
External appointments:
Non-Executive Director, Informa plc.
1 Joanne Wilson will join the Board and
become CFO designate on 19 April 2023 and
succeed John Rogers as CFO immediately
following the announcement of the Company’s
2023 First Quarter Trading Update
JOANNE WILSON
CHIEF FINANCIAL OFFICER1
106
WPP ANNUAL REPORT 2022
CORPORATE GOVERNANCE
OUR EXECUTIVE
COMMITTEE
The Executive Committee of WPP is responsible for
leading the Company and executing its strategy.
Its members lead WPP’s largest agency networks and
central corporate functions
Other Executive Committee members
during the year:
Andy Main retired from the Executive
Committee on 7 September 2022.
MARK READ
CHIEF EXECUTIVE OFFICER
Biography can be found on page 104.
JOHN ROGERS
CHIEF FINANCIAL OFFICER
Biography can be found on page 104.
AJAZ AHMED
CHIEF EXECUTIVE OFFICER,
AKQA
Ajaz is the CEO of AKQA, which also
includes Grey. Recognised as a creative
pioneer, AKQA has won over 75 Agency
of the Year awards.
DEVIKA BULCHANDANI
GLOBAL CHIEF EXECUTIVE OFFICER,
OGILVY
Devika was appointed Global CEO of
Ogilvy in 2022. She joined Ogilvy as
CEO of North America in 2021. Prior to
Ogilvy, Devika spent 26 years at McCann
in various leadership positions.
JON COOK
GLOBAL CHIEF EXECUTIVE OFFICER,
VMLY&R
Jon has led VMLY&R since its formation
in 2018 as WPP’s global brand and
customer experience agency. He was
formerly Global CEO of VML, which he
joined in 1996.
ANNAMARIA DESALVA
CHAIRMAN AND CEO,
HILL+KNOWLTON STRATEGIES
AnnaMaria rejoined Hill+Knowlton in
2019 after leading global corporate
affairs at DuPont and serving as Senior
Advisor to the CEO of DowDuPont.
She previously worked in transformation
roles at Pfizer. Currently she serves on
governance boards in the industrials
sector and in higher education.
MEL EDWARDS
GLOBAL CHIEF EXECUTIVE OFFICER,
WUNDERMAN THOMPSON
Mel was appointed as CEO of the newly
formed Wunderman Thompson in 2018,
having previously been the Global CEO
of Wunderman. She joined Wunderman
as UK CEO in 2012.
LAURENT EZEKIEL
CHIEF MARKETING
& GROWTH OFFICER
Laurent became WPP’s first Chief
Marketing & Growth Officer in 2019.
He joined from Publicis where he was
President of Digitas North America and
International, and Global Client Leader
for GSK.
JANE GERAGHTY
GLOBAL CHIEF EXECUTIVE OFFICER,
LANDOR & FITCH
Jane was appointed Landor & Fitch’s
Global CEO in 2017, having previously
been President of EMEA. She has
held senior positions at Naked
Communications, ITV, Ogilvy New York,
McCann-Erickson and Saatchi & Saatchi.
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107
CORPORATE GOVERNANCE OUR EXECUTIVE COMMITTEE
ADAM GERHART
GLOBAL CHIEF EXECUTIVE OFFICER,
MINDSHARE
Adam was appointed Global CEO of
Mindshare in January 2021, having
previously been its US CEO. He joined
the agency 20 years ago as a media
planner and has worked across the
globe in a variety of roles and
leadership positions.
RICHARD GLASSON
GLOBAL CHIEF EXECUTIVE OFFICER,
HOGARTH
Richard was appointed CEO of Hogarth
Worldwide in 2016, having joined the
company in 2011. Prior to this he was
CEO of Gyro, the B2B marketing
specialist.
ANDREA HARRIS
GROUP CHIEF COUNSEL
Andrea was appointed as Group Chief
Counsel in 2005 having joined WPP
in 1996. Andrea is Chair of the Risk
Committee.
MICHAEL HOUSTON
WPP COUNTRY PRESIDENT, US
Michael became WPP’s first Country
President for the United States in 2022.
Prior to this he held key positions at
WPP agencies Young & Rubicam and
Landor and, most recently, creative
agency Grey Group where he served
as Global CEO from 2017 to 2022.
DONNA IMPERATO
GLOBAL CHIEF EXECUTIVE OFFICER,
BCW
Donna became CEO of BCW, one of
the world’s largest earned-first creative
communications agencies, in 2018.
Before leading BCW, Donna was Global
CEO of Cohn & Wolfe for 15 years. In
January 2023 it was announced that
Donna will retire as CEO during 2023
and step down once her successor is
appointed.
CHRISTIAN JUHL
GLOBAL CHIEF EXECUTIVE OFFICER,
GROUPM
GroupM is the world’s largest media
investment group and home to WPP’s
media agencies. Formerly Global CEO
of Essence, Christian was appointed
CEO of GroupM in 2019.
LINDSAY PATTISON
CHIEF CLIENT OFFICER
STEPHAN PRETORIUS
CHIEF TECHNOLOGY OFFICER
Lindsay became Chief Client Officer
of WPP in 2018. Prior roles include
Chief Transformation Officer of WPP
and Global CEO of Maxus, which she
joined as UK CEO in 2009.
Stephan was appointed as WPP’s first
CTO in 2018. Before that he was UK
Group CEO and Global CTO of
Wunderman, having joined the
agency in 2016.
ROB REILLY
GLOBAL CHIEF CREATIVE OFFICER
JENNIFER REMLING
GLOBAL CHIEF PEOPLE OFFICER
ANDREW SCOTT
CHIEF OPERATING OFFICER
Rob joined in 2021 from McCann
Worldgroup where he was Global
Creative Chairman, after spending a
decade at Crispin, Porter + Bogusky.
In 2022, he led WPP to being named
Creative Company of the Year at the
Cannes Lions Festival of Creativity.
Jennifer was appointed Global Chief
People Officer in October 2021, joining
from GroupM where she held the same
role. Jennifer has worked in senior
positions across the industry,
including at Essence, R/GA, AKQA,
360i and Sapient.
Andrew joined WPP in 1999 as Director
of Corporate Development. He held a
number of other senior roles including
Chief Operating Officer for Europe
before being appointed COO in 2018.
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WPP ANNUAL REPORT 2022
HOW OUR BOARD ENGAGES
WITH STAKEHOLDERS
CORPORATE GOVERNANCE
OUR APPROACH TO ENGAGEMENT
Our stakeholders are central to our strategy
and critical to the long-term success of our
business. The Board oversees our approach
to engagement as we seek feedback and
make decisions for the long-term benefit of
WPP. For each matter that comes before the
Board for decision, the Board considers the
likely consequences of any decision in the
long term, identifies stakeholders who may
be affected, and carefully considers their
interests and any potential impact as part
of the decision-making process.
Our stakeholder engagement processes
enable our Board to understand what
matters to stakeholders most, consider
carefully all relevant factors and select the
course of action that best delivers long-term
value for our stakeholders and protects their
interests, reflecting what are referred to as
Section 172 factors.
As a Jersey incorporated company, WPP is
not subject to UK legislation. However, as a
matter of good governance and in order to
comply with the provisions of the 2018 UK
Corporate Governance Code, the Board
considers the matters described in Section
172 of the Companies Act 2006 in its
decision-making. Section 172 factors are
not only considered at Board level – they
are part of our culture and help drive our
business. Illustrations of this can be found
throughout the Strategic Report.
ENGAGEMENT IN ACTION DURING 2022
The table below illustrates direct and indirect Board engagement with various stakeholders. Additional detail on how we have engaged with
each of these stakeholder groups on an operational level can be found on page 22 within the Strategic Report.
STAKEHOLDER GROUP
DIRECT BOARD ENGAGEMENT
INDIRECT BOARD ENGAGEMENT
IMPACT OF ENGAGEMENT
SHAREHOLDERS
Our shareholders provide
capital to invest in the
business and support the
valuation and liquidity
of WPP shares.
Shareholders benefit
from the Board acting in
the best interests of the
Company and investing
for long-term value
generation.
The Chief Executive Officer and the
Chief Financial Officer hosted quarterly
results presentations and took
questions from investors and analysts.
The Chairman, Chairs of the Board
Committees and Executive Directors
met regularly with institutional
investors to discuss the business
and to respond to any concerns.
Feedback to the Board on investor
views, particularly from the Chairman,
Chair of the Compensation Committee,
Chief Executive Officer and Chief
Financial Officer.
Monthly reports to the Board detailing
investor relations activities, key themes
of interest from investors and share
register composition and movements.
In 2022, the Chair of the Compensation
Committee consulted with key
shareholders in respect of potential
changes to the Directors’
Compensation Policy. For more
detail see page 134.
Analyst and broker briefings and
reports of meetings with major
shareholders. Additionally, the Board
received communications from major
shareholders, including in respect of
voting practices.
In 2022, the Board oversaw the return
of £1.1 billion (2021: £1.0 billion) in
cash to shareholders through
dividends and share buybacks.
Feedback from shareholders in
respect to potential changes to
the Directors’ Compensation Policy
helped to inform the Compensation
Committee’s final decision to not
make any significant changes to the
Policy at this time. Shareholders are
being asked to approve an updated
Policy which includes only minor
amendments. For more detail see
page 134.
The 2022 AGM was live-streamed
via a webcast hosted by the Chairman.
Shareholders were able to watch the
presentations and ask questions in
advance and during the meeting.
As a listed global company, engagement
with listing authorities and financial
regulators.
The Chief Executive Officer met with
government representatives and
regulators around the world, including
through attendance at the World
Economic Forum Annual meeting
in Davos.
Responded to government
consultations, such as the Parker Review.
GOVERNMENTS
AND REGULATORS
Governments receive the
tax contributions we
make to public finances,
enabling them to invest
in public services.
Governments and
regulators determine the
policy frameworks that
affect us and our
stakeholders.
In 2022 we contributed £1.5 billion
in taxes to public finances (2021:
£1.4 billion).
Participated in consultations
associated with ESG disclosure
requirements and regulation, and
supported efforts to increase ESG
standardisation and alignment.
Reports to the Board and its
Committees on regulatory changes
from the Group Chief Counsel, Group
Company Secretary and external
auditor.
Received reports from the Chief
Sustainability Officer on regulatory
changes with regards to ESG.
Received reports from the Chief
Privacy Officer and Global Data
Protection Officer on changing
regulatory landscapes with regards to
data protection, security and privacy
as well as data ethics and artificial
intelligence.
WPP ANNUAL REPORT 2022
109
CORPORATE GOVERNANCE HOW OUR BOARD ENGAGES
ENGAGEMENT IN ACTION DURING 2022 CONTINUED
STAKEHOLDER GROUP
DIRECT BOARD ENGAGEMENT
INDIRECT BOARD ENGAGEMENT
IMPACT OF ENGAGEMENT
CLIENTS,
PARTNERS AND
SUPPLIERS
Our clients come from
businesses across every
sector. The work we do
for clients provides our
revenue and helps them
to grow their businesses,
build relationships with
their customers and
ready themselves for
future success.
Our suppliers range
from small businesses
to the world’s largest
technology partners.
They provide us with the
products and services
we need to meet our
clients’ needs.
PEOPLE
We depend on the
talent, creativity and
technology skills of our
people. And we want our
employees to embrace
our purpose, culture and
values. In return, our
people receive salaries,
pension contributions,
employee benefits,
career development
and training.
Engaged with clients on issues
including strategy, changes taking
place in our market and understanding
the changes taking place in our clients’
and suppliers’ markets.
Through our Chief Executive Officer,
engaged with suppliers in joint
product development, skills
development and joint go-to-market
programmes.
Board engagement with key partners
and clients, including site meetings in
various locations.
Cindy Rose, our Workforce
Engagement Non-Executive Director,
attended meetings of the Workforce
Advisory Panel (WAP), in addition to
the United States and India People
Forums where possible, and updated
the Board on matters discussed.
The Chief Executive Officer hosted
10 townhalls and various leadership
events, which gave him the chance to
speak to our people directly and to
hear from attendees in return.
The Board engaged with senior
managers at the Board strategy
meeting and wider WPP management
at the September 2022 leadership
event.
With respect to client satisfaction,
we consistently achieved a Likelihood
to Recommend score of 8.0 (out of
10) over the last year, including a DE&I
score of 8.2.
The Company developed a revised
Assignment Acceptance Policy and
Framework to help our agencies
review potentially sensitive new
client work. For more detail see
page 77.
To align management with
employees and shareholders, senior
executives are being held to account
on ESG metrics. DE&I goals continue
to be included in incentive plans for
senior executives, and carbon
reduction targets were included in
incentive plans for Executive
Directors in 2022.
To help us better support our people,
we launched the refreshed All In staff
survey in 2022, achieving our
highest-ever engagement levels
with 72,700 employees taking part.
See page 36 for more details.
In 2022, we invested £31.3 million
in learning and development
opportunities for our people.
Received updates on WPP’s client
satisfaction scores.
Received reports from operating
companies, which included
GroupM’s global framework for
media decarbonisation to support
the commitment to decarbonise its
media supply chain.
Received deep-dive updates at each
Board meeting from Global Client
Leaders on key clients.
WPP’s Modern Slavery Act Statement,
available on our website, is reviewed
by the Sustainability Committee each
year and recommended to the Board
for approval. For more detail on how
the Company manages modern slavery
risk, see our website at wpp.com/
sustainability/modern-slavery-act-
statement
Formal reports to the Board from the
Chief Executive Officer and Chief
People Officer included:
– Updates on new ways of working and
WPP’s new Making Space campaign
(for more detail see page 9)
– Updates on talent, career
development and succession
planning
– Reports on employee mental health
and wellbeing
– In-depth reviews of the people
strategy, people risk and workforce
engagement
– Progress on DE&I initiatives
– Results of various employee
engagement and culture monitoring
surveys undertaken through the year
and actions taken to address
employee feedback
WPP’s Global Inclusion Council met
throughout the year to support the
delivery of our diversity, equity and
inclusion commitments.
Reports at each Audit Committee
meeting were received on issues raised
via Right to Speak channels.
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WPP ANNUAL REPORT 2022
HOW OUR BOARD ENGAGES
CORPORATE GOVERNANCE
STAKEHOLDER GROUP
DIRECT BOARD ENGAGEMENT
INDIRECT BOARD ENGAGEMENT
IMPACT OF ENGAGEMENT
PLANET
We are committed
to responsible and
sustainable business
practices. We take steps
to optimise our own
environmental impact,
but recognise that our
greatest contribution to
the planet is through our
work with clients, which
can shift attitudes and
change behaviours to
build a sustainable future
and a more inclusive
society.
The Board undertook deep-dives on
a range of ESG topics, including media
decarbonisation.
Professor Dr Johan Rockström, the
expert on climate change and
sustainable development, engaged
with and presented to the Board on
climate-related issues.
The Board and Sustainability
Committee reviewed climate-related
risks and opportunities as part of their
review and approval of WPP’s Task
Force on Climate-related Financial
Disclosures statement on page 220,
in addition to including climate-related
risks as an emerging risk. For more
detail see page 97.
Reports to the Sustainability
Committee included progress updates
on the Company-wide sustainability
strategy and industry-leading net zero
carbon reduction commitments;
progress on WPP’s single-use plastics
commitment, including adjusted
commitment timescales; performance
against science-based carbon
reduction targets and sustainability
KPIs including renewable energy;
and stakeholder engagement and
feedback. For more detail see
page 128.
COMMUNITIES
We can help boost the
impact of charities and
non-governmental
organisations by
providing marketing and
creative services, often
on a pro bono basis,
enabling them to raise
awareness and funds,
recruit members, and
achieve campaign
objectives. We believe,
and so do many of our
stakeholders, that acting
responsibly is both the
right thing to do and in
our long-term interests.
The Board received updates on
progress against the 2020 commitment
to spend $30 million over three years
to fund internal and external racial
equity programmes. For more detail
on how we are investing in our
communities, see page 79.
The Sustainability Committee oversaw
the work on the sustainability strategy
and the progress made on embedding
Group-wide sustainability targets tied
to the WPP purpose statement.
Reports to the Sustainability Committee
included updates on a new partnership
with UNHCR to support those affected
by events in Ukraine, the floods in
Pakistan and the earthquakes in Turkey
and Syria.
Updates received from the business
on elements of the Group’s operations
which impact the wider community,
including the Group’s tax strategy.
The Company launched a new Green
Claims Guide, supported by training
sessions, to help equip its people
with principles and practical tips to
make effective environmental claims
and avoid misleading claims. For
more detail see page 77.
To support delivery of its science-
based carbon reduction targets,
the Company launched a programme
to accelerate the decarbonisation of
the world’s media supply chain (see
page 76).
The Company made progress
towards its commitment to phase out
single-use plastics across campuses.
Monitoring progress beyond
campuses will remain a priority for
the Sustainability Committee in 2023.
To support those affected by
events in Ukraine, we formed a
partnership with UNHCR, which
raised $1.34 million, and provided
similar support for those impacted
by floods in Pakistan and the
earthquakes in Turkey and Syria.
Since 2020, we have committed
$16.2 million to racial equity and
inclusion programmes as part of
WPP’s commitment to invest
$30 million over three years. This
excludes amounts invested in 2022
which we intend to report later in
the year.
Our total social contribution in 2022
was £35.5 million (2021: £41 million).
WPP ANNUAL REPORT 2022
111
CORPORATE GOVERNANCE
DIVISION OF RESPONSIBILITIES
The WPP Board is committed to ensuring there is a strong and
effective system of corporate governance in place to support
the successful execution of the Company’s strategy
GOVERNANCE MODEL
THE BOARD
– Responsible for the overall long-term
success of WPP and for setting the
Company’s purpose, values and culture
and strategic direction
– Oversees the implementation of appropriate
risk assessment processes to identify and
mitigate WPP’s principal risks and consider
emerging risks
– Responsible for corporate governance
– Oversees the execution of the strategy
and responsible for the overall financial
performance of the Company
The Matters Reserved for the Board are
available on our website, wpp.com
CHAIR
– Responsible for Board governance principles,
including setting the Board agenda and
ensuring the Board receives timely and
accurate information
– Ensures all Directors are enabled to play their
full part in Board activities
NON-EXECUTIVE DIRECTORS
– Bring an external perspective to support and
challenge the performance of management
– Assist in developing the Company’s strategy and
offer specialist advice to management based on
their particular skills and experience
– Represents the Board in discussions with
shareholders and other stakeholders
SENIOR INDEPENDENT DIRECTOR
– Provides a sounding board for the Chair and
CHIEF EXECUTIVE OFFICER
– Responsible for the day-to-day leadership of
the Company, representing the Company to
clients, employees, partners, suppliers,
governments and other stakeholders
– Develops the strategic direction for
consideration by the Board
– Sets the tone at the top with regard to culture
and values
– Ensures there are effective processes for
engaging with and listening to employees
and other stakeholders
acts as an intermediary for the other Directors
– Meets with the Non-Executive Directors (without
the Chair present) when necessary and at least
once a year to appraise the Chair’s performance
and communicates the results to the Chair
COMPANY SECRETARY
– Ensures the Board operates in accordance with
the corporate governance framework and that
there are good information flows between the
Board and Committees
– Advises the Board on matters of corporate
governance
– Supports the Board’s development through
organising training and induction programmes
– Supports the Board and Committee Chairs with
annual agenda planning
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WPP ANNUAL REPORT 2022
DIVISION OF RESPONSIBILITIES
CORPORATE GOVERNANCE
BOARD COMMITTEES
NOMINATION AND GOVERNANCE
COMMITTEE
– Reviews the size, skills, diversity,
AUDIT COMMITTEE
– Monitors the integrity of the financial
statements
experience and composition of the Board
– Provides oversight of internal controls and
– Leads the process for Director
risk management
appointments in conjunction with the
Board and Director and senior
management succession planning
– Oversees general governance matters,
including the ongoing suitability of the
governance framework
Read more on page 118
– Manages the relationship with the external
auditor, including making recommendations
to the Board and shareholders in relation to
the appointment and re-appointment of the
external auditor
Read more on page 122
COMPENSATION COMMITTEE
– Sets, reviews and recommends the
policy on remuneration of the Chair,
Executives and senior management team
– Recommends and monitors the
implementation of the Company’s overall
remuneration policy and strategy
– Reviews the remuneration and related
policies across the general workforce and
the alignment of incentives and rewards
with culture
Read more on page 130
SUSTAINABILITY COMMITTEE
– Supports the Board in its oversight of
corporate responsibility, sustainability and
reputational matters
– Reviews and monitors implementation of
the Company’s sustainability strategy
– Reviews policy statements on
environmental and social matters
Read more on page 128
EXECUTIVE COMMITTEES
EXECUTIVE COMMITTEE
Assists the Chief Executive Officer in
discharging his responsibilities and is
collectively responsible for implementing
strategy, ensuring consistent execution
and embedding the Company’s culture
and values.
DISCLOSURE COMMITTEE
An executive Disclosure Committee responsible
for overseeing the accuracy and timeliness of
Group disclosures and reviewing controls and
procedures in relation to the public disclosure
of financial information.
RISK COMMITTEE
An executive Risk Committee, which assists the
Board and Audit Committee in discharging their
responsibilities by reviewing, monitoring and
advising on the design and implementation of
WPP’s compliance framework, compliance
policies and procedures and risks that present
themselves throughout WPP.
WPP ANNUAL REPORT 2022
113
CORPORATE GOVERNANCE
BOARD ACTIVITIES
The key areas of focus considered by the Board during 2022 are set out below
The Board is responsible for setting the Company’s purpose, values and
culture, in addition to overseeing the Company’s overall financial performance
and execution of the strategy. The Board recognises the importance of
considering the perspectives of, and the potential impact on, the Company’s
key stakeholders in its discussions. Its responsibilities are discharged through
an annual programme of meetings, each of which follows a tailored agenda.
A typical Board meeting will comprise reports on operational and financial
performance including on the transformation programme, progress on
strategy, people updates and a deep-dive into a particular ESG topic
MATTERS CONSIDERED
PERFORMANCE
– Received regular updates on the Group’s financial performance
– Reviewed the Company’s financial results, earnings guidance, investor materials and related announcements
– Considered performance against the 2021-2022 budget and agreed on the 2022-2023 budget
– Confirmation of the viability statement and going concern assessment
– Monitored progress of the transformation programme and received deep-dives on component parts
STRATEGY & PURPOSE
PEOPLE & CULTURE
GOVERNANCE
& COMPLIANCE
– Board strategy meeting held to consider the end-to-end strategy and to align around the vision and future prospects
of the Company over the next three to five years, with a particular focus on key market trends, clients, culture, DE&I,
creativity, key markets, data and commerce as well as broader themes in areas of geopolitics, innovation and ESG
– Regional review meeting held in Berlin to deep-dive into WPP’s European businesses with a focus on geopolitical
environment, European innovation, and opportunities and challenges in the market
– Received presentations from the agencies on their work to support WPP’s strategy and updates on key clients
– Simplification activities, including: the merger of Essence and MediaCom to form EssenceMediacom and the
formation of GroupM Nexus; the opening of new WPP campuses in Brussels, Düsseldorf, Santiago, Tokyo and Toronto
in 2022 and Guangzhou, China (in 2023); and legal entity rationalisation
– Reviewed TCFD disclosures and climate-related physical and transition risks and opportunities
– Considered the timeline and approach for a net zero transition plan
– Considered how the people strategy would enable the overall business strategy and foster the best possible culture
– Prioritised return to work initiatives. Received regular updates from the Chief People Officer on talent management,
learning and development, succession planning and employee engagement, with a particular focus on driving
greater diversity and inclusion supported by data and insights
– Endorsed implementation of Making Space, which began with a Company-wide break focused on giving people
space to look after their wellbeing and inspire creativity
– Reviewed Company-wide All In survey results. For more details see page 36
– Received regular updates from the designated NED on the Workforce Advisory Panel and other People Forums
– Reviewed progress against the set of commitments and actions announced to advance racial equity
– Received reports from Board Committees and the external auditor
– Reviewed and approved the 2021 Annual Report, Form 20-F and Sustainability Report
– Reviewed the 2022 Modern Slavery Act Statement and approved it for publication on the Company website
– Reviewed Annual General Meeting arrangements and approved the 2022 Notice of Annual General Meeting
– Undertook and considered the output of an internally facilitated evaluation of the Board’s effectiveness, the
effectiveness of each committee and individual directors. For more details see page 119
– Continued focus on the Board’s composition, diversity and succession plans, resulting in the appointment of a new
Chief Financial Officer and new Senior Independent Director
– Reviewed the risk management and internal controls approach across the Group. For more details see page 124
– Carried out a robust assessment of the principal and emerging risks and uncertainties affecting the Group and the
markets we operate in and broader reputational risks, as well as strategic risk reviews, including cyber and
information security
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WPP ANNUAL REPORT 2022
COMPOSITION, SUCCESSION
AND EVALUATION
CORPORATE GOVERNANCE
BOARD ATTENDANCE TABLE: 2022
Total number of scheduled meetings
6
9
5
4
5
Board Audit Committee
Compensation
Committee
Nomination and
Governance
Committee
Sustainability
Committee
Members
Roberto Quarta
Mark Read
John Rogers
Angela Ahrendts1
Simon Dingemans – appointed on 31 January 2022
Sandrine Dufour
Tarek Farahat
Tom Ilube
Cindy Rose
Nicole Seligman
Keith Weed
Jasmine Whitbread
Dr. Ya-Qin Zhang2
Former Directors who served for part of the year
Jacques Aigrain – retired on 24 May 2022
Sally Susman – retired on 24 May 2022
Number of ad hoc meetings
Attended
Attended
Attended
Attended
Attended
6
6
6
6
6
6
6
6
6
6
6
6
6
3(3)
3(3)
5
8(8)
9
8
9
8
4(4)
0
5
5
5
5
5
5
2(2)
5
4
3(3)
4
4
0(1)
0
5
3
5
5
2(3)
3(3)
1
For Directors who served for part of the year, the numbers in brackets denote the number of meetings the Directors were eligible to attend
1 Angela Ahrendts joined the Nomination and Governance Committee in March 2022
2 Dr. Ya-Qin Zhang joined the Sustainability Committee in March 2022
BOARD COMPOSITION
As at the date of this report, our Board
comprised 10 independent Non-Executive
Directors, the Chairman and two Executive
Directors. The aim is to ensure the balance
of the Board reflects the needs of the
Company, is culturally diverse and is
able to consider matters from a broad
perspective, understanding the views of
all our stakeholders. Each individual Board
member brings a wide range of skills
and experience from different business
backgrounds to Board deliberations. Further
details, including the external appointments
held by Board members and their Committee
membership, can be found on pages 104-106.
Further detail on the responsibilities of the
Chairman and members of the Board can
be found on pages 112-113.
The chart opposite details those skills and
experience of our Board which are identified
as being particularly important to the
execution of the Company’s strategy.
OUR BOARD – A DIVERSE MIX OF SKILLS,
EXPERIENCE AND KNOWLEDGE
SKILLS
11
9
12
12
10
7
6
8
Corporate
governance
Audit and
risk
management
Finance
FMCG
Global
media and
advertising
Strategy,
transactions,
M&A
Technology ESG
GEOGRAPHICAL EXPERIENCE
12
12
12
9
8
5
Africa and
Middle
East
Asia
Pacific
Europe
International
Latin
America
North
America
WPP ANNUAL REPORT 2022
115
CORPORATE GOVERNANCE COMPOSITION, SUCCESSION AND EVALUATION
DIVERSITY
WPP believes that diversity and difference
power creativity. We foster an inclusive
culture across WPP – one that is equitable
and respectful of diverse thoughts and
individual expression – and the same
principle applies to the composition of our
Board. The Board has a diverse range of
experience by way of expertise, business
sector background and length of tenure on
the Board. Our Non-Executive Directors
demonstrate expertise from a range of
industries including tech, marketing, financial
services, FMCG and pharma, representative
of our customer base. The chart on page 115
illustrates the range of skills across the
Board, with the new appointments in
2022-2023 bringing additional expertise
in M&A, corporate governance and ESG.
The Board’s Diversity Policy reinforces the
Board’s ongoing commitment to all aspects
of diversity and supports the principles of
the FTSE Women Leaders and Parker reviews
on gender and ethnic diversity. The Policy
was reviewed during the year and
recommended updates were approved by
the Board in February 2023. As part of Board
discussions, recognition was given to the
importance and benefits of greater diversity
throughout the organisation. The targets of
the policy and an update against each of
them can be found on page 121, in addition
to a breakdown of the Board and Executive
Committee by gender and ethnicity. A copy
of the Board Diversity Policy is available on
the Company’s website at wpp.com/
investors/corporate-governance.
Diversity, equity and inclusion is also
integrated across workforce policy and
the Board is provided with regular updates
covering a range of metrics and measures,
including trends around gender and ethnic
diversity. This year we were named in the
Bloomberg Gender-Equality Index for the
fifth consecutive year1 and in the FTSE
Women Leaders Review, WPP moved up
from ninth to sixth in the FTSE 100.2
For more information see page 37
1 Gender-Equality Index 2022, Bloomberg
2 FTSE Women Leaders Review 2022
RE-ELECTION OF DIRECTORS
The Chairman, Senior Independent Director
and Non-Executive Directors are appointed
for a three-year term, subject to annual
re-election by the shareholders at the AGM.
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 United
States’ standards, which is nine years.
Nicole Seligman and Tarek Farahat will not
stand for re-election at the AGM in 2023.
With the exception of Joanne Wilson, who
is standing for election for the first time,
all other Directors will stand for re-election
at the AGM with the support of the Board.
The Non-Executive Directors’ letters of
appointment are available for inspection
at the Company’s registered office.
INDUCTION PROGRAMME
To ensure that they are able to effectively
contribute to discussion and decision-making,
all Directors participate in an induction
programme on joining the Board. Each
induction programme is tailored to the
individual Director, based on their personal
experience and background, including
matters specific to their role as a member
of the Committees upon which they sit.
Each induction programme includes
meetings with members of the Executive
Committee, senior management and external
advisors including the external auditor and
the Company’s corporate brokers. New
Directors will also receive a Board induction
pack, which is devised to assist with building
an understanding of the Company and to
introduce the Company’s key stakeholders,
as well as explain the commercial and
regulatory environment in which the
Company operates. Access to key industry
bodies and publications is also provided.
INDEMNIFICATION OF DIRECTORS
Liability insurance and third-party indemnity
provisions are in force for the benefit of
Directors and officers who held office during
the year and up to the approval of the
Annual Report.
BOARD EVALUATION
Each year, WPP completes a review of the
Board and its Committees to monitor their
effectiveness and identify improvement
opportunities. Progress against the outcomes
of the 2021 evaluation conducted by Nicole
Seligman, Senior Independent Director, are
set out in the table shown overleaf.
2022 BOARD EVALUATION
The 2022 evaluation was internally
facilitated by the Senior Independent
Director. The review comprised a
questionnaire and discussions with each
member of the Board based on a number of
themes, including the Board’s leadership,
development and effectiveness and how the
Board was working as a whole, performance
and strategy including key challenges, risks
and opportunities for WPP over the longer
term and alignment of leadership skills,
experience and expertise against them,
stakeholder insights and broader additional
areas of future focus.
The conclusions of the 2022 review were
positive, confirming that the Board continues
to operate effectively with strong leadership
and a continual enhancement of skills and
experience. The relationships among the
Chairman, the Senior Independent Director,
Non-Executive Directors and the Executive
Directors remained of a high quality. Previous
evaluation recommendations had been
implemented effectively and the Board’s
strategic stewardship of key matters
remained strong.
Key areas of focus in 2023 will be:
– Briefings/deep-dives: enhance depth
of Board operational and commercial
knowledge through deep-dive sessions
outside scheduled meetings on key
themes and component parts of the
strategy including technology, key
markets, key agency businesses and
transformation workstreams
– Stakeholder engagement and insights:
continue to identify and create
opportunities to engage with the
Company’s broader stakeholder groups
(internal and external) and receive
insights on their views and expectations
of the Company
116
WPP ANNUAL REPORT 2022
COMPOSITION, SUCCESSION AND EVALUATION
CORPORATE GOVERNANCE
– Succession planning and talent
development: as well as continuing to
review the optimal composition and
skills of the Board, greater focus and time
to be spent on WPP’s senior leadership
succession and talent development,
reviewing key criteria and skillsets
required for senior leadership positions to
support the longer-term prospects of the
Company, as well as engaging with the
talent bench and hearing their views on
key strengths, weaknesses, opportunities
and threats for the organisation
– Longer-term strategy and performance:
continue to focus on long-term strategy
and organic and inorganic opportunities
for margin enhancement and oversee key
deliverables under the transformation
programme
CHAIRMAN’S PERFORMANCE REVIEW
The Senior Independent Director met with
the Non-Executive Directors during the year
to appraise the performance of the Chairman.
BOARD TRAINING AND DEVELOPMENT
To assist the Board in undertaking its
responsibilities, ongoing training is provided
to all Directors and training needs are
assessed as part of the induction programme
and Board evaluation process. In 2022, the
Board programme included regular
presentations from the management teams
of our businesses on developments in WPP’s
sector and operating environment,
particularly focused on financial and IT
transformation, metaverse, ESG and key
emerging risks.
KEY RECOMMENDATIONS FOR 2022
WHAT WE HAVE DONE IN 2022
STRATEGY AND PERFORMANCE
Create further engagement opportunities
with stakeholders to receive insights and
enhance visibility of the emerging and
evolving landscape. Ensure there is continued
and dedicated focus on the transformation
programme including performance of the
component parts
The agendas delivered at the Board regional
review and strategy meetings in particular
ensured there was a mixture of internal and
external insights shared, including on external
market perception, digital transformation and
innovation in response to the changing
landscape and future trends. The Board
received deep-dives on key transformation
workstreams at each Board meeting
SUCCESSION PLANNING
Continue to strengthen leadership, talent,
diversity and succession for key senior
management positions, and consider future
Board and committee composition
Leadership talent and development and
succession remained a focus through the
year with the Board being kept apprised of
initiatives in place to strengthen and support
key talent
RISK/RISK APPETITE
Further align approach to risk appetite across
the organisation to support the longer-term
strategy and inform key decisions. Monitor
cyber risk and resilience across the organisation
MEETING AGENDAS
Improve the balance between presentation
and discussion at meetings to create more
time for debate
A full review of enterprise risk across the
organisation and external risk factors was
conducted. Key aspects of the strategy and
operations across the organisation are
continually tracked and monitored from a risk
perspective, including emerging risks. IT and
cyber risk updates were regularly shared with
both the Audit Committee and Board, and a
summary dashboard was introduced to
monitor progress, including on infrastructure
and cyber capabilities and ongoing
assessments of aged technology, cyber
vulnerabilities and business continuity risk
Presenters received guidance on both the
content and format of presentations, final
versions of which were reviewed by the CEO
or CFO to ensure they covered the salient
points and were succinct enough to allow
more time for discussion. Presenters were
encouraged to focus on areas where the
Board’s input would be particularly valuable
At the Board strategy meeting in October,
members of the senior management team,
together with the Board, had an opportunity
to review WPP’s strategy for performance,
data and transformation.
The Group Chief Counsel and the Group
Company Secretary provide regular updates
on current legal and governance matters
relevant to WPP, with external counsel
providing briefings on the wider landscape.
The Board activities schedule on page 114
sets out further detail on topics covered
during the year.
The Board is asked to complete a
programme of training covering How We
Behave, Business Integrity, Safer Data and
Sustainability, which are connected to the
ethical and business objectives set out in
our Code of Conduct. As part of our ongoing
commitment to create more open and
inclusive workplaces, the Board is also asked
to complete a dedicated Company-wide
inclusion module – Belonging at WPP.
All Directors have access to the advice and
services of the Group Chief Counsel and the
Group Company Secretary. The Board also
obtains advice from professional advisors,
as and when required, and Directors may,
as required, obtain external advice at the
expense of the Company.
TIME COMMITMENT
In addition to attending Board and
Committee meetings, each of the Non-
Executive Directors devotes sufficient
time to the Company to ensure that their
responsibilities are met effectively. When
making new appointments, the Board takes
into account other demands on Directors’
time. Prior to appointment, significant
commitments are disclosed by Directors
to the Board. Any additional external
appointments are not undertaken by any
of the Directors without prior approval
from the Board.
WPP ANNUAL REPORT 2022
117
CORPORATE GOVERNANCE
NOMINATION AND
GOVERNANCE COMMITTEE REPORT
Committee members
- Roberto Quarta (Chair)
- Nicole Seligman
- Tom Ilube CBE
- Angela Ahrendts DBE
(appointed 15 March 2022)
The Company Secretary is Secretary to the
Committee and attends all meetings.
Key responsibilities:
- Reviewing the composition of the Board
including the balance of skills, knowledge
and expertise, experience and diversity
- In conjunction with the Board, considering
succession planning for Non-Executive
Directors, Executive Directors and senior
management
- Making recommendations to the Board
for the appointment or reappointment
of Directors
- Considering other significant commitments
of prospective directors and reviewing the
external commitments of Directors
- Monitoring external governance
developments and bringing any issues
to the attention of the Board
Attendance at Committee meetings during
the year can be found on page 115.
Any decisions relating to the appointment
of Directors are made by the entire Board
based on the merits of the candidates and
the relevance of their background and
experience, measured against objective
criteria, with care taken to ensure that
appointees have enough time to devote
to our business. Detail of the Committee’s
review of the Board Diversity Policy and
its assessment of progress against it can
be found on pages 120-121, alongside
gender identity and ethnic background
information, which has been presented in
accordance with FCA Listing Rules on an
early adoption basis.
The Committee also considered the
findings of the 2022 Board evaluation
which was conducted internally by
Nicole Seligman in her capacity as Senior
Independent Director. I am pleased that
the review concluded that the Committee
and the Board are operating effectively.
Lastly, the Committee continued to review
action taken to comply with the Code and
other legal, governance and regulatory
obligations during the year.
I would like to thank Nicole both personally
and on behalf of the Board for her outstanding
commitment and invaluable contribution to
the Board and its committees throughout her
tenure. I should also like to thank the other
Committee members for their dedication
and support throughout the year. The
sections that follow provide more detail on
the work undertaken by the Committee
during the year.
Roberto Quarta
Chair of the Nomination
and Governance Committee
23 March 2023
ROBERTO QUARTA
CHAIR OF THE NOMINATION AND GOVERNANCE
COMMITTEE
DEAR SHAREHOLDER
As Chair of the Nomination and Governance
Committee, I am pleased to present the
Committee’s 2022 report.
During the year, the Committee continued
to focus on near- to medium-term succession
planning, with a particular focus on
appointing a new Senior Independent
Director. As noted in last year’s report,
Nicole Seligman will retire from the Board
at the 2023 AGM having completed her
nine-year tenure. The Committee, with
the initial assistance of Russell Reynolds,
led the search process based on agreed
criteria and I am delighted that Angela
Ahrendts has agreed to be appointed as
Senior Independent Director with effect
from the conclusion of the 2023 AGM.
Angela will bring deep knowledge and
insight to this important role and lead the
process for my successor.
The Committee, with further assistance
from Russell Reynolds, also led the search
process for a Chief Financial Officer to
succeed John Rogers following his decision
to step down from the Company. Following
a formal, inclusive and extensive selection
process, the Board appointed Joanne Wilson
to succeed John as Chief Financial Officer,
which will take effect immediately following
the announcement of the Company’s 2023
First Quarter Trading Update. More detail on
the appointment process is set out overleaf.
Joanne is a highly regarded CFO and leader,
and we look forward to welcoming her to
WPP this year.
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WPP ANNUAL REPORT 2022
NOMINATION AND GOVERNANCE COMMITTEE REPORT
CORPORATE GOVERNANCE
BOARD AND COMMITTEE CHANGES
As mentioned in last year’s report, Simon
Dingemans was appointed on 31 January
2022 and Jacques Aigrain and Sally Susman
did not stand for re-election at the AGM in
2022. Nicole Seligman and Tarek Farahat
will not be standing for re-election at the
AGM in 2023. It was announced in November
2022 that John Rogers had decided to step
down from the Company and would be
succeeded by Joanne Wilson, which will
take effect immediately following the
announcement of the Company’s 2023
First Quarter Trading Update.
and took into account the balance of skills,
knowledge, independence, diversity and
experience of the Board, together with an
assessment of the time commitment
expected. The preferred candidate met
with the Chair and other members of the
Committee and Board, following which
the Committee recommended to the Board
the appointment of Angela Ahrendts.
Joanne Wilson will stand for election at the
AGM. All other Directors, with the exception
of Nicole Seligman and Tarek Farahat, will
stand for re-election.
We also made a number of changes to
Committee membership in early 2022, as
disclosed in last year’s report. In addition, as
announced on 15 March 2023, Cindy Rose will
step down as a member of the Compensation
Committee and will join the Nomination and
Governance Committee with effect from the
conclusion of the 2023 AGM.
SUCCESSION PLANNING
The Committee, with the assistance of
Russell Reynolds, who are independent of
the Company and all the Directors, led the
search for a new Chief Financial Officer to
succeed John Rogers following his decision
to step down from the Company. A formal
selection process that was inclusive and
extensive was followed by an interview
process which gave the Non-Executive
Directors the opportunity to meet the
shortlisted candidates. The Non-Executive
Directors were kept well informed
throughout the process and the Chair
received support from the Global Chief
People Officer and the Company Secretary.
Board succession planning, from the
perspective of addressing diversity and
governance requirements, following the
planned Senior Independent Director
departure at the 2023 AGM, also formed
a key area of focus this year.
The Committee, having considered the
criteria, relevant skills, experience and
expertise needed on the Board, with the
initial assistance of Russell Reynolds, led
the search for a new Senior Independent
Director with business leadership expertise
as well as strong facilitation and engagement
skills. The Committee considered a list of
potential internal and external candidates
The Committee will continue to review and
refresh the composition and size of the Board
and its Committees to ensure we have the
right balance of skills and attributes and
fresh perspectives, to support the next
stage of the Company’s growth and long-
term strategy. The Committee recommended
that given the current size of the Board,
future appointments should be made on
a needs basis.
The Committee supported the Board on
succession plans for senior management
and Executive Committee members to
ensure a diverse pipeline of potential
successors to continue to support the
longer-term prospects of the business.
INDEPENDENCE OF NON-EXECUTIVE
DIRECTORS
The Committee assessed the independence
of all the Non-Executive Directors pursuant
to the Code and concluded that all are
considered independent and continue
to make independent contributions and
effectively challenge management. The
Committee was satisfied with the
contributions and time commitment of all
the Non-Executive Directors during the year.
2022 AGM VOTING OUTCOMES
At the Company’s AGM in 2022 some
shareholders expressed concerns with
the number of directorships of listed
companies held by Jasmine Whitbread,
and the potential impact on her time
commitment to WPP. The Board believes
that Jasmine has brought and continues to
bring considerable business experience and
knowledge of the client sectors that WPP
serves and makes a valuable contribution
to the work of the Board, as set out in the
CHIEF FINANCIAL OFFICER
APPOINTMENT PROCESS
STEP 1
STEP 2
STEP 3
STEP 4
STEP 5
The Committee engaged Russell
Reynolds and agreed a search
specification and preferred
attributes, relevant skills, experience
and expertise.
The Chair and other members of the
Committee and Board met with the
shortlisted candidates. Following
the interviews, the Nomination and
Governance Committee members
met to discuss feedback.
The Committee was unanimous in
its final selection and recommended
to the Board that Joanne Wilson be
appointed as Chief Financial Officer.
The Compensation Committee
approved the terms and conditions
relating to Joanne Wilson’s
remuneration arrangements.
Joanne Wilson’s appointment as
Chief Financial Officer was approved
by the Board and announced on
8 November 2022 and will take
effect immediately following the
announcement of the Company’s
2023 First Quarter Trading Update.
statement on the AGM section of our website
at wpp.com. The Board is satisfied that all
Directors, including Jasmine, continue to
make effective and valuable contributions to
the Board and continue to devote sufficient
time to discharging their responsibilities as
Directors of WPP.
2022 BOARD EVALUATION
The Committee considered the findings
of the 2022 Board evaluation.
The performance of the Committee was
considered as part of the 2022 Board
evaluation process, which concluded that
the Committee is operating effectively and
continues to successfully plan for and ensure
Board composition is aligned to strategy
and governance requirements, and reflects
greater diversity and an enhanced mix of
skills and expertise. Further details on the
process and output of the Board evaluation
are set out on page 116.
WPP ANNUAL REPORT 2022
119
CORPORATE GOVERNANCE NOMINATION AND GOVERNANCE COMMITTEE REPORT
GOVERNANCE
The Committee has responsibility for
overseeing the effective governance of the
Board and its Committees and for making
recommendations to the Board to ensure
arrangements are consistent with emerging
best practice. During the year, the Committee
reviewed action taken to comply with the
Code and other legal, governance and
regulatory obligations. The Committee
also reviewed and recommended for
Board approval the Directors External
Appointments Policy in December 2022.
WORKFORCE ENGAGEMENT
Cindy Rose continued to fulfil the position of
designated Non-Executive Director for WPP’s
established UK Workforce Advisory Panel
(WAP). As noted in last year’s report, similar
People Forums were established during 2021
in the United States and India to enable
further engagement with the Company’s
global employee base.
Cindy regularly attends the WAP meetings
and where possible, the United States and
India People Forums, and presents updates
on issues discussed at Board meetings as
well as engaging with and hearing from our
people on a broad range of topics. Agendas
for the WAP meetings are set by WAP
members, views and insights from the
various forums are shared directly with the
Board, and the Board’s feedback on how
the insights have informed decision making
is presented back. During 2022, Jasmine
Whitbread, Chair of the Compensation
Committee, the WPP Chief People Officer
and the Global Head of Reward attended
WAP meetings as guests to engage with
members on remuneration and the impact
of remuneration policy and outcomes. Issues
raised at the WAP meetings and People
Forums included: return to office plans; cost
of living concerns; employee retention; and
diversity and inclusion.
The Chief Executive Officer and the Chief
People Officer provided frequent people
updates to the Board, including results on
various employee engagement and culture
monitoring surveys undertaken throughout
the year on a range of topics from career
growth and development to engagement,
belonging and wellbeing. In addition, the
Global Inclusion Council met throughout
the year to support the delivery of the
Company’s diversity, equity and inclusion
commitments. For more information on
initiatives to engage with our people and
actions taken, please see page 36.
CONFLICTS OF INTEREST
The Committee and the Board are satisfied
that the external commitments of the
Non-Executive Directors and of me, your
Chairman, do not conflict with our duties
and commitments as Directors of the
Company, and that each Non-Executive
Director is able to dedicate sufficient time
to the Company’s affairs.
Directors have a duty to avoid a situation
in which they have, or may have, a direct
or indirect interest that conflicts, or might
conflict, with the interests of the Company.
This duty is in addition to the existing duty
owed to the Company to disclose to the
Board any interest in a transaction or
arrangement under consideration by the
Company. Our Directors must: report any
changes to their commitments to the
Committee; immediately notify the Company
of actual or potential conflicts or a change
in circumstances relating to an existing
authorisation; and complete an annual
conflicts questionnaire. Any conflicts or
potential conflicts identified are considered
and, as appropriate, authorised by the Board
in accordance with the Company’s Articles
of Association. A register of authorised
conflicts is also reviewed periodically.
During the financial year, no actual or
potential conflicts were identified.
FOCUS FOR 2023
The Committee, in conjunction with the
Board, will continue to review succession
plans both at the Board, Executive
Committee and senior management level
to develop a strong and diverse talent
pipeline. In particular, the Committee, led
by the Senior Independent Director, will
focus on the search for a new Non-Executive
Chair, in addition to building an induction
and training programme to support the
appointment process.
The Committee will also continue to monitor
external governance developments likely to
impact the operation of the Board.
TERMS OF REFERENCE
The Committee’s terms of reference are
reviewed annually by the Committee and
adopted by the Board, most recently on
1 February 2023. A copy of the Committee’s
terms of reference is available on the
Company’s website at wpp.com/investors/
corporate-governance.
BOARD DIVERSITY POLICY
In February 2023, the Committee reviewed
the Board Diversity Policy and associated
targets. The review recommended policy
changes and proposed new diversity
targets, which the Board approved on
1 February 2023. As part of Board
discussions, recognition was given to the
importance and benefits of greater diversity
throughout the organisation. The targets of
the policy and an update against each of
them are set out overleaf. A copy of the
Board Diversity Policy is available on the
Company’s website at wpp.com/investors/
corporate-governance.
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WPP ANNUAL REPORT 2022
NOMINATION AND GOVERNANCE COMMITTEE REPORT
CORPORATE GOVERNANCE
BOARD DIVERSITY POLICY – TARGETS
PREVIOUS POLICY TARGETS1
PROGRESS AGAINST TARGETS
POLICY TARGETS
FOR 2023/2024
POSITION AGAINST TARGETS
FOR 2023/20242
33% female share of Board
Directors by 2020
As at 31 December 2022,
women represented 38% of the
Board, as shown in the below
gender identity table
To maintain a minimum of 40%
female share of Board Directors
As at the date of this report, women
represent 38% of the Board
The Board recognises that it may
fall short of the policy’s stated aim
for periods of time while the Board
is refreshed. When Joanne Wilson
succeeds John Rogers as CFO
following the announcement of the
Company’s 2023 First Quarter Trading
Update, the proportion of women on
the Board will be 46%. Our ambition
for Board gender diversity remains
to reach parity
As at the date of this report, there
continues to be three Board Directors
from an ethnic minority background,
equating to a 23% share
As at the date of this report, one
senior Board member is a woman
When Joanne Wilson succeeds
John Rogers as CFO following the
announcement of the Company’s
2023 First Quarter Trading Update,
two senior Board members will
be women
Minimum of one Board Director
from a minority ethnic
background by 2021
As at 31 December 2022, three
Board Directors were from a
minority ethnic background,
as shown in the below ethnic
background table
To maintain a minimum of 10%
share of Board Directors from
an ethnic minority background
N/A
N/A
To maintain at least one female
in the senior Board positions
of Chair, Senior Independent
Director, Chief Executive Officer
or Chief Financial Officer
1 Previously recommended by the Hampton-Alexander Review and Parker Review
2 Further information on Board composition and diversity can be found on pages 115-116
TABLES PRESENTED WITH REFERENCE TO LISTING RULE 9.8.6, AS AT 31 DECEMBER 2022
GENDER IDENTITY
Men
Women
Not specified/prefer not to say
ETHNIC BACKGROUND
Number of
Board members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
8
5
-
62%
38%
-
3
1
-
12
8
-
60%
40%
-
Number of
Board members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
White British or other white (including minority-white groups)
Mixed/multiple ethnic groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified/prefer not to say
10
1
1
-
1
-
77%
8%
8%
-
8%
-
4
-
-
-
-
-
16
1
1
-
-
2
WPP ANNUAL REPORT 2022
80%
5%
5%
-
-
10%
121
CORPORATE GOVERNANCE
AUDIT COMMITTEE
REPORT
Committee members
- Sandrine Dufour (Chair)
- Tarek Farahat
- Cindy Rose OBE
- Tom Ilube CBE
- Simon Dingemans
(appointed 31 January 2022)
The Company Secretary is Secretary to the
Committee and attends all meetings.
The entire Board is invited to attend the
Committee meetings and typically the Chair of
the Board and the Senior Independent Director
attend. Other regular attendees include the
Chief Executive Officer, the Chief Financial
Officer, the Chief Operating Officer, the Group
Chief Counsel, the Group Finance Director, the
Group Finance Controller, the Global Director
Risk and Controls, the General Counsel
Corporate Risk, the Director of Internal Audit,
and the external auditor.
The Board has determined that Sandrine Dufour
is the Audit Committee financial expert as
defined by the Sarbanes-Oxley Act 2002
and, together with Tarek Farahat and Simon
Dingemans, has recent and relevant financial
experience for the purposes of the 2018 UK
Corporate Governance Code. The members
of the Committee have been determined
to be independent within the meaning of the
applicable NYSE listing standards and rules of
the Securities Exchange Act 1934, as amended.
The Committee has, as a whole, competence
relevant to the sectors in which the Company
operates.
Key responsibilities
- Monitoring the integrity of financial
information provided to shareholders,
including the review of significant financial
reporting judgements
- Reviewing the integrity, adequacy and
effectiveness of the Company’s internal
financial controls and the internal control
and risk management systems, including
the risk management framework and related
compliance activities and the assessment
of principal and emerging risks
- Monitoring and reviewing the Company’s
internal audit function effectiveness and
activities
- Reviewing the selection and appointment
of the external auditor
- Reviewing the effectiveness of the external
audit process and reviewing and monitoring
the independence and objectivity of the
external auditor
Attendance at Committee meetings during the
year can be found on page 115.
122
WPP ANNUAL REPORT 2022
- Reviewing headline cyber security risks
and vulnerability management capabilities
- Overseeing initial audit transition
activities, following the Board’s decision,
subject to shareholder approval, to
appoint PricewaterhouseCoopers LLP
(PwC) as external auditor from the
Company’s 2024 financial year onwards
- Ongoing monitoring of the business
integrity programme, including oversight
of whistleblower reports
- Monitoring progress against the internal
audit plan and reviewing the effectiveness
of the internal audit function
- Providing recommendations to the Board
to extend the share buyback programme
Other reviews undertaken in 2022 by the
Committee included:
- Group tax strategy, performance and
drivers of the Group effective tax rate;
- Reports on any actual or potential
material litigation
- Group Treasury performance and risk
management
- Reports on UK corporate reporting and
audit reform initiatives
- Supply chain finance
- Enterprise risk management and the
risk management framework
- Procurement organisational design
- Reports on data protection and
SANDRINE DUFOUR
CHAIR OF THE AUDIT COMMITTEE
DEAR SHAREHOLDER
As Chair of the Audit Committee, I am
pleased to present the Committee’s 2022
report, my first having taken over the role of
Chair from Jacques Aigrain during the year.
I would like to thank Jacques for his valuable
contributions to the Committee and smooth
handover. In the following pages of this
report, we have set out an overview of the
activities undertaken or overseen by the
Committee during the year.
The Committee has discharged its important
oversight role, in accordance with its terms
of reference, to monitor the integrity of the
Company’s financial reporting and the
effectiveness of internal control and risk
management systems on which it has
reported to the Board.
Key areas of focus for the Committee in
2022 included:
data privacy
- Continuing to provide oversight of the
financial reporting process and integrity
of the financial statements
- Monitoring the role and performance of
the Risk and Controls Group against its
objectives, including for the continuous
improvement of the control environment
- Considering the identification and review
of emerging risks, including ongoing
macroeconomic uncertainty, global
climate change and sustainability and
associated impacts to the regulatory
landscape
The Chief Financial Officer and Chief
Information Officer provided regular
updates directly to the Board on the IT and
finance components of the transformation
programme, as well as deep-dives on
other parts. The Board also established
a Transformation Board sub-Committee
to oversee programme aspects in
greater depth.
During 2023 the Committee will provide
oversight of the CFO transition including
transformation programme responsibilities
following the appointment of Joanne Wilson,
who will succeed John Rogers as Chief
Financial Officer.
AUDIT COMMITTEE REPORT
CORPORATE GOVERNANCE
The annual Board effectiveness evaluation
assessed the performance of the Committee
and I am pleased that this concluded that
the Committee operates effectively and the
Board takes reassurance from the quality of
the Committee’s work. The Board is satisfied
that the Committee members bring a
wide range and depth of financial and
commercial experience and, in addition
to those members designated to have
recent and relevant financial experience
for the purposes of the 2018 UK Corporate
Governance Code (the ‘Code’), Tom Ilube
and Cindy Rose bring extensive subject
matter and process expertise including on
emerging technologies and cyber security
to the Committee’s membership.
The sections that follow provide a more
detailed explanation of the work of the
Committee undertaken during the year.
Sandrine Dufour
Chair of the Audit Committee
23 March 2023
FINANCIAL REPORTING
The Committee is responsible for reviewing
the quarterly, half yearly and annual financial
results, including the Annual Report, with
management, focusing on the integrity of
the financial reporting process, compliance
with relevant legal and financial reporting
standards and application of accounting
policies and judgements.
During the year, the Committee considered
management’s application of key accounting
policies, compliance with disclosure
requirements and relevant information
presented on significant matters of
judgement to ensure the adequacy, clarity
and completeness of half yearly and annual
financial results announcements. The
Committee undertook a detailed review
before recommending to the Board that
the Company continues to adopt the going
concern basis in preparing the annual
financial statements.
The Committee also reviewed various
materials to support the statements in the
Annual Report on risk management and
internal control and the assessment of the
Company’s long-term viability - see page 90
for more details.
FAIR, BALANCED AND
UNDERSTANDABLE
To support the Board’s confirmation that
the Annual Report and Accounts, taken as
a whole, is considered to be fair, balanced
and understandable, and provides the
information necessary for shareholders to
assess the Company’s position, performance,
business model and strategy, the Committee
oversaw the process by which the Annual
Report and Accounts were prepared.
The Committee received a summary of
the approach taken by management in
the preparation of the Annual Report and
Accounts, and considered in particular: the
accuracy, integrity and consistency of the
messages conveyed in the Annual Report;
the appropriateness of the level of detail in
the narrative reporting; and that a balance
had been sought between describing
potential challenges and opportunities.
The Committee therefore recommended
to the Board (which the Board subsequently
approved) that, taken as a whole, the 2022
Annual Report and Accounts is fair, balanced
and understandable and provides the
necessary information for shareholders
to assess the Company’s position and
performance, business model and strategy.
WPP ANNUAL REPORT 2022
123
CORPORATE GOVERNANCE AUDIT COMMITTEE REPORT
INTERNAL CONTROLS OVER
FINANCIAL REPORTING
The Committee carried out in-depth reviews
of the Group’s internal controls over financial
reporting, with a focus on monitoring and
compliance with Section 404 of the
Sarbanes-Oxley Act.
During 2022, the Committee monitored the
effectiveness of the internal financial controls
and internal control system of the Group.
This primarily consisted of reviewing
assurance reports from internal audit on
the effectiveness of the internal controls
and being provided frequent updates of the
status of and reviewing the conclusions of
management’s assessment of internal control
over financial reporting. Management’s
assessment was based on the internal audit
testing plan reviewed by the Committee in
early 2022, which used the criteria for
effective internal control reflected in the
Internal Control - Integrated Framework
(2013) issued by the Committee of
Sponsoring Organizations of the Treadway
Commission (COSO). Management evaluated
all internal control deficiencies identified
throughout the Group both individually
and in the aggregate, to conclude on the
effectiveness of the Group’s internal control
framework and reported these conclusions
to the Committee.
INTERNAL AUDIT
The Internal Audit team, which reports
functionally to the Audit Committee,
provides independent assurance over the
Company’s risk management and internal
controls processes via internal audits and the
testing programme for the Sarbanes-Oxley
Act. The Internal Audit team has unrestricted
access to all Group documentation, premises,
functions and employees to enable it to
perform its work.
RISK MANAGEMENT AND
INTERNAL CONTROL
The Board has overall responsibility for
setting the Company’s risk appetite and for
ensuring there is effective risk management.
The Committee supports the Board in the
management of risk and, in 2022, was
responsible for monitoring and reviewing
the effectiveness of the Company’s
approach to risk management and the
internal control framework.
The Committee Chair met regularly with
the Director of Internal Audit during the year
without executive management present to
discuss risk matters and the nature of internal
audit findings in more depth. The Director
of Internal Audit formally reports to each
Committee meeting on the key internal
audit findings, together with the status
of management’s implementation of
recommendations. On a quarterly basis this
includes key themes from internal audit’s
work. Significant issues identified were
discussed in detail by the Committee along
with the remediation plans to resolve them.
The annual internal audit plan includes
assurance over the Group’s transformation
activities, other key projects and initiatives,
and audits of key business risks and
operating companies. It was approved by
the Committee and progress against the
plan was monitored throughout the year
with any changes to the plan noted and
approved by the Committee. The team
continued to operate successfully remotely
and have recommenced limited international
travel in some regions to deliver audit work.
We are satisfied that the scope, extent
and effectiveness of internal audit work are
appropriate for the Group and that there is
an appropriate plan in place to sustain and
continually improve this.
Under the overall supervision of the
Committee, the WPP Risk Committee,
an executive committee supported by Risk
Committees in each network, identifies and
assesses emerging and principal risks and
oversees and manages day-to-day risk in
the business. The General Counsel,
Corporate Risk provides regular updates
to the Committee on risk matters including
emerging risks, adherence to the Company’s
business integrity programme (including
mitigating and remediation actions) and the
monitoring and evolution of the Company’s
four risk modules: governance, culture,
appetite and management.
An overview of how our risks are assessed
and managed and how these were reviewed
to assess the Company’s viability can be
found on pages 86 to 89, together with an
assessment of the principal risks and
uncertainties facing the Company on pages
91 to 97.
In fulfilling its responsibilities, the Committee
received reports throughout 2022 to enable
evaluation of the control environment and
risk management framework.
124
WPP ANNUAL REPORT 2022
AUDIT COMMITTEE REPORT
CORPORATE GOVERNANCE
EFFECTIVENESS AND INDEPENDENCE
OF THE EXTERNAL AUDITOR
In 2022, the Committee evaluated the
effectiveness of the external audit process
through its ongoing review of the external
audit planning process and discussions with
key members of the Company’s finance team.
The Committee also considered:
- A report from Deloitte confirming it
maintains appropriate internal safeguards
in line with applicable professional
standards to remain independent, and
mitigation actions to safeguard Deloitte’s
independence such as the operation of
the Non-Audit Services Policy
- The Audit Quality Review’s 2021/22 Audit
Quality Inspection Report on Deloitte and
the actions taken by Deloitte to address
the findings in that report
BUSINESS INTEGRITY
During the year, the Committee reviewed
the adherence to, and evolution of, the
business integrity programme. The Company
has established procedures by which all
employees may, in confidence (and, if they
wish, anonymously) report any concerns and
more information on this can be found on
page 87. The Committee received regular
updates on the Company’s systems and
controls for ethical behaviour, which included
matters reported on the Company’s Right to
Speak helpline and investigations and actions
undertaken in response. The Committee
received regular reports on the total number
and nature of reports from whistleblowers
and investigations by region and by network
both for substantiated and unsubstantiated
cases. During the year the Committee was
satisfied that the Right to Speak helpline
arrangements are effective and facilitate the
proportionate and independent investigation
of reported matters and allow appropriate
follow-up action.
TERMS OF REFERENCE
The Committee’s terms of reference are
reviewed annually by the Committee and
adopted by the Board, most recently on
1 February 2023. A copy of the Committee’s
terms of reference is available on the
Company’s website at wpp.com/investors/
corporate-governance.
EXTERNAL AUDITOR
The Committee has primary responsibility
for overseeing the relationship with
the external auditor, including assessing
its performance, effectiveness and
independence annually prior to making a
recommendation to the Board in respect
of its reappointment or removal.
The Company has complied with the
Competition and Markets Authority’s
Statutory Audit Services Order 2014 for
the financial year under review in respect
to audit tendering and the provision of
non-audit services.
AUDIT TENDER
In last year’s report, we advised shareholders
that after the conclusion of a competitive
audit contract tender and for purposes of
compliance with applicable auditor rotation
rules, the Board appointed, upon the
Committee’s recommendation,
PricewaterhouseCoopers LLP (PwC) as
the Company’s new independent auditor
commencing with the audit of the Company’s
2024 financial year. PwC’s appointment
remains subject to shareholder approval to
be obtained at the Company’s 2024 AGM.
Deloitte was re-elected at our 2022 AGM,
will be proposed for re-election at our 2023
AGM, and will continue in office until they
complete the audit for the financial year
ending 31 December 2023.
A transition governance group (Governance
Group) was established during 2021. It is led
by the Group Finance Director and includes
representation from WPP, PwC and Deloitte.
Ten workstream teams, consisting of
members from both WPP and PwC, have
coordinated during 2022 to ensure all
aspects of the transition are proactively
managed. The workstreams have provided
regular updates to the Governance Group,
which in turn provided quarterly updates
to the Committee. This has supported the
Committee in overseeing the initial audit
transition activities from Deloitte to PwC
to ensure that:
- Deloitte continues to discharge its
auditing responsibilities effectively
to the end of its time in office
- PwC takes the necessary steps to ensure
that it is independent of the Company and
fully mobilised by the time it begins audit
planning activities (including shadowing
Deloitte’s 2023 audit) at an appropriate
juncture in 2023. It is anticipated that PwC
will be independent by early Q2 2023
The Committee looks forward to further
updating shareholders on discharging the
activities associated with this transition in
the Company’s 2023 Annual Report.
WPP ANNUAL REPORT 2022
125
CORPORATE GOVERNANCE AUDIT COMMITTEE REPORT
AUDIT/NON-AUDIT SERVICES
£m
2022
2021
38.0
33.7
Audit fees (2022: 36.9, 2021: 31.9)
Non-audit fees (2022: 1.1, 2021: 1.8)
Deloitte attended all Committee meetings
in 2022 and met the Committee at least once
without executive management present.
Overall, the Committee concluded that:
- It continues to be satisfied with the
performance of the external auditor and
with the policies and procedures in place
to maintain its objectivity and
independence
- Deloitte possesses the skills and
experience required to fulfil its duties,
there was constructive challenge and
appropriate scepticism where necessary
to ensure balanced reporting and the
audit for the year ended 31 December
2022 was effective
APPOINTMENT OF EXTERNAL AUDITOR
AT ANNUAL GENERAL MEETING
The Committee has recommended to the
Board, and the Board has approved, that
Deloitte should be reappointed as auditor.
Resolutions will be put to the 2023
Annual General Meeting proposing the
reappointment of Deloitte and to authorise
the Audit Committee to determine the
auditor’s remuneration.
NON-AUDIT SERVICES
To preserve objectivity and independence,
Deloitte is not asked to provide other
services unless it is in the best interests
of the Company, in accordance with the
Non-Audit Services Policy that sets out the
circumstances and financial limits within
which Deloitte is permitted to provide
certain non-audit services.
All fees are summarised periodically for the
Committee to assess the aggregate value of
non-audit fees against audit fees. During the
year, Deloitte received £36.9 million in fees
for work relating to the audit services it
provides to the Company. Non-audit related
work undertaken by Deloitte amounted to
fees of £1.1 million this year, which amounted
to 3% of the total audit fees paid.
126
WPP ANNUAL REPORT 2022
38.0
AUDIT COMMITTEE REPORT
CORPORATE GOVERNANCE
FINANCIAL REPORTING AND SIGNIFICANT FINANCIAL JUDGEMENTS
Key accounting judgements made by management were reported to and examined by the Committee and discussed with management and
Deloitte. The Committee considered the following significant financial reporting judgements in relation to the financial statements:
AREA OF FOCUS
CRITICAL JUDGEMENTS AND ESTIMATES
ACTIONS TAKEN/CONCLUSION
Goodwill impairments
Estimates and judgements in relation to goodwill
impairment testing
The Committee assessed the appropriateness of the assumptions used by management in the goodwill
impairment assessment model, with a particular focus on the discount rate and growth assumptions
Remuneration
Accounting for elements of remuneration where
estimates and judgements are required
The Committee reviewed the assumptions applied by management in relation to judgemental elements
of remuneration, including pensions, bonus accruals and share-based payments, and agreed that these
are reasonable
Taxation
The estimates and judgements made in respect
of tax
OTHER AREAS
Headline profit
Judgements relating to headline profit measures
The Committee considered management’s assumptions, in particular in relation to the level of central tax
provisions, and believes that the level of central tax provisions is reasonable
The Committee considered the judgement applied by management in calculating headline profit, in order
to present an alternative picture of performance by excluding significant, non-recurring or volatile items
otherwise included in the reportable figures. The Committee reviewed management’s judgements
relating to restructuring and transformation costs, with particular focus on the continued rollout of the
Group’s ERP system and other ongoing transformation projects, including IT transformation, shared
service centres and campus co-locations and right-of-use asset impairments. The Committee was satisfied
that excluding these amounts from headline profit measures was reasonable and that it had been
disclosed appropriately
Going concern
The going concern assessment and
viability statement
The Committee reviewed the scenarios modelled by management and assessed management’s view that
the likelihood of declines of over 28% of revenue less pass-through costs compared to 2022 was remote.
The Committee has considered and concurs with management’s going concern, viability and forecasting
assumptions, as set out on page 90
Liabilities in respect of put options and earnouts
The accuracy of the calculation of the fair value of
liabilities in respect of put options and earnouts
The Committee considered management’s calculations of the fair value of liabilities in respect of put
option agreements and payments due to vendors (earnout agreements), including the forecasts, growth
rates and discount rates used in these calculations. The Committee was satisfied that liabilities for
potential future earnout payments had been accounted for appropriately
Investments
The valuations of non-controlled investments
The Committee examined management’s valuations, based on input from external advisors, forecasts,
recent third-party investment, external transactions and/or other available information such as industry
valuation multiples. The Committee considered the valuations and agreed that these were appropriate
based on the information available to the Group
WPP ANNUAL REPORT 2022
127
CORPORATE GOVERNANCE SUSTAINABILITY COMMITTEE REPORT
SUSTAINABILITY
COMMITTEE REPORT
Throughout the year, the Committee has
supported management in the development
of a revised Assignment Acceptance Policy
and Framework, detailed on page 77, that
subsidiaries are expected to follow when
taking on new business. For work that may
present an ethical risk, such as work for
government clients or work relating to
sensitive products, all potential new
assignments need to be considered by our
agencies’ risk committees or escalated to
WPP for review.
CLIMATE CRISIS
The Committee had regular in-depth
progress reviews on the Company’s
ambitious commitments to reach net zero
carbon emissions. In July, the Committee
received an update on GroupM’s media
decarbonisation programme (page 76) and
in December the Committee conducted its
annual review of climate-related risks and
opportunities. The planet section on pages
74 and 75 sets out the Company’s net zero
commitments and performance. In 2023, the
Committee will receive regular updates as
the Company develops a formal transition
plan to deliver against these commitments.
Recognising the growing urgency of the
climate crisis, in September the Board
welcomed Professor Dr Johan Rockström,
Director of the Potsdam Institute for Climate
Impact Research and Professor in Earth
System Science at the University of Potsdam,
to engage with and present to the Board on
climate-related issues. Several members of
the Committee are also active members of
Chapter Zero, an online community of
non-executive directors which aims to
equip NEDs to lead crucial UK boardroom
discussions on the impacts of climate change.
KEITH WEED CBE
CHAIR OF THE
SUSTAINABILITY COMMITTEE
DEAR SHAREHOLDER
As the Chair of the Committee, I am pleased
to present the Committee’s 2022 report.
In 2022, the Committee continued to place
increased focus on sustainability for the Board
and the Company, monitoring sustainability
performance as we strive to meet the
expectations of our stakeholders as well as
ensuring we are managing our risks and
taking advantage of opportunities.
The ongoing impacts of the war in Ukraine,
energy security, inflation, social unrest,
political division and climate-related
disasters around the globe continue to
drive a focus on environmental, social and
governance (ESG) matters, with significant
risks and opportunities for our business and
our clients.
A large focus for the Committee and the
Company in 2022 has been the impact these
different pressures have on our people, who
want to work for a company that is willing
to stand up for the issues they care about.
The Committee has received updates on a
wide range of topics throughout the year,
ranging from the launch of our new Green
Claims Guide to equip our people to make
effective environmental claims that are not
misleading in any way (page 77), to support
for our people in Ukraine and the generosity
of our people around the world who donated
$670,000 (matched by WPP to bring the
total to $1.34 million) to the UNHCR Ukraine
appeal, and, more recently, the response
to the earthquakes in Turkey and Syria.
Committee members
- Keith Weed CBE (Chair)
- Angela Ahrendts DBE
- Jasmine Whitbread
- Dr. Ya-Qin Zhang
(appointed 15 March 2022)
Regular attendees include the Chief
Executive Officer, the Chief Financial
Officer, the Senior Independent
Director, the Group Chief Counsel,
the Chief People Officer, the Chief
Sustainability Officer and the Director of
Communications and Corporate Affairs.
The Company Secretary is Secretary to
the Committee and attends all meetings.
Key responsibilities
- Understanding the sustainability
risks and opportunities for the
Company
- Assisting the Board in its oversight
of corporate responsibility,
sustainability, health and safety
and reputation matters taking into
account the Company’s purpose,
strategy and culture
- Assessing the Company’s current
sustainability footprint, reviewing
sustainability targets and
commitments and materiality
- Reviewing and considering the
Company’s Modern Slavery
Statement and sustainability-related
policies, including the Environment
Policy, for approval by the Board
Attendance at Committee meetings
during the year can be found on page 115.
128
WPP ANNUAL REPORT 2022
SUSTAINABILITY COMMITTEE REPORT
CORPORATE GOVERNANCE
HEALTH, SAFETY AND WELLBEING
The Committee assists the Board in its
oversight of health and safety-related matters,
and, during the year, received updates on
the Company’s investment in mental health
and wellbeing, including on WPP’s new
Making Space campaign - an initiative
focused on giving people space to look after
their wellbeing (see page 72) - and regular
updates on new ways of working as office
occupancy levels increased. Employee
mental health and wellbeing will be a
continued area of focus for the Board and
the Committee in 2023.
Throughout the year, the Committee,
alongside the Board, received regular updates
on WPP’s response to disasters including the
Colorado wildfires, the war in Ukraine and, in
February 2023, the devastating Turkey-Syria
earthquakes, including support for
employees directly impacted, support
through WPP’s Employee Assistance
Programme (page 72) and employee
match-funding run in partnership with the
UNHCR. Further details can be found on
page 79.
The Committee will continue to monitor
how well prepared WPP agencies and
people are to recognise and respond to
existing and emerging disruptive events,
including the social and economic impacts
of climate change.
The Committee continues to support
management’s engagement strategy on
sustainability. Employee engagement remains
a high priority and this report highlights a
number of initiatives, from encouraging
volunteering (page 79) and taking a stand
on the issues that matter to our people to
building ESG capability (page 71). In January
2023, a sustainability-focused CEO townhall
attracted an audience of over 8,500. During
the year, I also enjoyed engaging with key
investors on ESG topics and look forward
to continued dialogue in 2023.
TERMS OF REFERENCE
The Committee’s terms of reference are
reviewed annually by the Committee and
adopted by the Board most recently on
1 February 2023.
A copy of the Committee’s terms of
reference is available on the Company’s
website at wpp.com/investors/
corporate-governance.
I would like to thank the members of the
Committee and the management team for
their commitment throughout the year and
look forward to continuing our work in 2023.
Keith Weed
Chair of the
Sustainability Committee
23 March 2023
TRANSPARENCY AND ENGAGEMENT
Measuring and monitoring sustainability
KPIs is critical to delivering against our
sustainability strategy and targets. In 2021,
WPP strengthened its approach to data
assurance: the Committee participated
in the selection process to appoint
PricewaterhouseCoopers LLP (PwC) as
independent limited assurance provider
over selected ESG metrics disclosed in this
report. In May 2022 PwC presented their first
management report to the Committee, and
throughout the year management provided
regular updates to the Committee on
progress in addressing the weaknesses
identified by PwC in the first year of their
assurance programme. The ‘sustainability
governance and management’ section of this
report on page 85 outlines work undertaken
during the year to strengthen data quality,
including new ESG data controls, training
and work to centralise data.
was subject
Throughout this report, selected content
highlighted with the symbol
to independent limited assurance
procedures by PwC for the year ended
31 December 2022. For the details and
results of the limited assurance, see our
2022 Sustainability Report.
The Committee will continue to monitor
sustainability KPIs. The Committee welcomes
the significant progress made during the
year towards the Company’s commitment
to phase out single-use plastics across its
offices and notes there is still work to do to
meet this target. Monitoring progress on
single-use plastics will remain a priority for
the Committee in 2023.
Progress against our strategy also relies on
accountability. Diversity, equity and inclusion
goals are included in our incentive plans for
senior executives and we have also included
carbon-reduction targets in incentive plans
for Executive Directors from 2021.
WPP ANNUAL REPORT 2022
129
CORPORATE GOVERNANCE
COMPENSATION COMMITTEE REPORT
Committee members
– Jasmine Whitbread (Chair)
– Jacques Aigrain (retired 24 May 2022)
– Sandrine Dufour
– Tom Ilube CBE
– Roberto Quarta
– Cindy Rose OBE
– Nicole Seligman
Attendees
Other attendees at the Committee meetings
were:
– Chief Executive Officer
– Chief Financial Officer
– Chief People Officer
– Global Reward Director
– Committee advisor (WTW)
The Chief Executive Officer, Chief Financial
Officer and Chief People Officer are not present
when matters relating to their own compensation
or contracts are discussed and decided.
The Company Secretary is Secretary to the
Committee and attends all meetings.
Key responsibilities
– Setting the Compensation Policy and the
terms and conditions for the Chairman of
the Board, Executive Committee and
Company Secretary
– Designing and monitoring incentive
arrangements including setting targets
and assessing performance
– Maintaining an active dialogue with
shareholders and ensuring WPP practice
aligns with corporate governance standards
THE COMMITTEE'S
DECISIONS DURING
THE YEAR REFLECT
CONSIDERATION
OF EXECUTIVE
PERFORMANCE
WITHIN THE WIDER
ENVIRONMENT”
Jasmine Whitbread
Chair of the Compensation Committee
Learn more at
wpp.com/about/
corporate-governance
130
WPP ANNUAL REPORT 2022
The Committee applied the existing Directors'
Compensation Policy and the terms of his
employment contract in determining his
compensation arrangements. John will
receive salary, benefits allowance and
pension allowance for the duration of his
notice period. He was eligible to receive a
2022 STIP award (cash and ESA), full details
of which are disclosed on pages 144-147.
No EPSP awards will be granted in respect
of 2023. He will not receive a STIP or other
incentive award for the 2023 financial year.
Any outstanding ESA awards will vest on a
pro rata basis and unvested EPSP awards
will lapse on his departure.
The Board has appointed Joanne Wilson
to succeed John as CFO, and she will join
during 2023. The Committee determined
that her compensation should be set broadly
in line with the current CFO. Joanne will
receive fixed pay comprising a base salary
of £740,000, a benefits allowance of £30,000
and a pension allowance of 10% of base
salary. Joanne will participate in the STIP
with a maximum award of 200% of base
salary, and the EPSP with a maximum
award of 300% of base salary. Joanne will
also be granted cash and share awards
to compensate for incentives forfeited at
her previous employer. The Committee
considered the value and form of the awards
being forfeited to ensure that the buyout
awards will be no more generous in amount
or deferral schedule. Full details will be
disclosed in the Compensation Committee
Report for the relevant year.
COMPENSATION IN 2022
STIP 2022
The Executive Directors participated
in the 2022 STIP, which was based on a
combination of financial and non-financial
measures aligned to the delivery of the
Company strategy and purpose. This is the
second year that this structure has been in
place for all senior leadership, incorporating
an element of bonus based on WPP financial
performance as well as the performance of
individual agency brands. Certain employees
across the wider workforce are eligible to
participate in alternative annual bonus plans.
The financial measures, which determined
75% of the award, were like-for-like headline
operating profit growth, headline operating
margin improvement and like-for-like revenue
less pass-through costs. WPP showed strong
JASMINE WHITBREAD
CHAIR OF THE
COMPENSATION COMMITTEE
DEAR SHAREHOLDER
On behalf of the WPP Board, I am pleased
to present the Compensation Committee
report for the financial year ended
31 December 2022. In this report, I include
my introductory letter which summarises
the main changes proposed to the Directors’
Compensation Policy, an At a Glance summary
of compensation, the proposed updated
Directors’ Compensation Policy ('the Policy')
for shareholders’ consideration and the
Annual Report on Compensation setting out
the implementation of the existing Policy in
2022. The report also sets out the proposed
implementation for 2023.
CONTINUED GROWTH AND STRONG
PERFORMANCE IN 2022
WPP has delivered another year of strong
performance driven by growth across all
key agencies despite the macroeconomic
challenges faced. As always, WPP's success is
underpinned by the strength of our work and
the talent of our people.
The Committee recognises the role that
compensation plays in the global competition
for talent within senior leadership and across
the wider business, and that retention and
incentivisation is key to ensure WPP continues
to deliver value to clients and shareholders.
The Committee believes that the decisions
made in respect of fixed compensation, the
annual Short-Term Incentive Plan (STIP) and
long-term Executive Performance Share
Plan (EPSP) reflect the efforts and strong
performance of the Executive Directors
during 2022.
CFO TRANSITION
As announced on 8 November 2022, Chief
Financial Officer (CFO) John Rogers decided
to step down from the Board and leaves the
Company during 2023.
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
performance in 2022 with like-for-like headline
operating profit growth performance
achieving maximum, and headline operating
margin improvement and like-for-like revenue
less pass-through costs performance
between target and maximum. This resulted
in an outcome of 66.56% of the 75% maximum
in respect of the financial element of the STIP.
See page 146 for further detail on performance
against targets. The Committee felt this was
an accurate reflection of performance and
has made no adjustments to the outcome.
In 2022 we continued the use of a balanced
scorecard to assess performance against
non-financial measures, which determined
the remaining 25% of the award. The
scorecard is based on four categories:
clients; people and diversity, equity and
inclusion (DE&I); purpose and reputation;
and strategic priorities.
The Committee considers performance
against all four categories to be strong.
From a client perspective, client satisfaction
remains strong having maintained the high
Likelihood to Recommend scores achieved
in the prior year. From a people and DE&I
perspective, we continue to see progress
in diversity and an increased focus on
programmes and initiatives to promote
diversity and inclusion at WPP. We also
launched our most comprehensive
engagement survey in 2022 with
72,700 participants and we saw our
Company-wide eNPS score (how likely you
are to recommend WPP as a place to work)
improve by 14 points.
With respect to purpose and reputation,
WPP has made excellent progress on the
carbon reduction targets set in 2021 (see
pages 74 and 75 for further detail). WPP was
awarded Most Creative Company of the
Year at Cannes Lions in 2022 for the second
year in a row, a testament to the creative
talent of our people and their ability to help
clients succeed. WPP continued to make
good progress against strategic priorities,
expanding capabilities in high-growth areas
of experience, commerce and technology
and delivering significant cost efficiencies
through the transformation programme.
Full details of non-financial performance
are included on pages 146 and 147.
The Committee considered the Executive
Directors' non-financial performance under
each of the four categories. An overall
assessment of 22% for Mark Read and 20%
for John Rogers out of a maximum of 25%
was determined by the Committee, resulting
in a total bonus of 88.56% of maximum for
Mark Read and 86.56% of maximum for
John Rogers.
EPSP
In 2020, the structure of the EPSP was
amended from a performance period
spanning five years to a more typical
three-year plan with a two-year holding
period. As a result, there are overlapping
award cycles for two financial years. Both the
2018 EPSP and the 2020 EPSP completed their
performance periods on 31 December 2022.
The 2018 EPSP has a five-year performance
period with performance assessed against
three measures: relative total shareholder
return (TSR), average return on equity (ROE)
and headline earnings per share (EPS)
growth. This is a legacy plan in which targets
were set prior to the CEO's appointment,
Covid-19 and the launch of the strategy.
Consistent with prior award cycles, the
Committee did not feel it was appropriate
to adjust the targets during the performance
period. As a result, performance over the
five-year period fell below threshold levels
for each of the three performance measures
resulting in no vesting in respect of the 2018
EPSP awards. This was the third EPSP cycle
in which the CEO has experienced nil to
minimal vesting of an LTIP based on legacy
targets set prior to 2020.
The 2020 EPSP has a three-year performance
period with performance assessed against
three measures: TSR, return on invested
capital (ROIC) and adjusted free cash flow
(AFCF). Performance was above maximum
for both ROIC and AFCF but below the
threshold required for TSR resulting in a
formulaic vesting of 66.67%. Prior to
confirming the vesting of any EPSP award,
the Committee considers whether there
is a compelling rationale to change the
formulaic outcome. For the awards vesting in
2023 the Committee was especially mindful
of investor concerns around the potential risk
of windfall gains for awards made in 2020
following volatility in global stock markets as
a result of the emerging Covid-19 pandemic.
The Committee considered a number of
factors including share price movement and
volatility on an absolute and relative basis,
underlying financial performance, historical
award and vesting levels, and absolute
award value in the context of total
compensation as well as wider stakeholders
(see page 148 for further detail). The
Committee noted that the 2020 EPSP award
was made in November 2020, more than six
months after the lowest point of the market
dip at a time when the share price had
increased more than 50%. Having reviewed
these factors, the Committee determined
that the share price increase during the
performance period reflects the strong
underlying performance of the Company
and that no adjustment to the formulaic
vesting is required.
DIRECTORS' COMPENSATION
POLICY REVIEW
The WPP Directors' Compensation
Policy was last reviewed and approved by
shareholders in 2020. During the last year,
the Committee reviewed this Policy to
determine whether any amendments should
be considered. The Committee took into
account the existing incentive structure and
opportunity, market practice within the
FTSE 100 and our media sector peer group,
and the challenges and needs of the business
at the current time. The Committee concluded
that whilst the existing compensation
structure and incentive model remained fit
for purpose, the quantum limits presented
challenges from a retention and compression
perspective within the senior leadership
team of the business.
We undertook an extensive shareholder
consultation to seek feedback on potential
Policy changes, for which I would like to
thank those who participated for their
considered views and constructive
discussions. Views were varied but a
common theme of the conversations was the
uncertain macroeconomic environment and
the experience of stakeholders including
investors and the wider workforce. The
process helped to inform the Committee's
final decision to not make any significant
changes to the existing Policy at this time,
and to keep this under review as the
landscape evolves. Shareholders are being
asked to approve an updated Policy which
includes only minor adjustments, further
details of which are included on page 136.
CONCLUSION
I would like to thank the leadership team
for its continued superior contribution and
performance despite the macroeconomic
challenges it faced.
Jacques Aigrain retired from the
Compensation Committee and the Board
at the AGM in 2022. I would like to express
my thanks to him for his experienced
contributions to the Committee as well
as to the rest of the Committee for their
continuing valued input and commitment.
Jasmine Whitbread
Chair of the
Compensation Committee
23 March 2023
WPP ANNUAL REPORT 2022
131
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
2022 PERFORMANCE OUTCOMES
The information below summarises the 2022 STIP and EPSP performance outcomes for our Executive Directors. Full details of financial and
non-financial performance are included on pages 145 to 149.
STIP PERFORMANCE
WEIGHTING
Threshold
(0% payable)
Target
(50% payable)
Maximum
(100% payable)
OUTCOME ACHIEVED
Mark Read John Rogers
Like-for-like headline
operating profit growth
Headline operating
margin improvement
Like-for-like revenue less
pass-through costs growth
25%
25%
25%
0.0%
0.0%
0.0%
5.0%
10.0% 10.0%
25.00%
25.00%
0.25%
0.4%
0.5%
20.00%
20.00%
4.0%
6.9%
8.0%
21.56%
21.56%
Non-financial performance
25%
See pages 146 and 147 for performance against non-financial
measures for both Mark Read and John Rogers
Total
100%
2018 EPSP PERFORMANCE
The performance measures for the 2018 EPSP grant were:
– Average ROE
– Headline EPS growth
– Relative TSR (based on both common and local currency)
22.00%
20.00%
88.56%
86.56%
Performance over the five-year performance period was below threshold for all three measures, resulting in no vesting for the 2018 EPSP award. For further detail
of metrics and performance, see page 148.
2020 EPSP PERFORMANCE
WEIGHTING
OUTCOME ACHIEVED
Average return on invested
capital (ROIC)
Cumulative adjusted
free cash flow (AFCF)
Relative TSR
(common currency)
Relative TSR
(local currency)
1/3
1/3
1/3
Total
100%
Below
threshold
Below
threshold
Threshold
(20% payable)
11.5%
£2,300m
Median
Median
Actual STIP performance
Actual EPSP performance
Indicates a scale break
Maximum
(100% payable)
12.9%
16.8%
£3,100m
£4,081m
Upper
decile
Upper
decile
1/3
1/3
0
66.67%
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WPP ANNUAL REPORT 2022
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
TOTAL COMPENSATION 2022
£000
Mark Read
2022
(maximum)
2022
(target)
2022
(actual)
2021
(actual)
John Rogers
2022
(maximum)
8,145
2022
(target)
2022
(actual)
2021
(actual)
5,106
6,682
3,799
3,100
4,872
4,392
4,776
0
2,000
4,000
6,000
8,000
10,000
0
2,000
4,000
6,000
8,000
10,000
fixed compensation, consisting of base salary, benefits and pension (as set out in the single figure on page 144)
short-term incentives (STIP)
long-term incentives (EPSP)
Target: 50% of maximum STIP, 60% of maximum LTIP
SHAREHOLDING REQUIREMENTS
Mark Read is on target to reach his shareholding requirement within seven years of his appointment as an Executive Director, as required by
the Policy. John Rogers has achieved his shareholding requirement and will be obligated to maintain this following his departure (see page
137 for further details of the post-employment shareholding policy). Their shareholding as at 31 December 2022 and previous years is shown
below as a percentage of base salary.1 The Executive Directors have not sold shares during the year in excess of those required to settle tax
obligations; the reduction in shareholding as a percentage of salary for the CEO is a result of a lower average share price than the prior year.
Mark Read
Appointed to the Board 3 September 2018
John Rogers
John Rogers
Appointed to the Board 3 February 2020
Appointed to the Board 3 February 2020
121%
215%
305%
2018
2019
2020
2021
2022
Target
538%
439%
600%
77%
2020
2021
2022
Target
402%
418%
300%
1 The share price used for the calculation is the average share price for the last two months of the relevant financial year
PENSIONS
As set out in our 2020 report, Mark Read’s pension contribution has been reduced to 10% on a phased basis to align executive pensions with
the wider workforce in the UK. The chart below shows the contribution levels at the end of each year of the Policy period. John Rogers’
pension contribution has been aligned at 10% of base salary since appointment.
2019
2020
2021
2022
17.6%
15%
12%
10%
WPP ANNUAL REPORT 2022
133
2022(actual)2022(maximum)2022(target)8,1455,1066,6822022(actual)2022(maximum)2022(target)4,8723,1004,392John RogersAppointed to the Board 3 February 20202022202277%402%121%215%305%538%439%418%202217.6%15%12%
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
DIRECTORS’ COMPENSATION POLICY
This section of the report sets out the proposed new Directors’ Compensation Policy ('the Policy'). The Policy will take effect from the date of
the 2023 AGM, subject to approval by shareholders.
REVIEW OF EXISTING POLICY
During the year the Committee undertook an extensive review of the existing Directors’ Compensation Policy, which was approved by
shareholders at the AGM in 2020. The Committee considered the extent to which the existing compensation structure and performance-
related pay remain fit for purpose, as well as how appropriate the compensation opportunity is, from both a market competitive and internal
relativity basis.
The Committee concluded that, whilst the existing compensation structure and incentive model remain appropriate, as a global business
operating in a competitive talent market, achieving competitive market positioning in respect of our executives and senior leadership team is
more challenging. The Committee is mindful of both retention of top talent and the increasing compensation compression at leadership levels.
CONSULTATION WITH SHAREHOLDERS
The Committee Chair consulted with a significant number of our largest shareholders to seek their views on potential changes to the Policy.
This was a valuable exercise in which shareholders provided thoughtful views and opinions which allowed for a useful and constructive
conversation around the challenges and possible solutions. Whilst there were differing views among the shareholder group involved in the
consultation, a common theme of the conversations related to the uncertain macro-economic environment and the experience of
stakeholders, including the investors and wider workforce.
CHANGES TO DIRECTORS' COMPENSATION POLICY
The Committee considered these views and determined that it would not propose significant changes to the Policy at this time. The Policy
will be kept under review and the Committee will undertake further consultation with shareholders if changes to the Policy are proposed.
This section of the report sets out an updated Directors’ Compensation Policy which shareholders will be asked to approve at the 2023 AGM.
This Policy includes only minor changes with no changes to compensation structure or incentive opportunity.
HOW THE POLICY ADDRESSES THE FACTORS SET OUT IN THE UK CORPORATE GOVERNANCE CODE
The table below summarises how our Directors' Compensation Policy and practices support the expectations of Provision 40 of the 2018 UK
Corporate Governance Code.
Clarity
Simplicity
Risk
Predictability
Proportionality
Our Policy, how it is implemented and the decisions the Committee makes are transparent and clearly disclosed. The
Committee engages with shareholders on key compensation matters to ensure the rationale for any proposed decisions
is clearly communicated and understood.
The performance measures used in our incentive plans are aligned with our strategy and are transparent to stakeholders
and participants. We have a simple compensation structure that is familiar to stakeholders comprising the following
elements: fixed pay – base salary, a benefits allowance and pension; short-term variable pay – an annual bonus with a
combination of financial and non-financial metrics paid partly in cash and partly in deferred shares; and long-term variable
pay – a three-year Executive Performance Share Plan subject to the achievement of stretching performance conditions.
The Directors' Compensation Policy includes elements designed to mitigate any risks including: deferral and additional
holding period; malus and clawback provisions on all incentive plans; shareholding requirements including post-
employment requirements; and Committee discretion to adjust the formulaic outcome of incentive plans.
Target payouts and maximum available opportunity, including potential share price appreciation, have been considered by
the Committee and are disclosed in the scenario charts.
The Committee has a pay-for-performance philosophy. A large proportion of Executive Directors' compensation is variable
and linked to the achievement of stretching performance conditions based on a combination of financial and strategic
non-financial measures.
Alignment to culture
The incentive schemes are designed to underpin the Company's culture and strategy, using measures that are aligned to
our overall purpose and WPP's values of being open, optimistic and extraordinary. The inclusion of both financial measures
and a scorecard of non-financial strategic measures enables us to ensure alignment.
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WPP ANNUAL REPORT 2022
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
GUIDING PRINCIPLES
Our Directors’ Compensation Policy is designed in the context of the UK Corporate Governance Code to attract and retain best-in-class talent
and incentivise Directors to deliver growth, creativity and outstanding performance, thereby producing long-term value for shareholders.
The WPP Directors’ Compensation Policy is determined by the following guiding principles:
1
2
3
4
PERFORMANCE-DRIVEN
REWARD
Our compensation structure
has a high proportion
of performance-based
variable compensation
COMPETITIVENESS
Director compensation is
designed to attract and
retain best-in-class talent
Fixed pay / 24%
STIP / 26%
EPSP / 50%
Value of CEO's
compensation
package at target
LONG-TERM ALIGNMENT
WITH SHAREHOLDER
INTERESTS
Executive Directors have a large
portion of their compensation
paid in the form of shares as
well as significant share
ownership requirements both
during and post-employment
ALIGNMENT TO WPP
STRATEGY AND VALUES
Our incentive plans contain
metrics linked to WPP strategy
and values. These measures
are regularly reviewed by
the Committee to ensure
continued performance in
line with strategy
ALIGNING COMPENSATION WITH STRATEGY
Performance measures are selected to align to our business strategy and include a range of financial and non-financial measures. Non-financial
measures are set out in a scorecard based on role and accountabilities of the Executive. There are four categories: client – relating to new
business and client satisfaction; people and DE&I – this will include improvements in relation to diversity as well as the delivery of our broader
people strategy; purpose and reputation – aligned to the Company’s sustainability strategy, the management of governance and controls as
well as industry achievements and awards; and strategic priorities – in relation to our Group-wide transformation.
STRATEGIC ELEMENTS
Vision
& offer
Creativity
Data &
technology
Simpler
structure
People
Short-term
incentive plan
(STIP)
Financial measures
Like-for-like headline
operating profit growth
Headline operating profit margin
improvement
Like-for-like revenue less
pass-through costs growth
Non-financial scorecard
Client
People and DE&I
Purpose and reputation
Strategic priorities
Long-term
incentive plan
(EPSP)
Return on invested capital
Adjusted free cash flow
Relative TSR
WPP ANNUAL REPORT 2022
135
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
DIRECTORS’ COMPENSATION POLICY
REMUNERATION POLICY TABLE
The table below summarises the new proposed Policy. Whilst no significant changes have been made to the existing Policy, some minor
adjustments have been made to the core elements of compensation and to the Executive Director appointment and loss of office provisions
to ensure alignment with the wider workforce and good governance. These changes include: updating the default base salary review period
for Executive Directors and Executive Committee to be annual to align to the wider workforce cycle; clarification on buy-out policy; inclusion
of the ability to provide one-off benefits on appointment; inclusion of a payment in lieu of notice provision to align with executive contracts;
clarification of incentive treatment for leavers including full vesting of the deferred element of the STIP (ESA) and aligning the Policy around
Good Leaver treatment for EPSP awards to the updated EPSP rules (approved by shareholders at the 2022 AGM).
FIXED ELEMENTS
BASE SALARY
Purpose and
link to strategy
To maintain package competitiveness and reflect skills and experience; to enable recruitment and retention.
Operation
Base salary is typically reviewed annually to align with the wider workforce.
The Committee may realign base salary over a phased period for new Board appointees who start on a below-market salary.
Salary levels and increases take into consideration:
– Salary increases awarded across the Group
– Individual performance
– Levels in other companies of similar size, scope and complexity
Opportunity
Increases for Executive Directors will usually be aligned to the wider workforce which will reflect the performance of the Company, the
individual and local economic factors.
Increases above the normal level may be made to take into account special circumstances such as:
– Increase in nature and scope of the role
– To reflect development in a role such as in the case of an Executive Director appointed at a below-market salary
BENEFITS
Purpose and
link to strategy
Operation
Provide an annual fixed and non-itemised allowance, to enable the Executive Director to ensure their wellbeing and security.
The fixed annual allowance will be reviewed periodically by the Committee. The allowance is set with regard to the individual concerned
and the role they undertake.
Should the Executive Director be required to move to a different country, a relocation benefit may be provided in addition to the usual
benefit allowance over and above the maximum stated opportunity.
Opportunity
Maximum opportunity: the maximum fixed annual benefit allowance payable is £50,000 (excluding relocation benefit).
PENSIONS
Purpose and
link to strategy
Operation
To enable provision for retirement benefits.
Pension is provided by way of a contribution to a defined contribution retirement arrangement, a cash allowance or a combination of the
two. Determined as a percentage of base salary.
Opportunity
Maximum opportunity: Executive Director: 10% of base salary.
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WPP ANNUAL REPORT 2022
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
VARIABLE ELEMENTS
SHORT-TERM INCENTIVE PLAN (STIP)
The STIP is an incentive plan designed to reward annual performance. The plan makes awards in cash and Executive Share Awards (ESA)
Purpose and
link to strategy
To drive the achievement of strategic priorities for the financial year and to motivate, retain and reward executives over the short and
medium term; the ESA element of the incentive aligns executives with shareholder interests.
Operation
Targets are set early in the year. The Committee determines the extent to which these targets have been achieved at the end of the year
based on the performance and has discretion to adjust the formulaic outcome both upwards and downwards (including to zero) to ensure
the outcome reflects underlying Company performance and value creation for shareholders.
At least 40% of the STIP pay-out is delivered in the form of conditional deferred shares (ESA) which will be released after a period of two years.
STIP is subject to the malus and clawback policy as may be amended from time to time.
Opportunity
Maximum opportunity: 250% of base salary.
Target opportunity: 50% of the maximum opportunity.
Dividends will accrue on the ESA during the deferral period.
Performance
Performance measures and targets are reviewed and set annually to ensure continued strategic alignment.
Financial measures represent a minimum of 75% of the award; individual strategic or non-financial objectives may represent up to 25% of the
award. These might include Company-wide priorities tied to ESG, individual performance goals and/or other individual or Company-wide
non-financial objectives.
LONG-TERM INCENTIVE PLAN – EXECUTIVE PERFORMANCE SHARE PLAN (EPSP)
The EPSP is an incentive plan that rewards long-term performance. Awards are made in shares which vest subject to the achievement of certain metrics over
a three-year period
Purpose and
link to strategy
To drive the achievement of long-term strategic priorities, to aid retention and to align Executive Director and shareholder interests over the
long term.
Operation
The EPSP comprises a grant of performance share awards which will vest subject to the achievement of performance conditions. The
Committee has the discretion to adjust the formulaic outcome of the award to ensure that vesting reflects underlying Company performance
and value creation for shareholders.
The EPSP has a performance period of three years, followed by a two-year holding period of the vested shares.
EPSP is subject to the malus and clawback policy as may be amended from time to time.
Opportunity
Maximum opportunity: 400% of base salary.
Less than the maximum opportunity may be applied to Executive Directors.
Dividends will accrue on awards during the performance period.
Performance
Vesting of the EPSP is subject to the achievement of stretching performance targets.
Performance measures and targets are reviewed and set annually by the Committee to ensure continued strategic alignment. These may be
a mix of market, financial and non-financial measures.
Threshold performance will produce an award of 20% of the award granted and increase on a sliding scale to 100% for maximum
performance achievement.
Full details of the awards are in the Annual Report on Compensation.
SHAREHOLDING REQUIREMENTS
Purpose and
link to strategy
Operation
To align the interests of Executive Directors with shareholders.
Executive Directors and other members of the senior management team are subject to share ownership requirements which seek to reinforce
the WPP principle of alignment of management's interests with those of shareholders.
Executive Directors are required to hold 100% of their shareholding requirement, or their shareholding at the date of departure, for a period of
one year following cessation of employment, reducing to 50% for a second year.
If an Executive Director fails to achieve the required level 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 Executive Director to purchase shares in the market to meet
the ownership requirements.
If an Executive Director fails to maintain their shareholding requirement post-employment, this may result in a reduction of outstanding awards.
Opportunity
Chief Executive Officer: 600% of base salary; Chief Financial Officer: 300% of base salary; minimum for any other new Executive Director
appointed to the Board: 200% of base salary.
Executive Directors will be permitted a period of seven years from the date of their appointment to achieve the required level.
WPP ANNUAL REPORT 2022
137
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
DIRECTORS’ COMPENSATION POLICY
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.
EPSP
The EPSP performance measures are
selected to complement the annual STIP
measures and capture the longer-term
performance of the Company.
The Directors’ Compensation Policy table
for Executive Directors 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
Performance measures are selected by the
Committee based on their alignment with
strategic priorities and the key metrics used
across the business.
STIP
STIP measures are reviewed annually by
the Committee taking into account business
performance and priorities. The performance
targets for the STIP are set to incentivise and
reward strong, sustainable performance. 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 these targets at the end of the
relevant performance period in that year’s
Annual Report, if these targets are no longer
commercially sensitive.
When setting targets, the Committee takes
into account a combination of factors
including internal forecasts, analysts'
expectations and historical performance
relative to budgets.
Cascade to WPP Group pay policy
As well as setting the policy for the Executive
Directors, the Committee is also responsible
for managing the compensation of the
Executive Committee and the Company
Secretary.
Compensation packages for these individuals
are typically reviewed annually to align
with the Executive Directors and the wider
workforce. As is the case for Executive
Directors, 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 shareholders and
senior individuals within the Group, but also
enables the Group to attract, retain and
motivate the talented people upon whom
its success depends.
Stock Plan 2018
The WPP plc Stock Plan 2018 is used to satisfy
awards under the short-term incentive plans
(including ESAs) as well as to grant awards
to management under the WPP Leadership
Award programme. In this programme,
awards are made to participants that vest
three years after grant, provided the
participant is still employed within the Group.
Executive Directors, and other senior
management employees, may receive part
of their annual bonus entitlement as a
deferred share award (ESA) under the Stock
Plan 2018. Executive Directors are ineligible
to participate in any other aspect of the
management share award programme, other
than in relation to awards granted prior to
appointment or in relation to awards granted
to buy-out previous awards on appointment.
Share Option Plan 2015
The WPP plc 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 plc Share Option Plan 2015 has
the capability to make grants of executive
share options.
ILLUSTRATIONS OF TOTAL COMPENSATION
The charts below provide an illustration of the potential future total remuneration of the Executive Directors. Four scenarios of potential
outcomes are provided based on the assumptions set out in the notes on the following page. The charts are reflective of the Policy that is
being presented for approval at the 2023 AGM.
COMPENSATION SCENARIO
£000
Mark Read
Fixed
pay
100%
1,225
Joanne Wilson (incoming CFO announced 8 November 2022)
Fixed
pay
100%
844
Target
24%
26%
50%
5,108
Target
29%
25%
46%
2,916
Maximum
15%
33%
52%
8,147
Maximum
18%
33%
49%
4,544
Maximum
including
share price
appreciation
12%
26%
41%
21%
10,256
Maximum
including
share price
appreciation
15%
26%
39%
20%
5,654
Fixed, consisting of base salary, benefits and pension
Short-term incentives (STIP)
Long-term incentives (EPSP)
50% share price appreciation
138
WPP ANNUAL REPORT 2022
5,1081,2258,14710,2562,916 8444,5445,654
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
NOTES TO THE COMPENSATION SCENARIO CHARTS
The scenarios in the charts on the previous page have been calculated based on the following assumptions:
Fixed pay
Target
Consists of base salary, benefits and pension
Base salary as at 1 January 2023 (or date of appointment if later)
Pension at 10% of base salary
Assumes STIP of 50% of maximum
Assumes EPSP vesting of 60% of maximum
Maximum excluding any share price growth
Assumes maximum STIP and maximum EPSP
Maximum including 50% share price growth
Assumes maximum STIP, maximum EPSP and 50% share price appreciation on the EPSP element
of the package
HOW WE WILL IMPLEMENT OUR PROPOSED COMPENSATION POLICY IN 2023
On the assumption that the proposed Policy is approved at the 2023 AGM, the table below demonstrates how we plan to implement the
Policy specifically for 2023.
Policy
2023
2024
2025
2026
2027
Implementation for 2023
Base salary
Typically reviewed annually to align with the
wider workforce.
Benefits
Pension
Short-term
incentives
Provide an annual fixed and non-itemised
allowance, to enable the Executive Director
to ensure their wellbeing and security.
Pension is provided by way of a contribution
to a defined contribution arrangement,
or a cash allowance, or a combination of
the two. Determined as a percentage of
base salary.
– 75%-100% financial
– 0%-25% individual strategic objectives
– One-year performance period
– At least 40% delivered in the form of
deferred shares released after a period
of two years
Long-term
incentives
– Performance measures may be a mix
of market, financial and non-financial
measures
– Three-year performance period
– Two-year holding period
Cash
Deferred shares
Performance period
Holding period
Mark Read: £1,081,600
John Rogers: £784,400
Joanne Wilson: £740,000
Salary levels may be
reviewed in 2023
Mark Read: £35,000
John Rogers: £30,000
Joanne Wilson: £30,000
All Executives: 10%
Mark Read: 0-250%
John Rogers: N/A
Joanne Wilson: 0-200%
75% financial and 25%
non-financial targets
60% cash/40% deferred
shares
Mark Read: 0-390%
John Rogers: N/A
Joanne Wilson: 0-300%
Performance measures: TSR,
ROIC and AFCF
WPP ANNUAL REPORT 2022
139
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
DIRECTORS’ COMPENSATION POLICY
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 will be set considering a range
of factors, including the profile and prior
experience of the candidate, internal
relativities, cost and external market data.
If base salary is set at a lower initial level,
contingent on individual performance, the
Committee retains the discretion to realign
the base salary 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. The
Committee may also provide one-off
benefits such as reasonable relocation
expenses and assistance with visa
applications. Short-term benefits, such as
accommodation following appointment and
tax filing assistance may also be provided.
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
broad and diverse global group. The actual
level of incentive offered will be in
accordance with the Policy limits and will be
dependent on the role and existing package
of the candidate.
The Committee retains the discretion to
make awards on recruitment, within the
Policy limits, to provide an immediate
alignment with the interests of shareholders.
BUY-OUT AWARDS
In addition to the above (and outside the
Policy limits) the Committee may consider
buying-out compensation entitlements that
the individual has had to forfeit by accepting
the appointment. The structure and value
of the awards will generally be made on a
like-for-like basis and will be informed by the
structure and value of those entitlements
being forfeited, unless the Committee
consider it not to be practical or appropriate.
The performance targets, time horizon and
method of payment will be set in an
appropriate manner at the discretion of the
Committee and may or may not reflect the
vesting, deferral and holding requirements in
the Policy.
SERVICE CONTRACTS
The following terms will apply for any new
Executive Director role appointed to the
Board in the future:
– Executive Directors will normally be
appointed on a notice period of up to
12 months from both parties
– Remuneration terms include base salary,
benefits allowance, pension, holidays and
participation in the short and long-term
incentive plans
– At the Committee’s discretion, the
Executive Director’s employment may be
terminated by making a payment in lieu
of notice of fixed compensation (base
salary, benefits and pension) either in
a lump sum or by monthly instalments
rather than as a lump sum. The Committee
has the discretion to reduce or stop the
monthly instalment payments if alternative
employment is taken up or other
remuneration is received for the provision
of services during the period when
monthly instalments are due. Current
Executive Directors' contracts align to
the above
– More detail on the loss of office provisions
are included on page 141
TERMS SPECIFIC TO INTERNAL
APPOINTMENTS
The Committee can honour any pre-existing
commitments if an internal candidate is
appointed to the Board.
SERVICE CONTRACTS
Executive Directors’ service contracts are on
a rolling basis without a specific end date.
Name
Mark Read
John Rogers
Effective from
3 September 2018
27 January 2020
Notice period
12 months
12 months
The effective dates and notice periods under
the current Executive Directors’ service
contracts are shown in this table:
The Executive Directors’ service contracts are available for inspection at the Company’s registered office and head office.
Joanne Wilson's contract also includes a 12 months' notice period that will be effective from her commencement of employment.
140
WPP ANNUAL REPORT 2022
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
LOSS OF OFFICE PROVISIONS
FIXED COMPENSATION ELEMENTS
As noted on page 140, the service contracts of Executive Directors 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. Alternatively, a payment in lieu of notice (as described on page 140 under
'Service Contracts') may be made at the Committee’s discretion. 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 shareholder 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.
VARIABLE COMPENSATION ELEMENTS
The table below summarises the policy on short-term and long-term incentives in certain
leaver scenarios. As noted on page 138, 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 below.
STIP
– The Executive Directors are entitled to receive their short-term incentive
(cash element and/or ESA element) for any particular year provided they are
employed on the last date of the performance period. If they are not employed
they will not receive it unless the Committee decides to award a pro rata
bonus in respect of the period worked
ESA (unvested
existing awards)
– Provided the Executive Director is a Good Leaver, awards will vest in full on
the normal vesting date subject to their terms. If the Executive Director is not
a Good Leaver, unvested awards will lapse. Good Leaver for these purposes
includes leaving on retirement, ill health, injury or disability, as a result of
death in service and other circumstances determined by the Committee.
In exceptional circumstances, the Committee may determine that an award
will vest on a different basis
EPSP
– Provided the Executive Director is a Good Leaver, awards will vest subject
to performance to the end of the performance period and (unless the
Committee decides otherwise) time pro-rating. Awards will vest on the normal
date. If the Executive Director is not a Good Leaver, unvested awards will lapse.
Good Leaver for these purposes includes leaving on retirement, ill health, injury
or disability, as a result of death in service and other circumstances determined
by the Committee
– Generally, awards will vest on the date of death, having regard to the extent
to which any performance conditions have been achieved and any holding
period will come to an end (and subject to time pro-rating unless
the Committee decides otherwise)
– Awards will vest immediately on a change of control subject to performance
and time pro-rating will be applied (unless the Committee decides otherwise)
unless the outstanding shares are exchanged for equivalent new awards
– In exceptional circumstances, the Compensation Committee may determine
that an award will vest on a different basis
OTHER COMMITTEE DISCRETIONS NOT SET OUT ABOVE
Leaver status: the Committee has the discretion to determine an Executive Director’s leaver
classification considering the guidance set out within the relevant plan rules.
Settlement agreements: the Committee is authorised to reach settlement agreements with
departing Executive Directors, informed by the default position set out above.
WPP ANNUAL REPORT 2022
141
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
DIRECTORS’ COMPENSATION POLICY
EXTERNAL APPOINTMENTS
Executive Directors are permitted to serve as non-executives on the boards of other organisations. If the Company is a shareholder in that
organisation, non-executive fees for those roles are waived. However, if the Company is not a shareholder in that organisation, any non-executive
fees can be retained by the office holder.
PAYMENTS IN EXCEPTIONAL CIRCUMSTANCES
In 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 Directors’ Compensation 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.
DIRECTORS’ COMPENSATION POLICY TABLE – CHAIR AND NON-EXECUTIVE DIRECTORS
The following table sets out details of the ongoing compensation elements for WPP’s Chair and Non-Executive Directors. No element of pay
is performance-linked.
Base fees
To reflect the skills,
experience and time
required to undertake
the role.
The Chair and Non-Executive Directors receive a 'base fee' in connection with their
appointment to the Board.
Fees are typically reviewed annually and consider the skills, experience and time required
to undertake the role, as well as fee levels in similarly-sized UK companies.
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
– Chair 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
An overall cap on all non-executive
fees, excluding consultancy fees,
will apply consistent with the
prevailing and shareholder-
approved limit in the Articles
of Association.
An overall cap on all non-executive
fees, excluding consultancy fees,
will apply consistent with the
prevailing and shareholder-
approved limit in the Articles
of Association.
Consultancy fees will be set on a
discretionary basis, taking account
of the nature of the role and
time required.
Benefits and allowances
To enable the Chair and
Non-Executive Directors to
undertake their roles.
The Company will reimburse the Chair and Non-Executive Directors for all reasonable and
properly documented expenses incurred in performing their duties of office.
The Company may provide additional allowance to facilitate the operation of the Board
such as a travel allowance for attendance at international meetings.
Benefits and allowances for the
Chair and Non-Executive Directors
will be set at a level that is
appropriate for the performance
of the role.
In the event that the reimbursement of these expenses gives rise to a personal tax liability
for the Chair 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 Chair including, but not limited to, use of car, office space and secretarial support.
OTHER CHAIR AND NON-EXECUTIVE
DIRECTOR POLICIES
LETTERS OF APPOINTMENT FOR THE
CHAIR AND NON-EXECUTIVE
DIRECTORS
Letters of appointment have a one- to
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 Chair 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 Chair,
the Committee has the discretion to set fees
considering a range of factors including the
profile and prior experience of the candidate
and external market data.
SHAREHOLDING
Non-Executive Directors are encouraged to
hold shares in the Company. The ownership
guideline is to reach a shareholding equal to
1 x annual base fee within a three-year
period.
142
WPP ANNUAL REPORT 2022
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
ANNUAL REPORT
ON COMPENSATION
This section of the report sets out details
of how the Directors’ Compensation Policy
was implemented in 2022.
Payments have been made in accordance
with the current Directors’ Compensation
Policy, approved by shareholders at the 2020
AGM. The information included in this section
has been audited where stated.
GOVERNANCE IN RELATION
TO COMPENSATION
During 2022, there were five scheduled and
five unscheduled Compensation Committee
meetings. A table of Board and Committee
attendance can be found on page 115 and
the detail of key activities discussed is set
out below.
The Committee members have no personal
financial interest (other than as a shareholder
as disclosed on page 154) in the matters
to be decided by the Committee, potential
conflicts of interest arising from cross-
directorships, or day-to-day involvement
in running the Company’s businesses. The
terms of reference for the Compensation
Committee are available on the Company’s
website.
ADVISORS TO THE COMPENSATION
COMMITTEE
The Committee invites certain individuals
to attend meetings, including the Chief
Executive Officer, Chief Financial Officer, the
Company Secretary, the Chief People Officer
(who are not present when matters relating
to their own compensation or contracts
are discussed and decided) and the Global
Reward 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 Committee’s external
advisors.
EXTERNAL ADVISORS
The Committee retains WTW to act as
independent advisor. WTW provides advice
to the Compensation Committee and works
with management on matters related to our
compensation policy and practices. WTW is
a member of the Remuneration Consultants
Group and has signed the code of conduct
relating to the provision of advice in the UK.
Considering this, and the level and nature of
the service received, the Committee remains
satisfied that the advice is objective and
independent. WTW provides limited other
services at a Group level and some of our
operating companies engage WTW as
advisor at a local level. In 2022, WTW
received fees of £147,570 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.
DIRECTOR CHANGES DURING
THE YEAR
As referenced in the Committee Chair's letter,
it was announced in 2022 that John Rogers
would step down as Chief Financial Officer.
Mr Rogers will be succeeded by Joanne
Wilson, following the announcement of the
Company’s 2023 First Quarter Trading Update.
John Rogers will be treated in accordance
with WPP’s shareholder-approved Directors’
Compensation Policy for the remaining term
of his employment. He was eligible to
receive a STIP award (cash and ESA) for the
2022 financial year, details of which are
included on page 145. He will not receive a
STIP or other incentive award for the 2023
financial year. Any outstanding ESA awards
will vest on a pro rata basis. All long-term
incentive (EPSP) awards which are unvested
at the point that John leaves WPP will lapse
in full. No further EPSP awards will be granted.
John will be subject to post-employment
shareholding requirements as set out in
the Policy.
A summary of Joanne Wilson’s compensation
arrangements is included in the press
release of 8 November 2022. Further
detail will be disclosed in next year’s
Compensation Committee Report following
her appointment in 2023.
ACTIVITY DURING THE YEAR
The key activities of the Compensation Committee are set out below. In addition to the specific items outlined, the Committee reviews any
compensation matters relating to the Executive Directors and the Executive Committee, as well as all compensation governance matters.
2022
Q1
Q3
– Determined performance outcomes for 2017-2021 EPSP
– Consideration of 2021 STIP in the context of performance during the year
– Setting targets for 2022 EPSP
– Reviewed and approved 2021 Compensation Committee Report
– Received an update on the wider workforce providing an overview of the
diversity demographics and compensation of employees at WPP
– Continued review of Directors’ Compensation Policy
Q2
Q4
– Reviewed the CEO and CFO's salaries
– Reviewed and approved proposed changes to Executive Committee
salaries and compensation structure
– Set targets for 2022 STIP
– Directors’ Compensation Policy review
– Shareholders’ consultation in respect of proposed changes to Directors’
Compensation Policy
– Reviewed outcome of consultation and finalised proposed Policy changes
– Agreement of terms for CFO transition
– Corporate governance update
To learn more, see wpp.com/about/corporate-governance
WPP ANNUAL REPORT 2022
143
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
ANNUAL REPORT ON COMPENSATION
STATEMENT OF SHAREHOLDER VOTING
The result of the shareholder vote at the Company’s 2022 AGM in respect of the 2021 Compensation Committee Report is set out below along
with the result of the most recent vote on the Directors’ Compensation Policy at the 2020 AGM:
Voting outcome for 2021 Compensation Committee Report (at 2022 AGM)
Votes for
Number
841,723,026
Votes against
Number
59,344,966
%
93.41
Resolution
To approve the
Compensation
Committee Report
Voting outcome for 2020 Compensation Policy (at 2020 AGM)
Resolution
To approve the
Compensation Policy
Votes for
Number
Votes against
%
Number
885,129,086
90.76
90,096,398
%
6.59
%
9.24
Votes cast
Number
901,067,992
Votes withheld
Number
137,143
Votes cast
Number
Votes withheld
Number
975,225,484
14,009,046
2022 COMPENSATION
The decisions made with respect to 2022 compensation were made in line with the 2020 Directors’ Compensation Policy, approved by
shareholders at the AGM in 2020.
EXECUTIVE DIRECTORS’ TOTAL COMPENSATION RECEIVED (AUDITED)
Single total figure of compensation
Mark Read
John Rogers1
2022
2021
2022
2021
Base
salary
£000
1,061
1,013
762
740
Benefits
£000
Pension
£000
36
37
32
32
125
149
76
74
Total
fixed
£000
1,222
1,199
870
846
Short-term incentive £000
Cash
Deferred
Long-term
incentive
£000
Total
variable
£000
Total annual
compensation
£000
1,437
1,560
917
999
958
1,040
611
666
3,065
0
1,994
2,265
5,460
2,600
3,522
3,930
6,682
3,799
4,392
4,776
1 John Rogers received buy-out awards to compensate for the forfeiture of incentive awards from his previous employer. In 2021 this comprised an EPSP which vested in March 2022 based on a
performance period of 1 Jan 2019 to 31 Dec 2021 with a final vesting value of £2,265,468. See page 147 of 2021 Annual Report and Accounts for further details
144
WPP ANNUAL REPORT 2022
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
FIXED ELEMENTS OF COMPENSATION (AUDITED)
BASE SALARY
Mark Read
John Rogers
Annual base
salary
£1,081,600
£784,400
Base salary
received in
2022
£000
£1,061
£762
Effective date
1 July 2022
1 July 2022
The CEO and CFO’s salaries were reviewed in 2022 in line with a salary review which took place throughout the organisation. When reviewing
executive salaries in 2022, the Committee took into consideration the external market in the UK as well as the global advertising and media
sector; performance in role; time since previous review; and salary increases across the wider workforce during the year.
For the CEO, the Committee agreed an increase of 4.0% to £1,081,600. This is in line with average annual salary increases in the UK of around
3.6%. The CFO’s salary has not been reviewed since his appointment in January 2020 and the Committee agreed an increase of 6.0% to reflect
performance and the 30-month period since appointment without review.
BENEFITS
In addition to the allowance received, the values
disclosed include the value of expenses related directly
to attendance at Board meetings. The expenses for
Mark Read and John Rogers were £1,347 and £2,169
respectively (£2,431 for both Executive Directors in 2021).
These values include the grossed-up cost of UK income
tax and national insurance paid by the Company on
behalf of the Directors.
Mark Read
John Rogers
PENSION
In line with the plan to reduce Mark Read's pension to
ensure alignment with the wider workforce by the end
of the policy period, the final reduction was made to
reduce his pension to 10% during 2022.
Mark Read
John Rogers
SHORT-TERM INCENTIVE (AUDITED)
2022 STIP OUTCOME
Mark Read
John Rogers
2022
Benefits
£000
36
32
Contractual
pension
(% of base salary)
10
10
2022
Pension
£000
125
76
Maximum bonus
(% of salary)
2022 STIP
(% of maximum)
2022 STIP
(% of base salary)
250
225
88.56
86.56
221.40
194.76
2022 STIP
(£000)
2,395
1,528
In accordance with the 2020 Directors’ Compensation Policy, 60% of the total STIP was paid in cash and 40% deferred into an ESA.
WPP ANNUAL REPORT 2022
145
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
ANNUAL REPORT ON COMPENSATION
PERFORMANCE AGAINST 2022 FINANCIAL OBJECTIVES (75% OF AWARD)
The financial bonus targets and outcomes for the year are set out in the table below. Performance against all financial objectives is calculated
on a ‘like-for-like’ basis other than headline operating margin, which is calculated on a constant currency basis.
Measure
Like-for-like headline operating profit growth
Headline operating margin improvement
Like-for-like revenue less pass-through costs growth
Total achieved
Weighting
(as portion of
financial element)
1/3
1/3
1/3
Threshold
(0% payable)
Target
(50% payable)
Maximum
(100% payable)
Actual
performance
% of award
achieved
0.0%
0.0%
0.0%
5.0%
0.25%
4.0%
10.0%
0.5%
8.0%
10.0%
0.4%
6.9%
25.00%
20.00%
21.56%
66.56%
PERFORMANCE AGAINST 2022 INDIVIDUAL STRATEGIC OBJECTIVES (25% OF AWARD)
Non-financial performance is assessed using a scorecard of measures with four categories: client; people and DE&I; purpose and reputation;
and strategic priorities. The Committee has assessed performance against these targets holistically to inform its decision on each Executive
Director's non-financial performance and determined an award of 22% for Mark Read and 20% for John Rogers, out of a maximum of 25%.
NON-FINANCIAL PERFORMANCE APPLICABLE TO BOTH EXECUTIVE DIRECTORS
Category
Area
2022 performance
Purpose and reputation
– Aligned to the
Company's
sustainability strategy,
the management of
governance and
controls as well as
industry achievements
and awards
Strategic priorities
– In relation to our
growth strategy
and Group-wide
transformation
Progress on
carbon
reduction
– Carbon reduction targets: We have reduced our total market-based Scope 1 and 2 carbon emissions by 28%
year-on-year and by 71% versus our 2019 baseline, driven by energy savings from our campus programme and
increased purchasing of renewable electricity (see pages 74 and 75 for further detail)
– Media decarbonisation: GroupM developed and released a methodology for calculating emissions from media,
launched a coalition of leading advertisers – $10 billion in global advertising investment – with a shared
commitment to accelerate the decarbonisation of the world’s media supply chain, and in February 2023
launched a new media carbon calculator for clients
– See pages 74 and 75 for further detail on carbon reduction progress
Creative
reputation
Governance and
controls
Focus on high-
growth areas
Transformation
programme
– WPP awarded Most Creative Company of the Year in 2022 at the Cannes Lions International Festival of
Creativity, for the second year in a row
– WPP agencies collected a total of 176 Lions including one Titanium, four Grand Prix, 36 Gold, 47 Silver and 88
Bronze, with winners representing 40 different countries. Ogilvy was recognised as Network of the Year
– SOX testing improvements have continued across 2022, with enhanced key financial controls tests finding
reductions in deficiencies from 2021
– ESG data controls have been built into the Group's Risk and Control matrix and rolled out to leaders to embed
– Software Development Lifecycle controls were introduced into the control framework in 2022
– Expanded our offer in experience, commerce and technology through a number of acquisitions and
partnerships (see page 14 for further detail)
– Revenue less pass-through costs growth in experience, commerce and technology was an estimated 9% in
2022, increasing their share of our global integrated agencies, excluding GroupM, business mix to 39% in 2022
– Delivered £375m of gross annual savings against a 2019 base, ahead of the planned £300m with savings in
property, procurement and our operating model
MARK READ – NON-FINANCIAL PERFORMANCE
Category
Area
2022 performance
Client
– Relating to
new business and
client satisfaction
Client
satisfaction
– The high client satisfaction levels achieved in 2021 have remained high with an average Likelihood to
Recommend of 8.0 overall in 2022, with Quality of Work at 8.1 and DE&I at 8.2. See page 53 for further detail
New business
– New business performance continues to be strong at $5.9billion of net new billings in 2022, including new
assignments with a range of major brands from Audible, Danone and SC Johnson to Nationwide and Verizon.
We grew relationships with existing clients and our unprecedented global partnership with The Coca-Cola
Company continued to expand
146
WPP ANNUAL REPORT 2022
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
People and DE&I
– Improvements in
relation to diversity
and delivery of our
people strategy
Inclusive culture
– Continued improvements in our journey to achieve greater gender balance throughout the Company,
particularly at the senior leadership level. Women represent 45.8% of our Executive Committee and Direct
Reports (42.9% in 2021) as reported in the FTSE Women Leaders Review
– Continued to develop a number of initiatives to foster an open and inclusive culture
– Additional details on the diversity of our leadership and our inclusion initiatives are included on pages 36-37
Employee
engagement
– In 2022 we launched the refreshed All In survey, an engagement survey which helps us better support staff,
hold ourselves accountable and create an inclusive culture
– We achieved our highest ever participation levels, with 72,700 employees taking part, an increase of 65% from
2021. We were pleased to see our Company-wide eNPS score (how likely you are to recommend WPP as a
place to work) increase by 14 points from 2021 (see page 36 for more details)
Continued
simplification
of WPP
– Announced several business combinations in 2022: fusion of two agencies to create EssenceMediacom with
10,000 employees in over 100 offices; brought together three agencies to create GroupM Nexus; merged two
agencies to create a new design company, Design Bridge and Partners
Strategic priorities
– In relation to our
growth strategy
and Group-wide
transformation
JOHN ROGERS – NON-FINANCIAL PERFORMANCE
Category
Area
2022 performance
Client
– Relating to
new business and
client satisfaction
People and DE&I
– Improvements in
relation to diversity
and delivery of our
people strategy
Strategic priorities
– In relation to our
growth strategy
and Group-wide
transformation
Commercial
insights
– A focus on supporting client commercial insights with the roll-out of Quantum technology tool across top 20
markets in a global integrated agency, providing leading indicators data
Inclusive culture
– Continuing focus on diversity in the finance leadership team with development a priority. Over 60% of the
female leaders in the finance function (representing 35% of the leadership team) are new in role
Employee
engagement
Campus
programme
Continued
simplification
of WPP
– Engagement in the finance team was 84% favourable, with an eNPS of 18, which reflected strong engagement
in the finance team
– The transformation of our property estate continues, with a further five campuses opened in 2022 (Brussels,
Düsseldorf, Santiago, Tokyo, Toronto) and another in Guangzhou, China, in January, taking the global total to 37.
These campuses now accommodate around half our people around the world
– Shared services roll-out continued with operation rolled out in five locations across APAC and the Americas.
Finance shared services are now live in 20 markets, providing efficient scaled resources
– Successful roll out of Maconomy Finance tool to over 20,000 people in several Asia Pacific markets, with further
planned rollouts in Latin America in 2023
– Established 24/7 global IT services capabilities for the Group, with global hubs in Bucharest, Chennai, Kuala
Lumpur and Mexico
SHORT-TERM INCENTIVE WEIGHTINGS AND MEASURES FOR 2023
The Committee has reviewed the performance objectives for 2023 to ensure continued alignment with Company strategy. The Group
financial measures remain headline operating profit growth, headline operating profit margin improvement and revenue less pass-through
costs growth. Non-financial performance continues to be measured based on a scorecard including the following metrics: client – relating
to new business and client satisfaction; people and DE&I – this will include improvements in relation to diversity as well as the delivery of our
people strategy; purpose and reputation – aligned to the Company’s sustainability strategy, the management of governance and controls as
well as industry achievements and awards; and strategic priorities – in relation to our Group-wide transformation.
The Committee is of the view that the specific 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, as has been done in previous years.
WPP ANNUAL REPORT 2022
147
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
ANNUAL REPORT ON COMPENSATION
LONG-TERM INCENTIVES (AUDITED)
VESTING OF 2018-2022 EPSP AWARDS
Vesting of the 2018 legacy EPSP awards was dependent on performance against three measures, all assessed over a five-year period:
– WPP’s relative TSR, measured in common and local currency, against a custom group of WPP’s comparators (Dentsu, Interpublic, Ipsos,
Nielsen, Omnicom and Publicis, weighted by their respective market capitalisation)
– Compound annual growth in headline EPS
– Average ROE
The targets were set prior to the CEO's appointment, Covid-19 and the launch of the strategy. Consistent with prior award cycles, the
Committee did not feel it was appropriate to adjust the targets during the performance period. As a result, performance against all three
measures was below the threshold required for vesting.
Performance measure
Relative TSR (common currency)
Relative TSR (local currency)
Headline EPS growth
Average ROE
Total vesting (% of maximum)
Weighting
%
%
Threshold
Maximum
Actual
%
% of maximum
achieved
50% of
weighted peer
group
outperformed
90% of
weighted peer
group
outperformed
7.0
15.0
14.0
18.0
1/3
1/3
1/3
27%
26%
-3.9%
14.6%
0%
0%
0%
0%
Number of
shares awarded
Additional
shares in respect
of dividend
accrual
Number of
shares vesting
Share price
on vesting
Value of vested
2018-2022
EPSP awards
£000
Mark Read
396,617
0
0
n/a
0
VESTING OF 2020-2022 EPSP AWARDS
Vesting of the 2020 EPSP award was dependent on performance against three measures, all assessed over a three-year period:
– WPP’s relative TSR, measured in common and local currency, against a custom group of WPP’s comparators (Dentsu, Interpublic, Omnicom,
Publicis and the FTSE 100 index). Each comparator carries an equal weighting
– Cumulative AFCF
– Average ROIC
The performance against ROIC and AFCF was above maximum for the performance period, resulting in maximum vesting for those elements
of the award. The relative TSR was below threshold on both a local and common currency basis resulting in zero vesting for the TSR element
and a total formulaic vesting of 66.7% for the award.
The Committee is mindful of investor concerns around windfall gains for awards made in 2020 following reductions in share price across
the market as a result of the emerging Covid-19 pandemic. The Committee undertook a review of the extent to which the gain over the
performance period was due to a market recovery rather than Company performance. The Committee considered share price movement and
volatility on an absolute basis and compared to peers and the market, underlying financial performance, historic award and vesting levels, and
absolute award value in the context of total compensation as well as wider stakeholders. The Committee deferred making the EPSP awards in
March 2020 due to the uncertainty surrounding the emerging Covid-19 pandemic. The awards were made in November 2020 following a
consultation with key shareholders concerning the definition and quantum of the EPSP targets. By this point the share price had shown signs
of recovery having increased c.50% since mid-March 2020. Vesting of the EPSP awards in recent years has been at or close to zero and the
Committee has not adjusted these historic awards to take account of the economic situation at the time to allow for a higher vesting. Having
reviewed these factors, the Committee determined that the gain generated during the performance period is a fair reflection of performance
and that a consistent approach of making no adjustment to the formulaic vesting of the 2020 EPSP is required.
148
WPP ANNUAL REPORT 2022
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
Performance measure
Relative TSR (common currency)
Relative TSR (local currency)
AFCF
ROIC
Total vesting (% of maximum)
Mark Read
John Rogers
Weighting
Threshold
%
Maximum
%
Actual
%
% of maximum
achieved
1/3
1/3
1/3
Median
Upper decile
Below median
Below median
£2,300m
11.5%
£3,100m
12.9%
£4,081m
16.8%
Number of shares
awarded
Additional shares
in respect of
dividend accrual
Number of
shares vesting
Share price
on vesting1
460,464
299,554
21,637
14,075
328,628
213,787
£9.3278
£9.3278
0%
0%
100%
100%
66.67%
Value of vested
2020-2022
EPSP awards
£000
3,065
1,994
1 The share price increased 25.86% between the grant and vest dates for this award. £629,914 and £409,787 of the total value of vested shares for the CEO and CFO respectively is attributable to share
price appreciation
GRANTING OF 2022-2024 AWARDS
In 2022, the Executive Directors were granted awards under the EPSP as approved by shareholders in 2020. The performance measures are
ROIC, AFCF and relative TSR. Proposed targets were developed based on detailed medium-term financial plans and robust modelling, with
reference to analyst consensus estimates.
Definition of measure
Relative TSR
AFCF
(Adjusted free cash flow)
ROIC
(Return on invested capital)
TSR performance is compared to that of five comparators: Dentsu, IPG, Omnicom, Publicis and the
FTSE 100 Index. Each comparator carries an equal weighting. TSR performance is calculated both in
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.
A cumulative AFCF for each of the three years in the performance period. Adjusted free cash flow is
calculated as cash generated by operations plus dividends received from associates, interest received,
investment income received, and proceeds from the issue of shares, less interest and similar charges paid,
dividends paid to non-controlling interests in subsidiary undertakings, repayment of lease liabilities
(including interest), and purchases of property, plant and equipment and purchases of other intangible
assets over the course of the performance period.
An average of the year end ROIC for each of the three years in the performance period calculated as:
Headline operating profit/Invested capital
Where invested capital =
(Opening net assets + closing net assets)/2
+ average net debt
+ average lease liabilities (opening lease liabilities + closing lease liabilities)/2
WPP ANNUAL REPORT 2022
149
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
ANNUAL REPORT ON COMPENSATION
The table below summarises the awards granted and the performance conditions against which participants will be measured.
Awards granted in 2022
Mark Read
John Rogers2
Basis and level of award
(% of salary)
390
300
Number of
shares awarded
384,746
210,586
1 Awards were granted on 25 March 2022. Face value is calculated based on the five-day average share price preceding the date of award (£10.5421)
2 Awards for John Rogers will lapse on leaving the Company
Performance measure
Weight
Nature
Relative TSR
One-third
Relative to peers
AFCF
One-third
Cumulative
Face value at date of grant1
£000
4,056
2,220
ROIC
One-third
Average
Performance zone (threshold to maximum)
Median to upper decile
£2,300m-£3,100m
16.5%-18.5%
Payout
Performance period
Holding period
For performance below threshold there is nil vesting. 20% vesting occurs at threshold performance,
100% vesting at maximum performance and straight-line vesting between threshold and maximum
1 January 2022 to 31 December 2024
1 January 2022 to 31 December 2024
EPSP MEASURES AND TARGETS FOR 2023
The table below shows the targets against which performance will be measured for the awards granted in 2023. The Committee considers
the measures and targets set to be appropriate and challenging.
Performance measure
Weight
Nature
Relative TSR
One-third
Relative to peers
AFCF
One-third
Cumulative
Performance zone (threshold to maximum)
Median to upper decile
£3,500m-£4,500m
ROIC
One-third
Average
17.5%-19.5%
Payout
Performance period
Holding period
For performance below threshold there is nil vesting. 20% vesting occurs at threshold performance,
100% vesting at maximum performance and straight-line vesting between threshold and maximum
1 January 2023 to 31 December 2025
1 January 2026 to 31 December 2027
A 2023 award will not be made to John Rogers. Joanne Wilson is eligible for a 2023 EPSP award upon commencement of employment at the
first available opportunity.
In 2022, an increased EPSP award was made to Mark Read of 390% of base salary following consultation with shareholders. The award was
within the range approved by shareholders under the 2020 Policy. The Committee considered performance, the competitive nature of the
global talent market and the interests of wider stakeholders and determined that the award will remain at 390% of salary.
150
WPP ANNUAL REPORT 2022
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
ALIGNING PAY AND PERFORMANCE
As set out in the Directors’ Compensation Policy, the Committee’s objective is to align variable compensation with the key strategic priorities
of WPP, maximising the link between pay and performance.
The following graph and table demonstrate the relationship between pay and performance over the last ten years for the CEO. The graph
shows WPP's performance against the performance of the FTSE 100 over the ten-year period to 31 December 2022. TSR is rebased to £100
from 1 January 2012 to show the value of a hypothetical £100 holding. The FTSE 100 has been chosen as a comparator as the Company has
been a constituent member throughout the period. With respect to 2018, the pay for both the current and previous CEO is included separately.
HISTORICAL TSR PERFORMANCE1
250
200
150
100
50
0
£184
£134
WPP
FTSE 100
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Source: S&P Capital IQ.
CEO total compensation (£000)2
Short-term incentive award against
maximum (%)
Long-term incentive award against
maximum (%)
2013
2014
2015
2016
2017
2018
MSS3
29,846
42,704
70,409
48,148
13,930
3,085
82
87
72
100
86
100
60
100
0
73
0
33
2018
MR3
965
30
33
2019
2,594
2020
1,136
2021
3,799
2022
6,682
55
15
0
5
100
0
89
2018: 0
2020: 67
1 Growth in the value of a hypothetical £100 holding over ten years versus the FTSE 100 (the broad market equity index of which WPP is a constituent) based on one month average of trading day values.
Source: CapIQ
2 Calculated based on the methodology used for disclosing compensation in the single figure of compensation table
3 Sir Martin Sorrell (MSS) left the company on 14 April 2018; Mark Read (MR) was appointed as Chief Executive Officer from 3 September 2018
WPP ANNUAL REPORT 2022
151
£134
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
ANNUAL REPORT ON COMPENSATION
NON-EXECUTIVE DIRECTORS’ FEES
The fees due to Non-Executive Directors were reviewed and increased in 2021. The Chair of the Sustainability Committee's fee was reviewed
and increased effective June 2021 and the Senior Independent Director's fee was reviewed and increased effective October 2021. The fees are
shown in the table below:
Chairman
Non-Executive Director
Senior Independent Director
Chair of Audit or Compensation Committee
Chair of Nomination and Governance Committee1
Chair of Sustainability Committee2
Member of Audit or Compensation Committee
Member of Nomination and Governance Committee
Member of Sustainability Committee
£000
525
85
40
40
15
40
20
10
10
1 The Nomination and Governance Committee is chaired by Roberto Quarta as part of his role as Chairman; no additional fee is paid
2
In prior years the Sustainability Committee has been co-chaired with each Chair receiving a fee of £15,000. The Committee now has a single Chair, who receives a fee of £40,000
NON-EXECUTIVE DIRECTORS’ TOTAL COMPENSATION RECEIVED (AUDITED)
The single figure table below details the value of fees and taxable benefits received by the Non-Executive Directors during 2022 while they
held a position on the Board. The benefits amounts include the grossed-up cost of UK tax and national insurance paid by the Company on
behalf of the Directors where applicable.
Roberto Quarta
Angela Ahrendts1
Jacques Aigrain, retired 24 May 2022
Simon Dingemans, appointed 31 January 2022
Sandrine Dufour1
Tarek Farahat
Tom Ilube
Cindy Rose
Nicole Seligman
Sally Susman, retired 24 May 2022
Keith Weed
Jasmine Whitbread
Dr. Ya-Qin Zhang1
Fees
£000
2022
525
103
58
97
140
105
135
125
155
42
125
135
93
2021
525
95
145
n/a
125
105
133
123
147
107
114
135
85
Benefits
£000
2022
32
42
9
6
6
18
7
5
24
15
7
5
20
Total
£000
2022
557
145
67
103
146
123
142
130
179
57
132
140
113
2021
558
96
148
n/a
125
105
138
129
147
107
122
141
85
2021
33
1
3
n/a
0
0
5
6
0
0
8
6
0
1 Angela Ahrendts joined the Nomination and Governance Committee in March 2022; Dr. Ya-Qin Zhang joined the Sustainability Committee in March 2022. Sandrine Dufour took on the role of Chair of the
Audit Committee during 2022
152
WPP ANNUAL REPORT 2022
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
PAYMENTS TO PAST DIRECTORS
No payments were made to past directors during the year.
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,
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 Employee Share Ownership Plan Trusts (ESOPs).
More specifically, the Executive Directors have potential interests in shares related to the outstanding awards under the EPSP and outstanding
ESAs. As at 31 December 2022, the Company’s ESOPs (which are entirely independent of the Company and have waived their rights to receive
dividends) held in total 1,211,974 shares in the Company (5,803,641 in 2021).
Director
Mark Read
John Rogers
At 31 December 2022
At 16 March 20234
At 31 December 2022
At 16 March 20234
Total
beneficial
interests
566,060
739,923
391,715
391,715
Shares without
performance
conditions
(unvested)1
Shares with
performance
conditions
(unvested)2,3
109,220
109,220
69,943
69,943
1,951,164
1,094,083
750,373
450,819
Total
unvested
shares
2,060,384
1,203,303
820,316
520,762
Shareholding requirements
% of
base salary
Achieved/
On track
600%
300%
1 Shares due pursuant to the 2021 Executive Share awards. Additional dividend shares will be due on vesting
2 Maximum number of shares due on vesting pursuant to the outstanding EPSP awards, full details of which can be found below. Additional dividend shares will be due on vesting
3 As noted in footnote 2 above, reduced by the maximum due under the 2018 EPSP award, which lapsed on 15 March 2023, and the 2020 EPSP, which vested on 15 March 2023 (full details can be found on
page 149)
4 Total beneficial interests calculated at the last practicable date for this Annual Report
SHAREHOLDING REQUIREMENTS
As detailed in the Directors’ Compensation Policy, the Executive Directors are required to achieve a minimum level of shareholding of WPP
shares. The Chief Executive Officer and Chief Financial Officer are required to hold shares to the value of 600% and 300% of base salary
respectively. Both Executive Directors have seven years from the date they were appointed to their respective roles in which to reach the
required level.
As at 31 December 2022, the Chief Executive Officer held shares to the value of 439% of his base salary. At the same date, the Chief Financial
Officer held shares to the value of 418% of his base salary. This was calculated based on the average share price for the last two months of
the year.
OUTSTANDING SHARE-BASED AWARDS
The table below shows outstanding shares as at 31 December 2022. ESAs (Executive Share Awards) are granted under the WPP Stock Plan
2018. This is the stock component of the annual short-term incentive plan and granted subject to the achievement of performance measures
prior to grant. EPSP awards (Executive Performance Share Plan) are subject to performance measures over the period stated below. Dividend
shares will accrue on these awards.
Mark Read
John Rogers
Award type
Grant date
Performance period
Share price on
grant date
No. of shares
granted
ESA
EPSP
ESA
EPSP
10.05.22
06.12.18
24.09.19
24.11.20
28.03.21
25.03.22
10.05.22
24.11.20
28.03.21
25.03.22
n/a
01.01.18-31.12.22
01.01.19-31.12.23
01.01.20-31.12.22
01.01.21-31.12.23
01.01.22-31.12.24
n/a
01.01.20-31.12.22
01.01.21-31.12.23
01.01.22-31.12.24
£9.522
£8.604
£10.035
£7.411
£9.241
£10.542
£9.522
£7.411
£9.241
£10.542
109,220
396,617
340,059
460,464
369,278
384,746
69,943
299,554
240,233
210,586
Vesting date
10.03.2024
15.03.2023
15.03.2024
15.03.2023
15.03.2024
15.04.2025
10.03.2024
15.03.2023
15.03.2024
15.04.2025
WPP ANNUAL REPORT 2022
153
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
ANNUAL REPORT ON COMPENSATION
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,
no Non-Executive Director had any interest in any contract of significance with the Group during the year.
Non-Executive Director
Roberto Quarta
Angela Ahrendts
Jacques Aigrain, retired 24 May 2022
Simon Dingemans, appointed 31 January 2022
Sandrine Dufour
Tarek Farahat
Tom Ilube
Cindy Rose
Nicole Seligman
Sally Susman, retired 24 May 2022
Keith Weed
Jasmine Whitbread
Dr. Ya-Qin Zhang
Total interests at
31 December 20221
Total interests at
16 March 20232
87,500
12,571
34,000
6,000
15,000
3,775
6,335
8,000
8,750
5,000
8,424
8,735
0
87,500
12,571
n/a
6,000
15,000
3,775
6,335
8,000
8,750
n/a
8,424
8,735
10,000
1 Or at date of retirement if retired during the year
2 Total beneficial interests calculated at the last practicable date for this Annual Report
COMPENSATION IN THE WIDER CONTEXT
When setting the Directors’ Compensation Policy and making decisions in relation to executive compensation, the Compensation Committee
considers the wider workforce and the broader compensation context. The Committee places significant value on the views of employees
and has facilitated the engagement with the Workforce Advisory Panel (WAP) on compensation matters at the executive level and throughout
the organisation. This included the Compensation Committee Chair and the Global Reward Director’s attendance at a WAP meeting to
discuss how executive compensation aligns with wider Company compensation policies. Further information on the Workforce Advisory Panel
can be found in the Nomination Committee report on page 120.
The Committee also receives regular updates on compensation for the wider workforce to ensure that pay for Executive Directors is set
against this backdrop. In 2022, the Committee was particularly mindful of the challenges faced by employees as a result of increased inflation
in many parts of the world, and the resulting actions taken including making more funds available for annual salary review budgets and
importance of wider programmes to support our people in areas such as financial education and mental wellbeing. The Committee also noted
the comprehensive support offered throughout 2022 to colleagues in Ukraine since the war began in February 2022. This has included
financial support packages, medical and wellbeing care, relocation support and other practical resources.
RELATIVE IMPORTANCE OF SPEND ON PAY
The following table sets out the percentage change in total staff costs, headcount, dividends and share buybacks.
Total staff costs (continuing operations)
Headcount – average over year
Dividends and share buybacks
2022
£8,165.8m
114,129
£1,228.1m
2021
% change
£7,166.7m
104,808
£1,133.2m
13.9
8.9
8.4
ANNUAL PERCENTAGE CHANGE IN COMPENSATION OF DIRECTORS AND EMPLOYEES
The table overleaf shows the annual change in each individual Director's pay for 2022 and 2021. Since WPP plc, the statutory entity for which
this disclosure is required, does not have any employees, the table includes a voluntary disclosure of the annual average change for
employees of the UK head office.
Mark Read and John Rogers received salary increases of 4.0% and 6.0% respectively, effective 1st July 2022 (see page 145 for further detail).
The difference between this and the increase disclosed in the table on the following page reflects the timing of salary reviews for
Executive Directors.
154
WPP ANNUAL REPORT 2022
COMPENSATION COMMITTEE REPORT
CORPORATE GOVERNANCE
Directors are reimbursed for expenses that directly relate to attendance at Board meetings, including the grossed-up cost of UK income tax
and national insurance paid by the Company on behalf of the Directors. Directors returned to travel in 2022 to attend Board meetings in WPP
key locations following a reduction in travel during the Covid-19 pandemic. This has resulted in increased benefits for some Directors. Other
than travel-related expenses, no additional benefits were provided.
2021-2022
2020–2021
2019–2020
Base salary/
Fees
% change
Benefits
% change
Annual bonus
% change1
Base salary/
Fees
% change
Benefits
% change
Annual bonus
% change2
Base salary/
Fees
% change
Benefits
% change
Annual bonus
% change
Year-on-year change in pay
Executive Directors
Mark Read3
John Rogers4
Non-Executive Directors
Roberto Quarta
Angela Ahrendts5
Jacques Aigrain5
Simon Dingemans5
Sandrine Dufour5
Tarek Farahat
Tom Ilube5
Cindy Rose
Nicole Seligman
Sally Susman5
Keith Weed
Jasmine Whitbread
Dr. Ya-Qin Zhang5
Average UK head office
employees6
(7.9)
(8.2)
Non-Executive
Directors do
not receive
variable
compensation
4.7
3.0
0.0
8.4
(60.0)
n/a
12.0
0.0
1.5
1.6
5.4
(60.7)
9.6
0.0
9.4
(2.9)
(0.8)
(3.0)
4,100.0
200.0
n/a
–
–
40.0
(16.7)
–
–
(12.5)
(16.7)
–
11.3
15.1
7.1
131.2
7.1
n/a
40.1
7.1
554.5
25.6
8.7
4.4
22.2
14.5
n/a
–
–
Non-Executive
Directors do
not receive
variable
compensation
4.0
8.1
19.6
n/a
53.1
n/a
(48.4)
(65.0)
429.6
21.5
(78.6)
(71.3)
40.2
21.6
n/a
6.0%
0.0%
316.3%
2.5%
0.0%
(49.5)%
(6.7)
n/a
(2.0)
n/a
(6.9)
n/a
n/a
(6.7)
n/a
24.1
(6.9)
5.1
447.1
218.9
n/a
1.2%
0.0
n/a
(51.9)
n/a
(73.3)
n/a
n/a
(57.2)
n/a
113.8
47.2
135.3
820.9
1,318.1
n/a
0.0%
(100)
n/a
Non-Executive
Directors do
not receive
variable
compensation
23.6%
1
The annual percentage change in bonus is calculated by reference to the bonus payable in respect of the financial year ended 31 December 2022 compared to the financial year ended 31 December
2021 for Executive Directors, and by reference to cash bonus payments received during the financial year ended 31 December 2022 in comparison to the financial year ended 31 December 2021 for the
UK head office employees. Non-Executive Directors do not receive variable compensation
2 As the Executives did not receive a bonus in respect of the financial year ended 31 December 2020, it is not possible to calculate a percentage change between 2020 and 2021
3 Mark Read took a voluntary 20% salary reduction for a period of four months in 2020 as part of cost-reduction targets implemented during Covid-19; this, together with a salary increase after three years,
explains the changes shown between 2020 and 2021. Mark Read received a salary increase of 4.0% in 2022 (see page 145)
4 John Rogers joined the Company on 27 January 2020 and his salary and benefits in 2020 were prorated accordingly. Changes between 2020 and 2021 were a result of a prorated salary in 2020 and a voluntary
20% salary reduction for a period of four months in 2020 as part of cost-reduction targets implemented during Covid-19. John Rogers received a salary increase of 6.0% during 2022 (see page 145)
5 Jacques Aigrain and Sally Susman retired from the Board on 24 May 2022. Simon Dingemans was appointed 31 January 2022. Angela Ahrendts, Sandrine Dufour, Tom Ilube and Dr. Ya-Qin Zhang were
appointed to the Board on 1 July 2020, 3 February 2020, 5 October 2020 and 1 January 2021 respectively
6 Based on full-time equivalent comparisons. Average is calculated by reference to the median percentage change. Due to the timing of annual bonus payments, the change in average employee annual
bonus of 316.3% reflects the change between the bonus paid in respect of 2021 performance (paid in 2022) and 2020 performance (paid in 2021) and is therefore not directly comparable to Executive
Director bonus awards made in respect of 2022 performance (paid in 2023) and 2021 performance (paid in 2022)
SHARE-BASED COMPENSATION BELOW THE BOARD
The Company uses share-based compensation programmes to incentivise and retain employees, recruit new talent and encourage a strong
ownership culture among employees. The use of the core share plans in 2022 is described below.
WPP STOCK PLAN 2018 (WSP)
The WPP Leader programme made awards under the WSP to around 1,900 of our key leaders in 2022. Awards vest three years after grant,
provided the participant is still employed within the Group. In addition, senior executives have part of their annual bonus paid in the form of
Executive or Performance Share Awards that vest two years after grant.
The Executive Directors' Executive Share Awards are granted under the WSP. No further awards are made to Executive Directors.
All awards granted under the WSP are subject to malus and clawback conditions.
WPP SHARE OPTION PLAN 2015
During 2022, the WPP Share Option Plan 2015 was used to make awards to over 43,500 employees. By 31 December 2022, options under this
plan, and its predecessor, the Worldwide Ownership Plan, had been granted to approximately 215,500 employees over 110.5 million shares
since March 1997.
WPP ANNUAL REPORT 2022
155
CORPORATE GOVERNANCE COMPENSATION COMMITTEE REPORT
ANNUAL REPORT ON COMPENSATION
While the Share Option Plan provides the authority to make executive option awards, in addition to all employee awards, no awards were
granted in 2022. The Executive Directors do not participate in this plan.
CEO PAY RATIO
The ratios shown in the table below compare the total compensation of the CEO (as shown in the single figure table on page 144) to the
compensation of the median UK employee and those at the lower and upper quartile.
Year
2022
2021
2020
2019
Total compensation
Total compensation
Total compensation
Total compensation
Methodology used 25th percentile pay ratio 50th percentile pay ratio
118:1
Option B
154:1
75th percentile pay ratio
81:1
Option B
Option B
Option B
101:1
36:1
79:1
79:1
24:1
55:1
55:1
15:1
34:1
The pay ratio reflects how the structure and approach to compensation changes with increased seniority and accountability within the Group
and is therefore consistent with pay, reward and progression policies. The CEO’s pay is significantly weighted towards performance-related
pay with a focus on aligning with long-term performance and the interests of shareholders. In prior years, the CEO has not received significant
value from the vesting of long-term incentive plans due to legacy targets that were set prior to the CEO's appointment, Covid-19 and the
launch of the strategy. This year the 2020 EPSP, the first of the newly structured EPSP awards more closely aligned with the strategy, vested at
66.67% resulting in an increase in the CEO's total compensation compared with the prior year, reflecting WPP's pay-for-performance
philosophy and focus on rewarding long-term performance. At the 25th, 50th and 75th percentile employee level, variable compensation
carries a much smaller weighting. As a result, the CEO pay ratio has increased since 2021.
The salary and total pay and benefits for the 25th, 50th and 75th percentile employees are shown in the table below:
Year
2022
2021
2020
2019
Salary
Methodology used
Option B
25th percentile pay
£39,292
50th percentile pay
£51,985
75th percentile pay
£74,250
Total pay and benefits
Salary
Total pay and benefits
Salary
Total pay and benefits
Salary
Total pay and benefits
Option B
Option B
Option B
Option B
Option B
Option B
Option B
£43,417
£32,067
£37,606
£30,000
£31,800
£31,000
£32,636
£56,460
£44,250
£48,293
£45,000
£46,800
£44,739
£46,975
£82,551
£61,500
£68,583
£71,000
£73,840
£70,000
£77,416
Given the number of payrolls used across the UK Group, Option B (using the gender pay gap information to identify three employees as the
best equivalents of the 25th, 50th and 75th percentile employees) was the most appropriate methodology to use to determine the CEO pay
ratio. We believe this approach provides accurate information and representation of the ratios. The latest data collected as part of gender pay
reporting was used, with a snapshot date of 5 April 2022. The ratio has been computed taking into account the pay and benefits of over
10,000 UK employees, other than the role of the CEO. Where an employee works part-time, fixed pay, benefits, and any variable pay were
adjusted, where appropriate, to reflect full-time equivalent compensation. The 25th, 50th and 75th percentile employees were determined
based on this adjusted data and are considered to be representative. Total compensation for 2022 was calculated using single-figure table
methodology for these employees in order to provide a meaningful comparison with the CEO. We are satisfied that the median pay ratio is
consistent with the compensation policies for our UK workforce taken as a whole and our objective of delivering market competitive pay for
each role.
SHARE INCENTIVE DILUTION FOR 2012 TO 2022
The share incentive dilution level, measured on a ten-year rolling basis, was at 3.2% at 31 December 2022 (2021: 2.9%). 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.
Jasmine Whitbread
Chair of the Compensation Committee
on behalf of the Board of Directors of WPP plc
23 March 2023
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WPP ANNUAL REPORT 2022
CORPORATE GOVERNANCE
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
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 125.
The Board considers the Annual Report and financial statements,
taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Company’s
position, performance, business model and strategy.
The letters from the Chairs of the Sustainability, 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 are included in the Directors’
report, which also includes the Strategic Report and Corporate
Governance sections.
By Order of the Board
Balbir Kelly-Bisla
Company Secretary
23 March 2023
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
(IFRS) as issued by the International Accounting Standards Board
(IASB) as they apply to the financial statements of the Group for the
year ended 31 December 2022. Under company law the Directors
must not approve the accounts unless they are satisfied that they
give a true and fair view of the state of affairs of the Company and
of the profit or loss of the Company for that period.
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
– 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 and enable them to ensure that the financial
statements comply with the Companies (Jersey) Law 1991. They are
also responsible 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’ Compensation 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.
WPP ANNUAL REPORT 2022
157
FINANCIAL
STATEMENTS
Accounting policies
Consolidated financial statements
160
166
Notes to the consolidated financial statements 171
Company financial statements
203
Notes to the Company financial statements
206
Independent auditor’s report
Reconciliation to non-GAAP
measures of performance
208
216
158
WPP ANNUAL REPORT 2022
FINANCIAL STATEMENTS
WPP ANNUAL REPORT 2022
159
FINANCIAL STATEMENTS
ACCOUNTING POLICIES
The consolidated financial statements of WPP plc and its subsidiaries (the Group)
for the year ended 31 December 2022 have been prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB) as they apply to the financial statements of
the Group for the year ended 31 December 2022.
BASIS OF PREPARATION
The consolidated financial statements have been prepared under the historical
cost convention, except for the revaluation of certain financial instruments.
The financial statements have been prepared using the going concern basis
of accounting. 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.
NEW IFRS ACCOUNTING PRONOUNCEMENTS
The Group has elected to adopt the hedge accounting requirements of IFRS 9
Financial Instruments from 1 January 2022. The IFRS 9 hedge accounting
requirements are applied prospectively, and all hedge arrangements in place
at the point of transition are regarded as continuing hedging relationships
under IFRS 9. Accordingly, prior year financial information is not required to be
restated and remains as reported under IAS 39. Management has elected not
to take the 'cost of hedging' approach, and instead the currency basis risk has
been designated in the hedge relationships. There has been no significant
impact on the financial statements as a result of the adoption of the hedge
accounting requirements of IFRS 9, both at the point of transition and
in the year ended 31 December 2022.
The Group has applied the following amendments for the first time for their
annual reporting period commencing 1 January 2022:
– Property, Plant and Equipment: Proceeds before Intended Use –
Amendments to IAS 16
– Onerous Contracts – Cost of Fulfilling a Contract – Amendments to IAS 37
– Annual Improvements to IFRS Standards 2018-2020
– Reference to the Conceptual Framework – Amendments to IFRS 3
The amendments listed above did not have any impact on the amounts
recognised in prior periods, did not have a significant impact on the amounts
recognised in the current period, and are not expected to significantly affect
the future periods.
At the date of authorisation of these financial statements, there were a number
of standards or amendments to standards, which have not been applied in
these financial statements, that were in issue but not yet effective. The Group
does not consider that any of these standards or amendments to standards
in issue but not yet effective will have a significant impact on the financial
statements.
GOODWILL AND OTHER INTANGIBLE ASSETS
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 recoverable amount,
defined as the higher of fair value less costs of disposal and value in use. The
net present value of future cash flows, to determine value in use, is 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
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 and retranslation of financial instruments.
The effect of any revisions to fair value adjustments that had been determined
provisionally at the immediately preceding balance sheet date are accounted
for as revisions to goodwill, as permitted by IFRS 3 Business Combinations.
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WPP ANNUAL REPORT 2022
ACCOUNTING POLICIES
FINANCIAL STATEMENTS
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, where the recoverable amount is the higher of an asset's fair
value less costs of disposal and value in use. 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:
A discontinued operation is a component of the entity that has been disposed
of or is classified as held for sale and that represents a separate major line of
business or geographical area of operations, is part of a single co-ordinated
plan to dispose of such a line of business or area of operations, or is a subsidiary
acquired exclusively with a view to resale. The profit or loss from a discontinued
operation is shown as a single amount on the face of the income statement
and the comparatives and related notes restated accordingly. This represents
total post-tax profit of the disposal group for the whole of the financial year
including any post-tax gain or loss on the measurement of fair value less costs
of disposal, as well as the post-tax loss on sale of the disposal group. Assets
and liabilities classified as held for sale are shown as a separate line on the
balance sheet.
– 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
INTERESTS IN ASSOCIATES AND JOINT VENTURES
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 and joint ventures 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 recoverable
amount is defined as the higher of fair value less costs of disposal and value
in use.
The Group accounts for joint venture investments under the equity method
which is consistent with the Group’s treatment of associates.
OTHER INVESTMENTS
Certain equity investments are designated as either fair value through other
comprehensive income or fair value through profit or loss. Movements in
fair value through profit or loss are recorded in the consolidated income
statement within revaluation and retranslation of financial instruments.
The Group generally elects to classify equity investments as fair value through
other comprehensive income where the Group forms a strategic partnership
with the investee.
NON-CURRENT ASSETS HELD FOR SALE AND
DISCONTINUED OPERATIONS
Under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations,
where certain conditions are met, an asset or disposal group that is for sale
is recognised as "held for sale". The Group has classified a 'disposal group'
as held for sale if the carrying amount will be recovered principally through
a sale transaction rather than through continuing use. For this to be the case,
the disposal group must be available for immediate sale in its present
condition subject only to terms that are usual and customary for sales of
such assets and its sale must be highly probable. Such assets are measured
at the lower of carrying amount and fair value less costs for disposal, and are
not depreciated or amortised, excluding certain assets that are carried at fair
value under IFRS 5. Furthermore, when an associate is classified as held for
sale, equity accounting ceases.
ACCRUED AND DEFERRED INCOME
Accrued income is a contract asset, within the scope of IFRS 9 Financial
Instruments, and is recognised when a performance obligation has been
satisfied but has not yet been billed. Contract assets are transferred to
receivables once the right to consideration becomes unconditional and billed
per the terms of the contractual agreement.
In certain cases, payments are received from customers or amounts are billed
with an unconditional right to receive consideration prior to satisfaction of
performance obligations and recognised as deferred income. These balances
are considered contract liabilities and are typically related to prepayments
for third-party expenses that are incurred shortly after billing.
TRADE RECEIVABLES AND WORK IN PROGRESS
Trade receivables are stated net of loss allowances.
Work in progress includes outlays incurred on behalf of clients, including
production costs, and other third-party costs that have not yet been billed
and are considered receivables under IFRS 15 Revenue from Contracts
with Customers.
EXPECTED CREDIT LOSSES
The Group has applied the simplified approach to measuring expected credit
losses, as permitted by IFRS 9 Financial Instruments. This has been applied to
trade receivables, contract assets and lease receivables. Under this approach,
the Group utilises a provision matrix based on the age of the trade receivables
and historical loss rates to determine the expected credit losses. The Group
also considers forward-looking information. Therefore, the Group does not
track changes in credit risk, but recognises a loss allowance based on the
financial asset's lifetime expected credit loss. For all other assets, the general
approach has been applied and a loss allowance for 12-month expected credit
losses is recognised.
Under IFRS 9, the expected credit losses are measured as the difference
between the asset’s gross carrying amount and the present value of estimated
future cash flows discounted at the financial asset’s original effective interest
rate. Given the short-term nature of the Group’s trade receivables, work in
progress and accrued income, which are mainly due from large national or
multinational companies, the Group's assessment of expected credit losses
includes provisions for specific clients and receivables where the contractual
cash flow is deemed at risk.
The Group considers that the credit risk increased significantly since initial
recognition when the credit rating changes, the debtor has significant financial
difficulty or if there was a breach of contract. For balances that are beyond
180 days overdue it is presumed to be an indicator of a significant increase in
credit risk.
Financial assets are written off when there is evidence indicating that the
debtor is in severe financial difficulty and the Group has no realistic prospect
of recovery. Receivables written off are still subject to enforcement activity
and pursued by the Group.
Further details on expected credit losses are provided in note 18.
WPP ANNUAL REPORT 2022
161
FINANCIAL STATEMENTS ACCOUNTING POLICIES
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.
DERECOGNITION OF FINANCIAL LIABILITIES
In accordance with IFRS 9 Financial Instruments, a financial liability of the
Group is only removed from the statement of financial position when the
underlying legal obligation is extinguished.
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.
DEBT
Interest-bearing debt is recorded at the proceeds received, net of direct
issue costs.
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 inception of the hedge relationship, the Group documents the relationship
between hedging instruments and hedged items, including whether changes
in the cash flows of the hedging instruments are expected to offset changes in
the fair values or cash flows of hedged items. Furthermore the Group
documents its risk management objectives and its strategy for undertaking
various hedge transactions.
Note 26 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 items that are 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 recognised in
other comprehensive income and 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, 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 profit or loss for the period.
Derivatives embedded in other financial liabilities 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.
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
the Group's own 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,
the financial liability is measured in accordance with IFRS 9 Financial
Instruments. On initial recognition, the corresponding amount is recognised
against the equity reserve, which is subsequently reversed on derecognition,
either through exercise or non-exercise of the option agreement. Changes in
the measurement of the financial liability due to the unwinding of the discount
or changes in the amount that the Group could be required to pay are
recognised in profit or loss within revaluation and retranslation of financial
instruments in the consolidated income statement.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank and in hand and short-term
highly liquid investments which are readily convertible to known amounts of
cash and which are subject to insignificant risk of changes in value, including
bank deposits and money market funds. The Group's overdrafts are included in
cash and cash equivalents where they are repayable on demand, are components
of the Group's centralised treasury strategy employed across the Group and
form an integral part of the Group's cash management, in accordance with
IAS 7 Statement of Cash Flows.
BORROWING COSTS
Finance costs of borrowing are recognised in the consolidated income
statement over the term of those borrowings.
REVENUE RECOGNITION
The Group is a leading worldwide creative transformation organisation offering
national and multinational clients a comprehensive range of communications,
experience, commerce and technology services. Contracts often involve
multiple agencies offering different services in different countries. As such, the
terms of local, regional and global contracts can vary to meet client needs and
regulatory requirements. Consistent with the industry, contracts are typically
short-term in nature and tend to be cancellable by either party with 90 days'
notice. The Group is generally entitled to payment for work performed to date.
The Group is generally paid in arrears for its services. Invoices are typically
payable within 30 to 60 days. Revenue comprises commissions and fees
earned in respect of amounts billed and is stated exclusive of VAT, sales taxes
and trade discounts. Pass-through costs comprise fees paid to external
suppliers when they are engaged to perform part or all of a specific project
and are charged directly to clients, predominantly media costs. As the
contracts are generally short-term in nature, the Group has applied the
practical expedient permitted by IFRS 15 to expense costs to obtain a contract
as incurred, where applicable.
In most instances, promised services in a contract are not considered distinct
or represent a series of services that are substantially the same with the same
pattern of transfer to the customer and, as such, are accounted for as a single
performance obligation. However, where there are contracts with services
that are capable of being distinct, are distinct within the context of the
contract, and are accounted for as separate performance obligations,
revenue is allocated to each of the performance obligations based on
relative stand-alone selling prices.
Revenue is recognised when a performance obligation is satisfied, in
accordance with the terms of the contractual arrangement. Typically,
performance obligations are satisfied over time as services are rendered.
Revenue recognised over time is based on the proportion of the level of
service performed. Either an input method or an output method, depending
on the particular arrangement, is used to measure progress for each
performance obligation. For most fee arrangements, costs incurred are
used as an objective input measure of performance. The primary input of
substantially all work performed under these arrangements is labour. There
is normally a direct relationship between costs incurred and the proportion
of the contract performed to date. In other circumstances relevant output
measures, such as the achievement of any project milestones stipulated in
the contract, are used to assess proportional performance.
For our retainer arrangements, we have a stand-ready obligation to perform
services on an ongoing basis over the life of the contract. The scope of these
arrangements is broad and generally not reconcilable to another input or
output criteria. In these instances, revenue is recognised using a time-based
method resulting in straight-line revenue recognition.
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WPP ANNUAL REPORT 2022
ACCOUNTING POLICIES
FINANCIAL STATEMENTS
The amount of revenue recognised depends on whether we act as an agent
or as a principal. Certain arrangements with our clients are such that our
responsibility is to arrange for a third party to provide a specified good or
service to the client. In these cases we are acting as an agent as we do not
control the relevant good or service before it is transferred to the client. When
we act as an agent, the revenue recorded is the net amount retained. Costs
incurred with external suppliers (such as production costs and media suppliers)
are excluded from revenue and recorded as work in progress until billed.
The Group acts as principal when we control the specified good or service
prior to transfer. When the Group acts as a principal (such as when supplying
in-house production services, events and branding), the revenue recorded is
the gross amount billed. Billings related to out-of-pocket costs such as travel
are also recognised at the gross amount billed with a corresponding amount
recorded as an expense.
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 able to be estimated, 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.
Further details on revenue recognition are detailed by sector below.
GLOBAL INTEGRATED AGENCIES
Revenue is typically derived from integrated product offerings including media
placements and creative 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 for commissions on purchased
media is typically recognised at the point in time the media is run.
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.
Variable incentive-based revenue typically comprises both quantitative and
qualitative elements. Incentive compensation is estimated using the most
likely amount and is included in revenue up to the amount that is highly
probable not to result in a significant reversal of cumulative revenue
recognised. The Group recognises incentive revenue as the related
performance obligation is satisfied.
PUBLIC RELATIONS AND SPECIALIST AGENCIES
Revenue for these services is typically derived from retainer fees and fees for
services to be performed subject to specific agreement. Most revenue under
these arrangements is earned over time, in accordance with the terms of the
contractual arrangement.
DISCONTINUED OPERATIONS (DATA INVESTMENT MANAGEMENT)
Revenue for market research services is typically recognised over time based
on input measures. For certain performance obligations, 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 are used to measure progress.
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. When the
terms of the transaction provide for licensing the right to access a product
on a subscription basis, revenue is recognised over the subscription period,
typically on a straight-line basis.
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.
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 recognised within 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.
WPP ANNUAL REPORT 2022
163
FINANCIAL STATEMENTS ACCOUNTING POLICIES
RETIREMENT BENEFIT COSTS
The Group accounts for retirement benefit costs in accordance with IAS 19
Employee Benefits.
Depreciation is recognised in both costs of services and general and
administrative costs and interest expense is recognised under finance costs
in the consolidated income statement.
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 other
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 Group 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.
PROVISIONS FOR LIABILITIES AND CHARGES
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 other property-related liabilities such as onerous
contracts and dilapidations. Also included are other provisions, primarily
long-term employee benefits such as deferred compensation plans, and
legal claims, where the likelihood of settlement is considered probable.
LEASES
The Group leases most of its offices in cities where it operates. Other lease
contracts include office equipment and motor vehicles.
At inception of a contract, the Group assesses whether a contract is, or contains,
a lease based on whether the contract conveys the right to control the use of
an identified asset for a period of time in exchange for consideration.
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured based on the
initial amount of the lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs incurred, less any
lease incentives received. The assets are depreciated over the term of the lease
using the straight-line method. The lease term includes periods covered by an
option to extend if the Group is reasonably certain to exercise that option.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined,
the Group’s incremental borrowing rate for the same term as the underlying
lease. Lease payments included in the measurement of lease liabilities
comprise fixed payments less any lease incentives receivable and variable
lease payments that depend on an index or a rate as at the commencement
date. Lease modifications result in remeasurement of the lease liability.
The Group has elected to use the exemption not to recognise right-of-use
assets and lease liabilities for short-term leases that have a lease term of
12 months or less and leases of low-value assets (under $5,000). The payments
associated with these leases are recognised as cost of services and general
and administrative costs within the consolidated income statement on a
straight-line basis over the lease term.
The Group assesses at the reporting date whether there are any indicators
of impairment and performs an impairment test when an impairment
indicator exists. The Group tests a right-of use asset as a stand-alone asset
for impairment when it either meets the definition of investment property
which generates independent cash flows or it is vacant with minimal to no
continued utility for the Group. When a right-of-use asset is tested as a
stand-alone asset, an impairment loss is recognised when the carrying amount
of the right-of-use asset exceeds its recoverable amount. The recoverable
amount of a right-of-use asset is estimated mainly based on the present value
of the estimated sublease income, discounted using the property yield rates.
The property held by the Group as right-of-use assets to earn rentals is
classified as investment property. The Group measures its investment
property applying the cost model.
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 foreign 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.
HYPERINFLATION IN ARGENTINA AND TURKEY
During 2022, 2021 and 2020, Argentina was designated as a hyperinflationary
economy. In 2022, Turkey was designated as a hyperinflationary economy.
The financial statements of the Group’s subsidiaries in Argentina and Turkey
have been adjusted for the effects of inflation in accordance with IAS 29
Financial Reporting in Hyperinflationary Economies.
IAS 29 requires that the income statement is adjusted for inflation in the
period and translated at the year-end foreign exchange rate and that
non-monetary assets and liabilities on the balance sheet are restated to
reflect the change in purchasing power caused by inflation from the date
of initial recognition. In 2022, this resulted in an increase in goodwill of
£82.6 million (2021: £23.9 million, 2020: £22.6 million), an increase in other
intangibles of £16.3 million (2021: £7.6 million, 2020: £5.3 million), and an
increase in property, plant and equipment of £41.5 million (2021: £20.3 million,
2020: £19.3 million). A consumer price index (CPI) of 1,134.6 was used at
31 December 2022 (2021: 582.5, 2020: 385.9) for Argentina. For Turkey, a CPI
of 1,128.5 was used at 31 December 2022. The impact on other non-monetary
assets and liabilities and the impact on the Group’s income statement in the
year were immaterial.
164
WPP ANNUAL REPORT 2022
ACCOUNTING POLICIES
FINANCIAL STATEMENTS
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. These estimates and judgements are reviewed
on an ongoing basis. 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.
The most significant area of estimation uncertainty is:
– Goodwill: the discounted cash flow methodology employed by the
Group when testing for goodwill impairment requires estimates regarding
operating margins and discount rates. Further details of the methodology,
discount rates and estimates used in relation to the goodwill impairment,
and sensitivities to these estimates are set out in note 14
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 23 and 27.
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.
GOVERNMENT SUPPORT
In reaction to the Covid-19 pandemic, certain governments have introduced
measures to assist companies. A reduction to operating costs is recorded in
relation to government subsidies/schemes where these amounts will never
have to be repaid. Further details of such amounts are included in note 3.
In other cases, this involves the deferral of certain tax payments in order to
stimulate the economy. The deferral of payments does not impact the income
statement and these are charged as normal in the period they are incurred.
NON-CONTROLLING INTERESTS
Non-controlling interests in acquired companies are measured at the
non-controlling interests’ proportionate share of the acquiree’s identifiable net
assets. The acquisition of a non-controlling interest in a subsidiary, and the sale
of an interest while retaining control, is accounted for within equity, and the
cash cost of such purchases is included within "financing activities" in the cash
flow statement.
WPP ANNUAL REPORT 2022
165
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
Continuing operations
Revenue
Costs of services
Gross profit
General and administrative costs
Operating profit/(loss)
(Loss)/earnings from associates – after interest and tax
Profit/(loss) before interest and taxation
Finance and investment income
Finance costs
Revaluation and retranslation of financial instruments
Profit/(loss) before taxation
Taxation
Profit/(loss) for the year from continuing operations
Discontinued operations
Profit for the year from discontinued operations
Profit/(loss) for the year
Attributable to
Equity holders of the parent:
Continuing operations
Discontinued operations
Non-controlling interests:
Continuing operations
Discontinued operations
Earnings per share from continuing and discontinued operations
Basic earnings per ordinary share
Diluted earnings per ordinary share
Earnings per share from continuing operations
Basic earnings per ordinary share
Diluted earnings per ordinary share
Note
The accompanying notes form an integral part of this consolidated income statement
Notes
2022
£m
2021
£m
2020
£m
2
3
3
4
6
6
6
7
14,428.7
(11,890.1)
2,538.6
(1,180.4)
1,358.2
(60.4)
1,297.8
145.4
(359.4)
76.0
1,159.8
(384.4)
775.4
12,801.1
(10,597.5)
2,203.6
(974.6)
1,229.0
23.8
1,252.8
69.4
(283.6)
(87.8)
950.8
(230.1)
720.7
12,002.8
(9,987.9)
2,014.9
(4,293.0)
(2,278.1)
(136.0)
(2,414.1)
82.7
(312.0)
(147.2)
(2,790.6)
(127.1)
(2,917.7)
12
–
–
16.4
775.4
720.7
(2,901.3)
682.7
–
682.7
92.7
–
92.7
775.4
637.7
–
637.7
83.0
–
83.0
720.7
(2,971.6)
6.5
(2,965.1)
53.9
9.9
63.8
(2,901.3)
9
9
9
9
62.2p
61.2p
53.4p
52.5p
(242.5p)
(242.5p)
62.2p
61.2p
53.4p
52.5p
(243.0p)
(243.0p)
166
WPP ANNUAL REPORT 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Profit/(loss) for the year
Items that may be reclassified subsequently to profit or loss
Foreign exchange differences on translation of foreign operations1
(Loss)/gain on net investment hedges
Cash flow hedges:1
Fair value gain/(loss) arising on hedging instruments
Less: (loss)/gain reclassified to profit or loss
Share of other comprehensive income/(loss) of associate undertakings
Exchange adjustments recycled to the income statement on disposal of discontinued operations
Items that will not be reclassified subsequently to profit or loss
Movements on equity investments held at fair value through other comprehensive income
Actuarial gain on defined benefit pension plans
Deferred tax on defined benefit pension plans
Other comprehensive income/(loss) for the year
Total comprehensive income/(loss) for the year
Attributable to
Equity holders of the parent:
Continuing operations
Discontinued operations
Non-controlling interests:
Continuing operations
Discontinued operations
2022
£m
775.4
424.2
(141.5)
38.5
(38.5)
51.2
–
333.9
(22.3)
16.6
(7.4)
(13.1)
320.8
1,096.2
988.3
–
988.3
107.9
–
107.9
1,096.2
2021
£m
720.7
(143.0)
45.5
(38.0)
38.0
13.5
–
(84.0)
(35.5)
14.3
(3.0)
(24.2)
(108.2)
612.5
539.8
–
539.8
72.7
–
72.7
612.5
2020
£m
(2,901.3)
75.4
9.7
(5.9)
5.9
(61.5)
(20.6)
3.0
(127.7)
2.0
7.4
(118.3)
(115.3)
(3,016.6)
(3,063.9)
(12.6)
(3,076.5)
50.5
9.4
59.9
(3,016.6)
Notes
The accompanying notes form an integral part of this consolidated statement of comprehensive income
1 Balances for the year ended 31 December 2021 and 31 December 2020 have been re-presented following a reclassification between the Hedging Reserve and Translation Reserve of £38.0 million and
£5.9 million, respectively. See note 28
WPP ANNUAL REPORT 2022
167
FINANCIAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
Net cash inflow from operating activities1
Investing activities
Acquisitions1
Disposal of investments and subsidiaries
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
Repayment of lease liabilities
Share option proceeds
Cash consideration received from non-controlling interests
Cash consideration for purchase of non-controlling interests
Share repurchases and buybacks
Proceeds from issue of bonds
Repayment of 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 of cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Notes
11
2022
£m
700.9
2021
£m
2,029.0
2020
£m
2,050.6
11
11
11
11
11
11
11
11
(236.2)
37.7
(208.4)
(14.9)
12.9
(408.9)
(309.6)
1.2
–
(84.2)
(862.7)
–
(220.6)
(0.2)
(365.4)
(69.5)
(1,911.0)
(1,619.0)
64.2
3,540.6
1,985.8
(382.3)
28.3
(263.2)
(29.9)
8.7
(638.4)
(320.7)
4.4
39.5
(135.0)
(818.5)
–
(397.1)
(0.4)
(314.7)
(114.5)
(2,057.0)
(666.4)
(130.1)
4,337.1
3,540.6
(174.2)
272.3
(218.3)
(54.4)
11.2
(163.4)
(300.1)
–
–
(80.6)
(290.2)
915.5
(282.7)
(7.1)
(122.0)
(83.3)
(250.5)
1,636.7
(99.2)
2,799.6
4,337.1
Notes
The accompanying notes form an integral part of this consolidated cash flow statement.
1
Earnout payments in excess of the amount determined at acquisition are recorded as operating activities. Prior year excess amounts were recorded as investing activities and have been re-presented
as operating activities. See note 11
168
WPP ANNUAL REPORT 2022
FINANCIAL STATEMENTS
Notes
2022
£m
2021
£m
14
14
15
13
16
16
17
18
18
19
13
21
21
20
17
24
22
13
27
28
8,453.4
1,451.9
1,000.7
1,528.5
305.1
369.8
322.1
74.1
218.6
13,724.2
107.1
12,499.7
2,491.5
15,098.3
7,612.3
1,359.5
896.4
1,395.1
412.9
318.3
341.5
46.6
152.6
12,535.2
90.4
11,362.3
3,882.9
15,335.6
(15,834.9)
(422.0)
(282.4)
(1,169.0)
(17,708.3)
(2,610.0)
11,114.2
(15,252.3)
(386.2)
(279.7)
(567.2)
(16,485.4)
(1,149.8)
11,385.4
(3,801.8)
(490.9)
(350.8)
(137.5)
(244.6)
(1,928.2)
(6,953.8)
4,160.4
114.1
575.9
285.2
(1,054.1)
3,759.7
3,680.8
479.6
4,160.4
(4,216.8)
(619.9)
(312.5)
(136.6)
(268.5)
(1,762.1)
(7,316.4)
4,069.0
122.4
574.7
(335.9)
(1,112.1)
4,367.3
3,616.4
452.6
4,069.0
CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2022
Non-current assets
Intangible assets:
Goodwill
Other
Property, plant and equipment
Right-of-use assets
Interests in associates and joint ventures
Other investments
Deferred tax assets
Corporate income tax recoverable
Trade and other receivables
Current assets
Corporate income tax recoverable
Trade and other receivables
Cash and short-term deposits
Current liabilities
Trade and other payables
Corporate income tax payable
Short-term lease liabilities
Bank overdrafts, bonds and bank loans
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Bonds and bank loans
Trade and other payables
Deferred tax liabilities
Provision for post-employment benefits
Provisions for liabilities and charges
Long-term lease liabilities
Net assets
Equity
Called-up share capital
Share premium account
Other reserves
Own shares
Retained earnings
Equity shareholders’ funds
Non-controlling interests
Total equity
Note
The accompanying notes form an integral part of this consolidated balance sheet.
The financial statements were approved by the Board of Directors and authorised for issue on 23 March 2023.
Signed on behalf of the Board:
Mark Read
Chief Executive Officer
John Rogers
Chief Financial Officer
WPP ANNUAL REPORT 2022
169
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Balance at 1 January 2021
Ordinary shares issued
Share cancellations
Treasury share allocations
Profit for the year
Foreign exchange differences on translation of foreign operations2
Gain on net investment hedges
Cash flow hedges:2
Fair value loss arising on hedging instruments
Less: gain reclassified to profit or loss
Share of other comprehensive income of associate undertakings
Movements on equity investments held at fair value through
other comprehensive income
Actuarial gain on defined benefit pension plans
Deferred tax on defined benefit pension plans
Other comprehensive loss
Total 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/derecognition of liabilities in respect of put options
Share purchases – close period commitments3
Share of other equity movements of associates
Acquisition of subsidiaries4
Balance at 31 December 2021
Ordinary shares issued
Share cancellations
Treasury share allocations
Profit for the year
Foreign exchange differences on translation of foreign operations
Loss on net investment hedges
Cash flow hedges:
Fair value gain arising on hedging instruments
Less: loss reclassified to profit or loss
Share of other comprehensive income of associate undertakings
Movements on equity investments held at fair value through
other comprehensive income
Actuarial gain on defined benefit pension plans
Deferred tax on defined benefit pension plans
Other comprehensive income
Total comprehensive 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/derecognition of liabilities in respect of put options
Share purchases – close period commitments3
Share of other equity movements of associates
Acquisition of subsidiaries4
Balance at 31 December 2022
Called-up
share
capital
£m
129.6
−
(7.2)
−
−
−
−
Share
premium
account
£m
570.3
4.4
−
−
−
−
−
Other
reserves
£m
191.2
−
7.2
−
−
(132.7)
45.5
Own
shares
£m
(1,118.3)
−
−
3.7
−
−
−
Retained
earnings1
£m
4,959.2
−
(729.3)
(3.7)
637.7
−
−
Total
equity
shareholders’
funds
£m
4,732.0
4.4
(729.3)
–
637.7
(132.7)
45.5
Non-
controlling
interests
£m
318.1
−
−
−
83.0
(10.3)
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
122.4
−
(8.3)
−
−
−
−
−
−
−
−
−
−
–
–
–
–
–
–
–
–
–
–
114.1
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
574.7
1.2
−
−
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
575.9
(38.0)
38.0
7.3
−
−
−
(79.9)
(79.9)
−
−
−
−
(242.7)
(211.7)
−
−
(335.9)
−
8.3
−
–
409.0
(141.5)
38.5
(38.5)
31.9
–
–
–
299.4
299.4
–
–
–
–
101.7
211.7
–
–
285.2
−
−
−
−
−
−
−
−
−
−
−
2.5
−
−
−
−
(1,112.1)
−
−
−
–
–
–
–
–
–
–
–
–
–
–
–
–
–
58.0
–
–
–
–
(1,054.1)
−
−
6.2
(35.5)
14.3
(3.0)
(18.0)
619.7
(314.7)
99.6
15.4
(91.7)
1.1
–
(8.0)
(180.3)
4,367.3
−
(807.4)
−
682.7
–
–
–
–
19.3
(22.3)
16.6
(7.4)
6.2
688.9
(365.4)
122.0
(9.2)
(113.3)
(40.3)
–
–
(82.9)
3,759.7
(38.0)
38.0
13.5
(35.5)
14.3
(3.0)
(97.9)
539.8
(314.7)
99.6
15.4
(89.2)
(241.6)
(211.7)
(8.0)
(180.3)
3,616.4
1.2
(807.4)
−
682.7
409.0
(141.5)
38.5
(38.5)
51.2
(22.3)
16.6
(7.4)
305.6
988.3
(365.4)
122.0
(9.2)
(55.3)
61.4
211.7
–
(82.9)
3,680.8
−
−
−
−
−
−
(10.3)
72.7
(114.5)
−
−
−
−
−
−
176.3
452.6
−
−
−
92.7
15.2
–
–
–
–
–
–
–
15.2
107.9
(69.5)
–
–
–
–
–
–
(11.4)
479.6
Total
£m
5,050.1
4.4
(729.3)
−
720.7
(143.0)
45.5
(38.0)
38.0
13.5
(35.5)
14.3
(3.0)
(108.2)
612.5
(429.2)
99.6
15.4
(89.2)
(241.6)
(211.7)
(8.0)
(4.0)
4,069.0
1.2
(807.4)
−
775.4
424.2
(141.5)
38.5
(38.5)
51.2
(22.3)
16.6
(7.4)
320.8
1,096.2
(434.9)
122.0
(9.2)
(55.3)
61.4
211.7
–
(94.3)
4,160.4
Notes
The accompanying notes form an integral part of this consolidated statement of changes in equity.
1 Accumulated losses on existing equity investments held at fair value through other comprehensive income are £330.8 million at 31 December 2022 (2021: £308.5 million)
2 Balances for the year ended 31 December 2021 and 31 December 2020 have been re-presented following a reclassification between the Hedging Reserve and Translation Reserve of £38.0 million and
£5.9 million, respectively. See note 28
3 During 2021, the Company entered into an arrangement with a third party to conduct share buybacks on its behalf in the close period commencing on 16 December 2021 and ending on 18 February
2022, in accordance with UK listing rules. The commitment resulting from this agreement constituted a liability at 31 December 2021 and was recognised as a movement in other reserves in the year
ended 31 December 2021. After the close period ended on 18 February 2022, the liability was settled and the amount in other reserves was reclassified to retained earnings
4 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
170
WPP ANNUAL REPORT 2022
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. GENERAL INFORMATION
WPP plc is a company incorporated in Jersey. The address of the registered office is 13 Castle Street, St Helier, Jersey, JE1 1ES and the address of the principal
executive office is Sea Containers, 18 Upper Ground, London, United Kingdom, SE1 9GL. 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 creative transformation organisation offering national and multinational clients a comprehensive range of communications,
experience, commerce and technology services. Substantially all of the Group’s revenue is from contracts with customers.
Reportable segments
The Group is organised into three reportable segments – Global Integrated Agencies, Public Relations and Specialist Agencies.
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’s Chief Executive Officer (the Chief Operating Decision Maker). Provided certain quantitative and qualitative criteria are fulfilled, IFRS 8
permits 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 bases, the similar
nature of their products or services and their long-term margins, amongst other factors.
Reported contributions were as follows:
Income statement
2022
Global Integrated Agencies
Public Relations
Specialist Agencies
20211
Global Integrated Agencies
Public Relations
Specialist Agencies
20201
Global Integrated Agencies
Public Relations
Specialist Agencies
Revenue less
pass-through
costs3
£m
Headline
operating
profit4
£m
Revenue2
£m
12,191.0
1,228.3
1,009.4
14,428.7
10,890.5
959.0
951.6
12,801.1
10,329.0
892.9
780.9
12,002.8
9,742.8
1,157.0
899.5
11,799.3
8,683.1
909.7
804.4
10,397.2
8,247.8
854.4
659.8
9,762.0
1,432.4
190.8
118.6
1,741.8
1,221.8
143.1
128.6
1,493.5
1,070.3
141.3
48.9
1,260.5
Notes
1 Prior year figures have been re-presented to reflect the reallocation of a number of businesses between Global Integrated Agencies and Specialist Agencies
2
3 Revenue less pass-through costs is defined on page 233
4 A reconciliation from profit before taxation to headline operating profit is provided on page 216
Intersegment sales have not been separately disclosed as they are not material
WPP ANNUAL REPORT 2022
171
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other information
2022
Global Integrated Agencies
Public Relations
Specialist Agencies
2021
Global Integrated Agencies
Public Relations
Specialist Agencies
2020
Global Integrated Agencies
Public Relations
Specialist Agencies
Share-based
payments
£m
Capital
additions1
£m
Depreciation
and
amortisation2
£m
Goodwill
impairment
£m
Loss/(earnings)
from results of
associates
£m
Interests in
associates and
joint ventures
£m
100.5
14.7
6.8
122.0
92.3
4.8
2.5
99.6
61.3
8.0
5.1
74.4
193.8
11.0
18.5
223.3
252.7
17.9
22.5
293.1
234.2
15.5
22.9
272.6
372.9
36.7
41.4
451.0
372.8
28.1
43.1
444.0
449.7
32.8
59.4
541.9
–
3.7
34.2
37.9
–
–
1.8
1.8
2,355.1
161.5
306.3
2,822.9
10.8
0.5
(71.7)
(60.4)
22.7
1.7
(0.6)
23.8
19.0
1.3
(156.3)
(136.0)
80.1
0.1
224.9
305.1
115.2
8.0
289.7
412.9
158.4
6.4
165.9
330.7
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, depreciation of right-of-use assets and amortisation of other intangible assets
Contributions by geographical area were as follows:
Non-current assets1
North America2
United Kingdom
Western Continental Europe
Asia Pacific, Latin America, Africa &
Middle East and Central & Eastern Europe
2022
£m
2021
£m
5,896.4
1,556.2
2,797.9
5,075.4
1,565.4
2,618.8
3,151.0
13,401.5
2,933.6
12,193.2
Notes
1 Non-current assets excluding financial instruments and deferred tax
2 North America includes the United States with non-current assets of £5,379.5 million
(2021: £4,730.1 million)
Revenue1
North America2
United Kingdom
Western Continental Europe
Asia Pacific, Latin America,
Africa & Middle East and
Central & Eastern Europe
Revenue less pass-through costs3
North America2
United Kingdom
Western Continental Europe
Asia Pacific, Latin America,
Africa & Middle East and
Central & Eastern Europe
Headline operating profit3
North America2
United Kingdom
Western Continental Europe
Asia Pacific, Latin America,
Africa & Middle East and
Central & Eastern Europe
2022
£m
2021
£m
2020
£m
5,549.5
2,003.8
2,876.2
4,494.2
1,866.9
2,786.3
4,464.9
1,637.0
2,441.6
3,999.2
14,428.7
3,653.7
12,801.1
3,459.3
12,002.8
4,688.1
1,537.2
2,318.5
3,849.2
1,414.3
2,225.4
3,743.4
1,233.8
2,019.4
3,255.5
11,799.3
2,908.3
10,397.2
2,765.4
9,762.0
770.4
187.1
301.3
655.7
180.9
288.6
611.9
137.7
198.7
483.0
1,741.8
368.3
1,493.5
312.2
1,260.5
Intersegment sales have not been separately disclosed as they are not material
Notes
1
2 North America includes the United States with revenue of £5,230.9 million (2021: £4,220.8 million,
2020: £4,216.1 million), revenue less pass-through costs of £4,402.0 million (2021: £3,597.4 million,
2020: £3,524.8 million) and headline operating profit of £727.6 million (2021: £615.2 million, 2020:
£563.7 million)
3 Revenue less pass-through costs and headline operating profit are defined on page 233
172
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
3. COSTS OF SERVICES AND GENERAL
AND ADMINISTRATIVE COSTS
Costs of services
General and administrative costs
2022
£m
11,890.1
1,180.4
13,070.5
2021
£m
10,597.5
974.6
11,572.1
2020
£m
9,987.9
4,293.0
14,280.9
Costs of services and general and administrative costs include:
Staff costs (note 5)
Establishment costs
Media pass-through costs
Other costs of services and general and
administrative costs1
2022
£m
8,165.8
536.0
1,905.7
2021
£m
7,166.7
529.0
1,865.3
2020
£m
6,556.5
638.5
1,555.2
2,463.0
13,070.5
2,011.1
11,572.1
5,530.7
14,280.9
Included within costs of services and general administrative costs are the
following:
Goodwill impairment (note 14)
Amortisation and impairment of acquired
intangible assets
Investment and other impairment charges/
(reversals)
Intangible asset impairment
Restructuring and transformation costs
Restructuring costs in relation to Covid-19
Property related costs
Losses/(gains) on disposal of investments
and subsidiaries
Gains on remeasurement of equity interests
arising from a change in scope of ownership
Litigation settlement
Amortisation of other intangible assets
Depreciation of property, plant
and equipment
Depreciation of right-of-use assets
(Gains)/losses on sale of property, plant and
equipment
Net foreign exchange (gains)/losses
Short-term lease expense
Low-value lease expense
2022
£m
37.9
2021
£m
1.8
2020
£m
2,822.9
62.1
97.8
89.1
48.0
29.0
203.7
15.1
18.0
36.3
(66.5)
–
21.9
(42.4)
–
145.5
29.9
–
10.6
–
21.3
19.9
166.9
262.2
151.2
272.9
(6.4)
(8.7)
20.2
1.9
(1.3)
4.4
18.0
2.3
296.2
–
80.7
232.5
–
(7.8)
(0.6)
25.6
35.2
174.8
331.9
0.3
5.9
36.7
2.3
Note
1 Other costs of services and general and administrative costs include £723.7 million
(2021: £538.6 million, 2020: £685.6 million) of other pass-through costs
In 2022, operating profit includes credits totalling £29.3 million (2021:
£19.3 million, 2020: £46.3 million) relating to the release of provisions and
other balances established in respect of acquisitions completed prior to 2021.
Further details of the Group’s approach to acquisition reserves, as required
by IFRS 3 Business Combinations, are given in note 29.
The goodwill impairment charge of £37.9 million in 2022 (2021: £1.8 million,
2020: £2,822.9 million) relates to a number of businesses in the Group where
the impact of increases in discount rates and current, local economic
conditions and trading circumstances is sufficiently severe to indicate
impairment to the carrying value. The goodwill impairment charge of
£2,822.9 million in 2020 reflects the adverse impacts of Covid-19 on a
number of businesses in the Group at that time.
Amortisation and impairment of acquired intangible assets of £62.1 million
(2021: £97.8 million, 2020: £89.1 million) includes an impairment charge in the
year of £1.4 million (2021: £47.9 million, 2020: £21.6 million) in regard to certain
brand names that are no longer in use.
The investment and other impairment charges of £48.0 million (2021: reversal
of £42.4 million, 2020: £296.2 million) relate to the same macro-economic
factors noted above. The reversal in the prior year for investments primarily
relates to the partial reversal of a £255.6 million impairment taken in 2020
relating to Imagina, an associate in Spain.
Intangible asset impairment of £29.0 million in 2022 (2021: nil, 2020: nil) relates
to the write off of capitalised configuration and customisation costs related to
a software development project.
Restructuring and transformation costs of £203.7 million (2021: £145.5 million,
2020: £80.7 million) include £134.5 million (2021: £94.2 million) in relation to the
Group’s IT transformation programme. This programme will allow technology
to become a competitive advantage in the market as our clients, and their
clients, move to an ever-increasing digital world. It includes costs of £96.8
million (2021: £62.2 million, 2020: nil) in relation to the rollout of a new ERP
system in order to drive efficiency and collaboration throughout the Group.
The remaining restructuring and transformation costs of £69.2 million (2021:
£51.3 million) relates to the continuing restructuring plan. As part of that plan,
restructuring actions have been taken to right-size under-performing
businesses, address high-cost severance markets and simplify operational
structures.
Restructuring costs in relation to Covid-19 of £15.1 million (2021: £29.9 million,
2020: £232.5 million) primarily relate to property costs which the Group
undertook in response to the Covid-19 pandemic.
Property related costs include further right-of-use asset impairments taken for
properties that were previously impaired due to challenging conditions in the
subletting market. In 2022, £18.0 million (2021: nil, 2020: nil) were incurred.
Losses on disposal of investments and subsidiaries of £36.3 million in 2022
primarily includes a loss of £63.1 million on the divestment of our Russian
interests which completed in May 2022. This was partially offset by gains
on other disposals during the period including Res Publica for £17.7 million
and Mutual Mobile for £9.4 million with the remaining gains/losses due to
individually insignificant transactions. Losses on disposal of investments and
subsidiaries of £10.6 million in 2021 includes a loss of £4.9 million on the
disposal of XMKT in China, which completed in September 2021.
Gains on remeasurement of equity interests arising from a change in scope of
ownership of £66.5 million (2021: £nil, 2020: £0.6 million) comprises a gain in
relation to the reclassification of the Group's interest in Imagina in Spain from
interests in associates to other investments.
In 2022, the Group received £8.2 million (2021: £5.3 million, 2020: £77.1 million)
of aid from governments around the world in relation to the Covid-19
pandemic, which is included as a credit in other staff costs.
Other impairment charges included in restructuring costs of £43.3 million
(2021: £39.2 million, 2020: £196.7 million) consists of £7.1 million (2021: £17.6
million, 2020: £147.6 million) within restructuring costs in relation to Covid-19
and £36.2 million (2021: £21.6 million, 2020: £49.1 million) within restructuring
and transformation costs and property related costs. These impairment
charges include £33.5 million (2021: £19.3 million, 2020: £117.0 million) in relation
to right-of-use assets, £9.8 million (2021: £9.8 million, 2020: £79.7 million) of
related property, plant and equipment and £nil (2021: £10.1 million, 2020: £nil)
of other intangibles, arising from the Group’s reassessment of its property
requirements as a result of effective remote working practices during the
Covid-19 pandemic and continued focus on campuses.
Auditors’ remuneration:
Fees payable to the Company’s auditors for
the audit of the Company and Group's annual
accounts
Fees payable for the audit of the Company’s
subsidiaries
Fees payable to the auditors pursuant to
legislation1
Audit-related services2
Other services3
Tax compliance services
Total other fees
Total fees
2022
£m
2021
£m
2020
£m
8.4
28.5
36.9
0.4
0.6
0.1
1.1
38.0
7.1
24.8
31.9
0.4
1.4
–
1.8
33.7
6.4
22.9
29.3
0.4
0.7
0.1
1.2
30.5
Includes fees in respect of the audit of internal control over financial reporting
Notes
1
2 Audit-related assurance services are in respect of the review of the interim financial information
3 Other services include audits for earnout purposes and other agreed upon procedures
WPP ANNUAL REPORT 2022
173
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4. (LOSS)/EARNINGS FROM ASSOCIATES – AFTER INTEREST
AND TAX
(Loss)/earnings from associates – after interest and tax was a loss of
£60.4 million in 2022, earnings of £23.8 million in 2021, and loss of £136.0 million
in 2020. (Loss)/earnings from associates – after interest and tax includes
£75.8 million (2021: £38.8 million, 2020: £54.3 million) of amortisation and
impairment of acquired intangible assets as well as restructuring and one-off
transaction costs of £54.8 million (2021: £18.8 million, 2020: £89.3 million)
within Kantar.
5. OUR PEOPLE
Our staff numbers averaged 114,129 for the year ended 31 December 2022
against 104,808 in 2021 and 104,163 in 2020. Their geographical distribution
was as follows:
North America
United Kingdom
Western Continental Europe
Asia Pacific, Latin America, Africa &
Middle East and Central & Eastern Europe
2022
23,740
12,490
22,717
2021
21,764
10,995
21,514
2020
21,524
10,670
21,551
55,182
114,129
50,535
104,808
50,418
104,163
Their reportable segment distribution was as follows:
Global Integrated Agencies
Data Investment Management
Public Relations
Specialist Agencies
2022
97,288
−
8,125
8,716
114,129
2021
89,701
−
7,121
7,986
104,808
2020
88,406
1,341
6,810
7,606
104,163
At the end of 2022, staff numbers were 115,473 (2021: 109,382, 2020: 99,830).
Staff costs include:
Wages and salaries
Cash-based incentive plans
Share-based incentive plans (note 23)
Social security costs
Pension costs (note 24)
Severance
Other staff costs1
2022
£m
5,721.0
292.6
122.0
689.4
204.8
44.2
1,091.8
8,165.8
2021
£m
4,797.2
455.2
99.6
630.1
177.7
41.8
965.1
7,166.7
2020
£m
4,781.0
110.7
74.4
570.9
171.7
68.2
779.6
6,556.5
Note
1 Freelance and temporary staff costs are included in other staff costs
Compensation for key management personnel includes:
Short-term employee benefits
Pensions and other post-retirement benefits
Share-based payments
2022
£m
29.7
1.1
29.8
60.6
2021
£m
28.0
0.9
14.6
43.5
2020
£m
17.9
1.0
10.3
29.2
Key management personnel comprises the Board and the Executive
Committee. Further details of compensation for the Board are disclosed on
pages 130 to 156.
6. FINANCE AND INVESTMENT INCOME, FINANCE COSTS AND
REVALUATION AND RETRANSLATION OF FINANCIAL INSTRUMENTS
Finance and investment income includes:
Income from equity investments
Interest income
Finance costs include:
Net interest expense on pension plans
Interest on other long-term employee benefits
Interest expense and similar charges1
Interest expense related to lease liabilities
2022
£m
24.5
120.9
145.4
2022
£m
2.2
3.7
257.8
95.7
359.4
Revaluation and retranslation of financial instruments include:
Movements in fair value of treasury
instruments
Premium on the early repayment of bonds
Revaluation of investments held at
fair value through profit or loss
Revaluation of put options over
non-controlling interests
Revaluation of payments due to
vendors (earnout agreements)
Retranslation of financial instruments
2022
£m
0.5
–
23.1
27.9
26.2
(1.7)
76.0
2021
£m
17.9
51.5
69.4
2021
£m
1.8
2.4
188.5
90.9
283.6
2021
£m
9.1
(13.0)
(7.5)
2020
£m
8.7
74.0
82.7
2020
£m
2.9
3.1
205.0
101.0
312.0
2020
£m
15.4
–
8.0
(40.6)
12.3
(58.7)
22.9
(87.8)
13.4
(196.3)
(147.2)
Note
1
Interest expense and similar charges are payable on bank overdrafts, bonds and bank loans held
at amortised cost
The majority of the Group’s long-term debt is represented by $1,063 million
of US dollar bonds at an average interest rate of 4.26%, €3,350 million of
Eurobonds at an average interest rate of 2.20% and £650 million of Sterling
bonds at an average interest rate of 3.21%.
Average borrowings under the US Dollar Revolving Credit Facilities (note 10)
amounted to nil (2021: nil).
Average borrowings under the Australian Dollar Revolving Credit Facilities
amounted to nil (2021: A$52 million at an average rate of 1.89%).
Average borrowings under the US Commercial Paper Programme for 2022
amounted to $195 million at an average interest rate of 2.56% inclusive of
margin (2021: nil).
Average borrowings under the Euro Commercial Paper Programme for 2022
amounted to £34 million at an average interest rate of 1.95% inclusive of
currency swaps (2021: nil).
7. TAXATION
In 2022, the effective tax rate on reported profit/(loss) before taxation was
33.1% (2021: 24.2%, 2020: -4.6%).
The tax charge comprises:
Corporation tax
Current year
Prior years
Deferred tax
Current year
Prior years
Tax charge
2022
£m
2021
£m
2020
£m
425.8
(55.5)
370.3
9.4
4.7
14.1
384.4
404.0
(41.4)
362.6
(131.0)
(1.5)
(132.5)
230.1
307.8
(83.2)
224.6
(80.2)
(17.3)
(97.5)
127.1
174
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
The corporation tax credit for prior years in 2022, 2021 and 2020 primarily
comprises the release of a number of provisions following the resolution of tax
matters in various countries.
significant 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.
The tax charge for the year can be reconciled to profit/(loss) before taxation
in the consolidated income statement as follows:
8. ORDINARY DIVIDENDS
Amounts recognised as distributions to equity holders in the year:
Profit/(loss) before taxation
Tax at the corporation tax rate of 19.0%1
Tax effect of earnings from associates
Irrecoverable withholding taxes
Tax effect of items that are not deductible in
determining taxable profits
Tax effect of non-deductible goodwill
impairment
Effect of different tax rates in subsidiaries
operating in other jurisdictions
Origination and reversal on unrecognised
temporary differences
Tax losses not recognised or utilised in
the year
Utilisation of tax losses not previously
recognised
Net release of prior year provisions in
relation to acquired businesses
Other prior year adjustments
Impact of deferred tax rate change
Tax charge
Effective tax rate on profit/(loss) before tax
2022
£m
1,159.8
220.4
17.4
25.9
2021
£m
950.8
180.7
(13.3)
52.3
2020
£m
(2,790.6)
(530.2)
16.2
49.4
66.7
29.3
67.0
7.2
0.6
542.4
94.3
81.2
92.7
(1.1)
(36.3)
(29.3)
9.8
7.4
(5.4)
(5.1)
(2.8)
(48.0)
–
384.4
33.1%
(1.1)
(41.8)
(23.8)
230.1
24.2%
21.1
(1.7)
(1.7)
(98.8)
–
127.1
(4.6%)
2022
2021
2020
2022
Per share
2021 Final dividend
Pence per share
14.00p
18.70p
–
2022 Interim dividend 15.00p
33.70p
12.50p
26.50p
10.00p
10.00p
2022
2021
2020
Per ADR1
2021 Final dividend
128.63¢
2022 Interim dividend 92.72¢
221.35¢
Cents per ADR
89.85¢
85.98¢
175.83¢
–
64.18¢
64.18¢
£m
203.5
161.9
365.4
2022
$m
280.0
200.1
480.1
2021
£m
167.7
147.0
314.7
2021
$m
215.3
202.2
417.5
2020
£m
–
122.0
122.0
2020
$m
–
156.6
156.6
Proposed final dividend for the year ended 31 December 2022:
Per share
Final dividend
Per ADR1
Final dividend
2022
2021
2020
Pence per share
24.40p
18.70p
14.00p
2022
2021
2020
Cents per share
150.83¢
128.63¢
89.85¢
Note
1 As the Group is subject to the tax rates of more than one country, it has chosen to present its
reconciliation of the tax charge using the UK corporation tax rate of 19.0% (2021: 19.0%, 2020:
19.0%)
Note
1
These figures have been translated for convenience purposes only, using the approximate
average rate for the year of US$1.2363 (2021: US$1.3757, 2020: US$1.2836). 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
FACTORS AFFECTING THE TAX CHARGE IN FUTURE YEARS
The tax charge may be affected by the impact of acquisitions, disposals and
other corporate restructurings, the resolution of open tax issues, and the
ability to use brought forward tax losses. Changes in local or international tax
rules, for example, increasing tax rates as a consequence of the financial
support programmes implemented by governments during the Covid-19
pandemic, the OECD/G20 Inclusive Framework on Base Erosion and Profit
Shifting, and changes arising from the application of existing rules or
challenges by tax or competition authorities, may expose the Group to
additional tax liabilities or impact the carrying value of deferred tax assets,
which could affect the future tax charge.
Liabilities relating to open and judgemental matters are based upon an
assessment of whether the tax authorities will accept the position taken, after
considering external advice where appropriate. Where the final tax outcome
of these matters is different from the amounts which were initially recorded,
such differences will impact the current and deferred income tax assets and
liabilities in the period in which such determination is made. The Group does
not currently consider that judgements made in assessing tax liabilities have
a significant risk of resulting in any material additional charges or credits in
respect of these matters, within the next financial year, beyond the amounts
already provided.
Following the enactment in 2021 of an increase in the UK corporation tax rate
from 19% to 25% from 1 April 2023, the Group remeasured UK deferred tax
balances accordingly and recognised a tax credit of £23.8 million in the prior
period.
TAX RISK MANAGEMENT
We look to maintain open and transparent relationships with the tax
authorities in the jurisdictions in which we operate and relevant government
representatives. We maintain 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
The payment of dividends will not have any tax consequences for the Group.
Final dividends are paid in the subsequent year to which they relate.
9. EARNINGS PER SHARE
BASIC EPS
The calculation of basic reported and headline EPS is as follows:
Continuing operations
Reported earnings1 (£m)
Headline earnings (£m) (page 216)
Weighted average shares used in basic
EPS calculation (m)
Reported EPS
Headline EPS
Discontinued operations
Reported earnings1 (£m)
Weighted average shares used in basic
EPS calculation (m)
Reported EPS
2022
682.7
1,100.2
1,097.9
62.2p
100.2p
2022
–
–
–
2021
637.7
954.5
1,194.1
53.4p
79.9p
2020
(2,971.6)
742.5
1,223.0
(243.0p)
60.7p
2021
–
2020
6.5
–
–
1,223.0
0.5p
Continuing and discontinued operations
Reported earnings1 (£m)
Weighted average shares used in basic
EPS calculation (m)
Reported EPS
2022
682.7
2021
637.7
2020
(2,965.1)
1,097.9
62.2p
1,194.1
53.4p
1,223.0
(242.5p)
Note
1 Reported earnings is equivalent to profit/(loss) for the year attributable to equity holders of
the parent
WPP ANNUAL REPORT 2022
175
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9. EARNINGS PER SHARE CONTINUED
DILUTED EPS
The calculation of diluted reported and headline EPS is as follows:
10. SOURCES OF FINANCE
The following table summarises the equity and debt financing of the Group,
and changes during the year:
Continuing operations
Diluted reported earnings (£m)
Diluted headline earnings (£m)
Weighted average shares used in reported
diluted EPS calculation (m)1
Weighted average shares used in headline
diluted EPS calculation (m)
Diluted reported EPS
Diluted headline EPS
2022
682.7
1,100.2
2021
637.7
954.5
2020
(2,971.6)
742.5
1,116.4
1,215.3
1,223.0
1,116.4
61.2p
98.5p
1,215.3
52.5p
78.5p
1,236.0
(243.0p)
60.1p
Discontinued operations
Diluted reported earnings (£m)
Weighted average shares used in diluted
EPS calculation (m)1
Diluted reported EPS
2022
–
–
–
2021
–
2020
6.5
–
–
1,223.0
0.5p
Continuing and discontinued operations
Diluted reported earnings (£m)
Weighted average shares used in diluted
EPS calculation (m)1
Diluted reported EPS
2022
682.7
2021
637.7
20201
(2,965.1)
1,116.4
61.2p
1,215.3
52.5p
1,223.0
(242.5p)
Note
1 The weighted average shares used in the basic EPS calculation for 2020 have also been used for
reported diluted EPS due to the anti-dilutive effect of the weighted average shares calculated
for the reported diluted EPS calculation
Diluted EPS has been calculated based on the diluted reported and diluted
headline earnings amounts above. At 31 December 2022, options to purchase
19.7 million ordinary shares (2021: 7.2 million, 2020: 14.2 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:
Weighted average shares used in basic
EPS calculation
Dilutive share options outstanding
Other potentially issuable shares
Weighted average shares used in diluted
EPS calculation
2022
m
2021
m
2020
m
1,097.9
0.7
17.8
1,194.1
1.3
19.9
1,223.0
–
13.0
1,116.4
1,215.3
1,236.0
At 31 December 2022 there were 1,141,427,296 (2021: 1,224,459,550, 2020:
1,296,080,242) ordinary shares in issue, including 70,489,953 treasury shares
(2021: 70,489,953, 2020: 70,748,100).
176
WPP ANNUAL REPORT 2022
Analysis of changes in
financing
Beginning of year
Ordinary shares issued
Share cancellations
Net (decrease)/increase
in drawings on bank
loans and corporate
bonds
Amortisation of financing
costs included in debt
Changes in fair value
due to hedging
arrangements
Other movements
Exchange adjustments
End of year
Shares
2021
£m
699.9
4.4
(7.2)
2022
£m
697.1
1.2
(8.3)
2020
£m
703.1
–
(3.2)
Debt
2021
£m
2022
£m
2020
£m
4,441.7 5,032.7 4,272.9
–
–
–
–
–
–
–
–
–
–
–
–
(220.6)
(397.1)
632.8
7.0
8.1
7.5
–
–
–
690.0
–
–
–
697.1
–
–
–
(1.4)
(7.1)
128.0
699.9 4,465.1 4,441.7 5,032.7
–
(0.2)
237.2
(2.5)
(0.4)
(199.1)
The table above excludes bank overdrafts which fall within cash and cash
equivalents for the purposes of the consolidated cash flow statement. Other
liabilities from financing activities including lease liabilities and derivatives
used for hedging debts are disclosed in note 13 and note 26, respectively.
SHARES
At 31 December 2022, the Company's share base was entirely composed
of ordinary equity share capital and share premium of £690.0 million
(2021: £697.1 million, 2020: £699.9 million), further details of which are disclosed
in note 27.
DEBT
US$ bonds The Group has in issue $750 million of 3.75% bonds due September
2024, $93 million of 5.125% bonds due September 2042 and $220 million of
5.625% bonds due November 2043.
Eurobonds The Group has in issue €750 million of 3.0% bonds due November
2023, €500 million of 1.375% bonds due March 2025, €750 million of 2.25%
bonds due September 2026, €750 million of 2.375% bonds due May 2027, and
€600 million of 1.625% bonds due March 2030. In March 2022, €250 million of
Floating Rate Notes carrying a coupon of 3m EURIBOR +0.45% were repaid.
Sterling bonds The Group has in issue £250 million of 3.750% bonds due May
2032 and £400 million of 2.875% bonds due September 2046.
Revolving Credit Facility The Group has a five-year Revolving Credit Facility of
$2.5 billion due March 2026, signed in November 2021. The Group’s borrowings
under these facilities, which are drawn down predominantly in pounds
sterling, averaged nil in 2022 (2021: nil, 2020: nil).
In May 2021, the Group's subsidiary, WPP AUNZ, repaid in full its A$150 million
Revolving Credit Facility due August 2021, and its A$270 million Revolving
Credit Facility due August 2023. The Group's borrowings under the Australian
dollar facilities, which were drawn down in Australian dollars and New Zealand
dollars, averaged the equivalent of nil in 2022 (2021: A$52 million, 2020:
A$151 million).
The Group had available undrawn committed credit facilities of £2,069.0
million at 31 December 2022 (2021: £1,847.5 million, 2020: £2,023.2 million).
Borrowings under the $2.5 billion Revolving Credit Facility are governed by
certain financial covenants based on the results and financial position of the
Group.
During 2022, all covenants have been complied with and based on current
forecasts it is expected that such covenants will continue to be complied with
for the foreseeable future.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
The $2.5 billion Revolving Credit Facility, due March 2026, includes terms
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.
COMMERCIAL PAPER PROGRAMMES
The Group operates commercial paper programmes using its Revolving Credit
Facility as a backstop. The average US commercial paper outstanding in 2022
was $195 million (2021: nil, 2020: $2 million). The average Euro commercial
paper outstanding in 2022 was €34 million (2021: nil, 2020: nil) inclusive of the
effect of currency swaps, where applicable. There was no US or Euro
commercial paper outstanding at 31 December 2022.
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
Adjusted net debt
2022
£m
(791.6)
(724.3)
(524.2)
(740.3)
(719.9)
(1,963.7)
2021
£m
(326.8)
(745.4)
(646.5)
(492.8)
(698.0)
(2,546.3)
2020
£m
(182.2)
(725.6)
(795.7)
(649.1)
(528.2)
(3,387.1)
(5,464.0)
(505.7)
(5,969.7)
998.9
(4,970.8)
2,491.5
(2,479.3)
(5,455.8)
(342.3)
(6,267.9)
(8,562.0)
(5,798.1) (14,829.9)
1,235.2
(4,784.0) (13,594.7)
12,899.1
3,882.9
(695.6)
(901.1)
1,014.1
The following table is an analysis of future undiscounted anticipated cash flows
in relation to the Group’s financial derivatives, which include interest rate
swaps, forward contracts and other foreign exchange swaps assuming interest
rates and foreign exchange rates as at 31 December:
2022
Within one year
Between one and two years
Between two and three years
2021
Within one year
Between one and two years
Between two and three years
Between three and four years
2020
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
Financial liabilities
Payable
£m
1,186.3
–
–
1,186.3
Receivable
£m
1,126.2
–
–
1,126.2
Financial liabilities
Payable
£m
185.8
551.4
11.6
449.8
1,198.6
Receivable
£m
173.7
521.1
6.0
445.6
1,146.4
Financial liabilities
Payable
£m
201.7
11.6
41.9
11.6
449.8
716.6
Receivable
£m
195.4
6.2
35.7
6.3
466.3
709.9
Financial assets
Payable
£m
347.1
11.6
449.8
808.5
Receivable
£m
345.7
6.2
461.8
813.7
Financial assets
Payable
£m
581.1
30.0
–
–
611.1
Receivable
£m
582.5
30.4
–
–
612.9
Financial assets
Payable
£m
102.3
17.8
449.2
–
–
569.3
Receivable
£m
98.2
13.6
461.2
–
–
573.0
Analysis of fixed and floating rate debt by currency including the effect of
cross-currency swaps:
2022
Currency
$
£
€
– fixed
– fixed
– fixed
– floating
Other
2021
Currency
$
£
€
– fixed
– fixed
– fixed
– floating
Other
2020
Currency
$
£
€
– fixed
– fixed
– fixed
– floating
Other
Note
1 Weighted average
£m
Fixed
rate1
Floating
basis
Period
(months)1
1,379.5
1,094.1
2,080.6
–
(89.1)
4,465.1
n/a
4.18
n/a
2.97
2.21
n/a
n/a EURIBOR
n/a
n/a
60
143
55
–
n/a
£m
Fixed
rate1
Floating
basis
Period
(months)1
1,231.8
1,094.1
1,976.0
210.2
(70.4)
4,441.7
n/a
4.18
n/a
2.97
2.04
n/a
n/a EURIBOR
n/a
n/a
72
155
69
3
n/a
£m
Fixed
rate1
Floating
basis
Period
(months)1
1,585.1
1,094.1
2,104.6
223.9
25.0
5,032.7
n/a
4.06
n/a
3.21
2.20
n/a
n/a EURIBOR
n/a
n/a
70
167
79
15
n/a
WPP ANNUAL REPORT 2022
177
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. SOURCES OF FINANCE CONTINUED
ANALYSIS OF CHANGE IN FINANCING ACTIVITIES (INCLUSIVE OF LEASES)
The table below details changes arising from financing activities, including both cash and non-cash changes.
2022
Borrowings (excluding lease liabilities) (note 10, 11, 21 and 26)¹
Derivatives (note 18, 19 and 20)
Lease liabilities (note 13)²
Share repurchase commitments (note 19)³
Liabilities from financing activities
Cash and short-term deposits (note 11 and 26)
Bank overdrafts
2021
Borrowings (excluding lease liabilities) (note 10, 11, 21 and 26)¹
Derivatives (note 18, 19 and 20)
Lease liabilities (note 13)²
Share repurchase commitments (note 19)³
Liabilities from financing activities
Cash and short-term deposits (note 11 and 26)
Bank overdrafts
Opening
balance
£m
4,441.7
50.6
2,041.8
211.7
6,745.8
(3,882.9)
342.3
3,205.2
5,032.7
3.2
2,156.3
–
7,192.2
(12,899.1)
8,562.0
2,855.1
Cash flow
£m
(220.6)
–
(402.0)
(211.7)
(834.3)
1,494.4
163.4
823.5
Acquisition of
subsidiaries
£m
–
–
0.1
–
0.1
(38.8)
–
(38.7)
Foreign
exchange
£m
237.2
6.4
145.8
–
389.4
(64.2)
–
325.2
Interest and
Other
£m
6.8
(4.7)
424.9
–
427.0
–
–
427.0
(397.1)
–
(409.1)
–
(806.2)
8,883.8
(8,219.7)
(142.1)
–
–
34.2
–
34.2
2.3
–
36.5
(199.1)
47.0
(23.3)
–
(175.4)
130.1
–
(45.3)
5.2
0.4
283.7
211.7
501.0
–
–
501.0
Closing
balance
£m
4,465.1
52.3
2,210.6
–
6,728.0
(2,491.5)
505.7
4,742.2
4,441.7
50.6
2,041.8
211.7
6,745.8
(3,882.9)
342.3
3,205.2
Notes
1 Borrowings includes: bonds and bank loans. The interest and other amounts within borrowings comprises amortisation of capitalised borrowing costs
2 Repayment of lease liabilities includes £92.4 million (2021: £88.4 million) of interest paid on lease liabilities recognised within net cash inflow from operating activities (note 11). Interest and other within
lease liabilities comprises interest on leases as well as the lease liability additions and disposals as disclosed in note 13
3 The cash flow of £211.7 million related to share repurchase commitments is included within the £862.7 million of total share repurchase and buybacks (note 11)
178
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
11. ANALYSIS OF CASH FLOWS
The following tables analyse the items included within the main cash flow
headings on page 168.
Acquisitions and disposals:
Net cash from operating activities:
Profit/(loss) for the year
Taxation
Revaluation and retranslation of
financial instruments
Finance costs
Finance and investment income
Loss/(earnings) from associates – after interest
and tax
Gain on sale of discontinued operations
Attributable tax expense on sale of
discontinued operations
Operating profit/(loss) of continuing
and discontinued operations
Adjustments for
Non-cash share-based incentive plans
(including share options)
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Impairment charges included within
restructuring costs1
Goodwill impairment
Amortisation and impairment of acquired
intangible assets
Amortisation of other intangible assets
Investment and other impairment
charges/ (reversals)
Losses/(gains) on disposal of investments
and subsidiaries
Gains on remeasurement of equity interests
arising from a change in scope of ownership
(Gains)/losses on sale of property,
plant and equipment
Operating cash flow before movements
in working capital and provisions
(Increase)/decrease in trade receivables and
accrued income
Increase in trade payables and deferred income
(Increase)/decrease in other receivables
(Decrease)/increase in other payables –
short-term
Decrease in other payables – long-term
(Decrease)/increase in provisions
Cash generated by operations
Corporation and overseas tax paid
Payment on early settlement of bonds
Interest and similar charges paid
Interest paid on lease liabilities
Interest received
Investment income
Dividends from associates
Earnout payments recognised in operating
activities2
Net cash inflow from operating activities
Initial cash consideration
Cash and cash equivalents acquired
Earnout payments1
Purchase of other investments
(including associates)
Acquisitions
Proceeds on disposal of investments
and subsidiaries2
Cash and cash equivalents disposed
Disposals of investments and subsidiaries
Cash consideration received from
non-controlling interests
Cash consideration for purchase
of non-controlling interests
Cash consideration for
non-controlling interests
Net acquisition payments and
disposal proceeds
2022
£m
(218.3)
38.8
(46.6)
2021
£m
(227.6)
(2.3)
(53.2)
(10.1)
(236.2)
(99.2)
(382.3)
50.1
(12.4)
37.7
51.9
(23.6)
28.3
2020
£m
(32.8)
−
(111.0)
(30.4)
(174.2)
320.0
(47.7)
272.3
–
39.5
–
(84.2)
(135.0)
(80.6)
(84.2)
(95.5)
(80.6)
(282.7)
(449.5)
17.5
Notes
1 Earnout payments in excess of the amount determined at acquisition are recorded as operating
activities. Prior year excess amounts were recorded as investing activities and have been
re-presented as operating activities
2 Proceeds on disposal of investments and subsidiaries includes return of capital from investments
in associates
Share repurchases and buybacks:
Purchase of own shares by ESOP Trusts
Shares purchased into treasury for cancellation
Net cash outflow
2022
£m
(55.3)
(807.4)
(862.7)
2021
£m
(89.2)
(729.3)
(818.5)
2020
£m
(5.1)
(285.1)
(290.2)
2022
£m
775.4
384.4
2021
£m
2020
£m
720.7 (2,901.3)
129.3
230.1
(76.0)
359.4
(145.4)
87.8
283.6
(69.4)
147.2
312.3
(82.8)
60.4
–
(23.8)
−
136.0
(10.0)
–
−
1.9
1,358.2 1,229.0 (2,267.4)
122.0
166.9
262.2
99.6
151.2
272.9
74.4
174.8
331.9
72.3
37.9
62.1
21.9
39.2
196.7
1.8 2,822.9
97.8
19.9
89.1
35.2
48.0
(42.4)
296.2
36.3
10.6
(7.8)
(66.5)
−
(0.6)
Proceeds from issue of bonds:
(6.4)
(1.3)
0.3
2,114.9 1,878.3 1,745.7
(498.6)
170.6
(154.1)
(458.9)
777.8
(120.0)
585.2
195.0
123.3
Proceeds from issue of €750 million bonds
Proceeds from issue of £250 million bonds
Net cash inflow
Repayment of borrowings:
547.0
(11.0)
(32.9)
(259.6)
(67.0)
(38.0)
(36.6)
(44.3)
15.6
1,268.2 2,580.3 2,583.9
(371.5)
(390.9)
–
–
(173.9)
(210.2)
(98.5)
(92.4)
73.6
88.9
8.7
24.5
32.5
37.6
(391.1)
(13.0)
(173.7)
(88.4)
47.5
17.8
53.4
(4.2)
(24.8)
700.9 2,029.0 2,050.6
(3.8)
Decrease in drawings on bank loans
Repayment of $500 million bonds
Repayment of €250 million bonds
Net cash outflow
Cash and cash equivalents:
Cash at bank and in hand
Short-term bank deposits
Overdrafts1
2022
£m
–
–
–
2021
£m
–
–
–
2020
£m
665.5
250.0
915.5
2022
£m
(11.3)
−
(209.3)
(220.6)
2021
£m
(36.3)
(360.8)
−
(397.1)
2020
£m
(59.6)
−
(223.1)
(282.7)
2022
£m
2,271.6
219.9
(505.7)
1,985.8
2021
£m
2020
£m
2,776.6 10,075.0
2,824.1
1,106.3
(8,562.0)
(342.3)
4,337.1
3,540.6
Notes
1
Impairment charges included within restructuring costs includes impairments for right-of-use
assets, property, plant and equipment and other intangible assets
2 Earnout payments in excess of the amount determined at acquisition are recorded as operating
activities. Prior year excess amounts were recorded as investing activities and have been
re-presented as operating activities
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.
WPP ANNUAL REPORT 2022
179
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
In July 2019, the Group announced the proposed sale of its Kantar business to
Bain Capital. On 5 December 2019 the first stage of the transaction completed,
consisting of approximately 90% of the Kantar group, with consideration of
£2,140.2 million after tax and disposal costs. The sale involved the Group
disposing of the Kantar business and holding 40% equity stakes post-
transaction which are treated as associates. This generated a pre-tax gain
of £73.8 million, tax charge of £157.4 million and goodwill impairment of
£94.5 million for the Group. In 2020, the remaining stages of the transaction
completed with total consideration of £236.1 million after tax and disposal
costs. This generated a pre-tax gain of £10.0 million and a tax charge of
£1.9 million.
The Kantar group is classified as a discontinued operation in 2020 under IFRS
5, as it forms a separate major line of business and there was a single
co-ordinated plan to dispose of it.
Results of the discontinued operations, which have been included in profit for
the year, were as follows:
Revenue
Costs of services
Gross profit
General and administrative costs
Operating profit
Profit before interest and taxation
Finance and investment income
Finance costs
Profit before taxation
Attributable tax expense
Profit after taxation
Gain on sale of discontinued operations
Attributable tax expense on sale of discontinued operations
Net gain attributable to discontinued operations
Attributable to
Equity holders of the parent
Non-controlling interests1
2020
£m
107.4
(92.3)
15.1
(4.4)
10.7
10.7
0.1
(0.3)
10.5
(2.2)
8.3
10.0
(1.9)
16.4
6.5
9.9
16.4
Note
1
In 2020, non-controlling interests includes £9.3 million recognised on the disposal of Kantar
within WPP Scangroup, a 56% owned subsidiary of the Group
For the year ended 31 December 2020, the Kantar group contributed
£30.8 million to the Group’s net operating cash flows, paid £0.9 million
in respect of investing activities and paid £0.7 million in respect of
financing activities.
The gain on sale of discontinued operations disposed by 31 December 2020 is
calculated as follows:
Intangible assets (including goodwill)
Property, plant and equipment
Right-of-use assets
Interests in associates and joint ventures
Deferred tax assets
Corporate income tax recoverable
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Corporate income tax payable
Lease liabilities
Deferred tax liabilities
Provisions for post-employment benefits
Provisions for liabilities and charges
Net assets
Non-controlling interests
Net assets excluding non-controlling interests
Consideration received in cash and cash equivalents
Transaction costs
Deferred consideration1
Total consideration received
Loss on sale before exchange adjustments
Exchange adjustments recycled to the income statement
Gain on sale of discontinued operation
2020
£m
162.5
15.1
27.2
4.6
6.1
16.9
170.3
32.2
(141.6)
(5.6)
(23.2)
(1.3)
(7.9)
(0.6)
254.7
(6.1)
248.6
240.9
(4.5)
1.6
238.0
(10.6)
20.6
10.0
Note
1 Deferred consideration in 2020 is made up of £79.6 million expected to be received in future
periods on the satisfaction of certain conditions and the deferral of £78.0 million consideration
against services the Group will supply to Kantar on favourable terms in the future. The conditions
expected to be met in the future include the settlement of ongoing legal cases, realisation of the
value of certain investments and the utilisation of certain tax losses and allowances. There was
uncertainty at the date of disposal in regard to the ultimate resolution of these items and
estimates of amounts due to be received were required to be made; there were no individually
material estimates. Future services provided by the Group to Kantar arose through the
negotiation of Transition Service Arrangements, as is customary for a disposal of this magnitude.
The Group will support Kantar for a period of up to four years, primarily in the area of IT, on terms
which are favourable to the disposal group. As such, an element of consideration has been
deferred and will be recognised as the services are provided
180
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
13. LEASES
The movements in 2022 and 2021 were as follows:
The maturity of lease liabilities at 31 December 2022 and 2021 were as follows:
Right-of-use assets
1 January 2021
Additions
Transfers to net investment in subleases
Disposals
Depreciation of right-of-use assets
Impairment charges included within
restructuring costs
Other reversals
Exchange adjustments
31 December 2021
Additions
Transfers to net investment in subleases
Disposals
Depreciation of right-of-use assets
Impairment charges included within
restructuring costs
Exchange adjustments
31 December 2022
Land and
buildings1
£m
1,461.8
264.6
(26.9)
(53.6)
(254.7)
Plant and
machinery
£m
42.7
17.2
−
(1.3)
(18.2)
(18.9)
6.8
(22.1)
1,357.0
363.8
(7.0)
(42.2)
(245.3)
(33.3)
89.2
1,482.2
(0.4)
−
(1.9)
38.1
23.8
–
(0.8)
(16.9)
(0.2)
2.3
46.3
Total
£m
1,504.5
281.8
(26.9)
(54.9)
(272.9)
(19.3)
6.8
(24.0)
1,395.1
387.6
(7.0)
(43.0)
(262.2)
(33.5)
91.5
1,528.5
Note
1 For the years ended 31 December 2022 and 2021, the Company has £18.5 million and £38.5 million
of right-of-use assets that are classified as investment property, respectively
Lease liabilities
1 January 2021
Additions
Interest expense related to lease liabilities
Disposals
Repayment of lease liabilities (including interest)
Exchange adjustments
31 December 2021
Additions
Interest expense related to lease liabilities
Disposals
Repayment of lease liabilities (including interest)
Exchange adjustments
31 December 2022
Land and
buildings
£m
2,111.8
277.0
89.7
(64.2)
(390.6)
(21.2)
2,002.5
353.6
94.2
(46.1)
(385.6)
143.6
2,162.2
Plant and
machinery
£m
44.5
16.1
1.2
(1.9)
(18.5)
(2.1)
39.3
23.7
1.5
(1.9)
(16.4)
2.2
48.4
Total
£m
2,156.3
293.1
90.9
(66.1)
(409.1)
(23.3)
2,041.8
377.3
95.7
(48.0)
(402.0)
145.8
2,210.6
The following table shows the breakdown of the lease expense between
amounts charged to operating profit and amounts charged to finance costs:
Depreciation of right-of-use assets:
Land and buildings
Plant and machinery
Impairment charges
Short-term lease expense
Low-value lease expense
Variable lease expense
Sublease income
Charge to operating profit
Interest expense related to lease liabilities
Charge to profit before taxation for leases
2022
£m
2021
£m
2020
£m
(245.3)
(16.9)
(33.5)
(20.2)
(1.9)
(57.3)
18.6
(356.5)
(95.7)
(452.2)
(254.7)
(18.2)
(12.5)
(18.0)
(2.3)
(56.2)
17.3
(344.6)
(90.9)
(435.5)
(312.1)
(19.8)
(125.1)
(36.7)
(2.3)
(65.4)
25.3
(536.1)
(101.0)
(637.1)
Variable lease payments primarily include real estate taxes and insurance costs.
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
Effect of discounting
Lease liability at end of year
Short-term lease liability
Long-term lease liability
2022
£m
379.1
337.7
293.0
252.3
234.8
1,328.5
2,825.4
(614.8)
2,210.6
282.4
1,928.2
2021
£m
369.7
321.9
273.7
229.1
199.1
1,227.1
2,620.6
(578.8)
2,041.8
279.7
1,762.1
The total committed future cash flows for leases not yet commenced at
31 December 2022 is £440.0 million.
The Group does not face a significant liquidity risk with regard to its lease
liabilities. Refer to note 25 for management of liquidity risk.
14. INTANGIBLE ASSETS
GOODWILL
The movements in 2022 and 2021 were as follows:
Cost
1 January 2021
Additions1
Disposals
Exchange adjustments
31 December 2021
Additions1
Disposals
Exchange adjustments
31 December 2022
Accumulated impairment losses and write-downs
1 January 2021
Impairment losses for the year
Exchange adjustments
31 December 2021
Impairment losses for the year
Exchange adjustments
31 December 2022
Net book value
31 December 2022
31 December 2021
1 January 2021
£m
10,807.3
335.8
(5.4)
(146.7)
10,991.0
262.6
–
891.0
12,144.6
3,418.5
1.8
(41.6)
3,378.7
37.9
274.6
3,691.2
8,453.4
7,612.3
7,388.8
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
WPP ANNUAL REPORT 2022
181
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. INTANGIBLE ASSETS CONTINUED
OTHER INTANGIBLE ASSETS
The movements in 2022 and 2021 were as follows:
Cost
1 January 2021
Additions
Disposals
New acquisitions
Other movements1
Exchange adjustments
31 December 2021
Additions
Disposals
New acquisitions
Other movements1
Exchange adjustments
31 December 2022
Brands
with an
indefinite
useful life
£m
Acquired
intangibles
£m
1,071.9
−
−
−
−
(4.6)
1,067.3
−
−
−
−
98.7
1,166.0
1,569.7
−
(7.3)
97.7
−
(15.7)
1,644.4
−
(4.7)
46.5
9.3
131.6
1,827.1
Other
£m
Total
£m
300.3
29.9
(44.6)
−
3.9
(1.4)
288.1
14.9
(59.2)
1.2
0.8
34.7
280.5
2,941.9
29.9
(51.9)
97.7
3.9
(21.7)
2,999.8
14.9
(63.9)
47.7
10.1
265.0
3,273.6
Amortisation and impairment
1 January 2021
Charge for the year
Impairment charges included within
restructuring costs
Disposals
Other movements
Exchange adjustments
31 December 2021
Charge for the year
Intangible asset impairment
Disposals
Exchange adjustments
31 December 2022
12.8
43.8
−
−
−
0.2
56.8
−
−
−
5.8
62.6
1,329.2
53.5
210.6
19.9
1,552.6
117.2
−
(3.5)
−
(8.2)
1,371.0
61.9
−
(4.4)
109.9
1,538.4
10.1
(24.5)
(1.5)
(2.1)
212.5
21.9
29.0
(59.4)
16.7
220.7
10.1
(28.0)
(1.5)
(10.1)
1,640.3
83.8
29.0
(63.8)
132.4
1,821.7
Net book value
31 December 2022
31 December 2021
1 January 2021
1,103.4
1,010.5
1,059.1
288.7
273.4
240.5
59.8
75.6
89.7
1,451.9
1,359.5
1,389.3
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
Cash-generating units (CGUs) with significant goodwill and brands with an
indefinite useful life as at 31 December are:
GroupM
Wunderman Thompson
Ogilvy
VMLY&R
Burson Cohn & Wolfe
AKQA Group
FGS Global
Landor Group
Other
Goodwill
Brands with an
indefinite useful life
2022
£m
3,178.3
1,210.8
849.8
776.0
646.0
628.7
451.8
106.5
605.5
8,453.4
2021
£m
2,982.5
997.3
784.4
675.6
585.7
570.2
393.2
97.1
526.3
7,612.3
2022
£m
−
442.0
222.8
207.6
140.5
−
−
55.7
34.8
1,103.4
2021
£m
−
405.1
205.0
189.8
128.4
−
−
50.7
31.5
1,010.5
Other goodwill represents goodwill on a large number of CGUs, none of which
is individually significant in comparison to the total carrying value of goodwill.
Separately identifiable brands with an indefinite useful life are carried at
historical cost in accordance with the Group’s accounting policy for intangible
assets. The carrying values of the other brands with an indefinite useful life are
not individually significant in comparison with the total carrying value of
brands with an indefinite useful life.
182
WPP ANNUAL REPORT 2022
Acquired intangible assets at net book value at 31 December 2022 include
brand names of £142.3 million (2021: £137.4 million), customer-related
intangibles of £120.3 million (2021: £110.4 million), and other assets (including
proprietary tools) of £26.1 million (2021: £25.6 million).
The total amortisation and impairment of acquired intangible assets of
£61.9 million (2021: £97.3 million) includes an impairment charge in the year of
£1.4 million (2021: £47.9 million) in regards to certain brand names in the Global
Integrated Agencies segment that are no longer in use. In 2021, £43.8 million of
the impairment charge related to brands with an indefinite useful life. In 2021,
£45.1 million of the impairment charge related to the Global Integrated
Agencies segment and £2.8 million related to the Specialist Agencies segment.
In addition, the total amortisation and impairment of acquired intangible
assets includes £0.2 million (2021: £0.5 million) in relation to associates.
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 impairment review is undertaken
annually on 30 September. A goodwill impairment charge of £37.9 million
(2021: £1.8 million) was recognised during the year due to a number of
underperforming businesses in the Group. This year, £34.2 million of the
impairment charge related to the Specialist Agencies segment and £3.7 million
related to the Public Relations segment. 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 of disposal and value
in use. The review assessed whether the carrying value of goodwill and
intangible assets with indefinite useful lives was supported by the value in
use determined as the net present value of future cash flows.
Due to the significant number of CGUs, the impairment test was performed in
two steps. In the first step, the recoverable amount was calculated for each
CGU using the latest available forecasts for 2022 and/or 2023, nil growth rate
thereafter (2021: nil) and a conservative pre-tax discount rate of 15.5% (2021:
13.5%). The pre-tax discount rate of 15.5% was above the rate calculated for the
global networks of 14.5% (2021: 12.5%). For smaller CGUs that operate primarily
in a particular region subject to higher risk, the higher of 15.5% or 100 basis
points above the regional discount rate was used in the first step.
The recoverable amount was then compared to the carrying amount, which
includes goodwill, intangible assets and other assets. CGUs where the
recoverable amount exceeded the carrying amount were not considered to
be impaired. Those CGUs where the recoverable amount did not exceed the
carrying amount were then further reviewed in the second step.
In the second step, these CGUs were retested for impairment using more
refined assumptions. This included using a CGU specific pre-tax discount rate
and management forecasts for a projection period of up to five years, followed
by an assumed long-term growth rate of 2.0% (2021: 2.0%, 2020: 2.0%). If the
recoverable amount using the more specific assumptions did not exceed the
carrying value of a CGU, an impairment charge was recorded.
The long-term growth rate is derived from management’s best estimate of
the likely long-term trading performance with reference to external industry
reports and other relevant market trends. As at 31 December 2022, we have
assessed long-term industry trends based on recent historical data and
assumed a long-term growth rate of 2.0% (2021: 2.0%, 2020: 2.0%).
Management have made the judgement that the long-term growth rate does
not exceed the long-term average growth rate for the industry.
The discount rate uses the capital asset pricing model (CAPM) to derive the
cost of equity along with an estimated cost of debt that is weighted by an
appropriate capital structure to derive an indication of a weighted average
cost of capital. The cost of equity is calculated based on long-term
government bond yield, an estimate of the required premium for investment
in equity relative to government securities and further considers the volatility
associated with peer public companies relative to the market. The cost of debt
reflects an estimated market yield for long-term debt financing after taking
into account the credit profile of public peer companies in the industry. The
capital structure used to weight the cost of equity and cost of debt has been
derived from the observed capital structure of public peer companies.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
In developing the cash flows for the 2020 impairment tests, we considered
the impact of the Covid-19 pandemic to our businesses and adjusted projected
revenue less pass-through costs and operating margins in 2020 and/or 2021
accordingly. For the remaining years in the projection period, we assessed
when the cash flows would recover to 2019 levels as representative of
pre-Covid-19 revenue less pass-through costs and operating margins. For many
of our CGUs, recovery to 2019 levels by 2023 was estimated with some CGUs
using alternative recovery profiles as considered appropriate.
The pre-tax discount rate applied to the cash flow projections for the CGUs
that operate globally was 12.5%. The pre-tax discount rates applied to the
CGUs that have more regional specific operations ranged from 10.8% to 18.6%
for the 30 June 2020 test, 11.3% to 14.4% for the 30 September 2020 test, and
11.2% to 13.6% for the 31 December 2020 test.
As part of the overall effort to simplify operations and become more
client-centric, certain operations were realigned between the various
networks. These realignments were reflected in the CGUs being tested. The
most significant of these for the 30 June 2020 test included the treatment of
Landor and Fitch as a single CGU given the collaboration of the two brands
from both a management and client perspective; the shift of certain European
operations into VMLY&R; and the transfer of certain Asian operations from
VMLY&R to Ogilvy in order to improve the operational synergies and offer in
the respective regions.
Subsequent realignments to improve the operational synergies and regional
offers were reflected in the September and December tests including the shift
of certain Latin American and European operations between Wunderman
Thompson, VMLY&R and GroupM; and the transfer of certain Asian operations
to VMLY&R that previously operated independently from a network.
The transfers of carrying value between CGUs were determined on a relative
value basis. These realignments did not have a significant impact on the
impairment figures recognised. The CGUs with significant impairments of
goodwill as at 31 December 2020 are set out in the below table with the
recoverable amount determined as of the December 2020 test.
Operating Sector
Wunderman Thompson Global Integrated Agencies
Global Integrated Agencies
VMLY&R
Public Relations
Burson Cohn & Wolfe
Global Integrated Agencies
Geometry Global
Landor & Fitch
Specialist Agencies
Other
Recoverable
amount
2020
£m
1,956.8
1,075.7
790.2
164.4
177.6
1,409.5
5,574.2
Goodwill
impairment
charge
2020
£m
1,207.5
516.9
144.8
305.8
185.4
462.5
2,822.9
The pre-tax discount rate applied to the cash flow projections for the CGUs
that operate globally was 14.5% (2021: 12.5%). We developed a global discount
rate that takes into account the diverse nature of the operations, as these
CGUs operate with a diverse range of clients in a range of industries
throughout the world, hence are subject to similar levels of market risks. The
pre-tax discount rates applied to the CGUs that have more regional specific
operations ranged from 14.0% (2021: 11.3%) to 22.6% (2021: 18.4%).
Our approach in determining the recoverable amount utilises a discounted
cash flow methodology, which necessarily involves making numerous estimates
and assumptions regarding revenue less pass-through costs 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 less passthrough costs
growth and operating margins. The key assumptions take account of the
business’s expectations for the projection period. These expectations consider
the macroeconomic environment, industry and market conditions, the CGU’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 CGU 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 additional 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.
Historically our impairment losses have resulted from a specific event,
condition or circumstance in one or more of our companies, such as the
impact of Covid-19 or the loss of a significant client. As a result, changes in the
assumptions used in our impairment model have generally not had a significant
effect on the impairment charges recognised. The average operating margins
used in the five-year projection period for CGUs with significant goodwill and
brands with an indefinite useful life ranged from 12.8% to 23.6%. Wunderman
Thompson's recoverable amount exceeded its carrying value by £105.5 million
and is the only CGU with significant goodwill and brands with an indefinite
useful life that is sensitive to changes in the key assumptions used in
determining the recoverable amount. Holding other assumptions constant,
the carrying value would be greater than its recoverable amount if the average
operating margin decreased by 0.8% or the discount rate increased by 0.7%.
Wunderman Thompson is not sensitive to a reasonably possible change in
revenue less pass-through costs growth. The carrying value of goodwill and
other intangible assets will continue to be reviewed at least annually for
impairment and adjusted down to the recoverable amount if required.
IMPAIRMENTS IN 2020
In 2020, £2,822.9 million of impairment charges were incurred. The
impairments related to historical acquisitions whose carrying values were
reassessed in light of the impact of Covid-19. The impairments were driven by
a combination of higher discount rates used to value future cash flows, a lower
profit base in 2020 and lower industry growth rates. By operating sector,
£2,355.1 million of the impairment charge related to Global Integrated
Agencies, £161.5 million related to Public Relations and £306.3 million related
to Specialist Agencies.
As noted above, the impairment review is undertaken annually on 30
September. Given the Covid-19 pandemic, impairment indicators such as a
decline in revenue less pass-through costs forecasts, and downturns in the
global economy and the advertising industry were identified in the first half
of 2020. As such, the Group also performed an impairment test over goodwill
and intangible assets with indefinite useful lives as at 30 June 2020. Given the
continued impact of Covid-19, an additional impairment test was performed
as of 31 December 2020.
WPP ANNUAL REPORT 2022
183
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15. PROPERTY, PLANT AND EQUIPMENT
The movements in 2022 and 2021 were as follows:
16. INTERESTS IN ASSOCIATES, JOINT VENTURES AND
OTHER INVESTMENTS
The movements in 2022 and 2021 were as follows:
1 January 2021
Additions
Earnings from associates – after interest and tax
Share of other comprehensive income of associate
undertakings
Dividends
Other movements
Exchange adjustments
Disposals
Reclassification from subsidiaries
Revaluation of other investments through profit or loss
Revaluation of other investments through other
comprehensive income
Amortisation of other intangible assets
Reversal of write-downs
31 December 2021
Additions
Loss from associates – after interest and tax
Share of other comprehensive income of associate
undertakings
Dividends
Other movements
Exchange adjustments
Disposals
Reclassification to subsidiaries
Reclassification from associates to other investments
Revaluation of other investments through profit or loss
Revaluation of other investments through other
comprehensive income
Amortisation of other intangible assets
Write-downs
31 December 2022
Interests in
associates
and joint
ventures
£m
330.7
93.6
23.8
Other
investments
£m
387.3
5.9
−
13.5
(53.4)
(0.2)
(22.5)
(4.8)
4.2
−
−
(0.5)
28.5
412.9
4.4
(60.4)
51.2
(37.6)
2.9
17.1
(9.6)
(5.9)
(22.5)
−
−
(0.2)
(47.2)
305.1
−
−
−
−
(31.9)
−
(7.5)
(35.5)
−
−
318.3
5.1
−
−
−
−
−
(16.0)
−
61.6
23.1
(22.3)
−
−
369.8
Interests in joint ventures are immaterial and none of the Group's associates
are individually material at 31 December 2022.
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 information from outside sources.
The carrying values of the Group’s associates and joint ventures are reviewed
for impairment in accordance with the Group’s accounting policies.
Freehold
buildings
£m
Leasehold
buildings
£m
Land
£m
Fixtures,
fittings and
equipment
£m
Computer
equipment
£m
Total
£m
34.3
14.3
–
(0.1)
(5.3)
43.2
13.8
–
(0.1)
39.6
8.9
–
(0.6)
13.5
61.4
0.1
–
(8.3)
1,052.5
134.5
1.5
(108.3)
(5.2)
1,075.0
75.8
0.5
(62.1)
189.3
31.5
1.3
(60.0)
(12.6)
149.5
32.1
0.2
(40.0)
381.7
74.0
1.2
(56.4)
1,697.4
263.2
4.0
(225.4)
(8.7)
(18.3)
391.8 1,720.9
208.4
86.6
1.3
0.6
(182.6)
(72.1)
(16.9)
40.0
39.3
92.5
89.7
1,178.9
23.0
164.8
39.8
174.9
446.7 1,922.9
Cost
1 January 2021
Additions
New acquisitions
Disposals
Exchange
adjustments
31 December 2021
Additions
New acquisitions
Disposals
Exchange
adjustments
31 December 2022
–
–
–
–
Depreciation and impairment
1 January 2021
Charge for the year
Impairment charges
included within
restructuring costs
Disposals
Exchange
adjustments
31 December 2021
Charge for the year
Impairment charges
included within
restructuring costs
Disposals
Exchange
adjustments
31 December 2022
–
–
–
–
–
–
–
2.3
1.0
510.4
66.5
106.9
27.6
286.9
56.1
906.5
151.2
–
–
7.1
(108.2)
(0.6)
2.7
0.7
–
(1.7)
0.3
2.0
(6.2)
469.6
74.0
9.1
(63.5)
43.2
532.4
1.8
(55.9)
(8.5)
71.9
26.5
0.6
(36.7)
17.5
79.8
0.9
(55.1)
9.8
(219.2)
(8.5)
280.3
65.7
(23.8)
824.5
166.9
0.1
(71.1)
9.8
(173.0)
33.0
308.0
94.0
922.2
Net book value
31 December 2022
31 December 2021
1 January 2021
40.0
43.2
34.3
90.5
58.7
37.3
646.5
605.4
542.1
85.0
77.6
82.4
138.7 1,000.7
896.4
111.5
790.9
94.8
At 31 December 2022, capital commitments contracted, but not provided
for in respect of property, plant and equipment, were £128.2 million
(2021: £107.3 million).
184
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
AGGREGATE INFORMATION OF ASSOCIATES THAT ARE NOT
INDIVIDUALLY MATERIAL
The following table presents a summary of the aggregate financial
performance of the Group’s associate undertakings and joint ventures.
(Loss)/earnings from associates – after
interest and tax (note 4)
Share of other comprehensive
income/(loss) of associate
undertakings
Share of total comprehensive (loss)/
income of associate undertakings
2022
£m
2021
£m
2020
£m
(60.4)
23.8
(136.0)
51.2
(9.2)
13.5
37.3
(61.5)
(197.5)
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.
As at 31 December 2021, the cumulative share of unrecognised losses in
relation to Imagina, an associate in Spain with the investment carrying value
reduced to zero, were £23.0 million. In 2022, the Group partially disposed of its
investment in Imagina in Spain resulting in its reclassification from interests in
associates to other investments (within the scope of IFRS 9) designated as fair
value through other comprehensive income. Refer to note 26 for further details
on financial instruments held at fair value though other comprehensive
income.
In the year ended 31 December 2022, share of losses of £29.5 million for the US
and £33.8 million for the Rest of World were not recognised in relation to
Kantar as the investment was reduced to zero.
At 31 December 2022, capital commitments contracted, but not provided for,
in respect of interests in associates and other investments were £3.2 million
(2021: £5.4 million).
WPP ANNUAL REPORT 2022
185
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17. 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.
– the timing of future reversal of taxable temporary differences
– the expiry period associated with the deferred tax assets
– 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, no asset
is recognised in relation to that portion.
Deferred tax assets have only been recognised for territories where the Group
considers that 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
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.
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
2022
£m
588.8
(617.5)
(28.7)
Offset
2022
£m
(266.7)
266.7
–
As
reported
2022
£m
322.1
(350.8)
(28.7)
Gross
2021
£m
565.0
(536.0)
29.0
Offset
2021
£m
(223.5)
223.5
–
As
reported
2021
£m
341.5
(312.5)
29.0
The following are the major gross deferred tax assets recognised by the Group and movements thereon in 2022 and 2021:
1 January 2021
Acquisition of subsidiaries
Credit/(charge) to income
Charge to other comprehensive income
Credit to equity
Exchange differences and other
movements
31 December 2021
Acquisition of subsidiaries
(Charge)/credit to income
Charge to other comprehensive income
Charge to equity
Exchange differences and other
movements
31 December 2022
Deferred
compensation
£m
49.5
–
58.2
–
–
Accounting
provisions
and accruals
£m
109.5
–
0.3
–
–
Retirement
benefit
obligations
£m
57.9
–
1.2
(3.0)
–
Property,
plant and
equipment
£m
80.9
–
(15.9)
–
–
Tax losses
and credits
£m
90.3
–
19.7
–
–
Share-based
payments
£m
21.4
–
9.9
–
11.9
Restructuring
provisions
£m
56.4
–
9.1
–
–
Other
temporary
differences
£m
11.6
0.9
(1.6)
–
–
0.8
108.5
–
(38.7)
–
–
4.5
74.3
(3.6)
106.2
–
3.3
–
–
10.6
120.1
(2.7)
53.4
–
(2.9)
(7.0)
–
4.5
48.0
3.0
68.0
–
(10.0)
–
–
43.6
101.6
0.5
110.5
–
5.0
–
–
7.0
122.5
0.3
43.5
–
1.3
–
(15.5)
3.0
32.3
(4.4)
61.1
–
21.2
–
–
2.3
84.6
2.9
13.8
1.1
(14.2)
–
–
4.7
5.4
Total
£m
477.5
0.9
80.9
(3.0)
11.9
(3.2)
565.0
1.1
(35.0)
(7.0)
(15.5)
80.2
588.8
Other temporary differences comprise a number of items, none of which is individually significant to the Group's consolidated balance sheet. At 31 December 2022
the balance related to temporary differences in relation to revenue adjustments, tax deductible goodwill, fair value adjustments and other temporary differences.
In addition the Group has recognised the following gross deferred tax liabilities and movements thereon in 2022 and 2021:
1 January 2021
Acquisition of subsidiaries
(Credit)/charge to income
Exchange differences and other movements
31 December 2021
Acquisition of subsidiaries
(Credit)/charge to income
Charge to other comprehensive income
Exchange differences and other movements
31 December 2022
Brands
and other
intangibles
£m
326.8
22.5
(19.5)
(4.7)
325.1
15.1
(12.4)
–
24.8
352.6
Associate
earnings
£m
58.0
–
(21.4)
0.2
36.8
–
(3.5)
–
3.2
36.5
Property,
plant and
equipment
£m
–
–
–
–
–
–
(14.2)
–
37.2
23.0
Financial
instruments
£m
35.8
–
(35.5)
(0.3)
–
–
–
–
–
–
Other
temporary
differences
£m
25.0
–
16.6
(0.7)
40.9
–
(10.5)
0.4
1.2
32.0
Goodwill
£m
123.1
–
8.2
1.9
133.2
–
19.7
–
20.5
173.4
Total
£m
568.7
22.5
(51.6)
(3.6)
536.0
15.1
(20.9)
0.4
86.9
617.5
Other temporary differences comprise a number of items none of which is individually significant to the Group's consolidated balance sheet. At 31 December 2022
the balance related to temporary differences in relation to unremitted earnings of subsidiaries, unremitted earnings of associates and other temporary differences.
186
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
At the balance sheet date, the Group has gross tax losses and other temporary
differences of £7,667.4 million (2021: £6,961.4 million) available for offset against
future profits. Deferred tax assets have been recognised in respect of the tax
benefit of £2,259.7 million (2021: £2,259.2 million) of such tax losses and other
temporary differences. No deferred tax asset has been recognised in respect
of the remaining £5,407.7 million (2021: £4,702.2 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 £60.3 million (2021: £63.8 million) that will expire
within one to ten years, and £5,138.1 million (2021: £4,457.3 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 £1,346.1 million (2021: £1,385.3 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.
2021
Gross trade
receivables
Loss
allowance
Gross
accrued
income
Loss
allowance
Other
financial
assets
Days past due
Carrying
amount at
31 December
2021
£m
Not past
due
£m
0-30
days
£m
31-90
days
£m
91-180
days
£m
181
days-
1 year
£m
Greater
than
1 year
£m
6,671.0 5,755.6
589.8
194.4
64.0
10.6
56.6
(70.5)
(2.3)
(0.2)
(1.9)
6,600.5 5,753.3
589.6
192.5
(7.5)
56.5
(4.9)
(53.7)
5.7
2.9
3,449.6
1,947.6
619.4
448.1
307.7
126.8
(13.9)
(1.8)
(1.0)
(0.8)
(4.3)
(6.0)
3,435.7 1,945.8
618.4
447.3
303.4
120.8
–
–
–
496.3
15.2
10,532.5 8,121.2 1,223.2
422.1
2.7
642.5
3.0
362.9
2.7
129.2
50.6
53.5
18. TRADE AND OTHER RECEIVABLES
The following are included in trade and other receivables:
Other financial assets are included in other debtors.
Past due amounts are not impaired where collection is considered likely.
Amounts falling due within one year
Trade receivables (net of loss allowance)
Work in progress
VAT and sales taxes recoverable
Prepayments
Accrued income
Fair value of derivatives
Other debtors
2022
£m
2021
£m
7,403.9
352.4
448.1
236.6
3,468.3
5.1
585.3
12,499.7
6,600.5
254.0
350.3
215.3
3,435.7
2.5
504.0
11,362.3
The ageing of trade receivables and other financial assets by due date is
as follows:
Days past due
Carrying
amount at
31 December
2022
£m
Not past
due
£m
0-30
days
£m
31-90
days
£m
91-180
days
£m
181
days-
1 year
£m
Greater
than
1 year
£m
7,475.4 6,386.5
706.4
247.1
66.8
23.5
45.1
(71.5)
(1.6)
7,403.9 6,384.9
(5.8)
700.6
(6.6)
240.5
(6.6)
60.2
(13.3)
10.2
(37.6)
7.5
3,485.6 2,027.0
603.8
450.5
376.8
27.5
(17.3)
(0.1)
3,468.3 2,026.9
(0.2)
603.6
(0.1)
450.4
(16.9)
359.9
–
27.5
–
–
–
2022
Gross trade
receivables
Loss
allowance
Gross
accrued
income
Loss
allowance
Other
financial
assets
Amounts falling due after more than one year
Prepayments
Fair value of derivatives
Other debtors
2022
£m
2021
£m
3.9
0.6
214.1
218.6
3.0
0.5
149.1
152.6
The Group has applied the practical expedient permitted by IFRS 15 to not
disclose the transaction price allocated to performance obligations unsatisfied
(or partially unsatisfied) as of the end of the reporting period as contracts
typically have an original expected duration of a year or less.
Other debtors falling due after more than one year for 31 December 2022
includes £15.4 million in relation to pension plans in surplus. The corresponding
figure for 31 December 2021 is included in provision for post employment
benefits.
Loss allowance
At beginning of year
New acquisitions
Charged to the income statement
Released to the income statement
Exchange adjustments
Utilisations and other movements
At end of year
2022
£m
2021
£m
70.5
–
29.1
(8.4)
5.1
(24.8)
71.5
112.5
3.7
17.2
(27.9)
(1.7)
(33.3)
70.5
The loss allowance is equivalent to 1.0% (2021: 1.1%) of gross trade accounts
receivables.
612.0
538.8
31.2
11,484.2 8,950.6 1,335.4
6.1
697.0
1.0
421.1
6.2
43.9
28.7
36.2
Impairment losses on work in progress, accrued income and other debtors
were immaterial for the years presented.
The Group considers that the carrying amount of trade and other receivables
approximates their fair value.
WPP ANNUAL REPORT 2022
187
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18. TRADE AND OTHER RECEIVABLES CONTINUED
EXPECTED CREDIT LOSSES
Given the short-term nature of the Group’s trade receivables, work in progress,
and accrued income, which are mainly due from large national or multinational
companies, the Group's assessment of expected credit losses includes
provisions for specific clients and receivables where the contractual cash flow
is deemed at risk. Considerations include the current economic environment,
and the level of credit insurance the Group has along with historical and
forward-looking information. Additional provisions are made based on the
assessment of recoverability of aged receivables over one year where
sufficient evidence of recoverability is not evident.
19. 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
Deferred income
Payments due to vendors (earnout agreements)
Liabilities in respect of put option agreements
with vendors
Fair value of derivatives
Share repurchases – close period commitments1
Other creditors and accruals
2022
£m
11,182.3
1,599.0
62.0
2021
£m
10,596.9
1,334.0
85.6
18.8
58.0
–
2,914.8
58.4
6.4
211.7
2,959.3
15,834.9 15,252.3
Note
1 During 2021, the Company entered into an arrangement with a third party to conduct share
buybacks on its behalf in the close period commencing on 16 December 2021 and ending on
18 February 2022, in accordance with UK listing rules. The commitment resulting from this
agreement constituted a liability at 31 December 2021 and was recognised as a movement in
other reserves in the year ended 31 December 2021. After the close period ended on 18 February
2022, the liability was settled and the amount in other reserves was reclassified to retained
earnings
The Group considers that the carrying amount of trade and other payables
approximates their fair value.
In all material respects, deferred income at 31 December 2021 was recognised
as revenue during the year. Other than business-as-usual movements, and
deferred income acquired on the acquisition of subsidiaries, there were no
other significant changes in contract liability balances during the year.
20. 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
2022
£m
98.1
323.3
–
69.5
490.9
2021
£m
111.1
333.1
47.2
128.5
619.9
The Group considers that the carrying amount of trade and other payables
approximates their fair value.
The following table sets out payments due to vendors, comprising
contingent 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
2022
£m
62.0
19.5
27.6
28.6
22.4
160.1
2021
£m
85.6
24.0
35.7
51.4
–
196.7
The following table is an analysis of future anticipated cash flows in relation to
liabilities in respect of put option agreements with vendors at 31 December:
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
21. BANK OVERDRAFTS, BONDS AND BANK LOANS
Amounts falling due within one year:
Bank overdrafts
Corporate bonds and bank loans
2022
£m
18.8
5.2
76.6
99.2
74.8
67.5
342.1
2021
£m
58.4
15.1
14.4
99.0
76.6
128.0
391.5
2022
£m
505.7
663.3
1,169.0
2021
£m
342.3
224.9
567.2
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
2022
£m
3,801.8
2021
£m
4,216.8
The Group estimates that the fair value of corporate bonds is £4,049.1 million
at 31 December 2022 (2021: £4,790.3 million). The fair values of the corporate
bonds are based on quoted market prices and is within Level 1 of the fair value
hierarchy.
The Group considers that the carrying amount of bank loans of £nil
(2021: £14.7 million) approximates their fair value.
188
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
The corporate bonds, bank loans and overdrafts included within liabilities fall
due for repayment as follows:
23. SHARE-BASED PAYMENTS
Charges for share-based incentive plans were 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
22. PROVISIONS FOR LIABILITIES AND CHARGES
The movements in 2022 and 2021 were as follows:
2022
£m
1,169.0
618.0
441.5
658.8
661.1
1,422.4
4,970.8
2021
£m
567.2
629.2
550.4
418.8
623.6
1,994.8
4,784.0
1 January 2021
Charged to the income statement
Acquisitions1
Utilised
Released to the income statement
Other movements
Exchange adjustments
31 December 2021
Charged to the income statement
Acquisitions1
Utilised
Released to the income statement
Other movements
Exchange adjustments
31 December 2022
Property
£m
76.7
25.2
–
(7.0)
(18.3)
(5.2)
(0.8)
70.6
8.1
–
(12.8)
(3.2)
(4.8)
4.9
62.8
Other
£m
229.6
35.8
7.3
(69.9)
(25.0)
18.9
1.2
197.9
6.4
1.3
(37.2)
(22.2)
17.8
17.8
181.8
Total
£m
306.3
61.0
7.3
(76.9)
(43.3)
13.7
0.4
268.5
14.5
1.3
(50.0)
(25.4)
13.0
22.7
244.6
Note
1 Acquisitions include £1.3 million (2021: £7.3 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
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.
The utilisation of “Other” provisions in 2021 is primarily driven by litigation
settlements.
Share-based payments
2022
£m
122.0
2021
£m
99.6
2020
£m
74.4
Share-based payments comprise charges for stock options and restricted
stock awards to employees of the Group.
As of 31 December 2022, there was £200.7 million (2021: £203.4 million) of total
unrecognised compensation cost related to the Group’s restricted stock plans.
Further information on stock options is provided in note 27.
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:
EXECUTIVE PERFORMANCE SHARE PLAN (EPSP)
This scheme is intended to reward and incentivise the most senior executives
of the Group. The performance period is three or five complete financial years,
commencing with the financial year in which the award is granted. The vest
date will usually be in the March following the end of the performance
period. Vesting is conditional on continued employment throughout the
vesting period.
The 2020, 2021 and 2022 EPSP awards are subject to three equally weighted
performance conditions: three-year average Return on Invested Capital (ROIC),
cumulative Adjusted Free Cash Flow (AFCF), and relative Total Shareholder
Return (TSR). Achieving the threshold performance requirement will result in
a vesting opportunity of 20% for that element. The vesting opportunity will
increase on a straight-line basis to 100% of the award for maximum
performance. The Compensation Committee has an overriding discretion to
determine the extent to which the award will vest.
The 2019 EPSP awards are subject to a relative TSR performance condition,
with a ROIC underpin. TSR performance will be compared to companies
representing the most relevant, listed global competitors, with performance
below median resulting in zero vesting. Performance between median and
upper decile provides for a vesting opportunity of between 15% and 100%.
The awards will vest subject to a ROIC underpin of an average of 7.5% over
the performance period. The Compensation Committee has an overriding
discretion to determine the extent to which the award will vest.
For EPSP awards granted between 2017 and 2018 there are three performance
criteria, each constituting one-third of the vesting value, and each measured
over the performance 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 15% 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. The performance range is 7% to 14%
compound annual growth. Threshold performance will result in 15%
vesting, maximum performance will result in 100% vesting. There is a
sliding vesting scale in between threshold and maximum.
(iii) Return on equity (ROE). Average annual ROE is defined as headline diluted
EPS divided by the balance sheet value per share of shareholders’ equity.
The performance range is 15% – 18% average annual ROE. Threshold
performance will result in 15% vesting, maximum performance will result
in 100% vesting. There is a sliding vesting scale in between threshold
and maximum.
WPP ANNUAL REPORT 2022
189
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. SHARE-BASED PAYMENTS CONTINUED
PERFORMANCE SHARE AWARDS (PSA)
Conditional stock awards made under the 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.
LEADERSHIP SHARE AWARDS
WPP Leadership Awards are conditional stock awards made to around 1,900
of our key executives. Awards vest three years after grant, provided the
participant is still employed within the Group.
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 27, 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.
EPSP is 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 charge
for each grant is revised, if appropriate, to take account of any changes in
estimate of the likely number of shares expected to vest.
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
2022
number
m
16.7
3.1
10.4
Granted
number
m
Forfeited
number
m
Vested
number
m
Non-
vested 31
December
2022
number
m
6.1
4.0
4.9
(2.2)
(0.2)
20.4
(0.2)
(1.2)
(2.8)
(2.8)
4.1
11.3
900p
1,025p
1,055p
613p
924p
604p
922p
911p
787p
798p
881p
519p
795p
952p
899p
Non-
vested
1 January
2021
number
m
13.0
4.3
11.0
Granted
number
m
Forfeited
number
m
Vested
number
m
Non-
vested 31
December
2021
number
m
6.1
0.4
3.6
(2.2)
(0.2)
16.7
(0.2)
(1.1)
(1.4)
(3.1)
3.1
10.4
943p
951p
1,289p
833p
900p
675p
831p
666p
990p
534p
853p
859p
709p
604p
922p
Executive Performance
Share Plan (EPSP)
Performance Share
Awards (PSA)
Leadership Share Awards
Weighted average fair
value (pence per share)
Executive Performance
Share Plan (EPSP)
Performance Share
Awards (PSA)
Leadership Share Awards
Executive Performance
Share Plan (EPSP)
Performance Share
Awards (PSA)
Leadership Share Awards
Weighted average fair
value (pence per share)
Executive Performance
Share Plan (EPSP)
Performance Share
Awards (PSA)
Leadership Share Awards
The total fair value of shares vested for all the Group’s restricted stock plans
during the year ended 31 December 2022 was £65.4 million (2021: £64.1 million,
2020: £71.6 million).
190
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
24. 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)
2022
£m
191.3
13.5
204.8
2.2
207.0
2021
£m
162.8
14.9
177.7
1.8
179.5
2020
£m
157.8
13.9
171.7
2.9
174.6
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 2022.
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.
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 majority of plans provide final salary benefits, with plan benefits typically
based either on mandatory plans under local legislation, termination indemnity
benefits, or on the rules of WPP sponsored supplementary plans. The
implications of IFRIC 14 have been allowed for where relevant, in particular
with regard to the asset ceiling/irrecoverable surplus.
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 2022, the life expectancies underlying the value of the
accrued liabilities for the main defined benefit pension plans operated by the
Group were as follows:
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
All
plans
North
America
Western
Continental
Europe
UK
22.3
21.9
23.6
24.0
23.3
25.1
21.0
24.0
Other1
12.7
15.5
24.0
23.3
25.6
23.2
12.7
25.7
24.7
27.1
25.9
15.5
Note
1
Includes Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe
The life expectancies after age 65 at 31 December 2021 were 22.3 years and
24.0 years for male and female current pensioners (at age 65) respectively,
and 24.1 years and 25.8 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.
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 2022 amounted to £24.0 million (2021: £16.7 million, 2020:
£20.3 million). Employer contributions and benefit payments in 2023 are
expected to be approximately £20.0 million.
(A) ASSUMPTIONS
There are a number of areas in pension accounting that involve estimates
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:
2022
% pa
2021
% pa
2020
% pa
2019
% pa
UK
Discount rate1
Rate of increase in pensions
in payment
Inflation
North America
Discount rate1
Rate of increase in salaries2
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
5.1
4.4
3.0
5.2
n/a
4.1
2.5
2.0
2.0
6.4
5.7
3.4
1.8
4.5
3.2
2.6
n/a
1.2
2.3
1.8
1.7
5.3
5.6
3.7
1.3
4.4
2.8
2.0
3.0
0.9
2.2
1.8
1.7
4.2
5.2
3.7
2.0
4.4
2.6
3.0
3.0
1.2
2.2
1.8
1.7
4.6
6.1
3.7
Notes
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
2 The salary assumptions are no longer applicable to the US as all plans were frozen. Active
participants will not accrue additional benefits for future services under these plans
WPP ANNUAL REPORT 2022
191
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 ten years. The duration corresponds to the
weighted average length of the underlying cash flows.
Weighted average
duration of the
defined benefit
obligation (years)
Expected benefit
payments over the
next ten years (£m)
Within 12 months
In 2024
In 2025
In 2026
In 2027
In the next five years
All
plans
North
America
Western
Continental
Europe
UK
Other1
8.5
7.5
10.0
9.7
5.9
46.6
43.5
44.5
46.4
44.2
213.2
21.7
21.1
20.6
21.2
21.1
93.5
12.7
12.7
13.4
13.4
12.0
56.5
5.8
6.1
6.0
6.4
6.2
33.9
6.4
3.6
4.5
5.4
4.9
29.3
Note
1
Includes Asia Pacific, Latin America, Africa & Middle East and Central & 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.
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:
(Decrease)/increase
in benefit obligation
2022
£m
2021
£m
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:
Western Continental Europe
Other1
Decrease by 25 basis points:
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
(3.6)
(4.4)
(2.0)
(0.5)
3.8
4.6
2.1
0.6
0.5
0.5
(0.5)
(0.5)
0.7
1.1
(0.6)
(1.0)
6.8
4.2
2.6
(7.6)
(6.4)
(3.4)
(0.6)
8.0
6.6
3.6
0.6
0.8
0.5
(0.8)
(0.5)
0.9
1.7
(0.9)
(1.7)
13.3
5.3
4.2
Note
1
Includes Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe
192
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
24. PROVISION FOR POST-EMPLOYMENT BENEFITS CONTINUED
(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 surplus2
Plans in deficit
%
6.2
48.5
34.7
0.3
4.2
6.1
100.0
2022
£m
26.7
208.8
149.2
1.4
18.1
26.3
430.5
(552.6)
(122.1)
–
(122.1)
15.4
(137.5)
2021
£m
31.8
259.7
222.5
1.0
15.3
21.8
552.1
(688.5)
(136.4)
(0.2)
(136.6)
30.1
(166.7)
%
5.8
47.0
40.3
0.2
2.8
3.9
100.0
%
6.7
46.1
41.0
0.1
2.4
3.7
100.0
2020
£m
41.6
284.2
252.8
0.7
14.7
22.6
616.6
(772.7)
(156.1)
(0.6)
(156.7)
27.2
(183.9)
Notes
1 The related deferred tax asset is discussed in note 17
2 The net asset related to plans in surplus of £15.4 million for 31 December 2022 is recorded in the
consolidated balance sheet within other debtors. The corresponding figures for 31 December
2021 and 31 December 2020 are recorded in provision for post-employment benefits
All plan assets have quoted prices in active markets with the exception of
insured annuities and other assets. The value of insured annuities is equal to
the value of the pension benefits covered by the annuities.
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
2022
£m
2.3
(37.1)
(52.6)
2021
£m
0.4
(28.1)
(74.0)
2020
£m
0.7
(37.9)
(85.9)
(34.7)
(122.1)
(34.7)
(136.4)
(33.0)
(156.1)
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.
The following table shows the split of the deficit at 31 December between
funded and unfunded pension plans.
2022
Surplus/
(deficit)
£m
2022
Present
value of
liabilities
£m
2021
Surplus/
(deficit)
£m
2021
Present
value of
liabilities
£m
2020
Surplus/
(deficit)
£m
2020
Present
value of
liabilities
£m
2.3
4.1
(155.5)
(208.5)
0.4
20.1
(231.9)
(237.9)
0.7
17.4
(262.7)
(271.8)
(29.1)
(67.9)
(45.1)
(87.6)
(38.6)
(84.3)
(4.1)
(25.4)
(6.4)
(25.7)
(5.8)
(24.1)
(26.8)
(457.3)
(31.0)
(583.1)
(26.3)
(642.9)
(41.2)
(41.2)
(48.2)
(48.2)
(55.3)
(55.3)
(23.5)
(23.5)
(28.9)
(28.9)
(47.3)
(47.3)
(30.6)
(30.6)
(28.3)
(28.3)
(27.2)
(27.2)
(95.3)
(95.3)
(105.4)
(105.4)
(129.8)
(129.8)
(122.1)
(552.6)
(136.4)
(688.5)
(156.1)
(772.7)
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
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
In accordance with IAS 19, plans that are wholly or partially funded are
considered funded plans.
(C) PENSION EXPENSE
The following tables show the breakdown of the pension expense between
amounts charged to operating profit and amounts charged to finance costs:
Service cost1
Administrative expenses
Charge to operating profit
Net interest expense on pension plans
Charge to profit before taxation for defined
benefit plans
2022
£m
10.4
3.1
13.5
2.2
2021
£m
12.6
2.3
14.9
1.8
2020
£m
12.0
1.9
13.9
2.9
15.7
16.7
16.8
Note
1
Includes current service cost, past service costs related to plan amendments and (gain)/loss on
settlements and curtailments
The following table shows the breakdown of amounts recognised in other
comprehensive income (OCI):
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 recognised in OCI
2022
£m
(127.6)
2021
£m
(29.3)
2020
£m
57.2
0.6
(3.6)
3.8
143.5
(0.1)
0.2
16.6
31.1
15.7
0.4
14.3
(54.0)
(4.4)
(0.6)
2.0
WPP ANNUAL REPORT 2022
193
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
2022
£m
688.5
10.4
15.5
(0.6)
(143.5)
0.1
(52.0)
40.4
(8.7)
2.5
552.6
2021
£m
772.7
12.6
12.0
3.6
(31.1)
(15.7)
(59.5)
(6.1)
(0.3)
0.3
688.5
2020
£m
767.5
12.0
17.0
(3.8)
54.0
4.4
(59.6)
(4.2)
(17.0)
2.4
772.7
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
2022
£m
552.1
13.3
(127.6)
24.0
(52.0)
31.5
(8.7)
(3.1)
1.0
430.5
(114.3)
2021
£m
616.6
10.2
(29.3)
16.7
(59.5)
(0.6)
(0.3)
(1.8)
0.1
552.1
(19.1)
2020
£m
608.5
14.1
57.2
20.3
(59.6)
(6.8)
(17.0)
(1.9)
1.8
616.6
71.3
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
25. 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 partially 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 (including cross currency
swaps) at 31 December 2022 were primarily made up of $1,667 million,
£1,094 million and €2,350 million (2021: $1,667 million, £1,094 million and
€2,600 million). The Group’s average gross debt during the course of 2022
was $1,667 million, £1,094 million and €2,404 million (2021: $1,934 million,
£1,094 million and €2,600 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, 100% of the
year-end US dollar debt is at fixed rates averaging 4.18% for an average period
of 60 months; 100% of the sterling debt is at a fixed rate of 2.97% for an
average period of 143 months; and 100% of the euro debt is at fixed rates
averaging 2.21% for an average period of 55 months.
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 impact of the Russian invasion of Ukraine and sanctions response from
governments has been considered. The Company modelled a range of
revenue less pass-through costs compared with the year ended 31 December
2022 and a number of mitigating cost actions that are available to the Company.
Considering the Group's bank covenant and liquidity headroom and cost
mitigation actions which could be implemented, the Company and the Group
would be able to operate with appropriate liquidity and within its banking
covenants and be able to meet its liabilities as they fall due with a decline in
revenue less pass-through costs up to 28% in 2023. The likelihood of such a
decline is considered remote as compared to Company expectations and
external benchmarks, including previously witnessed declines in times of
economic stress or external forces such as the pandemic. The modelling in this
extreme scenario includes cost mitigations of 70% of the decline in revenue
less pass-through costs and the suspension of the share buyback programme
and dividend. Further measures that were not included in the modelling,
should the Company face such an extreme scenario, include the reduction of
capital expenditure and acquisitions. Therefore, the Directors have concluded
that the Group will 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 and that there are no material uncertainties which give rise to
a significant going concern risk.
194
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
25. RISK MANAGEMENT POLICIES CONTINUED
At 31 December 2022, the Group has access to £6.6 billion of committed facilities with maturity dates spread over the years 2023 to 2046 as illustrated below:
2023
£m
2024
£m
2025
£m
2026
£m
2027+
£m
400.0
181.9
76.8
250.0
531.2
664.0
664.0
2,069.0
442.7
664.0
664.0
664.0
620.7
620.7
620.7
442.7
442.7
2,733.0
664.0
2,103.9
2,103.9
400.0
181.9
76.8
250.0
531.2
664.0
664.0
2,069.0
442.7
620.7
664.0
6,564.3
4,495.3
2,069.0
4,495.3
(1,985.8)
(30.2)
2,479.3
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 26.
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 loss allowances,
estimated by the Group’s management based on expected losses, 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 6% of total trade
receivables as at 31 December 2022 or 31 December 2021.
The credit risk on liquid funds and derivative financial instruments is limited
because the counterparties are high-rated (AAA) funds, banks with high credit
ratings assigned by international credit-rating agencies or banks that have
been financed by their government.
£ bonds £400m (2.875% 2046)
US bond $220m (5.625% 2043)
US bond $93m (5.125% 2042)
£ bonds £250m (3.75% 2032)
Eurobonds €600m (1.625% 2030)
Eurobonds €750m (2.375% 2027)
Eurobonds €750m (2.25% 2026)
Bank revolver ($2,500m 2026)
Eurobonds €500m (1.375% 2025)
US bond $750m (3.75% 2024)
Eurobonds €750m (3.0% 2023)
Total committed facilities available
Drawn down facilities at 31 December 2022
Undrawn committed credit facilities
Drawn down facilities at 31 December 2022
Net cash at 31 December 2022
Other adjustments
Adjusted net debt at 31 December 2022
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 adjusted 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 27 and 28.
WPP ANNUAL REPORT 2022
195
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
EFFECTS OF HEDGE ACCOUNTING ON THE FINANCIAL POSITION
AND PERFORMANCE
The effects of the hedging instruments on the Group's financial position and
performance are as follows:
(i) Cash flow hedges of foreign currency risk
Carrying amount of derivative hedging instruments1
Notional amount of hedged items
Notional amount of hedging instruments
Maturity date
Hedge ratio
Change in value of hedged item used to
determine hedge effectiveness
Change in value of hedging instrument used to
determine hedge effectiveness
Hedge ineffectiveness (revaluation and retranslation
of financial instruments)
Weighted average hedged rate for the year
(ii) Net investment hedges of foreign currency risk
Carrying amount of derivative hedging instruments1
Carrying amount of non-derivative hedging
instruments (bonds and bank loans)
Notional amount of hedging instruments
Notional amount of hedged net assets
Hedge ratio
Change in value of hedged item used to determine
hedge effectiveness
Change in value of hedging instrument used to
determine ineffectiveness
Hedge ineffectiveness (revaluation and retranslation
of financial instruments)
Weighted average hedged rate for the year (USD/
GBP)
2022
2021
(£6.6m)
(£48.0m)
€1,000.0m €1,000.0m
€1,000.0m €1,000.0m
2023-2025
2023-2025
1:1
1:1
£38.5m
(£38.0m)
(£41.4m)
£35.5m
£2.9m
3.2%
£2.5m
3.2%
(£46.9m)
£0.7m
(£879.5m)
(£879.5m)
$1,666.8m $1,666.8m
$1,666.8m $1,666.8m
1:1
1:1
(£141.5m)
£45.5m
£141.5m
(£45.5m)
−
−
1.2083
1.3532
Note
1 This amount is presented in trade and other receivables, and trade and other payables. The use
of derivatives may entail a derivative transaction qualifying for more than one hedge type
designation under IFRS 9. Therefore, the carrying amounts are grossed up by hedge type,
whereas they are presented at an instrument level in the balance sheet
26. 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. The Group designates foreign currency denominated
debt as hedging instruments against the exposure to movements in the spot
translation rates associated with the translation of its foreign operations.
The Group also designates certain cross currency swaps as hedging
instruments in cash flow hedges to manage its exposure to foreign exchange
risk and interest rate risk on its borrowings. Contracts due in November 2023
have receipts of €500.0 million and payments of $604.2 million. Contracts due
in March 2025 have receipts of €500.0 million and payments of £444.1 million.
Critical terms of hedging instruments and hedged items are transacted to
match on a 1:1 ratio by notional values. Hedge ineffectiveness can nonetheless
arise from inherent differences between derivatives and non-derivative
instruments and other market factors including credit, correlations, supply and
demand, and market volatilities. In addition, hedge ineffectiveness can arise as
a result of the currency basis being included in the hedge designation. Hedge
accounting is discontinued when a hedging relationship no longer qualifies for
hedge accounting.
At 31 December 2022, the fair value of the Group’s currency derivatives is
estimated to be a net liability of approximately £52.7 million (2021: £46.7 million).
These amounts are based on market values of equivalent instruments at the
balance sheet date, comprising £0.6 million (2021: £0.5 million) assets included
in trade and other receivables and £53.3 million (2021: £47.2 million) liabilities
included in trade and other payables. The fair value of currency derivatives is
based on the present value of contractual cash flows using foreign currency
and interest rate forward market curves at the balance sheet date. The amounts
taken to and deferred in equity during the year for currency derivatives that
are designated and effective hedges was a debit of £141.5 million (2021: credit
of £45.5 million) for net investment hedges and a credit of £38.5 million
(2021: debit of £38.0 million) for cash flow hedges.
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.
For cash flow hedge arrangements, amounts of a credit of £38.5 million (2021:
debit of £38.0 million) representing the effective portion of the gain or loss on
the hedging instrument were taken to equity, and reclassified to profit or loss
in the same period when the related foreign exchange impact on the
associated hedged item affected profit or loss.
CURRENCY RISK
A 10% weakening of sterling against the Group’s major currencies would
result in the following impacts on the income statement and equity, which
would arise on the retranslation of foreign currency denominated borrowings
and derivatives. A 10% strengthening of sterling would have an equal and
opposite effect.
US dollar
Euro
Impact on income statement
2021
£m
0.7
17.4
2022
£m
(179.6)
78.9
Impact on equity
2022
£m
34.6
(11.3)
2021
£m
64.0
(49.9)
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 2022 would
increase profit before tax by approximately £19.9 million (2021: £33.3 million).
A one percentage point 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. Note that in
practice, the Group has a cyclical cash profile throughout the year.
Changes in the fair value relating to the ineffective portion of the currency
derivatives that are designated hedges amounted to £2.7 million (2021: £2.5
million) which is included within revaluation and retranslation of financial
instruments in the income statement. At the balance sheet date, the total
nominal amount of outstanding forward foreign exchange contracts not
designated as hedges was £1,004.8 million (2021: £764.8 million). The Group
estimates the fair value of these contracts to be a net asset of £0.4 million
(2021: net liability of £3.9 million).
As at 31 December 2022, the Group had designated its $93 million bond,
$750 million bond, $220 million bond, and $604 million leg of its cross currency
swap, as the hedging instruments in a net investment hedge relationship. The
Group has designated its €500 million leg of its cross currency swap as the
hedging instrument in a cash flow hedge. Possible sources of ineffectiveness
include any impairments to the Group's net investment in US dollars. The
hedges are documented and are assessed for effectiveness on an ongoing
basis. Both hedge relationships were effective during the year.
These arrangements are designed to address significant exchange exposure
and are renewed on a revolving basis as required.
196
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
An analysis of the Group’s financial assets and liabilities by accounting classification is set out below:
2022
Other investments
Cash and short-term deposits
Bank overdrafts, bonds and bank 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)
Liabilities in respect of put options
2021
Other investments
Cash and short-term deposits
Bank overdrafts, bonds and bank 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)
Liabilities in respect of put options
Derivatives in
designated
hedge
relationships
£m
Held at fair
value through
profit or loss
£m
Held at
fair value
through other
comprehensive
income
£m
–
–
–
–
–
–
–
–
0.6
(53.3)
–
–
(52.7)
255.7
–
–
–
–
–
–
–
5.1
(4.7)
(160.1)
(342.1)
(246.1)
114.1
–
–
–
–
–
–
–
–
–
–
–
114.1
Derivatives in
designated
hedge
relationships
£m
Held at fair
value through
profit or loss
£m
Held at
fair value
through other
comprehensive
income
£m
–
–
–
–
–
–
–
–
0.5
(47.2)
–
–
(46.7)
228.3
–
–
–
–
–
–
–
2.5
(6.4)
(196.7)
(391.5)
(363.8)
90.0
–
–
–
–
–
–
–
–
–
–
–
90.0
Amortised
cost
£m
Carrying
value
£m
–
2,491.5
(1,169.0)
(3,801.8)
11,338.0
146.2
(11,283.0)
(0.9)
–
–
–
–
(2,279.0)
369.8
2,491.5
(1,169.0)
(3,801.8)
11,338.0
146.2
(11,283.0)
(0.9)
5.7
(58.0)
(160.1)
(342.1)
(2,463.7)
Amortised
cost
£m
Carrying
value
£m
–
3,882.9
(567.2)
(4,216.8)
10,448.0
84.5
(10,674.8)
(1.5)
–
–
–
–
(1,044.9)
318.3
3,882.9
(567.2)
(4,216.8)
10,448.0
84.5
(10,674.8)
(1.5)
3.0
(53.6)
(196.7)
(391.5)
(1,365.4)
WPP ANNUAL REPORT 2022
197
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26. FINANCIAL INSTRUMENTS CONTINUED
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 (ie as prices) or indirectly (ie 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).
2022
Derivatives in designated hedge
relationships
Derivative assets
Derivative liabilities
Held at fair value through profit or loss
Other investments
Derivative assets
Derivative liabilities
Payments due to vendors (earnout
agreements)
Liabilities in respect of put options
Held at fair value through other
comprehensive income
Other investments
2021
Derivatives in designated hedge
relationships
Derivative assets
Derivative liabilities
Held at fair value through profit or loss
Other investments
Derivative assets
Derivative liabilities
Payments due to vendors (earnout
agreements)
Liabilities in respect of put options
Held at fair value through other
comprehensive income
Other investments
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
–
–
0.6
(53.3)
–
–
0.6
(53.3)
0.4
–
–
–
–
10.9
–
5.1
(4.7)
255.3
–
–
255.7
5.1
(4.7)
–
–
–
(160.1)
(342.1)
(160.1)
(342.1)
103.2
114.1
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
–
–
0.5
(47.2)
–
–
0.5
(47.2)
0.4
–
–
–
–
27.9
–
2.5
(6.4)
227.9
–
–
228.3
2.5
(6.4)
–
–
–
(196.7)
(391.5)
(196.7)
(391.5)
62.1
90.0
There have been no transfers between these levels in the years presented.
Reconciliation of level 3 fair value measurements:
1 January 2021
Losses recognised in the income
statement
Losses recognised in other
comprehensive income
Exchange adjustments
Additions
Disposals
Cancellations
Settlements
31 December 2021
Gains recognised in the income
statement
Losses recognised in other
comprehensive income
Exchange adjustments
Additions
Disposals
Cancellations
Settlements
31 December 2022
Payments due
to vendors
(earnout
agreements)
(114.3)
Liabilities in
respect of
put options
£m
(110.7)
Other
investments
£m
366.6
(58.7)
(40.6)
(7.7)
–
1.0
(81.7)
–
–
57.0
(196.7)
–
1.3
(247.7)1
–
0.8
5.4
(391.5)
(42.8)
–
5.9
(32.0)
–
–
290.0
26.2
27.9
23.1
–
(14.3)
(46.7)
–
–
71.4
(160.1)
–
(39.9)
(5.0)
–
11.0
55.4
(342.1)
(5.3)
–
66.7
(16.0)
–
–
358.5
Note
1 During 2021, the Group merged Finsbury Glover Hering and Sard Verbinnen & Co to form a
leading global strategic communications firm. As a part of this transaction, certain management
acquired shares in the Company and a put option was granted which allows the equity partners
to require the Group to purchase these shares. This resulted in additions to liabilities in respect
of put options in the year of £219.6 million
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 available information from
outside sources. There have been no movements between level 3 and
other levels.
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 IFRS 9. 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.
As of 31 December 2022, 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
ranges from £nil to £226 million (2021: £nil to £124 million) and £nil to £695
million (2021: £nil to £595 million), respectively. The decrease in the maximum
potential undiscounted amount of future payments for all earnout agreements
is due to earnout arrangements that have completed and payments made on
active arrangements during the year, and exchange adjustments, partially
offset by earnout arrangements related to new acquisitions.
198
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
SHARE OPTIONS
WPP WORLDWIDE SHARE OWNERSHIP PROGRAMME (WWOP)
As at 31 December 2022, unexercised options over ordinary shares of 897,900
and unexercised options over ADRs of 148,225 have been granted under the
WPP Worldwide Share Ownership Programme as follows:
Number of ordinary
shares under option
696,975
3,625
196,675
625
Number of ADRs
under option
80,265
67,960
Exercise price
per share (£)
13.145
13.145
13.505
13.505
Exercise price
per ADR ($)
102.670
110.760
Exercise
dates
2017-2024
2018-2024
2016-2023
2017-2023
Exercise
dates
2017-2024
2016-2023
WPP SHARE OPTION PLAN 2015 (WSOP)
As at 31 December 2022, unexercised options over ordinary shares of
13,567,625 and unexercised options over ADRs of 1,546,280 have been granted
under the WPP Share Option Plan as follows:
Number of ordinary
shares under option
10,125
2,045,200
7,875
1,017,925
232,625
3,150,575
9,375
1,618,875
2,581,000
8,250
1,141,850
802,475
4,375
6,750
930,350
Number of ADRs
under option
226,670
366,420
136,260
189,600
294,270
131,040
111,770
90,250
Exercise price
per share (£)
7.344
7.344
8.372
8.372
8.684
8.684
9.600
9.600
11.065
13.085
13.085
15.150
15.150
17.055
17.055
Exercise price
per ADR ($)
48.950
52.600
53.140
62.590
73.780
88.260
105.490
115.940
Exercise
dates
2023-2027
2023-2030
2021-2025
2021-2028
2025-2029
2025-2032
2022-2026
2022-2029
2023-2030
2020-2024
2020-2027
2018-2025
2019-2025
2019-2023
2019-2026
Exercise
dates
2023-2030
2025-2032
2021-2028
2022-2029
2023-2030
2020-2027
2020-2026
2018-2025
At 31 December 2022, the weighted average growth rate in estimating future
financial performance was 12.4% (2021: 16.7%). The weighted average of the
risk-adjusted discount rate applied to these obligations at 31 December 2022
was 7.6% (2021: 6.5%).
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 £9.1 million
(2021: £6.0 million) and £6.9 million (2021: £6.6 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
£7.3 million (2021: £8.6 million) and £7.4 million (2021: £8.9 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 is 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 information from outside sources using the most
appropriate valuation technique, including all external funding rounds, revenue
and EBITDA multiples, the share of fund net asset value and discounted cash
flows. The sensitivity to changes in unobservable inputs is specific to each
individual investment. A change to one or more of these unobservable inputs
to reflect a reasonably possible alternative assumption would not result in
a significant change to the fair value.
During the year, Imagina stepped down from interests in associates to other
investments and this investment has been designated as fair value through
other comprehensive income. The fair value of Imagina as at 31 December
2022 was £61.6 million.
27. AUTHORISED AND ISSUED SHARE CAPITAL
Authorised
1 January 2021
31 December 2021
31 December 2022
Issued and fully paid
1 January 2021
Exercise of share options
Share cancellations
At 31 December 2021
Exercise of share options
Share cancellations
At 31 December 2022
Equity
ordinary
shares
Nominal
value
£m
1,750,000,000
1,750,000,000
1,750,000,000
1,296,080,242
534,800
(72,155,492)
1,224,459,550
125,700
(83,157,954)
1,141,427,296
175.0
175.0
175.0
129.6
–
(7.2)
122.4
–
(8.3)
114.1
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 the Company 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 130 to 156.
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 2022 was 1,211,974
(2021: 5,803,641) and £9.9 million (2021: £65.0 million) respectively. The number
and market value of ordinary shares held in treasury at 31 December 2022 was
70,489,953 (2021: 70,489,953) and £578.2 million (2021: £789.1 million)
respectively.
WPP ANNUAL REPORT 2022
199
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27. AUTHORISED AND ISSUED SHARE CAPITAL CONTINUED
The aggregate status of the WPP Share Option Plans during 2022 was as follows:
MOVEMENTS ON OPTIONS GRANTED (REPRESENTED IN ORDINARY SHARES)
WPP
WWOP
WSOP
WPP
WWOP
WSOP
WEIGHTED AVERAGE EXERCISE PRICE FOR OPTIONS OVER
Ordinary shares (£)
WPP
WWOP
WSOP
ADRs ($)
WWOP
WSOP
Ordinary shares (£)
WPP
WWOP
WSOP
ADRs ($)
WWOP
WSOP
1 January
2022
6,741
2,049,299
19,608,150
21,664,190
1 January
2021
6,741
2,499,674
17,940,725
20,447,140
Granted
–
–
5,224,050
5,224,050
Granted
–
–
5,155,800
5,155,800
Exercised
–
(2,575)
(123,125)
(125,700)
Forfeited
(6,741)
(407,699)
(3,410,050)
(3,824,490)
Exercised
–
(54,050)
(480,750)
(534,800)
Forfeited
–
(396,325)
(3,007,625)
(3,403,950)
Outstanding
31 December
2022
–
1,639,025
21,299,025
22,938,050
Outstanding
31 December
2021
6,741
2,049,299
19,608,150
21,664,190
Exercisable
31 December
2022
–
–
3,188,675
3,188,675
Exercisable
31 December
2021
6,741
184,124
14,287,525
14,478,390
1 January
2022
9.355
12.923
10.854
101.693
72.228
1 January
2021
9.355
12.631
10.596
98.509
70.363
Granted
Exercised
Forfeited
Outstanding
31 December
2022
Exercisable
31 December
2022
–
–
8.684
–
52.600
–
8.458
8.357
-
53.270
9.355
11.565
10.530
85.706
71.674
–
13.224
10.356
106.379
67.910
–
−
7.344
−
48.950
Granted
Exercised
Forfeited
Outstanding
31 December
2021
Exercisable
31 December
2021
–
–
11.065
–
73.780
–
7.304
8.372
49.313
53.248
–
11.803
10.116
89.225
66.257
9.355
12.923
10.854
101.693
72.228
9.355
8.458
9.322
67.490
61.479
OPTIONS OVER ORDINARY SHARES
Outstanding
OPTIONS OVER ADRs
Outstanding
Range of
exercise prices
£
7.344-17.055
Weighted
average
exercise price
£
10.534
Weighted
average
contractual life
Months
84
Range of
exercise prices
$
48.950-115.940
Weighted
average
exercise price
$
71.275
Weighted
average
contractual life
Months
82
As at 31 December 2022 there was £11.1 million (2021: £10.2 million) of total
unrecognised compensation costs related to share options. The cost is
expected to be recognised over a weighted average period of 20 months
(2021: 21 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
2022
177.0p
$11.48
2.92%
4.09%
48
32%
3.9%
2021
220.0p
$14.89
0.63%
1.16%
48
34%
3.4%
2020
128.0p
$8.95
-0.02%
0.31%
48
34%
4.2%
Options are issued at an exercise price equal to market value on the date
of grant.
The average share price of the Group for the year ended 31 December 2022
was £9.13 (2021: £9.64, 2020: £6.96) and the average ADR price for the same
period was $56.80 (2021: $66.44, 2020: $44.56). The average share price of the
Group for year ended 31 December 2022 approximates the weighted average
share price during the periods of exercise throughout the year.
Expected volatility is sourced from external market data and represents the
historical volatility in the Company’s share price over a period equivalent to
the expected option life.
Expected life is based on a review of historical exercise behaviour in the context
of the contractual terms of the options, as described in more detail below.
200
WPP ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
TERMS OF SHARE OPTION PLANS
In 2015, 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 Programme 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 programmes
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.
28. OTHER RESERVES
Other reserves comprise the following:
Balance at 1 January 2021
Reclassification between Hedging reserve and Translation reserve1
Re-presented balance at 1 January 2021
Foreign exchange differences on translation of foreign operations1
Gain on net investment hedges
Cash flow hedges:1
Fair value loss arising on hedging instruments
Less: gain reclassified to profit or loss
Share of other comprehensive income of associate undertakings
Share cancellations
Recognition/derecognition of liabilities in respect of put options
Share purchases – close period commitments
Balance at 31 December 2021
Foreign exchange differences on translation of foreign operations
Loss on net investment hedges
Cash flow hedges:
Fair value gain arising on hedging instruments
Less: loss reclassified to profit or loss
Share of other comprehensive income of associate undertakings
Share cancellations
Recognition/derecognition of liabilities in respect of put options
Share purchases – close period commitments
Balance at 31 December 2022
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 terms of these stock options are such that if,
after nine years and eight months, the performance conditions have not
been met, the stock option will vest automatically.
The Group grants stock options with a life of ten years, including the
vesting period.
Capital
redemption
reserve
£m
6.4
–
6.4
–
–
–
–
–
7.2
–
–
13.6
–
–
–
–
–
8.3
–
–
21.9
Equity
reserve
£m
(122.3)
–
(122.3)
–
–
–
–
–
–
(242.7)
(211.7)
(576.7)
–
–
–
–
–
–
101.7
211.7
(263.3)
Hedging
reserve
Translation
reserve
£m
(5.9)
5.9
–
–
–
(38.0)
38.0
–
–
–
–
–
–
–
38.5
(38.5)
–
–
–
–
–
£m
313.0
(5.9)
307.1
(132.7)
45.5
–
–
7.3
–
–
–
227.2
409.0
(141.5)
–
–
31.9
–
–
–
526.6
Total
other
reserves
£m
191.2
–
191.2
(132.7)
45.5
(38.0)
38.0
7.3
7.2
(242.7)
(211.7)
(335.9)
409.0
(141.5)
38.5
(38.5)
31.9
8.3
101.7
211.7
285.2
Note
1 Balances for the year ended 31 December 2021 and 31 December 2020 have been re-presented following a reclassification between the hedging reserve and translation reserve of £38.0 million and
£5.9 million, respectively
The capital redemption reserve relates entirely to share cancellations.
The equity reserve primarily relates to the recognition of liabilities in respect of put options agreements entered into by the Group as part of a business
combination that allows non-controlling shareholders to sell their shares to the Group in the future. During 2021, the Company entered into an agreement with a
third party to conduct share buybacks on its behalf in the close period commencing on 16 December 2021 and ending on 18 February 2022, in accordance with
UK listing rules. The commitment resulting from this agreement constituted a liability at 31 December 2021 and was also recognised as a movement in the equity
reserve in the year ended 31 December 2021. After the close period ended on 18 February 2022, the liability was settled and the amount in other reserves was
reclassified to retained earnings.
The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow hedges less amounts reclassified to profit or loss.
The translation reserve contains the accumulated gains/(losses) on currency translation of foreign operations arising on consolidation.
The translation reserve comprises:
Balance relating to continuing net investment hedges
Balance relating to discontinued net investment hedges
Balance related to foreign exchange differences on translation of foreign operations1
2022
£m
(143.8)
(85.0)
755.4
526.6
2021
£m
(2.3)
(85.0)
314.5
227.2
Note
1 Balances for the year ended 31 December 2021 and 31 December 2020 have been re-presented following a reclassification between the hedging reserve and translation reserve of £38.0 million and
£5.9 million, respectively
WPP ANNUAL REPORT 2022
201
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29. 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 and cash equivalents
Trade receivables due within one year
Other current assets
Total assets
Current liabilities
Trade and other payables due after one year
Deferred tax liabilities
Long-term lease 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
1.2
1.3
38.8
27.0
13.1
81.4
(49.4)
(10.3)
(0.1)
(0.1)
(0.1)
(60.0)
21.4
Fair
value
adjustments
£m
46.5
–
–
–
1.1
47.6
(5.3)
(27.3)
(12.4)
–
(1.2)
(46.2)
1.4
Fair
value to
Group
£m
47.7
1.3
38.8
27.0
14.2
129.0
(54.7)
(37.6)
(12.5)
(0.1)
(1.3)
(106.2)
22.8
(2.1)
(9.0)
249.3
261.0
218.3
42.7
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
£42.7 million.
Non-controlling interests in acquired companies are measured at the
non-controlling interests’ proportionate share of the acquiree’s identifiable
net assets. There continues to be no subsidiaries with non-controlling interests
that are individually material to the Group.
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 2022 and the date the financial statements have been
authorised for issue.
30. RELATED PARTY TRANSACTIONS
The Group enters into transactions with its associate undertakings. The Group
has continuing transactions with Kantar, including sales, purchases, the provision
of IT services, subleases and property related items.
In the year ended 31 December 2022, revenue of £88.3 million
(2021: £117.2 million) was reported in relation to Compas, an associate in
the USA, and revenue of £42.7 million (2021: £11.3 million) was reported in
relation to Kantar. All other transactions in the years presented were immaterial.
The following amounts were outstanding at 31 December:
Amounts owed by related parties
Kantar
Other
Amounts owed to related parties
Kantar
Other
2022
£m
26.1
62.4
88.5
(10.5)
(65.2)
(75.7)
2021
£m
30.3
45.7
76.0
(6.2)
(51.4)
(57.6)
31. EVENTS AFTER THE REPORTING PERIOD
There are no material events after the reporting period that require an
adjustment or a disclosure within the financial statements.
202
WPP ANNUAL REPORT 2022
COMPANY PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2022
Turnover
Operating income
Operating profit
Dividend income
Interest receivable and similar income
Interest payable and similar charges
Profit/(loss) on ordinary activities before taxation
Taxation on profit/(loss) on ordinary activities
Profit/(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.
FINANCIAL STATEMENTS
Notes
33
34
2022
£m
−
17.0
17.0
2,052.6
8.0
(163.1)
1,914.5
−
1,914.5
2021
£m
−
1.8
1.8
−
8.1
(91.9)
(82.0)
−
(82.0)
There are no recognised gains or losses in either year, other than those shown above, and accordingly no statement of comprehensive income has been prepared.
WPP ANNUAL REPORT 2022
203
FINANCIAL STATEMENTS
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2022
Fixed assets
Investments
Current assets
Debtors due within one year
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
Other reserves
Capital redemption reserve
Own shares
Profit and loss account
Equity shareholders’ funds
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 23 March 2023.
Mark Read
Chief Executive Officer
John Rogers
Chief Financial Officer
Registered Company Number: 111714
Notes
2022
£m
2021
£m
35
36
37
38
39
13,525.2
13,525.2
13,403.1
13,403.1
363.0
363.0
1,992.5
1,992.5
(7,891.3)
(7,528.3)
5,996.9
(395.9)
5,601.0
(10,845.8)
(8,853.3)
4,549.8
(25.4)
4,524.4
114.1
575.9
(10.0)
21.9
(1,041.6)
5,940.7
5,601.0
122.4
574.7
(221.7)
13.6
(1,041.6)
5,077.0
4,524.4
204
WPP ANNUAL REPORT 2022
FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Balance at 1 January 2021
Ordinary shares issued
Share cancellations
Treasury share allocations
Loss for the year
Dividends paid
Non-cash share-based incentive plans (including share options)
Share purchases – close period commitments
Balance at 31 December 2021
Ordinary shares issued
Share cancellations
Treasury share allocations
Income for the year
Dividends paid
Non-cash share-based incentive plans (including share options)
Reversal of share purchases – close period commitments
Balance at 31 December 2022
Notes
The accompanying notes form an integral part of this statement of changes in equity.
1 Other reserves are analysed in note 39
Ordinary share
capital
£m
129.6
−
(7.2)
−
−
−
−
−
122.4
−
(8.3)
−
−
−
−
−
114.1
Share
premium
£m
570.3
4.4
−
−
−
−
−
−
574.7
1.2
−
−
−
−
−
−
575.9
Other
reserves1
£m
(10.0)
−
−
−
−
−
−
(211.7)
(221.7)
−
−
−
−
−
−
211.7
(10.0)
Capital
redemption
reserve
£m
6.4
−
7.2
−
−
−
−
−
13.6
−
8.3
−
−
−
−
−
21.9
Own
shares
£m
(1,045.3)
−
−
3.7
−
−
−
−
(1,041.6)
−
−
−
−
−
−
−
(1,041.6)
Profit and
loss account
£m
6,107.1
−
(729.3)
(3.7)
(82.0)
(314.7)
99.6
−
5,077.0
−
(807.4)
−
1,914.5
(365.4)
122.0
−
5,940.7
Total
equity
shareholders’
funds
£m
5,758.1
4.4
(729.3)
−
(82.0)
(314.7)
99.6
(211.7)
4,524.4
1.2
(807.4)
−
1,914.5
(365.4)
122.0
211.7
5,601.0
WPP ANNUAL REPORT 2022
205
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
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.
(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.
(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.
These financial statements were prepared in accordance with Financial
Reporting Standard 101 Reduced Disclosure Framework (FRS 101). 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 Strategic Report on page 90.
(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.
Investments are tested for impairment annually. At 31 December 2022, the
recoverable amount was assessed based on the Group's market value and
exceeded the carrying value at that 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 Company 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 Payments 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
WPP plc, the Company has recognised an addition to fixed asset investments
of the aggregate amount of these contributions of £122.0 million in 2022
(2021: £99.6 million), with a credit to equity for the same amount.
(F) EXPECTED CREDIT LOSSES
Amounts owed by subsidiaries are recorded at amortised cost and are
reduced by expected credit losses. The general approach has been applied
and a loss allowance for 12-month expected credit losses is recognised. Under
IFRS 9 Financial Instruments, the expected credit losses are measured as the
difference between the asset’s gross carrying amount and the present value
of estimated future cash flows discounted at the financial asset’s original
effective interest rate.
The Group considers that the credit risk increased significantly since initial
recognition when the credit rate changes, the debtor has significant financial
difficulty or if there was a breach of contract. For balances that are beyond
180 days overdue it is presumed to be an indicator of a significant increase
in credit risk.
206
WPP ANNUAL REPORT 2022
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
33. INTEREST PAYABLE AND SIMILAR CHARGES
37. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
The following are included in creditors falling due within one year:
Bank and other interest payable
Interest payable to subsidiary undertakings
2022
£m
−
163.1
163.1
2021
£m
1.4
90.5
91.9
34. TAXATION ON LOSS ON ORDINARY ACTIVITIES
The tax assessed for the year differs from that resulting from applying the
rate of corporation tax in the UK of 19% (2021: 19%). The differences are
explained below:
Profit/(loss) on ordinary activities before tax
Tax charge/(credit) at the corporation tax rate of
19.0% thereon
Factors affecting tax charge for the year
Losses (claimed)/surrendered for nil consideration
Items that are (not taxable)/not deductible
Current tax charge for the year
2022
£m
1,914.5
363.8
26.2
(390.0)
−
2021
£m
(82.0)
(15.6)
15.6
−
−
Bank overdrafts
Amounts due to subsidiary undertakings
Share purchases – close period commitments
Other creditors and accruals
2022
£m
−
7,887.5
−
3.8
7,891.3
2021
£m
−
10,633.0
211.7
1.1
10,845.8
During 2021 the Group converted the majority of its cash pool arrangements
to zero-balancing cash pools, whereby the cash and overdrafts within these
cash pools are physically swept to the header accounts on a daily basis. At
31 December 2022, there are no gross cash or overdraft balances reported by
the Company as these now form amounts owed by/to subsidiary undertakings.
38. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN
ONE YEAR
The following are included in creditors falling due after more than one year:
35. FIXED ASSET INVESTMENTS
The following are included in the net book value of fixed asset investments:
Amounts due to subsidiary undertakings
Total borrowings are repayable as follows:
2022
£m
395.9
2021
£m
25.4
2022
£m
7,891.3
−
395.9
8,287.2
2021
£m
10,845.8
25.4
−
10,871.2
Within one year
Between one and five years
Over five years
39. EQUITY SHAREHOLDERS’ FUNDS
Other reserves at 31 December 2022 comprise a translation reserve of
£10.0 million (2021: £10.0 million) and an equity reserve of £nil
(2021: £211.7 million).
At 31 December 2022 the Company's distributable reserves amounted to
£5,465.0 million (2021: £4,388.4 million) which, under the Companies (Jersey)
Law 1991, is total reserves excluding share capital and capital redemption
reserve. Further details of the Company’s share capital are shown in note 27.
Cost
1 January 2021
Additions
31 December 2021
Additions
31 December 2022
Accumulated impairment losses and write-downs
1 January 2021
Impairment losses for the year
31 December 2021
Impairment gains for the year
31 December 2022
Net book value
31 December 2022
31 December 2021
1 January 2021
Subsidiary
undertakings
£m
13,305.9
99.6
13,405.5
122.0
13,527.5
(2.3)
(0.1)
(2.4)
0.1
(2.3)
13,525.2
13,403.1
13,303.6
Fixed asset investments primarily represent 100% of the issued share capital
of WPP Emerald Limited, a company incorporated in Ireland. Fixed asset
investments were purchased in a share-for-share exchange.
36. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
The following are included in debtors falling due within one year:
Amounts owed by subsidiary undertakings
Other debtors
2022
£m
362.8
0.2
363.0
2021
£m
1,992.3
0.2
1,992.5
The amounts owed by subsidiary undertakings are repayable on demand.
There was no loss allowance on debtors in the year ended 31 December 2022
(2021: £nil), as these are amounts due from other entities within the Group. Our
historical experience of collecting these balances supported by the level of
default confirms that the credit risk is low.
WPP ANNUAL REPORT 2022
207
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WPP PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
1. OPINION
In our opinion:
– The financial statements of WPP plc (the ‘parent company’) and its
subsidiaries (the ‘group’) give a true and fair view of the state of the group’s
and of the parent company’s affairs as at 31 December 2022 and of the
group’s profit and of the parent company’s loss for the year then ended
– The group financial statements have been properly prepared in accordance
with International Financial Reporting Standards (IFRSs) as issued by the
International Accounting Standards Board (IASB)
– The parent company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting Practice,
including Financial Reporting Standard 101 “Reduced Disclosure
Framework”
– The financial statements have been properly prepared in accordance with
Companies (Jersey) Law, 1991
We have audited the financial statements which comprise:
– The accounting policies
– The consolidated income statement
– The consolidated statement of comprehensive income
– The consolidated cash flow statement
– The consolidated balance sheet
– The consolidated statement of changes in equity
– The related notes 1 to 31 of the consolidated financial statements
– The parent company profit and loss account, balance sheet and statement
of changes in equity
– The related notes 32 to 39 of the parent company financial statements
The financial reporting framework that has been applied in the preparation
of the group financial statements is applicable law, and IFRSs as issued by
the IASB. 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, including FRS 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted Accounting Practice).
2. BASIS FOR OPINION
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the auditor’s responsibilities for the audit
of the financial statements section of our report.
We are independent of the group and the parent company in accordance
with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’)
Ethical Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services provided to the group and parent company for the year
are disclosed in note 3 to the financial statements. We confirm that we have
not provided any non-audit services prohibited by the FRC’s Ethical Standard
to the group or the parent company.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
3. SUMMARY OF OUR AUDIT APPROACH
Key audit matter
The key audit matter we identified in the current year was valuation of goodwill.
Materiality
Scoping
We considered a number of metrics when determining group materiality, including: pre-tax profit; revenue; and headline EBITDA. Our
selected materiality represents 5.2% of pre-tax profit (2021: 5.8%), 0.4% of revenue (2021: 0.4%) and 2.6% of Headline EBITDA (2021: 2.7%).
Those entities subject to audit represented 68% of the group’s consolidated revenue (2021: 70% of revenue) 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.
Significant changes
in our approach
There have been no significant changes in our approach in the current year.
208
WPP ANNUAL REPORT 2022
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC
FINANCIAL STATEMENTS
4. CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the directors’ use
of the going concern basis of accounting in the preparation of the financial
statements is appropriate.
Our evaluation of the directors’ assessment of the group’s and parent
company’s ability to continue to adopt the going concern basis of accounting
included:
5. KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement,
were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team.
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.
– Testing controls over management’s going concern model, including the
review of the inputs and assumptions used in the model
– Identifying the key assumptions, including those relating to the current
macroeconomic uncertainty, and evaluating the appropriateness of these
assumptions and their consistency with management’s presentations to
the Board and Audit Committee
– Comparing the forecasts within the going concern model to recent
historical financial information
– Testing the mechanical accuracy of the going concern model
– Testing the covenant compliance calculations and headroom thereof,
both under the group’s forecasts and in severe downside scenarios
– Confirming the existence and availability of financing facilities
– Evaluating the appropriateness of management’s sensitivity analysis
modelled under their most severe scenario, including an evaluation of
the mitigating actions available to management
– Evaluating the disclosures on going concern
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or collectively,
may cast significant doubt on the group's and parent company’s ability to
continue as a going concern for a period of at least twelve months from when
the financial statements are authorised for issue.
In relation to the reporting on how the group has applied the UK Corporate
Governance Code, we have nothing material to add or draw attention to in
relation to the directors’ statement in the financial statements about whether
the directors considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the directors with respect
to going concern are described in the relevant sections of this report.
WPP ANNUAL REPORT 2022
209
FINANCIAL STATEMENTS INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC
5.1. VALUATION OF GOODWILL
Key audit matter description
How the scope of our audit responded to the key audit matter
Key observations
VALUATION OF GOODWILL
(Refer to the Accounting Policies and Note 14 (Intangible assets) to the financial statements, and the Audit Committee Report)
Based on our
procedures,
we determined
management’s
assumptions used
in the valuation of
goodwill to be
reasonable.
The group’s assessment of goodwill for impairment involves
the comparison of the recoverable amount of goodwill to its
carrying value at the measurement date. The recoverable
amount is calculated as the higher of fair value less costs of
disposal and value in use. The group used the value in use
approach, which uses a discounted cash flow model to estimate
the recoverable amount of each cash generating unit or group
of cash generating units and requires management to make
significant estimates and assumptions related to discount rates,
short-term cash flow forecasts and long-term growth rates.
The net book value of goodwill was £8,453 million as at
31 December 2022 (31 December 2021: £7,612 million).
We identified goodwill valuation as a key audit matter because
of the significant judgements made by management, which
consider future impacts of the current economic uncertainty, to
estimate the value in use of goodwill and the increased auditor
judgement and level of audit effort required to obtain evidence
to test these significant judgements, including the use of
specialists. Estimates of future performance and market
conditions used to arrive at the net present value of future cash
flows at the relevant assessment date, which is used within the
goodwill impairment analysis, are subjective in nature with
increased uncertainty due to inflationary pressures, rising
interest rates and global economic uncertainty. Through our risk
assessment procedures, we identified those inputs that were the
most sensitive in determining the value in use, which enabled us
to design our audit procedures to focus on those estimates that
are either complex, including the discount rate calculation, or
subjective in nature, including the short-term forecasts and
long-term growth rates.
Our audit procedures focused on challenging and evaluating
the discount rates, short-term forecasts and long-term growth
rates used in the discounted cash flow model to determine the
value in use and included the following audit procedures,
among others:
– We tested the effectiveness of controls over management’s
estimations of the short-term cash flow forecasts, discount
rates and long-term growth rates used to determine the value
in use
– We assessed the appropriateness of forecasted revenue and
operating margin growth rates by performing procedures
such as comparing to external economic data, including
peers, market data and wider economic forecasts, specifically
assessing the impact of inflationary pressures and rising
interest rates on the forecasts
– We evaluated management’s ability to accurately forecast
future revenues and growth rates by comparing actual results
to management’s historical forecasts
– With the assistance of our valuation specialists, we assessed
the mechanical accuracy of the impairment model and the
methodology applied by management for consistency with
the requirements of IAS 36
– With the assistance of our valuation specialists, we evaluated
the appropriateness of the discount rates and long-term
growth rates used by:
– Testing the source information underlying the
determination of the discount rates and the mathematical
accuracy of the calculation
– Assessing the methodology applied in the discount rate
calculation against market practice valuation techniques
– Assessing the long-term growth rates against independent
market data and an independently derived weighted
average rate for each country, based on their GDP forecasts
– We evaluated the group’s disclosures on goodwill against the
requirements of IFRS
210
WPP ANNUAL REPORT 2022
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC
FINANCIAL STATEMENTS
6. OUR APPLICATION OF MATERIALITY
6.1. 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.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group
financial statements
Parent Company
financial statements
Materiality
£60 million (2021: £55 million)
£30 million (2021: £27.5 million)
Basis for determining
materiality
We have considered a number of metrics when determining
group materiality, including: pre-tax profit; revenue; and headline
EBITDA. Our selected materiality figure represents 5.2% of pre-tax
profit, 0.4% of revenue and 2.7% of Headline EBITDA.1
The basis for materiality is shareholder's equity. The materiality
used is less than 1% of shareholders’ equity (2021: less than 1% of
shareholders’ equity), and is capped at 50% of group materiality
(2021: 50%).
In 2021, we determined materiality to be £55 million, as 5.8% of
pre-tax profit excluding impairment of goodwill and investments
in associates, and retranslation of financial instruments, 0.4% of
revenue and 2.7% of Headline EBITDA.
Rationale
for the benchmark
applied
We have determined that the critical benchmark for the Group
was pre-tax profit because we consider this measure to be the
primary focus of users of the financial statements. We also
considered revenue and headline EBITDA as relevant metrics
to the users of the financial statements.
1 The calculation of headline EBITDA is set out on page 216
Due to the nature of the company as a parent entity holding
company, we consider shareholders’ equity to be the most
appropriate basis for materiality.
Group materiality
£60m
Component materiality
range £2.5m-£30m
Audit Committee
reporting threshold
£2.5m
PBT
£1,160m
PBT
Group materiality
WPP ANNUAL REPORT 2022
211
FINANCIAL STATEMENTS INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC
6.2. PERFORMANCE MATERIALITY
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements
exceed the materiality for the financial statements as a whole.
Performance
materiality
Basis and rationale
for determining
performance
materiality
Group
financial statements
Parent Company
financial statements
65% (2021: 60%) of group materiality
65% (2021: 60%) of parent company materiality
In determining performance materiality, we considered factors
including:
The parent company performance materiality has been set at 60%
of parent company materiality, to align with the group performance
materiality threshold used.
– Our risk assessment and assessment of the Group’s overall
control environment, financial processes and systems in the
majority of areas of the audit
– Our past experience of the audit, including the restatements
required during 2020 for the 2018 and 2019 financial statements
The increase in the performance materiality percentage in the
current period reflects the prior-year remediation of previously
identified material weaknesses.
6.3. ERROR REPORTING THRESHOLD
We agreed with the Audit Committee that we would report to the Committee
all audit differences in excess of £2.5 million (2021: £2.0 million), as well as
differences below that threshold that, in our view, warranted reporting on
qualitative grounds. We also report to the Audit Committee on disclosure
matters that we identified when assessing the overall presentation of the
financial statements.
7. AN OVERVIEW OF THE SCOPE OF OUR AUDIT
7.1. IDENTIFICATION AND SCOPING OF COMPONENTS
As a result of the disaggregated structure and diversity of the Group, a
significant portion of our audit planning effort was ensuring that the scope of
work is appropriate in addressing the 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
ensure that the components selected for audit 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 subjected to audit represented 68% of the group’s consolidated
revenue (2021: 70% revenue) achieved through a combination of direct testing
and specified audit procedures, including substantive analytical review
procedures, performed by the group auditor and component auditors across
the world. Component teams performed specified audit procedures on 64
operating units (2021: 62), defined as business locations operating under a
common control environment. Our audit work on components is executed at
levels of materiality appropriate for such components, many of which are local
statutory materiality levels which in all instances are no higher than 50% of
group performance 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, we tested the consolidation process and performed analytical
procedures at both the group level and component level for components
deemed to be out-of-scope.
32%
Revenue
68%
Full audit scope
Analytical procedures at group level
212
WPP ANNUAL REPORT 2022
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC
FINANCIAL STATEMENTS
7.2. OUR CONSIDERATION OF THE CONTROL ENVIRONMENT
WPP plc is reliant on the effectiveness of a number of IT applications and
controls to ensure that financial transactions are processed and recorded
completely and accurately. As the group files its financial statements in the US,
the group is required to comply with the US Sarbanes Oxley Act. Accordingly,
we perform testing of internal controls, including the general IT controls, over
financial reporting in all areas of the audit.
In years when we elect to not visit a component, either physically or
virtually, we:
– Include the component audit partner in our team planning meeting
– Discuss the results of the Group-led risk assessment
– Review the documentation of the findings from their work and discuss with
them as needed
7.3. OUR CONSIDERATION OF CLIMATE-RELATED RISKS
The group identified climate-related risks such as the increased frequency of
extreme weather and climate-related natural disasters, increased reputational
risk associated with working on environmentally detrimental client briefs,
and/or misrepresenting environmental claims and changes in regulation and
reporting standards which could result in climate-related litigation and claims.
The risks are disclosed within the Task Force on Climate-Related Financial
Disclosures (“TCFD”) statement on pages 220 to 226 of the Annual Report.
These are designed so that the Senior Statutory Auditor or a senior member
of the group audit team can have oversight of the work of our component
auditors on a regular basis. In addition, we assess the competence of each
of our component auditors.
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 ongoing basis.
Our risk assessment procedures in relation to the impact of climate-related
risks involved obtaining an understanding of management’s relevant processes
and controls. We further reviewed management’s paper assessing these risks.
We evaluated these risks to assess whether they were complete and
consistent with our understanding of the entity and our wider risk assessment
procedures.
Our procedures to address our identified risks involved considering the impact
of the risks on the financial statements overall, including in the application of
individual accounting standards. Such considerations included the impact of
the Group’s net zero carbon emission commitments, and changes in regulation
and reporting standards. We further reconciled the disclosures made to
underlying supporting evidence. With the assistance of internal specialists,
we assessed the TCFD recommended disclosures within the Annual Report
and considered whether they are materially consistent with the financial
statements and our knowledge obtained in the audit.
7.4. WORKING WITH OTHER AUDITORS
The group audit team exercises its oversight of component auditors using a
carefully designed programme, which considers a variety of factors including
the size and complexity of the entity. The group audit team directs, supervises
and evaluates the audit work performed by component audit teams by:
– Speaking regularly with teams about the status of their work
– Reviewing reporting and underlying workpapers where determined to
be necessary
– Attending key meetings including close meetings
In order to drive consistency and comparability over the audit work performed
by our component auditors, the group engagement team directly leads the
risk assessment process in all areas of the audit. This process involves
workshops with our local audit teams to enhance and confirm the group teams
understanding of local processes and risks. After consideration of how the
nature and extent of those operating unit level risks contribute to risk of
material misstatement at a group level the group engagement team, in
consultation with the local team, confirms the specific audit procedures
that component auditors are instructed to perform.
8. OTHER INFORMATION
The other information comprises the information included in the annual report,
other than the financial statements and our auditor’s report thereon. The
directors are responsible for the other information contained within the annual
report.
Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise to a material misstatement
in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
9. RESPONSIBILITIES OF DIRECTORS
As explained more fully in the statement of directors’ responsibilities, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group’s and the parent company’s ability to continue as a going
concern, disclosing as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have
no realistic alternative but to do so.
WPP ANNUAL REPORT 2022
213
FINANCIAL STATEMENTS INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC
10. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
11. EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE
OF DETECTING IRREGULARITIES, INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
11.1. IDENTIFYING AND ASSESSING POTENTIAL RISKS RELATED TO
IRREGULARITIES
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud and non-compliance with laws and regulations,
we considered the following:
– The nature of the industry and sector, control environment and business
performance including the design of the group’s remuneration policies, key
drivers for directors’ remuneration, bonus levels and performance targets,
including consideration of the visibility of management incentive schemes
and how they could influence local, regional and global management
behaviour
– The group’s own assessment of the risks that irregularities may occur either
as a result of fraud or error that was approved by the board
– Results of our enquiries of management, the group’s general counsel,
internal audit and the audit committee about their own identification
and assessment of the risks of irregularities, including consideration of the
nature and quantum of matters raised to the group’s Business Integrity team
– Any matters we identified having obtained and reviewed the group’s
documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and
whether they were aware of any instances of non-compliance
– detecting and responding to the risks of fraud and whether they have
knowledge of any actual, suspected or alleged fraud
– the internal controls established to mitigate risks of fraud or non-
compliance with laws and regulations
– The matters discussed among the audit engagement team including
significant component audit teams and relevant internal specialists,
including fraud, impairment, tax, valuations, pensions and IT specialists
regarding how and where fraud might occur in the financial statements
and any potential indicators of fraud
As a result of these procedures, we considered the opportunities and
incentives that may exist within the organisation for fraud. In common with all
audits under ISAs (UK), we are also required to perform specific procedures
to respond to the risk of management override, including adjustments made
in the financial reporting process outside of local operational reporting.
We also obtained an understanding of the legal and regulatory frameworks
that the group operates in, focusing on provisions of those laws and
regulations that had a direct effect on the determination of material amounts
and disclosures in the financial statements. The key laws and regulations we
considered in this context included the Securities and Exchange Commission
rules, Securities Law in the UK and US, the UK Listing Rules, Companies (Jersey)
Law, 1991 and tax legislation in the group’s various jurisdictions.
In addition, we considered provisions of other laws and regulations that do not
have a direct effect on the financial statements but compliance with which
may be fundamental to the group’s ability to operate or to avoid a material
penalty. These included the US Foreign Corrupt Practices Act and the UK
Bribery Act.
11.2. AUDIT RESPONSE TO RISKS IDENTIFIED
As a result of performing the above, we did not identify any key audit matters
related to the potential risk of fraud or non-compliance with laws and
regulations.
Our procedures to respond to risks identified included the following:
– Reviewing the financial statement disclosures and testing to supporting
documentation to assess compliance with provisions of relevant laws and
regulations described as having a direct effect on the financial statements
– Enquiring of management, the audit committee and external legal counsel
concerning actual and potential litigation and claims
– Performing analytical procedures to identify any unusual or unexpected
relationships that may indicate risks of material misstatement due to fraud
– Reading minutes of meetings of those charged with governance, reviewing
internal audit reports and reviewing correspondence with relevant tax
authorities
– In addressing the risk of fraud through management override of controls,
testing the appropriateness of journal entries and other adjustments,
including those made outside of local operational reporting; assessing
whether the judgements made in making accounting estimates are
indicative of a potential bias; and evaluating the business rationale of any
significant transactions that are unusual or outside the normal course
of business
We also communicated relevant identified laws and regulations and potential
fraud risks to all engagement team members including internal specialists and
significant component audit teams, and remained alert to any indications of
fraud or non-compliance with laws and regulations throughout the audit.
214
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC
FINANCIAL STATEMENTS
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
12. OPINIONS 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 Companies Act 2006 as if that
Act had applied to the group.
In our opinion, based on the work undertaken in the course of the audit:
– The information given in the strategic report and the corporate governance
report for the financial year for which the financial statements are prepared
is consistent with the financial statements
– The strategic report and the corporate governance report have been
prepared in accordance with applicable legal requirements
In the light of the knowledge and understanding of the group and the parent
company and their environment obtained in the course of the audit, we have
not identified any material misstatements in the strategic report or the
directors’ report.
13. CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the directors' statement in relation to
going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the group’s compliance with the provisions of the UK
Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that
each of the following elements of the Corporate Governance Statement is
materially consistent with the financial statements and our knowledge
obtained during the audit:
– The directors’ statement with regards to the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified set out on page 90
– The directors’ explanation as to its assessment of the group’s prospects, the
period this assessment covers and why the period is appropriate set out on
page 90
– The directors' statement on fair, balanced and understandable set out on
page 157
– The board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks set out on pages 91 to 97
– The section of the annual report that describes the review of effectiveness
of risk management and internal control systems set out on page 124
– The section describing the work of the audit committee set out on pages
122 to 127
14. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
14.1. 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 parent company financial statements are not in agreement with the
accounting records and returns
We have nothing to report in respect of these matters.
14.2 DIRECTORS’ REMUNERATION
Under our engagement letter we are also required to report if in our opinion
certain disclosures of directors’ remuneration 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 in respect of these matters.
15. OTHER MATTERS WHICH WE ARE REQUIRED TO ADDRESS
15.1. AUDITOR TENURE
Following the recommendation of the audit committee, we were appointed
by the company at the Annual General Meeting on 20 May 2002 to audit the
financial statements for the year ending 31 December 2002 and subsequent
financial periods. The period of total uninterrupted engagement including
previous renewals and reappointments of the firm is 21 years, covering the
years ending 31 December 2002 to 31 December 2022.
15.2. CONSISTENCY OF THE AUDIT REPORT WITH THE ADDITIONAL REPORT
TO THE AUDIT COMMITTEE
Our audit opinion is consistent with the additional report to the audit
committee we are required to provide in accordance with ISAs (UK).
16. USE OF OUR REPORT
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 those 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.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and
Transparency Rule (DTR) 4.1.14R, these financial statements will form part of the
European Single Electronic Format (ESEF) prepared Annual Financial Report
filed on the National Storage Mechanism of the UK FCA in accordance with the
ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report provides
no assurance over whether the annual financial report has been prepared
using the single electronic format specified in the ESEF RTS.
James Bates, FCA
Senior statutory auditor
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
23 March 2023
WPP ANNUAL REPORT 2022
215
FINANCIAL STATEMENTS
RECONCILIATION TO NON-GAAP MEASURES OF PERFORMANCE
The Group presents alternative performance measures, including headline
operating profit, headline operating profit margin, headline profit before
interest and tax, headline profit before tax, headline earnings, headline EPS,
headline EBITDA, revenue less pass-through costs, adjusted net debt and
adjusted free cash flow. They are used by management for internal
performance analyses; the presentation of these measures facilitates
comparability with other companies, although management’s measures may
not be calculated in the same way as similarly titled measures reported by
other companies; and these measures are useful in connection with
discussions with the investment community.
In the calculation of headline profit measures, judgement is required by
management in determining which revenues and costs are considered to be
significant, non-recurring or volatile items that are to be excluded.
The exclusion of certain adjusting items may result in headline earnings being
materially higher or lower than reported earnings, for example when significant
impairments or restructuring charges are excluded but the related benefits are
included headline earnings will be higher. Headline measures should not be
considered in isolation as they provide additional information to aid the
understanding of the Group’s financial performance.
Reconciliation of revenue to revenue less pass-through costs:
Revenue
Media pass-through costs
Other pass-through costs
Revenue less pass-through costs
2022
£m
14,428.7
(1,905.7)
(723.7)
11,799.3
2021
£m
12,801.1
(1,865.3)
(538.6)
10,397.2
2020
£m
12,002.8
(1,555.2)
(685.6)
9,762.0
Pass-through costs comprise fees paid to external suppliers when they are
engaged to perform part or all of a specific project and are charged directly
to clients. This includes the cost of media where the Group is buying digital
media for its own account on a transparent opt-in basis and, as a result, the
subsequent media pass-through costs have to be accounted for as revenue,
as well as billings. Therefore, management considers that revenue less
pass-through costs gives a helpful reflection of top-line growth.
Reconciliation of profit/(loss) before taxation to headline operating profit:
Profit/(loss) before taxation
Finance and investment income
Finance costs
Revaluation and retranslation of financial
instruments
Profit/(loss) before interest and taxation
Earnings/(loss) from associates – after interest
and tax
Operating profit/(loss)
Operating profit/(loss) margin %
Goodwill impairment
Amortisation and impairment of acquired
intangible assets
Investment and other impairment charges/
(reversals)
Intangible asset impairment
Restructuring and transformation costs
Restructuring costs in relation to Covid-19
Property related costs
Losses/(gains) on disposal of investments
and subsidiaries
Gains on remeasurement of equity interests
arising from a change in scope of ownership
Litigation settlement
Headline operating profit
Headline operating profit margin %
2022
£m
1,159.8
145.4
(359.4)
2021
£m
950.8
69.4
(283.6)
2020
£m
(2,790.6)
82.7
(312.0)
76.0
1,297.8
(87.8)
1,252.8
(147.2)
(2,414.1)
60.4
1,358.2
11.5%
37.9
(23.8)
1,229.0
11.8%
1.8
136.0
(2,278.1)
(23.3%)
2,822.9
62.1
97.8
89.1
48.0
29.0
203.7
15.1
18.0
(42.4)
–
145.5
29.9
–
296.2
–
80.7
232.5
–
36.3
10.6
(7.8)
(66.5)
−
1,741.8
14.8%
–
21.3
1,493.5
14.4%
(0.6)
25.6
1,260.5
12.9%
Headline operating profit
Finance and investment income
Finance costs (excluding interest expense
related to lease liabilities)
Interest cover¹ on headline operating profit
2022
£m
2021
£m
2020
£m
1,741.8
145.4
1,493.5
69.4
1,260.5
82.7
(263.7)
(118.3)
14.7
times
(192.7)
(123.3)
12.1
times
(211.0)
(128.3)
9.8
times
Note
1
Interest expense related to lease liabilities is excluded from interest cover as lease liabilities are
excluded from the Group’s key leverage metrics
Headline operating profit and headline operating margin are metrics that
management use to assess the performance of the business.
Headline operating profit margin before and after earnings from associates:
Revenue less pass-
through costs
Headline operating profit
Earnings from associates
(after interest and tax,
excluding adjusting
items)
Headline PBIT
Margin
%
2022
£m
Margin
%
2021
£m
Margin
%
2020
£m
11,799.3
14.8 1,741.8
10,397.2
14.4 1,493.5
9,762.0
12.9 1,260.5
73.9
15.4 1,815.7
86.1
15.2 1,579.6
10.1
13.0 1,270.6
Headline PBIT is one of the metrics that management uses to assess the
performance of the business.
Calculation of headline EBITDA:
Headline PBIT (as above)
Depreciation of property, plant
and equipment
Amortisation of other intangible assets
Headline EBITDA (including depreciation
of right-of-use assets)
Depreciation of right-of-use assets
Headline EBITDA
2022
£m
1,815.7
2021
£m
1,579.6
2020
£m
1,270.6
166.9
21.9
151.2
19.9
174.8
35.2
2,004.5
262.2
2,266.7
1,750.7
272.9
2,023.6
1,480.6
331.9
1,812.5
Headline EBITDA is a key metric that private equity firms, for example, use for
valuing companies, and is one of the metrics that management uses to assess
the performance of the business. Headline EBITDA (including depreciation of
right-of-use assets) is used in the Group’s key leverage metric.
Reconciliation of profit before taxation to headline PBT and headline earnings:
Profit/(loss) before taxation
Goodwill impairment
Amortisation and impairment of acquired
intangible assets
Investment and other impairment charges/
(reversals)
Intangible asset impairment
Restructuring and transformation costs
Restructuring costs in relation to Covid-19
Property related costs
Losses/(gains) on disposal of investments
and subsidiaries
Gains on remeasurement of equity interests
arising from a change in scope of ownership
Litigation settlement
Share of adjusting items of associates
Revaluation and retranslation of financial
instruments
Headline PBT
Headline tax charge
Headline non-controlling interests
Headline earnings
2022
£m
1,159.8
37.9
2021
£m
950.8
1.8
2020
£m
(2,790.6)
2,822.9
62.1
97.8
89.1
48.0
29.0
203.7
15.1
18.0
36.3
(66.5)
−
134.3
(76.0)
1,601.7
(408.8)
(92.7)
1,100.2
(42.4)
−
145.5
29.9
−
10.6
–
21.3
62.3
296.2
−
80.7
232.5
−
(7.8)
(0.6)
25.6
146.1
87.8
1,365.4
(327.9)
(83.0)
954.5
147.2
1,041.3
(239.9)
(58.9)
742.5
216
WPP ANNUAL REPORT 2022
RECONCILIATION TO NON-GAAP MEASURES OF PERFORMANCE
FINANCIAL STATEMENTS
Headline PBT and headline earnings are metrics that management use to
assess the performance of the business.
Calculation of headline taxation:
Headline PBT
Tax charge
Tax (charge)/credit relating to gains on
disposal of investments and subsidiaries
Tax credit relating to restructuring
and transformation costs
Tax credit relating to restructuring
and transformation costs in relation to Covid-19
Tax (charge)/credit relating to litigation settlement
Deferred tax impact of the amortisation of acquired
intangible assets and other goodwill items
Deferred tax relating to gains on
disposal of investments and subsidiaries
Headline tax charge
Headline tax rate
2021
£m
2022
£m
2020
£m
1,601.7 1,365.4 1,041.3
127.1
230.1
384.4
(9.0)
31.5
(2.7)
41.1
38.4
14.3
5.4
−
7.3
(5.4)
51.2
5.4
(15.4)
5.6
36.0
8.6
20.4
2.3
239.9
327.9
408.8
25.5% 24.0% 23.0%
In 2021 the Group reassessed the measure of headline tax rate, as some
associate businesses are classified as US tax partnerships with their related tax
forming part of the headline tax charge, and now considers the most
appropriate metric is to use the headline tax charge as a percentage of
headline PBT (that includes the share of headline results of associates). The
headline tax rate on headline PBT including the share of headline results of
associates was 25.5% (2021: 24.0%, 2020: 23.0%). Given the Group’s
geographic mix of profits and the changing international tax environment, the
headline tax rate is expected to increase over the next few years.
Calculation of headline non-controlling interests:
Non-controlling interests
Non-controlling interests relating to restructuring
costs in relation to Covid-19
Headline non-controlling interests
Reconciliation of adjusted free cash flow:
2022
£m
92.7
−
92.7
2021
£m
83.0
–
83.0
2020
£m
53.9
5.0
58.9
Cash generated by operations
Plus
Interest received
Investment income
Dividends from associates
Share option proceeds
Less
Earnout payments
Corporation and overseas tax paid
Interest and similar charges paid
Interest paid on lease liabilities
Repayment of lease liabilities
Purchases of property, plant and equipment
Purchase of other intangible assets
(including capitalised computer software)
Dividends paid to non-controlling interests
in subsidiary undertakings
Adjusted free cash flow
2022
£m
2020
£m
1,268.2 2,580.3 2,583.9
2021
£m
88.9
24.5
37.6
1.2
47.5
17.8
53.4
4.4
73.6
8.7
32.5
–
(71.4)
(390.9)
(210.2)
(92.4)
(309.6)
(208.4)
(57.0)
(391.1)
(173.7)
(88.4)
(320.7)
(263.2)
(115.2)
(371.5)
(173.9)
(98.5)
(300.1)
(218.3)
(14.9)
(29.9)
(54.4)
(69.5)
53.1
(114.5)
(83.3)
1,264.9 1,283.5
The Group bases its internal cash flow objectives on adjusted free cash flow.
Management believes adjusted free cash flow is meaningful to investors
because it is the measure of the Group’s funds available for acquisition related
payments, dividends to shareholders, share repurchases and debt repayment.
The purpose of presenting adjusted free cash flow is to indicate the ongoing
cash generation within the control of the Group after taking account of the
necessary cash expenditures of maintaining the capital and operating
structure of the Group (in the form of payments of interest, corporate taxation
and capital expenditure).
ADJUSTED NET DEBT AND AVERAGE ADJUSTED NET DEBT
Management believes that adjusted net debt and average adjusted net debt
are appropriate and meaningful measures of the debt levels within the Group.
This is because of the seasonal swings in our working capital generally, and those
resulting from our media buying activities on behalf of our clients in particular.
WPP ANNUAL REPORT 2022
Adjusted net debt at a period end consists of cash and short-term deposits,
bank overdraft, bonds and bank loans due within one year and bonds and bank
loans due after one year.
Reconciliation of adjusted net debt:
Cash and short-term deposits
Bank overdraft, bonds and bank loans due
within one year
Bonds and bank loans due after one year
Adjusted net debt
2022
£m
2,491.5
2021
£m
3,882.9
2020
£m
12,899.1
(1,169.0)
(3,801.8)
(2,479.3)
(567.2)
(4,216.8)
(901.1)
(8,619.2)
(4,975.5)
(695.6)
Average adjusted net debt is calculated as the average daily net borrowings
of the Group. Adjusted net debt excludes lease liabilities.
FUTURE RESTRUCTURING AND TRANSFORMATION COSTS
Further restructuring and transformation costs are expected from 2023 to
2025, with approximately £250 million in relation to the continued rollout of
the Group’s new ERP system in order to drive efficiency and collaboration
throughout the Group. Costs of between £100 million and £150 million are also
expected in relation to other IT transformation projects, shared service centres
and co-locations.
CONSTANT CURRENCY AND PRO FORMA (‘LIKE-FOR-LIKE’)
These consolidated financial statements are presented in pounds sterling.
However, the Group’s significant international operations give rise to
fluctuations in foreign exchange rates. To neutralise foreign exchange impact
and illustrate the underlying change in revenue and profit from one year to the
next, the Group has adopted the practice of discussing results in both reportable
currency (local currency results translated into pounds sterling at the
prevailing foreign exchange rate) and constant currency.
Management also believes that discussing pro forma or like-for-like contributes
to the understanding of the Group’s performance and trends because it allows
for meaningful comparisons of the current year to that of prior years.
Further details of the constant currency and pro forma methods are given in
the Glossary on pages 232 and 233.
Reconciliation of reported revenue less pass-through costs to like-for-like
revenue less pass-through costs:
2020
Impact of exchange rate changes
Impact of acquisition
Like-for-like growth
2021
Impact of exchange rate changes
Impact of acquisition
Like-for-like growth
2022
Revenue less
pass-through costs
£m
9,762.0
(487.4)
(58.6)
1,181.2
10,397.2
611.9
72.8
717.4
11,799.3
-5.0%
-0.6%
12.1%
6.5%
5.9%
0.7%
6.9%
13.5%
(LOSS)/EARNINGS FROM ASSOCIATES – AFTER INTEREST AND TAX
Management reviews the '(Loss)/earnings from associates – after interest and
tax' by assessing the underlying component movements including 'share of
profit before interest and taxation of associates', 'share of adjusting items of
associates', 'share of interest and non-controlling interests of associates', and
'share of taxation of associates', which are derived from the Income
Statements of the associate undertakings.
The following table is an analysis of '(Loss)/earnings from associates – after
interest and tax' and underlying component movements:
Share of profit before interest and taxation
Share of adjusting items
Share of interest and non-controlling interests
Share of taxation
(Loss)/earnings from associates – after interest and
tax
2022
£m
219.6
(134.3)
(104.7)
(41.0)
2021
£m
208.5
(62.3)
(83.9)
(38.5)
2020
£m
142.5
(146.1)
(91.4)
(41.0)
(60.4)
23.8
(136.0)
Share of adjusting items of £134.3 million (2021: £62.3 million, 2020: £146.1
million) primarily comprise £75.8 million (2021: £38.8 million, 2020 £54.3 million)
of amortisation and impairment of acquired intangible assets as well as
restructuring and one-off costs of £54.8 million (2021: £18.8 million,
2020: £89.3 million) within Kantar.
217
ADDITIONAL
INFORMATION
Task Force on Climate-Related
Financial Disclosures statement
Other statutory information
Shareholder information
Five-year summary
Glossary
Where to find us
220
227
228
231
232
234
218
WPP ANNUAL REPORT 2022
ADDITIONAL INFORMATION
WPP ANNUAL REPORT 2022
219
ADDITIONAL INFORMATION
TASK FORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES STATEMENT
UK LISTING RULES STATEMENT OF COMPLIANCE
WPP was an early adopter of the Task Force on Climate-related Financial
Disclosures. WPP’s fifth disclosure, set out below, is structured around the
four TCFD themes of governance, strategy, risk management, and metrics
and targets. We aim to develop our disclosures in line with TCFD’s 11
recommended disclosures set out in June 2017 (see table below).
We report in line with the FCA Listing Rule LR 9.8.6(8)b, which requires us
to report on a ‘comply or explain’ basis against the TCFD Recommended
Disclosures in respect of the financial year ended 31 December 2022.
We consider our climate-related financial disclosures to be consistent with
nine of the 11 TCFD Recommended Disclosures and we have explained why we
are not consistent for the remaining two in the related sections. Therefore our
disclosures are compliant with Listing Rule 9.8.6(8)b.
Some of these recommendations, published in the 2021 TCFD Annex, will take
more time for us to become fully consistent with due to challenges around
data access. These relate to detailed financial impacts and quantitative
scenario analysis of climate-related risks and opportunities. We will continue
to implement the rest of the 2021 TCFD Annex 1 recommendations over the
course of 2023 and intend to apply these more fully in our future disclosures.
COMPLIANCE STATUS
Governance
Strategy
Risk management
Metrics and targets
a) Board’s
a) Climate-related
oversight of
climate-related
risks and
opportunities
risks and
opportunities
over a short,
medium and
long-term
horizon
a) Processes for
identifying
and assessing
climate-related
risks
a) Metrics to assess
climate-related
risks and
opportunities
in line with
strategy and risk
management
process
b) Management’s
b) Impact of
role in assessing
and managing
climate-related
risks and
opportunities
climate-related
risks and
opportunities
on the business,
strategy and
financial
planning
b) Processes for
managing
climate-related
risks
b) Disclose Scope 1,
Scope 2, and,
if appropriate,
Scope 3 GHG
emissions, and
the related risks
c) Resilience of the
organisation’s
strategy,
considering
different
climate-related
scenarios,
including a 2°C
or lower
scenario
c) Identifying,
assessing and
managing
climate-related
risks, and
integration
into overall risk
management
c) Targets used
to manage
climate-related
risks and
opportunities,
and performance
against targets
GOVERNANCE
Our Executive Directors (CEO and CFO) have overall responsibility for
climate-related risks and opportunities and our performance on carbon
reduction is integrated into their incentive plans. The WPP Executive
Committee sets the sustainability strategy and oversees the approach across
agencies in its implementation. The Chief Sustainability Officer has operational
responsibility for assessing and managing climate issues. Progress against
climate-related metrics and targets is communicated to the business on an
annual basis. Where appropriate, agencies and functions are informed about
climate-related issues through targeted briefings.
The Board is responsible for the overall long-term success of WPP and for
setting the Company’s strategic direction, including in relation to climate
change. The Board approves the Sustainability Policy and Environment Policy
and, where relevant, considers climate-related issues (as Section 172 factors)
when overseeing major decisions (set out in ‘WPP Matters Reserved for the
Board’ on wpp.com).
The Sustainability Committee of the Board is attended by both the CEO and
CFO, as well as experienced Non-Executive Directors (see ‘Our Board’ from
page 104) with extensive sustainability expertise, and supports the Board in its
oversight of the Company’s net zero strategy. The Sustainability Committee
met five times in 2022 and selected a sustainability-related topic to be
presented to the Board after each Committee meeting. Climate-related topics
were discussed at all Committee meetings in 2022. The Committee’s remit
includes reviewing and monitoring implementation of the Company’s
sustainability strategy and evaluating performance against climate targets
and commitments.
As the Company’s clients integrate climate adaptation and mitigation into
their business strategies, the Committee will continue to review the growth
of services which maximise their success. It will also review climate adaptation
and transition plans, including steps to ensure that our campuses and offices
are resilient to extreme weather and that we are meeting growing regulatory
requirements that face both WPP and its clients.
2022 Board actions:
Next steps:
Updated Sustainability Policy and
new Environment Policy approved
by the Board.
Annual Board review and approval
of Sustainability and Environment
Policies.
GroupM presented its media
decarbonisation strategy, covering
55% of WPP’s overall emissions.
In 2023, the Board Sustainability
Committee will monitor the
development and review the outputs
of WPP’s Net Zero Transition Plan.
Reviewed and commented on
WPP’s climate-related risks and
opportunities.
Reviewed WPP’s Assignment
Acceptance Policy and Framework
and Green Claims Guide.
Professor Dr Johan Rockström,
Director of the Potsdam Institute for
Climate Impact Research and
Professor in Earth System Science at
the University of Potsdam, engaged
with and presented to the Board on
climate-related issues.
Further information on sustainability governance is provided on page 85
of this Annual Report. The Sustainability Committee’s report features on
pages 128 and 129
KEY
In compliance
Partial compliance
220
WPP ANNUAL REPORT 2022
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES STATEMENT
ADDITIONAL INFORMATION
ADDITIONAL INFORMATION
CLIMATE CHANGE STRATEGY
At WPP we support the aims of the Paris Agreement and believe in the
urgent need to transition to net zero. WPP is a proud signatory to the UN
Global Compact’s Business Ambition for 1.5°C, the purpose of which is to
galvanise business support for climate action, and to the UNFCCC’s Race
to Zero campaign.
WPP’s disclosure of climate-related risks and opportunities provided in this
section outlines the impacts we expect to see on our business between now
and 2030. It includes qualitative disclosure of both the impact on, and the
resilience of, WPP’s strategy. Details of the time horizons and climate scenarios
considered as part of this assessment are included in the tables below. The
process used to determine these risks and opportunities is covered in the Risk
Management section (page 225).
There is no material impact from climate change on our current year financial
reporting. Materiality is described in Our Application of Materiality (page 211).
The most significant impacts from the climate-related risks and opportunities
summarised below are expected to be realised on a timeframe that exceeds
our current financial planning. At present, we do not provide quantified
disclosures of the financial impacts of climate-related risks and opportunities
in the context of financial planning. In 2023, we will develop and publish a Net
Zero Transition Plan, including an evaluation of the costs associated with our
climate-related risks and opportunities.
CLIMATE-RELATED RISK AND OPPORTUNITIES DISCLOSURE
Further information on WPP’s sustainability strategy and commitments
can be found on pages 66 to 85 of this Annual Report
2022 actions:
Next steps:
– Time horizons for climate-related
– Develop and publish Net Zero
risks and opportunities and
qualitative scenario analysis
integrated into TCFD disclosures
for the first time.
Transition Plan, including a first
evaluation of costs associated with
our climate-related risks and
opportunities.
– Continue to strengthen climate
scenario analysis and resilience
testing eg factoring into
investment case for new assets
and longer-term (eg 2050)
impacts.
TIME HORIZONS
Time horizon
Short term
Time period
2022-2023
Internal time horizon alignment
Annual Reporting periods
Medium Term
2024-2027
Scope 1 and 2 science-based reduction target (2025) and Transformation Programme (2027)
Long Term
2027-2030
Scope 3 science-based reduction target (2030)
CLIMATE SCENARIOS
Description
High carbon (more than 4oC)
Low carbon (less than 2oC)
Very low carbon (less than 1.5oC)
Physical Impacts
The physical impacts of climate change are broadly consistent across all three scenarios considered (in line with the RCP and SSP
narratives). We are already experiencing increased exposure to extreme weather events.
Policy to support
decarbonisation
Limited policy support. Market-based
solutions are prioritised.
Regulation and
reporting standards
Limited regulation and reporting
standards applicable to our sector.
No regulation of green claims and
carbon-based products.
Sustainable
consumption
Some clients and consumers seek
sustainable products and services, but
the rise in demand is not substantial.
Support in markets currently advancing
policy. This includes the UK, United States
and EU. Market-based solutions make up a
significant proportion of achieved
decarbonisation.
Policy support is widespread,
accelerating progress towards net zero
across our value chain. Market-based
solutions are still utilised.
Limited to markets currently advancing
regulation and reporting standards
applicable to our sector. This includes
some regulation of green claims and the
advertising of high-carbon products.
Clients and consumers in many markets
increasingly seek sustainable products
and services and are supported by
regulation and policy.
Widespread regulation and reporting
standard applicable to our sector. This
includes regulation of green claims and
the advertising of high-carbon products.
Rapid and substantial growth in demand
for sustainable products and services,
supported by regulation and policy.
Sustainable consumption becomes the
norm in many markets.
RCP Alignment
RCP 8.5- Business as Usual,
4-degree Celsius.
RCP 2.6- ‘Acceptable Limit’
2-degree Celsius.
RCP 1.9- net zero transition,
1.5-degree Celsius.
IPCC SSP Alignment
SSP4- A Road Divided.
SSP2- Middle of the Road.
SSP1- The Green Road.
WPP ANNUAL REPORT 2022
221
ADDITIONAL INFORMATION TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES STATEMENT
WPP’S CLIMATE-RELATED RISKS AND OPPORTUNITIES
POTENTIAL IMPACT
RISK OR OPPORTUNITY
DESCRIPTION
HIGH CARBON
LOW CARBON
VERY LOW CARBON
Under these two scenarios, WPP’s existing plans for
campuses, business continuity procedures and employee
support systems would minimise the impact of these.
Additional plans would need to be put in place to manage
the dynamics of issues including climate-related migration.
PHYSICAL RISKS AND OPPORTUNITIES
Increased frequency of
extreme weather and
climate-related natural
disasters
This includes storms,
flooding, wildfires and
water and heat stress which
can damage our buildings,
jeopardise the safety and
wellbeing of our people
and significantly disrupt
our operations. We consider
this risk relevant to all
operations, however certain
geographies (eg coastal
cities, especially in Asia)
are more exposed.
Our industry is less exposed
to the costs of physical
climate change than others.
As the longer-term physical
impacts under this scenario
are more severe, WPP’s
campuses, business
continuity procedures and
employee support systems
would require additional
investment above current
plans to minimise risk to
infrastructure and, more
critically, our people. These
would also need to respond
to increased climate-related
migration, for example
supporting our people
through relocations.
TRANSITION RISKS AND OPPORTUNITIES
Increased investment would
be required in building
renovation, electrification
and supplier engagement
to meet targets, including
developing internal ESG
capacity and capabilities.
Carbon removals offsets
prices would likely rise,
increasing the overall
required expenditure to
meet our net zero
commitments.
Markets with less policy
support and regulation
may require additional
expenditure to meet targets.
Moderate demand-led
increase in market-price per
tonne of carbon would
increase the cost of carbon
removals required to meet
our net zero commitments.
Policy support would
accelerate the pace
of change, reducing
investment required
to deliver targets.
More rapid decarbonisation
would reduce pressure on
the carbon removals offset
market, and reduce the
overall cost associated
with meeting our net zero
commitment.
Delivering net zero
commitments
Delivering WPP’s Scope 3
carbon reduction targets
depends upon the adoption
of new technologies (some
of which have not yet been
conceived or created) and
business model innovations
across the supply chain. We
consider this risk relevant
to all geographies, however
it is more significant for
operations with larger
associated carbon emissions
(eg media and production).
HOW IT IS MANAGED
AND RESILIENCE
CONSIDERATIONS
Campuses (see page 19):
Co-locating our people in
fewer, higher-capacity
buildings means we can
centralise emergency
preparedness procedures
and deploy climate mitigation
measures more efficiently.
Climate-related risk is
considered when we invest
in new campus buildings. In
2023 we will pilot a new ESG
scorecard to assess building
performance across a number
of climate-related metrics.
Our hybrid working approach,
which incorporates new ways
of working adopted during the
pandemic, provides additional
resilience by enabling fully
remote working – provided
employees and their families
are in safe locations – during
extreme weather events.
Employee Assistance
Programme (EAP): Available to
100% of employees, (see page
72) is activated in response to
climate-related extreme
weather events.
Transition Plan: In 2023, we
will publish our first net zero
transition plan which will
outline further details on how
we intend to deliver against
our net zero targets.
Strong net zero governance
and policy structures:
The Board Sustainability
Committee was formed in 2019
to place increased focus on
sustainability (see pages 128
and 129). In 2022, the Board
approved an updated
Sustainability Policy, and new
Environment Policy which
includes policy guidance
around offsetting.
Environmental, social and
governance KPIs are included
as part of the scorecard that
determines the short-term
incentive rewards for WPP’s
CEO and CFO. This includes
WPP’s performance against
carbon reduction targets.
KEY
Risk
Opportunity
Short term
Medium term
Long term
222
WPP ANNUAL REPORT 2022
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES STATEMENT
ADDITIONAL INFORMATION
RISK OR OPPORTUNITY
DESCRIPTION
HIGH CARBON
LOW CARBON
VERY LOW CARBON
POTENTIAL IMPACT
HOW IT IS MANAGED
AND RESILIENCE
CONSIDERATIONS
TRANSITION RISKS AND OPPORTUNITIES
A lack of ESG reporting
regulation and standards
could lead to mistrust of
corporate carbon emissions
data, net zero commitments
and the advertising of
sustainable products and
services among consumers
and clients.
Additional investment in
internal capability building
(managed at a global level),
data capture, reporting
and assurance would be
required to meet the needs
of legislation, including in
the UK, United States and EU
where legislation addressing
ESG reporting is currently
being enacted.
Additional investment in
internal capability building
(with localised expertise to
support local compliance),
data capture, reporting
and assurance would be
required to meet the needs
of this legislation.
Emerging regulation and
reporting standards: We are
monitoring developments in
legislation relating to ESG
reporting and the regulation
of environmental claims and
investing in internal capability
building in response.
Media decarbonisation: Media
accounts for more than 50%
of WPP's total carbon footprint.
Through our global framework
for media decarbonisation,
launched by GroupM in 2022,
we are exploring opportunities
to improve accounting for
emissions from media buying
(see page 76).
Offsetting: Our Environment
Policy covers how we manage
the cost and quality of carbon
credits purchased to offset
emissions we cannot remove.
In 2023 we will further develop
our offsetting strategy as part
of our transition plan.
Investment in sustainable
products and services: Our
sustainability strategy (see
page 68) outlines our
commitment to developing
products and services which
enable our clients to adopt
leadership positions on climate
change and exceed the
expectations of consumers.
In 2022, investment continued
in virtual advertising production
capability and GroupM’s media
decarbonisation programme.
We continued to train our
people to deliver net zero
products and services through
programmes such as AdGreen
and our new Green Claims
Guide and associated training,
and to innovate on behalf of
our clients through initiatives
like Change the Brief, now
open-sourced across our
industry through the Change
the Brief Alliance.
Under this scenario we have
assumed that, while some
clients and consumers will
seek sustainable products
and services, the overall rise
in demand is limited. The
overall impact on Group-
level financial planning
processes would, therefore,
be limited.
Growth in demand would
be steady, and revenue
generated from sustainable
products and services by
2030 would be material with
some markets and services
seeing more growth than
others. Budgets and cash
flow forecasts would likely
reflect an investment in
sustainability-related skills,
as well as new sustainable
product and service
offerings.
Growth in demand would
be rapid, and sustainable
products and services
would make up a significant
proportion of revenues by
2030 across most markets
and service offerings.
Budgets and cash flow
forecasts would be likely
to reflect the required
investment to meet the
opportunity.
Significantly increased
investment in employee
capability required, and
growth through acquisition
may be needed to meet
demand. Innovation and
investment in new products
and services would be
extensive.
Changes in regulation and
reporting standards
WPP could be subject to
increased costs to comply
with potential future
changes in environmental
laws and regulations and
increasing carbon offset
pricing to meet its net zero
commitments.
Carbon emission accounting
for marketing and media
is in its infancy and
methodologies continue to
evolve. This is particularly
the case for emissions
associated with digital
media.
Increased demand for
sustainable products
and services
Opportunity to grow
revenues from products
and services which support
clients as they seek to
decarbonise their
businesses.
This may include developing
low or net zero marketing,
media and ecommerce
services, developing
sustainability-focused brand
strategies and promoting
sustainable consumption
to consumers. This
opportunity is relevant
globally.
KEY
Risk
Opportunity
Short term
Medium term
Long term
WPP ANNUAL REPORT 2022
223
ADDITIONAL INFORMATION TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES STATEMENT
RISK OR OPPORTUNITY
DESCRIPTION
HIGH CARBON
LOW CARBON
VERY LOW CARBON
POTENTIAL IMPACT
HOW IT IS MANAGED
AND RESILIENCE
CONSIDERATIONS
TRANSITION RISKS AND OPPORTUNITIES
Achieving resource
efficiencies through cutting
our carbon footprint and
improving energy efficiency
Through carbon reduction
initiatives we have the
opportunity to decrease
the costs associated
with energy use and limit
increased costs associated
with carbon taxation. This
relates both to our buildings,
and to energy-intense
activities such as data
storage. This opportunity
is relevant globally.
While policy support for
decarbonisation may be
limited under this scenario,
our investment in our net
zero strategy would
still achieve resource
efficiencies. However,
some decarbonisation
opportunities, including
technology-based solutions,
may not be available
without a support policy
environment. This may
increase our overall
expenditure on carbon
removals and offsets
required to meet our net
zero commitment.
Increased reputational
risk associated with
misrepresenting
environmental claims
in marketing and
advertising content
Government regulation of
environmental advertising
and marketing claims is
likely to be limited. We
continue to invest in training
to support credible
environmental claims to
respond to consumer and
client concerns around
credibility. There is little
risk of litigation.
As consumer consciousness
around climate change rises,
our sector is seeing
increased scrutiny of our
role in driving unsustainable
consumption. Our clients
seek expert partners who
can give recommendations
that take into account
stakeholder concerns
around climate change. This
risk is globally relevant, but
in the short term is greater
in geographies with existing
or emerging regulation
(Australia, EU, UK and
United States).
A greater level of policy support for decarbonisation would
widen the availability of opportunities to WPP. This would
accelerate the overall rate at which we could decarbonise
our buildings and value chain, and increase the potential
rate of return. Overall, this would lower our reliance on
removal-based offsetting and reduce the cost associated
with meeting our net zero commitments.
Government regulation of
environmental advertising
and marketing claims is
likely to be centred on
markets already advancing
climate policy, in addition to
consumer and client
concern around credibility.
This includes the UK and
United States. The risk of
litigation increases in those
markets, and increased
investment in training and
capability is required to
ensure advertising and
marketing content is
compliant.
Government regulation of
environmental advertising
and marketing claims is
likely to be widespread, in
addition to a significant rise
in consumer and client
concern around credibility.
There is widespread risk of
litigation and the potential
for revenue losses should
our reputation for credibility
be jeopardised. Investment
in localised training and
capability would be
required to ensure
advertising and marketing
content is compliant.
Transition Plan: As we develop
our Net Zero Transition Plan we
are assessing the cost-benefit
of existing and potential
decarbonisation projects
in order to realise resource
efficiency in our operations
and value chain.
Campuses: We have been
driving energy efficiency gains
by ensuring that all buildings
with a floor space exceeding
50,000 square feet are certified
to advanced sustainability
standards eg LEED and
BREEAM. By 2025, the majority
of our people will be based in
net zero campuses using
electricity purchased from
100% renewable sources.
Media decarbonisation:
Media investment accounts for
more than 50% of WPP's total
carbon footprint. Our global
framework for media
decarbonisation, launched by
GroupM in 2022, sets out their
approach to measuring and
reducing carbon emissions
associated with media
placement (see page 76).
Internal tools and procedures:
We have developed internal
tools to help our people
identify environmentally
harmful briefs. These tools
embed climate-related issues
within existing content
review procedures across
the organisation. The
misrepresentation of
environmental issues is
governed by our Code of
Conduct. We also ensure our
policies reduce the risk that
any client brief undermines
the implementation of the
Paris Agreement. In 2022, we
introduced the Assignment
Acceptance Policy and
Framework and the Green
Claims Guide to provide
further guidance about how
to conduct additional due
diligence in relation to clients
and any work we are asked to
undertake (see page 77).
KEY
Risk
Opportunity
Short term
Medium term
Long term
224
WPP ANNUAL REPORT 2022
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES STATEMENT
ADDITIONAL INFORMATION
POTENTIAL IMPACT
HIGH CARBON
LOW CARBON
VERY LOW CARBON
Government regulation of
environmental advertising
and marketing claims is
likely to be limited. We
continue to invest in training
to support credible
environmental claims to
respond to consumer and
client concerns around
credibility. There is little
risk of litigation.
The reputational risk
associated with working
on client briefs perceived
to be environmentally
detrimental is likely to be
low, with limited
government regulation
of the ability to advertise
for high-carbon products
or services.
There is likely to be an
increased risk associated
with working on client briefs
perceived to be
environmentally detrimental.
Government regulation in a
limited number of markets
could outline definitions of
high-carbon products or
services that cannot be
advertised but this is
restricted to the most
carbon intense instances.
The risk of litigation
increases in those markets,
and increased investment in
training and capability is
required to ensure
advertising and marketing
content is compliant.
There is a significant
increased risk associated
with working on client briefs
perceived to be
environmentally detrimental.
Government regulation in
a wide number of markets
may outline definitions of
high-carbon products or
services that cannot be
advertised and this covers
a wider number of instances.
There is widespread risk of
litigation and the potential
for revenue losses should
our reputation for credibility
be jeopardised. Investment
in localised training and
capability would be
required to ensure
advertising and marketing
content is compliant.
HOW IT IS MANAGED
AND RESILIENCE
CONSIDERATIONS
Accepting new assignments:
In 2022, we introduced
the revised Assignment
Acceptance Policy and
Framework to provide further
guidance about how to
conduct additional due
diligence in relation to clients
and any work we are asked
to undertake (see page 77).
RISK OR OPPORTUNITY
DESCRIPTION
Increased reputational risk
associated with working
on client briefs perceived
to be environmentally
detrimental
WPP serves some clients
whose business models are
under increased scrutiny,
for example energy
companies or associated
industry groups who are
at different stages of the
decarbonisation process.
This creates both a
reputational and related
financial risk for WPP if
we are not rigorous in our
content standards as we
grow our sustainability-
related services.
RISK MANAGEMENT: IDENTIFYING CLIMATE RISK AND
OPPORTUNITY
Sustainability risks, including climate-related risks, are integrated into our
overall risk management processes. Performance and updated risk
implications are reviewed by the Audit Committee on a regular basis.
Our overall risk management process is outlined on pages 86 to 90 and climate
change risk is included as a risk within the principal risks and uncertainties
disclosure on page 97.
WPP has implemented Risk Committees at Group level and in our operating
companies with the aim of ensuring accountability at both levels to identify,
monitor and proactively manage risk and compliance issues and we are
embedding climate risks in their agendas.
Our business integrity programme is integral to ensuring that the policies,
procedures and control environment set by the Board and commitments
made on topics such as climate risk are understood and adhered to across
all geographies and markets.
In 2021, the business continuity implications of physical climate change and
the risk of not meeting WPP’s sustainability commitments were integrated
into the Business Integrity function’s annual risk assessment.
The Board Sustainability Committee reviews WPP’s climate-related risks and
opportunities on an annual basis. This analysis is informed by interviews with
sustainability and consumer experts from within WPP’s agencies and external
data sources including the Intergovernmental Panel on Climate Change (IPCC)
Representative Concentration Pathways (RCPs).
Factors considered include regulatory requirements, reputational risk, physical
risks and opportunities to advise our clients. Evaluation criteria include
relevance to our industry, relevance to sustainability, regulatory and legal risks,
financial implications and the operations affected.
WPP’s overall approach to risk management and a summary of our
principal risks can be found on pages 86 to 97 of this Annual Report
KEY
Risk
Opportunity
Short term
Medium term
Long term
WPP ANNUAL REPORT 2022
225
ADDITIONAL INFORMATION TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES STATEMENT
METRICS AND TARGETS
Metrics and targets are used by WPP to assess and manage our climate-related
risks and opportunities. As part of the process of preparing this disclosure, we
have considered the metrics set out by the TCFD in tables A1.1, A1.2 and A2.1 of
the TCFD recommendations.
For the second year, WPP appointed PricewaterhouseCoopers LLP (‘PwC’)
to support the expansion of WPP’s assurance programme for the carbon
data disclosed in this report. Throughout this report, selected carbon
metrics highlighted with the symbol
assurance by PwC. For the details and results of the limited assurance, see
wpp.com/sustainabilityreport2022.
were subject to independent limited
A common challenge for reducing carbon emissions is being able to measure
them with confidence. We are working to improve the quality and coverage
of our emissions data.
WPP risk or opportunity
TCFD A2.1 category
Metric or target
Increased frequency of extreme weather
and climate-related natural disasters
Physical Risks
10% of headcount located in countries at “extreme” risk from the
physical impacts of climate change in the next 30 years (2021: 10%)
Changes in regulation and
reporting standards
Transition Risks
In 2023, assess impact of ESG reporting legislation changes and
determine a programme of works for implementation
Delivering net zero commitments
GHG Emissions1
Achieving net zero in our own operations (Scope 1 and 2) by 2025
and across our supply chain (Scope 3) by 2030, including emissions
from media buying – an industry first
Reducing absolute Scope 1 and 2 greenhouse gas emissions by 84%
by 2025 and absolute Scope 3 emissions – including media buying
– by 50% by 2030, both from a 2019 base year
Sourcing 100% of our electricity from renewable sources by 2025
Absolute Scope 1 and Scope 2 emissions (see Carbon Emissions
Statement – page 227)
Scope 1 and 2 carbon emissions per person and per unit of revenue
(see Carbon Emissions Statement – page 227)
Scope 3 carbon emissions2 (see 2022 Sustainability Report)
83% electricity purchased from renewable sources (2021: 74%)
Capital Deployment
Publish net zero transition plan in 2023
Remuneration
Integration of performance on Scope 1 and 2 carbon reduction
targets in executive remuneration (see Compensation, succession
and evaluation – from page 130)
Internal Carbon Prices
£6.01 per tCO2e associated with business air travel recharged to
WPP agencies (2021: £2.03 per tCO2e)
Increased demand for sustainable
products and services
Climate-Related Opportunities
78% of our top 50 clients have set or committed to set science-
based carbon reduction targets (2021: 62%)
Achieving resource efficiencies through
cutting our carbon footprint and
improving energy efficiency
Climate-Related Opportunities
100% electricity purchased from renewable sources by 2025
85% of employees in net zero campuses by 2025
Increased reputational risk associated
with misrepresenting environmental claims
in marketing and advertising content
Transition Risks
Increased reputational risk associated
with working on client briefs perceived
to be environmentally detrimental
Transition Risks
In 2023, make Green Claims Guide training available for clients and
sectors most exposed to reputational or legal risk
In 2023, make Green Claims Guide training available for clients and
sectors most exposed to reputational or legal risk
KEY
Target
Metric
226
WPP ANNUAL REPORT 2022
1 For our emissions and energy disclosure, including prior year metrics, see page 227. Additional
information on our carbon emissions methodology is included in the ‘WPP Sustainability
Reporting Criteria 2022’, see wpp.com/sustainabilityreport2022
2 Our 2022 Sustainability Report provides additional information on our strategy, targets and
commitments. It is referred to where additional detail to that which is included in the 2022
Annual Report is required
ADDITIONAL INFORMATION
2021
Total
Tonnes
of
CO2e
2020
Total
Tonnes
of
CO2e
2019
Total
Tonnes
of
CO2e
4,429
10,138
3,154
17,041
18,175
OTHER STATUTORY INFORMATION
EMISSIONS AND ENERGY
CO2e EMISSIONS BREAKDOWN (TONNES/ENERGY (MWh)
Emissions source
UK
Non-UK
Total
2022
Continuing operations
Scope 1 Natural Gas
Diesel and Heating Oil
Company cars (Centrally Contracted)
Energy
MWh
7,297
0
N/A
0
16
Tonnes
of
CO2e
Energy
MWh
Tonnes
of
CO2e
Energy
MWh
Tonnes
of
CO2e
1,476
14,667
2,967
21,964
4,443
5,071
4,069
6,299
2,356
698
2,356
698
638
692
541
N/A
4,894
N/A
4,910
Sub-total Scope 1
7,297
1,492
17,023
8,559
24,320
10,051
Company cars (Local Contracts)
N/A
17
N/A
4,037
N/A
4,054
Total Scope 1
7,297
1,509
17,023
12,596
24,320
14,105
13,292
21,802
25,015
Scope 2 Standard Electricity (location based)
0
0
23,508
10,241
23,508
10,241
20,602
28,984
56,421
Green and renewable electricity (location based)
10,105
1,954
104,314
37,418
114,419
39,372
34,150
31,671
27,324
Heat and steam
0
0
7,197
1,254
7,197
1,254
1,238
1,177
1,820
Total Scope 2 (location based emissions)
10,105
1,954
135,019
48,913
145,124 50,867
55,990
61,832
85,565
Standard electricity (market based)
Green and renewable electricity (market-based)
Heat and steam
Total Scope 2 (market based emissions)
0
10,105
0
10,105
0
0
0
0
23,508
9,842
23,508
9,842
20,602
28,983
60,750
104,314
0
114,419
0
0
0
0
7,197
1,254
7,197
1,254
1,238
1,177
1,820
135,019
11,096
145,124
11,096
21,840
30,160
62,570
Total
Scope
1 and 2
Total Scope 1 and 2 (location based)
17,402
3,463
152,042
61,509
169,444 64,972
69,282
83,634
110,580
Total Scope 1 and 2 (market based)
17,402
1,509
152,042
23,692
169,444 25,201
35,132
51,962
87,585
Scope 3 Business air travel (Centrally Contracted Flights)
Business air travel (Locally Contracted and Uplifted)
Total Scope 3
N/A
N/A
N/A
N/A
N/A
34,315
21,347
11,421
23,325
122,967
N/A 55,662
11,421
23,325
122,967
WPP’S CARBON INTENSITY (TONNES OF CO2e)
Intensity metric
UK
Non-UK
Tonnes per full-time employee (market based)
N/A
0.12
N/A
0.23
Total
Scope
1 and 2
Tonnes per £m revenue (market based)
Scope 3 Tonnes per full-time employee
N/A
N/A
Total
0.22
1.75
0.48
2021
0.32
2.74
0.10
2020
0.52
4.33
0.23
2019
0.82
6.62
1.15
Notes
1 Our carbon emissions statement has been prepared in accordance with the Greenhouse Gas Protocol and aligns with the scope 2 market-based emissions methodology guidance. Our reporting
incorporates carbon dioxide equivalent emissions from building energy use and business air travel. Emissions data is included for all operations where WPP have control of the entity, either through
majority ownership of the equity share capital or through other facts and circumstances that lead to the conclusion that WPP have power over the investee.
2 This year, in line with UK Streamlined Energy and Carbon Reporting (SECR) requirements, we have calculated our energy use and emissions for UK markets, showing in a separate column.
3 Additional information on our carbon emissions methodology is included in our Sustainability Report and Reporting Criteria on our website (wpp.com/sustainability).
Indicates the selected metrics have been subject to independent limited assurance procedures by PricewaterhouseCoopers for the year ending 31 December 2022. For PwC’s 2022 Limited Assurance
report and the ‘WPP Sustainability Reporting Criteria 2022’, see our 2022 Sustainability Report at www.wpp.com/sustainabilityreport2022
WPP ANNUAL REPORT 2022
227
ADDITIONAL INFORMATION
SHAREHOLDER INFORMATION
SHARE CAPITAL AND CONTROL
Details of our issued share capital and the number of shares held in Treasury
as at 31 December 2022 can be found in note 27 to the financial statements.
Our ordinary shares are listed on the London Stock Exchange (LSE) and are
also quoted on the New York Stock Exchange (NYSE) in the form of American
Depositary Receipts (ADRs).
MAJOR SHAREHOLDERS
The table below shows the holdings of major shareholders in the Company’s
issued ordinary share capital in accordance with the Disclosure Guidance and
Transparency Rules (DTRs) notified to the Company as at 31 December 2022
and 16 March 2023. Information provided to the Company under the DTRs is
publicly available via the regulatory information services and on the
Company’s website.
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 24 May 2022, shareholders passed resolutions authorising
the Company, in accordance with its Articles, to allot shares up to a maximum
nominal amount of £37,416,459 of which £5,612,469 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 27 to the financial statements on pages 199-201.
AUTHORITY FOR PURCHASE OF OWN SHARES
At the AGM on 24 May 2022 shareholders passed a special resolution
authorising the Company, in accordance with its Articles of Association,
to purchase up to 112,249,376 of its own shares in the market. In the year
under review, 83,157,954 ordinary shares were purchased.
BlackRock Inc
Silchester International Investors LLP
1 Percentage as at date of notification
SHAREHOLDERS AS AT 31 DECEMBER 2022
At 31 December
20221
7.70%
5.03%
At 16 March
20231
7.60%
5.03%
Holding of shares
Up to 1,000
1,001 to 5,000
5,001 to 100,000
100,001 to 1,000,000
Over 1,000,000
Number of
holders
5,093
1,459
2,092
850
215
% Owners
52
15
22
9
2
Shareholdings % Outstanding
0.1
0.3
5.7
24.5
69.4
1,228,606
3,593,633
64,472,673
280,111,340
792,021,044
Shareholders by geography
UK
United States
Rest of World
Total
%
30.5
37.2
32.3
100
Shareholders by type
Institutional investors
Our people
Other individuals
Total
%
95.8
0.4
3.8
100
228
WPP ANNUAL REPORT 2022
SHAREHOLDER INFORMATION
ADDITIONAL INFORMATION
SHARE PRICE
The closing price of the shares at 31 December was as follows:
Ordinary 10p shares
Share price information is also available online at wpp.com/investors/share-price
At 16 March
2023
939.6p
2022
820.2p
2021
1,119.5p
2020
800.0p
2019
1,066.5p
2018
846.6p
SHARE BUYBACK PROGRAMME
The Board has been authorised to issue and allot ordinary shares under Article
12 of the Company’s Articles of Association. The power under Article 12 and
the authority for the Company to make purchases of its own shares are subject
to shareholder authorities which are sought on an annual basis at our Annual
General Meeting (AGM). Any shares purchased by the Company may be
cancelled, held as Treasury shares or used for satisfying share options and
grants under the Company’s employee share plans.
The Company announced a share buyback programme of up to £250 million
on 16 December 2021, which would take place during the period commencing
16 December 2021 and ending no later than 18 February 2022. On 4 March 2022
the Company announced a share buyback programme, with a plan to purchase
up to £200 million. On 24 March 2022 the Company announced a further share
buyback programme of up to £300 million which would take place during the
period commencing 24 March 2022 and ending no later than 24 June 2022.
On 8 September 2022 the Company announced a share buyback programme
of up to £170 million beginning 8 September 2022, and ending no later than
31 December 2022. As a result of these programmes, the Company bought
back £807,383,034 million of shares in 2022.
DIVIDENDS
Subject to shareholder approval at the 2023 AGM, the final dividend for 2022
will become due and payable on 7 July 2023 to all holders of ordinary shares
on the Register of Members at the close of business on 9 June 2023.
The table below sets out the dividend per share ordinary shareholders have
received for the last five years.
Interim dividend per ordinary share
Final dividend per ordinary share
Total
2022
15.00p
24.40p
39.40p
2021
12.50p
18.70p
31.20p
2020
10.00p
14.00p
24.00p
2019
22.70p
–
22.70p
2018
22.70p
37.30p
60.00p
2017
22.70p
37.30p
60.00p
AMERICAN DEPOSITARY RECEIPTS (ADRS)
Each ADR represents five ordinary shares.
WPP plc is subject to the informational requirements of the United States’
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.
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 230).
Dividends per ADR in respect of each financial year are set out below.
In £ sterling
Interim
Final
Total
In US dollars1
Interim
Final
Total
2022
2021
2020
2019
2018
62.50p
93.50p
156.00p
50.00p
70.00p
120.00p
113.50p
–
113.50p
113.50p
186.50p
300.00p
113.50p
186.50p
300.00p
85.98¢
128.63¢
214.61¢
64.18¢
89.85¢
154.03¢
144.88¢
–
144.88¢
151.53¢
249.00¢
400.53¢
146.27¢
240.34¢
386.61¢
1 These figures have been translated for convenience purposes only, using the approximate average rate for the year of US$1.2363 (2021: US$1.3757, 2020: US$1.2836, 2019: US$1.2765, 2018: US$1.3351). 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. The dividends received will be subject to United States’ taxation.
WPP ANNUAL REPORT 2022
229
ADDITIONAL INFORMATION SHAREHOLDER INFORMATION
LISTING RULES
For the purposes of Listing Rule (LR) 9.8.4R, the information required to
be disclosed by that section can be found in the following locations:
Section
Applicable sub-paragraph
within LR 9.8.4R
Location
4
5
6
Details of long-term
incentive schemes
Details of Directors’
waiver of emoluments
Director waiver of future
emoluments
Directors’ compensation report
page 130-156
Directors’ compensation report
page 130-156
Directors’ compensation report
page 130-156
The above table sets out only those sections of LR 9.8.4R which are relevant. The remaining
sections of LR 9.8.4R are not applicable
ARTICLES OF ASSOCIATION
There are no restrictions on amending the Articles of Association of the
Company (Articles) other than the requirement to pass a special resolution
of the shareholders at a general meeting. Subject to applicable law and the
Company’s Articles, the Directors may exercise all powers of the Company.
The Articles are available on the Company’s website at
wpp.com/investors/corporate-governance
SHAREHOLDER INFORMATION
2023 FINANCIAL CALENDAR
Ordinary dividend timetable
Ordinary ex-dividend date
Dividend record date
Dividend payment date
Other key dates:
Final
8 June 2023
9 June 2023
7 July 2023
2022 preliminary results
23 February 2023
First quarter trading update
27 April 2023
Annual General Meeting
2023 interim results
17 May 2023
August 2023
Third quarter trading update
October 2023
RESULTS ANNOUNCEMENTS
Results announcements are issued to the London Stock Exchange and are
available on its news service. They are also sent to the US Securities and
Exchange Commission and the NYSE, issued to the media and made available
on our website.
SHAREHOLDER COMMUNICATIONS
A growing number of our shareholders have opted to receive communications
from us electronically. The use of electronic communications, rather than
printed paper documents, means information about the Company can be
accessed through emails or the Company’s website, thus reducing our
impact on the environment. Shareholders who have elected for electronic
communication will be sent an email alert containing a link to the relevant
documents. We encourage all our shareholders to sign up for this service.
You can register for this service at investorcentre.co.uk/je or by contacting
Computershare by the telephone number provided below.
WPP’s public website, wpp.com, provides current and historical financial
information, news releases, trading reports and share price information.
Go to wpp.com/investors
PAYMENT OF DIVIDENDS
From July 2022 we have only been able to pay cash dividends in to your
nominated bank account. To update your payment details please go to
www.investorcentre.co.uk/je or contact Computershare at the details below.
SHAREHOLDERS’ REGISTER
The ordinary shareholders’ register is kept at the offices of the Company’s
registrar in Jersey and is available for inspection on request. The address of the
registrar is 13 Castle Street, St Helier, Jersey JE1 1ES.
230
WPP ANNUAL REPORT 2022
Interim
12 October 2023
13 October 2023
3 November 2023
Opening hours are Monday to Friday, 8.30am to 6pm US Eastern Standard
Time. Please call +1 781 575 4555 if calling from outside of the US.
By email: citibank@shareholders-online.com
In writing: Citibank N.A., PO Box 43077, Providence, RI 02940–3077, USA
ACCESS NUMBERS/TICKER SYMBOLS
Ordinary shares
American Depositary Shares WPP
NYSE
–
Reuters
WPP.L
WPP.N
Bloomberg
WPP LN
WPP US
SHAREHOLDER CONTACTS
ORDINARY SHARES
For any queries regarding your shareholding, please contact Computershare:
By telephone: +44 (0)370 707 1411
Lines are open from Monday to Friday, 8.30am to 5.30pm UK time, excluding
public holidays.
Using the contact form on the website: investorcentre.co.uk/je/contactus
In writing: Computershare Investor Services (Jersey) Limited, 13 Castle Street,
St Helier, Jersey, JE1 1ES
AMERICAN DEPOSITARY RECEIPTS (ADRS) OFFICE
For any queries regarding WPP ADRs, please contact Citibank Shareholder
Services (Citibank):
By telephone: +1 877 248 4237
REGISTERED OFFICE
WPP plc
13 Castle Street, St Helier
Jersey, JE1 1ES
Telephone: +44 (0)20 7282 4600
Registered number: 111714
Website: wpp.com
TAXATION INFORMATION
As this is a complex area investors should consult their own tax advisor
regarding the US federal, state and local, the UK and other tax consequences
of owning and disposing of shares and ADSs in their particular circumstances.
DIVIDENDS RECEIVED
For UK tax years up to and including 6 April 2022 to 5 April 2023, UK resident
individuals receive a Dividend Allowance in the form of a 0% tax rate on the
first £2,000 of dividend income received. The UK Government has announced
that the Dividend Allowance will be cut to £1,000 for the tax year 6 April 2023
to 5 April 2024, and for the 2024/2025 tax year it will be further cut to £500.
Dividends received by UK resident individuals on or after 6 April 2022, and
which are over the Dividend Allowance, are taxed at a rate of 8.75% for
individuals in the basic rate band, at 33.75% for higher rate tax payers and at
39.35% 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, shareholders 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, shareholders are advised to consult their
professional advisors.
FIVE-YEAR SUMMARY
Income statement
Billings1
Revenue
Revenue less pass-through costs1
Operating profit/(loss)
Headline EBITDA2
Headline operating profit2
Profit/(loss) before taxation
Headline PBT2
Profit/(loss) for the year
ADDITIONAL INFORMATION
Continuing operations
2022
£m
2021
£m
2020
£m
2019
£m
2018
£m
52,971.4
14,428.7
11,799.3
1,358.2
2,266.7
1,741.8
1,159.8
1,601.7
775.4
50,656.8
12,801.1
10,397.2
1,229.0
2,023.6
1,493.5
950.8
1,365.4
720.7
46,917.8
12,002.8
9,762.0
(2,278.1)
1,812.5
1,260.5
(2,790.6)
1,041.3
(2,917.7)
53,059.0
13,234.1
10,846.5
1,295.9
2,131.4
1,560.6
1,214.3
1,363.0
927.1
53,219.7
13,046.7
10,875.7
1,245.3
1,932.5
1,651.2
1,019.3
1,543.0
763.3
Headline operating profit margin2
14.8%
14.4%
12.9%
14.4%
15.2%
Balance sheet
Non-current assets
Net current (liabilities)/assets
Net assets
Adjusted net debt
Average adjusted net debt
Our people
Revenue per employee (£000)
Revenue less pass-through costs1 per employee (£000)
Staff cost per employee (£000)
Average headcount
Share information
Headline3 – basic earnings per share from continuing operations
– diluted earnings per share from continuing operations
Reported – basic earnings per share from continuing operations
– diluted earnings per share from continuing operations
Dividends per share4
Share price – high
– low
Market capitalisation at year-end (£m)
13,724.2
(2,610.0)
4,160.4
(2,479.3)
(2,928.0)
12,535.2
(1,149.8)
4,069.0
(901.1)
(1,565.1)
12,185.4
754.6
5,050.1
(695.6)
(2,331.0)
15,826.7
(298.4)
8,297.3
(1,539.6)
(4,282.0)
17,854.1
(649.5)
9,784.3
(4,016.7)
(4,965.6)
2022
2021
2020
2019
2018
126.4
103.4
71.5
114,129
100.2p
98.5p
62.2p
61.2p
39.40p
1,224.0p
725.8p
8,783.8
122.1
99.2
68.4
104,808
79.9p
78.5p
53.4p
52.5p
31.20p
1,129.5p
765.8p
12,918.7
116.7
94.9
63.8
102,822
60.7p
60.1p
(243.0p)
(243.0p)
24.00p
1,071.0p
483.7p
9,802.7
124.3
101.8
66.6
106,498
77.8p
77.1p
67.8p
67.3p
22.70p
1,077.5p
800.4p
13,410.0
123.0
102.5
65.5
106,090
92.4p
91.4p
56.0p
55.4p
60.00p
1,471.0p
805.0p
10,682.6
Notes
1 Billings and revenue less pass-through costs are defined on pages 232 and 233
2 The calculation of ‘headline’ measures of performance (including headline EBITDA, headline operating profit, headline operating profit margin and headline PBT) is set out on pages 216 and 217
3 Headline earnings per share is set out in note 9 of the financial statements
4 Dividends per share represents the dividends declared in respect of each year
The information on this page is unaudited.
WPP ANNUAL REPORT 2022
231
ADDITIONAL INFORMATION
GLOSSARY
Term used in this Annual Report
United States’ equivalent or brief description
Adjusted free cash flow
Adjusting items
ADRs/ADSs
Allotted
Average adjusted net debt and adjusted net debt
Billings and estimated net new billings
Brand awareness
Brand consideration
Called-up share capital
Click-through rate (CTR)
Adjusted free cash flow is calculated as cash generated by operations plus dividends received
from associates, interest received, investment income received, and proceeds from the issue of
shares, less corporation and overseas tax paid, interest and similar charges paid, dividends paid
to non-controlling interests in subsidiary undertakings, repayment of lease liabilities (including
interest), earnout payments and purchases of property, plant and equipment and purchases of
other intangible assets
Adjusting items include gains/losses on disposal of investments and subsidiaries, gains/losses
on remeasurement of equity interests arising from a change in scope of ownership, investment
and other charges/reversals, litigation settlement, restructuring and transformation costs,
restructuring costs in relation to Covid-19, goodwill impairment, amortisation and impairment of
acquired intangible assets, intangible asset impairment, property related costs and share of
adjusting items of associates
American Depositary Receipts/American Depositary Shares. The Group uses the terms ADR and
ADS interchangeably. One ADR/ADS represents five ordinary shares
Issued
Average adjusted net debt is calculated as the average daily net borrowings of the Group.
Adjusted net debt at a period end consists of cash and short-term deposits, bank overdraft,
bonds and bank loans due within one year and bonds and bank loans due after one year.
Adjusted net debt excludes lease liabilities
Billings comprise the gross amounts billed to clients in respect of commission-based/fee-based
income together with the total of other fees earned. 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 number of people or percentage of a group that are aware of a brand
Those who would consider purchasing a brand are measured as a subset of those aware of a brand
Ordinary shares, issued and fully paid
The ratio of the number of users exposed to a specific link on a website page or in an email and
those who click the link and view the advertised product or service
Company or Parent Company
WPP plc
Constant currency
The Group uses US dollar-based, constant currency models to measure performance. These are
calculated by applying budgeted 2022 exchange rates to local currency reported results for the
current and prior year, which excludes any variances attributable to foreign exchange rate
movements
Direct-to-consumer
Marketing from company to consumer without distributor or retailer involvement
ESOP
EURIBOR
Finance lease
Freehold
Full-Time Equivalent (FTE) employee
General and administrative costs
Employee share ownership plan
The euro area inter-bank offered rate for euro deposits
Capital lease
Ownership with absolute rights in perpetuity
A permanent person or employee of WPP Group or any of its majority owned Operating
Companies, as captured locally by each reporting unit and entered into the centralised Finance
system. FTE employees do not include contractors
General and administrative costs include marketing costs, certain professional fees and an
allocation of other costs, including staff and establishment costs, based on the function of
employees within the Group
General Data Protection Regulation (GDPR)
A European Union law governing digital data collection, use and storage
Group
Headline earnings
Headline EBITDA
232
WPP ANNUAL REPORT 2022
WPP plc and its subsidiaries
Headline PBT less headline tax charge and headline non-controlling interests (excluding Covid-19
restructuring costs)
Profit before finance income/costs and revaluation and retranslation of financial instruments,
taxation, gains/losses on disposal of investments and subsidiaries, investment and other
charges/reversals, goodwill impairment, amortisation and impairment of acquired intangible
assets, intangible asset impairment, amortisation of other intangibles, depreciation of property,
plant and equipment, depreciation of right-of-use assets, restructuring and transformation costs,
restructuring costs in relation to Covid-19, property related costs, litigation settlement, share of
adjusting items of associates and gains/losses on remeasurement of equity interests arising from
a change in scope of ownership
GLOSSARY
ADDITIONAL INFORMATION
Term used in this Annual Report
United States’ equivalent or brief description
Headline operating profit
Headline operating profit margin
Headline PBIT
Headline PBT
Headline tax charge
IFRS/IAS
LIBOR
Net Promoter Score (NPS)
Net working capital
OCI
Pass-through costs
Pro forma (“like-for-like”)
Operating profit before gains/losses on disposal of investments and subsidiaries, investment
and other charges/(reversals), goodwill impairment, amortisation and impairment of acquired
intangible assets, intangible asset impairment, restructuring and transformation costs,
restructuring costs in relation to Covid-19, property related costs, litigation settlement, and
gains/losses on remeasurement of equity interests arising from a change in scope of ownership
Headline operating profit margin is calculated as headline operating profit (defined above) as
a percentage of revenue less pass-through costs
Profit before finance income/costs and revaluation and retranslation of financial instruments,
taxation, gains/losses on disposal of investments and subsidiaries, investment and other
charges/reversals, goodwill impairment, amortisation and impairment of acquired intangible
assets, intangible asset impairment, restructuring and transformation costs, restructuring costs
in relation to Covid-19, property related costs, litigation settlement, share of adjusting items of
associates and gains/losses on remeasurement of equity interests arising from a change in scope
of ownership
Profit before taxation, gains/losses on disposal of investments and subsidiaries, investment
and other charges/reversals, goodwill impairment, amortisation and impairment of acquired
intangible assets, intangible asset impairment, restructuring and transformation costs,
restructuring costs in relation to Covid-19, property related costs, litigation settlement, share
of adjusting items of associates, gains/losses arising from the revaluation and retranslation of
financial instruments and gains/losses on remeasurement of equity interests arising from a
change in scope of ownership
Taxation excluding tax/deferred tax relating to gains/losses on disposal of investments and
subsidiaries, investment and other charges/reversals, goodwill impairment, restructuring and
transformation costs, restructuring costs in relation to Covid-19, litigation settlement, and the
deferred tax impact of the amortisation of acquired intangible assets and other goodwill items
International Financial Reporting Standards/International Accounting Standards
The London inter-bank offered rate
A metric used to assess overall customer satisfaction and how likely customers are to
recommend a company to a peer or colleague
The movement in net working capital consists of movements in trade working capital and
movements in other working capital and provisions per the analysis of cash flows note
Consolidated statement of comprehensive income
Pass-through costs comprise fees paid to external suppliers where they are engaged to perform
part or all of a specific project and are charged directly to clients, predominantly media costs
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 and disposals,
the reclassification of certain businesses to associates in 2022 and the restatement of agency
arrangements under IFRS 15 for the commensurate period in the prior year. Both periods exclude
results from Russia. The Group uses the terms ‘pro forma’ and ‘like-for-like’ interchangeably
Profit
Income
Profit attributable to equity holders of the parent
Net income
Programmatic advertising
Automated buying and selling ad inventory, using software to make data-driven decisions
Revenue less pass-through costs
Revenue less pass-through costs is revenue less media and other pass-through costs
Sarbanes-Oxley Act or SOX
Share capital
Shares in issue
An Act passed in the United States 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
Shares outstanding
Share premium account
Additional paid-in capital or paid-in surplus (not distributable)
UK Corporate Governance Code
The UK Corporate Governance Code published by the Financial Reporting Council dated
April 2018
WPP
WPP plc and its subsidiaries
WPP ANNUAL REPORT 2022
233
ADDITIONAL INFORMATION
WHERE TO FIND US
COMPANY CENTRES
WPP NEW YORK
3 World Trade Center
175 Greenwich Street
New York NY 10007
Tel +1 (212) 632 2200
WPP LONDON
Sea Containers
18 Upper Ground
London SE1 9GL
Tel +44 (0)20 7282 4600
WPP ASIA PACIFIC
50 Scotts Road
Singapore 228242
Tel +65 6508 5219
COMPANY INFORMATION
If you would like further general
information about WPP, its agencies
or any of the programmes or initiatives
mentioned in this Annual Report, please
visit our website, wpp.com, or email:
enquiries@wpp.com
CONTACT POINTS
INVESTOR RELATIONS
Tom Waldron
Group Investor Relations Director
Tel +44 (0)20 7282 4600
tom.waldron@wpp.com
Anthony Hamilton
Director Investor Relations
Tel +44 (0)20 7282 4600
anthony.hamilton@wpp.com
CORPORATE COMMUNICATIONS
AND MEDIA RELATIONS
Chris Wade
Director of Communications & Corporate Affairs
Tel +44 (0)20 7282 4600
chris.wade@wpp.com
GLOBAL & EMEA
Niken Wresniwiro
Tel +44 (0)20 7282 4600
niken.wresniwiro@wpp.com
INVESTOR INFORMATION
Investor relations material and our financial
statements are available online at
wpp.com/investors
NORTH AMERICA
Martina Suess
Tel +1 (212) 632 2522
martina.suess@wpp.com
ASIA PACIFIC
Jonathan Sanchez
Tel +65 9011 4679
jonathan.sanchez@wpp.com
SUSTAINABILITY
Hannah Harrison
Chief Sustainability Officer
Tel +44 (0)20 7282 4600
hannah.harrison@wpp.com
FORWARD-LOOKING STATEMENTS
In connection with the provisions of the U.S. 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, beliefs,
intentions, strategies, projections and anticipated future economic
performance based on assumptions and the like that are subject to risks and
uncertainties. These statements can be identified by the fact that they do not
relate strictly to historical or current facts. They use words such as ‘aim’,
‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘forecast’, ‘guidance’, ‘intend’, 'may',
‘will’, ‘should’, ‘potential’, ‘possible’, ‘predict’, ‘project’, ‘plan’, ‘target’, and
other words and similar references to future periods but are not the exclusive
means of identifying such statements. As such, all forward-looking statements
involve risk and uncertainty because they relate to future events and
circumstances that are beyond the control of the Company. Actual results
or outcomes may differ materially from those discussed or implied in the
forward-looking statements. Therefore, you should not rely on such forward-
looking statements, which speak only as of the date they are made, as a
prediction of actual results or otherwise. Important factors which may cause
actual results to differ include but are not limited to: the impact of, epidemics
or pandemics including restrictions on businesses, social activities and travel;
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; changes in
competitive factors in the industries in which we operate and demand for our
products and services; changes in client advertising, marketing and corporate
communications requirements; our inability to realise the future anticipated
benefits of acquisitions; failure to realise our assumptions regarding goodwill
and indefinite lived intangible assets; natural disasters or acts of terrorism;
the Company’s ability to attract new clients; the economic and geopolitical
impact of the Russian invasion of Ukraine; the risk of global economic
downturn, slower growth, increasing interest rates and high and sustained
inflation; supply chain issues affecting the distribution of our clients’ products;
technological changes and risks to the security of IT and operational
infrastructure, systems, data and information resulting from increased threat
of cyber and other attacks; 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 in Item 3D,
captioned “Risk Factors”, 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. Neither the Company, nor any of its directors, officers or
employees, provides any representation, assurance or guarantee that the
occurrence of any events anticipated, expressed or implied in any forward-
looking statements will actually occur. 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.
WEBSITE
WPP’s website wpp.com gives additional information on the Group.
Notwithstanding the references we make in this Annual Report to WPP’s
website, none of the information made available on the website constitutes
part of this Annual Report or shall be deemed to be incorporated by
reference herein.
234
WPP ANNUAL REPORT 2022
Written by WPP
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