27 February 2025
2024 Preliminary Results
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Strategic progress driving
stronger margin and improved cash conversion, despite top line
pressures
|
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Key
figures (£m)
|
2024
|
+/(-) %
reported1
|
+/(-)
%
LFL2
|
2023
|
|
Revenue
|
14,741
|
(0.7)
|
2.3
|
14,845
|
|
Revenue less pass-through
costs
|
11,359
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(4.2)
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(1.0)
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11,860
|
|
|
|
|
|
|
|
Reported:
|
|
|
|
|
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Operating profit
|
1,325
|
149.5
|
|
531
|
|
Operating profit margin3
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9.0%
|
|
|
3.6%
|
|
Profit before tax
|
1,031
|
198.0
|
|
346
|
|
Diluted EPS (p)
|
49.4
|
389.1
|
|
10.1
|
|
Dividends per share (p)
|
39.4*
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-
|
|
39.4
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|
|
|
|
|
|
|
Headline4:
|
|
|
|
|
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Operating profit
|
1,707
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(2.5)
|
2.0
|
1,750
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Operating profit margin
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15.0%
|
0.2pt
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0.4pt
|
14.8%
|
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Diluted EPS (p)
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88.3
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(5.9)
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0.1
|
93.8
|
*including proposed final
dividend.
Full year and Q4 financial highlights
• FY reported revenue -0.7%, LFL
revenue +2.3%. FY revenue less pass-through costs -4.2%, LFL
revenue less pass-through costs -1.0%
•
Q4 LFL revenue less pass-through costs -2.3% with
growth in Western Continental Europe +1.4% offset by
declines in North America -1.4%, UK
-5.1% and Rest of World
-4.8%, including -21.2% in
China
• Global Integrated Agencies FY LFL revenue less
pass-through costs -0.8% (Q4: -2.2%): GroupM,
our media planning and buying business, +2.7% (Q4: +2.4%), offset by
-3.9% in other Global Integrated Agencies
(Q4: -6.5%)
•
FY headline operating profit £1,707m. Headline operating
margin of 15.0% (2023: 14.8%) a 0.4pt LFL
improvement reflecting structural cost savings of £85m from Burson,
GroupM and VML initiatives; disciplined cost control and continued
investment in our AI and data offer; with a 0.2pt FX drag. FY
reported operating profit £1,325m up 149.5% primarily reflecting lower
amortisation charges and higher gains on
disposals
•
Adjusted operating cash flow
increased to £1,460m (2023: £1,280m) and adjusted free cash
flow rose to £738m (2023:
£637m) benefiting
from strong working capital management
• Adjusted net
debt at 31 December 2024 £1.7bn down £0.8bn
year-on-year
• Final dividend of 24.4p
proposed (2023: 24.4p)
Delivering on strategic priorities
• Simpler client-facing
structure: six agency networks represent c92%5 of WPP;
more integrated offer across creative, production, commerce and
media; improving new business performance in the second half of
2024
• WPP Open: AI, data and
technology increasingly central to the way we serve our clients;
critical to new business wins including Amazon, J&J,
Kimberly-Clark and Unilever; increasing annual investment to £300m
(from £250m)
• More efficient operations:
stronger headline operating margin, cash conversion and balance
sheet
Focus and outlook for 2025
• Lead through AI, data and
technology: Increase our investment in WPP Open to keep it at the
forefront of AI and further deploy it across the business and our
clients
• Accelerate growth through the
power of creative transformation: Drive transformation across our
clients with an increasingly integrated offer across creative,
production, commerce and media
•
Build world-class, market-leading brands: Improve the
competitiveness of our media offer, globally, with a focus on the
US
• Execute efficiently to drive
financial returns: Increase our operational efficiency and optimise
our investment allocation
• 2025 guidance: LFL revenue less
pass-through costs of flat to -2% with performance improving in the
second half, and headline operating profit margin expected to be
around flat (excluding the impact of FX)
Mark Read, Chief Executive Officer of WPP,
said:
"We achieved significant progress
against our strategy in 2024 with the creation of VML, Burson and
the simplification of GroupM - some 70% of our business. We sold
our stake in FGS Global to create significant value for
shareholders. And we increased our margin, while stepping up our
investment in AI through WPP Open, which is now used by
33,0006 people across WPP.
"The top line was lower, however,
with Q4 impacted by weaker client discretionary spend. We did see
growth from our top 25 clients of 2.0% and an improving new
business performance in the second half of the year with wins from
Amazon, J&J, Kimberly-Clark and Unilever reflecting the
strength of our integrated offer.
"The actions we are taking across
WPP will strengthen our existing client relationships and drive our
new business results. We expect some improvement in the performance
of our integrated creative agencies in the year ahead. At the same
time, we have comprehensive efforts underway to improve our
competitive positioning through new leadership at GroupM, with
further investment in AI, data and proprietary media.
"Though we remain cautious given the
overall macro environment, we are confident in our medium-term
targets and believe our focus on innovation, a simpler
client-facing offer and operational excellence will support our
growth and deliver greater value for our shareholders."
"WPP's 2024 Preliminary Results
announcement has been submitted in full unedited text to the
Financial Conduct Authority's National Storage Mechanism and will
be available shortly for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
The Report is also available at
http://www.rns-pdf.londonstockexchange.com/rns/6199Y_1-2025-2-26.pdf and
on the WPP investor relations website https://www.wpp.com/en/investors."
This announcement contains information that qualifies or may
qualify as inside information. The person responsible for arranging
the release of this announcement on behalf of WPP plc is Balbir
Kelly-Bisla, Company Secretary
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For
further information:
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Media
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Investors and analysts
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Chris Wade
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+44 20 7282 4600
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Thomas Singlehurst, CFA
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+44 7876 431922
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Anthony Hamilton
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+44 7464 532903
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Richard Oldworth,
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+44 7710 130 634
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Caitlin Holt
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+44 7392 280178
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Burson Buchanan
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+44 20 7466 5000
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press@wpp.com
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irteam@wpp.com
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wpp.com/investors
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1. Percentage change in reported sterling.
2. Like-for-like. LFL 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 for the commensurate period in the prior year.
3. Reported operating profit divided by revenue (including
pass-through costs).
4. In this press release not all of the figures and ratios used
are readily available from the unaudited results included in
Appendix 1. Management believes these non-GAAP measures, including
constant currency and like-for-like growth, revenue less
pass-through costs and headline profit measures, are both useful
and necessary to better understand the Group's results. Details of
how these have been arrived at are shown in Appendix 4.
5. 2024 pro forma for the disposal of FGS Global.
6. Monthly active users in December 2024.
Strategic progress
We are one year into executing on
the strategy we outlined in January 2024 - 'Innovating to Lead' -
and have made significant progress on each of the four strategic
pillars: leading through AI, data and technology, accelerating
growth through the power of creative transformation, building
world-class brands and executing efficiently to drive financial
returns.
Lead through AI, data and
technology
The past year in AI has been marked
by significant advancements in AI technology with increasing
capabilities, greater speed and lower cost. This acceleration in
the pace of innovation is broadening the capabilities that we can
deploy through WPP Open.
These developments reinforce our
conviction that AI will be the single most
transformational development in our industry since the internet. It
will impact every element of how we work, freeing up our creative
people to do better work, increasing the efficiency of our
production teams to produce much greater volumes of high-quality
work and empowering our media teams to develop and deploy more
effective plans in a fraction of the
time.
To deliver on this potential, we are
accelerating our investment in WPP Open, our AI-powered marketing
operating system, increasing cash investment to £300m in 2025 from
£250m in 2024. We are making this investment to keep WPP Open at
the forefront of our industry, enabling us to use AI more
effectively in our work and delivering an end-to-end marketing
platform that gets from ideas to results more efficiently and
quickly.
WPP Open is being broadly adopted by
our people and our clients are seeing tangible benefits. It is
enabling our teams to generate insights more rapidly, move
seamlessly from idea to near-finished executions and test these
ideas on synthetic audiences. These are just some of the
capabilities built into WPP Open in the past year and why 33,000 of
our people are now active users.
As our people are increasingly
embedding AI in the way that we work this is resulting in
increasing client adoption with major clients including Google,
IBM, L'Oréal, LVMH, Nestlé and The Coca-Cola Company seeing
benefits both in how we work and the effectiveness of what we do
together.
WPP Open Creative Studio has been
rolling out a new user interface, Canvas, which is augmenting our
strategic and creative teams with AI capabilities. Canvas empowers
teams to leverage data insights and WPP's knowledge to generate
effective campaign ideas, such as strategies to overcome audience
barriers identified by AI models, which can then be instantly
visualised for clients as storyboards and
finished work.
WPP Open Media Studio continued its
rollout to clients and was central to our successful pitch at
Amazon in 2024. Media Studio provides an end-to-end media workflow
solution accessing GroupM's scale and Choreograph data and
technology.
GroupM and Choreograph's approach to
data leverages AI-powered federated learning. Federated learning
uses AI agents operating across client, WPP and third-party data
sources to create new knowledge about customers. Establishing this
data connectivity in place of a dependence on legacy ID-first
solutions and lookalike models maintains data integrity and
provides superior insight.
Accelerate growth through the
power of creative transformation
We continue to see growing demand
from clients for more integrated marketing solutions and WPP is
moving quickly to be even more effective in bringing together our
many capabilities around the world in teams to service clients. The
reason for this is clear. Managing multiple agency partners is
complex, leads to fragmentation of marketing efforts and smaller,
more integrated teams promise greater agility and speed. In our
view, AI will only accelerate this trend as clients face the
challenge that complex agency rosters, spread across multiple
companies and independent agencies, are unable to deliver the
transformation required. The simplest analogy is that procuring
marketing services is becoming more like procuring technology
services, requiring greater strategic focus, technology due
diligence and attention to long-term partnerships.
This trend has been reflected in the
growth of WPP's top 25 clients in 2024 (+2.0%) and
this demand for integration also aligns with WPP's position.
We have a very well-balanced business with strong geographic
positions in critical markets combined with strength in creativity,
production commerce and influencer. When
powered by AI, data and technology and a world-leading global media
platform, this forms an unparalleled integrated offer to
clients.
As well as the relatively stronger
growth we delivered across WPP's largest clients in 2024, which
included expanded scope for many top clients, the quality of our
offer is evidenced by recent wins including
creative assignments for Kimberly-Clark, media assignments for
Amazon and Johnson & Johnson, and creative and commerce
assignments for Unilever. 2024 net new billings were
$4.5bn (2023: $4.5bn).
WPP's commitment to creative
excellence continues to garner industry recognition, with the
company being named 'Creative Company of
the Year' for 2024 at the Cannes Lions International Festival of
Creativity. Ogilvy took home 'Creative Network of the Year' at
Cannes and The Coca-Cola Company, whose global marketing partner is
WPP Open X, was named 'Creative Brand of the Year' for the first
time in its history. These awards underscore WPP's ability to
deliver innovative, integrated solutions that not only meet but
exceed client expectations, driving both growth
and expansion from across its client base.
Build world-class,
market-leading brands
In 2024, we further simplified our
structure making it easier for clients to access our talent and
allowing us to build a more efficient operating model. WPP now has
six powerful agency networks - GroupM, VML, Ogilvy, AKQA, Hogarth
and Burson - which collectively account for
around 92%of revenue less pass-through
costs.
2025 will be the first full year of
operation for our two newly created agencies: Burson, a leading
global strategic communications agency formed through the
consolidation of BCW and Hill & Knowlton, and VML, the world's
largest integrated creative agency, bringing together VMLY&R
and Wunderman Thompson. The swift completion of these mergers in
2024 by the teams at VML and Burson has strategically aligned our
brands for continued progress, leveraging their enhanced
capabilities and global reach.
Brian Lesser joined as the Global
CEO of GroupM, our media planning and buying business, in September
2024, and is focused on improving the competitiveness of our media
offer, globally and in the US, leveraging WPP Open Media Studio and
Choreograph.
Under Brian's leadership, GroupM
will bring this differentiated strategy together with
next-generation proprietary trading media products, WPP Open Media
Studio and the power of WPP's broader integrated offer in creative,
production and commerce to drive media effectiveness and
performance for our clients.
Execute efficiently to drive
financial returns
Integral to our strategy over the
past year has been the imperative to execute more efficiently.
Investing in AI through WPP Open will allow us to work faster and
with more discipline. Integrating our offer for clients means that
we can streamline the marketing process and take out duplicate
roles. As a simpler company, with fewer brands, we are able to
maximise our investments in client-facing roles and take out
unnecessary overhead.
As well as our success in
delivering, at an accelerated pace, the structural cost savings
relating to the agency mergers and GroupM simplification, we
continue to make good progress in our back-office efficiency
programme across enterprise IT, finance, procurement and real
estate. This success is reflected in the improved margin and cash
conversion in 2024.
In enterprise IT, we successfully rolled out Maconomy
ERP in certain markets in EMEA and South America during 2024 and
will go live with Workday ERP in VML and Ogilvy in the UK
in the first half of 2025.
We have a targeted programme of work
around our enterprise IT to continue to modernise our estate, drive
efficiencies and protect our business and are making good progress
with costs reducing year-on-year in 2024. Our cloud migration
continued to deliver benefits as we migrate workloads to the cloud
and decommission legacy equipment and capacity.
Across IT and Finance, we continue
to optimise our finance shared service centres, offshoring more
back-office processes and driving further automation and
efficiencies in the work we do.
WPP is also investing in Global
Delivery Centres (GDCs) with a capability hub headquartered in
India, accessible to all WPP agency teams around the world. Our
GDCs play a critical role in WPP's business transformation and
simplification strategy with capabilities from
hyper-personalisation and composable commerce to cloud
modernisation and product engineering. Prashant Mehta joined WPP in
2024 from Accenture as Managing Director to lead the
GDCs.
Our category-led procurement model
continues to consolidate spend by sub-category to drive further
savings. We are digitalising our source-to-contract processes,
enabling further automation as we consolidate our ERP
landscape.
In real estate, our ongoing campus
programme and consolidation of leases continues to deliver
benefits. Seven new campuses opened during the year, including
WPP's third London campus at One Southwark Bridge and our third
campus in India, located in Chennai.
During 2024 we made further progress
on the simplification of our specialist agencies with the disposal
of our stake in Two Circles, the integration of BSG with Burson and
other actions to rationalise and improve the performance of the
tail of smaller agencies within WPP.
Purpose and ESG
WPP's purpose is to use the power of
creativity to build better futures for our people, planet, clients
and communities. Read more on the ways WPP is working to deliver
against its purpose in our 2023
Sustainability Report.
Full year overview
Revenue was £14.7bn, down 0.7% from
£14.8bn in 2023, and up 2.3% like-for-like. Revenue less
pass-through costs was £11.4bn, down 4.2% from £11.9bn in 2023, and
down 1.0% like-for-like.
|
|
Q4 2024
£m
|
%
reported
|
%
M&A
|
%
FX
|
%
LFL
|
|
Revenue
|
3,956
|
(3.9)
|
(0.3)
|
(3.7)
|
0.1
|
|
Revenue less pass-through costs
|
2,994
|
(6.7)
|
(0.8)
|
(3.6)
|
(2.3)
|
|
|
2024
£m
|
%
reported
|
%
M&A
|
%
FX
|
%
LFL
|
|
Revenue
|
14,741
|
(0.7)
|
0.2
|
(3.2)
|
2.3
|
|
Revenue less pass-through costs
|
11,359
|
(4.2)
|
(0.1)
|
(3.1)
|
(1.0)
|
Segmental review
Business segments - revenue less pass-through
costs
|
%
LFL +/(-)
|
Global
Integrated
Agencies
|
Public
Relations
|
Specialist
Agencies
|
|
Q4
2024
|
(2.2)
|
(5.3)
|
(0.4)
|
|
2024
|
(0.8)
|
(1.7)
|
(2.3)
|
Global Integrated
Agencies: GroupM, our media planning and buying business, grew 2.7% in
2024 (2023: 4.9%),
benefiting from continued client investment in media, partially
offset by the impact of historical client losses and a more
challenging environment in China. GroupM saw an improved new
business performance in the second half of the year with the Amazon
and J&J wins and an important Unilever retention, despite some
losses, including Volvo.
GroupM's growth was offset by a 3.9%
LFL decline at other Global Integrated Agencies. Mid-single digit
growth in Hogarth in 2024 was offset by weaker performance across
integrated creative agencies, which included the impact of the 2023
loss of assignments with a large healthcare client and a
challenging trading environment in China. AKQA experienced a low
double digit decline in revenue less pass-through costs as spend on
project-based work remained weak throughout the year. Other Global
Integrated Agencies declined 6.5% in Q4 reflecting the continuation
of those factors and weaker client discretionary spend than is
typically seen in the final quarter, together with the lap of a
particularly strong quarter for variable client incentives in Q4
2023.
Public
Relations: Burson, created in June
from the merger of BCW and Hill & Knowlton, made good progress
with its integration and launched additional AI-powered
tools.
During Q4, Burson declined high
single digits as the business continued to be impacted by the 2023
loss of assignments with a large healthcare client and a more
challenging environment for client discretionary spending. This was
offset by continued strong growth at FGS Global, which is reflected
up to early December 2024 when its disposal to KKR
completed.
Specialist
Agencies: CMI Media Group, our
specialist healthcare media planning and buying agency, grew
strongly, offset by declines at Landor and Design Bridge and
Partners. Our smaller specialist agencies continued to be affected
by more cautious client spending, including delays in project-based
work.
Regional segments - revenue less pass-through
costs
|
%
LFL +/(-)
|
North
America
|
United
Kingdom
|
Western Continental
Europe
|
Rest of
World
|
|
Q4
2024
|
(1.4)
|
(5.1)
|
1.4
|
(4.8)
|
|
2024
|
(0.7)
|
(2.7)
|
1.7
|
(2.6)
|
North America declined by 0.7% in
2024 with good growth in automotive, TME and financial services
client spending, offset by lower revenues in healthcare, due to a
2023 client loss, and a tough comparison for CPG in 2023. Revenues
from technology clients continued to stabilise in the second half
with good growth in North America in Q4.
The United Kingdom declined in 2024
reflecting a strong comparison (2023: +5.6%) and the impact of
slower client spending in Q4 with further weakness in project-based
work across creative and specialist agencies exacerbated by an
uncertain macro outlook, only partially offset by growth in GroupM
and Ogilvy.
In Western Continental Europe,
France, Spain and Italy grew during 2024. Our largest market,
Germany, declined 1.0% reflecting macro pressures on client
spending in automotive and travel & leisure sectors, but saw
stronger performance in Q4, growing 4.0%, lapping a softer
comparison (Q4 2023: -5.3%), benefiting from growth in spend at
financial services clients and a good overall performance at
GroupM.
The Rest of World declined
2.6%. India grew 2.8% with
a decline in Q4 lapping a tough comparison (Q4 2023:
22.0%) influenced by the timing of sporting events. This was offset
by China which declined 20.8% on client assignment losses and
persistent macroeconomic pressures impacting across our
agencies.
The new management team in China is
focused on stabilising performance and evolving our offer to bring
together the best of our talent and capabilities and build on our
leading market position.
We expect performance to continue to
be challenging in China in the first half of 2025, with some
improvement later in the year as we begin to lap easier comparisons
from the second quarter onwards. We remain confident the actions we
are taking in China will strengthen our business over the
medium-term in what is an important strategic market for
WPP.
Top
five markets - revenue less pass-through costs
|
%
LFL +/(-)
|
USA
|
UK
|
Germany
|
China
|
India
|
|
Q4
2024
|
(1.4)
|
(5.1)
|
4.0
|
(21.2)
|
(5.4)
|
|
2024
|
(0.6)
|
(2.7)
|
(1.0)
|
(20.8)
|
2.8
|
Client sector - revenue less pass-through
costs
|
|
Q4 2024
|
2024
|
2024
|
|
|
% LFL +/(-)
|
% LFL +/(-)
|
% share, revenue less
pass-through costs†
|
|
CPG
|
(0.3)
|
5.1
|
28.4
|
|
Tech & Digital
Services
|
2.5
|
(1.6)
|
17.3
|
|
Healthcare & Pharma
|
(3.1)
|
(7.2)
|
11.0
|
|
Automotive
|
(3.3)
|
1.3
|
10.4
|
|
Retail
|
(5.8)
|
(7.8)
|
8.8
|
|
Telecom, Media &
Entertainment
|
4.6
|
3.7
|
6.9
|
|
Financial Services
|
5.8
|
3.1
|
6.3
|
|
Other
|
(13.3)
|
(14.8)
|
4.6
|
|
Travel & Leisure
|
(8.5)
|
1.7
|
3.6
|
|
Government, Public Sector &
Non-profit
|
2.9
|
(1.4)
|
2.7
|
†. Proportion of WPP group revenue less pass-through costs in
2024; table made up of clients representing 79% of WPP total revenue less pass-through
costs.
Financial results
Unaudited headline income
statement†:
|
£
million
|
2024
|
2023
|
+/(-) %
reported
|
+/(-) %
LFL
|
|
|
|
|
|
|
|
Revenue
|
14,741
|
14,845
|
(0.7)
|
2.3
|
|
Revenue less pass-through
costs
|
11,359
|
11,860
|
(4.2)
|
(1.0)
|
|
Operating profit
|
1,707
|
1,750
|
(2.5)
|
2.0
|
|
Operating profit margin %
|
15.0 %
|
14.8 %
|
0.2pt*
|
0.4
|
|
Earnings from associates
|
40
|
37
|
8.1
|
|
|
PBIT
|
1,747
|
1,787
|
(2.2)
|
|
|
Net finance costs
|
(280)
|
(262)
|
(6.9)
|
|
|
Profit before taxation
|
1,467
|
1,525
|
(3.8)
|
|
|
Tax charge
|
(411)
|
(412)
|
0.2
|
|
|
Profit after taxation
|
1,056
|
1,113
|
(5.1)
|
|
|
Non-controlling interests
|
(87)
|
(87)
|
0.0
|
|
|
Profit attributable to
shareholders
|
969
|
1,026
|
(5.6)
|
|
|
Diluted EPS
|
88.3p
|
93.8p
|
(5.9)
|
0.1
|
|
Reported:
|
|
|
|
|
|
Revenue
|
14,741
|
14,845
|
(0.7)
|
|
|
Operating profit
|
1,325
|
531
|
149.5
|
|
|
Profit before taxation
|
1,031
|
346
|
198.0
|
|
|
Diluted EPS
|
49.4p
|
10.1p
|
389.1
|
|
*margin points
†Non-GAAP measures in this table are reconciled in Appendix
4.
Operating profit
Headline operating profit was
£1,707m (2023: £1,750m), with the year-on-year decline reflecting
lower revenue less pass-through costs and investment in WPP Open,
AI and data partially offset by continued cost discipline and
structural cost savings. Headline operating profit margin was 15.0%
(2023: 14.8%), equivalent to an improvement of 0.4 points on a
constant currency basis.
Total headline operating costs were
down 4.5%, to £9,652m (2023: £10,110m). Headline staff costs
(excluding incentives) of £7,398m were down 4.5% compared to the
prior period (2023: £7,750m), reflecting wage inflation offset by
lower headcount, as a result of the actions associated with our
restructuring initiatives and our swift response to softer top-line
performance in certain markets. Incentives of £363m were down 6.2%
compared to the prior period (2023: £387m). As a percentage of
revenue less pass-though costs, overall incentives were flat year
on year at 3.2%.
Headline establishment costs of
£472m were down 8.5% compared to the prior period (2023: £516m)
driven by benefits from the campus programme and consolidation of
leases. IT costs of £684m (2023: £698m) were down 2.0%, reflecting
our ongoing focus on driving efficiencies to mitigate inflation.
Personal costs of £209m (2023: £223m) were down 6.3% driven by
savings in travel and entertainment, and other operating expenses
of £526m (2023: £536m) were down 1.9%.
On a like-for-like basis, the
average number of people in the Group in 2024 was 111,281 compared
to 114,732 in 2023. The total number of people as at 31 December
2024 was 108,044 compared to 114,173
as at 31 December 2023.
Headline EBITDA (including IFRS 16
depreciation) for the period was down by 2.1% to £1,935m (2023:
£1,977m).
Reported operating profit was
£1,325m (2023: £531m) with the increase primarily due to lower
amortisation charges, as 2023 included accelerated brand
amortisation charges following the creation of VML, lower
property-related restructuring costs and higher gains on disposal
of subsidiaries. Reported operating profit included goodwill
impairment charges of £237m (2023: £63m), primarily relating to
AKQA, and legal provision charges of £68m (2023: £11m
credit).
Restructuring and transformation
costs included in reported operating profit were £251m (2023:
£196m). Restructuring and transformation costs in 2024 include £90m
(2023: £113m) in relation to the Group's ERP and IT transformation
program and £144m (2023: £73m) relating to the continuing
transformation program including the creation of VML and Burson and
simplification of GroupM.
Net
finance costs
Headline net finance costs of £280m
were up 6.9% compared to the prior period (2023: £262m), primarily
due to the impact of refinancing bonds at higher rates.
Reported net finance costs were
£330m (2023: £255m), including net charges of £50m (2023: net gains
£7m) relating to the revaluation and retranslation of financial
instruments.
Tax
The headline effective tax rate
(based on headline profit before tax) was 28.0% (2023: 27.0%). The
increase in the headline effective tax rate is driven by changes in
tax rates or tax bases in the markets in which we operate. Given
the Group's geographic mix of profits and the changing
international tax environment, the tax rate is expected to increase
over the next few years.
The reported effective tax rate was
39.0% (2023: 43.1%). The reported effective tax rate is higher than
the headline effective tax rate due to non-deductible goodwill
impairment charges.
Earnings per share ("EPS") and dividend
Headline diluted EPS was
88.3p (2023: 93.8p), a decrease of 5.9% due
to lower headline operating profit, higher headline net finance
costs and a higher headline effective tax rate.
Reported diluted EPS was
49.4p (2023: 10.1p), an increase of 389% due
to higher reported operating profit.
The Board is proposing a final
dividend for 2024 of 24.4 pence per share, which together with the
interim dividend paid in November 2024 gives a full-year dividend
of 39.4 pence per share. The record date for the final dividend is
6 June 2025, and the dividend will be payable on 4 July
2025.
Unaudited headline cash flow
statement†
|
Twelve months ended (£
million)
|
31 December
2024
|
31 December
2023
|
|
Headline operating profit
|
1,707
|
1,750
|
|
Headline earnings from
associates
|
40
|
37
|
|
Depreciation of property, plant and
equipment
|
156
|
165
|
|
Amortisation of other
intangibles
|
32
|
25
|
|
Depreciation of right-of-use
assets
|
213
|
257
|
|
Headline EBITDA
|
2,148
|
2,234
|
|
Less: headline earnings from
associates
|
(40)
|
(37)
|
|
Repayment of lease liabilities and
related interest
|
(377)
|
(362)
|
|
Non-cash compensation
|
109
|
140
|
|
Non-headline cash items (including
restructuring cost)
|
(261)
|
(218)
|
|
Capex
|
(236)
|
(217)
|
|
Working capital
|
117
|
(260)
|
|
Adjusted operating cash flow
|
1,460
|
1,280
|
|
%
conversion of Headline operating profit
|
86 %
|
73 %
|
|
Dividends (to minorities)/ from
associates
|
(36)
|
(58)
|
|
Contingent consideration liability
payments
|
(97)
|
(31)
|
|
Net interest
|
(197)
|
(159)
|
|
Cash tax
|
(392)
|
(395)
|
|
Adjusted free cash flow
|
738
|
637
|
|
Disposal proceeds
|
667
|
122
|
|
Net initial acquisition
payments
|
(153)
|
(280)
|
|
Dividends
|
(425)
|
(423)
|
|
Share purchases
|
(82)
|
(54)
|
|
Adjusted net cash flow
|
745
|
2
|
†Non-GAAP measures in this table are reconciled in Appendix
4.
Adjusted operating cash outflow was
£1,460m (2023: £1,280m). The main drivers of the larger cash inflow
year on year was a working capital inflow of £117m compared with an
outflow of £260m in the prior year, partially offset by an increase
in non-headline cash items to £261m (2023: £218m), mainly driven by
costs related to the previously announced restructuring plan,
including the creation of VML and Burson and the simplification of
GroupM. Reported net cash from operating activities (see Note 6)
increased to £1,408m (2023: £1,238m).
Cash restructuring and
transformation costs of £275m, included in non-headline cash items
are slightly lower than the guidance given in January 2024 and
relate to actions shared at the January Capital Markets Day,
primarily the structural cost saving plan relating to the creation
of VML and Burson and the simplification of GroupM (£135m). These
structural savings are to deliver annualised net cost savings of
c.£125m in 2025, with £85m of that saving achieved in 2024 (ahead
of the original plan of 40-50%).
Adjusted free cash flow was £738m
(2023: £637m) with the year on year increase reflecting higher
adjusted operating cash flow and contingent consideration liability
payments and higher cash interest and taxes, offset by lower
dividends to minorities. Adjusted net cash flow of £745m was higher
than the prior period (2023: £2m), primarily due to higher disposal
proceeds and lower net acquisition payments.
A summary of the Group's unaudited
cash flow statement and notes for the years to 31 December 2024 is
provided in Appendix 1.
Unaudited balance sheet
As at 31 December 2024, the Group
had total equity of £3,734m (31 December 2023: £3,833m).
Non-current assets decreased by
£831m to £11,848m (31 December 2023: £12,679m), primarily driven by
a decrease in goodwill of £779m. Lower goodwill is primarily due to
goodwill derecognised on disposal of FGS Global of £448m and
goodwill impairment charges of £237m.
Current assets of £13,661m decreased
by £283m (31 December 2023: £13,944m). The decrease is principally
driven by lower trade and other receivables, (decrease of £738m),
partially offset by higher cash and cash equivalents (increase of
£420m).
Current liabilities of £15,516m
decreased by £789m (31 December 2023: £16,305m), primarily due to
lower borrowings and lower trade and other payables. Lower
borrowings is predominantly due to $750m in bonds that were
repaid in September 2024, partially offset by an increase as a
result of the reclassification from current liabilities of €500m of
bonds due within the next 12 months.
The decrease in both current trade
and other receivables and trade and other payables is primarily due
to client activity and timing of payments.
Non-current liabilities decreased by
£226m, to £6,259m (31 December 2023: £6,485m). This reduction
primarily reflects lower long-term lease liabilities and
non-current payables.
Recognised within total equity,
other comprehensive loss of £62m (2023: £329m loss) for the year
includes a £72m loss (2023: £427m loss) for foreign exchange
differences on translation of foreign operations, and a £3m loss
(2023: gain of £108m) on the Group's net investment hedges. Other
equity movements include the net decrease in the movement in
non-controlling interest of £218m (2023: increase of £12m), in part
from the derecognition of FGS Global non-controlling
interest.
A summary of the Group's unaudited
balance sheet and selected notes as at 31 December 2024 is provided
in Appendix 1.
Adjusted net debt
As at 31 December 2024, the Group
had cash and cash equivalents of £2.6bn (31 December 2023: £2.2bn)
and borrowings of £4.3bn (31 December 2023: £4.7bn).
The Group has current liquidity of
£4.5bn (31 December 2023: £3.8bn), comprising cash and cash
equivalents and bank overdrafts, and undrawn credit
facilities.
As at 31 December 2024 adjusted net
debt was £1.7bn, against £2.5bn as at 31 December 2023, down £0.8bn
reflecting free cash flow generation and disposal proceeds,
including proceeds from the disposal of FGS Global completed in
December 2024. Average adjusted net debt in 2024 was £3.5bn (31
December 2023: £3.6bn).
The average adjusted net debt to
headline EBITDA ratio in the 12 months ended 31 December 2024 is
1.80x (12 months ended 31 December 2023: 1.83x).
In February 2024, we refinanced our
five-year Revolving Credit Facility of $2.5bn, with the new
facility running for five years, with two one-year extension
options maturing in February 2029 (excluding options) and with no
financial covenants. The first of the two-year extension option was
triggered in January 2025, effective from February 2025 to extend
the maturity to February 2030.
In March 2024, we refinanced $750m
of 3.75% bonds due September 2024 and €500m of 1.375% bonds due
March 2025 as planned, issuing €600m of 3.625% bonds due September
2029 and €650m of 4.0% bonds due September 2033.
In December 2024, we repurchased
€200m of 4.125% bonds due May 2028, €249 million of 3.625% bonds
due September 2029 and €150m of 4% bonds due September
2033.
Our bond portfolio as at 31 December
2024 had an average maturity of 6.3 years (31 December 2023: 6.2
years).
Outlook
Our guidance for 2025 is as
follows:
|
Like-for-like revenue less pass-through costs growth of flat
to -2%, with performance improving in H2.
Headline
operating margin expected to be around flat (excluding the impact
of FX)
|
Other 2025 financial
indications:
• Mergers and
acquisitions will reduce revenue less pass-through costs by around
3.0 points
primarily due to the disposal of FGS Global,
partially offset by anticipated M&A
• FX impact:
current rates (at 18 February 2025) imply a c.0.1% drag on FY 2025
revenue less pass-through costs, with no meaningful impact expected
on FY 2025 headline operating margin
• Headline
earnings from associates around £40m
•
Non-controlling interests around £65m
• Headline
net finance costs of around £280m
• Effective
tax rate (measured as headline tax as a % of headline profit before
tax) of around 29%. Cash taxes will include tax in relation to the
FGS Global disposal
• Capex of
around £250m
• Cash
restructuring costs of around £110m
• Adjusted
operating cash flow before working capital of around
£1.4bn (2024: £1.3bn)
Medium-term targets
In January 2024 we presented updated
medium-term financial framework including the following three
targets:
• 3%+ LFL
growth in revenue less pass-through costs
• 16-17%
headline operating profit margin
• Adjusted
operating cash flow conversion of 85%+
Business sector and regional analysis
Business sector7
Revenue analysis
|
£
million
|
2024
|
2023
|
+/(-) %
reported
|
+/(-) %
LFL
|
|
Global Int. Agencies
|
12,562
|
12,532
|
0.2
|
3.0
|
|
Public Relations
|
1,156
|
1,262
|
(8.4)
|
(2.6)
|
|
Specialist Agencies
|
1,023
|
1,051
|
(2.7)
|
(0.6)
|
|
Total Group
|
14,741
|
14,845
|
(0.7)
|
2.3
|
Revenue less pass-through costs analysis
|
£
million
|
2024
|
2023
|
+/(-) %
reported
|
+/(-) % LFL
|
|
Global Int. Agencies
|
9,384
|
9,751
|
(3.8)
|
(0.8)
|
|
Public Relations
|
1,089
|
1,180
|
(7.7)
|
(1.7)
|
|
Specialist Agencies
|
886
|
929
|
(4.6)
|
(2.3)
|
|
Total Group
|
11,359
|
11,860
|
(4.2)
|
(1.0)
|
Headline operating profit analysis
|
£
million
|
2024
|
% margin*
|
2023
|
% margin*
|
|
Global Int. Agencies
|
1,482
|
15.8
|
1,480
|
15.2
|
|
Public Relations
|
166
|
15.2
|
191
|
16.2
|
|
Specialist Agencies
|
59
|
6.7
|
79
|
8.5
|
|
Total Group
|
1,707
|
15.0
|
1,750
|
14.8
|
* Headline operating profit as a
percentage of revenue less pass-through costs.
Regional
Revenue analysis
|
£
million
|
2024
|
2023
|
+/(-) %
reported
|
+/(-) % LFL
|
|
N. America
|
5,567
|
5,528
|
0.7
|
2.9
|
|
United Kingdom
|
2,185
|
2,155
|
1.4
|
0.9
|
|
W Cont. Europe
|
3,013
|
3,037
|
(0.8)
|
2.7
|
|
AP, LA, AME,
CEE8
|
3,976
|
4,125
|
(3.6)
|
1.8
|
|
Total Group
|
14,741
|
14,845
|
(0.7)
|
2.3
|
7. Prior year figures have been re-presented to reflect the
reallocation of a number of businesses between Global Integrated
Agencies and Specialist Agencies. The impact of the re-presentation
is not material.
8.
Asia Pacific, Latin America, Africa & Middle
East and Central & Eastern Europe.
Revenue less pass-through costs analysis
|
£
million
|
2024
|
2023
|
+/(-) %
reported
|
+/(-) % LFL
|
|
N. America
|
4,394
|
4,556
|
(3.6)
|
(0.7)
|
|
United Kingdom
|
1,588
|
1,626
|
(2.3)
|
(2.7)
|
|
W Cont. Europe
|
2,375
|
2,411
|
(1.5)
|
1.7
|
|
AP, LA, AME, CEE
|
3,002
|
3,267
|
(8.1)
|
(2.6)
|
|
Total Group
|
11,359
|
11,860
|
(4.2)
|
(1.0)
|
Headline operating profit analysis
|
£
million
|
2024
|
% margin*
|
2023
|
% margin*
|
|
|
N. America
|
825
|
18.8
|
834
|
18.3
|
|
|
United Kingdom
|
237
|
14.9
|
215
|
13.2
|
|
|
W Cont. Europe
|
259
|
10.9
|
258
|
10.7
|
|
|
AP, LA, AME, CEE
|
386
|
12.9
|
443
|
13.6
|
|
|
Total Group
|
1,707
|
15.0
|
1,750
|
14.8
|
|
* Headline operating profit as a
percentage of revenue less pass-through costs.
