FINANCIAL
STATEMENTS
In this section
Accounting policies  172

Consolidated financial statements  178

Notes to the consolidated financial statements  183

Independent auditor’s report  215

Reconciliation to non-GAAP
measures of performance 223

170 WPP ANNUAL REPORT 2023

 FINANCIAL STATEMENTS

WPP ANNUAL REPORT 2023 171

 FINANCIAL STATEMENTS 

ACCOUNTING POLICIES

The consolidated financial statements of WPP plc and its subsidiaries GOODWILL AND OTHER INTANGIBLE ASSETS
(the Group) for the year ended 31 December 2023 have been prepared in Intangible assets comprise goodwill, certain acquired separable corporate
accordance with International Financial Reporting Standards (IFRS) as issued brand names, acquired customer relationships, acquired proprietary tools
by the International Accounting Standards Board (IASB) as they apply to the and capitalised computer software not integral to a related item of hardware.
financial statements of the Group for the year ended 31 December 2023.
Goodwill represents the excess of fair value attributed to investments in
The separate financial statements of WPP plc (the Company), a company businesses over the fair value of the underlying net assets where relevant,
registered in Jersey, for the year ending 31 December 2023 are filed with the including intangible assets, at the date of their acquisition.
Company’s registrar in Jersey.
Goodwill impairment reviews are undertaken annually or more frequently
BASIS OF PREPARATION if events or changes in circumstances indicate a potential impairment.
The Group consolidated financial statements have been prepared on a going The carrying value of goodwill is compared to the recoverable amount,
concern basis, under the historical cost convention, except for the revaluation defined as the higher of fair value less costs of disposal and value in use.
of certain financial instruments. In performing its going concern assessment, The net present value of future cash flows, to determine value in use, is
management's forecasts and projections, taking account of (i) reasonably derived from the underlying assets using a projection period of up to five
possible declines in revenue less pass-through costs and (ii) remotely possible years for each cash-generating unit. After the projection period, a steady
declines in revenue less pass-through costs for stress-testing purposes growth rate representing an appropriate long-term growth rate for the
compared to 2023, considering the Group’s liquidity headroom taking into industry is applied. Any goodwill impairment is recognised immediately
account the suspension of share buybacks, dividends and acquisitions, and as an expense and is not subsequently reversed.
cost-mitigation actions which could be implemented, show that the Company
and the Group would be able to operate with appropriate liquidity and be Corporate brand names, customer relationships and proprietary tools
able to meet its liabilities as they fall due, considering that the Group was in a acquired as part of acquisitions of businesses are capitalised separately from
£2.3 billion net current liability position as at 31 December 2023. The Company goodwill as intangible assets if their value can be measured reliably on initial
modelled a range of revenue less pass-through cost declines up to 31% recognition and it is probable that the expected future economic benefits
compared with the year ended 31 December 2023. The Directors therefore that are attributable to the asset will flow to the Group.
have a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the foreseeable Certain corporate brands of the Group are considered to have an indefinite
future. Thus, they continue to adopt the going concern basis of accounting economic life because of the institutional nature of the corporate brand
in preparing the financial statements. names, their proven ability to maintain market leadership and profitable
operations over long periods of time and the Group’s commitment to develop
The principal accounting policies are set out below. and enhance their value. The carrying value of these intangible assets is
reviewed at least annually for impairment and adjusted to the recoverable
BASIS OF CONSOLIDATION amount if required.
The consolidated financial statements include the results of the Company
and all its subsidiary undertakings made up to the same accounting date. Amortisation is provided at rates calculated to write off the cost less estimated
All intra-Group balances, transactions, income and expenses are eliminated residual value of each asset on a straight-line basis over its estimated useful life
in full on consolidation. Subsidiary undertakings are those entities controlled as follows:
by the Group. Control exists where the Group is exposed to, or has the rights
to variable returns from its involvement with, the investee and has the ability – brand names (with finite lives) – 10-20 years
to use its power over the investee to affect its returns. The results of subsidiary – customer-related intangibles – 3-10 years
undertakings acquired or disposed of during the period are included or – other proprietary tools – 3-10 years
excluded from the consolidated income statement from the effective date – other (including capitalised computer software) – 3-5 years
of acquisition or disposal. Non-controlling interests represent the share of
earnings or equity in subsidiaries that is not attributable, directly or indirectly, CONTINGENT CONSIDERATION
to shareholders of the Group. Contingent consideration is accounted for in accordance with IFRS 3 Business
Combinations. Contingent consideration only applies to situations where
NEW IFRS ACCOUNTING PRONOUNCEMENTS contingent payments are not dependent on future employment of vendors
The Group has applied the following standards and amendments for the first and any such payments are expensed when they relate to future employment.
time for their annual reporting period commencing on or after 1 January 2023:
Future anticipated payments to vendors in respect of contingent consideration
– IFRS 17 Insurance Contracts (earnout agreements) are initially recorded at fair value which is the present
– Definition of Accounting Estimates – Amendments to IAS 8 value of the expected cash outflows of the obligations. The obligations are
– Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice dependent on the future financial performance of the interests acquired
Statement 2 (typically over a four- to five-year period following the year of acquisition)
– Deferred Tax related to Assets and Liabilities arising from a Single and assume the operating companies improve profits in line with Directors’
Transaction – Amendments to IAS 12 estimates. The Directors derive their estimates from internal business plans
– International Tax Reform – Pillar Two Model Rules – Amendments to IAS 12 together with financial due diligence performed in connection with
the acquisition.
The standards and amendments listed above did not have any impact on
the amounts recognised in prior periods, did not have a significant impact Subsequent adjustments to the fair value are recorded in the consolidated
on the amounts recognised in the current period, and are not expected to income statement within revaluation and retranslation of financial instruments.
significantly affect the future periods. The effect of any revisions to fair value adjustments that had been determined
provisionally at the immediately preceding balance sheet date are accounted
At the date of authorisation of these financial statements, there were a for as revisions to goodwill, as permitted by IFRS 3 Business Combinations.
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.

172 WPP ANNUAL REPORT 2023

ACCOUNTING POLICIES  FINANCIAL STATEMENTS

PROPERTY, PLANT AND EQUIPMENT ACCRUED AND DEFERRED INCOME

Property, plant and equipment are shown at cost less accumulated Accrued income is a receivable within the scope of IFRS 9 Financial
depreciation and any provision for impairment with the exception of freehold Instruments, and is recognised when a performance obligation has been
land which is not depreciated. The Group assesses the carrying value of its satisfied but has not yet been billed. Accrued income is transferred to trade
property, plant and equipment to determine if any impairment indicators exist. receivables once the right to consideration is billed per the terms of the
Where this indicates that an asset may be impaired, the Group applies the contractual agreement.
requirements of IAS 36 Impairment of Assets in assessing the carrying amount
of the asset. This process includes comparing its recoverable amount with its In certain cases, payments are received from customers or amounts are billed
carrying value, where the recoverable amount is the higher of an asset's fair with an unconditional right to receive consideration prior to satisfaction of
value less costs of disposal and value in use. Property, plant and equipment performance obligations and recognised as deferred income. These balances
impairment charges also form part of the property-related restructuring costs are considered contract liabilities and are typically related to prepayments for
described in note 3; and are derived applying the method described in the third-party expenses that are incurred shortly after billing.
Leases accounting policy. Depreciation is provided at rates calculated to write
off the cost less estimated residual value of each asset on a straight-line basis TRADE RECEIVABLES AND UNBILLED COSTS
over its estimated useful life, as follows: Trade receivables are stated net of expected credit loss.

– freehold buildings – 50 years Unbilled costs (previously named Work in progress) includes outlays incurred
– leasehold land and buildings – over the term of the lease or life of the asset, on behalf of clients, including production costs, and other third-party costs
if shorter that have not yet been billed and are considered receivables under IFRS 15
– fixtures, fittings and equipment – 3-10 years Revenue from Contracts with Customers.
– computer equipment – 3-5 years
EXPECTED CREDIT LOSSES
INTERESTS IN ASSOCIATES AND JOINT VENTURES The Group has applied the simplified approach to measuring expected credit
An associate is an entity over which the Group has significant influence. In losses, as permitted by IFRS 9 Financial Instruments. This has been applied to
certain circumstances, significant influence may be represented by factors trade receivables, contract assets and lease receivables. Under this approach,
other than ownership and voting rights, such as representation on the Board the Group utilises a provision matrix based on the age of the trade receivables
of Directors. and historical loss rates to determine the expected credit losses. The Group
also considers forward-looking information. Therefore, the Group does not
The Group’s share of the profits less losses of associate undertakings net track changes in credit risk, but recognises a loss allowance based on the
of tax, interest and non-controlling interests is included in the consolidated financial asset's lifetime expected credit loss. For all other assets, the general
income statement and the Group’s share of net assets is shown within interests approach has been applied and a loss allowance for 12-month expected credit
in associates and joint ventures in the consolidated balance sheet. The Group’s losses is recognised.
share of the profits less losses and net assets is based on current information
produced by the undertakings, adjusted to conform with the accounting Under IFRS 9, the expected credit losses are measured as the difference
policies of the Group. The Group discontinues recognising its share of net between the asset’s gross carrying amount and the present value of estimated
assets or its share of net results from an associate if the value of the investment future cash flows discounted at the financial asset’s original effective interest
has reduced to nil. Any additional losses are provided for, and a liability is rate. Given the short-term nature of the Group’s trade receivables, unbilled
recognised, only to the extent that the Group has incurred legal or constructive costs and accrued income, which are mainly due from large national or
obligations or made payments on behalf of the associate. If the associate multinational companies, the Group's assessment of expected credit losses
subsequently reports a positive equity, the Group resumes recognising its includes provisions for specific clients and receivables where the contractual
share of net assets, net result and other comprehensive income. cash flow is deemed at risk.

The Group assesses the carrying value of its associate undertakings to The Group considers that the credit risk increased significantly since
determine if any impairment has occurred. Where this indicates that an initial recognition when the credit rating changes adversely, the debtor
investment may be impaired, the Group applies the requirements of IAS 36 has significant financial difficulty or if there was a breach of contract.
in assessing the carrying amount of the investment. This process includes
comparing its recoverable amount with its carrying value. The recoverable Financial assets are written off when there is evidence indicating that the
amount is defined as the higher of fair value less costs of disposal and value debtor is in severe financial difficulty and the Group has no realistic prospect
in use. of recovery. Receivables written off are still subject to enforcement activity
and pursued by the Group.
The Group accounts for joint venture investments under the equity method
which is consistent with the Group’s treatment of associates. Further details on expected credit losses are provided in note 17.

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.

WPP ANNUAL REPORT 2023 173

 FINANCIAL STATEMENTS ACCOUNTING POLICIES 

FOREIGN CURRENCY AND INTEREST RATE HEDGING DERECOGNITION OF FINANCIAL LIABILITIES

The Group’s policy on interest rate and foreign exchange rate management In accordance with IFRS 9 Financial Instruments, a financial liability of the
sets out the instruments and methods available to hedge interest and currency Group is only removed from the statement of financial position when the
risk exposures and the control procedures in place to ensure effectiveness. underlying legal obligation is extinguished.

The Group uses derivative financial instruments to reduce exposure to foreign DEBT
exchange risk and interest rate movements. The Group does not hold or issue Interest-bearing debt is recorded at the proceeds received, net of direct
derivative financial instruments for speculative purposes. issue costs.

Derivatives are initially recognised at fair value at the date a derivative CASH AND CASH EQUIVALENTS
contract is entered into and are subsequently remeasured to their fair value Cash and cash equivalents comprise cash at bank and in hand and short-term
at each balance sheet date. The resulting gain or loss is recognised in profit or highly liquid investments which are readily convertible to known amounts of
loss immediately unless the derivative is designated and effective as a hedging cash and are subject to insignificant risk of changes in value, including bank
instrument, in which event the timing of the recognition in profit or loss deposits and money market funds. For Cash Flow Statement presentation
depends on the nature of the hedge relationship. purposes, the Group's overdrafts are included in cash and cash equivalents
where they are repayable on demand, are components of the Group's
At inception of the hedge relationship, the Group documents the relationship centralised treasury strategy employed across the Group and form an integral
between hedging instruments and hedged items, including whether changes part of the Group's cash management, in accordance with IAS 7 Statement
in the cash flows of the hedging instruments are expected to offset changes of Cash Flows.
in the fair values or cash flows of hedged items. Furthermore the Group
documents its risk management objectives and its strategy for undertaking BORROWING COSTS
various hedge transactions. Finance costs of borrowing are recognised in the consolidated income
statement over the term of those borrowings.
Note 25 contains details of the fair values of the derivative instruments used
for hedging purposes. REVENUE RECOGNITION
The Group is a leading worldwide creative transformation organisation
Changes in the fair value of derivatives that are designated and qualify as fair offering national and multinational clients a comprehensive range of
value hedges are recorded in profit or loss immediately, together with any communications, experience, commerce and technology services. Contracts
changes in the fair value of the hedged items that are attributable to the often involve multiple agencies offering different services in different
hedged risk. countries. As such, the terms of local, regional and global contracts can
vary to meet client needs and regulatory requirements. Consistent with
The effective portion of changes in the fair value of derivatives that are the industry, contracts are typically short-term in nature and tend to be
designated and qualify as cash flow or net investment hedges is recognised cancellable by either party with 90 days' notice. The Group is generally
in other comprehensive income and deferred in equity. The gain or loss entitled to payment for work performed to date.
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 Group is generally paid in arrears for its services. Invoices are typically
the hedged item is recognised in profit or loss. However, when the forecast payable within 30 to 60 days. Revenue comprises commissions and fees
transaction that is hedged results in the recognition of a non-financial asset or earned in respect of amounts billed and is stated exclusive of VAT, sales
a non-financial liability, the gains and losses previously deferred in equity are taxes and trade discounts. Pass-through costs comprise fees paid to external
transferred from equity and included in the initial measurement of the cost of suppliers when they are engaged to perform part or all of a specific project
the asset or liability. and are charged directly to clients. This includes media costs where the Group
is buying digital media for its own account on a transparent opt-in basis and,
Hedge accounting is discontinued when the hedging instrument expires or as a result, the subsequent media pass-through costs are recorded as Group
is sold, terminated, exercised, or no longer qualifies for hedge accounting. revenue. As the contracts are generally short-term in nature, the Group has
At that time, any cumulative gain or loss on the hedging instrument recognised applied the practical expedient permitted by IFRS 15 to expense costs to
in equity is retained in equity until the forecast transaction occurs. If a hedged obtain a contract as incurred, where applicable.
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. 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
Derivatives embedded in other financial liabilities or other host contracts pattern of transfer to the customer and, as such, are accounted for as a single
are treated as separate derivatives when their risks and characteristics are performance obligation. However, where there are contracts with services
not closely related to those of host contracts and the host contracts are not that are capable of being distinct, are distinct within the context of the contract,
carried at fair value with unrealised gains or losses reported in the and are accounted for as separate performance obligations, revenue is
consolidated income statement. allocated to each of the performance obligations based on relative stand-alone
selling prices.
LIABILITIES IN RESPECT OF OPTION AGREEMENTS
Option agreements that allow the Group’s equity partners to require the Revenue is recognised when a performance obligation is satisfied in
Group to purchase a non-controlling interest are recorded in the consolidated accordance with the terms of the contractual arrangement. Typically,
balance sheet initially at the present value of the redemption amount in performance obligations are satisfied over time as services are rendered.
accordance with IAS 32 Financial Instruments: Presentation and subsequently, Revenue recognised over time is based on the proportion of the level of
the financial liability is measured at amortised cost in accordance with IFRS 9 service performed. Either an input method or an output method, depending
Financial Instruments. On initial recognition, the corresponding amount is on the particular arrangement, is used to measure progress for each
recognised against the equity reserve, which is subsequently reversed on performance obligation. For most fee arrangements, costs incurred are
derecognition, either through exercise or non-exercise of the option agreement. used as an objective input measure of performance. The primary input of
Changes in the measurement of the financial liability due to the unwinding of substantially all work performed under these arrangements is labour. There
the discount or changes in the amount that the Group could be required to is normally a direct relationship between costs incurred and the proportion
pay are recognised in profit or loss within revaluation and retranslation of of the contract performed to date. In other circumstances relevant output
financial instruments in the consolidated income statement. measures, such as the achievement of any project milestones stipulated
in the contract, are used to assess proportional performance.

174 WPP ANNUAL REPORT 2023

ACCOUNTING POLICIES  FINANCIAL STATEMENTS

REVENUE RECOGNITION CONTINUED TAXATION

For our retainer arrangements, we have a stand-ready obligation to perform Corporate taxes are payable on taxable profits at current rates. The tax
services on an ongoing basis over the life of the contract. The scope of these expense represents the sum of the tax currently payable and deferred tax.
arrangements is broad and generally not reconcilable to another input or
output criteria. In these instances, revenue is recognised using a time-based The Group is subject to corporate taxes in a number of different jurisdictions
method resulting in straight-line revenue recognition. and judgement is required in determining the appropriate provision for
transactions where the ultimate tax determination is uncertain. In such
The amount of revenue recognised depends on whether we act as an circumstances, the Group recognises liabilities for anticipated taxes based
agent or as a principal. Certain arrangements with our clients are such that on the best information available and where the anticipated liability is both
our responsibility is to arrange for a third party to provide a specified good probable and able to be estimated, liabilities are classified as current. Any
or service to the client. In these cases we are acting as an agent as we do interest and penalties accrued are included in corporate income taxes both
not control the relevant good or service before it is transferred to the client. in the consolidated income statement and balance sheet. Where the final
When we act as an agent, the revenue recorded is the net amount retained. outcome of such matters differs from the amount recorded, any differences
Costs incurred with external suppliers (such as production costs and media may impact the income tax and deferred tax provisions in the period in which
suppliers) are excluded from revenue and recorded as unbilled costs the final determination is made.
until billed.
The tax laws that apply to the Group’s subsidiaries may be amended by the
The Group acts as principal when we control the specified good or service relevant tax authorities. Such potential amendments are regularly monitored
prior to transfer. When the Group acts as a principal (such as when supplying and adjustments are made to the Group’s tax liabilities and deferred tax assets
in-house production services, events and branding), the revenue recorded is and liabilities where necessary.
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 The tax currently payable is based on taxable profit for the year. Taxable
recorded as an expense. 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
Further details on revenue recognition are detailed by sector below. 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
GLOBAL INTEGRATED AGENCIES enacted or substantively enacted by the balance sheet date.
Revenue is typically derived from integrated product offerings including
media placements and creative services. Revenue may consist of various Deferred tax is the tax expected to be payable or recoverable on differences
arrangements involving commissions, fees, incentive-based revenue or a between the carrying amounts of assets and liabilities in the financial
combination of the three, as agreed upon with each client. Revenue for statements and the corresponding tax bases used in the computation of
commissions on purchased media is typically recognised at the point in taxable profit, and is accounted for using the balance sheet liability method.
time the media is run. Deferred tax liabilities are recognised for all taxable temporary differences
unless specifically excepted by IAS 12 Income Taxes. Deferred tax is charged
The Group receives volume rebates from certain suppliers for transactions or credited in the consolidated income statement, except when it relates to
entered into on behalf of clients that, based on the terms of the relevant items charged or credited to other comprehensive income or directly to
contracts and local law, are either remitted to clients or retained by the Group. equity, in which case the deferred tax is also recognised within other
If amounts are passed on to clients they are recorded as liabilities until settled comprehensive income or equity. Deferred tax assets are recognised to the
or, if retained by the Group, are recorded as revenue when earned. extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised, which can require the use
Variable incentive-based revenue typically comprises both quantitative and of accounting estimation and the exercise of judgement. Such assets and
qualitative elements. Incentive compensation is estimated using the most liabilities are not recognised if the temporary difference arises from the initial
likely amount and is included in revenue up to the amount that is highly recognition of goodwill or other assets and liabilities (other than in a business
probable not to result in a significant reversal of cumulative revenue combination) in a transaction that affects neither the taxable profit nor the
recognised once the related uncertainty is resolved. The Group recognises accounting profit.
incentive revenue as the related performance obligation or obligations are
satisfied depending on the specific contractual terms. 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
PUBLIC RELATIONS AND SPECIALIST AGENCIES sufficient taxable profits will be available to allow all or part of the asset to
Revenue for these services is typically derived from retainer fees and fees for be recovered.
services to be performed subject to specific agreement. Most revenue under
these arrangements is earned over time, in accordance with the terms of the Deferred tax liabilities are recognised for taxable temporary differences arising
contractual arrangement. 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 2023 175

 FINANCIAL STATEMENTS ACCOUNTING POLICIES 

RETIREMENT BENEFIT COSTS LEASES

The Group accounts for retirement benefit costs in accordance with IAS 19 The Group leases most of its offices in cities where it operates. Other lease
Employee Benefits. contracts include office equipment and motor vehicles.

For defined contribution plans, contributions are charged to the consolidated At inception of a contract, the Group assesses whether a contract is, or
income statement as payable in respect of the accounting period. 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 defined benefit plans the amounts charged to operating profit are the for consideration.
current service costs, past service costs, administrative expenses and gains
and losses on settlements and curtailments. They are included as part of The Group recognises a right-of-use asset and a lease liability at the lease
staff costs. Past service costs are recognised immediately in the consolidated commencement date. The right-of-use asset is initially measured based on
income statement when the related plan amendment occurs. Net interest the initial amount of the lease liability adjusted for any lease payments made
expense is calculated by applying the discount rate to the recognised overall at or before the commencement date, plus any initial direct costs incurred,
surplus or deficit in the plan. 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
Actuarial gains and losses are recognised immediately in other covered by an option to extend if the Group is reasonably certain to exercise
comprehensive income. that option.

Where defined benefit plans are funded, the assets of the plan are held The lease liability is initially measured at the present value of the lease
separately from those of the Group, in separate independently managed payments that are not paid at the commencement date, discounted using the
funds. Pension plan assets are measured at fair value and liabilities are interest rate implicit in the lease or, if that rate cannot be readily determined,
measured on an actuarial basis using the projected unit method and the Group’s incremental borrowing rate for the same term as the underlying
discounted at a rate equivalent to the current rate of return on a high-quality lease. Lease payments included in the measurement of lease liabilities
corporate bond of equivalent currency and term to the plan liabilities. The comprise fixed payments less any lease incentives receivable and variable
actuarial valuations are obtained at least triennially and are updated at each lease payments that depend on an index or a rate as at the commencement
balance sheet date. date. Lease modifications result in remeasurement of the lease liability.

Recognition of a surplus in a defined benefit plan is limited based on the Depreciation is recognised in both costs of services and general and
economic gain the Group is expected to benefit from in the future by means administrative costs and interest expense is recognised under finance costs
of a refund or reduction in future contributions to the plan, in accordance in the consolidated income statement.
with IAS 19.
The Group has elected to use the exemption not to recognise right-of-use
PROVISIONS FOR LIABILITIES AND CHARGES assets and lease liabilities for short-term leases that have a lease term of 12
Provisions comprise liabilities where there is uncertainty about the timing of months or less and leases of low-value assets (under $5,000). The payments
settlement, but where a reliable estimate can be made of the amount using associated with these leases are recognised as cost of services and general
either the most likely or expected value, depending on which method best and administrative costs within the consolidated income statement on a
estimates the uncertainty. These include provisions for other property-related straight-line basis over the lease term.
liabilities such as onerous contracts and dilapidations. The timing of utilisation
or release of such provisions are typically dependent on the term of the The Group assesses at the reporting date whether there are any indicators of
underlying lease. The eventual settling of such property-related provisions impairment and performs an impairment test when an impairment indicator
will be dependent on negotiations with the relevant landlord. Also included exists. The Group tests a right-of use asset as a stand-alone asset for
are other provisions, primarily long-term employee benefits such as deferred impairment when it either meets the definition of investment property which
compensation plans, and legal claims, where the likelihood of settlement is generates independent cash flows or it is vacant with minimal to no continued
considered probable. The timing of release and utilisation of the deferred utility for the Group. When a right-of-use asset is tested as a stand-alone asset,
compensation plans are dependent on applicable plan rules while the timing an impairment loss is recognised when the carrying amount of the right-of-use
of settlement of legal claims are dependent on the status of any relevant legal asset exceeds its recoverable amount. The recoverable amount of a right-of-
proceedings. While we have factored in all known facts and circumstances, use asset is estimated mainly based on the present value of the estimated
it is likely certain legal settlements will vary from the provisioned amount. sublease income, discounted using the property yield rates.

CONTINGENT LIABILITIES The property held by the Group as right-of-use assets to earn rentals is
Contingent liabilities are possible obligations whose existence will only be classified as investment property. The Group measures its investment
confirmed by future events not wholly within the control of the group, or property applying the cost model.
present obligations where it is not probable that an outflow of resources will
be required or the amount of the obligation cannot be measured with
sufficient reliability. Contingent liabilities are not recognised in the
consolidated financial statements but are disclosed, if material, unless the
possibility of an outflow of economic resources is considered remote.

176 WPP ANNUAL REPORT 2023

ACCOUNTING POLICIES  FINANCIAL STATEMENTS

TRANSLATION OF FOREIGN CURRENCIES GOVERNMENT SUPPORT

Foreign currency transactions arising from normal trading activities are In reaction to the Covid-19 pandemic, certain governments introduced
recorded at the rates in effect at the date of the transaction. Monetary assets measures to assist companies. A reduction to operating costs is recorded in
and liabilities denominated in foreign currencies at the year-end are translated relation to government subsidies/schemes where these amounts will never
at the year-end exchange rate. Foreign currency gains and losses are credited have to be repaid. In other cases, this involves the deferral of certain tax
or charged to the consolidated income statement as they arise. 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
The income statements of foreign subsidiary undertakings, with functional period they are incurred.
currencies other than pounds sterling, are translated into pounds sterling at
average exchange rates and the year-end net assets of these companies are NON-CONTROLLING INTERESTS
translated at year-end exchange rates. Non-controlling interests in acquired companies are measured at the
non-controlling interests’ proportionate share of the acquiree’s identifiable net
Exchange differences arising from retranslation of the opening net assets and assets. The acquisition of a non-controlling interest in a subsidiary, and the sale
on foreign currency borrowings (to the extent that they hedge the Group’s of an interest while retaining control, is accounted for within equity, and the
investment in such operations) are reported in the consolidated statement cash cost of such purchases is included within 'Financing activities' in the cash
of comprehensive income. flow statement.

Goodwill and fair value adjustments arising on the acquisition of a foreign CLIMATE CHANGE CONSIDERATIONS
entity are treated as assets and liabilities of the foreign entity and translated In preparing these consolidated financial statements, the potential impacts
at the closing rate. of climate change risks, particularly in the context of the TCFD Statement on
pages 62-68 and the Strategic Report on pages 53-71, have been considered.
HYPERINFLATION IN ARGENTINA AND TURKEY This primarily focused on the impairment assessments for goodwill and
During 2023, 2022 and 2021, Argentina was designated as a hyperinflationary intangible assets with indefinite useful lives; the carrying value and estimated
economy. During 2023 and 2022, Turkey was designated as a hyperinflationary useful life of intangible assets, property, plant and equipment and right-of-use
economy. The financial statements of the Group’s subsidiaries in Argentina and assets; the measurement of deferred tax assets and provisions, including
Turkey have been adjusted for the effects of inflation in accordance with IAS 29 post-employment benefits; and the going concern period and viability of
Financial Reporting in Hyperinflationary Economies. the Group over the next three years. There has been no material impact on
the financial statements for the years ending 31 December 2023 and 2022.
IAS 29 requires that the income statement is adjusted for inflation in the period The potential implications of climate change risks on the financial statements
and translated at the year-end foreign exchange rate and that non-monetary will continue to be monitored and assessed in future periods.
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. CRITICAL JUDGEMENTS AND ESTIMATION UNCERTAINTY
The impact on other non‑monetary assets and liabilities and the impact on IN APPLYING ACCOUNTING POLICIES
the Group’s income statement in the year were immaterial. Management is required to make key decisions and judgements whilst
acknowledging there is estimation uncertainty in the process of applying the
SHARE-BASED PAYMENTS Group’s accounting policies. These estimates and judgements are reviewed
The Group issues equity-settled share-based payments (including share on an ongoing basis. Where judgement has been applied or estimation
options) to certain employees and accounts for these awards in accordance uncertainty exists, the key factors taken into consideration are disclosed in
with IFRS 2 Share-based Payment. Equity-settled share-based payments are the accounting policies and the appropriate note in these financial statements.
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 The most significant area of estimation uncertainty is:
settled share-based transactions are set out in note 22.
– Goodwill: the discounted cash flow methodology applied by the Group
The fair value determined at the grant date is recognised in the consolidated when testing for goodwill impairment requires key estimates regarding
income statement as an expense on a straight-line basis over the relevant operating margins and discount rates. Further details of the methodology
vesting period, based on the Group’s estimate of the number of shares and key estimates used in relation to the goodwill impairment assessment,
that will ultimately vest and adjusted for the effect of non-market-based and the approach to sensitivities to these estimates, are set out in note 13.
vesting conditions.

WPP ANNUAL REPORT 2023 177

 FINANCIAL STATEMENTS 

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2023

2023 2022 2021

Notes £m £m £m
Revenue 2 14,844.8 14,428.7 12,801.1
Costs of services 3 (12,325.8) (11,890.1) (10,597.5)
Gross profit 2,519.0 2,538.6 2,203.6
General and administrative costs 3 (1,988.0) (1,180.4) (974.6)
Operating profit 531.0 1,358.2 1,229.0
Earnings/(loss) from associates – after interest and tax 4 70.2 (60.4) 23.8
Profit before interest and taxation 601.2 1,297.8 1,252.8
Finance and investment income 6 127.3 145.4 69.4
Finance costs 6 (389.0) (359.4) (283.6)
Revaluation and retranslation of financial instruments 6 6.8 76.0 (87.8)
Profit before taxation 346.3 1,159.8 950.8
Taxation 7 (149.1) (384.4) (230.1)
Profit for the year 197.2 775.4 720.7

Attributable to:
Equity holders of the parent 110.4 682.7 637.7
Non-controlling interests 86.8 92.7 83.0
197.2 775.4 720.7

Earnings per share:

Basic earnings per ordinary share 9 10.3p 62.2p 53.4p
Diluted earnings per ordinary share 9 10.1p 61.2p 52.5p

Note
The accompanying notes form an integral part of this consolidated income statement

178 WPP ANNUAL REPORT 2023

 FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2023

2023 2022 2021

£m £m £m
Profit for the year 197.2 775.4 720.7
Items that may be reclassified subsequently to profit or loss
Foreign exchange differences on translation of foreign operations (427.1) 424.2 (143.0)
Gain/(loss) on net investment hedges 108.2 (141.5) 45.5
Cash flow hedges:
Fair value (loss)/gain arising on hedging instruments (43.3) 38.5 (38.0)
Less: gain/(loss) reclassified to profit or loss 44.2 (38.5) 38.0
Share of other comprehensive (loss)/income of associate undertakings (0.9) 51.2 13.5
(318.9) 333.9 (84.0)
Items that will not be reclassified subsequently to profit or loss
Movements on equity investments held at fair value through other comprehensive income (3.0) (22.3) (35.5)
Actuarial (loss)/gain on defined benefit pension plans (9.1) 16.6 14.3
Deferred tax on defined benefit pension plans 1.7 (7.4) (3.0)
(10.4) (13.1) (24.2)
Other comprehensive (loss)/income for the year (329.3) 320.8 (108.2)
Total comprehensive (loss)/income for the year (132.1) 1,096.2 612.5

Attributable to:
Equity holders of the parent (195.8) 988.3 539.8
Non-controlling interests 63.7 107.9 72.7
(132.1) 1,096.2 612.5

Note
The accompanying notes form an integral part of this consolidated statement of comprehensive income

WPP ANNUAL REPORT 2023 179

 FINANCIAL STATEMENTS 

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2023

2023 2022 2021

Notes £m £m £m
Net cash inflow from operating activities 1
11 1,238.2 700.9 2,029.0
Investing activities
Acquisitions1 11 (266.8) (236.2) (382.3)
Disposal of investments and subsidiaries 11 98.8 37.7 28.3
Purchases of property, plant and equipment (177.2) (208.4) (263.2)
Purchases of other intangible assets (including capitalised computer software) (40.0) (14.9) (29.9)
Proceeds on disposal of property, plant and equipment 4.8 12.9 8.7
Net cash outflow from investing activities (380.4) (408.9) (638.4)
Financing activities
Repayment of lease liabilities (258.7) (309.6) (320.7)
Share option proceeds 0.7 1.2 4.4
Cash consideration received from non-controlling interests 11 46.1 – 39.5
Cash consideration for purchase of non-controlling interests 11 (16.4) (84.2) (135.0)
Share repurchases and buybacks 11 (53.9) (862.7) (818.5)
Proceeds from issue of bonds 11 1,052.6 – –
Repayment of borrowings 11 (1,147.5) (220.6) (397.1)
Financing and share issue costs (3.5) (0.2) (0.4)
Equity dividends paid (422.8) (365.4) (314.7)
Dividends paid to non-controlling interests in subsidiary undertakings (101.3) (69.5) (114.5)
Net cash outflow from financing activities (904.7) (1,911.0) (2,057.0)
Net decrease in cash and cash equivalents (46.9) (1,619.0) (666.4)
Translation of cash and cash equivalents (79.6) 64.2 (130.1)
Cash and cash equivalents at beginning of year 1,985.8 3,540.6 4,337.1
Cash and cash equivalents at end of year 11 1,859.3 1,985.8 3,540.6

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

180 WPP ANNUAL REPORT 2023

 FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET

AT 31 DECEMBER 2023

2023 2022
Notes £m £m
Non-current assets
Intangible assets:
Goodwill 13 8,388.9 8,453.4
Other 13 849.9 1,451.9
Property, plant and equipment 14 828.5 1,000.7
Right-of-use assets 12 1,382.2 1,528.5
Interests in associates 15 286.5 305.1
Other investments 15 332.7 369.8
Deferred tax assets 16 324.4 322.1
Corporate income tax recoverable 76.5 74.1
Trade and other receivables 17 209.2 218.6
12,678.8 13,724.2
Current assets
Corporate income tax recoverable 114.9 107.1
Trade and other receivables 17 8,460.6 9,031.4
Accrued income1 17 3,150.6 3,468.3
Cash and short-term deposits 11 2,217.5 2,491.5
13,943.6 15,098.3
Current liabilities
Trade and other payables 18 (13,323.1) (14,235.9)
Deferred income1 (1,318.9) (1,599.0)
Corporate income tax payable (370.2) (422.0)
Short-term lease liabilities 12 (292.3) (282.4)
Bank overdrafts and bonds 20 (946.3) (1,169.0)
(16,250.8) (17,708.3)
Net current liabilities (2,307.2) (2,610.0)

Non-current liabilities
Bonds 20 (3,775.0) (3,801.8)
Trade and other payables 19 (282.8) (490.9)
Deferred tax liabilities 16 (178.5) (350.8)
Employee benefit obligations 23 (135.9) (137.5)
Provisions for liabilities and charges 21 (304.5) (244.6)
Long-term lease liabilities 12 (1,862.2) (1,928.2)
(6,538.9) (6,953.8)
Net assets 3,832.7 4,160.4
Equity
Called-up share capital 26 114.1 114.1
Share premium account 576.6 575.9
Other reserves 27 186.6 285.2
Own shares (990.1) (1,054.1)
Retained earnings 3,488.4 3,759.7
Equity shareholders’ funds 3,375.6 3,680.8
Non-controlling interests 457.1 479.6
Total equity 3,832.7 4,160.4

Notes
The accompanying notes form an integral part of this consolidated balance sheet
1 Accrued income and Deferred income were previously presented in Trade and other receivables and Trade and other payables respectively

The financial statements were approved by the Board of Directors and authorised for issue on 21 March 2024.

Signed on behalf of the Board:

Mark Read Joanne Wilson

Chief Executive Officer Chief Financial Officer

WPP ANNUAL REPORT 2023 181

 FINANCIAL STATEMENTS 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Total
Called-up Share equity Non-
share premium Other Own Retained shareholders' controlling
capital account reserves shares earnings 1
funds interests Total
£m £m £m £m £m £m £m £m
Balance at 1 January 2022 122.4 574.7 (335.9) (1,112.1) 4,367.3 3,616.4 452.6 4,069.0
Ordinary shares issued − 1.2 − − − 1.2 − 1.2
Share cancellations (8.3) − 8.3 − (807.4) (807.4) − (807.4)
Treasury shares used for share option schemes − − − − − − − −
Profit for the year − – – – 682.7 682.7 92.7 775.4
Foreign exchange differences on translation of foreign operations − – 409.0 – – 409.0 15.2 424.2
Loss on net investment hedges − – (141.5) – – (141.5) – (141.5)
Cash flow hedges:
Fair value gain arising on hedging instruments − – 38.5 – – 38.5 – 38.5
Less: loss reclassified to profit or loss − – (38.5) – – (38.5) – (38.5)
Share of other comprehensive income of associate undertakings − – 31.9 – 19.3 51.2 – 51.2
Movements on equity investments held at fair value through other
comprehensive income − – – – (22.3) (22.3) – (22.3)
Actuarial gain on defined benefit pension plans − – – – 16.6 16.6 – 16.6
Deferred tax on defined benefit pension plans − – – – (7.4) (7.4) – (7.4)
Other comprehensive income – – 299.4 – 6.2 305.6 15.2 320.8
Total comprehensive income – – 299.4 – 688.9 988.3 107.9 1,096.2
Dividends paid – – – – (365.4) (365.4) (69.5) (434.9)
Non-cash share-based incentive plans (including share options) – – – – 122.0 122.0 – 122.0
Tax adjustment on share-based payments – – – – (9.2) (9.2) – (9.2)
Net movement in own shares held by ESOP Trusts – – – 58.0 (113.3) (55.3) – (55.3)
Recognition/derecognition of liabilities in respect of put options – – 101.7 – (40.3) 61.4 – 61.4
Share purchases – close period commitments2 – – 211.7 – – 211.7 – 211.7
Net movement in non-controlling interests3 – – – – (82.9) (82.9) (11.4) (94.3)
Balance at 31 December 2022 114.1 575.9 285.2 (1,054.1) 3,759.7 3,680.8 479.6 4,160.4
Ordinary shares issued – 0.7 – – – 0.7 – 0.7
Share cancellations – – – – – – – –
Treasury shares used for share option schemes – – – 55.2 (55.2) – – –
Profit for the year – – – – 110.4 110.4 86.8 197.2
Foreign exchange differences on translation of foreign operations – – (404.0) – – (404.0) (23.1) (427.1)
Gain on net investment hedges – – 108.2 – – 108.2 – 108.2
Cash flow hedges:
Fair value loss arising on hedging instruments – – (43.3) – – (43.3) – (43.3)
Less: gain reclassified to profit or loss – – 44.2 – – 44.2 – 44.2
Share of other comprehensive loss of associate undertakings – – (0.9) – – (0.9) – (0.9)
Movements on equity investments held at fair value through other
comprehensive income – – – – (3.0) (3.0) – (3.0)
Actuarial loss on defined benefit pension plans – – – – (9.1) (9.1) – (9.1)
Deferred tax on defined benefit pension plans – – – – 1.7 1.7 – 1.7
Other comprehensive loss – – (295.8) – (10.4) (306.2) (23.1) (329.3)
Total comprehensive (loss)/income – – (295.8) – 100.0 (195.8) 63.7 (132.1)
Dividends paid – – – – (422.8) (422.8) (101.3) (524.1)
Non-cash share-based incentive plans (including share options) – – – – 140.1 140.1 – 140.1
Tax adjustment on share-based payments – – – – 1.9 1.9 – 1.9
Net movement in own shares held by ESOP Trusts – – – 8.8 (62.7) (53.9) – (53.9)
Recognition/derecognition of liabilities in respect of put options4 – – 197.2 – 30.5 227.7 – 227.7
Share purchases – close period commitments – – – – – – – –
Net movement in non-controlling interests3 – – – – (3.1) (3.1) 15.1 12.0
Balance at 31 December 2023 114.1 576.6 186.6 (990.1) 3,488.4 3,375.6 457.1 3,832.7

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 £346.5 million at 31 December 2023 (2022: £343.7 million)
2 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
3 Net movement in non-controlling interests 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
4 During 2023, WPP sold a portion of its ownership of FGS to KKR. As part of this transaction, the previous put option granted to management shareholders was derecognised

182 WPP ANNUAL REPORT 2023

 FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

1. GENERAL INFORMATION
WPP plc is a company incorporated in Jersey. The address of the registered office is 22 Grenville Street, St Helier, Jersey, JE4 8PX 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, which includes the aggregation of certain operating 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:

Revenue less Headline

pass-through operating
Revenue2 costs3 profit4
Income statement £m £m £m
2023
Global Integrated Agencies 12,594.9 9,808.2 1,474.3
Public Relations 1,262.2 1,180.0 191.1
Specialist Agencies 987.7 871.5 84.8
14,844.8 11,859.7 1,750.2
20221
Global Integrated Agencies 12,191.9 9,743.6 1,433.4
Public Relations 1,232.4 1,161.2 191.9
Specialist Agencies 1,004.4 894.5 116.5
14,428.7 11,799.3 1,741.8
20211
Global Integrated Agencies 10,887.6 8,680.4 1,221.2
Public Relations 963.5 914.2 144.6
Specialist Agencies 950.0 802.6 127.7
12,801.1 10,397.2 1,493.5

Notes
1 Prior year figures have been re-presented to reflect the reallocation of a number of businesses between Global Integrated Agencies, Specialist Agencies and Public Relations
2 Intersegment sales have not been separately disclosed as they are not material
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 223

WPP ANNUAL REPORT 2023 183

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2. SEGMENT INFORMATION CONTINUED

Depreciation Earnings/(loss) Interests in

Share-based Capital and Goodwill from associates and
payments additions2 amortisation3 impairment associates joint ventures
Other information £m £m £m £m £m £m
2023
Global Integrated Agencies 118.9 180.4 362.8 40.3 56.4 93.1
Public Relations 14.3 15.4 40.0 – 0.2 –
Specialist Agencies 6.9 21.4 43.9 23.3 13.6 193.4
140.1 217.2 446.7 63.6 70.2 286.5
20221
Global Integrated Agencies 100.7 193.8 373.0 – 10.8 80.1
Public Relations 14.4 11.1 36.7 3.7 0.5 0.1
Specialist Agencies 6.9 18.4 41.3 34.2 (71.7) 224.9
122.0 223.3 451.0 37.9 (60.4) 305.1
20211
Global Integrated Agencies 92.5 253.1 374.7 – 22.7 115.2
Public Relations 4.8 18.0 28.2 – 1.7 8.0
Specialist Agencies 2.3 22.0 41.1 1.8 (0.6) 289.7
99.6 293.1 444.0 1.8 23.8 412.9

Notes
1 Prior year figures have been re-presented to reflect the reallocation of a number of businesses between Global Integrated Agencies, Specialist Agencies and Public Relations
2 Capital additions include purchases of property, plant and equipment and other intangible assets (including capitalised computer software)
3 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:

2023 2022 2021 2023 2022

£m £m £m £m £m
Revenue1 Non-current assets1
North America2 5,527.6 5,549.5 4,494.2 North America2 5,217.6 5,896.4
United Kingdom 2,155.4 2,003.8 1,866.9 United Kingdom 1,669.7 1,556.2
Western Continental Europe 3,037.2 2,876.2 2,786.3 Western Continental Europe 2,695.5 2,797.9
Asia Pacific, Latin America, Africa & Middle Asia Pacific, Latin America, Africa & Middle East
East and Central & Eastern Europe 4,124.6 3,999.2 3,653.7 and Central & Eastern Europe 2,739.3 3,151.0
14,844.8 14,428.7 12,801.1 12,322.1 13,401.5
Revenue less pass-through costs3
Notes
North America2 4,556.3 4,688.1 3,849.2 1 Non-current assets excluding financial instruments and deferred tax
United Kingdom 1,626.3 1,537.2 1,414.3 2 North America includes the US with non-current assets of £5,113.9 million (2022: £5,379.5 million)

Western Continental Europe 2,410.5 2,318.5 2,225.4

Asia Pacific, Latin America, Africa & Middle
East and Central & Eastern Europe 3,266.6 3,255.5 2,908.3
11,859.7 11,799.3 10,397.2
Headline operating profit4
North America2 834.3 770.4 655.7
United Kingdom 214.5 187.1 180.9
Western Continental Europe 258.4 301.3 288.6
Asia Pacific, Latin America, Africa & Middle
East and Central & Eastern Europe 443.0 483.0 368.3
1,750.2 1,741.8 1,493.5

Notes
1 Intersegment sales have not been separately disclosed as they are not material
2 North America includes the US with revenue of £5,187.1 million (2022: £5,230.9 million,
2021: £4,220.8 million), revenue less pass-through costs of £4,270.6 million (2022: £4,402.0 million,
2021: £3,597.4 million) and headline operating profit of £785.4 million (2022: £727.6 million,
2021: £615.2 million)
3 Revenue less pass-through costs and headline operating profit are defined on page 233
4 A reconciliation from reported profit before tax to headline operating profit is provided
on page 223

184 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

3. COSTS OF SERVICES AND GENERAL Restructuring and transformation costs of £195.5 million (2022: £218.8 million,
AND ADMINISTRATIVE COSTS 2021: £175.4 million) include £113.4 million (2022: £134.5 million, 2021: £94.2 million)
in relation to the Group’s IT-transformation programme. These IT costs include
2023 2022 2021 costs of £52.3 million (2022: £96.8 million, 2021: £62.2 million) in relation to the
£m £m £m
rollout of new ERP systems in order to drive efficiency and collaboration
Costs of services 12,325.8 11,890.1 10,597.5 throughout the Group; and £38.3 million (2022: nil, 2021: nil) related to an
General and administrative costs 1,988.0 1,180.4 974.6 IT-transition programme to move to a multi-vendor environment.
14,313.8 13,070.5 11,572.1
Also included within restructuring and transformation costs is £9.8 million
Costs of services and general and administrative costs include: (2022: £15.1 million, 2021: £29.9 million) of ongoing property costs, related
to impairments the Group recognised in prior years in response to the
2023 2022 2021 Covid-19 pandemic. The remaining restructuring and transformation costs of
£m £m £m £72.3 million (2022: £69.2 million, 2021: £51.3 million) relates to the continuing
Staff costs (note 5) 8,137.6 8,165.8 7,166.7 restructuring plan, including the creation of VML and simplification of GroupM.
Establishment costs 515.8 536.0 529.0 This includes restructuring actions at under-performing businesses, aiming to
Media pass-through costs 2,173.6 1,905.7 1,865.3 reduce ongoing costs and simplify operational structures.
Other costs of services and general and
administrative costs1 3,486.8 2,463.0 2,011.1 Property-related restructuring costs of £232.5 million (2022: £18.0 million,
14,313.8 13,070.5 11,572.1 2021: nil) have been incurred related to a review of the Group’s property
requirements in 2023, following the stabilisation of return-to-work practices
Note post the Covid-19 pandemic and campus strategy. This identified a number
1 Other costs of services and general and administrative costs include £811.5 million
of properties that are surplus to requirements and opportunities to further
(2022: £723.7 million, 2021: £538.6 million) of other pass-through costs
consolidate Agencies within the existing Campus portfolio. The impairment
charges included within property-related restructuring costs include
Included within costs of services and general administrative costs are
£128.8 million (2022: £18.0 million, 2021: nil) in relation to right-of-use assets
the following:
and £55.8 million (2022: nil, 2021: nil) of related property, plant and equipment.
2023 2022 2021
£m £m £m Gains on disposal of investments and subsidiaries of £7.1 million in 2023
Goodwill impairment (note 13) 63.6 37.9 1.8 includes a gain of £18.1 million related to net receipts from the prior disposal
Amortisation and impairment of acquired of Kantar, offset primarily by losses on disposals of £11.0 million including
intangible assets 727.9 62.1 97.8 disposal of the Group’s investment in Astus Australia. Losses on disposal of
Investment and other impairment charges/ investments and subsidiaries of £36.3 million in 2022 primarily included a loss
(reversals) 17.8 77.0 (42.4) of £63.1 million on the divestment of the Group's Russian interests which
Restructuring and transformation costs 195.5 218.8 175.4 completed in May 2022. This was partially offset by gains on other disposals
Property-related restructuring costs 232.5 18.0 – during the period including Res Publica for £17.7 million and Mutual Mobile for
(Gains)/losses on disposal of investments £9.4 million with the remaining gains/losses due to individually insignificant
and subsidiaries (7.1) 36.3 10.6 transactions. Losses on disposal of investments and subsidiaries of
Gains on remeasurement of equity interests £10.6 million in 2021 included a loss of £4.9 million on the disposal of XMKT
arising from a change in scope of ownership – (66.5) – in China, which completed in September 2021.
Litigation settlement (11.0) – 21.3
Amortisation of other intangible assets 24.8 21.9 19.9 There were no remeasurements of equity interests in 2023. In 2022, gains
on remeasurement of equity interests arising from a change in scope of
Depreciation of property, plant and equipment 165.1 166.9 151.2
ownership of £66.5 million (2021: nil) comprises a gain in relation to the
Depreciation of right-of-use assets 256.8 262.2 272.9
reclassification of the Group's interest in Imagina in Spain from interests
Losses/(gains) on sale of property, plant in associates to other investments.
and equipment 0.4 (6.4) (1.3)
Net foreign exchange (gains)/losses (14.5) (8.7) 4.4
In 2023, £11.0 million (2022: nil) has been received by the Group (net of legal
Short-term lease expense 22.2 20.2 18.0 costs) related to a previous litigation matter that settled in 2023.
Low-value lease expense 2.8 1.9 2.3
Auditors’ remuneration:
In 2023, operating profit includes credits totalling £16.9 million (2022:
2023 2022 2021
£29.3 million, 2021: £19.3 million) relating to the release of provisions and
£m £m £m
other balances established in respect of acquisitions completed prior to 2022.
Fees payable to the Company’s auditors for
Further details of the Group’s approach to acquisition provisions, as required the audit of the Company and Group's annual
by IFRS 3 Business Combinations, are given in note 28. accounts 10.0 8.4 7.1
Fees payable for the audit of the Company’s
The goodwill impairment charge of £63.6 million in 2023 (2022: £37.9 million, subsidiaries 29.9 28.5 24.8
2021: £1.8 million) relates to businesses in the Group that have closed or where Fees payable to the auditors pursuant to
the impact of current macroeconomic conditions and trading circumstances legislation1 39.9 36.9 31.9
indicate impairment to the carrying value. Audit-related services2 0.5 0.4 0.4
Other services3 1.7 0.6 1.4
Amortisation and impairment of acquired intangible assets of £727.9 million Tax compliance services – 0.1 –
(2022: £62.1 million including £0.2 million relating to associates, 2021: £97.8 Total other fees 2.2 1.1 1.8
million) includes a charge of £650.1 million (2022: £1.4 million, 2021: £47.9 Total fees 42.1 38.0 33.7
million) predominantly in relation to certain brands that no longer have any
useful life. This includes accelerated amortisation charges of £430.8 million Notes
1 Includes fees in respect of the audit of internal control over financial reporting
and £202.3 million for Wunderman Thompson and Y&R brands respectively,
2 Audit-related assurance services are in respect of the review of the interim financial information
due to the creation of VML in the fourth quarter of 2023. 3 Other services include audits for earnout purposes, non-statutory audits and other agreed
upon procedures
The investment and other impairment charges/(reversals) of £17.8 million
(2022: £77.0 million, 2021: reversal of £42.4 million) relate to the same
macroeconomic factors noted above. The 2022 charge of £77.0 million
consisted of £48.0 million related to impairments due also to macroeconomic
factors and a £29.0 million impairment of capitalised configuration and
customisation costs related to software development projects.

WPP ANNUAL REPORT 2023 185

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

4. EARNINGS/(LOSS) FROM ASSOCIATES – AFTER INTEREST 6. FINANCE AND INVESTMENT INCOME, FINANCE COSTS AND
AND TAX REVALUATION AND RETRANSLATION OF FINANCIAL INSTRUMENTS
Earnings/(loss) from associates – after interest and tax was earnings of Finance and investment income includes:
£70.2 million in 2023, a loss of £60.4 million in 2022 and earnings of £23.8 million
in 2021. In 2023 this included £45.1 million of non-refundable distributions 2023 2022 2021
£m £m £m
received from Kantar, which are recorded in the income statement (non
headline) given the Group's balance sheet investment in Kantar is nil (2022: nil, Income from equity investments 12.9 24.5 17.9
2021: £61.2 million). The loss in 2022 included £75.8 million (2021: £38.8 million) Interest income 114.4 120.9 51.5
of amortisation and impairment of acquired intangible assets as well as 127.3 145.4 69.4
restructuring and one-off transaction costs of £54.8 million (2021: £18.8 million)
within Kantar. Finance costs include:

5. OUR PEOPLE 2023 2022 2021

Our staff numbers averaged 114,732 for the year ended 31 December 2023 £m £m £m
against 114,129 in 2022 and 104,808 in 2021. Their geographical distribution Net interest expense on pension plans 4.3 2.2 1.8
was as follows: Interest on other long-term employee benefits 6.0 3.7 2.4
Interest expense and similar charges1 272.4 257.8 188.5
2023 2022 2021
Interest expense related to lease liabilities 106.3 95.7 90.9
North America 23,562 23,740 21,764
389.0 359.4 283.6
United Kingdom 12,457 12,490 10,995
Western Continental Europe 23,580 22,717 21,514 Note
1 Interest expense and similar charges are payable on bank overdrafts, bonds and bank loans held
Asia Pacific, Latin America, Africa & Middle
East and Central & Eastern Europe 55,133 55,182 50,535 at amortised cost

114,732 114,129 104,808

Revaluation and retranslation of financial instruments include:

Their reportable segment distribution was as follows: 2023 2022 2021

£m £m £m
2023 2022 2021 Movements in fair value of treasury instruments (3.1) 0.5 9.1
Global Integrated Agencies 97,838 97,288 89,701 Premium on the early repayment of bonds – – (13.0)
Public Relations 8,377 8,125 7,121 Revaluation of investments and other assets
Specialist Agencies 8,517 8,716 7,986 held at fair value through profit or loss (20.9) 23.1 (7.5)
Remeasurement of put options over
114,732 114,129 104,808 non-controlling interests (1.5) 27.9 (40.6)
Revaluation of payments due to vendors
At the end of 2023, staff numbers were 114,173 (2022: 115,473, 2021: 109,382). (earnout agreements) 50.8 26.2 (58.7)
Retranslation of financial instruments (18.5) (1.7) 22.9
Staff costs include: 6.8 76.0 (87.8)

2023 2022 2021

£m £m £m The majority of the Group’s long-term debt is represented by $1,063 million
Wages and salaries 5,878.8 5,721.0 4,797.2 of US dollar bonds at an average interest rate of 4.26%, €3,350 million of
Eurobonds at an average interest rate of 2.46% and £650 million of Sterling
Cash-based incentive plans 232.9 292.6 455.2
bonds at an average interest rate of 3.21%.
Share-based incentive plans (note 22) 140.1 122.0 99.6
Social security costs 715.1 689.4 630.1 Average borrowings in 2023 under the US Dollar Revolving Credit Facilities
Pension costs (note 23) 213.1 204.8 177.7 (note 10) amounted to $41 million at an average interest rate of 4.54%
Severance 78.2 44.2 41.8 (2022: nil).
Other staff costs1 879.4 1,091.8 965.1
8,137.6 8,165.8 7,166.7 Average borrowings under the US Commercial Paper Programme for 2023
amounted to $433 million at an average interest rate of 5.45% inclusive of
Note margin (2022: $195 million at an average interest rate of 2.56% inclusive
1 Freelance and temporary staff costs are included in other staff costs
of margin).

Compensation for key management personnel includes:

Average borrowings under the Euro Commercial Paper Programme for 2023
amounted to £45 million at an average interest rate of 4.90% inclusive of
currency swaps (2022: £34 million at an average interest rate of 1.95% inclusive
2023 2022 2021
£m £m £m of currency swaps).
Short-term employee benefits 28.1 29.7 28.0
Pensions and other post-retirement benefits 1.3 1.1 0.9
Share-based payments 30.1 29.8 14.6
59.5 60.6 43.5

Key management personnel comprises the Board and the Executive

Committee. Further details of compensation for the Board are disclosed on
pages 139 to 168.

186 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

7. TAXATION after considering external advice where appropriate. Where the final tax
In 2023, the effective tax rate on reported profit before taxation was 43.1% outcome of these matters is different from the amounts which were initially
(2022: 33.1%, 2021: 24.2%). recorded, such differences will impact the current and deferred income tax
assets and liabilities in the period in which such determination is made. The
The tax charge comprises: Group does not currently consider that judgements made in assessing tax
2023 2022 2021 liabilities have a significant risk of resulting in any material additional charges
£m £m £m or credits in respect of these matters, within the next financial year, beyond
Corporation tax the amounts already provided.
Current year 432.8 425.8 404.0
Prior years (85.6) (55.5) (41.4) 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
347.2 370.3 362.6
balances accordingly and recognised a tax credit of £23.8 million in 2021.
Deferred tax
Current year (197.1) 9.4 (131.0) TAX RISK MANAGEMENT
Prior years (1.0) 4.7 (1.5) We look to maintain open and transparent relationships with the tax
(198.1) 14.1 (132.5) authorities and relevant government representatives in the jurisdictions in
Tax charge 149.1 384.4 230.1 which we operate. 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
The corporation tax credit for prior years in 2023, 2022 and 2021 primarily
principles. We have a Tax Risk Management Strategy in place which sets out
comprises the release of a number of provisions following the resolution of tax
the controls established and our assessment procedures for decision making
matters in various countries.
and how we monitor tax risk. We monitor proposed changes in taxation
legislation and ensure these are taken into account when we consider our
The current year deferred tax credit of £197.1 million (2022: debit of £9.4 million,
future business plans. Our Directors are informed by management of any
2021: credit of £131.0 million) reflects the tax impact of accelerated
significant tax law changes, the nature and status of any significant ongoing
amortisation of intangible assets as a result of the creation of VML.
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 before taxation in the
consolidated income statement as follows:
8. ORDINARY DIVIDENDS
2023 2022 2021 Amounts recognised as distributions to equity holders in the year:
£m £m £m
Profit before taxation 346.3 1,159.8 950.8 2023 2022 2021 2023 2022 2021
Tax at the corporation tax rate of 23.5%1 81.4 220.4 180.7 Per share Pence per share £m £m £m
Tax effect of (earnings)/losses from associates (15.0) 17.4 (13.3) Final dividend in
Irrecoverable withholding taxes 34.8 25.9 52.3 respect of the
Tax effect of items that are not deductible prior year (2022) 24.40p 18.70p 14.00p 261.8 203.5 167.7
in determining taxable profits 39.0 66.7 29.3 Interim dividend
Tax effect of non-deductible goodwill in respect of the
impairment 16.2 7.2 0.6 current year (2023) 15.00p 15.00p 12.50p 161.0 161.9 147.0
Effect of different tax rates in subsidiaries 39.40p 33.70p 26.50p 422.8 365.4 314.7
operating in other jurisdictions 41.8 94.3 81.2
Origination and reversal of unrecognised 2023 2022 2021 2023 2022 2021
temporary differences 8.8 (1.1) (36.3)
Per ADR1 Cents per ADR $m $m $m
Tax losses not recognised or utilised in the year 44.0 9.8 7.4
Final dividend in
Utilisation of tax losses not previously respect of the
recognised (15.3) (5.4) (5.1) prior year (2022) 150.83¢ 128.63¢ 89.85¢ 323.7 280.0 215.3
Net release of prior year provisions in relation Interim dividend
to acquired businesses (3.9) (2.8) (1.1) in respect of the
Other prior year adjustments (82.7) (48.0) (41.8) current year (2023) 93.29¢ 92.72¢ 85.98¢ 200.3 200.1 202.2
Impact of deferred tax rate change – – (23.8) 244.12¢ 221.35¢ 175.83¢ 524.0 480.1 417.5
Tax charge 149.1 384.4 230.1
Effective tax rate on profit before tax 43.1% 33.1% 24.2% Proposed final dividend for the year ended 31 December 2023:

Note 2023 2022 2021

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 23.5% (2022: 19.0%,
Per share Pence per share
2021: 19.0%) Final dividend 24.40p 24.40p 18.70p

FACTORS AFFECTING THE TAX CHARGE IN FUTURE YEARS 2023 2022 2021
The tax charge may be affected by the impact of acquisitions, disposals and Per ADR1 Cents per share
other corporate restructurings, the resolution of open tax issues, and the
Final dividend 151.74¢ 150.83¢ 128.63¢
ability to use brought forward tax losses. Changes in local or international tax
rules, and changes arising from the application of existing rules, new demands Note
and assessments or challenges by tax authorities, may expose the Group to 1 These figures have been translated for convenience purposes only, using the approximate

additional tax liabilities or impact the carrying value of deferred tax assets, average rate for the year of US$1.2438 (2022: US$1.2363, 2021: US$1.3757). This conversion should
not be construed as a representation that the pound sterling amounts actually represent, or
which could affect the future tax charge.
could be converted into, US dollars at the rates indicated

Legislation in respect of the UK adoption of OECD Pillar Two Multinational

The payment of dividends will not have any tax consequences for the Group.
top-up tax was substantively enacted in the UK in 2023 and is to apply for
periods commencing 1 January 2024. The Group is currently monitoring the
Final dividends are paid in the subsequent year to which they relate.
potential impact, which is expected to be insignificant on the Group’s tax
charge, including assessing the applicability of legislative safe harbours. The
At 31 December 2023 the WPP plc (the parent Company) distributable
IAS 12 exception to recognise and disclose information about deferred tax
reserves amounted to £4,797.7 million (2022: £5,465.0 million) which, under
assets and liabilities related to Pillar Two income taxes has been applied.
the Companies (Jersey) Law 1991, is total reserves excluding share capital and
capital redemption reserve. Further details of the Company’s share capital are
Liabilities relating to open and judgemental matters are based upon an
shown in note 26.
assessment of whether the tax authorities will accept the position taken,

WPP ANNUAL REPORT 2023 187

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

9. EARNINGS PER SHARE The table above excludes bank overdrafts which fall within cash and cash
BASIC EPS equivalents for the purposes of the consolidated cash flow statement. Other
The calculation of basic EPS is as follows: liabilities from financing activities, including lease liabilities and derivatives
used for hedging debts, are disclosed in note 12 and note 25, respectively.
2023 2022 2021
Earnings1 (£m) 110.4 682.7 637.7 SHARES
Weighted average shares used in basic EPS At 31 December 2023, the Company's share base was entirely composed
calculation (m) 1,072.1 1,097.9 1,194.1 of ordinary equity share capital and share premium of £690.7 million
EPS 10.3p 62.2p 53.4p (2022: £690.0 million, 2021: £697.1 million), further details of which are
disclosed in note 26.
Note
1 Earnings is equivalent to profit for the year attributable to equity holders of the parent
DEBT AS AT 31 DECEMBER 2023
US$ bonds The Group had in issue $750 million of 3.75% bonds due September
DILUTED EPS
2024, $93 million of 5.125% bonds due September 2042 and $220 million of
The calculation of diluted EPS is as follows:
5.625% bonds due November 2043.
2023 2022 2021
Eurobonds During the year, the Group issued €750 million of 4.125% bonds
Earnings1 (£m) 110.4 682.7 637.7
due May 2028. The Group also had in issue €500 million of 1.375% bonds due
Weighted average shares used in reported March 2025, €750 million of 2.25% bonds due September 2026, €750 million
diluted EPS calculation (m) 1,094.0 1,116.4 1,215.3
of 2.375% bonds due May 2027, and €600 million of 1.625% bonds due
Diluted EPS 10.1p 61.2p 52.5p
March 2030. In November 2023, €750 million of 3.0% bonds were repaid.
Note
1 Earnings is equivalent to profit for the year attributable to equity holders of the parent Sterling bonds The Group had in issue £250 million of 3.750% bonds due
May 2032 and £400 million of 2.875% bonds due September 2046.
Diluted EPS has been calculated based on the earnings amounts above.
At 31 December 2023, options to purchase 25.2 million ordinary shares Revolving Credit Facility The Group had a five-year Revolving Credit Facility of
(2022: 19.7 million, 2021: 7.2 million) were outstanding, but were excluded $2.5 billion due March 2026, signed in November 2021. The Group’s borrowings
from the computation of diluted earnings per share because the exercise under these facilities, which are drawn down predominantly in pounds
prices of these options were greater than the average market price of the sterling, averaged $41 million in 2023 (2022: nil, 2021: nil).
Group’s shares and, therefore, their inclusion would have been accretive.
In May 2021, the Group's subsidiary, WPP AUNZ, repaid in full its A$150 million
A reconciliation between the shares used in calculating basic and diluted EPS Revolving Credit Facility due August 2021, and its A$270 million Revolving
is as follows: Credit Facility due August 2023. The Group's borrowings under the Australian
dollar facilities, which were drawn down in Australian dollars and New Zealand
2023 2022 2021 dollars, averaged the equivalent of nil in 2023 (2022: nil, 2021: A$52 million).
m m m
Weighted average shares used in basic The Group had available undrawn committed credit facilities of £1,963.7 million
EPS calculation 1,072.1 1,097.9 1,194.1
at 31 December 2023 (2022: £2,069.0 million, 2021: £1,847.5 million).
Dilutive share options outstanding 0.6 0.7 1.3
Other potentially issuable shares 21.3 17.8 19.9 Borrowings under the $2.5 billion Revolving Credit Facility were governed by
Weighted average shares used in diluted certain financial covenants based on the results and financial position of the
EPS calculation 1,094.0 1,116.4 1,215.3
Group. During 2023, and until 20 February 2024 when the Revolving Credit Facility
was refinanced with no financial covenants (see note 30 for further details),
At 31 December 2023 there were 1,141,513,196 (2022: 1,141,427,296, 2021: all covenants have been complied with.
1,224,459,550) ordinary shares in issue, including 66,675,497 treasury shares
(2022: 70,489,953, 2021: 70,489,953). The $2.5 billion Revolving Credit Facility, due March 2026, included terms
which required the consent of the majority of the lenders if a proposed merger
10. SOURCES OF FINANCE or consolidation of the Company would alter its legal personality or identity.
The following table summarises the equity and debt financing of the Group,
and changes during the year: COMMERCIAL PAPER PROGRAMMES
The Group operates commercial paper programmes using its Revolving Credit
Shares Debt Facility as a backstop. The average US commercial paper in issue in 2023 was
Analysis of changes 2023 2022 2021 2023 2022 2021 $433 million (2022: $195 million, 2021: nil). The average Euro commercial paper
in financing £m £m £m £m £m £m in issue in 2023 was £45 million (2022: £34 million, 2021: nil) inclusive of the
Beginning of year 690.0 697.1 699.9 4,465.1 4,441.7 5,032.7 effect of currency swaps, where applicable. There was no US or Euro
Ordinary shares commercial paper outstanding at 31 December 2023.
issued 0.7 1.2 4.4 – – –
Share cancellations – (8.3) (7.2) – – –
Net decrease in
drawings on bank
loans and bonds – – – (48.9) (220.6) (397.1)
Amortisation of
financing costs
included in debt – – – 0.2 7.0 8.1
Acquisition of
subsidiaries – – – 48.9 – –
Changes in fair value
due to hedging
arrangements – – – – – (2.5)
Other movements – – – (3.5) (0.2) (0.4)
Exchange
adjustments – – – (98.7) 237.2 (199.1)
End of year 690.7 690.0 697.1 4,363.1 4,465.1 4,441.7

188 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

10. SOURCES OF FINANCE CONTINUED The following table is an analysis of future undiscounted anticipated cash flows
The following table is an analysis of future anticipated cash flows in relation to in relation to the Group’s financial derivatives, which include interest rate
the Group’s debt, on an undiscounted basis which, therefore, differs from the swaps, forward contracts and other foreign exchange swaps assuming interest
fair value and carrying value: rates and foreign exchange rates as at 31 December:

2023 2022 2021 Financial liabilities Financial assets

£m £m £m Payable Receivable Payable Receivable
Within one year (711.3) (791.6) (326.8) 2023 £m £m £m £m
Between one and two years (534.6) (724.3) (745.4) Within one year 682.2 681.3 335.3 310.7
Between two and three years (746.2) (524.2) (646.5) Between one and
Between three and four years (726.2) (740.3) (492.8) two years 15.9 15.7 487.4 479.6
Between two and
Between four and five years (704.1) (719.9) (698.0) three years 15.0 14.6 37.5 32.3
Over five years (1,858.8) (1,963.7) (2,546.3) Between three and four
Debt financing (including interest) under the years 14.7 14.2 37.1 32.5
Revolving Credit Facility and in relation to Between four and five
unsecured loan notes (5,281.2) (5,464.0) (5,455.8) years 3.7 3.5 646.6 714.8
Short-term overdrafts – within one year (358.2) (505.7) (342.3) 731.5 729.3 1,543.9 1,569.9
Future anticipated cash flows (5,639.4) (5,969.7) (5,798.1)
Effect of discounting/financing rates 918.1 998.9 1,014.1 Financial liabilities Financial assets
Debt financing (4,721.3) (4,970.8) (4,784.0) Payable Receivable Payable Receivable
Cash and short-term deposits 2,217.5 2,491.5 3,882.9 2022 £m £m £m £m
Adjusted net debt (2,503.8) (2,479.3) (901.1) Within one year 1,186.3 1,126.2 347.1 345.7
Between one and
two years – – 11.6 6.2
Analysis of fixed and floating rate debt by currency including the effect of Between two and
cross-currency swaps: three years – – 449.8 461.8
1,186.3 1,126.2 808.5 813.7
Fixed Floating Period
2023 £m rate1 basis profit1
Currency Financial liabilities Financial assets
Payable Receivable Payable Receivable
$ – fixed 1,471.7 4.62 n/a 66
2021 £m £m £m £m
£ – fixed 1,094.1 2.97 n/a 130
Within one year 185.8 173.7 581.1 582.5
€ – fixed 1,820.5 2.12 n/a 48 Between one and
– floating – n/a EURIBOR – two years 551.4 521.1 30.0 30.4
Other (23.2) n/a n/a n/a Between two and
4,363.1 three years 11.6 6.0 – –
Between three and
four years 449.8 445.6 – –
Fixed Floating Period
2022 £m rate1 basis profit1 1,198.6 1,146.4 611.1 612.9
Currency
$ – fixed 1,379.5 4.18 n/a 60
£ – fixed 1,094.1 2.97 n/a 143
€ – fixed 2,080.6 2.21 n/a 55
– floating – n/a EURIBOR –
Other (89.1) n/a n/a n/a
4,465.1

Fixed Floating Period

2021 £m rate1 basis profit1
Currency
$ – fixed 1,231.8 4.18 n/a 72
£ – fixed 1,094.1 2.97 n/a 155
€ – fixed 1,976.0 2.04 n/a 69
– floating 210.2 n/a EURIBOR 3
Other (70.4) n/a n/a n/a
4,441.7

Note
1 Weighted average

WPP ANNUAL REPORT 2023 189

 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.

Opening Acquisition of Foreign Interest and Closing

balance Cash flow subsidiaries exchange other balance
2023 £m £m £m £m £m £m
Borrowings (excluding lease liabilities) (note 11, 20 and 25)1 4,465.1 (48.9) 48.9 (98.7) (3.3) 4,363.1
Derivatives (note 11, 17, 18 and 19) 52.3 (46.0) – (50.8) 13.6 (30.9)
Lease liabilities (note 12)2 2,210.6 (361.6) 1.9 (75.6) 379.2 2,154.5
Liabilities from financing activities 6,728.0 (456.5) 50.8 (225.1) 389.5 6,486.7
Cash and short-term deposits (note 11 and 25) (2,491.5) 216.9 (22.5) 79.6 – (2,217.5)
Bank overdrafts 505.7 (147.5) – – – 358.2
4,742.2 (387.1) 28.3 (145.5) 389.5 4,627.4

2022
Borrowings (excluding lease liabilities) (note 11, 20 and 25)1 4,441.7 (220.6) – 237.2 6.8 4,465.1
Derivatives (note 11, 17, 18 and 19) 50.6 – – 6.4 (4.7) 52.3
Lease liabilities (note 12)2 2,041.8 (402.0) 0.1 145.8 424.9 2,210.6
Share repurchase commitments 211.7 (211.7) – – – –
Liabilities from financing activities 6,745.8 (834.3) 0.1 389.4 427.0 6,728.0
Cash and short-term deposits (note 11 and 25) (3,882.9) 1,494.4 (38.8) (64.2) – (2,491.5)
Bank overdrafts 342.3 163.4 – – – 505.7
3,205.2 823.5 (38.7) 325.2 427.0 4,742.2

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 £102.9 million (2022: £92.4 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 12

190 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

11. ANALYSIS OF CASH FLOWS Acquisitions and disposals:

The following tables analyse the items included within the main cash flow
headings on page 180. 2023 2022 2021
£m £m £m

Net cash from operating activities: Initial cash consideration (227.0) (218.3) (227.6)
Cash and cash equivalents acquired 22.5 38.8 (2.3)
2023 2022 2021 Earnout payments recognised in investing
£m £m £m activities1 (52.5) (46.6) (53.2)
Profit for the year 197.2 775.4 720.7 Purchase of other investments
Taxation 149.1 384.4 230.1 (including associates) (9.8) (10.1) (99.2)
Revaluation and retranslation of financial Acquisitions (266.8) (236.2) (382.3)
instruments (6.8) (76.0) 87.8 Proceeds on disposal of investments
Finance costs 389.0 359.4 283.6 and subsidiaries2 99.5 50.1 51.9
Finance and investment income (127.3) (145.4) (69.4) Cash and cash equivalents disposed (0.7) (12.4) (23.6)
(Earnings)/loss from associates – after interest Disposals of investments and subsidiaries 98.8 37.7 28.3
and tax (70.2) 60.4 (23.8) Cash consideration received from
Operating profit of continuing and non‑controlling interests 46.1 – 39.5
discontinued operations 531.0 1,358.2 1,229.0 Cash consideration for purchase of
Adjustments for non‑controlling interests (16.4) (84.2) (135.0)
Non-cash share-based incentive plans Cash consideration for
(including share options) 140.1 122.0 99.6 non‑controlling interests 29.7 (84.2) (95.5)
Depreciation of property, plant and equipment 165.1 166.9 151.2 Net acquisition payments and
disposal proceeds (138.3) (282.7) (449.5)
Depreciation of right-of-use assets 256.8 262.2 272.9
Impairment charges included within Notes
restructuring costs1 184.6 43.3 39.2 1 Earnout payments in excess of the amount determined at acquisition are recorded as

Goodwill impairment 63.6 37.9 1.8 operating activities

2 Proceeds on disposal of investments and subsidiaries includes return of capital from investments
Amortisation and impairment of acquired in associates
intangible assets 727.9 62.1 97.8
Amortisation of other intangible assets 24.8 21.9 19.9
Share repurchases and buybacks:
Investment and other impairment charges/
(reversals) 17.8 77.0 (42.4)
2023 2022 2021
(Gains)/losses on disposal of investments £m £m £m
and subsidiaries (7.1) 36.3 10.6
Purchase of own shares by ESOP Trusts (53.9) (55.3) (89.2)
Gains on remeasurement of equity interests
arising from a change in scope of ownership – (66.5) − Shares purchased into treasury for cancellation – (807.4) (729.3)
Losses/(gains) on sale of property, plant Net cash outflow (53.9) (862.7) (818.5)
and equipment 0.4 (6.4) (1.3)
Operating cash flow before movements Proceeds from issue of bonds:
in working capital and provisions 2,105.0 2,114.9 1,878.3
Decrease/(increase) in trade receivables 2023 2022 2021
and accrued income 231.8 (498.6) (458.9) £m £m £m
(Decrease)/increase in trade payables and Proceeds from issue of €750 million bonds 652.6 – –
deferred income (238.0) 170.6 777.8
Drawdown of revolving credit facility 400.0 – –
Decrease/(increase) in other receivables 125.0 (154.1) (120.0)
Net cash inflow 1,052.6 – –
(Decrease)/increase in other payables –
short-term (563.5) (259.6) 547.0
Increase/(decrease) in other payables – Repayment of borrowings:
long-term 118.8 (67.0) (11.0)
Increase/(decrease) in provisions 65.7 (38.0) (32.9) 2023 2022 2021
Cash generated by operations 1,844.8 1,268.2 2,580.3 £m £m £m

Corporation and overseas tax paid (395.3) (390.9) (391.1) Decrease in drawings on bank loans – (11.3) (36.3)
Payment on early settlement of bonds – – (13.0) Repayment of borrowing-related derivatives (46.0) − −
Interest paid on lease liabilities (102.9) (92.4) (88.4) Repayment of revolving credit facility (400.0) − −
Other interest and similar charges paid (274.5) (210.2) (173.7) Net repayment of debt assumed on acquisition (48.9) − −
Interest received 115.8 88.9 47.5 Repayment of €750 million bonds (652.6) − −
Investment income 12.9 24.5 17.8 Repayment of $500 million bonds – − (360.8)
Dividends from associates 43.4 37.6 53.4 Repayment of €250 million bonds – (209.3) −
Earnout payments recognised in operating Net cash outflow (1,147.5) (220.6) (397.1)
activities2 (6.0) (24.8) (3.8)
Net cash inflow from operating activities 1,238.2 700.9 2,029.0 Cash and cash equivalents:
Notes
2023 2022 2021
1 Impairment charges included within restructuring costs includes impairments for right-of-use
£m £m £m
assets, property, plant and equipment and other intangible assets
2 Earnout payments in excess of the amount determined at acquisition are recorded as Cash at bank and in hand 2,036.8 2,271.6 2,776.6
operating activities Short-term bank deposits 180.7 219.9 1,106.3
Overdrafts1 (358.2) (505.7) (342.3)
1,859.3 1,985.8 3,540.6

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 2023 191

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

12. LEASES The following table shows the breakdown of the lease expense between
The movements in 2023 and 2022 were as follows: amounts charged to operating profit and amounts charged to finance costs:

Land and Plant and 2023 2022 2021

buildings1 machinery Total £m £m £m
Right-of-use assets £m £m £m Depreciation of right-of-use assets:
1 January 2022 1,357.0 38.1 1,395.1 Land and buildings (235.9) (245.3) (254.7)
Additions 363.8 23.8 387.6 Plant and machinery (20.9) (16.9) (18.2)
Transfers to net investment in subleases (7.0) – (7.0) Impairment charges (128.8) (33.5) (12.5)
Disposals (42.2) (0.8) (43.0) Short-term lease expense (22.2) (20.2) (18.0)
Depreciation of right-of-use assets (245.3) (16.9) (262.2) Low-value lease expense (2.8) (1.9) (2.3)
Impairment charges included within Variable lease expense (45.5) (57.3) (56.2)
restructuring costs (33.3) (0.2) (33.5)
Sublease income 17.3 18.6 17.3
Exchange adjustments 89.2 2.3 91.5
Charge to operating profit (438.8) (356.5) (344.6)
31 December 2022 1,482.2 46.3 1,528.5
Interest expense related to lease liabilities (106.3) (95.7) (90.9)
Additions 255.0 49.6 304.6
Charge to profit before taxation for leases (545.1) (452.2) (435.5)
Transfers to net investment in subleases (4.6) – (4.6)
Disposals (9.2) (1.1) (10.3)
Depreciation of right-of-use assets (235.9) (20.9) (256.8) Variable lease payments primarily include real estate taxes and insurance costs.
Impairment charges included within
restructuring costs (128.8) – (128.8) The maturity of lease liabilities at 31 December 2023 and 2022 were as follows:
Exchange adjustments (49.1) (1.3) (50.4)
2023 2022
31 December 2023 1,309.6 72.6 1,382.2 £m £m

Note Within one year 405.9 379.1

1 For the year ended 31 December 2023, the Company has £20.8 million (2022: £18.5 million) of Between one and two years 326.9 337.7
right-of-use assets that are classified as investment property Between two and three years 282.1 293.0
Between three and four years 261.0 252.3
Land and Plant and
buildings machinery Total Between four and five years 231.1 234.8
Lease liabilities £m £m £m Over five years 1,265.2 1,328.5
1 January 2022 2,002.5 39.3 2,041.8 2,772.2 2,825.4
Additions 353.6 23.7 377.3 Effect of discounting (617.7) (614.8)
Interest expense related to lease liabilities 94.2 1.5 95.7 Lease liability at end of year 2,154.5 2,210.6
Disposals (46.1) (1.9) (48.0) Short-term lease liability 292.3 282.4
Repayment of lease liabilities (including Long-term lease liability 1,862.2 1,928.2
interest) (385.6) (16.4) (402.0)
Exchange adjustments 143.6 2.2 145.8
The total committed future cash flows for leases not yet commenced at
31 December 2022 2,162.2 48.4 2,210.6
31 December 2023 is £280.0 million (2022: £440.0 million).
Additions 237.7 50.2 287.9
Interest expense related to lease liabilities 103.4 2.9 106.3 The Group does not face a significant liquidity risk with regard to its lease
Disposals (11.4) (1.7) (13.1) liabilities. Refer to note 24 for management of liquidity risk.
Repayment of lease liabilities (including
interest) (340.0) (21.6) (361.6)
Exchange adjustments (74.1) (1.5) (75.6)
31 December 2023 2,077.8 76.7 2,154.5

192 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

Brands
13. INTANGIBLE ASSETS with an
GOODWILL indefinite Acquired
The movements in 2023 and 2022 were as follows: useful life intangibles Other Total
£m £m £m £m
£m Amortisation and impairment
Cost 1 January 20221 56.8 648.0 212.5 917.3
1 January 2022 10,991.0 Charge for the year − 61.9 21.9 83.8
Additions1 262.6 Impairment charges
included within
Disposals – restructuring costs3 − − 29.0 29.0
Exchange adjustments 891.0 Disposals and
31 December 2022 12,144.6 derecognition1 − (33.6) (59.4) (93.0)
Additions1 319.1 Exchange adjustments1 5.8 108.2 16.7 130.7
Disposals – 31 December 20221 62.6 784.5 220.7 1,067.8
Exchange adjustments (484.5) Charge for the year – 727.9 24.8 752.7
31 December 2023 11,979.2 Other movements2 − − (0.7) (0.7)
Disposals and
derecognition − (15.1) (51.5) (66.6)
Exchange adjustments (2.8) (27.0) (7.4) (37.2)
Accumulated impairment losses and write-downs
31 December 2023 59.8 1,470.3 185.9 1,716.0
1 January 2022 3,378.7
Impairment losses for the year 37.9
Net book value
Exchange adjustments 274.6
31 December 2023 412.4 344.2 93.3 849.9
31 December 2022 3,691.2
31 December 2022 1,103.4 288.7 59.8 1,451.9
Impairment losses for the year 63.6
1 January 2022 1,010.5 273.4 75.6 1,359.5
Exchange adjustments (164.5)
31 December 2023 3,590.3 Notes
1 The acquired intangibles balances within these line items have been re-presented to reflect
the derecognition of previously fully amortised assets that had no future economic benefit in
prior periods
Net book value 2 Other movements in acquired intangibles include reclassifications of items previously recorded

31 December 2023 8,388.9 in trade and other receivables; and revisions to fair value adjustments arising on the acquisition
of subsidiary undertakings that had been determined provisionally at the immediately preceding
31 December 2022 8,453.4
balance sheet date, as permitted by IFRS 3 Business Combinations
1 January 2022 7,612.3 3 Refer to note 3 for further explanation in relation to the impairment charges included within
restructuring costs
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
Cash-generating units (CGUs) with significant goodwill and brands with an
the immediately preceding balance sheet date, as permitted by IFRS 3 Business Combinations. indefinite useful life as at 31 December are:
The effect of such revisions was not material in either year presented
Brands with an
Goodwill indefinite useful life
OTHER INTANGIBLE ASSETS
2023 2022 2023 2022
The movements in 2023 and 2022 were as follows: £m £m £m £m
GroupM 3,254.9 3,178.3 − −
Brands
with an Wunderman Thompson 1,165.0 1,210.8 − 442.0
indefinite Acquired VMLY&R 814.6 776.0 − 207.6
useful life intangibles Other Total
£m £m £m £m Ogilvy 809.3 849.8 213.2 222.8
Cost BCW 618.8 646.0 112.7 140.5
1 January 20221 1,067.3 921.4 288.1 2,276.8 AKQA Group 600.1 628.7 − −
Additions − − 14.9 14.9 FGS Global 452.1 451.8 − −
Disposals and Hill & Knowlton 141.7 145.7 33.2 34.8
derecognition1 − (33.8) (59.2) (93.0) Landor Group 115.0 106.5 53.3 55.7
New acquisitions − 46.5 1.2 47.7 Other 417.4 459.8 − −
Other movements2 − 9.3 0.8 10.1 8,388.9 8,453.4 412.4 1,103.4
Exchange adjustments1 98.7 129.8 34.7 263.2
31 December 20221 1,166.0 1,073.2 280.5 2,519.7
Additions − − 40.0 40.0
Disposals and
derecognition − (15.1) (51.8) (66.9)
Reclassifications (665.4) 665.4 – –
New acquisitions − 138.5 2.9 141.4
Other movements2 − − 17.0 17.0
Exchange adjustments (28.4) (47.5) (9.4) (85.3)
31 December 2023 472.2 1,814.5 279.2 2,565.9

WPP ANNUAL REPORT 2023 193

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

13. INTANGIBLE ASSETS CONTINUED DISCOUNT RATES

Other goodwill represents goodwill on a large number of CGUs, none of which The discount rate uses the capital asset pricing model (CAPM) to derive the
is individually significant in comparison to the total carrying value of goodwill. cost of equity along with an estimated cost of debt that is weighted by an
Separately identifiable brands with an indefinite useful life are carried at appropriate capital structure to derive an indication of a weighted average
historical cost in accordance with the Group’s accounting policy for intangible cost of capital, which is then adjusted for relevant market and asset-specific
assets. The carrying values of the other brands with an indefinite useful life risk where they are not already adjusted for within the underlying cash flow
are not individually significant in comparison with the total carrying value of estimates. The cost of equity is calculated based on long-term government
brands with an indefinite useful life. bond yield, an estimate of the required premium for investment in equity
relative to government securities and further considers the volatility associated
Acquired intangible assets at net book value at 31 December 2023 include with peer public companies relative to the market. The cost of debt reflects
brand names of £134.6 million (2022: £142.3 million), customer-related an estimated market yield for long-term debt financing after taking into
intangibles of £108.2 million (2022: £120.3 million) and other assets account the credit profile of public peer companies in the industry. The capital
(including proprietary tools) of £101.4 million (2022: £26.1 million). structure used to weight the cost of equity and cost of debt has been derived
from the observed capital structure of public peer companies.
AMORTISATION AND IMPAIRMENT
The total amortisation and impairment of acquired intangible assets of The pre-tax discount rate applied to the cash flow projections for the CGUs
£727.9 million (2022: £61.9 million) includes a charge of £650.1 million (2022: that operate globally was 13.7% (2022: 14.5%). We developed a global discount
£1.4 million) predominantly in regard to certain brands that no longer have rate that takes into account the diverse nature of the operations, as these CGUs
any useful life. This includes accelerated amortisation charges of £430.8 million operate with a diverse range of clients in a range of industries throughout the
and £202.3 million for Wunderman Thompson and Y&R brands respectively, world, hence are subject to similar levels of market risks. The pre-tax discount
due to the creation of VML in the fourth quarter of 2023. rates applied to the CGUs that have more regional specific operations ranged
from 12.6% (2022: 14.0%) to 28.4% (2022: 22.6%).
In accordance with the Group’s accounting policy, the carrying values of
goodwill and intangible assets with indefinite useful lives are reviewed for DISCOUNTED CASH FLOW ASSESSMENT
impairment annually or more frequently if events or changes in circumstances Our approach in determining the recoverable amount utilises a discounted
indicate that the asset might be impaired. The impairment review is undertaken cash flow methodology, which necessarily involves making numerous estimates
annually on 30 September. The goodwill impairment charge of £63.6 million and assumptions regarding revenue less pass-through costs growth, operating
(2022: £37.9 million) recognised during the year relates to businesses in the margins, appropriate discount rates and working capital requirements. The
Group that have closed or where the impact of current macroeconomic key assumptions used for estimating cash flow projections in the Group’s
conditions and trading circumstances indicate impairment to the carrying value. impairment testing are those relating to operating margins and discount rates.
This year, £40.3 million of the impairment charge related to the Global The key assumptions take account of the business’s expectations for the
Integrated Agencies segment and £23.3 million related to the Specialist projection period. These expectations consider the macroeconomic
Agencies segment. environment, industry and market conditions, the CGU’s historical
performance and any other circumstances particular to the unit, such as
IMPAIRMENT ASSESSMENT PROCESS business strategy and client mix.
Under IFRS, an impairment charge is required for both goodwill and other
indefinite life assets when the carrying amount exceeds the 'recoverable These estimates will likely differ from future actual results of operations and
amount', defined as the higher of fair value less costs of disposal and value cash flows, and it is possible that these differences could be material. In
in use. The review assessed whether the carrying value of goodwill and addition, judgements are applied in determining the level of CGU identified for
intangible assets with indefinite useful lives was supported by the value impairment testing and the criteria used to determine which assets should be
in use determined as the net present value of future cash flows. aggregated. A difference in testing levels could affect whether an impairment
is recorded and the extent of impairment loss. Changes in our business activities
RECOVERABLE AMOUNT ASSESSMENT or structure may also result in additional changes to the level of testing in
Due to the significant number of CGUs, the impairment test was performed future periods. Further, future events could cause the Group to conclude that
in two steps. In the first step, the recoverable amount was calculated for each impairment indicators exist and that the asset values associated with a given
CGU using the latest available forecasts for 2023 and/or 2024, nil growth rate operation have become impaired.
thereafter (2022: nil) and a conservative pre-tax discount rate of 14.7% (2022:
15.5%). The pre-tax discount rate of 14.7% was above the rate calculated for the Historically, the Group's impairment losses have resulted from a specific
global networks of 13.7% (2022: 14.5%). For smaller CGUs that operate primarily event, condition or circumstance in one or more of our companies, such as
in a particular region subject to higher risk, the higher of 14.7% or 100 basis the impact of Covid-19 or the loss of a significant client. As a result, changes
points above the regional discount rate was used in the first step. in the assumptions used in our impairment model have generally not had
a significant effect on the impairment charges recognised. Following the
The recoverable amount was then compared to the carrying amount, which £650.1 million amortisation charge recorded in the fourth quarter of 2023,
includes goodwill, intangible assets and other assets. CGUs where the described further above and in note 3, for certain brands that no longer have
recoverable amount exceeded the carrying amount were not considered any useful life, as at 31 December 2023 there are no CGUs for which a
to be impaired. Those CGUs where the recoverable amount did not exceed reasonably possible change in key assumptions would lead to a significant
the carrying amount were then further reviewed in the second step. impairment. The carrying value of goodwill and other intangible assets will
continue to be reviewed at least annually for impairment and adjusted down
In the second step, these CGUs were retested for impairment using more to the recoverable amount, if required.
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% (2022: 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 2023, we have
assessed long-term industry trends based on recent historical data and
assumed a long-term growth rate of 2.0% (2022: 2.0%). Management has made
the judgement that the long-term growth rate does not exceed the long-term
average growth rate for the industry.

194 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

14. PROPERTY, PLANT AND EQUIPMENT 15. INTERESTS IN ASSOCIATES AND OTHER INVESTMENTS
The movements in 2023 and 2022 were as follows: The movements in 2023 and 2022 were as follows:

Fixtures, Interests in Other

Freehold Leasehold fittings and Computer associates investments
Land buildings buildings equipment equipment Total £m £m
£m £m £m £m £m £m 1 January 2022 412.9 318.3
Cost Additions 4.4 5.1
1 January 2022 43.2 61.4 1,075.0 149.5 391.8 1,720.9 Loss from associates – after interest and tax (60.4) −
Additions 13.8 0.1 75.8 32.1 86.6 208.4 Share of other comprehensive income
New acquisitions – – 0.5 0.2 0.6 1.3 of associate undertakings 51.2 −
Disposals (0.1) (8.3) (62.1) (40.0) (72.1) (182.6) Dividends (37.6) −
Exchange Other movements 2.9 −
adjustments (16.9) 39.3 89.7 23.0 39.8 174.9 Exchange adjustments 17.1 −
31 December 2022 40.0 92.5 1,178.9 164.8 446.7 1,922.9 Disposals (9.6) (16.0)
Additions 3.5 3.3 88.3 17.1 65.0 177.2 Reclassification from subsidiaries (5.9) −
New acquisitions – – 0.8 – – 0.8 Reclassification from associates to other
Disposals – – (155.9) (51.0) (95.6) (302.5) investments (22.5) 61.6
Exchange Revaluation of other investments through
adjustments (31.6) (61.5) (51.0) (11.5) (26.3) (181.9) profit or loss − 23.1
31 December 2023 11.9 34.3 1,061.1 119.4 389.8 1,616.5 Revaluation of other investments through
other comprehensive income − (22.3)
Depreciation and impairment Amortisation of other intangible assets (0.2) −
1 January 2022 – 2.7 469.6 71.9 280.3 824.5 Impairment charges (47.2) −
Charge for the year – 0.7 74.0 26.5 65.7 166.9 31 December 2022 305.1 369.8
Impairment charges Additions 39.4 2.5
included within Gain from associates – after interest and tax 25.1 –
restructuring costs – – 9.1 0.6 0.1 9.8 Share of other comprehensive loss
Disposals – (1.7) (63.5) (36.7) (71.1) (173.0) of associate undertakings (0.9) –
Exchange Dividends (30.4) –
adjustments – 0.3 43.2 17.5 33.0 94.0 Other movements (12.5) -
31 December 2022 – 2.0 532.4 79.8 308.0 922.2 Exchange adjustments (19.3) -
Charge for the year – 1.0 70.5 24.9 68.7 165.1
Disposals (5.4) (10.4)
Impairment charges
included within Reclassification to subsidiaries – –
restructuring costs – – 52.2 2.7 0.9 55.8 Reclassification from associates to
Disposals – (0.2) (144.9) (48.4) (94.1) (287.6) other investments – –
Exchange Revaluation of other investments through
adjustments – (0.2) (29.0) (14.2) (24.1) (67.5) profit or loss – (26.2)
31 December 2023 – 2.6 481.2 44.8 259.4 788.0 Revaluation of other investments through
other comprehensive income – (3.0)
Amortisation of other intangible assets – –
Net book value
Impairment charges (14.6) –
31 December 2023 11.9 31.7 579.9 74.6 130.4 828.5
31 December 2023 286.5 332.7
31 December 2022 40.0 90.5 646.5 85.0 138.7 1,000.7
1 January 2022 43.2 58.7 605.4 77.6 111.5 896.4
Interests in joint ventures are immaterial and none of the Group's associates
are individually material at 31 December 2023.
At 31 December 2023, capital commitments contracted, but not provided
for in respect of property, plant and equipment, were £38.4 million The investments included above as 'Other investments' represent investments
(2022: £128.2 million). in equity securities that present the Group with the 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 at the balance sheet date. For unlisted securities, where market value is
not available, the Group has estimated relevant fair values on the basis of
information from outside sources at the balance sheet date.

The carrying values of the Group’s associates are reviewed for impairment in
accordance with the Group’s accounting policies.

WPP ANNUAL REPORT 2023 195

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

15. INTERESTS IN ASSOCIATES AND OTHER INVESTMENTS 16. DEFERRED TAX

CONTINUED The Group's deferred tax assets and liabilities are measured at the end of each
AGGREGATE INFORMATION OF ASSOCIATES THAT ARE NOT period in accordance with IAS 12 Income Taxes. The recognition of deferred
INDIVIDUALLY MATERIAL tax assets is determined by reference to the Group's estimate of recoverability,
The following table presents a summary of the aggregate financial using models, where appropriate, to forecast future taxable profits.
performance of the Group’s associate undertakings.
Deferred tax assets have only been recognised for territories where the Group
2023 2022 2021 considers that it is probable that all or a portion of the deferred tax assets will
£m £m £m
be realised. The main factors that we consider include:
Earnings/(loss) from associates – after interest
and tax (note 4) 70.2 (60.4) 23.8
– The future earnings potential determined through the use of internal forecasts
Share of other comprehensive (loss)/earnings
of associate undertakings (0.9) 51.2 13.5 – The cumulative losses in recent years
Share of total comprehensive earnings/(loss) – The various jurisdictions in which the potential deferred tax assets arise
of associate undertakings 69.3 (9.2) 37.3 – The history of losses carried forward and other tax assets expiring
– The timing of future reversal of taxable temporary differences
– The expiry period associated with the deferred tax assets
The application of equity accounting is ordinarily discontinued when the
– The nature of the income that can be used to realise the deferred tax asset
investment is reduced to zero and additional losses are not provided for unless
the Group has guaranteed obligations of the investee or is otherwise
If it is probable that some portion of these assets will not be realised, no asset
committed to provide further financial support for the investee.
is recognised in relation to that portion.
As at 31 December 2023, share of losses of £30.1 million (2022: £29.5 million) for
If market conditions improve and future results of operations exceed our
the US and £137.9 million (2022: £33.8 million) for the Rest of World have not
current expectations, our existing recognised deferred tax assets may be
been recognised in relation to Kantar as the investment was previously
adjusted, resulting in future tax benefits. Alternatively, if market conditions
reduced to zero.
deteriorate further or future results of operations are less than expected,
future assessments may result in a determination that some or all of the
As at 31 December 2021, the cumulative share of unrecognised losses in relation
deferred tax assets are not realisable. As a result, all or a portion of the
to Imagina, an associate in Spain with the investment carrying value reduced
deferred tax assets may need to be reversed.
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 25 for further details
on financial instruments held at fair value though other comprehensive income.

At 31 December 2023, capital commitments contracted, but not provided for,

in respect of interests in associates and other investments were £2.2 million
(2022: £3.2 million).

The following is the analysis of the deferred tax balances for financial reporting purposes:

Offset of
balances arising Gross balances
from a single before offset Offset within As
Gross transaction1 within countries countries reported
2023 2023 2023 2023 2023
£m £m £m £m £m
Deferred tax assets 684.9 (94.0) 590.9 (266.5) 324.4
Deferred tax liabilities (539.0) 94.0 (445.0) 266.5 (178.5)
145.9 – 145.9 – 145.9

Offset of
balances arising Gross balances
from a single before offset Offset within As
Gross transaction1 within countries countries reported
2022 2022 2022 2022 2022
£m £m £m £m £m
Deferred tax assets 734.2 (145.4) 588.8 (266.7) 322.1
Deferred tax liabilities (762.9) 145.4 (617.5) 266.7 (350.8)
(28.7) – (28.7) – (28.7)

Note
1 The Group has applied Deferred tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12). Transactions which give rise to the recognition of an asset and a liability
on the Group’s balance sheet, including leases for which the Group recognises a right-of-use asset and a lease liability, lead to taxable and deductible temporary differences in certain jurisdictions.
The resulting deferred tax assets and deferred tax liabilities arising from these temporary differences have been offset and reported net on the Group’s balance sheet

196 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

16. DEFERRED TAX CONTINUED

The following are the major gross deferred tax assets before offset within countries recognised by the Group and movements thereon in 2023 and 2022:

Accounting Retirement Other

Deferred provisions benefit Plant and Tax losses Share-based Restructuring temporary
compensation and accruals obligations equipment Property and credits payments provisions differences Total
£m £m £m £m £m £m £m £m £m £m
1 January 2022 108.5 106.2 53.4 15.0 53.0 110.5 43.5 61.1 13.8 565.0
Acquisition of subsidiaries – – – – – – – – 1.1 1.1
(Charge)/credit to income (38.7) 3.3 (2.9) (1.0) (9.0) 5.0 1.3 21.2 (14.2) (35.0)
Charge to other comprehensive income – – (7.0) – – – – – – (7.0)
Charge to equity – – – – – – (15.5) – – (15.5)
Exchange differences and other movements 4.5 10.6 4.5 33.9 9.7 7.0 3.0 2.3 4.7 80.2
31 December 2022 74.3 120.1 48.0 47.9 53.7 122.5 32.3 84.6 5.4 588.8
Acquisition of subsidiaries – – – – – – – – – –
(Charge)/credit to income (6.0) 13.8 2.8 (11.8) (5.7) (11.5) 3.7 38.7 1.8 25.8
Credit to other comprehensive income – – 1.5 – – – – – – 1.5
Charge to equity – – – – – – (0.3) – – (0.3)
Exchange differences and other movements (3.2) (2.2) (2.6) (0.3) 8.4 (6.8) (0.7) (15.7) (1.8) (24.9)
31 December 2023 65.1 131.7 49.7 35.8 56.4 104.2 35.0 107.6 5.4 590.9

Other temporary differences comprise a number of items, none of which is individually significant to the Group's consolidated balance sheet. At 31 December 2023
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 before offset within countries and movements thereon in 2023 and 2022:

Brands Other
and other Associate Plant and temporary
intangibles earnings Goodwill equipment differences Total
£m £m £m £m £m £m
1 January 2022 325.1 36.8 133.2 – 40.9 536.0
Acquisition of subsidiaries 15.1 – – – – 15.1
(Credit)/charge to income (12.4) (3.5) 19.7 (14.2) (10.5) (20.9)
Charge to other comprehensive income – – – – 0.4 0.4
Exchange differences and other movements 24.8 3.2 20.5 37.2 1.2 86.9
31 December 2022 352.6 36.5 173.4 23.0 32.0 617.5
Acquisition of subsidiaries 35.0 – – – – 35.0
(Credit)/charge to income (173.7) (15.6) 18.4 0.3 (1.7) (172.3)
Credit to other comprehensive income – – – – (0.2) (0.2)
Exchange differences and other movements (21.2) (1.1) (10.8) (1.1) (0.8) (35.0)
31 December 2023 192.7 19.8 181.0 22.2 29.3 445.0

Other temporary differences comprise a number of items none of which is individually significant to the Group's consolidated balance sheet. At 31 December
2023 the balance related to temporary differences in relation to unremitted earnings of subsidiaries and other temporary differences.

At the balance sheet date, the Group has gross tax losses and other temporary At the balance sheet date, the aggregate amount of the temporary differences
differences of £10,321.0 million (2022: £7,667.4 million) available for offset in relation to the investment in subsidiaries for which deferred tax liabilities
against future profits. Deferred tax assets have been recognised in respect have not been recognised was £1,355.1 million (2022: £1,346.1 million). No
of the tax benefit of £2,399.4 million (2022: £2,259.7 million) of such tax losses liability has been recognised in respect of these differences because the
and other temporary differences. No deferred tax asset has been recognised Group is in a position to control the timing of the reversal of the temporary
in respect of the remaining £7,921.6 million (2022: £5,407.7 million) of losses and differences and the Group considers that it is probable that such differences
other temporary differences as the Group considers that there will not be will not reverse in the foreseeable future.
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 £92.0 million (2022: £60.3 million) that will expire
within one to ten years, and £7,712.8 million (2022: £5,138.1 million) of losses
that may be carried forward indefinitely. The increase in losses primarily arose
in Luxembourg as a result of steps that were part of the Group's continuing
structural simplification programme.

WPP ANNUAL REPORT 2023 197

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

17. TRADE AND OTHER RECEIVABLES Other financial assets are included in other debtors.
The following are included in trade and other receivables1:

2023 2022 2023 2022

£m £m £m £m
Amounts to be realised within one year Amounts to be realised after more than one year
Trade receivables (net of loss allowance) 7,055.0 7,403.9 Prepayments 2.0 3.9
Unbilled costs2 273.6 352.4 Fair value of derivatives 32.3 0.6
VAT and sales taxes recoverable 370.7 448.1 Other debtors 174.9 214.1
Prepayments 239.0 236.6 209.2 218.6
Fair value of derivatives 1.6 5.1
Other debtors3 520.7 585.3 The Group has applied the practical expedient permitted by IFRS 15 to not
8,460.6 9,031.4 disclose the transaction price allocated to performance obligations unsatisfied
(or partially unsatisfied) as of the end of the reporting period as contracts
Notes
1 Accrued income was previously presented in Trade and other receivables
typically have an original expected duration of a year or less.
2 Previously named 'Work in progress'
3 This balance includes campus related enhancement prepayments and other individually not Other debtors falling due after more than one year at 31 December 2023
material items includes £13.7 million in relation to pension plans in surplus (2022: £15.4 million).

The ageing of trade receivables and other financial assets by due date is 2023 2022
£m £m
as follows:
Expected credit losses
Days past due At beginning of year 71.5 70.5
Carrying New acquisitions 0.6 −
amount at 181 Greater Charged to the income statement 14.9 29.1
31 December Not past 0-30 31-90 91-180 days- than
2023 due days days days 1 year 1 year Released to the income statement (22.2) (8.4)
2023 £m £m £m £m £m £m £m Exchange adjustments (5.3) 5.1
Gross trade Utilisations and other movements (15.6) (24.8)
receivables 7,098.9 6,173.0 612.7 183.0 52.7 30.6 46.9
At end of year 43.9 71.5
Expected
credit losses (43.9) (1.4) (1.1) (0.9) (2.6) (10.3) (27.6)
7,055.0 6,171.6 611.6 182.1 50.1 20.3 19.3 The expected credit loss is equivalent to 0.6% (2022: 1.0%) of gross
Expected trade receivables.
credit loss
rate 0.6% 0.0% 0.2% 0.5% 4.9% 33.7% 58.8%
Expected credit losses on unbilled costs, and other debtors were immaterial
Gross for the years presented.
accrued
income 3,165.6 2,022.1 548.3 336.7 244.5 14.0 –
Expected The Group considers that the carrying amount of trade and other receivables
credit losses (15.0) (0.3) (0.5) (1.3) (12.8) (0.1) – approximates their fair value.
3,150.6 2,021.8 547.8 335.4 231.7 13.9 –
Expected EXPECTED CREDIT LOSSES
credit loss Given the short-term nature of the Group’s trade receivables, unbilled costs,
rate 0.5% 0.0% 0.1% 0.4% 5.2% 0.7% n/a and accrued income, which are mainly due from large national or multinational
Other companies, the Group's assessment of expected credit losses includes
financial provisions for specific clients and receivables where the contractual cash flow
assets 514.1 413.2 33.8 14.4 6.4 17.2 29.1
is deemed at risk. Considerations include the current economic environment,
10,719.7 8,606.6 1,193.2 531.9 288.2 51.4 48.4
and the level of credit insurance the Group has along with historical loss rates
for each category of customers adjusted for forward-looking information.
Days past due Additional provisions are made based on the assessment of recoverability
Carrying of aged receivables over one year where sufficient evidence of recoverability
amount at 181 Greater is not evident.
31 December Not past 0-30 31-90 91-180 days- than
2022 due days days days 1 year 1 year
2022 £m £m £m £m £m £m £m
Gross trade
receivables 7,475.4 6,386.5 706.4 247.1 66.8 23.5 45.1
Expected
credit losses (71.5) (1.6) (5.8) (6.6) (6.6) (13.3) (37.6)
7,403.9 6,384.9 700.6 240.5 60.2 10.2 7.5
Expected
credit loss
rate 1.0% 0.0% 0.8% 2.7% 9.9% 56.6% 83.4%
Gross
accrued
income 3,485.6 2,027.0 603.8 450.5 376.8 27.5 –
Expected
credit losses (17.3) (0.1) (0.2) (0.1) (16.9) – –
Expected
credit loss
rate 0.5% 0.0% 0.0% 0.0% 4.5% 0.0% n/a
Expected
credit loss
rate 3,468.3 2,026.9 603.6 450.4 359.9 27.5 –
Other
financial
assets 612.0 538.8 31.2 6.1 1.0 6.2 28.7
11,484.2 8,950.6 1,335.4 697.0 421.1 43.9 36.2

198 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

18. TRADE AND OTHER PAYABLES: AMOUNTS FALLING The following table is an analysis of future anticipated cash flows in relation to
DUE WITHIN ONE YEAR liabilities in respect of put option agreements with vendors at 31 December:
The following are included in trade and other payables falling due within
one year1: 2023 2022
£m £m
2023 2022 Within one year 13.6 18.8
£m £m Between one and two years 24.0 5.2
Trade payables 10,825.7 11,182.3 Between two and three years 38.6 76.6
Payments due to vendors (earnout agreements) 73.3 62.0 Between three and four years 9.8 99.2
Liabilities in respect of put option agreements Between four and five years 6.2 74.8
with vendors 13.6 18.8
Over five years 11.4 67.5
Fair value of derivatives 1.8 58.0
103.6 342.1
Other creditors and accruals2 2,408.7 2,914.8
13,323.1 14,235.9
20. BANK OVERDRAFTS AND BONDS
Note Amounts falling due within one year:
1 Deferred income was previously presented in Trade and other payables
2 This balance includes staff costs, indirect taxes payable and other individually not material items
2023 2022
£m £m
The Group considers that the carrying amount of trade and other payables Bank overdrafts 358.2 505.7
approximates their fair value, except for liabilities in respect of put option Bonds 588.1 663.3
agreements with vendors for which the fair value is £12.3 million (this is level 3 946.3 1,169.0
fair value that is derived using a discounted cash flow approach).

In all material respects, deferred income at 31 December 2022 was recognised The Group considers that the carrying amount of bank overdrafts approximates
as revenue during the year. Other than business-as-usual movements, and their fair value.
deferred income acquired on the acquisition of subsidiaries, there were no
other significant changes in contract liability balances during the year. Amounts falling due after more than one year:

2023 2022
19. TRADE AND OTHER PAYABLES: AMOUNTS FALLING £m £m
DUE AFTER MORE THAN ONE YEAR
Bonds 3,775.0 3,801.8
The following are included in trade and other payables falling due after more
than one year:
The Group estimates that the fair value of bonds is £4,119.5 million at
2023 2022 31 December 2023 (2022: £4,049.1 million). The fair values of the bonds are based
£m £m on quoted market prices and are within Level 1 of the fair value hierarchy.
Payments due to vendors (earnout agreements) 125.4 98.1
Liabilities in respect of put option agreements The bonds and bank overdrafts included within liabilities fall due for
with vendors 90.0 323.3 repayment as follows:
Fair value of derivatives 1.2 –
Other creditors and accruals 66.2 69.5 2023 2022
£m £m
282.8 490.9
Within one year 946.3 1,169.0
Between one and two years 432.9 618.0
The Group considers that the carrying amount of trade and other payables
Between two and three years 647.2 441.5
approximates their fair value, except for liabilities in respect of put option
agreements with vendors for which the fair value is approximately £82.4 million Between three and four years 648.0 658.8
(this is level 3 fair value that is derived using a discounted cash flow approach). Between four and five years 647.5 661.1
Over five years 1,399.4 1,422.4
Liabilities in respect of put option agreements with vendors are initially 4,721.3 4,970.8
recorded at the present value of the redemption amount in accordance with
IAS 32 and subsequently measured at amortised cost in accordance with
IFRS 9. The cash flows of put options, which are discounted using the original
effective interest rate, are dependent on future earnings and are remeasured
each reporting period via the income statement.

The Group's approach to payments due to vendors (earnouts) is further

described in note 25. The following table sets out payments due to vendors
(earnouts), comprising contingent consideration and the Directors’ best
estimates of future earnout-related obligations:

2023 2022
£m £m
Within one year 73.3 62.0
Between one and two years 54.1 19.5
Between two and three years 70.9 27.6
Between three and four years 0.4 28.6
Between four and five years – 22.4
198.7 160.1

WPP ANNUAL REPORT 2023 199

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

21. PROVISIONS FOR LIABILITIES AND CHARGES 22. SHARE-BASED PAYMENTS

The movements in 2023 and 2022 were as follows: Charges for share-based incentive plans were as follows:

Employee 2023 2022 2021

benefits Property Other Total £m £m £m
£m £m £m £m Share-based payments 140.1 122.0 99.6
1 January 2022 140.3 70.6 57.6 268.5
Charged to the income statement 4.3 8.1 2.1 14.5
Share-based payments comprise charges for stock options and restricted
Acquisitions1 – – 1.3 1.3
stock awards to employees of the Group.
Utilised (32.5) (12.8) (4.7) (50.0)
Released to the income statement – (3.2) (22.2) (25.4) As of 31 December 2023, there was £179.9 million (2022: £200.7 million) of total
Other movements 14.6 (4.8) 3.2 13.0 unrecognised compensation cost related to the Group’s restricted stock plans.
Exchange adjustments 16.4 4.9 1.4 22.7
31 December 2022 143.1 62.8 38.7 244.6 RESTRICTED STOCK PLANS
Charged to the income statement 3.1 64.2 24.9 92.2 The Group operates a number of equity-settled share incentive schemes,
Acquisitions1 – – 0.6 0.6 in most cases satisfied by the delivery of stock from one of the Group’s
Utilised (21.8) (18.7) (0.7) (41.2) ESOP Trusts. The most significant current schemes are as follows:
Released to the income statement (2.3) (4.0) (8.5) (14.8) EXECUTIVE PERFORMANCE SHARE PLAN (EPSP)
Other movements 38.1 (2.9) (0.2) 35.0 This scheme is intended to reward and incentivise the most senior executives
Exchange adjustments (7.4) (2.7) (1.8) (11.9) of the Group. The performance period is three or five complete financial years,
31 December 2023 152.8 98.7 53.0 304.5 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.
Note
Vesting is conditional on continued employment throughout the vesting period.
1 Acquisitions include £0.6 million (2022: £1.3 million) of provisions arising from fair value
adjustments related to the acquisition of subsidiary undertakings as required by IFRS 3 Business
Combinations The 2020, 2021, 2022 and 2023 EPSP awards are subject to three equally
weighted performance conditions: three-year average Return on Invested
Employee benefits relate to statutory or contractual employee entitlements Capital (ROIC), cumulative Adjusted Free Cash Flow (AFCF), and relative Total
where there is uncertainty over the timing or amount of the settlement. Shareholder Return (TSR). Achieving the threshold performance requirement
The majority of this provision relates to various employee defined contribution will result in a vesting opportunity of 20% for that element. The vesting
and deferred compensation plans in the USA. It is anticipated that these costs opportunity will increase on a straight-line basis to 100% of the award for
will be incurred when employees choose to take their benefits or depart from maximum performance. The Compensation Committee has an overriding
the Company. discretion to determine the extent to which the award will vest.

The property provision balance relates primarily to onerous property PERFORMANCE SHARE AWARDS (PSA)
contracts and decommissioning where the Group has the obligation to Conditional stock awards made under the PSA are dependent upon annual
make-good its leased properties. Where the Group has made a decision to performance targets, typically based on one or more of: operating profit,
exit a leased property, onerous property contract provisions do not include profit before taxation and operating margin. Grants are made in the year
rent in accordance with IFRS 16 Leases, however, do include unavoidable following the year of performance measurement, and vest two years after
costs related to the lease such as ongoing service charges. Utilisation of grant date provided the individual concerned is continually employed by
the recognised provisions is expected to be incurred in conjunction with the Group throughout this time.
the profile of the leases to which they relate.
LEADERSHIP SHARE AWARDS
WPP Leadership Awards are conditional stock awards made to around 1,900
Other provisions primarily relate to legal provisions as well as various items
of our key executives. Awards vest three years after grant, provided the
that do not fall within the Group’s categories of provisions above. The
participant is still employed within the Group.
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. VALUATION METHODOLOGY
The Directors do not anticipate that the outcome of these proceedings and For all of these schemes, the valuation methodology is based upon fair value
claims will have a material adverse effect on the Group’s financial position on grant date, which is determined by the market price on that date or the
or on the results of its operations. application of a Black-Scholes model, depending upon the characteristics of
the scheme concerned. The assumptions underlying the Black-Scholes model
CONTINGENT LIABILITIES are detailed below including details of assumed dividend yields. Market price
The Group operates in a large number of markets with complex tax and on any given day is obtained from external, publicly available sources.
legislative regimes that are open to subjective interpretation, and for which
tax audits can take several years to resolve. The Group has received a number MARKET/NON-MARKET CONDITIONS
of demands and assessments from different states in India that have been or will Most share-based plans are subject to non-market performance conditions,
be appealed to the courts, none of which are individually material. However, such as margin or growth targets, as well as continued employment.
as permitted by IAS 37, the provision of any further information within this EPSP is subject to a number of performance conditions, including TSR,
disclosure is expected to seriously prejudice the Group’s position in the dispute, a market‑based condition.
given that appeals are ongoing. The Group believes that we will be successful
in our appeals, however any appeal process is intrinsically uncertain. 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.

200 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

22. SHARE-BASED PAYMENTS CONTINUED The Group grants stock options with a life of ten years, including the
Movement on ordinary shares granted for significant restricted stock plans: vesting period.

Non- Non- WPP WORLDWIDE SHARE OWNERSHIP PROGRAMME (WWOP)

vested vested
1 January 31 December
As at 31 December 2023, unexercised options over ordinary shares of 650,825
2023 Granted Forfeited Vested 2023 and unexercised options over ADRs of 72,695 have been granted under the
number number number number number WPP Worldwide Share Ownership Programme as follows:
m m m m m
Executive Performance Number of ordinary shares Exercise price Exercise
Share Plan (EPSP) 20.4 7.8 (1.4) (3.9) 22.9 under option per share (£) dates
Performance Share 647,575 13.145 2017-2024
Awards (PSA) 4.1 2.3 (0.5) (0.4) 5.5
3,250 13.145 2018-2024
Leadership Share
Awards 11.3 5.9 (1.0) (3.8) 12.4
Number of ADRs Exercise price Exercise
under option per share (£) dates
Weighted average fair
value (pence per share) 72,695 102.670 2017-2024
Executive Performance
Share Plan (EPSP) 924p 919p 947p 752p 950p WPP SHARE OPTION PLAN 2015 (WSOP)
Performance Share As at 31 December 2023, unexercised options over ordinary shares of
Awards (PSA) 952p 857p 939p 926p 915p 15,369,025 and unexercised options over ADRs of 1,772,400 have been granted
Leadership Share under the WPP Share Option Plan as follows:
Awards 899p 654p 934p 673p 848p
Number of ordinary shares Exercise price Exercise
under option per share (£) dates
Non- Non-
vested vested
3,524,700 7.064 2025-2032
1 January 31 December 1,806,625 7.344 2023-2030
2022 Granted Forfeited Vested 2022 9,500 7.344 2023-2027
number number number number number
m m m m m 849,350 8.372 2021-2028
Executive Performance 7,000 8.372 2021-2025
Share Plan (EPSP) 16.7 6.1 (2.2) (0.2) 20.4 125,125 8.684 2025-2029
Performance Share 2,682,975 8.684 2025-2032
Awards (PSA) 3.1 4.0 (0.2) (2.8) 4.1
1,466,100 9.600 2022-2029
Leadership Share
Awards 10.4 4.9 (1.2) (2.8) 11.3 8,875 9.600 2022-2026
2,237,900 11.065 2023-2030
Weighted average fair 1,040,350 13.085 2020-2027
value (pence per share) 7,625 13.085 2020-2024
Executive Performance 4,000 15.150 2019-2025
Share Plan (EPSP) 900p 1,025p 1,055p 613p 924p
739,850 15.150 2018-2025
Performance Share
Awards (PSA) 604p 911p 798p 519p 952p 859,050 17.055 2019-2026
Leadership Share
Awards 922p 787p 881p 795p 899p Number of ADRs Exercise price Exercise
under option per ADR ($) dates
The total fair value of shares vested for all the Group’s restricted stock plans 409,115 44.120 2025-2032
during the year ended 31 December 2023 was £81.6 million (2022: £65.4 million, 198,380 48.950 2023-2030
2021: £64.1 million). 318,125 52.600 2025-2032
120,995 53.140 2021-2028
SHARE OPTIONS
169,790 62.590 2022-2029
TERMS OF SHARE OPTION PLANS
255,510 73.780 2023-2030
In 2015, the Group introduced the Share Option Plan 2015 to replace both
the 'all-employee' Worldwide Share Ownership Plan and the discretionary 117,650 88.260 2020-2027
Executive Stock Option Plan. Two kinds of options over ordinary shares can 100,960 105.490 2020-2026
be granted, both with a market value exercise price. Firstly, options can be 81,875 115.940 2018-2025
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.

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 lapse automatically.

WPP ANNUAL REPORT 2023 201

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

22. SHARE-BASED PAYMENTS CONTINUED

The aggregate status of the WPP Share Option Plans during 2023 was as follows:

MOVEMENTS ON OPTIONS GRANTED (REPRESENTED IN ORDINARY SHARES)

Outstanding Exercisable
1 January 31 December 31 December
2023 Granted Exercised Forfeited 2023 2023
WPP – – – – – -
WWOP 1,639,025 – – (624,725) 1,014,300 -
WSOP 21,299,025 5,586,650 (85,900) (2,568,750) 24,231,025 7,386,400
22,938,050 5,586,650 (85,900) (3,193,475) 25,245,325 7,386,400

Outstanding Exercisable
1 January 31 December 31 December
2022 Granted Exercised Forfeited 2022 2022
WPP 6,741 – – (6,741) – –
WWOP 2,049,299 – (2,575) (407,699) 1,639,025 –
WSOP 19,608,150 5,224,050 (123,125) (3,410,050) 21,299,025 3,188,675
21,664,190 5,224,050 (125,700) (3,824,490) 22,938,050 3,188,675

WEIGHTED AVERAGE EXERCISE PRICE FOR OPTIONS OVER

Outstanding Exercisable
1 January 31 December 31 December
2023 Granted Exercised Forfeited 2023 2023
Ordinary shares (£)
WPP – – – – – –
WWOP 13.224 – – 13.432 13.145 –
WSOP 10.356 – 8.350 9.959 9.652 –

ADRs ($)
WWOP 106.379 – – 109.949 102.670 –
WSOP 67.910 – 48.950 66.181 62.587 44.120

Outstanding Exercisable
1 January 31 December 31 December
2022 Granted Exercised Forfeited 2022 2022
Ordinary shares (£)
WPP 9.355 – – 9.355 – –
WWOP 12.923 – 8.458 11.565 13.224 −
WSOP 10.854 8.684 8.357 10.530 10.356 7.344

ADRs ($)
WWOP 101.693 – – 85.706 106.379 −
WSOP 72.228 52.600 53.270 71.674 67.910 48.950

202 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

22. SHARE-BASED PAYMENTS CONTINUED 23. EMPLOYEE BENEFIT OBLIGATIONS

Companies within the Group operate a large number of pension plans,
OPTIONS OVER ORDINARY SHARES the forms and benefits of which vary with conditions and practices in the
countries concerned. The Group’s pension costs are analysed as follows:
Weighted Weighted
Range of average average 2023 2022 2021
exercise prices exercise price contractual life £m £m £m
Outstanding £ £ Months
Defined contribution plans 198.1 191.3 162.8
7.344-17.055 10.455 70
Defined benefit plans charge to operating profit 15.0 13.5 14.9
Pension costs (note 5) 213.1 204.8 177.7
OPTIONS OVER ADRs Net interest expense on pension plans (note 6) 4.3 2.2 1.8
Weighted Weighted
217.4 207.0 179.5
Range of average average
exercise prices exercise price contractual life
Outstanding $ $ Months DEFINED BENEFIT PLANS
44.120-115.940 64.166 80 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.
As at 31 December 2023 there was £10.1 million (2022: £11.1 million) of total These valuations have been updated by the local actuaries to 31 December 2023.
unrecognised compensation costs related to share options. The cost is
expected to be recognised over a weighted average period of 19 months The majority of plans provide final salary benefits, with plan benefits
(2022: 20 months). typically based either on mandatory plans under local legislation, termination
indemnity benefits, or on the rules of WPP-sponsored supplementary plans.
Share options are satisfied out of newly issued shares. The implications of IFRIC 14 have been allowed for where relevant, in particular
with regard to the asset ceiling/irrecoverable surplus.
The weighted average fair value of options granted in the year calculated
using the Black-Scholes model was as follows: 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.
Outstanding 2023 2022 2021
Fair value of UK options Contributions to funded plans are determined in line with local conditions and
(shares) 131.0p 177.0p 220.0p
practices. Contributions in respect of unfunded plans are paid as they fall due.
Fair value of US options
(ADRs) $8.59 $11.48 $14.89 The total contributions (for funded plans) and benefit payments (for unfunded
plans) paid for 2023 amounted to £19.8 million (2022: £24.0 million, 2021: £16.7
million). Employer contributions and benefit payments in 2024 are expected
Weighted average
assumptions to be approximately £17.0 million.
UK risk-free interest rate 4.00% 2.92% 0.63%
US risk-free interest rate 4.53% 4.09% 1.16%
Expected life (months) 48 48 48
Expected volatility 33% 32% 34%
Dividend yield 5.6% 3.9% 3.4%

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 2023
was £8.41 (2022: £9.13, 2021: £9.64) and the average ADR price for the same
period was $52.31 (2022: $56.80, 2021: $66.44). The average share price of the
Group for year ended 31 December 2023 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
on page 201.

WPP ANNUAL REPORT 2023 203

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

23. EMPLOYEE BENEFIT OBLIGATIONS CONTINUED The following table shows the split of the deficit at 31 December between
(A) ASSETS AND LIABILITIES funded and unfunded pension plans.
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 2023 2022 2021
2023 Present 2022 Present 2021 Present
in the following table: Surplus/ value of Surplus/ value of Surplus/ value of
(deficit) liabilities (deficit) liabilities (deficit) liabilities
2023 2022 2021 £m £m £m £m £m £m
£m % £m % £m %
Funded plans
Equities 24.2 9.3 26.7 6.2 31.8 5.8 by region
Bonds 170.2 65.7 208.8 48.5 259.7 47.0 UK 0.7 (9.2) 2.3 (155.5) 0.4 (231.9)
Insured annuities 3.0 1.2 149.2 34.7 222.5 40.3 North America 7.4 (182.9) 4.1 (208.5) 20.1 (237.9)
Property 1.3 0.5 1.4 0.3 1.0 0.2 Western
Cash 18.3 7.1 18.1 4.2 15.3 2.8 Continental
Europe (34.1) (70.6) (29.1) (67.9) (45.1) (87.6)
Other 42.0 16.2 26.3 6.1 21.8 3.9
Asia Pacific,
Total fair value of assets 259.0 100.0 430.5 100.0 552.1 100.0 Latin America,
Present value of liabilities (381.2) (552.6) (688.5) Africa & Middle
East and
Deficit in the plans (122.2) (122.1) (136.4) Central &
Irrecoverable surplus – – (0.2) Eastern Europe (5.4) (27.6) (4.1) (25.4) (6.4) (25.7)
Net liability1 (122.2) (122.1) (136.6) Deficit/
liabilities in
Plans in surplus2 13.7 15.4 30.1 the funded
Plans in deficit (135.9) (137.5) (166.7) plans (31.4) (290.3) (26.8) (457.3) (31.0) (583.1)

Notes
1 The related deferred tax asset is discussed in note 16
Unfunded
2 The net asset related to plans in surplus of £13.7 million for 31 December 2023 (2022: £15.4 million)
plans by
region
is recorded in the consolidated balance sheet within other debtors. The corresponding figures
for 31 December 2021 are recorded in provision for post-employment benefits North America (37.1) (37.1) (41.2) (41.2) (48.2) (48.2)
Western
Continental
All plan assets have quoted prices in active markets with the exception of Europe (26.0) (26.0) (23.5) (23.5) (28.9) (28.9)
other assets.
Asia Pacific,
Latin America,
2023 2022 2021 Africa & Middle
Surplus/(deficit) in plans by region £m £m £m East and
UK 0.7 2.3 0.4 Central &
Eastern Europe (27.7) (27.8) (30.6) (30.6) (28.3) (28.3)
North America (29.7) (37.1) (28.1)
Deficit/
Western Continental Europe (60.1) (52.6) (74.0) liabilities in
Asia Pacific, Latin America, Africa & Middle the unfunded
East and Central & Eastern Europe (33.1) (34.7) (34.7) plans (90.8) (90.9) (95.3) (95.3) (105.4) (105.4)
Deficit in the plans (122.2) (122.1) (136.4)
Deficit/
liabilities in
Some of the Group’s defined benefit plans are unfunded (or largely unfunded) the plans (122.2) (381.2) (122.1) (552.6) (136.4) (688.5)
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.
In accordance with IAS 19, plans that are wholly or partially funded are
Pre-funding of these plans would not be typical business practice.
considered funded plans.

204 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

23. EMPLOYEE BENEFIT OBLIGATIONS CONTINUED For the Group’s pension plans, the plans’ assets are invested with the objective
(B) ASSUMPTIONS of being able to meet current and future benefit payment needs, while
There are a number of areas in pension accounting that involve estimates controlling balance sheet volatility and future contributions. Pension plan
made by management based on advice of qualified advisors. These include assets are invested with a number of investment managers, and assets are
establishing the discount rates, rates of increase in salaries and pensions in diversified among equities, bonds, insured annuities, property and cash or
payment, inflation, and mortality assumptions. The main weighted average other liquid investments. The primary use of bonds as an investment class is to
assumptions used for the actuarial valuations at 31 December are shown in match the anticipated cash flows from the plans to pay pensions. The Group is
the following table: invested in high-quality corporate and government bonds which share similar
risk characteristics and are of equivalent currency and term to the plan liabilities.
2023 2022 2021 2020 Various insurance policies have also been bought historically to provide a more
% pa % pa % pa % pa
exact match for the cash flows, including a match for the actual mortality of
UK specific plan members. These insurance policies effectively provide protection
Discount rate1 4.7 5.1 1.8 1.3 against both investment fluctuations and longevity risks. The strategic target
Rate of increase in allocation varies among the individual plans.
pensions in payment 2.5 4.4 4.5 4.4
Inflation 3.1 3.0 3.2 2.8 Management considers the types of investment classes in which the pension
plan assets are invested. The types of investment classes are determined by
North America economic and market conditions and in consideration of specific asset-class risk.
Discount rate1 4.9 5.2 2.6 2.0 The investment strategy of the Group varies by country, albeit there was a
Rate of increase in general directive by the Group in recent years to de-risk the larger funded
salaries2 n/a n/a n/a 3.0 plans (mainly in the US and UK) and move towards a liability driven
investment strategy.
Western Continental
Europe Management periodically commissions detailed asset and liability studies
Discount rate1 3.4 4.1 1.2 0.9 performed by third-party professional investment advisors and actuaries
Rate of increase in that generate probability-adjusted expected future returns on those assets.
salaries 2.5 2.5 2.3 2.2 These studies also project the estimated future pension payments and
Rate of increase in evaluate the efficiency of the allocation of the pension plan assets into various
pensions in payment 2.0 2.0 1.8 1.8 investment categories.
Inflation 2.0 2.0 1.7 1.7

Asia Pacific, Latin

America, Africa & Middle
East and Central &
Eastern Europe
Discount rate1 6.5 6.4 5.3 4.2
Rate of increase
in salaries 6.2 5.7 5.6 5.2
Inflation 3.4 3.4 3.7 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 2023 205

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

(Decrease)/increase
23. EMPLOYEE BENEFIT OBLIGATIONS CONTINUED in benefit obligation
At 31 December 2023, the life expectancies underlying the value of the 2023 2022
accrued liabilities for the main defined benefit pension plans operated Sensitivity analysis of significant actuarial assumptions £m £m
by the Group were as follows: Discount rate
Increase by 25 basis points:
Western
Years life expectancy All North Continental UK (0.1) (3.6)
after age 65 plan America UK Europe Other1 North America (3.8) (4.4)
Current pensioners Western Continental Europe (2.3) (2.0)
(at age 65) – male 21.8 22.0 23.4 21.1 20.3
Other1 (0.5) (0.5)
Current pensioners
(at age 65) – female 23.6 23.4 24.9 24.2 25.1 Decrease by 25 basis points:
Future pensioners UK 0.2 3.8
(current age 45) North America 3.9 4.6
– male 23.5 23.4 25.4 23.4 20.3
Western Continental Europe 2.4 2.1
Future pensioners
(current age 45) Other1 0.5 0.6
– female 25.2 24.8 27.0 26.0 25.1 Rate of increase in salaries
Increase by 25 basis points:
Note
1 Includes Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe Western Continental Europe 0.6 0.5
Other1 0.4 0.5
The life expectancies after age 65 at 31 December 2022 were 22.3 years and Decrease by 25 basis points:
24.0 years for male and female current pensioners (at age 65) respectively, Western Continental Europe (0.6) (0.5)
and 24.0 years and 25.7 years for male and female future pensioners (current Other1 (0.5) (0.5)
age 45), respectively.
Rate of increase in pensions in payment
Increase by 25 basis points:
In the determination of mortality assumptions, management uses the most
up-to-date mortality tables available in each country. UK 0.2 0.7
Western Continental Europe 1.2 1.1
The following table provides information on the weighted average duration Decrease by 25 basis points:
of the defined benefit pension obligations and the distribution of the timing UK – (0.6)
of benefit payments for the next ten years. The duration corresponds to the Western Continental Europe (1.2) (1.0)
weighted average length of the underlying cash flows. Life expectancy
Increase in longevity by one additional year:
Western
All North Continental UK 0.7 6.8
plan America UK Europe Other1 North America 3.3 4.2
Weighted average Western Continental Europe 3.0 2.6
duration of the defined
benefit obligation (years) 8.0 7.4 6.3 10.2 5.9 Note
Expected benefit 1 Includes Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe
payments over the
next ten years (£m)
(C) PENSION EXPENSE
Within 12 months 30.2 18.5 0.7 6.0 5.0
The following tables show the breakdown of the pension expense between
In 2025 28.3 18.1 0.6 6.0 3.6 amounts charged to operating profit and amounts charged to finance costs:
In 2026 29.2 17.8 0.6 6.2 4.6
In 2027 29.0 18.7 0.5 6.2 3.6 2023 2022 2021
£m £m £m
In 2028 27.6 15.7 0.5 7.0 4.4
Service cost1 12.2 10.4 12.6
In the next five years 144.4 83.7 1.6 33.2 25.9
Administrative expenses 2.8 3.1 2.3
Note Charge to operating profit 15.0 13.5 14.9
1 Includes Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe
Net interest expense on pension plans 4.3 2.2 1.8
Charge to profit before taxation
The following table presents a sensitivity analysis for each significant actuarial for defined benefit plans 19.3 15.7 16.7
assumption showing how the defined benefit obligation would have been
affected by changes in the relevant actuarial assumption that were reasonably Note
1 Includes current service cost, past service costs related to plan amendments and (gain)/loss on
possible at the balance sheet date. This sensitivity analysis applies to the
settlements and curtailments
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 The following table shows the breakdown of amounts recognised in other
plan assets. comprehensive income (OCI):

2023 2022 2021

The sensitivity analyses are based on a change in one assumption while £m £m £m
holding all other assumptions constant so that interdependencies between Return on plan assets (excluding interest income) 6.5 (127.6) (29.3)
the assumptions are excluded. The methodology applied is consistent with
Changes in demographic assumptions underlying
that used to determine the recognised defined benefit obligation. The the present value of the plan liabilities (0.5) 0.6 (3.6)
sensitivity analysis for inflation is not shown as it is an underlying assumption Changes in financial assumptions underlying the
to build the pension and salary increase assumptions. Changing the inflation present value of the plan liabilities (13.8) 143.5 31.1
assumption on its own without changing the salary or pension assumptions Experience (loss)/gain arising on the plan liabilities (1.3) (0.1) 15.7
will not result in a significant change in pension liabilities. Change in irrecoverable surplus – 0.2 0.4
Actuarial (loss)/gain recognised in OCI (9.1) 16.6 14.3

206 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

23. EMPLOYEE BENEFIT OBLIGATIONS CONTINUED 24. RISK MANAGEMENT POLICIES

(D) MOVEMENT IN PLAN LIABILITIES FOREIGN CURRENCY RISK
The following table shows an analysis of the movement in the pension plan The Group’s results in pounds sterling are subject to fluctuation as a result
liabilities for each accounting period: of exchange rate movements. The Group does not hedge this translation
exposure to its earnings but does partially hedge the currency element
2023 2022 2021 of its net assets using foreign currency borrowings, cross-currency swaps,
£m £m £m forward foreign exchange contracts and non-deliverable forward contracts.
Plan liabilities at beginning of year 552.6 688.5 772.7
Service cost1 12.2 10.4 12.6 The Group effects these currency net asset hedges by borrowing in the same
Interest cost 20.5 15.5 12.0 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,
Actuarial loss/(gain):
pounds sterling and euros. The Group’s borrowings (including cross currency
Effect of changes in demographic assumptions 0.5 (0.6) 3.6
swaps) at 31 December 2023 were primarily made up of $1,874 million,
Effect of changes in financial assumptions 13.8 (143.5) (31.1) £1,094 million and €2,100 million (2022: $1,667 million, £1,094 million and
Effect of experience adjustments 1.3 0.1 (15.7) €2,350 million). The Group’s average gross debt during the course of 2023
Benefits paid (37.5) (52.0) (59.5) was $2,511 million, £1,173 million and €2,321 million (2022: $1,667 million,
(Gain)/loss due to exchange rate movements (16.7) 40.4 (6.1) £1,094 million and €2,404 million).
Settlement payments2 (163.2) (8.7) (0.3)
Other3 (2.3) 2.5 0.3 The Group’s operations conduct the majority of their activities in their own
Plan liabilities at end of year 381.2 552.6 688.5 local currency and consequently the Group has no significant transactional
foreign exchange exposures arising from its operations. Any significant
Notes cross-border trading exposures are hedged by the use of forward foreign-
1 Includes current service cost, past service costs related to plan amendments and (gain)/loss on exchange contracts. No speculative foreign exchange trading is undertaken.
settlements and curtailments
2 During the year ended 31 December 2023, the Group completed the winding-up of two defined
benefit pension plans: The Ogilvy & Mather Group Pension and Life Assurance Plan and the JWT
INTEREST RATE RISK
Pension and Life Assurance Scheme, constituting settlements under IAS 19. The settlements led The Group is exposed to interest rate risk on both interest-bearing assets and
to the full elimination of associated plan assets and plan liabilities of £145.0 million, the fair value interest-bearing liabilities. The Group has a policy of actively managing its
of plan assets equalled the underlying liabilities upon settlement such that there is no impact on interest rate risk exposure while recognising that fixing rates on all its debt
2023 net assets or the income statement eliminates the possibility of benefiting from rate reductions and, similarly, having
3 Other includes acquisitions, disposals, plan participants’ contributions and reclassifications. The
all its debt at floating rates unduly exposes the Group to increases in rates.
reclassifications represent certain of the Group’s defined benefit plans which are included in this
note for the first time in the periods presented
Including the effect of interest rate and cross-currency swaps, 100% of the
(E) MOVEMENT IN PLAN ASSETS year-end US dollar debt is at fixed rates averaging 4.62% for an average period
The following table shows an analysis of the movement in the pension plan of 66 months; 100% of the sterling debt is at a fixed rate of 2.97% for an
assets for each accounting period: average period of 130 months; and 100% of the euro debt is at fixed rates
averaging 2.12% for an average period of 48 months.
2023 2022 2021
£m £m £m GOING CONCERN AND LIQUIDITY RISK
Fair value of plan assets at beginning of year 430.5 552.1 616.6 In considering going concern and liquidity risk, the Directors have reviewed
Interest income on plan assets 16.2 13.3 10.2 the Group’s future cash requirements and earnings projections. The Directors
Return on plan assets (excluding interest income) 6.5 (127.6) (29.3) believe these forecasts have been prepared on a prudent basis and have also
Employer contributions 19.8 24.0 16.7 considered the impact of a range of potential changes to trading performance.
Benefits paid (37.5) (52.0) (59.5) The Company modelled a range of revenue less pass-through costs compared
with the year ended 31 December 2023 and a number of mitigating cost actions
(Loss)/gain due to exchange rate movements (12.4) 31.5 (0.6)
that are available to the Company. Considering the Group’s liquidity headroom
Settlement payments1 (163.2) (8.7) (0.3)
and cost mitigation actions which could be implemented, the Group would be
Administrative expenses (2.8) (3.1) (1.8) able to operate with appropriate liquidity and be able to meet its liabilities as
Other2 1.9 1.0 0.1 they fall due. The Company modelled a range of revenue less pass-through cost
Fair value of plan assets at end of year 259.0 430.5 552.1 declines up to 31% compared with the year ended 31 December 2023. The
Actual return/(loss) on plan assets 22.7 (114.3) (19.1) likelihood of such a decline is considered remote as compared to Company
expectations and external benchmarks. The modelling in this extreme scenario
Notes includes cost mitigations of 70% of the decline in revenue less pass-through
1 During the year ended 31 December 2023, the Group completed the winding-up of two defined
costs and the suspension of the share buyback programme and dividend.
benefit pension plans: The Ogilvy & Mather Group Pension and Life Assurance Plan and the JWT
Pension and Life Assurance Scheme, constituting settlements under IAS 19. The settlements led Further measures that were not included in the modelling, should the Company
to the full elimination of associated plan assets and plan liabilities of £145.0 million, the fair value face such an extreme scenario, include the reduction of capital expenditure and
of plan assets equaled the underlying liabilities upon settlement such that there is no impact on acquisitions. Based on the outcome of the above assessments, the Directors
2023 net assets or the income statement have concluded that it is reasonable to expect that the Group will be able to
2 Other includes acquisitions, disposals, plan participants’ contributions and reclassifications. The
operate within its current facilities for the period of assessment and are
reclassifications represent certain of the Group’s defined benefit plans which are included in this
note for the first time in the periods presented therefore comfortable that the Company will be a going concern for at least
12 months from the date of signing the Group's consolidated financial
statements. As such, it is appropriate to prepare the financial statements
of the Group on a going concern basis.

WPP ANNUAL REPORT 2023 207

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

24. RISK MANAGEMENT POLICIES CONTINUED

At 31 December 2023, the Group has access to £6.4 billion of committed facilities with maturity dates spread over the years 2024 to 2046 as illustrated below:

2024 2025 2026 2027 2028+

£m £m £m £m £m
£ bonds £400m (2.875% 2046) 400.0 400.0
US bond $220m (5.625% 2043) 172.7 172.7
US bond $93m (5.125% 2042) 72.9 72.9
£ bonds £250m (3.75% 2032) 250.0 250.0
Eurobonds €600m (1.625% 2030) 520.2 520.2
Eurobonds €750m (4.125% 2028) 650.2 650.2
Eurobonds €750m (2.375% 2027) 650.2 650.2
Eurobonds €750m (2.25% 2026) 650.2 650.2
Bank revolver ($2,500m 2026) 1,963.7 1,963.7
Eurobonds €500m (1.375% 2025) 433.5 433.5
US bond $750m (3.75% 2024) 589.1 589.1
Total committed facilities available 6,352.7 589.1 433.5 2,613.9 650.2 2,066.0
Drawn down facilities at 31 December 2023 4,389.0 589.1 433.5 650.2 650.2 2,066.0
Undrawn committed credit facilities 1,963.7
Drawn down facilities at 31 December 2023 4,389.0
Net cash at 31 December 2023 (1,859.3)
Other adjustments (25.9)
Adjusted net debt at 31 December 2023 2,503.8

Given its debt maturity profile and available facilities, the Directors believe The credit risk on liquid funds and derivative financial instruments is limited
the Group has sufficient liquidity to match its requirements for the because the counterparties are high-rated (AAA) funds, banks with high
foreseeable future. credit ratings assigned by international credit-rating agencies or banks
that have been financed by their government.
TREASURY ACTIVITIES
Treasury activity is managed centrally from London, New York and Hong Kong, EFFECTS OF HEDGE ACCOUNTING ON THE FINANCIAL
and is principally concerned with the monitoring of working capital, POSITION AND PERFORMANCE
managing external and internal funding requirements and the monitoring The effects of the hedging instruments on the Group's financial position
and management of financial market risks, in particular interest rate and and performance are as follows:
foreign exchange exposures.

2023 2022
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 (i) Cash flow hedges of foreign currency risk1
to regular review and audit. Carrying amount of derivative hedging instruments2 (£16.5m) (£6.6m)
Notional amount of hedged items €1,250.0m €1,000.0m
The Group manages liquidity risk by ensuring continuity and flexibility of Notional amount of hedging instruments €1,250.0m €1,000.0m
funding even in difficult market conditions. Undrawn committed borrowing Maturity date 2025-2028 2023-2025
facilities are maintained in excess of peak net-borrowing levels and debt Hedge ratio 1:1 1:1
maturities are closely monitored. Targets for average adjusted net debt are Change in value of hedged item used to
set on an annual basis and, to assist in meeting this, working capital targets determine hedge effectiveness for outstanding
are set for all the Group’s major operations. hedging instruments (£32.4m) £38.5m
Change in value of hedging instrument
CAPITAL RISK MANAGEMENT used to determine hedge effectiveness for
outstanding hedging instruments £29.6m (£41.4m)
The Group manages its capital to ensure that entities in the Group will be able
Hedge ineffectiveness (revaluation and
to continue as a going concern while maximising the return to stakeholders retranslation of financial instruments) £2.7m £2.9m
through the optimisation of the debt and equity balance. The capital structure
Weighted average hedged rate for outstanding
of the Group consists of debt, which includes the borrowings disclosed in note hedging instruments 4.4% 3.2%
10, cash and cash equivalents and equity attributable to equity holders of the (ii) Net investment hedges of foreign currency risk
parent, comprising issued capital, reserves and retained earnings as disclosed
Carrying amount of derivative hedging instruments2 £48.2m (£46.9m)
in the consolidated statement of changes in equity and in notes 26 and 27.
Carrying amount of non-derivative hedging
instruments (bonds and bank loans) (£835.0m) (£879.5m)
CREDIT RISK Notional amount of hedging instruments $1,873.9m $1,666.8m
The Group’s principal financial assets are cash and short-term deposits,
Notional amount of hedged net assets $1,873.9m $1,666.8m
trade and other receivables and other investments, the carrying values of
Hedge ratio 1:1 1:1
which represent the Group’s maximum exposure to credit risk in relation to
financial assets, as shown in note 25. Change in value of hedged item used
to determine hedge effectiveness £108.2m (£141.5m)
Change in value of hedging instrument
The Group’s credit risk is primarily attributable to its trade receivables. used to determine effectiveness (£110.1m) £141.5m
The majority of the Group’s trade receivables are due from large national Hedge ineffectiveness (revaluation and
or multinational companies where the risk of default is considered low. retranslation of financial instruments) £1.9m −
The amounts presented in the consolidated balance sheet are net of Weighted average hedged rate for the year
expected credit losses, estimated by the Group’s management based (USD/GBP) 1.2731 1.2083
on expected losses, prior experience and their assessment of the current
Notes
economic environment. A relatively small number of clients make up a
1 Relates to cross currency swaps designated as cash flow hedges
significant percentage of the Group’s debtors, but no single client 2 This amount is presented in trade and other receivables, and trade and other payables. The use
represents more than 6% of total trade receivables as at 31 December 2023 of derivatives may entail a derivative transaction qualifying for more than one hedge type
or 31 December 2022. 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

208 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

24. RISK MANAGEMENT POLICIES CONTINUED Critical terms of hedging instruments and hedged items are transacted
SENSITIVITY ANALYSIS to match on a 1:1 ratio by notional values. Hedge ineffectiveness can
The following sensitivity analysis addresses the effect of currency and interest nonetheless arise from inherent differences between derivatives and
rate risks on the Group’s financial instruments. The analysis assumes that all non-derivative instruments and other market factors including credit,
hedges are highly effective. correlations, supply and demand, and market volatilities. In addition, hedge
ineffectiveness can arise as a result of the currency basis being included in
CURRENCY RISK the hedge designation. Hedge accounting is discontinued when a hedging
A 10% weakening of sterling against the Group’s major currencies would relationship no longer qualifies for hedge accounting.
result in the following impacts on the income statement and equity, which
would arise on the retranslation of foreign currency-denominated monetary At 31 December 2023, the fair value of the Group’s currency derivatives in
items. A 10% strengthening of sterling would have an equal and opposite designated hedging relationships is estimated to be a net asset of
effect. approximately £31.7 million (2022: net liability of £52.7 million). These amounts
are based on market values of equivalent instruments at the balance sheet
Impact on income statement Impact on equity date, comprising £31.7 million (2022: £0.6 million) assets included in trade and
2023 2022 2023 2022 other receivables and nil (2022: £53.3 million) liabilities included in trade and
£m £m £m £m other payables. The fair value of currency derivatives is based on the present
US dollar (41.0) (179.6) (18.0) 34.6 value of contractual cash flows using foreign currency and interest rate
Euro (185.8) 78.9 – (11.3) 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
INTEREST RATE RISK as hedges and considered effective was a credit of £108.2 million (2022: debit of
A one percentage point increase in market interest rates for all currencies £141.5 million) for net investment hedges.
in which the Group had cash and borrowings at 31 December 2023 would
increase profit before tax by approximately £18.6 million (2022: £19.9 million). For cash flow hedge arrangements, amounts of a debit of £43.3 million (2022:
A one percentage point decrease in market interest rates would have an credit of £38.5 million) representing the effective portion of the gain or loss
equal and opposite effect. This has been calculated by applying the interest on the hedging instrument were taken to equity, and £44.2 million was
rate change to the Group’s variable rate cash and borrowings. Note that reclassified to profit or loss in the same period when the related foreign
in practice, the Group has a cyclical cash profile throughout the year. exchange impact on the associated hedged item affected profit or loss. During
the year the hedges of the €750.0 million Eurobond were discontinued as the
25. FINANCIAL INSTRUMENTS hedging item and hedging instrument matured which resulted in a debit of
CURRENCY DERIVATIVES £11.8 million taken to equity and recycled to profit and loss.
The Group utilises currency derivatives to hedge significant future transactions
and cash flows and the exchange risk arising on translation of the Group’s Changes in the fair value relating to the ineffective portion of the currency
investments in foreign operations. The Group is a party to a variety of foreign derivatives that are designated hedges amounted to £5.0 million (2022:
currency derivatives in the management of its exchange rate exposures. £2.7 million) which is included within revaluation and retranslation of financial
The instruments purchased are primarily denominated in the currencies of the instruments in the income statement. At the balance sheet date, the total
Group’s principal markets. The Group designates foreign currency-denominated nominal amount of outstanding forward foreign exchange contracts not
debt as hedging instruments against the exposure to movements in the spot designated as hedges was £955.2 million (2022: £1,004.8 million). The Group
translation rates associated with the translation of its foreign operations. estimates the fair value of these contracts to be a net liability of £0.8 million
(2022: net asset of £0.4 million).
The Group also designates certain cross currency swaps as hedging
instruments in cash flow hedges to manage its exposure to foreign exchange As at 31 December 2023, the Group had designated its $93.0 million bond,
risk and interest rate risk on its borrowings. During the year, the Group $750.0 million bond, $220.0 million bond, and $810.9 million leg of its cross
entered into cross currency swap contracts due in May 2028 with receipts of currency swap, as the hedging instruments in a net investment hedge
€750.0 million and payments of $810.9 million. In November 2023, the Group's relationship. The Group has designated the €500.0 million leg of its March 2025
contracts for receipts of €500.0 million and payments of $604.2 million cross currency swap and €750.0 million of its May 2028 cross currency swap
matured. Contracts due in March 2025 have receipts of €500.0 million and as hedging instruments in cash flow hedges. £80.6 million of non-deliverable
payments of £444.1 million. forward foreign exchange contracts has also been designated as the hedging
instrument in a cash flow hedge. Possible sources of ineffectiveness include
In March 2023, the Group designated £80.6 million of non-deliverable forward any impairments to the Group's net investment in US dollars. The hedges are
foreign exchange contracts as hedging instruments in cash flow hedges to documented and are assessed for effectiveness on an ongoing basis. All hedge
manage its exposure to foreign exchange risk on highly probable forecast relationships were effective during the year.
foreign currency transactions (primarily INR and USD). The contracts have
maturity dates between 2024 and 2028. These arrangements are designed to address significant foreign exchange
exposure and are renewed on a revolving basis as required.

WPP ANNUAL REPORT 2023 209

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

25. FINANCIAL INSTRUMENTS CONTINUED

An analysis of the Group’s financial assets and liabilities by accounting classification is set out below:

Held at
Derivatives in fair value
designated Held at fair through other
hedge value through comprehensive Amortised Carrying
relationships profit or loss income cost value
£m £m £m £m £m
2023
Other investments – 257.2 75.5 – 332.7
Cash and short-term deposits – 180.7 – 2,036.8 2,217.5
Bank overdrafts and bonds: amounts falling due within one year – – – (946.3) (946.3)
Bonds: amounts falling due after more than one year – – – (3,775.0) (3,775.0)
Trade and other receivables: amounts falling due within one year – – – 10,601.4 10,601.4
Trade and other receivables: amounts falling due after more than one year – – – 118.3 118.3
Trade and other payables: amounts falling due within one year – – – (10,917.4) (10,917.4)
Trade and other payables: amounts falling due after more than one year – – – (1.5) (1.5)
Derivative assets 31.7 2.2 – – 33.9
Derivative liabilities – (3.0) – – (3.0)
Payments due to vendors (earnout agreements) – (198.7) – – (198.7)
Liabilities in respect of put options – – – (103.6) (103.6)
31.7 238.4 75.5 (2,987.3) (2,641.7)

Held at
Derivatives in fair value
designated Held at fair through other
hedge value through comprehensive Amortised Carrying
relationships profit or loss income cost value
£m £m £m £m £m
2022
Other investments – 255.7 114.1 – 369.8
Cash and short-term deposits1 – 219.9 – 2,271.6 2,491.5
Bank overdrafts and bonds: amounts falling due within one year – – – (1,169.0) (1,169.0)
Bonds: amounts falling due after more than one year – – – (3,801.8) (3,801.8)
Trade and other receivables: amounts falling due within one year – – – 11,338.0 11,338.0
Trade and other receivables: amounts falling due after more than one year – – – 146.2 146.2
Trade and other payables: amounts falling due within one year – – – (11,283.0) (11,283.0)
Trade and other payables: amounts falling due after more than one year – – – (0.9) (0.9)
Derivative assets 0.6 5.1 – – 5.7
Derivative liabilities (53.3) (4.7) – – (58.0)
Payments due to vendors (earnout agreements) – (160.1) – – (160.1)
Liabilities in respect of put options2 – – – (342.1) (342.1)
(52.7) 315.9 114.1 (2,841.0) (2,463.7)

Notes
1 Certain money market funds included within cash and short-term deposits for the year ended 31 December 2022 have been re-presented given they are measured at held at fair value through profit
or loss in accordance with IFRS 9. Prior year balances were presented as amortised cost
2 Liabilities in respect of put option balances for the year ended 31 December 2022 have been re-presented given they are measured at amortised cost in accordance with IFRS 9. Prior year balances
were presented as held at fair value through profit or loss

210 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

25. FINANCIAL INSTRUMENTS CONTINUED Reconciliation of level 3 fair value measurements:

The following table provides an analysis of financial instruments that are
Payments due
measured subsequent to initial recognition at fair value, grouped into levels to vendors
1 to 3 based on the degree to which the fair value is observable: (earnout Other
agreements) investments
£m £m
Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities; 1 January 2022 (196.7) 290.0
Gains recognised in the income statement 26.2 23.1
Level 2 fair value measurements are those derived from inputs other than Losses recognised in other comprehensive income – (5.3)
quoted prices included within level 1 that are observable for the asset or Exchange adjustments (14.3) –
liability, either directly (ie as prices) or indirectly (ie derived from prices); Additions (46.7) 66.7
Disposals – (16.0)
Level 3 fair value measurements are those derived from valuation techniques
Cancellations – –
that include inputs for the asset or liability that are not based on observable
Settlements 71.4 –
market data (unobservable inputs).
31 December 2022 (160.1) 358.5
Level 1 Level 2 Level 3 Total Gains/(losses) recognised in the income statement 50.8 (26.7)
2023 £m £m £m £m
Gains recognised in other comprehensive income – 0.7
Derivatives in designated hedge
relationships Exchange adjustments 1.8 –
Derivative assets – 31.7 – 31.7 Additions (149.7) 2.6
Derivative liabilities – – – – Disposals – (10.4)
Held at fair value through profit or loss Settlements 58.5 –
Other investments 0.6 – 256.6 257.2 31 December 2023 (198.7) 324.7
Derivative assets – 2.2 – 2.2
Derivative liabilities – (3.0) – (3.0) The fair values of financial assets and liabilities are based on quoted market
Payments due to vendors prices where available. Where the market value is not available, the Group has
(earnout agreements) – – (198.7) (198.7) estimated relevant fair values on the basis of available information from outside
Held at fair value through other sources. There have been no movements between level 3 and other levels.
comprehensive income
Other investments 7.4 – 68.1 75.5

Level 1 Level 2 Level 3 Total

2022 £m £m £m £m
Derivatives in designated hedge
relationships
Derivative assets – 0.6 – 0.6
Derivative liabilities – (53.3) – (53.3)
Held at fair value through profit or loss
Other investments 0.4 – 255.3 255.7
Derivative assets – 5.1 – 5.1
Derivative liabilities – (4.7) – (4.7)
Payments due to vendors
(earnout agreements) – – (160.1) (160.1)
Held at fair value through other
comprehensive income
Other investments 10.9 – 103.2 114.1

There have been no transfers between these levels in the years presented.

WPP ANNUAL REPORT 2023 211

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

25. FINANCIAL INSTRUMENTS CONTINUED 26. AUTHORISED AND ISSUED SHARE CAPITAL
PAYMENTS DUE TO VENDORS (EARNOUT AGREEMENTS) AND
LIABILITIES IN RESPECT OF PUT OPTIONS Equity Nominal
ordinary value
Future anticipated payments due to vendors in respect of contingent shares £m
consideration (earnout agreements) are recorded at fair value, which is the
Authorised
present value of the expected cash outflows of the obligations. Liabilities
1 January 2022 1,750,000,000 175.0
in respect of put option agreements are initially recorded at the present
value of the redemption amount in accordance with IAS 32 and subsequently 31 December 2022 1,750,000,000 175.0
measured at amortised cost in accordance with IFRS 9. Both types of 31 December 2023 1,750,000,000 175.0
obligations are dependent on the future financial performance of the entity
and it is assumed that future profits are in line with Directors’ estimates. Issued and fully paid
The Directors derive their estimates from internal business plans together 1 January 2022 1,224,459,550 122.4
with financial due diligence performed in connection with the acquisition. Exercise of share options 125,700 –
Share cancellations (83,157,954) (8.3)
As of 31 December 2023, the potential undiscounted amount of future
At 31 December 2022 1,141,427,296 114.1
payments that could be required under the earnout agreements for
acquisitions completed in the current year and for all earnout agreements Exercise of share options 85,900 –
ranges from nil to £326 million (2022: nil to £226 million) and nil to £753 million Share cancellations – –
(2022: nil to £695 million), respectively. The increase in the maximum potential At 31 December 2023 1,141,513,196 114.1
undiscounted amount of future payments for all earnout agreements is due to
current year acquisitions, which is partially offset by earnout arrangements COMPANY’S OWN SHARES
that have been completed and paid. 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)
At 31 December 2023, the weighted average growth rate in estimating future trusts of shares in the Company for the purpose of funding certain of the
financial performance was 14.6% (2022: 12.4%). The weighted average of the Group’s share-based incentive plans, details of which are disclosed in the
risk-adjusted discount rate applied to these obligations at 31 December 2023 Compensation Committee report on pages 139 to 168.
was 7.0% (2022: 7.6%).
The trustees of the ESOP purchase the Company’s ordinary shares in the
A one percentage point increase or decrease in the growth rate in estimated open market using funds provided by the Company. The Company also has
future financial performance would increase or decrease the combined an obligation to make regular contributions to the ESOP to enable it to meet its
liabilities due to earnout agreements and put options by approximately administrative costs. The number and market value of the ordinary shares of the
£1.4 million (2022: £9.1 million) and £5.5 million (2022: £6.9 million), respectively. Company held by the ESOP at 31 December 2023 was 490,646 (2022: 1,211,974)
and £3.7 million (2022: £9.9 million) respectively. The number and market
A 0.5 percentage point increase or decrease in the risk adjusted discount value of ordinary shares held in treasury at 31 December 2023 was 66,675,497
rate would decrease or increase the combined liabilities by approximately (2022: 70,489,953) and £502.1 million (2022: £578.2 million) respectively.
£2.5 million (2022: £7.3 million) and £2.5 million (2022: £7.4 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, discounted cash flows and the share of fund net asset
value. 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 2022, Imagina stepped down from interests in associates to other

investments and this investment was designated as fair value through other
comprehensive income. There were no step downs to other investments
which occurred in 2023.

212 WPP ANNUAL REPORT 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  FINANCIAL STATEMENTS

27. OTHER RESERVES

Other reserves comprise the following:

Capital Total
redemption Equity Hedging Translation other
reserve reserve reserve reserve reserves
£m £m £m £m £m
Balance at 1 January 2022 13.6 (576.7) – 227.2 (335.9)
Foreign exchange differences on translation of foreign operations – – – 409.0 409.0
Loss on net investment hedges – – – (141.5) (141.5)
Cash flow hedges:
Fair value gain arising on hedging instruments – – 38.5 – 38.5
Less: loss reclassified to profit or loss – – (38.5) – (38.5)
Share of other comprehensive income of associate undertakings – – – 31.9 31.9
Share cancellations 8.3 – – – 8.3
Recognition/derecognition of liabilities in respect of put options – 101.7 – – 101.7
Share purchases – close period commitments – 211.7 – – 211.7
Balance at 31 December 2022 21.9 (263.3) – 526.6 285.2
Foreign exchange differences on translation of foreign operations – – – (404.0) (404.0)
Gain on net investment hedges – – – 108.2 108.2
Cash flow hedges:
Fair value loss arising on hedging instruments – – (43.3) – (43.3)
Less: gain reclassified to profit or loss – – 44.2 – 44.2
Share of other comprehensive loss of associate undertakings – – – (0.9) (0.9)
Share cancellations – – – – –
Recognition/derecognition of liabilities in respect of put options – 197.2 – – 197.2
Share purchases – close period commitments – – – – –
Balance at 31 December 2023 21.9 (66.1) 0.9 229.9 186.6

The capital redemption reserve relates entirely to share cancellations.

The equity reserve primarily relates to the recognition/derecognition of liabilities in respect of put option 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 2023, the Company sold a portion of
its ownership of FGS to KKR. As part of this transaction the previous put option granted to management shareholders was derecognised. 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:

2023 2022
£m £m
Balance relating to continuing net investment hedges (53.1) (143.8)
Balance relating to discontinued net investment hedges (67.5) (85.0)
Balance relating to foreign exchange differences on translation of foreign operations 350.5 755.4
229.9 526.6

WPP ANNUAL REPORT 2023 213

 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

28. ACQUISITIONS 29. RELATED PARTY TRANSACTIONS

The Group accounts for acquisitions in accordance with IFRS 3 Business The Group enters into transactions with its associate undertakings.
Combinations. IFRS 3 requires the acquiree’s identifiable assets, liabilities and The Group has continuing transactions with Kantar, including sales,
contingent liabilities (other than non-current assets or disposal groups held for purchases, the provision of IT services, subleases and property-related items.
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 In the year ended 31 December 2023, revenue of £233.0 million (2022:
where the fair value of an asset or liability may be contingent on a future event. £159.7 million1) was reported in relation to Compas, an associate in the USA,
In certain instances, the underlying transaction giving rise to an estimate may and revenue of £20.9 million (2022: £42.7 million) was reported in relation
not be resolved until some years after the acquisition date. IFRS 3 requires the to Kantar. All other transactions in the years presented were immaterial.
release to profit of any acquisition reserves which subsequently become
excess in the same way as any excess costs over those provided at acquisition The following amounts were outstanding at 31 December:
date are charged to profit. At each period end management assess provisions
and other balances established in respect of acquisitions for their continued 2023 2022
£m £m
probability of occurrence and amend the relevant value accordingly through
the consolidated income statement or as an adjustment to goodwill as Amounts owed by related parties
appropriate under IFRS 3. Kantar 17.5 26.1
Other 56.0 62.4
The Group acquired a number of subsidiaries in the year. Details of the purchase 73.5 88.5
consideration, the assets and liabilities recognised as a result of the acquisition Amounts owed to related parties
and the goodwill recognised has been outlined in the table below. Kantar (4.7) (10.5)
Other (70.4) (65.2)
Book value at Fair value Fair value
acquisition adjustments to Group (75.1) (75.7)
£m £m £m
Intangible assets 2.9 138.5 141.4 There are no material provisions for doubtful debts relating to these balances
Right-of-use assets 2.4 – 2.4 and no material expense has been recognised in the income statement in
Property, plant and equipment 0.8 – 0.8 relation to bad or doubtful debts for 2023 or 2022.
Cash and cash equivalents 22.5 – 22.5
Trade receivables due within Note
one year 12.6 – 12.6 1 Revenue in relation to Compas for the period ended 31 December 2022 was restated from
£88.3 million to £159.7 million
Other current assets 4.9 – 4.9
Total assets 46.1 138.5 184.6
30. EVENTS AFTER THE REPORTING PERIOD
Short-term loans (48.9) – (48.9) On 20 February 2024, the Group refinanced its five-year Revolving Credit
Other current liabilities (37.1) – (37.1) Facility of $2.5 billion maturing March 2026. The new $2.5 billion facility runs
Trade and other payables due for five years with two one-year extension options maturing February 2029
after one year (0.6) (3.0) (3.6)
(excluding options) and with no financial covenants.
Deferred tax liabilities 1.5 (35.0) (33.5)
Long-term lease liabilities (1.9) – (1.9) On 12 March 2024, the Group refinanced its $750 million of 3.75% bonds due
Provisions (0.4) (0.2) (0.6) September 2024 and €500 million of 1.375% bonds due March 2025 as planned,
Total liabilities (87.4) (38.2) (125.6) issuing two bonds, €600 million of 3.625% bonds due September 2029 and
Net assets (41.3) 100.3 59.0 €650 million of 4.0% bonds due September 2033.
Non-controlling interests (1.7)
Goodwill 297.8
Consideration 355.1
Consideration satisfied by:
Cash 227.4
Payments due to vendors 127.7

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
£61.9 million.

Non-controlling interests in acquired companies are measured at the

non-controlling interests’ proportionate share of the acquiree’s identifiable
net assets. There were no newly acquired 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 2023 and the date the financial statements have been
authorised for issue.

214 WPP ANNUAL REPORT 2023

 FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF WPP PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS 2. BASIS FOR OPINION
1. OPINION We conducted our audit in accordance with International Standards on
In our opinion the financial statements of WPP plc and its subsidiaries Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
(the ‘group’): standards are further described in the auditor’s responsibilities for the audit of
the financial statements section of our report.
– give a true and fair view of the state of the group’s affairs as at 31 December
2023 and of the group’s profit for the year then ended; We are independent of the group in accordance with the ethical requirements
– have been properly prepared in accordance with International Financial that are relevant to our audit of the financial statements in the UK, including
Reporting Standards (IFRSs) as issued by the International Accounting the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to
Standards Board (IASB); and listed public interest entities, and we have fulfilled our other ethical
– have been properly prepared in accordance with Companies (Jersey) responsibilities in accordance with these requirements. The non-audit services
Law, 1991 provided to the group for the year are disclosed in note 3 to the financial
statements. We confirm that we have not provided any non-audit services
We have audited the financial statements which comprise: prohibited by the FRC’s Ethical Standard to the group.

– the accounting policies; We believe that the audit evidence we have obtained is sufficient and
– the consolidated income statement; appropriate to provide a basis for our opinion.
– the consolidated statement of comprehensive income;
– the consolidated cash flow statement;
– the consolidated balance sheet;
– the consolidated statement of changes in equity; and
– the related notes 1 to 30 of the consolidated financial statements

The financial reporting framework that has been applied in their preparation
is applicable law and IFRSs as issued by the IASB.

3. SUMMARY OF OUR AUDIT APPROACH

Key audit matter The key audit matter we identified in the current year was valuation of goodwill, consistent with the 2022 audit.
Materiality Group materiality has been determined as £65m (2022: £60m). Our selected materiality represents 5.4% of pre-tax profit, normalised for
property-related restructuring costs and accelerated amortisation of acquired intangible assets arising from the VML merger (see note 3).
Scoping We identified 46 in scope operating units, only one of which is considered individually financially significant.

We performed audit procedures over 69% of the group’s consolidated revenue (2022: 68%), 81% of the group’s total assets (2022: 80%)
and 79% of the group’s total liabilities (2022: 74%). Procedures were performed either by a component auditor at an operating unit level
under the direction and supervision of the group auditor, or performed centrally by the group auditor.
Significant changes Change in materiality basis
in our approach
We have determined group materiality on the basis of pre-tax profit normalised for property-related restructuring costs and
accelerated amortisation of acquired intangible assets arising from the VML merger, also considering Headline EBITDA as a relevant
metric. In 2022, we determined materiality based on pre-tax profit, considering Headline EBITDA and revenue as relevant metrics.

Identification of financially significant component

Following internal group reorganisation during the year, we assessed that one component, representing 13% of group consolidated
revenues was individually financially significant (2022: 0).

WPP ANNUAL REPORT 2023 215

 FINANCIAL STATEMENTS INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC 

4. CONCLUSIONS RELATING TO GOING CONCERN 5. KEY AUDIT MATTERS

In auditing the financial statements, we have concluded that the directors’ Key audit matters are those matters that, in our professional judgement, were
use of the going concern basis of accounting in the preparation of the financial of most significance in our audit of the financial statements of the current
statements is appropriate. period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
Our evaluation of the directors’ assessment of the group’s ability to continue included those which had the greatest effect on: the overall audit strategy; the
to adopt the going concern basis of accounting included: allocation of resources in the audit; and directing the efforts of the
engagement team.
– testing controls over management’s going concern model, including the
review of the inputs and assumptions used in the model; These matters were addressed in the context of our audit of the financial
– identifying the key assumptions, including those relating to the current statements as a whole, and in forming our opinion thereon, and we do not
macroeconomic uncertainty, and evaluating the appropriateness of these provide a separate opinion on these matters.
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 calculation and headroom thereof at
the balance sheet date, both under the group's forecasts and in severe
downside scenarios, notwithstanding the subsequent refinancing of the
Group's Revolving Credit Facility in February 2024, which removed
financial covenants;
– 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; and
– 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 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.

216 WPP ANNUAL REPORT 2023

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC  FINANCIAL STATEMENTS

5.1. VALUATION OF GOODWILL (REFER TO THE ACCOUNTING POLICIES AND NOTE 13 (INTANGIBLE ASSETS) TO THE FINANCIAL STATEMENTS,
AND THE AUDIT COMMITTEE REPORT)

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 13 (Intangible assets) to the financial statements, and the Audit Committee Report)

The group’s assessment of goodwill for impairment involves the Our audit procedures focused on challenging and evaluating the Based on our
comparison of the recoverable amount of goodwill, calculated as discount rates, profit margins and long-term growth rates used procedures, we
the higher of fair value less costs of disposal and value in use, to in the discounted cash flow model to determine the value in use determined
its carrying value at each measurement date. The group applied and included the following audit procedures, among others: management’s
the value in use approach, which uses a discounted cash flow assumptions used
model to estimate the recoverable amount of each cash – We tested the effectiveness of controls over management’s in the valuation of
generating unit or group of cash generating units and requires estimations of the profit margins, discount rates and long-term goodwill to be
management to make significant estimates and assumptions growth rates used to determine the value in use reasonable.
related to discount rates, profit margins and long-term growth – We assessed the appropriateness of forecasted profit margins
rates. The net book value of goodwill was £8,389 million as at and growth rates by considering both corroboratory and
31 December 2023 (31 December 2022: £8,453 million). contradictory evidence. We performed procedures such as
comparing to external economic data, including peers, market
We identified goodwill valuation as a key audit matter because data and wider economic forecasts, specifically assessing the
of the significant judgements made by management, which impact of inflationary pressures and rising interest rates on
consider future impacts of the current economic uncertainty, to the forecasts
estimate the value-in-use of goodwill and the increased auditor – We evaluated management’s ability to accurately forecast
judgement and level of audit effort required to obtain evidence future profit margins and long-term growth rates by
to test these significant judgements, including the use of comparing actual results to management’s historical forecasts
specialists. Estimates of future performance and market – With the assistance of our valuation specialists, we assessed
conditions used to arrive at the net present value of future cash the mechanical accuracy of the impairment model and the
flows at the relevant assessment date, which is used within the methodology applied by management for consistency with
goodwill impairment analysis, are subjective in nature, with the requirements of IAS 36 Impairment of assets
increased uncertainty due to inflationary pressures, rising – With the assistance of our valuation specialists, we evaluated
interest rates and global economic uncertainty. Through our risk the appropriateness of the discount rates and long-term
assessment procedures, we identified those inputs that were the growth rates used by:
most sensitive in determining the value in use, which enabled us – Testing the source information underlying the
to design our audit procedures to focus on those estimates that determination of the discount rates and the mathematical
are either complex, including the discount rate calculations, or accuracy of the calculation;
subjective in nature, including the profit margins and long-term – Assessing the methodology applied in the discount
growth rates. rates calculations against market practice valuation
techniques; and
– 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.

WPP ANNUAL REPORT 2023 217

 FINANCIAL STATEMENTS INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC 

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 Materiality £65 million (2022: £60 million)

Basis for determining We have considered a number of metrics when determining group materiality, including: pre-tax profit normalised for property-related
materiality restructuring costs and accelerated amortisation of acquired intangible assets arising from the VML merger (see note 3) and Headline
EBITDA.1 Materiality represents 5.4% of normalised pre-tax profit; and 2.9% of Headline EBITDA.

In 2022, we determined materiality to be £60 million, which represented 5.2% of pre-tax profit, 0.4% of revenue and 2.7% of Headline EBITDA.

Rationale for the We have determined that the primary benchmark for the group was pre-tax profit normalised for property-related restructuring costs
benchmark applied and accelerated amortisation of acquired intangible assets arising from the VML merger (see note 3) because we consider this measure
to be the primary focus of users of the financial statements. Pre-tax profit was normalised to remove the effects of non-recurring costs
which would otherwise distort the earnings of the group when considering the performance of the underlying business.

We also considered headline EBITDA as a relevant metric to the users of the financial statements.

1 The calculation of headline EBITDA is set out on page 223

Group materiality
£65m

Normalised
PBT
£1,212m
Component materiality
range £4m-£21m
Audit Committee
reporting threshold
£3m

PBT
Group materiality

218 WPP ANNUAL REPORT 2023

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC  FINANCIAL STATEMENTS

6.2. PERFORMANCE MATERIALITY We identified 46 operating units as in scope components in the current year
We set performance materiality at a level lower than materiality to reduce the (2022: 64 operating units). The reduction in number of operating units in
probability that, in aggregate, uncorrected and undetected misstatements scope is a result of internal reorganisation of operating units during the period.
exceed the materiality for the financial statements as a whole. Group Operating units are defined as business locations operating under a common
performance materiality was set at 65% of group materiality for the 2023 control environment. Following the reorganisation, we assessed that one
audit (2022: 65%). In determining performance materiality, we considered operating unit, representing 13% of group consolidated revenues, was
the following factors: individually financially significant (2022: 0).

– our risk assessment and assessment of the group’s overall control Audit procedures were performed over 69% of the group’s consolidated
environment, financial processes and systems in the majority of areas revenue (2022: 68%), 81% of the group’s total assets (2022: 80%) and 79%
of the audit; and of the group’s total liabilities (2022: 74%). Audit procedures included testing
– our past experience of the audit, including the nature, volume and size at a component level performed by a component auditor under the direction
of historic misstatements. and supervision of the group auditor, and further testing, including
substantive analytical procedures, performed centrally by the group auditor.
6.3. ERROR REPORTING THRESHOLD The substantive analytical procedures were based on our current knowledge
We agreed with the Audit Committee that we would report to the Committee of the group, our historical experience and the wider market.
all audit differences in excess of £3.0 million (2022: £2.5 million), as well as
differences below that threshold that, in our view, warranted reporting on All our audit work on components is executed at levels of reduced materiality
qualitative grounds. We also report to the Audit Committee on disclosure according to the size of the component; many of which are local statutory
matters that we identified when assessing the overall presentation of the materiality levels which in all instances are no higher than 50% of group
financial statements. performance materiality.

7. AN OVERVIEW OF THE SCOPE OF OUR AUDIT In order to support our conclusion that there were no significant risks of
7.1. IDENTIFICATION AND SCOPING OF COMPONENTS material misstatement of the aggregated financial information of the remaining
As a result of the disaggregated structure and diversity of the group, a operating units, we tested the consolidation process and performed further
significant portion of our audit planning effort was ensuring that the scope of group level analytical procedures.
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 identified risks of material misstatement over
the group’s consolidated financial statements.

19% 21%
31%

Revenue Total Assets Total Liabilities

69%
81% 79%

Subject to audit procedures Subject to audit procedures Subject to audit procedures

Analytical procedures at group level Analytical procedures at group level Analytical procedures at group level

WPP ANNUAL REPORT 2023 219

 FINANCIAL STATEMENTS INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC 

7.2. OUR CONSIDERATION OF THE CONTROL ENVIRONMENT 8. OTHER INFORMATION

Our audit plan is designed to understand key internal controls in our audit The other information comprises the information included in the annual report,
so that we can design effective procedures. We tested the effectiveness of other than the financial statements and our auditor’s report thereon. The
internal controls, including the general IT controls, over financial reporting directors are responsible for the other information contained within the
in all areas of the audit across all in-scope entities. annual report.

7.3. OUR CONSIDERATION OF CLIMATE-RELATED RISKS Our opinion on the financial statements does not cover the other information
The group identified climate-related risks such as the increased frequency of and, except to the extent otherwise explicitly stated in our report, we do not
extreme weather and climate-related natural disasters, increased reputational express any form of assurance conclusion thereon.
risk associated with working on environmentally detrimental client briefs,
and/or misrepresenting environmental claims and changes in regulation and Our responsibility is to read the other information and, in doing so, consider
reporting standards which could result in climate-related litigation and claims. whether the other information is materially inconsistent with the financial
The risks are disclosed within the Task force on climate-related financial statements or our knowledge obtained in the course of the audit, or otherwise
disclosures (“TCFD”) statement of the Annual Report. appears to be materially misstated.

Our risk assessment procedures in relation to the impact of climate-related If we identify such material inconsistencies or apparent material misstatements,
risks involved obtaining an understanding of management’s relevant processes we are required to determine whether this gives rise to a material misstatement
and controls. We further reviewed management’s paper assessing these risks. in the financial statements themselves. If, based on the work we have
We evaluated these risks to assess whether they were complete and performed, we conclude that there is a material misstatement of this other
consistent with our understanding of the entity and our wider risk information, we are required to report that fact.
assessment procedures.
We have nothing to report in this regard.
Our procedures to address our identified risks involved considering the impact
of the risks on the financial statements overall, including in the application of 9. RESPONSIBILITIES OF DIRECTORS
individual accounting standards and within the procedures to address our key As explained more fully in the statement of directors’ responsibilities, the
audit matter, valuation of goodwill. Such considerations included the impact of directors are responsible for the preparation of the financial statements and
the group’s net zero carbon emission commitments, and changes in regulation for being satisfied that they give a true and fair view, and for such internal
and reporting standards. We further reconciled the disclosures made to control as the directors determine is necessary to enable the preparation
underlying supporting evidence. With the assistance of internal specialists, of financial statements that are free from material misstatement, whether
we assessed the TCFD recommended disclosures within the Annual Report due to fraud or error.
and considered whether they are materially consistent with the financial
statements and our knowledge obtained in the audit. We also assessed the In preparing the financial statements, the directors are responsible for
disclosures made in respect of climate change within the accounting policies assessing the group’s ability to continue as a going concern, disclosing as
of the annual report and for consistency with our audit procedures performed. applicable, matters related to going concern and using the going concern
These areas include valuation of intangible assets, property, plant and basis of accounting unless the directors either intend to liquidate the group
equipment and leases, measurement of deferred tax assets, provisions, or to cease operations, or have no realistic alternative but to do so.
including employee benefit obligations, and going concern.
10. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
7.4. WORKING WITH OTHER AUDITORS OF THE FINANCIAL STATEMENTS
The group audit team exercises its oversight of component auditors using a Our objectives are to obtain reasonable assurance about whether the financial
carefully designed programme, which considers a variety of factors including statements as a whole are free from material misstatement, whether due to
the size and complexity of the entity. The group audit team directs, supervises fraud or error, and to issue an auditor’s report that includes our opinion.
and evaluates the audit work performed by component audit teams by: 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
– speaking regularly with teams about the status of their work; misstatement when it exists. Misstatements can arise from fraud or error and
– reviewing reporting and underlying workpapers where determined to be are considered material if, individually or in the aggregate, they could
necessary; and reasonably be expected to influence the economic decisions of users taken
– attending key meetings including close meetings on the basis of these financial statements.

In order to drive consistency and comparability over the audit work performed A further description of our responsibilities for the audit of the financial
by the component auditors, the group engagement team directly leads the statements is located on the FRC’s website at: www.frc.org.uk/
risk assessment process in all areas of the audit. This process involves auditorsresponsibilities. This description forms part of our auditor’s report.
workshops with our local audit teams to enhance and confirm the group
team’s 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.

– In years when the group engagement team elects to not visit a component,
either physically or virtually, the group engagement team:
– includes the component audit partner in our team planning meeting;
– discusses the results of the group-led risk assessment; and
– reviews the documentation of the findings from their work and discusses
with them as needed

These procedures 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, the group engagement
team assesses the competence of each of our component auditors.

The group engagement team also holds 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.

220 WPP ANNUAL REPORT 2023

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC  FINANCIAL STATEMENTS

11. EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE 11.2. AUDIT RESPONSE TO RISKS IDENTIFIED
OF DETECTING IRREGULARITIES, INCLUDING FRAUD As a result of performing the above, we did not identify any key audit
Irregularities, including fraud, are instances of non-compliance with laws and matters related to the potential risk of fraud or non-compliance with laws
regulations. We design procedures in line with our responsibilities, outlined and regulations.
above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting Our procedures to respond to risks identified included the following:
irregularities, including fraud is detailed below.
– reviewing the financial statement disclosures and testing to supporting
11.1. IDENTIFYING AND ASSESSING POTENTIAL RISKS documentation to assess compliance with provisions of relevant laws and
RELATED TO IRREGULARITIES regulations described as having a direct effect on the financial statements;
In identifying and assessing risks of material misstatement in respect of – enquiring of management, the audit committee and external legal counsel
irregularities, including fraud and non-compliance with laws and regulations, concerning actual and potential litigation and claims;
we considered the following: – performing analytical procedures to identify any unusual or unexpected
relationships that may indicate risks of material misstatement due to fraud;
– the nature of the industry and sector, control environment and business – reading minutes of meetings of those charged with governance, reviewing
performance including the design of the group’s remuneration policies, internal audit reports and reviewing correspondence with relevant tax
key drivers for directors’ remuneration, bonus levels and performance authorities; and
targets, including consideration of the visibility of management incentive – in addressing the risk of fraud through management override of controls,
schemes and how they could influence local, regional and global testing the appropriateness of journal entries and other adjustments,
management behaviour; including those made outside of local operational reporting; assessing
– the group’s own assessment of the risks that irregularities may occur either whether the judgements made in making accounting estimates are
as a result of fraud or error that was approved by the board; indicative of a potential bias; and evaluating the business rationale of any
– results of our enquiries of management, the group’s general counsel, significant transactions that are unusual or outside the normal course
internal audit and the audit committee about their own identification and of business.
assessment of the risks of irregularities, including consideration of the
nature and quantum of matters raised to the group’s Business We also communicated relevant identified laws and regulations and potential
Integrity team; fraud risks to all engagement team members including internal specialists and
– any matters we identified having obtained and reviewed the group’s significant component audit teams and remained alert to any indications of
documentation of their policies and procedures relating to: fraud or non-compliance with laws and regulations throughout the audit.
– 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; and
– the matters discussed among the audit engagement team including
significant component audit teams and relevant internal specialists,
including fraud, impairment, tax, valuations, financial instruments, real
estate, ESG, 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.

WPP ANNUAL REPORT 2023 221

 FINANCIAL STATEMENTS INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WPP PLC 

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS 14. MATTERS ON WHICH WE ARE REQUIRED TO REPORT
12. OPINIONS ON OTHER MATTERS PRESCRIBED BY OUR BY EXCEPTION
ENGAGEMENT LETTER 14.1. ADEQUACY OF EXPLANATIONS RECEIVED AND ACCOUNTING RECORDS
In our opinion the part of the directors’ remuneration report to be audited has Under the Companies (Jersey) Law, 1991 we are required to report to you if,
been properly prepared in accordance with the UK Companies Act 2006 as if in our opinion:
that Act had applied to the group.
– we have not received all the information and explanations we require for our
In our opinion, based on the work undertaken in the course of the audit: audit; or
– proper accounting records have not been kept, or proper returns adequate
– the information given in the strategic report and the directors’ report for for our audit have not been received from branches not visited by us; or
the financial year for which the financial statements are prepared is – the financial statements are not in agreement with the accounting records
consistent with the financial statements; and and returns
– the strategic report and the directors’ report have been prepared in
accordance with applicable legal requirements The parent company financial statements are not in agreement with the
accounting records and returns
In the light of the knowledge and understanding of the group and their
environment obtained in the course of the audit, we have not identified any We have nothing to report in respect of these matters.
material misstatements in the strategic report or the directors’ report.
14.2 DIRECTORS’ REMUNERATION
13. CORPORATE GOVERNANCE STATEMENT Under our engagement letter we are also required to report if in our opinion
The Listing Rules require us to review the directors' statement in relation to certain disclosures of directors’ remuneration have not been made or the part
going concern, longer-term viability and that part of the Corporate of the directors’ remuneration report to be audited is not in agreement with
Governance Statement relating to the group’s compliance with the provisions the accounting records and returns.
of the UK Corporate Governance Code specified for our review.
We have nothing to report in respect of these matters.
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 15. OTHER MATTERS WHICH WE ARE REQUIRED TO ADDRESS
materially consistent with the financial statements and our knowledge 15.1. AUDITOR TENURE
obtained during the audit: 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
– the directors’ statement with regards to the appropriateness of adopting financial statements for the year ending 31 December 2002 and subsequent
the going concern basis of accounting and any material uncertainties financial periods. The period of total uninterrupted engagement including
identified set out on page 97 previous renewals and reappointments of the firm is 22 years, covering the
– the directors’ explanation as to its assessment of the group’s prospects, years ending 31 December 2002 to 31 December 2023.
the period this assessment covers and why the period is appropriate set
out on page 97; 15.2. CONSISTENCY OF THE AUDIT REPORT WITH THE ADDITIONAL REPORT
– the directors' statement on fair, balanced and understandable set out on TO THE AUDIT COMMITTEE
page 169; Our audit opinion is consistent with the additional report to the audit
– the board’s confirmation that it has carried out a robust assessment of the committee we are required to provide in accordance with ISAs (UK).
emerging and principal risks set out on pages 98-105;
– the section of the annual report that describes the review of effectiveness 16. USE OF OUR REPORT
of risk management and internal control systems set out on page 133; and This report is made solely to the company’s members, as a body, in
– the section describing the work of the audit committee set out on accordance with Article 113A of the Companies (Jersey) Law, 1991. Our audit
pages 130-136 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) 4.1.15R – DTR 4.1.18R, these financial statements will
form part of the Electronic Format Annual Financial Report filed on the National
Storage Mechanism of the FCA in accordance with DTR 4.1.15R – DTR 4.1.18R.
This auditor’s report provides no assurance over whether the Electronic
Format Annual Financial Report has been prepared in compliance with DTR
4.1.15R – DTR 4.1.18R.

We have reported separately on the parent company financial statements of

WPP plc for the year ended 31 December 2023. That report includes details of
the parent company key audit matters; how we applied the concept of
materiality in planning and performing our audit of the parent company; and
an overview of the scope of our audit of the parent company.

James Bates, FCA

For and on behalf of Deloitte LLP
London, United Kingdom
21 March 2024

222 WPP ANNUAL REPORT 2023

 FINANCIAL STATEMENTS

RECONCILIATION TO NON-GAAP MEASURES OF PERFORMANCE

2023 2022 2021

The Group presents alternative performance measures, including headline £m £m £m
operating profit, headline operating profit margin, headline profit before
Headline operating profit 1,750.2 1,741.8 1,493.5
interest and tax, headline profit before tax, headline earnings, headline EPS,
Finance and investment income 127.3 145.4 69.4
diluted headline EPS, headline EBITDA, revenue less pass‑through costs,
adjusted net debt and adjusted free cash flow. They are used by management Finance costs (excluding interest expense
related to lease liabilities) (282.7) (263.7) (192.7)
for internal performance analyses; the presentation of these measures
(155.4) (118.3) (123.3)
facilitates comparability with other companies, although management’s
measures may not be calculated in the same way as similarly titled measures Non-lease interest cover1 on headline 11.3 14.7 12.1
operating profit times times times
reported by other companies; and these measures are useful in connection
with discussions with the investment community. Note
1 Interest expense related to lease liabilities is excluded from interest cover as lease liabilities are

In the calculation of headline profit, judgement is required by management excluded from the Group’s key leverage metrics

in determining which revenues and costs are considered to be significant,

non-recurring or volatile items that are to be excluded. Headline operating profit and headline operating margin are metrics that
management uses to assess the performance of the business.
The exclusion of certain adjusting items may result in headline earnings being
materially higher or lower than reported earnings, for example when Headline operating profit margin before and after earnings from associates:
significant impairments or restructuring charges are excluded but the related
Margin 2023 Margin 2022 Margin 2021
benefits are included, headline earnings will be higher. Headline measures % £m % £m % £m
should not be considered in isolation as they provide additional information
Revenue less
to aid the understanding of the Group’s financial performance. pass-through costs 11,859.7 11,799.3 10,397.2
Headline operating profit 14.8 1,750.2 14.8 1,741.8 14.4 1,493.5
Reconciliation of revenue to revenue less pass-through costs: Earnings from associates
(after interest and tax,
2023 2022 2021 excluding adjusting items) 36.2 73.9 86.1
£m £m £m
Headline PBIT 15.1 1,786.4 15.4 1,815.7 15.2 1,579.6
Revenue 14,844.8 14,428.7 12,801.1
Media pass-through costs (2,173.6) (1,905.7) (1,865.3)
Headline PBIT is one of the metrics that management uses to assess the
Other pass-through costs (811.5) (723.7) (538.6)
performance of the business.
Revenue less pass-through costs 11,859.7 11,799.3 10,397.2
Calculation of headline EBITDA:
Pass-through costs comprise fees paid to external suppliers when they are
2023 2022 2021
engaged to perform part or all of a specific project and are charged directly
£m £m £m
to clients. This includes the cost of media where the Group is buying digital
Headline PBIT (as above) 1,786.4 1,815.7 1,579.6
media for its own account on a transparent opt-in basis and, as a result, the
Depreciation of property, plant and equipment 165.1 166.9 151.2
subsequent media pass-through costs have to be accounted for as revenue,
as well as billings. Therefore, management considers that revenue less Amortisation of other intangible assets 24.8 21.9 19.9
pass-through costs gives a helpful reflection of top-line growth. Headline EBITDA (including depreciation
of right-of-use assets) 1,976.3 2,004.5 1,750.7
Reconciliation of profit before taxation to headline operating profit: Depreciation of right-of-use assets 256.8 262.2 272.9
Headline EBITDA 2,233.1 2,266.7 2,023.6
2023 2022 2021
£m £m £m
Headline EBITDA is a key metric used for valuing companies and is one of the
Profit before taxation 346.3 1,159.8 950.8
metrics that management uses to assess the performance of the business.
Finance and investment income (127.3) (145.4) (69.4)
Headline EBITDA (including depreciation of right-of-use assets) is used in the
Finance costs 389.0 359.4 283.6 Group’s key leverage metric (average adjusted net debt/headline EBITDA
Revaluation and retranslation within the range of 1.5x-1.75x by year end 2024).
of financial instruments (6.8) (76.0) 87.8
Profit before interest and taxation 601.2 1,297.8 1,252.8
Reconciliation of profit before taxation to headline PBT and headline earnings:
(Earnings)/loss from associates
– after interest and tax (70.2) 60.4 (23.8)
2023 2022 2021
Operating profit 531.0 1,358.2 1,229.0 £m £m £m
Operating profit margin % 4.5% 11.5% 11.8% Profit before taxation 346.3 1,159.8 950.8
Goodwill impairment 63.6 37.9 1.8 Goodwill impairment 63.6 37.9 1.8
Amortisation and impairment of Amortisation and impairment
acquired intangible assets 727.9 62.1 97.8 of acquired intangible assets 727.9 62.1 97.8
Investment and other impairment Investment and other impairment
charges/(reversals) 17.8 77.0 (42.4) charges/(reversals) 17.8 77.0 (42.4)
Restructuring and transformation costs 195.5 218.8 175.4 Restructuring and transformation costs 195.5 218.8 175.4
Property-related restructuring costs 232.5 18.0 – Property-related restructuring costs 232.5 18.0 −
(Gains)/losses on disposal of investments (Gains)/losses on disposal of investments
and subsidiaries (7.1) 36.3 10.6 and subsidiaries (7.1) 36.3 10.6
Gains on remeasurement of equity interests Gains on remeasurement of equity interests
arising from a change in scope of ownership – (66.5) – arising from a change in scope of ownership – (66.5) –
Litigation settlement (11.0) − 21.3 Litigation settlement (11.0) − 21.3
Headline operating profit 1,750.2 1,741.8 1,493.5 Share of adjusting and other items for
Headline operating profit margin % 14.8% 14.8% 14.4% associates (34.0) 134.3 62.3
Revaluation and retranslation
of financial instruments (6.8) (76.0) 87.8
Headline PBT 1,524.7 1,601.7 1,365.4
Headline tax charge (412.2) (408.8) (327.9)
Headline non-controlling interests (86.8) (92.7) (83.0)
Headline earnings 1,025.7 1,100.2 954.5

Headline PBT and headline earnings are metrics that management uses to
assess the performance of the business.

WPP ANNUAL REPORT 2023 223

 FINANCIAL STATEMENTS RECONCILIATION TO NON-GAAP MEASURES OF PERFORMANCE 

Calculation of headline taxation: Reconciliation of adjusted operating cash flow and adjusted free cash flow:

2023 2022 2021 2023 2022 2021

£m £m £m £m £m £m
Headline PBT 1,524.7 1,601.7 1,365.4 Cash generated by operations 1,844.8 1,268.2 2,580.3
Tax charge 149.1 384.4 230.1 Purchases of property, plant and equipment (177.2) (208.4) (263.2)
Tax (charge)/credit relating to gains on Purchase of other intangible assets (including
disposal of investments and subsidiaries (9.3) (9.0) 31.5 capitalised computer software) (40.0) (14.9) (29.9)
Tax credit relating to restructuring Repayment of lease liabilities (258.7) (309.6) (320.7)
and transformation costs and property-related Interest paid on lease liabilities (102.9) (92.4) (88.4)
costs 98.6 46.5 45.7
Tax credit/(charge) relating Investment income 12.9 24.5 17.8
to litigation settlement 1.1 − (5.4) Share option proceeds 0.7 1.2 4.4
Deferred tax impact of the amortisation Adjusted operating cash flow 1,279.6 668.6 1,900.3
of acquired intangible assets and other Corporation and overseas tax paid (395.3) (390.9) (391.1)
goodwill items 157.4 (15.4) 5.6
Deferred tax relating to gains on disposal Interest and similar charges paid (274.5) (210.2) (173.7)
of investments and subsidiaries 15.3 2.3 20.4 Interest received 115.8 88.9 47.5
Headline tax charge 412.2 408.8 327.9 Dividends from associates 43.4 37.6 53.4
Headline tax rate 27.0% 25.5% 24.0% Earnout payments1 (30.5) (71.4) (57.0)
Dividends paid to non-controlling interests in
subsidiary undertakings (101.3) (69.5) (114.5)
The headline tax rate as a percentage of headline PBT (that includes the share
Adjusted free cash flow 637.2 53.1 1,264.9
of headline results of associates) is 27.0% (2022: 25.5%, 2021: 24.0%). Given
the Group’s geographic mix of profits and the changing international tax Note
environment, the headline tax rate is expected to increase over the next 1 Earnout payments in 2023 include a £28 million receipt connected with a previous earnout

few years. arrangement, that was settled within the year

Calculation of basic headline EPS is as follows: The Group bases its internal cash flow objectives on adjusted operating cash
flow and adjusted free cash flow. Management believes adjusted operating
2023 2022 2021 cash flow is a target that can be translated into targets for operating business
£m £m £m units that do not have direct control of items which influence adjusted free
Headline earnings (£ million) (page 223) 1,025.7 1,100.2 954.5 cash flow, such as the Group effective tax rate and leverage; and is meaningful
Weighted average shares used in headline to investors as a measure of the degree to which headline operating profit is
basic EPS calculation (million) (note 9) 1,072.1 1,097.9 1,194.1 converted into cash after the cost of leased operating assets, investment in
Headline EPS 95.7p 100.2p 79.9p capital expenditure, and working capital.

Calculation of diluted headline EPS is as follows: Adjusted free cash flow is meaningful to investors because it is the measure
of the Group’s funds available for acquisition-related payments, dividends
2023 2022 2021 to shareholders, share repurchases and debt repayment. The purpose of
£m £m £m presenting adjusted free cash flow is to indicate the ongoing cash generation
Headline earnings (£ million) (page 223) 1,025.7 1,100.2 954.5 within the control of the Group after taking account of the necessary cash
Weighted average shares used in headline expenditures of maintaining the capital and operating structure of the
diluted EPS calculation (million) (note 9) 1,094.0 1,116.4 1,215.3 Group (in the form of payments of interest, corporate taxation, and
Diluted headline EPS 93.8p 98.5p 78.5p 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.

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:

2023 2022 2021

£m £m £m
Cash and short-term deposits 2,217.5 2,491.5 3,882.9
Bank overdrafts, bonds and bank loans
due within one year (946.3) (1,169.0) (567.2)
Bonds and bank loans due after one year (3,775.0) (3,801.8) (4,216.8)
Adjusted net debt (2,503.8) (2,479.3) (901.1)

Average adjusted net debt is calculated as the average monthly net

borrowings of the Group. Adjusted net debt excludes lease liabilities.

224 WPP ANNUAL REPORT 2023

RECONCILIATION TO NON-GAAP MEASURES OF PERFORMANCE  FINANCIAL STATEMENTS

CONSTANT CURRENCY AND PRO FORMA (‘LIKE-FOR-LIKE’) EARNINGS/(LOSS) FROM ASSOCIATES – AFTER INTEREST AND TAX
These consolidated financial statements are presented in pounds sterling. Management reviews the ‘Earnings/(loss) from associates – after interest and
However, the Group’s significant international operations give rise to tax’ by assessing the underlying component movements including ‘share of
fluctuations in foreign exchange rates. To neutralise foreign exchange impact profit before interest and taxation of associates’, ‘share of adjusting items of
and illustrate the underlying change in revenue and profit from one year to associates’, ‘share of interest and non‑controlling interests of associates’,
the next, the Group has adopted the practice of discussing results in both and ‘share of taxation of associates’, which are derived from the Income
reportable currency (local currency results translated into pounds sterling Statements of the associate undertakings.
at the prevailing foreign exchange rate) and constant currency.
The following table is an analysis of ‘Earnings/(loss) from associates –
Management also believes that discussing pro forma or like-for-like contributes after interest and tax’ and underlying component movements:
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. 2023 2022 2021
£m £m £m

Further details of the constant currency and pro forma methods are given Share of profit before interest and taxation 181.2 219.6 208.5
in the Glossary on pages 232 and 233. Share of adjusting and other items 34.0 (134.3) (62.3)
Share of interest and non‑controlling interests (112.5) (104.7) (83.9)
Reconciliation of reported revenue to like-for-like revenue: Share of taxation (32.5) (41.0) (38.5)
Earnings/(loss) from associates
£m % – after interest and tax 70.2 (60.4) 23.8
2021 12,801.1 6.7
Impact of exchange rate changes 725.4 5.7 Share of adjusting and other items for associates was earnings of £34.0 million
Impact of acquisition 41.0 0.3 (2022: loss £134.3 million, 2021: loss £62.3 million). In 2023 this included
Like-for-like growth 861.2 6.7 £45.1 million of distributions received from Kantar, described in note 4. In 2022
2022 14,428.7 12.7 this included £75.8 million (2021: £38.8 million) of amortisation and impairment
Impact of exchange rate changes (211.2) (1.5) of acquired intangible assets as well as restructuring and one-off transaction
costs of £54.8 million (2021: £18.8 million) within Kantar.
Impact of acquisition 172.0 1.2
Like-for-like growth 455.3 3.2
2023 14,844.8 2.9

Reconciliation of reported revenue less pass-through costs to like-for-like

revenue less pass-through costs:

£m %
2021 10,397.2 6.5
Impact of exchange rate changes 611.9 5.9
Impact of acquisition 72.8 0.7
Like-for-like growth 717.4 6.9
2022 11,799.3 13.5
Impact of exchange rate changes (150.8) (1.3)
Impact of acquisition 101.4 0.9
Like-for-like growth 109.8 0.9
2023 11,859.7 0.5

WPP ANNUAL REPORT 2023 225