REG - WPP PLC - 2015 Interim Results <Origin Href="QuoteRef">WPP.L</Origin> - Part 3
26/08/2015 07:01
- Part 3: For the preceding part double click ID:nRSZ0851Xb
as follows:
million Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December 2014
Average shares used in basic EPS calculation 1,294.6 1,318.7 1,307.4
Dilutive share options outstanding 3.2 5.4 4.8
Other potentially issuable shares 19.3 25.1 25.3
Shares used in diluted EPS calculation 1,317.1 1,349.2 1,337.5
At 30 June 2015 there were 1,326,557,359 ordinary shares in issue.
1 Reported earnings is equivalent to profit for the period attributable to equity holders of the parent.
10. Analysis of cash flows
The following tables analyse the items included within the main cash flow headings on page 20:
Net cash (outflow)/inflow from operating activities:
£ million Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December 2014
Profit for the period 601.1 396.2 1,151.5
Taxation 108.6 94.9 300.4
Revaluation of financial instruments 21.8 (21.7) (50.7)
Finance costs 111.5 133.4 262.7
Finance income (38.1) (43.0) (94.7)
Share of results of associates (16.0) (28.7) (61.9)
Operating profit 788.9 531.1 1,507.3
Adjustments for:
Non-cash share-based incentive plans (including share options) 48.5 53.8 102.2
Depreciation of property, plant and equipment 97.5 95.8 197.3
Goodwill impairment - - 16.9
Amortisation and impairment of acquired intangible assets 66.7 74.0 147.5
Amortisation of other intangible assets 15.4 15.1 31.6
Investment write-downs - - 7.3
Gains on disposal of investments and subsidiaries (91.9) (17.1) (186.3)
Gains on remeasurement of equity interest on acquisition of controlling interest (140.2) (5.9) (9.2)
(Gains)/losses on sale of property, plant and equipment (0.1) 0.2 (0.8)
Operating cash flow before movements in working capital and provisions 784.8 747.0 1,813.8
Movements in working capital and provisions1 (772.2) (539.6) 295.0
Cash generated by operations 12.6 207.4 2,108.8
Corporation and overseas tax paid (165.0) (133.7) (289.9)
Interest and similar charges paid (110.0) (155.2) (249.1)
Interest received 28.6 30.4 69.8
Investment income 3.0 4.4 11.9
Dividends received from associates 50.1 29.4 52.2
(180.7) (17.3) 1,703.7
Acquisitions and disposals:
£ million Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December 2014
Initial cash consideration (307.8) (239.7) (382.7)
Cash and cash equivalents acquired (net) 19.2 54.1 74.4
Earnout payments (10.9) (15.3) (34.3)
Purchase of other investments (including associates) (201.7) (53.8) (188.8)
Proceeds on disposal of investments 41.9 35.0 42.3
Acquisitions and disposals (459.3) (219.7) (489.1)
Cash consideration for non-controlling interests (7.9) (1.8) (5.6)
Net acquisition payments and investments (467.2) (221.5) (494.7)
1 The Group typically experiences an outflow of working capital in the first half of the financial year and an inflow in
the second half. This is primarily due to the seasonal nature of working capital flows associated with its media buying
activities on behalf of clients.
10. Analysis of cash flows (continued)
Share repurchases and buybacks:
£ million Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December 2014
Purchase of own shares by ESOP Trusts (59.7) (74.0) (98.3)
Shares purchased into treasury (345.7) (316.2) (412.5)
(405.4) (390.2) (510.8)
Net increase/(decrease) in borrowings:
£ million Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December 2014
Increase in drawings on bank loans 197.7 201.5 -
Repayment of E500 million bonds (481.9) - -
Premium on exchange of E252 million bonds (13.7) - -
Proceeds from issue of E600 million bonds 439.0 - -
Repayment of $369 million bonds - (235.3) (235.3)
Repayment of $600 million bonds - - (333.7)
Repayment of $25 million TNS private placements - - (14.6)
Proceeds from issue of E750 million bonds - - 588.7
Proceeds from issue of $750 million bonds - - 460.1
141.1 (33.8) 465.2
Cash and cash equivalents:
£ million Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December 2014
Cash at bank and in hand 1,206.9 1,064.7 1,967.0
Short-term bank deposits 146.1 143.3 545.7
Overdrafts1 (165.7) (183.3) (265.1)
1,187.3 1,024.7 2,247.6
11. Net debt
£ million 30 June 2015 30 June 2014 31 December 2014
Cash and short-term deposits 1,353.0 1,208.0 2,512.7
Bank overdrafts and loans due within one year (518.7) (952.5) (653.2)
Bonds and bank loans due after one year (4,217.0) (3,212.7) (4,134.9)
(3,382.7) (2,957.2) (2,275.4)
1 Bank overdrafts are included in cash and cash equivalents because they form an integral part of the Group's cash
management.
The Group estimates that the fair value of corporate bonds is £4,611.9 million at 30 June 2015 (30 June 2014: £4,092.3
million; 31 December 2014: £4,944.8 million). The Group considers that the carrying amount of bank loans approximates their
fair value.
The following table is an analysis of future anticipated cash flows in relation to the Group's debt, on an undiscounted
basis which, therefore, differs from the carrying value:
£ million 30 June 2015 30 June 2014 31 December 2014
Within one year (528.7) (938.1) (578.4)
Between one and two years (550.0) (750.1) (748.4)
Between two and three years (308.4) (711.1) (533.7)
Between three and four years (129.2) (89.4) (125.7)
Between four and five years (129.2) (89.4) (125.7)
Over five years (4,682.5) (2,832.6) (4,192.3)
Debt financing (including interest) under the Revolving Credit Facility and in relation to unsecured loan notes (6,328.0) (5,410.7) (6,304.2)
Short-term overdrafts - within one year (165.7) (183.3) (265.1)
Future anticipated cash flows (6,493.7) (5,594.0) (6,569.3)
Effect of discounting/financing rates 1,758.0 1,428.8 1,781.2
Debt financing (4,735.7) (4,165.2) (4,788.1)
Cash and short-term deposits 1,353.0 1,208.0 2,512.7
Net debt (3,382.7) (2,957.2) (2,275.4)
12. Goodwill and acquisitions
Goodwill in relation to subsidiary undertakings increased by £77.9 million (30 June 2014: decreased by £7.1 million) in the
period. This movement includes both goodwill arising on acquisitions completed in the period and adjustments to goodwill
relating to acquisitions completed in prior years, net of the effect of currency translation.
The contribution to revenue and operating profit of acquisitions completed in the period was not material. There were no
material acquisitions completed during the period or between 30 June 2015 and the date the interim financial statements
were approved.
13. Other intangible assets
The following are included in other intangibles:
£ million 30 June 2015 30 June 2014 31 December 2014
Brands with an indefinite useful life 937.4 933.4 969.3
Acquired intangibles 674.3 635.0 596.9
Other (including capitalised computer software) 102.5 94.2 102.7
1,714.2 1,662.6 1,668.9
14. Trade and other receivables
Amounts falling due within one year:
£ million 30 June 2015 30 June 2014 31 December 2014
Trade receivables 6,109.2 5,897.9 6,337.6
VAT and sales taxes recoverable 122.3 122.1 116.0
Prepayments 369.5 297.1 222.1
Accrued income 2,805.2 2,482.4 2,401.5
Fair value of derivatives 1.2 10.7 11.4
Other debtors 577.6 512.4 441.4
9,985.0 9,322.6 9,530.0
Amounts falling due after more than one year:
£ million 30 June2015 30 June 2014 31 December 2014
Prepayments 1.7 3.6 1.9
Accrued income 11.8 35.2 7.0
Other debtors 98.6 63.9 97.8
Fair value of derivatives 29.8 29.7 41.9
141.9 132.4 148.6
The Group considers that the carrying amount of trade and other receivables approximates their fair value.
15. Trade and other payables: amounts falling due within one year
£ million 30 June2015 30 June 2014 31 December 2014
Trade payables 7,764.4 7,003.4 7,846.3
Deferred income 1,017.4 947.8 990.4
Payments due to vendors (earnout agreements) 102.8 57.5 67.1
Liabilities in respect of put option agreements with vendors 43.0 74.5 27.7
Fair value of derivatives 0.8 25.4 75.0
Share purchases - close period commitments - 76.0 78.8
Other creditors and accruals 2,431.4 2,308.7 2,698.7
11,359.8 10,493.3 11,784.0
The Group considers that the carrying amount of trade and other payables approximates their fair value.
16. Trade and other payables: amounts falling due after more than one year
£ million 30 June2015 30 June 2014 31 December 2014
Payments due to vendors (earnout agreements) 321.8 203.4 244.3
Liabilities in respect of put option agreements with vendors 163.8 90.9 157.2
Fair value of derivatives 3.2 1.9 2.1
Other creditors and accruals 218.7 215.1 221.3
707.5 511.3 624.9
The Group considers that the carrying amount of trade and other payables approximates their fair value.
The following table sets out payments due to vendors, comprising deferred consideration and the directors' best estimates
of future earnout-related obligations:
£ million 30 June2015 30 June 2014 31 December2014
Within one year 102.8 57.5 67.1
Between 1 and 2 years 87.3 46.4 67.4
Between 2 and 3 years 68.8 61.1 65.1
Between 3 and 4 years 63.6 45.5 34.6
Between 4 and 5 years 67.7 30.9 51.9
Over 5 years 34.4 19.5 25.3
424.6 260.9 311.4
The Group's approach to payments due to vendors is outlined in note 21.
16. Trade and other payables: amounts falling due after more than one year
(continued)
The following table sets out the movements of deferred and earnout related obligations during the period:
£ million Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December2014
At the beginning of the period 311.4 193.5 193.5
Earnouts paid (10.9) (15.3) (34.3)
New acquisitions 92.7 61.9 136.0
Revision of estimates taken to goodwill 19.5 28.4 26.4
Revaluation of payments due to vendors (note 5) 26.0 (1.9) (13.2)
Exchange adjustments (14.1) (5.7) 3.0
At the end of the period 424.6 260.9 311.4
The Group does not consider there to be any material contingent liabilities as at 30 June 2015.
17. Issued share capital - movement in the period
Number of equity ordinary shares (million) Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December2014
At the beginning of the period 1,325.7 1,348.7 1,348.7
Exercise of share options 0.9 1.1 3.9
Treasury share cancellations - - (26.9)
At the end of the period 1,326.6 1,349.8 1,325.7
18. Related party transactions
From time to time the Group enters into transactions with its associate undertakings. These transactions were not material
for any of the periods presented.
19.Non-GAAP measures of performance
Reconciliation of profit before interest and taxation to headline PBIT for the six months ended 30 June 2015:
£ million Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December 2014
Profit before interest and taxation 804.9 559.8 1,569.2
Amortisation and impairment of acquired intangible assets 66.7 74.0 147.5
Goodwill impairment - - 16.9
Gains on disposal of investments and subsidiaries (91.9) (17.1) (186.3)
Gains on remeasurement of equity interest on acquisition of controlling interest (140.2) (5.9) (9.2)
Investment write-downs - - 7.3
Restructuring costs 21.2 9.1 127.6
Share of exceptional losses of associates 8.4 2.1 7.6
Headline PBIT 669.1 622.0 1,680.6
Finance income 38.1 43.0 94.7
Finance costs (111.5) (133.4) (262.7)
(73.4) (90.4) (168.0)
Interest cover on headline PBIT 9.1 times 6.9 times 10.0 times
Calculation of headline EBITDA:
£ million Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December 2014
Headline PBIT (as above) 669.1 622.0 1,680.6
Depreciation of property, plant and equipment 97.5 95.8 197.3
Amortisation of other intangible assets 15.4 15.1 31.6
Headline EBITDA 782.0 732.9 1,909.5
Net sales margin before and after share of results of associates:
£ million Margin Six months ended 30 June 2015 Margin Six months ended 30 June 2014 Margin Year ended 31 December 2014
Net sales 5,040.7 4,791.7 10,064.8
Headline PBIT 13.3% 669.1 13.0% 622.0 16.7% 1,680.6
Share of results of associates (excluding exceptional gains/losses) 24.4 30.8 69.5
Headline PBIT excluding share of results of associates 12.8% 644.7 12.3% 591.2 16.0% 1,611.1
19. Non-GAAP measures of performance (continued)
Reconciliation of profit before taxation to headline PBT and headline earnings for the six months ended 30 June 2015:
£ million Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December 2014
Profit before taxation 709.7 491.1 1,451.9
Amortisation and impairment of acquired intangible assets 66.7 74.0 147.5
Goodwill impairment - - 16.9
Gains on disposal of investments and subsidiaries (91.9) (17.1) (186.3)
Gains on remeasurement of equity interest on acquisition of controlling interest (140.2) (5.9) (9.2)
Investment write-downs - - 7.3
Restructuring costs 21.2 9.1 127.6
Share of exceptional losses of associates 8.4 2.1 7.6
Revaluation of financial instruments 21.8 (21.7) (50.7)
Headline PBT 595.7 531.6 1,512.6
Headline tax charge (note 7) (119.1) (106.2) (302.5)
Non-controlling interests (34.9) (31.4) (74.3)
Headline earnings 441.7 394.0 1,135.8
Ordinary dividends1 211.1 150.5 460.0
Dividend cover on headline earnings 2.1 times 2.6 times 2.5 times
Reconciliation of free cash flow for the six months ended 30 June 2015:
£ million Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December 2014
Cash generated by operations 12.6 207.4 2,108.8
Plus:
Interest received 28.6 30.4 69.8
Investment income 3.0 4.4 11.9
Dividends received from associates 50.1 29.4 52.2
Share option proceeds 5.4 6.8 25.0
Proceeds on disposal of property, plant and equipment 11.2 1.1 5.9
Movements in working capital and provisions 772.2 539.6 (295.0)
Less:
Interest and similar charges paid (110.0) (155.2) (249.1)
Purchase of property, plant and equipment (73.1) (80.1) (177.9)
Purchase of other intangible assets (including capitalised computer software) (17.0) (15.3) (36.5)
Corporation and overseas tax paid (165.0) (133.7) (289.9)
Dividends paid to non-controlling interests in subsidiary undertakings (25.7) (21.7) (57.7)
Free cash flow 492.3 413.1 1,167.5
1 For the six months ended 30 June 2015, ordinary dividends represent an estimate of the 2015 interim dividend expected to
be paid to share owners in November 2015, based on the number of shares in issue at 30 June 2015. The corresponding figure
for the six months ended 30 June 2014 represents the 2014 interim dividend paid in November 2014.
20. Going concern and risk management policies
In considering going concern and liquidity risk, the directors have reviewed the Group's future cash requirements and
earnings projections. The directors believe these forecasts have been prepared on a prudent basis and have also considered
the impact of a range of potential changes to trading performance. The directors have concluded that the Group should be
able to operate within its current facilities and comply with its banking covenants for the foreseeable future and
therefore believe it is appropriate to prepare the financial statements of the Group on a going concern basis.
At 30 June 2015, the Group has access to £6.0 billion of committed facilities with maturity dates spread over the years
2016 to 2043 as illustrated below:
£ million Maturity by year
2016 2017 2018 2019+
US bond $500m (5.625% '43) 318.0 318.0
US bond $300m (5.125% '42) 190.8 190.8
Eurobonds E600m (1.625% '30) 425.5 425.5
Eurobonds E750m (2.25% '26) 531.9 531.9
US bond $750m (3.75% '24) 476.9 476.9
Eurobonds E750m (3.0% '23) 531.9 531.9
US bond $500m (3.625% '22) 318.0 318.0
US bond $812m (4.75% '21) 516.6 516.6
£ bonds £200m (6.375% '20) 200.0 200.0
Bank revolver ($2,500m) 1,589.8 1,589.8
Eurobonds E252m (0.43% '18) 178.7 178.7
£ bonds £400m (6.0% '17) 400.0 400.0
Eurobonds E498m (6.625% '16) 353.3 353.3
Total committed facilities available 6,031.4 353.3 400.0 178.7 5,099.4
Drawn down facilities at 30 June 2015 4,639.3 353.3 400.0 178.7 3,707.3
Undrawn committed credit facilities 1,392.1
Drawn down facilities at 30 June 2015 4,639.3
Net cash at 30 June 2015 (1,187.3)
Other adjustments (69.3)
Net debt at 30 June 2015 3,382.7
Given the strong cash generation of the business, its debt maturity profile and available facilities, the directors believe
the Group has sufficient liquidity to match its requirements for the foreseeable future.
Treasury management
The Group's treasury activities are principally concerned with monitoring of working capital, managing external and
internal funding requirements and monitoring and managing financial market risks, in particular risks from movements in
interest and foreign exchange rates.
The Group's risk management policies relating to foreign currency risk, interest rate risk, liquidity risk, capital risk
and credit risk are presented in the notes to the consolidated financial statements of the 2014 Annual Report and Accounts
and in the opinion of the Board remain relevant for the remaining six months of the year.
21. Financial instruments
The fair values of financial assets and liabilities are based on quoted market prices where available. Where the market
value is not available, the Group has estimated relevant fair values on the basis of publicly available information from
outside sources or on the basis of discounted cash flow models where appropriate.
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at
fair value, grouped into levels 1 to 3 based on the degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable inputs).
£ million Level 1 Level 2 Level 3
30 June 2015
Derivatives in designated hedge relationships
Derivative assets - 29.8 -
Derivative liabilities - (3.2) -
Held for trading
Derivative assets - 1.2 -
Derivative liabilities - (0.8) -
Payments due to vendors (earnout agreements) (note 16) - - (424.6)
Liabilities in respect of put options - - (206.8)
Available for sale
Other investments 362.5 - 558.4
Reconciliation of level 3 fair value measurements1:
£ million Liabilities in respect of put options Other investments
1 January 2015 (184.9) 534.4
Losses recognised in the income statement (5.8) -
Losses recognised in other comprehensive income - (5.1)
Exchange adjustments 16.4 (16.1)
Additions (34.2) 49.0
Disposals - (3.8)
Settlements 1.7 -
30 June 2015 (206.8) 558.4
1 Payments due to vendors (earnout agreements) are reconciled in note 16.
Notes to the unaudited condensed consolidated interim financial statements (continued)
21. Financial instruments (continued)
Payments due to vendors and liabilities in respect of put options
Future anticipated payments due to vendors in respect of contingent consideration (earnout agreements) are recorded at fair
value, which is the present value of the expected cash outflows of the obligations. Liabilities in respect of put option
agreements are initially recorded at the present value of the redemption amount in accordance with IAS 32 and subsequently
measured at fair value in accordance with IAS 39. Both types of obligations are dependent on the future financial
performance of the entity and it is assumed that future profits are in line with directors' estimates. The directors derive
their estimates from internal business plans together with financial due diligence performed in connection with the
acquisition. At 30 June 2015, the weighted average growth rate in estimating future financial performance was 20.1%, which
reflects the prevalence of recent acquisitions in the faster growing markets and new media sectors. The risk adjusted
discount rate applied to these obligations at 30 June 2015 was 1.8%.
A one percentage point increase or decrease in the growth rate in estimated future financial performance would increase or
decrease the combined liabilities due to earnout agreements and put options by approximately £8.7 million and £13.1
million, respectively. A 0.5 percentage point increase or decrease in the risk adjusted discount rate would decrease or
increase the combined liabilities by approximately £8.6 million and £8.9 million, respectively. An increase in the
liability would result in a loss in the revaluation of financial instruments (note 5), while a decrease would result in a
gain.
Other investments
Other investments included in level 1 are based on quoted market prices. Other investments included in level 3 are unlisted
securities, where market value is not readily available. The Group has estimated relevant fair values on the basis of
publicly available information from outside sources or on the basis of discounted cash flow models where appropriate. The
sensitivity to changes in unobservable inputs is specific to each individual investment.
22. Principal risks and uncertainties
The directors have considered the principal risks and uncertainties affecting the Group for the second half of 2015 and
determined that these are unchanged from those presented in the Group's published Annual Report and Accounts and Form 20-F
for the year ended 31 December 2014. The Annual Report and Accounts and Form 20-F are published in the Investor Relations
section of the Group website (www.wpp.com) and are available from the Group on request.
WPP plc has specific policies in place to ensure that risks are properly evaluated and managed at the appropriate level
within the business. These are presented on pages 173 to 177 of the published 2014 Annual Report and Accounts. Pages 5 to 7
of the Group's Form 20-F for the year ended 31 December 2014 contain a detailed explanation of the risk factors identified
by the Group and these are summarised below:
Clients
n The Group competes for clients in a highly competitive industry and client loss may have a material adverse effect on the
Group's market share and its business, revenues, results of operations, financial condition or prospects.
n The Group receives a significant portion of its revenues from a limited number of large clients and the net loss of some
of these clients could have a material adverse effect on the Group's prospects, business, financial condition and results
of operations.
Data Security
n The Group is subject to strict data protection and privacy legislation in the jurisdictions in which it operates and
relies extensively on information technology systems. The Group stores, transmits and relies on critical and sensitive data
such as strategic plans, personally identifiable information and trade secrets. Security of this type of data is exposed to
escalating external threats that are increasing in sophistication as well as internal data breaches.
Existing and proposed data protection laws, in particular in the EU and the US, concerning user privacy, use of personal
information and online tracking may restrict some of the Group's activities and increase costs.
The Group is carrying out an IT transformation project and will rely on third parties for the performance of a significant
portion of its worldwide information technology and operations functions. A failure to provide these functions could have
an adverse effect on our business.
Economic
n The Group's businesses are subject to economic cycles. Many of the economies in which the Group operates currently have
significant economic challenges.
Financial
n Currency exchange rate fluctuations could adversely impact the Group's consolidated results.
n The interest rates and fees payable by the Group in respect of certain of its borrowings are, in part, influenced by the
credit ratings issued by the international debt rating agencies.
n The Group is subject to credit risk through the default of a client or other counterparty.
Notes to the unaudited condensed consolidated interim financial statements (continued)
22. Principal risks and uncertainties (continued)
Mergers & Acquisitions
n The Group may be unsuccessful in evaluating material risks involved in completed and future acquisitions and may be
unsuccessful in integrating any acquired operations with its existing businesses.
n Goodwill and other intangible assets recorded on the Group's balance sheet with respect to acquired companies may become
impaired.
Operational
n The Group operates on a largely decentralised basis with approximately 16 operating entities in 112 countries and is
exposed to the risks of doing business globally and of maintaining reliable and uniform control procedures.
People
n The Group's performance could be adversely affected if it were unable to attract and retain key talent or had inadequate
talent management and succession planning for key management roles at both the Company and Group level.
Regulatory/Legal
n The Group may be subject to regulations restricting its activities or effecting changes in taxation.
n The Group is subject to strict anti-corruption, anti-bribery and anti-trust legislation and enforcement in the countries
in which it operates.
n The Group is subject to the laws of the US, the EU and other jurisdictions that impose sanctions and regulate the supply
of services to certain countries.
n Civil liabilities or judgements against the Company or its directors or officers based on United States federal or state
securities laws may not be enforceable in the United States or in England and Wales or in Jersey.
Responsibility statement
We confirm that to the best of our knowledge:
a) the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim
Financial Reporting';
b) the interim management report and note 22 includes a fair review of the information required by DTR
4.2.7R (indication of important events during the first six months and description of principal risks
and uncertainties for the remaining six months of the year); and
c) the interim management report and note 18 includes a fair review of the information required by DTR
4.2.8R (disclosure of related party transactions and changes therein).
Signed on behalf of the Board on 26 August 2015.
P W G Richardson
Group finance director
Independent review report to WPP plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 30 June 2015 which comprises the condensed consolidated interim income statement, statement of
comprehensive income, cash flow statement, balance sheet, statement of changes in equity and related notes 1 to 21. We have
read the other information contained in the half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland)
2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state
to them in an independent review report 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, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with International
Financial Reporting Standards as adopted by the European Union and issued by the International Accounting Standards Board.
The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance
with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union and issued by
the International Accounting Standards Board.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June 2015 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, UK
26 August 2015
Appendix 2: Interim results for the six months ended 30 June 2015 in
reportable US Dollars1
Unaudited illustrative condensed consolidated interim income statement for the six months ended 30 June 2015
$ million Six months ended 30 June 2015 Six months ended 30 June 2014 +/(-)% Year ended 31 December 2014
Billings 35,315.4 36,850.9 (4.2) 75,943.6
Revenue 8,900.8 9,135.0 (2.6) 18,956.0
Direct costs (1,217.8) (1,132.2) (7.6) (2,407.0)
Net sales 7,683.0 8,002.8 (4.0) 16,549.0
Operating costs (6,476.0) (7,111.7) 8.9 (14,097.4)
Operating profit 1,207.0 891.1 35.5 2,451.6
Share of results of associates 24.3 48.0 (49.4) 101.8
Profit before interest and taxation 1,231.3 939.1 31.1 2,553.4
Finance income 57.2 71.7 (20.2) 154.0
Finance costs (168.8) (222.3) 24.1 (430.9)
Revaluation of financial instruments (34.0) 36.8 - 82.1
Profit before taxation 1,085.7 825.3 31.6 2,358.6
Taxation (166.3) (159.2) (4.5) (487.2)
Profit for the period 919.4 666.1 38.0 1,871.4
Attributable to:
Equity holders of the parent 866.0 613.7 41.1 1,749.4
Non-controlling interests 53.4 52.4 (1.9) 122.0
919.4 666.1 38.0 1,871.4
Headline PBIT 1,021.5 1,042.8 (2.0) 2,739.8
Net sales margin 13.3% 13.0% 0.32 16.6%
Headline PBT 909.9 892.2 2.0 2,462.9
Reported earnings per share3
Basic earnings per ordinary share 66.9¢ 46.5¢ 43.9 133.8¢
Diluted earnings per ordinary share 65.8¢ 45.5¢ 44.6 130.8¢
Headline earnings per share3
Basic earnings per ordinary share 52.1¢ 50.2¢ 3.8 141.5¢
Diluted earnings per ordinary share 51.2¢ 49.0¢ 4.5 138.3¢
1 The unaudited consolidated income statement above is presented in reportable US Dollars for information purposes only and
has been prepared assuming the US Dollar is the reporting currency of the Group, whereby local currency results are
translated into US Dollars at actual monthly average exchange rates in the periods presented. Among other currencies, this
includes an average exchange rate of US$1.5239 to the pound for the period ended 30 June 2015 (period ended 30 June 2014:
US$1.6689; year ended 31 December 2014: US$1.6475).
2 Margin points.
3 The basis of the calculations of the Group's earnings per share and headline earnings per share are set out in note 9 of
Appendix 1.
Appendix 3: Interim results for the six months ended 30 June 2015 in
reportable Euro1
Unaudited illustrative condensed consolidated interim income statement for the six months ended 30 June 2015
E million Six months ended 30 June 2015 Six months ended 30 June 2014 +/(-)% Year ended 31 December 2014
Billings 31,679.3 26,871.7 17.9 57,366.4
Revenue 7,989.6 6,663.1 19.9 14,323.0
Direct costs (1,094.2) (825.9) (32.5) (1,820.8)
Net sales 6,895.4 5,837.2 18.1 12,502.2
Operating costs (5,804.9) (5,187.6) (11.9) (10,616.9)
Operating profit 1,090.5 649.6 67.9 1,885.3
Share of results of associates 21.8 35.1 (37.9) 77.2
Profit before interest and taxation 1,112.3 684.7 62.5 1,962.5
Finance income 51.6 52.4 (1.5) 117.9
Finance costs (151.7) (162.1) 6.4 (325.7)
Revaluation of financial instruments (30.3) 27.0 - 63.8
Profit before taxation 981.9 602.0 63.1 1,818.5
Taxation (149.2) (116.5) (28.1) (376.7)
Profit for the period 832.7 485.5 71.5 1,441.8
Attributable to:
Equity holders of the parent 784.8 447.2 75.5 1,349.3
Non-controlling interests 47.9 38.3 (25.1) 92.5
832.7 485.5 71.5 1,441.8
Headline PBIT 922.3 760.1 21.3 2,099.8
Net sales margin 13.4% 13.0% 0.42 16.8%
Headline PBT 822.2 650.4
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