REG - WPP PLC - 2024 Preliminary Results
27/02/2025 07:15
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RNS Number : 6199Y WPP PLC 27 February 2025
27 February 2025
2024 Preliminary Results
Strategic progress driving stronger margin and improved cash conversion,
despite top line pressures
Key figures (£m) 2024 +/(-) % reported(1) +/(-) % 2023
LFL(2)
Revenue 14,741 (0.7) 2.3 14,845
Revenue less pass-through costs 11,359 (4.2) (1.0) 11,860
Reported:
Operating profit 1,325 149.5 531
Operating profit margin(3) 9.0% 3.6%
Profit before tax 1,031 198.0 346
Diluted EPS (p) 49.4 389.1 10.1
Dividends per share (p) 39.4* - 39.4
Headline(4):
Operating profit 1,707 (2.5) 2.0 1,750
Operating profit margin 15.0% 0.2pt 0.4pt 14.8%
Diluted EPS (p) 88.3 (5.9) 0.1 93.8
*including proposed final dividend.
Full year and Q4 financial highlights
• FY reported revenue -0.7%, LFL revenue +2.3%. FY revenue less
pass-through costs -4.2%, LFL revenue less pass-through costs -1.0%
• Q4 LFL revenue less pass-through costs -2.3% with growth in Western
Continental Europe +1.4% offset by declines in North America -1.4%, UK -5.1%
and Rest of World -4.8%, including -21.2% in China
• Global Integrated Agencies FY LFL revenue less pass-through costs
-0.8% (Q4: -2.2%): GroupM, our media planning and buying business, +2.7% (Q4:
+2.4%), offset by -3.9% in other Global Integrated Agencies (Q4: -6.5%)
• FY headline operating profit £1,707m. Headline operating margin
of 15.0% (2023: 14.8%) a 0.4pt LFL improvement reflecting structural cost
savings of £85m from Burson, GroupM and VML initiatives; disciplined cost
control and continued investment in our AI and data offer; with a 0.2pt FX
drag. FY reported operating profit £1,325m up 149.5% primarily reflecting
lower amortisation charges and higher gains on disposals
• Adjusted operating cash flow increased to £1,460m (2023: £1,280m)
and adjusted free cash flow rose to £738m (2023: £637m) benefiting from
strong working capital management
• Adjusted net debt at 31 December 2024 £1.7bn down £0.8bn
year-on-year
• Final dividend of 24.4p proposed (2023: 24.4p)
Delivering on strategic priorities
• Simpler client-facing structure: six agency networks represent
c92%(5) of WPP; more integrated offer across creative, production, commerce
and media; improving new business performance in the second half of 2024
• WPP Open: AI, data and technology increasingly central to the
way we serve our clients; critical to new business wins including Amazon,
J&J, Kimberly-Clark and Unilever; increasing annual investment to £300m
(from £250m)
• More efficient operations: stronger headline operating margin,
cash conversion and balance sheet
Focus and outlook for 2025
• Lead through AI, data and technology: Increase our investment in
WPP Open to keep it at the forefront of AI and further deploy it across the
business and our clients
• Accelerate growth through the power of creative transformation:
Drive transformation across our clients with an increasingly integrated offer
across creative, production, commerce and media
• Build world-class, market-leading brands: Improve the competitiveness
of our media offer, globally, with a focus on the US
• Execute efficiently to drive financial returns: Increase our
operational efficiency and optimise our investment allocation
• 2025 guidance: LFL revenue less pass-through costs of flat to -2%
with performance improving in the second half, and headline operating profit
margin expected to be around flat (excluding the impact of FX)
Mark Read, Chief Executive Officer of WPP, said:
"We achieved significant progress against our strategy in 2024 with the
creation of VML, Burson and the simplification of GroupM - some 70% of our
business. We sold our stake in FGS Global to create significant value for
shareholders. And we increased our margin, while stepping up our investment in
AI through WPP Open, which is now used by 33,000(6) people across WPP.
"The top line was lower, however, with Q4 impacted by weaker client
discretionary spend. We did see growth from our top 25 clients of 2.0% and an
improving new business performance in the second half of the year with wins
from Amazon, J&J, Kimberly-Clark and Unilever reflecting the strength of
our integrated offer.
"The actions we are taking across WPP will strengthen our existing client
relationships and drive our new business results. We expect some improvement
in the performance of our integrated creative agencies in the year ahead. At
the same time, we have comprehensive efforts underway to improve our
competitive positioning through new leadership at GroupM, with further
investment in AI, data and proprietary media.
"Though we remain cautious given the overall macro environment, we are
confident in our medium-term targets and believe our focus on innovation, a
simpler client-facing offer and operational excellence will support our growth
and deliver greater value for our shareholders."
"WPP's 2024 Preliminary Results announcement has been submitted in full
unedited text to the Financial Conduct Authority's National Storage Mechanism
and will be available shortly for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
The Report is also available at
http://www.rns-pdf.londonstockexchange.com/rns/6199Y_1-2025-2-26.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/6199Y_1-2025-2-26.pdf) and
on the WPP investor relations website https://www.wpp.com/en/investors
(https://www.wpp.com/en/investors) ."
This announcement contains information that qualifies or may qualify as inside
information. The person responsible for arranging the release of this
announcement on behalf of WPP plc is Balbir Kelly-Bisla, Company Secretary
For further information:
Media Investors and analysts
Chris Wade +44 20 7282 4600 Thomas Singlehurst, CFA +44 7876 431922
Anthony Hamilton +44 7464 532903
Richard Oldworth, +44 7710 130 634 Caitlin Holt +44 7392 280178
Burson Buchanan +44 20 7466 5000
press@wpp.com irteam@wpp.com
wpp.com/investors
(1.) Percentage change in reported sterling.
(2.) Like-for-like. LFL comparisons are calculated as follows: current year,
constant currency actual results (which include acquisitions from the relevant
date of completion) are compared with prior year, constant currency actual
results, adjusted to include the results of acquisitions and disposals for the
commensurate period in the prior year.
(3.) Reported operating profit divided by revenue (including pass-through
costs).
(4.) In this press release not all of the figures and ratios used are readily
available from the unaudited results included in Appendix 1. Management
believes these non-GAAP measures, including constant currency and
like-for-like growth, revenue less pass-through costs and headline profit
measures, are both useful and necessary to better understand the Group's
results. Details of how these have been arrived at are shown in Appendix 4.
(5.) 2024 pro forma for the disposal of FGS Global.
(6.) Monthly active users in December 2024.
Strategic progress
We are one year into executing on the strategy we outlined in January 2024 -
'Innovating to Lead' - and have made significant progress on each of the four
strategic pillars: leading through AI, data and technology, accelerating
growth through the power of creative transformation, building world-class
brands and executing efficiently to drive financial returns.
Lead through AI, data and technology
The past year in AI has been marked by significant advancements in AI
technology with increasing capabilities, greater speed and lower cost. This
acceleration in the pace of innovation is broadening the capabilities that we
can deploy through WPP Open.
These developments reinforce our conviction that AI will be the single most
transformational development in our industry since the internet. It will
impact every element of how we work, freeing up our creative people to do
better work, increasing the efficiency of our production teams to produce much
greater volumes of high-quality work and empowering our media teams to develop
and deploy more effective plans in a fraction of the time.
To deliver on this potential, we are accelerating our investment in WPP Open,
our AI-powered marketing operating system, increasing cash investment to
£300m in 2025 from £250m in 2024. We are making this investment to keep WPP
Open at the forefront of our industry, enabling us to use AI more effectively
in our work and delivering an end-to-end marketing platform that gets from
ideas to results more efficiently and quickly.
WPP Open is being broadly adopted by our people and our clients are seeing
tangible benefits. It is enabling our teams to generate insights more rapidly,
move seamlessly from idea to near-finished executions and test these ideas on
synthetic audiences. These are just some of the capabilities built into WPP
Open in the past year and why 33,000 of our people are now active users.
As our people are increasingly embedding AI in the way that we work this is
resulting in increasing client adoption with major clients including Google,
IBM, L'Oréal, LVMH, Nestlé and The Coca-Cola Company seeing benefits both in
how we work and the effectiveness of what we do together.
WPP Open Creative Studio has been rolling out a new user interface, Canvas,
which is augmenting our strategic and creative teams with AI capabilities.
Canvas empowers teams to leverage data insights and WPP's knowledge to
generate effective campaign ideas, such as strategies to overcome audience
barriers identified by AI models, which can then be instantly visualised for
clients as storyboards and finished work.
WPP Open Media Studio continued its rollout to clients and was central to our
successful pitch at Amazon in 2024. Media Studio provides an end-to-end media
workflow solution accessing GroupM's scale and Choreograph data and
technology.
GroupM and Choreograph's approach to data leverages AI-powered federated
learning. Federated learning uses AI agents operating across client, WPP and
third-party data sources to create new knowledge about customers. Establishing
this data connectivity in place of a dependence on legacy ID-first solutions
and lookalike models maintains data integrity and provides superior insight.
Accelerate growth through the power of creative transformation
We continue to see growing demand from clients for more integrated marketing
solutions and WPP is moving quickly to be even more effective in bringing
together our many capabilities around the world in teams to service clients.
The reason for this is clear. Managing multiple agency partners is complex,
leads to fragmentation of marketing efforts and smaller, more integrated teams
promise greater agility and speed. In our view, AI will only accelerate this
trend as clients face the challenge that complex agency rosters, spread across
multiple companies and independent agencies, are unable to deliver the
transformation required. The simplest analogy is that procuring marketing
services is becoming more like procuring technology services, requiring
greater strategic focus, technology due diligence and attention to long-term
partnerships.
This trend has been reflected in the growth of WPP's top 25 clients in 2024
(+2.0%) and this demand for integration also aligns with WPP's position. We
have a very well-balanced business with strong geographic positions in
critical markets combined with strength in creativity, production commerce and
influencer. When powered by AI, data and technology and a world-leading global
media platform, this forms an unparalleled integrated offer to clients.
As well as the relatively stronger growth we delivered across WPP's largest
clients in 2024, which included expanded scope for many top clients, the
quality of our offer is evidenced by recent wins including creative
assignments for Kimberly-Clark, media assignments for Amazon and Johnson &
Johnson, and creative and commerce assignments for Unilever. 2024 net new
billings were $4.5bn (2023: $4.5bn).
WPP's commitment to creative excellence continues to garner industry
recognition, with the company being named 'Creative Company of the Year' for
2024 at the Cannes Lions International Festival of Creativity. Ogilvy took
home 'Creative Network of the Year' at Cannes and The Coca-Cola Company, whose
global marketing partner is WPP Open X, was named 'Creative Brand of the Year'
for the first time in its history. These awards underscore WPP's ability to
deliver innovative, integrated solutions that not only meet but exceed client
expectations, driving both growth and expansion from across its client base.
Build world-class, market-leading brands
In 2024, we further simplified our structure making it easier for clients to
access our talent and allowing us to build a more efficient operating model.
WPP now has six powerful agency networks - GroupM, VML, Ogilvy, AKQA, Hogarth
and Burson - which collectively account for around 92%of revenue less
pass-through costs.
2025 will be the first full year of operation for our two newly created
agencies: Burson, a leading global strategic communications agency formed
through the consolidation of BCW and Hill & Knowlton, and VML, the world's
largest integrated creative agency, bringing together VMLY&R and Wunderman
Thompson. The swift completion of these mergers in 2024 by the teams at VML
and Burson has strategically aligned our brands for continued progress,
leveraging their enhanced capabilities and global reach.
Brian Lesser joined as the Global CEO of GroupM, our media planning and buying
business, in September 2024, and is focused on improving the competitiveness
of our media offer, globally and in the US, leveraging WPP Open Media Studio
and Choreograph.
Under Brian's leadership, GroupM will bring this differentiated strategy
together with next-generation proprietary trading media products, WPP Open
Media Studio and the power of WPP's broader integrated offer in creative,
production and commerce to drive media effectiveness and performance for our
clients.
Execute efficiently to drive financial returns
Integral to our strategy over the past year has been the imperative to execute
more efficiently. Investing in AI through WPP Open will allow us to work
faster and with more discipline. Integrating our offer for clients means that
we can streamline the marketing process and take out duplicate roles. As a
simpler company, with fewer brands, we are able to maximise our investments in
client-facing roles and take out unnecessary overhead.
As well as our success in delivering, at an accelerated pace, the structural
cost savings relating to the agency mergers and GroupM simplification, we
continue to make good progress in our back-office efficiency programme across
enterprise IT, finance, procurement and real estate. This success is reflected
in the improved margin and cash conversion in 2024.
In enterprise IT, we successfully rolled out Maconomy ERP in certain markets
in EMEA and South America during 2024 and will go live with Workday ERP in VML
and Ogilvy in the UK in the first half of 2025.
We have a targeted programme of work around our enterprise IT to continue to
modernise our estate, drive efficiencies and protect our business and are
making good progress with costs reducing year-on-year in 2024. Our cloud
migration continued to deliver benefits as we migrate workloads to the cloud
and decommission legacy equipment and capacity.
Across IT and Finance, we continue to optimise our finance shared service
centres, offshoring more back-office processes and driving further automation
and efficiencies in the work we do.
WPP is also investing in Global Delivery Centres (GDCs) with a capability hub
headquartered in India, accessible to all WPP agency teams around the world.
Our GDCs play a critical role in WPP's business transformation and
simplification strategy with capabilities from hyper-personalisation and
composable commerce to cloud modernisation and product engineering. Prashant
Mehta joined WPP in 2024 from Accenture as Managing Director to lead the GDCs.
Our category-led procurement model continues to consolidate spend by
sub-category to drive further savings. We are digitalising our
source-to-contract processes, enabling further automation as we consolidate
our ERP landscape.
In real estate, our ongoing campus programme and consolidation of leases
continues to deliver benefits. Seven new campuses opened during the year,
including WPP's third London campus at One Southwark Bridge and our third
campus in India, located in Chennai.
During 2024 we made further progress on the simplification of our specialist
agencies with the disposal of our stake in Two Circles, the integration of BSG
with Burson and other actions to rationalise and improve the performance of
the tail of smaller agencies within WPP.
Purpose and ESG
WPP's purpose is to use the power of creativity to build better futures for
our people, planet, clients and communities. Read more on the ways WPP is
working to deliver against its purpose in our 2023 Sustainability Report
(https://www.wpp.com/en/sustainability/sustainability-report-2023) .
Full year overview
Revenue was £14.7bn, down 0.7% from £14.8bn in 2023, and up 2.3%
like-for-like. Revenue less pass-through costs was £11.4bn, down 4.2% from
£11.9bn in 2023, and down 1.0% like-for-like.
Q4 2024 % % % %
£m reported M&A FX LFL
Revenue 3,956 (3.9) (0.3) (3.7) 0.1
Revenue less pass-through costs 2,994 (6.7) (0.8) (3.6) (2.3)
2024 % % % %
£m reported M&A FX LFL
Revenue 14,741 (0.7) 0.2 (3.2) 2.3
Revenue less pass-through costs 11,359 (4.2) (0.1) (3.1) (1.0)
Segmental review
Business segments - revenue less pass-through costs
% LFL +/(-) Global Public Relations Specialist Agencies
Integrated Agencies
Q4 2024 (2.2) (5.3) (0.4)
2024 (0.8) (1.7) (2.3)
Global Integrated Agencies: GroupM, our media planning and buying business,
grew 2.7% in 2024 (2023: 4.9%), benefiting from continued client investment in
media, partially offset by the impact of historical client losses and a more
challenging environment in China. GroupM saw an improved new business
performance in the second half of the year with the Amazon and J&J wins
and an important Unilever retention, despite some losses, including Volvo.
GroupM's growth was offset by a 3.9% LFL decline at other Global Integrated
Agencies. Mid-single digit growth in Hogarth in 2024 was offset by weaker
performance across integrated creative agencies, which included the impact of
the 2023 loss of assignments with a large healthcare client and a challenging
trading environment in China. AKQA experienced a low double digit decline in
revenue less pass-through costs as spend on project-based work remained weak
throughout the year. Other Global Integrated Agencies declined 6.5% in Q4
reflecting the continuation of those factors and weaker client discretionary
spend than is typically seen in the final quarter, together with the lap of a
particularly strong quarter for variable client incentives in Q4 2023.
Public Relations: Burson, created in June from the merger of BCW and Hill
& Knowlton, made good progress with its integration and launched
additional AI-powered tools.
During Q4, Burson declined high single digits as the business continued to be
impacted by the 2023 loss of assignments with a large healthcare client and a
more challenging environment for client discretionary spending. This was
offset by continued strong growth at FGS Global, which is reflected up to
early December 2024 when its disposal to KKR completed.
Specialist Agencies: CMI Media Group, our specialist healthcare media planning
and buying agency, grew strongly, offset by declines at Landor and Design
Bridge and Partners. Our smaller specialist agencies continued to be affected
by more cautious client spending, including delays in project-based work.
Regional segments - revenue less pass-through costs
% LFL +/(-) North America United Kingdom Western Continental Europe Rest of World
Q4 2024 (1.4) (5.1) 1.4 (4.8)
2024 (0.7) (2.7) 1.7 (2.6)
North America declined by 0.7% in 2024 with good growth in automotive, TME and
financial services client spending, offset by lower revenues in healthcare,
due to a 2023 client loss, and a tough comparison for CPG in 2023. Revenues
from technology clients continued to stabilise in the second half with good
growth in North America in Q4.
The United Kingdom declined in 2024 reflecting a strong comparison (2023:
+5.6%) and the impact of slower client spending in Q4 with further weakness in
project-based work across creative and specialist agencies exacerbated by an
uncertain macro outlook, only partially offset by growth in GroupM and Ogilvy.
In Western Continental Europe, France, Spain and Italy grew during 2024. Our
largest market, Germany, declined 1.0% reflecting macro pressures on client
spending in automotive and travel & leisure sectors, but saw stronger
performance in Q4, growing 4.0%, lapping a softer comparison (Q4 2023: -5.3%),
benefiting from growth in spend at financial services clients and a good
overall performance at GroupM.
The Rest of World declined 2.6%. India grew 2.8% with a decline in Q4 lapping
a tough comparison (Q4 2023: 22.0%) influenced by the timing of sporting
events. This was offset by China which declined 20.8% on client assignment
losses and persistent macroeconomic pressures impacting across our agencies.
The new management team in China is focused on stabilising performance and
evolving our offer to bring together the best of our talent and capabilities
and build on our leading market position.
We expect performance to continue to be challenging in China in the first half
of 2025, with some improvement later in the year as we begin to lap easier
comparisons from the second quarter onwards. We remain confident the actions
we are taking in China will strengthen our business over the medium-term in
what is an important strategic market for WPP.
Top five markets - revenue less pass-through costs
% LFL +/(-) USA UK Germany China India
Q4 2024 (1.4) (5.1) 4.0 (21.2) (5.4)
2024 (0.6) (2.7) (1.0) (20.8) 2.8
Client sector - revenue less pass-through costs
Q4 2024 2024 2024
% LFL +/(-) % LFL +/(-) % share, revenue less pass-through costs(†)
CPG (0.3) 5.1 28.4
Tech & Digital Services 2.5 (1.6) 17.3
Healthcare & Pharma (3.1) (7.2) 11.0
Automotive (3.3) 1.3 10.4
Retail (5.8) (7.8) 8.8
Telecom, Media & Entertainment 4.6 3.7 6.9
Financial Services 5.8 3.1 6.3
Other (13.3) (14.8) 4.6
Travel & Leisure (8.5) 1.7 3.6
Government, Public Sector & Non-profit 2.9 (1.4) 2.7
(†.) Proportion of WPP group revenue less pass-through costs in 2024; table
made up of clients representing 79% of WPP total revenue less pass-through
costs.
Financial results
Unaudited headline income statement(†):
£ million 2024 2023 +/(-) % reported +/(-) % LFL
Revenue 14,741 14,845 (0.7) 2.3
Revenue less pass-through costs 11,359 11,860 (4.2) (1.0)
Operating profit 1,707 1,750 (2.5) 2.0
Operating profit margin % 15.0 % 14.8 % 0.2pt* 0.4
Earnings from associates 40 37 8.1
PBIT 1,747 1,787 (2.2)
Net finance costs (280) (262) (6.9)
Profit before taxation 1,467 1,525 (3.8)
Tax charge (411) (412) 0.2
Profit after taxation 1,056 1,113 (5.1)
Non-controlling interests (87) (87) 0.0
Profit attributable to shareholders 969 1,026 (5.6)
Diluted EPS 88.3p 93.8p (5.9) 0.1
Reported:
Revenue 14,741 14,845 (0.7)
Operating profit 1,325 531 149.5
Profit before taxation 1,031 346 198.0
Diluted EPS 49.4p 10.1p 389.1
*margin points
(†)Non-GAAP measures in this table are reconciled in Appendix 4.
Operating profit
Headline operating profit was £1,707m (2023: £1,750m), with the year-on-year
decline reflecting lower revenue less pass-through costs and investment in WPP
Open, AI and data partially offset by continued cost discipline and structural
cost savings. Headline operating profit margin was 15.0% (2023: 14.8%),
equivalent to an improvement of 0.4 points on a constant currency basis.
Total headline operating costs were down 4.5%, to £9,652m (2023: £10,110m).
Headline staff costs (excluding incentives) of £7,398m were down 4.5%
compared to the prior period (2023: £7,750m), reflecting wage inflation
offset by lower headcount, as a result of the actions associated with our
restructuring initiatives and our swift response to softer top-line
performance in certain markets. Incentives of £363m were down 6.2% compared
to the prior period (2023: £387m). As a percentage of revenue less
pass-though costs, overall incentives were flat year on year at 3.2%.
Headline establishment costs of £472m were down 8.5% compared to the prior
period (2023: £516m) driven by benefits from the campus programme and
consolidation of leases. IT costs of £684m (2023: £698m) were down 2.0%,
reflecting our ongoing focus on driving efficiencies to mitigate inflation.
Personal costs of £209m (2023: £223m) were down 6.3% driven by savings in
travel and entertainment, and other operating expenses of £526m (2023:
£536m) were down 1.9%.
On a like-for-like basis, the average number of people in the Group in 2024
was 111,281 compared to 114,732 in 2023. The total number of people as at 31
December 2024 was 108,044 compared to 114,173 as at 31 December 2023.
Headline EBITDA (including IFRS 16 depreciation) for the period was down by
2.1% to £1,935m (2023: £1,977m).
Reported operating profit was £1,325m (2023: £531m) with the increase
primarily due to lower amortisation charges, as 2023 included accelerated
brand amortisation charges following the creation of VML, lower
property-related restructuring costs and higher gains on disposal of
subsidiaries. Reported operating profit included goodwill impairment charges
of £237m (2023: £63m), primarily relating to AKQA, and legal provision
charges of £68m (2023: £11m credit).
Restructuring and transformation costs included in reported operating profit
were £251m (2023: £196m). Restructuring and transformation costs in 2024
include £90m (2023: £113m) in relation to the Group's ERP and IT
transformation program and £144m (2023: £73m) relating to the continuing
transformation program including the creation of VML and Burson and
simplification of GroupM.
Net finance costs
Headline net finance costs of £280m were up 6.9% compared to the prior period
(2023: £262m), primarily due to the impact of refinancing bonds at higher
rates.
Reported net finance costs were £330m (2023: £255m), including net charges
of £50m (2023: net gains £7m) relating to the revaluation and retranslation
of financial instruments.
Tax
The headline effective tax rate (based on headline profit before tax) was
28.0% (2023: 27.0%). The increase in the headline effective tax rate is driven
by changes in tax rates or tax bases in the markets in which we operate. Given
the Group's geographic mix of profits and the changing international tax
environment, the tax rate is expected to increase over the next few years.
The reported effective tax rate was 39.0% (2023: 43.1%). The reported
effective tax rate is higher than the headline effective tax rate due to
non-deductible goodwill impairment charges.
Earnings per share ("EPS") and dividend
Headline diluted EPS was 88.3p (2023: 93.8p), a decrease of 5.9% due to lower
headline operating profit, higher headline net finance costs and a higher
headline effective tax rate.
Reported diluted EPS was 49.4p (2023: 10.1p), an increase of 389% due to
higher reported operating profit.
The Board is proposing a final dividend for 2024 of 24.4 pence per share,
which together with the interim dividend paid in November 2024 gives a
full-year dividend of 39.4 pence per share. The record date for the final
dividend is 6 June 2025, and the dividend will be payable on 4 July 2025.
Unaudited headline cash flow statement(†)
Twelve months ended (£ million) 31 December 2024 31 December 2023
Headline operating profit 1,707 1,750
Headline earnings from associates 40 37
Depreciation of property, plant and equipment 156 165
Amortisation of other intangibles 32 25
Depreciation of right-of-use assets 213 257
Headline EBITDA 2,148 2,234
Less: headline earnings from associates (40) (37)
Repayment of lease liabilities and related interest (377) (362)
Non-cash compensation 109 140
Non-headline cash items (including restructuring cost) (261) (218)
Capex (236) (217)
Working capital 117 (260)
Adjusted operating cash flow 1,460 1,280
% conversion of Headline operating profit 86 % 73 %
Dividends (to minorities)/ from associates (36) (58)
Contingent consideration liability payments (97) (31)
Net interest (197) (159)
Cash tax (392) (395)
Adjusted free cash flow 738 637
Disposal proceeds 667 122
Net initial acquisition payments (153) (280)
Dividends (425) (423)
Share purchases (82) (54)
Adjusted net cash flow 745 2
(†)Non-GAAP measures in this table are reconciled in Appendix 4.
Adjusted operating cash outflow was £1,460m (2023: £1,280m). The main
drivers of the larger cash inflow year on year was a working capital inflow of
£117m compared with an outflow of £260m in the prior year, partially offset
by an increase in non-headline cash items to £261m (2023: £218m), mainly
driven by costs related to the previously announced restructuring plan,
including the creation of VML and Burson and the simplification of GroupM.
Reported net cash from operating activities (see Note 6) increased to £1,408m
(2023: £1,238m).
Cash restructuring and transformation costs of £275m, included in
non-headline cash items are slightly lower than the guidance given in January
2024 and relate to actions shared at the January Capital Markets Day,
primarily the structural cost saving plan relating to the creation of VML and
Burson and the simplification of GroupM (£135m). These structural savings are
to deliver annualised net cost savings of c.£125m in 2025, with £85m of that
saving achieved in 2024 (ahead of the original plan of 40-50%).
Adjusted free cash flow was £738m (2023: £637m) with the year on year
increase reflecting higher adjusted operating cash flow and contingent
consideration liability payments and higher cash interest and taxes, offset by
lower dividends to minorities. Adjusted net cash flow of £745m was higher
than the prior period (2023: £2m), primarily due to higher disposal proceeds
and lower net acquisition payments.
A summary of the Group's unaudited cash flow statement and notes for the years
to 31 December 2024 is provided in Appendix 1.
Unaudited balance sheet
As at 31 December 2024, the Group had total equity of £3,734m (31 December
2023: £3,833m).
Non-current assets decreased by £831m to £11,848m (31 December 2023:
£12,679m), primarily driven by a decrease in goodwill of £779m. Lower
goodwill is primarily due to goodwill derecognised on disposal of FGS Global
of £448m and goodwill impairment charges of £237m.
Current assets of £13,661m decreased by £283m (31 December 2023: £13,944m).
The decrease is principally driven by lower trade and other receivables,
(decrease of £738m), partially offset by higher cash and cash equivalents
(increase of £420m).
Current liabilities of £15,516m decreased by £789m (31 December 2023:
£16,305m), primarily due to lower borrowings and lower trade and other
payables. Lower borrowings is predominantly due to $750m in bonds that were
repaid in September 2024, partially offset by an increase as a result of the
reclassification from current liabilities of €500m of bonds due within the
next 12 months.
The decrease in both current trade and other receivables and trade and other
payables is primarily due to client activity and timing of payments.
Non-current liabilities decreased by £226m, to £6,259m (31 December 2023:
£6,485m). This reduction primarily reflects lower long-term lease liabilities
and non-current payables.
Recognised within total equity, other comprehensive loss of £62m (2023:
£329m loss) for the year includes a £72m loss (2023: £427m loss) for
foreign exchange differences on translation of foreign operations, and a £3m
loss (2023: gain of £108m) on the Group's net investment hedges. Other equity
movements include the net decrease in the movement in non-controlling interest
of £218m (2023: increase of £12m), in part from the derecognition of FGS
Global non-controlling interest.
A summary of the Group's unaudited balance sheet and selected notes as at 31
December 2024 is provided in Appendix 1.
Adjusted net debt
As at 31 December 2024, the Group had cash and cash equivalents of £2.6bn (31
December 2023: £2.2bn) and borrowings of £4.3bn (31 December 2023: £4.7bn).
The Group has current liquidity of £4.5bn (31 December 2023: £3.8bn),
comprising cash and cash equivalents and bank overdrafts, and undrawn credit
facilities.
As at 31 December 2024 adjusted net debt was £1.7bn, against £2.5bn as at 31
December 2023, down £0.8bn reflecting free cash flow generation and disposal
proceeds, including proceeds from the disposal of FGS Global completed in
December 2024. Average adjusted net debt in 2024 was £3.5bn (31 December
2023: £3.6bn).
The average adjusted net debt to headline EBITDA ratio in the 12 months ended
31 December 2024 is 1.80x (12 months ended 31 December 2023: 1.83x).
In February 2024, we refinanced our five-year Revolving Credit Facility of
$2.5bn, with the new facility running for five years, with two one-year
extension options maturing in February 2029 (excluding options) and with no
financial covenants. The first of the two-year extension option was triggered
in January 2025, effective from February 2025 to extend the maturity to
February 2030.
In March 2024, we refinanced $750m of 3.75% bonds due September 2024 and
€500m of 1.375% bonds due March 2025 as planned, issuing €600m of 3.625%
bonds due September 2029 and €650m of 4.0% bonds due September 2033.
In December 2024, we repurchased €200m of 4.125% bonds due May 2028, €249
million of 3.625% bonds due September 2029 and €150m of 4% bonds due
September 2033.
Our bond portfolio as at 31 December 2024 had an average maturity of 6.3 years
(31 December 2023: 6.2 years).
Outlook
Our guidance for 2025 is as follows:
Like-for-like revenue less pass-through costs growth of flat to -2%, with
performance improving in H2.
Headline operating margin expected to be around flat (excluding the impact of
FX)
Other 2025 financial indications:
• Mergers and acquisitions will reduce revenue less pass-through costs
by around 3.0 points primarily due to the disposal of FGS Global, partially
offset by anticipated M&A
• FX impact: current rates (at 18 February 2025) imply a c.0.1% drag
on FY 2025 revenue less pass-through costs, with no meaningful impact expected
on FY 2025 headline operating margin
• Headline earnings from associates around £40m
• Non-controlling interests around £65m
• Headline net finance costs of around £280m
• Effective tax rate (measured as headline tax as a % of headline
profit before tax) of around 29%. Cash taxes will include tax in relation to
the FGS Global disposal
• Capex of around £250m
• Cash restructuring costs of around £110m
• Adjusted operating cash flow before working capital of around
£1.4bn (2024: £1.3bn)
Medium-term targets
In January 2024 we presented updated medium-term financial framework including
the following three targets:
• 3%+ LFL growth in revenue less pass-through costs
• 16-17% headline operating profit margin
• Adjusted operating cash flow conversion of 85%+
Business sector and regional analysis
Business sector(7)
Revenue analysis
£ million 2024 2023 +/(-) % reported +/(-) % LFL
Global Int. Agencies 12,562 12,532 0.2 3.0
Public Relations 1,156 1,262 (8.4) (2.6)
Specialist Agencies 1,023 1,051 (2.7) (0.6)
Total Group 14,741 14,845 (0.7) 2.3
Revenue less pass-through costs analysis
£ million 2024 2023 +/(-) % reported +/(-) % LFL
Global Int. Agencies 9,384 9,751 (3.8) (0.8)
Public Relations 1,089 1,180 (7.7) (1.7)
Specialist Agencies 886 929 (4.6) (2.3)
Total Group 11,359 11,860 (4.2) (1.0)
Headline operating profit analysis
£ million 2024 % margin* 2023 % margin*
Global Int. Agencies 1,482 15.8 1,480 15.2
Public Relations 166 15.2 191 16.2
Specialist Agencies 59 6.7 79 8.5
Total Group 1,707 15.0 1,750 14.8
* Headline operating profit as a percentage of revenue less pass-through
costs.
Regional
Revenue analysis
£ million 2024 2023 +/(-) % reported +/(-) % LFL
N. America 5,567 5,528 0.7 2.9
United Kingdom 2,185 2,155 1.4 0.9
W Cont. Europe 3,013 3,037 (0.8) 2.7
AP, LA, AME, CEE(8) 3,976 4,125 (3.6) 1.8
Total Group 14,741 14,845 (0.7) 2.3
(7.) Prior year figures have been re-presented to reflect the reallocation of
a number of businesses between Global Integrated Agencies and Specialist
Agencies. The impact of the re-presentation is not material.
(8. ) Asia Pacific, Latin America, Africa & Middle East and Central &
Eastern Europe.
Revenue less pass-through costs analysis
£ million 2024 2023 +/(-) % reported +/(-) % LFL
N. America 4,394 4,556 (3.6) (0.7)
United Kingdom 1,588 1,626 (2.3) (2.7)
W Cont. Europe 2,375 2,411 (1.5) 1.7
AP, LA, AME, CEE 3,002 3,267 (8.1) (2.6)
Total Group 11,359 11,860 (4.2) (1.0)
Headline operating profit analysis
£ million 2024 % margin* 2023 % margin*
N. America 825 18.8 834 18.3
United Kingdom 237 14.9 215 13.2
W Cont. Europe 259 10.9 258 10.7
AP, LA, AME, CEE 386 12.9 443 13.6
Total Group 1,707 15.0 1,750 14.8
* Headline operating profit as a percentage of revenue less pass-through
costs.
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