UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_____________________
FORM
6-K
____________________
Report
of Foreign Private Issuer
Pursuant
to Rule 13a-16 or 15d-16
under
the Securities Exchange Act of 1934
For
the Month of December 2020
Commission
File Number: 001-38303
______________________
WPP
plc
(Translation
of registrant's name into English)
________________________
Sea
Containers, 18 Upper Ground
London,
United Kingdom SE1 9GL
(Address
of principal executive offices)
_________________________
Indicate by check
mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F:
Form 20-F
X
Form
40-F ___
Indicate by check
mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): ___
Note: Regulation S-T Rule
101(b)(1) only permits the submission in paper of a Form 6-K if
submitted solely to provide an attached annual report to security
holders.
Indicate by check
mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): ___
Note: Regulation S-T Rule
101(b)(7) only permits the submission in paper of a Form 6-K if
submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws
of the jurisdiction in which the registrant is incorporated,
domiciled or legally organized (the registrant’s “home
country”), or under the rules of the home country exchange on
which the registrant’s securities are traded, as long as the
report or other document is not a press release, is not required to
be and has not been distributed to the registrant’s security
holders, and, if discussing a material event, has already been the
subject of a Form 6-K submission or other Commission filing on
EDGAR.
Forward-Looking Statements
In
connection with the provisions of the Private Securities Litigation
Reform Act of 1995 (the “Reform Act”), WPP plc and its
subsidiaries (the “Company”) may include
forward-looking statements (as defined in the Reform Act) in oral
or written public statements issued by or on behalf of the Company.
These forward-looking statements may include, among other things,
plans, objectives, projections and anticipated future economic
performance based on assumptions and the like that are subject to
risks and uncertainties. As such, actual results or outcomes may
differ materially from those discussed in the forward-looking
statements. Important factors that may cause actual results to
differ include but are not limited to: the unanticipated loss of a
material client or key personnel, delays or reductions in client
advertising budgets, shifts in industry rates of compensation,
regulatory compliance costs or litigation, natural disasters or
acts of terrorism, the Company’s exposure to changes in the
values of major currencies other than the UK pound sterling
(because a substantial portion of its revenues are derived and
costs incurred outside of the United Kingdom) and the overall level
of economic activity in the Company’s major markets (which
varies depending on, among other things, regional, national and
international political and economic conditions and government
regulations in the world’s advertising markets). In addition,
you should consider the risks described in Item 3D, captioned
“Risk Factors” in the Company’s Form 20-F for the
year ended 31 December 2019, which could also cause actual results
to differ from forward-looking information. In light of these and
other uncertainties, the forward-looking statements included in the
oral or written public statements should not be regarded as a
representation by the Company that the Company’s plans and
objectives will be achieved.
The
Company undertakes no obligation to update or revise any such
forward-looking statements, whether as a result of new information,
future events or otherwise.
EXHIBIT INDEX
Exhibit No.
|
Description
|
1
|
Accelerating Growth dated 17 December 2020, prepared by WPP
plc.
|
17 December
2020
Accelerating Growth
WPP is hosting a virtual presentation for investors and analysts
which will provide an update on its strategy for growth, set out
opportunities for efficiency and reinvestment, outline its plans
for capital allocation and provide new medium-term financial
targets. The event will be webcast live from 1pm GMT today
at www.wpp.com/investors and
available for replay subsequently.
Strategic goals
■ Return core Communications
business to sustainable growth
■ Expand further into high-growth
areas of Commerce, Experience and Technology - from 25% of our
business today to 40% by 2025
■ Fund growth and improve
profitability through gross annual cost savings of £600
million by 2025, with approximately two-thirds reinvested in
talent, incentives and technology to drive
growth
■ Supplement growth through
targeted, scalable M&A of £200-400 million
annually
■ Invest capital expenditure of
£450-500 million per annum in 2021 and 2022 and £300-350
million per annum thereafter, in our campus programme, ERP systems
and shared services to deliver gross cost savings and
improved
business insight and talent
management
Medium-term targets
■ Recovery to 2019 revenue less
pass-through costs levels by 2022
■ 3-4% annual growth in revenue
less pass-through costs from 2023, including M&A benefit of
0.5-1.0% annually
■ 15.5-16.0% headline operating
margin in 2023
■ Double-digit headline EPS
growth over next three years
■ New dividend policy: intention
to grow annually with a pay-out ratio around 40% of headline
EPS
■ Average net debt/EBITDA
maintained in the range 1.5-1.75x
2020 and 2021 guidance
■ LFL revenue less pass-through
costs growth of -6.7% in the two months to
November
■ 2020 LFL revenue less
pass-through costs growth expected to be in line with year to date
performance of -8.4%
■ 2020 headline operating margin
expected to be 12.5-13.0%
■ 2020 year-end net debt expected
to be around £1.6 billion
■ 2020 dividend in line with new
policy
■ 2021 LFL revenue less
pass-through costs growth of mid-single-digits %, with headline
operating margin of 13.5-14.0%
■ Kantar share buyback programme
to resume in 2021
Mark Read, CEO of WPP, said:
"It has been two years since we set out our strategy
to return WPP to growth. Since then, we have made significant
progress, with stronger agency brands, new leadership, a simpler
structure and a strong balance sheet. We can see the results in our
industry-leading new business performance, with $5.6 billion won in
the first nine months including Alibaba, HSBC, Intel, Uber and
Unilever.
"The events of 2020 have only accelerated the structural changes in
our industry, from the expansion of digital channels to growing
demand for ecommerce solutions. The actions that we have taken have
positioned us well, and we are already working with 76 of our top
100 clients on ecommerce. There are significant new growth
opportunities for WPP as clients demand simple, integrated
solutions that combine creativity with technology and data
expertise. Clients need trusted partners more than ever to help
them transform and succeed.
"In partnership with our agency brands we are deepening and
accelerating the change already happening within WPP. We aim to
return our Communications business to sustainable growth and invest
further in the high-growth areas of Commerce, Experience and
Technology. We are converting our size into scale, making us more
effective and efficient as we share expertise across a simpler
company of stronger agency brands. £400 million of the
targeted £600 million savings will be used to fund investment
in the capabilities and technology that will drive future growth
for our people, our clients, our business and our
shareholders."
For further information:
Investors and analysts
Peregrine Riviere
} +44 7909 907193
Fran Butera (US)
} +1 914 484 1198
Media
Chris
Wade
} +44 20 7282 4600
Richard Oldworth,
+44 20 7466
5000
Buchanan Communications
+44 7710 130 634
wpp.com/investors
Progress since December 2018
WPP has made substantial progress since launching its new strategy
in December 2018. We now operate through fewer, stronger agency
brands, with the creation of the integrated agencies VMLY&R and
Wunderman Thompson. More recently we have announced the formation
of the AKQA Group with AKQA and Grey, and the creation of
VMLY&R Commerce through the combination with Geometry. These
new integrated agency models provide clients with simple solutions
not only in communications but also in experience, health,
ecommerce, data and technology. Under GroupM, our media business
leads its industry, winning a disproportionate share of this year's
new business reviews. The resilience of our public relations and
public affairs agencies has been clearly demonstrated in 2020.
Hogarth, our production agency, continues to innovate to provide
more data-driven and personalised content
solutions.
Together, WPP can provide clients with powerful solutions across
all their needs and the effectiveness of this offer is reflected in
our industry-leading new business performance with $5.6 billion of
new business won in the first nine months of the year. Our ability
to bring together creative, media, data, technology and public
relations was demonstrated most recently with the retention and
expansion of our relationship with Walgreens Boots
Alliance.
We are building a strong culture and attracting new talent. Many of
our major agencies have new leadership, from internal promotions
and external hires, who are working together as part of a WPP
Executive Committee. Most recently we appointed Andy Main to lead
Ogilvy. We have bolstered our creative talent around the
world, attracting some of the best people in our industry. We now
have around a third of our people co-located on 20 campuses around
the world, bringing our agencies closer together.
We have significantly simplified WPP and reduced debt, putting the
company in a solid financial position to navigate 2020. We have
sold more than 60 businesses and investments, raising over
£3.5 billion; merged 100 small, local offices; and closed a
further 80 business units. Our net debt has more than halved from
£4.9 billion at September 2018 to £2.3 billion at
September 2020 and is expected to end the year at around £1.6
billion.
This strategic progress is becoming evident in our results. Our
relative performance has consistently improved over recent
quarters, and both globally and in the US we have outperformed the
average of our global marketing services peers for the last two
quarters; we are leading in new business in 2020; and our client
satisfaction scores continue to improve, with a clear acceleration
during the pandemic as clients placed additional value on the work
that we do for them. Despite the challenges of the pandemic, we
grew our relationships with 15 of our top 30 clients in the third
quarter of the year.
Addressable market and WPP's growth agenda
The profound changes to consumer behaviour brought about by
COVID-19 have only accelerated the need for companies to invest in
digital technologies, ecommerce and new customer experiences. We
are strongly positioned to benefit from this acceleration. WPP
provides services in a global market with addressable fee income of
over $300 billion in 2019. Just over half of the addressable market
is in our core Communications services of media, creative and PR,
which are forecast to grow at around 1% annually 2021-2024. The
balance of spend is in higher-growth areas of Experience, Commerce
and Technology, where client spend is forecast to grow at around
10% annually over the same period.
WPP's business mix in 2019 was approximately 75% in Communications
and 25% in Experience, Commerce and Technology. Our goal is to
deliver sustainable growth in Communications through a focus on
digital communications, and to expand further into high-growth
areas of Commerce, Experience and Technology, growing our mix from
25% to 40% by 2025, so that we increase our share of the
higher-growth areas of client spend. Furthermore, leveraging WPP's
existing global strength we will accelerate our investment in high
growth potential markets, such as China, India and South
America.
In our four integrated creative agencies, we will increase
investment in creative talent, our global client teams and our
content and technology platforms, as well as attractive industry
sectors such as consumer packaged goods, technology and healthcare.
We will supplement organic growth with targeted acquisitions,
scalable across WPP, which bring in additional talent, capability
and technology.
In our media business, we will drive growth through investment in
our innovative digital platforms, such as Xaxis, our programmatic
business, and Finecast, our market-leading addressable TV
platform.
In PR and other specialist communications, we are well-positioned
to meet demand for advice around purpose, reputation management and
sustainability, which will be the growth drivers of the next few
years.
Purpose and sustainability progress and priorities
Our purpose is to use the power of creativity to build better
futures for our people, planet, clients and
communities. We
have the ability to use the power of marketing to communicate the
actions that our clients are taking to build a sustainable future
and a more inclusive society.
Our goal is for WPP to be the employer of choice for all. This
year, as part of a series of commitments to tackle racism, we
formed a Global Inclusion Council to help accelerate change
throughout WPP. The Council's role is to give a voice to
under-represented groups at the highest level of WPP, recommend
programmes, policies and initiatives that will systemically create
more inclusive and diverse workplaces, advise on leadership
succession, and remove barriers to progress. We have also committed
to investing $30 million over three years to fund inclusion
programmes within WPP and to support external organisations. We
will be publishing our racial diversity data annually in our
sustainability report.
We have made significant progress in driving gender equality, with
women now representing 50% of our senior managers. At the most
senior executive level, this figure is 37%, and our aim is to
achieve parity. From 2021, we will be integrating inclusion and
diversity metrics into executive remuneration to hold our leaders
accountable for progress.
We have made major steps in reducing our environmental impact,
cutting our carbon emissions intensity (scope 1 and 2) by 69% and
absolute emissions by 58% since 2006. We have committed to halving
our scope 1 and 2 emissions intensity by 2030, from a 2017
baseline. This year, we set two new goals: to reach net zero carbon
emissions in our campuses by 2025, and to source 100% of our
electricity from renewable sources by 2025. We are also completing
a scope 3 carbon inventory in order to set value chain carbon
reduction targets and have started taking steps to address the
carbon emissions associated with our value chain, for example as a
founding member of AdGreen, a new standard aimed at reducing the
emissions associated with advertising production.
Efficiency and reinvestment
WPP has a very material opportunity to unlock cost savings,
creating a more efficient operating platform for its agencies and
reinvesting the savings in growth. We aim to achieve annual gross
savings of around £600 million by 2025 by simplifying our
operating model, generating efficiencies in procurement and real
estate, and through improving the effectiveness of our support
functions and shared services. These savings include the £200
million permanent savings previously highlighted, which are part of
the 2020 cost reduction in response to the COVID-19
pandemic.
Of the total cost savings target, we expect to reinvest around
two-thirds into talent, technology and incentives to drive growth.
These cost savings will be phased over the next five
years.
Capital allocation
The four elements of our capital allocation strategy are as
follows:
Capital expenditure: we will
continue to invest in our technology infrastructure and campuses,
building platforms for our people and our clients, and supporting
reduced property costs and standardised systems. Capex will rise to
£450-500 million in 2021 and 2022, reflecting the peak of
campus and IT investments but also in part reflecting the
postponement of some 2020 spend. After 2022, we expect capex to
return to a more normalised range of £300-350 million per
annum.
Dividend: our goal is to pay a
dividend that is growing and sustainable, reflecting the strong
cash generation of the business while allowing for sufficient
reinvestment for growth. Starting from the current year, we intend
to grow the dividend annually and to pay out approximately 40% of
headline earnings per share.
M&A: acquisitions have
always been an important engine for growth for WPP, enhancing
organic growth and introducing future talent. We intend to pursue a
focused M&A strategy, building out our capabilities in key
growth areas, such as marketing technology and ecommerce, and
concentrating on a few targets with critical mass which are
scalable across WPP's offering to our clients. We expect to spend
£200-400 million a year on acquisitions.
Excess capital and leverage target: we anticipate recommencing the share buyback
funded by the Kantar transaction proceeds in 2021. We expect to
generate and return ongoing excess capital in future years, subject
to our leverage target of 1.5-1.75x average net
debt/EBITDA.
Current trading and 2020 full year outlook
Trends in October and November have been as expected, with LFL
revenue less pass-through costs growth of -6.7% across the two
months, taking the year-to-date performance to -8.4%.
We expect full-year 2020 LFL revenue less pass-through costs to be
in line with the 11-month figure. Headline operating profit margin
is expected to be 12.5-13.0%, reflecting a very strong performance
on cost reduction. We expect year-end net debt to be around
£1.6 billion, supported by strong working capital
management.
2021 guidance and medium-term targets
For 2021, we expect mid-single-digits % LFL growth in revenue less
pass-through costs, and a headline operating margin of
13.5-14.0%.
We expect to return to 2019 levels of revenue less pass-through
costs by 2022. From 2023, we are targeting annual revenue less
pass-through costs growth of 3-4%, including an annual benefit from
M&A of around 0.5-1.0%. Based on the expected phasing of our
five-year efficiency plan and reinvestment, we anticipate a
headline operating margin of 15.5-16.0% in 2023, and double-digit
headline EPS growth over the next three years.
Cautionary statement regarding forward-looking
statements
This document contains statements that are, or may be deemed to be,
"forward-looking statements". Forward-looking statements give the
Group's current expectations or forecasts of future events. An
investor can identify these statements by the fact that they do not
relate strictly to historical or current facts. They use words such
as 'anticipate', 'estimate', 'expect', 'intend', 'will', 'project',
'plan', 'believe', 'target' and other words and terms of similar
meaning in connection with any discussion of future operating or
financial performance.
These forward-looking statements may include, among other things,
plans, objectives, projections and anticipated future economic
performance based on assumptions and the like that are subject to
risks and uncertainties. As such, actual results or outcomes may
differ materially from those discussed in the forward-looking
statements. Important factors which may cause actual results to
differ include but are not limited to: the unanticipated loss of a
material client or key personnel, delays or reductions in client
advertising budgets, shifts in industry rates of compensation,
regulatory compliance costs or litigation, natural disasters or
acts of terrorism, the Company's exposure to changes in the values
of other major currencies (because a substantial portion of its
revenues are derived and costs incurred outside of the UK) and the
overall level of economic activity in the Company's major markets
(which varies depending on, among other things, regional, national
and international political and economic conditions and government
regulations in the world's advertising markets). In addition, you
should consider the risks described under Item 3D 'Risk Factors' in
the Group's Annual Report on Form 20-F for 2019 and any impacts of
the COVID-19 pandemic which could also cause actual results to
differ from forward-looking information. In light of these and
other uncertainties, the forward-looking statements included in
this document should not be regarded as a representation by the
Company that the Company's plans and objectives will be achieved.
Other than in accordance with its legal or regulatory obligations
(including under the Market Abuse Regulation, the UK Listing Rules
and the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority), the Group undertakes no obligation to update
any forward-looking statements, whether as a result of new
information, future events or otherwise. The reader should,
however, consult any additional disclosures that the Group may make
in any documents which it publishes and/or files with the SEC. All
readers, wherever located, should take note of these disclosures.
Accordingly, no assurance can be given that any particular
expectation will be met and investors are cautioned not to place
undue reliance on the forward-looking statements.
Any forward looking statements made by or on behalf of the Group
speak only as of the date they are made and are based upon the
knowledge and information available to the Directors on the date of
this document.
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
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WPP PLC
|
|
(Registrant)
|
Date:
17 December 2020
|
By:
______________________
|
|
Balbir
Kelly-Bisla
|
|
Company
Secretary
|