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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 August 2023

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:

Explanatory Note

Form 20-F x Form 40-F o WPP plc (“the Company”) and certain of its subsidiaries, including WPP Finance 2010, WPP 2005 Limited and WPP Jubilee Limited, may from time to time file registration statements for the registration of securities that may from time to time be offered by WPP Finance 2010 or other subsidiaries of the Company with guarantees of WPP plc, WPP 2005 Limited and WPP Jubilee Limited and, to the extent so indicated in an applicable prospectus supplement or otherwise established following the offer and sale of a series of debt securities, guarantees of other entities. The Company is furnishing this report on Form 6-K for the purpose of presenting its results for the six months ended 30 June 2023 in a format that can be incorporated by reference into any such registration statement.

Forward-Looking Statements

In connection with the provisions of the U.S. Private Securities Litigation Reform Act of 1995 (the ‘Reform Act’), 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, beliefs, intentions, strategies, projections and anticipated future economic performance based on assumptions and the like that are subject to risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as ‘aim’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘forecast’, ‘guidance’, ‘intend’, ‘may’, ‘will’, ‘should’, ‘potential’, ‘possible’, ‘predict’, ‘project’, ‘plan’, ‘target’, and other words and similar references to future periods but are not the exclusive means of identifying such statements. As such, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of the Company. Actual results or outcomes may differ materially from those discussed or implied in the forward-looking statements. Therefore, you should not rely on such forward-looking statements, which speak only as of the date they are made, as a prediction of actual results or otherwise. Important factors which may cause actual results to differ include but are not limited to: the impact of epidemics or pandemics including restrictions on businesses, social activities and travel; 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; changes in competitive factors in the industries in which we operate and demand for our products and services; changes in client advertising, marketing and corporate communications requirements; our inability to realise the future anticipated benefits of acquisitions; failure to realise our assumptions regarding goodwill and indefinite lived intangible assets; natural disasters or acts of terrorism; the Company’s ability to attract new clients; the economic and geopolitical impact of the Russian invasion of Ukraine; the risk of global economic downturn; slower growth, increasing interest rates and high and sustained inflation; supply chain issues affecting the distribution of our clients' products; technological changes and risks to the security of IT and operational infrastructure, systems, data and information resulting from increased threat of cyber and other attacks; effectively managing the risks, challenges and efficiencies presented by utilising Artificial Intelligence (AI) technologies and partnerships in our business; 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 in Item 3D, captioned “Risk Factors”, in the company’s 2022 Annual Report on Form 20-F, 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. Neither the Company, nor any of its directors, officers or employees, provides any representation, assurance or guarantee that the occurrence of any events anticipated, expressed or implied in any forward-looking statements will actually occur. 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	Operating and Financial Review for the period ended 30 June 2023
2	Unaudited Condensed Consolidated Interim Financial Statements of WPP plc
	(i)	Unaudited condensed consolidated interim income statement for the six months ended 30 June 2023 and 2022
	(ii)	Unaudited condensed consolidated interim statement of comprehensive income for the six months ended 30 June 2023 and 2022
	(iii)	Unaudited condensed consolidated interim cash flow statement for the six months ended 30 June 2023 and 2022
	(iv)	Unaudited condensed consolidated interim balance sheet as at 30 June 2023 and 31 December 2022
	(v)	Unaudited condensed consolidated interim statement of changes in equity for the six months ended 30 June 2023 and 2022
	(vi)	Notes to the unaudited condensed consolidated interim financial statements
101.INS	Inline XBRL Instance Document*
101.SCH	Inline XBRL Taxonomy Extension Schema Linkbase Document*
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*

* Filed herewith

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.


	WPP PLC
	(Registrant)

Date: 4 August 2023	By:	/s/ Balbir Kelly-Bisla
		Balbir Kelly-Bisla
		Company Secretary

EX-1 2 wpp-20230630x6kexx1.htm EX-1 Document

Exhibit 1

Operating and Financial Review for the period ended 30 June 2023

Six months ended June 2023 compared with six months ended June 2022

Certain Non-GAAP measures included in this operating and financial review have been derived from amounts calculated in accordance with IFRS but are not themselves IFRS measures. They should not be viewed in isolation as alternatives to the equivalent IFRS measure, rather they should be read in conjunction with the equivalent IFRS measure. These and other operational metrics include constant currency, like-for-like, headline operating profit, headline PBIT (Profit Before Interest and Taxation), headline PBT (Profit Before Taxation), billings and estimated net new business/billings, adjusted free cash flow, adjusted net debt and average adjusted net debt, share of profit before interest and taxation of associates, share of adjusting items of associates, share of interest and non-controlling interests of associates, and share of taxation of associates which we define, explain the use of and reconcile to the nearest IFRS measure on pages 8 to 11.

Management believes that these measures are both useful and necessary to present herein because they are used by management for internal performance analyses; the presentation of these measures facilitates comparability with other companies, although management’s measures may not be calculated in the same way as similarly titled measures reported by other companies; and these measures are useful in connection with discussions with the investment community.

In the calculation of headline profit measures, judgement is required by management in determining which revenues and costs are considered to be significant, non-recurring or volatile items that are to be excluded.

Headline measures should not be considered in isolation as they provide additional information to aid the understanding of the Group’s financial performance.

Unless the context otherwise requires, the terms "Company", "Group" and Registrant" as used herein shall also mean WPP.

First half overview

Introduction

Our performance in the first half has been resilient with Q2 growth accelerating in all regions except the USA, which was impacted in the second quarter by lower spending from technology clients and some delays in technology related projects. This was felt primarily in our integrated creative agencies. China returned to growth in the second quarter albeit more slowly than expected. In the near term, we expect the pattern of activity in the first half to continue into the second half of the year.

Our media business, GroupM, grew consistently across the first six months as did our businesses in the UK, Europe, Latin America and Asia-Pacific. Client spending in consumer packaged goods, financial services and healthcare remained good and, despite short-term challenges, our technology clients represent an important driver of long-term growth. Our agencies performed extremely well at the Cannes Lions Festival winning five Grand Prix and 165 Lions with Mindshare recognised as the most-awarded media agency. We won major new business assignments with clients including: Reckitt, Mondelēz, easyJet, Lloyds Banking Group, Pernod Ricard and India’s second largest advertiser, Maruti Suzuki.

We have exciting future plans in AI that build on our acquisition of Satalia in 2021 and our use of AI across WPP. We are leveraging our efforts with partnerships with the leading players including Adobe, Google, IBM, Microsoft, Nvidia and OpenAI. We are delivering work powered by AI for many clients including Nestlé, Nike and Mondelēz. AI will be fundamental to WPP’s future success and we are committed to embracing it to drive long-term growth and value.

Performance and progress

Revenue in the first half was £7.2 billion, up 6.9% from £6.8 billion in the first half of 2022, and up 3.5% like-for-like.

Clients

We have won $2.0 billion of net new business billings in the first half (H1 2022: $3.4 billion) including the potential loss of certain Pfizer assignments currently held by WPP integrated creative agencies. Key assignment wins included Maruti Suzuki (media), Pernod Ricard (creative), Reckitt (media), Beko (creative), and Costa Coffee (PR).

Our Vantage global client satisfaction survey has shown the key measure of “Likely To Recommend” has remained at all-time high levels with an increase in scores related to world-class creativity.

Creativity and awards

Creativity is at the heart of our offer, and we continue to be recognised for our creative excellence. WPP had another successful year at Cannes Lions International Festival of Creativity, winning a total of 165 Lions including one Titanium Lion, five Grand Prix, and 24 Gold awards. Mindshare was also named Media Network of the Year.

Earlier in the year, WARC named WPP the top company in all three of their rankings, the Creative 100, Effective 100 and Media 100 lists. Ogilvy ranked as the top network of the year in both the Creative 100 and Effective 100 while EssenceMediacom took first place in the Media 100. In addition, the Effie Awards named WPP the most effective communication company in the world, with Ogilvy placing first in the most effective agency network rankings.

Investment for growth

We have invested in strategically important areas and growth markets. We acquired Goat, a London-based, data-driven influencer marketing agency; Obviously, a New York-based, technology-led influencer marketing agency; 3K Communication, a Frankfurt-based healthcare PR agency; and amp, one of the world’s leading sonic branding companies. We also made a minority investment in Majority, a diversity-focused US creative agency.

In July, KKR completed their minority investment to become a 29% shareholder in FGS Global, after acquiring all of Golden Gate Capital’s equity and a proportion of the interests of WPP and FGS Global management. WPP remains the majority owner at 51%. The transaction valued FGS Global at $1.425 billion.

We have invested organically in new technology platforms to provide a future-facing offer to clients and innovate for the medium term. The main areas of investment are in Choreograph, our data company, and WPP Open, our AI-powered technology platform.

We believe that AI will be fundamental to WPP’s business and are excited by its transformational potential. Our expertise in the application of AI to marketing is based on investments that we have been making over many years, including the appointment of a Head of Creative AI in 2019 and the acquisition of Satalia in 2021.

AI is used extensively across our business today, particularly in GroupM and in Hogarth, our creative production business. Our application of AI includes automation of workflows, speeding up the process of ideation and concepting, and producing innovative creative work for clients. An example is our work for Cadbury’s in India which used AI to allow Bollywood superstar Shah Rukh Khan to produce personalised ads for local businesses which won a Titanium Lion for Creativity at the 2022 Cannes Lions festival and won again at the festival in 2023, securing a Grand Prix for Creative Effectiveness.

We are working with technology from all the main AI companies, including Adobe, Google, IBM, Microsoft, Nvidia, and OpenAI, with dedicated enterprise platforms, proprietary to WPP, to deliver work to clients that protects their information. We recognise the challenges of AI to society and have implemented legal and ethical guidelines to help us responsibly deploy this technology.

In May, WPP and Nvidia announced plans to develop a content engine that harnesses NVIDIA Omniverse™ and AI to enable creative teams to produce high-quality commercial content faster, more efficiently and at scale while staying fully aligned with a client’s brand.

The new engine connects an ecosystem of 3D design, manufacturing and creative supply chain tools, including those from Adobe and Getty Images, letting WPP’s artists and designers integrate 3D content creation with generative AI. This enables our clients to reach consumers in highly personalised and engaging ways, while preserving the quality, accuracy and fidelity of their company’s brand identity, products and logos.

Talent

Our success is driven by our exceptional talent. We have continued to invest to attract, engage and develop the best talent in our industry. In May, we hired Corey duBrowa, one of the industry’s most highly regarded communications leaders, as Chief Executive of BCW. We have invested in education and training, including through our Future Readiness Academies, a bespoke global learning programme available to everyone across WPP. We also launched the second cohort of our Creative Technology Apprenticeship, a nine-month intensive programme where apprentices learn creative technology skills using the latest software and hardware to prepare them for a career in today’s creative technology field. In addition, we sponsored a cohort of WPP leaders through a Postgraduate Diploma in AI for Business at Oxford University’s Saїd Business School, with 28 senior executives graduating earlier this year.

Transformation

We are making solid progress on our transformation plan which we set out in December 2020, designed to achieve £600 million in gross annual cost efficiencies by 2025. We are on target to achieve our annual run-rate of £450 million in efficiencies this year, against a 2019 baseline.

We opened five new campuses, in Atlanta, Austin, Guangzhou, Manchester and Paris, in the half, taking the total to 38 campuses. By the end of the year, we intend to open two further campuses and will accommodate around 60,000 of our people in campus buildings.

A review of our property portfolio has led to ongoing actions including the further consolidation of our operations in campuses across the US, in New York and other cities. These actions will result a benefit of approximately £30 million in the remainder of 2023.

Review of Group results from operations

Revenue

Revenue was up 6.9% at £7.2 billion in the first half of 2023 compared to £6.8 billion in the first half of 2022. Revenue on a constant currency basis was up 4.4% compared with the same period last year. Net changes from acquisitions and disposals had a positive impact of 0.9% on growth, leading to a like-for-like performance, excluding the impact of currency and acquisitions, of 3.5%. In the second quarter, revenue was up 2.7% and like-for-like revenue was up 2.3%.

Costs of services, general and administrative costs

Costs of services increased by 7.9% in the first half of 2023 to £6.2 billion from £5.7 billion in the first half of 2022. General and administrative costs increased by 49.1% in the first half of 2023 to £758 million from £509 million in the first half of 2022.

Staff costs increased by 5.4% in the first half of 2023 to £4.1 billion from £3.9 billion in the first half of 2022. Staff costs, excluding incentives (cash-based and share-based incentive) payments of £172 million (2022: £164 million), were up 5.4% year-on-year to £4.0 billion, including severance costs of £40 million (H1 2022: £17 million), partially offset by good control over our freelance spend. Severance costs increased as we aligned headcount to market conditions. Establishment costs were up 3.6% at £272 million while IT costs were up 13.6% at £350 million, reflecting investment in our IT infrastructure, cyber security and a move to cloud computing. Personnel costs rose 16.3% to £112 million, reflecting higher client-related business travel, and other operating expenses were down 1.0% at £270 million.

On a like-for-like basis, the average number of people in the Group in the first half was 115,000 compared to 113,000 in the first half of 2022. The total number of people as at 30 June 2023 was 114,000 compared to 115,000 as at 30 June 2022.

In the first half of 2023, the Group had £180 million of property related costs (primarily related to lease impairments in the US, which are non-cash), £87 million of restructuring and transformation costs, £53 million of goodwill impairment, £37 million of amortisation and impairment of acquired intangible assets, £11 million of investment and other impairment charges, and £3 million of losses on disposal of investments and subsidiaries. These costs were partially offset by a litigation settlement received of £10 million. This compares with £81 million of restructuring and transformation costs, £32 million of amortisation and impairment of acquired intangible assets, and £48 million of losses on disposal of investments and subsidiaries partially offset by £60 million from gains on remeasurement of equity interests arising from a change in scope of ownership in the first half of 2022.

Operating profitability

Operating profit was £306 million in the first half of 2023, compared to an operating profit of £539 million in the first half of 2022 primarily due to property related costs of £180 million. Headline operating profit was up 4.3% to £666 million from £639 million in the first half of 2022. The difference between the headline operating profit and operating profit principally reflects the £180 million of property related costs, £87 million of restructuring and transformation costs, £53 million of goodwill impairment, £37 million of amortisation and impairment of acquired intangible assets charges, £11 million of investment and other impairment charges and £3 million of losses on disposal of investments and subsidiaries, partially offset by £10 million of litigation settlement received in the first half of 2023.

The Group’s headline operating profit is net of £40 million of severance costs, compared with £17 million in the first half of 2022. £172 million of incentive payments were accrued in the first half, compared to £164 million in the first half of 2022.

Interest and taxes

Net finance costs, equal to finance and investment income less finance costs (excluding the revaluation and retranslation of financial instruments), were £128 million, an increase of £39 million for the half year compared to 2022, due to higher levels of debt and lower investment income partially offset by higher interest earned on cash.

Revaluation and retranslation of financial instruments resulted in a gain of £26 million for the half year of 2023, a decrease of £7 million from a gain of £33 million for the half year 2022.

The tax rate on profit before tax was 26.9% (2022: 28.1%).

Earnings and dividend

Profit before tax was £204 million, compared to £419 million in the prior period for the half year, principally reflecting lower operating profit and higher finance costs, partially offset by higher finance and investment income and earnings from associates - after interest and tax. Headline profit before tax was down 2.9% at £546 million.

Profit after tax was £149 million compared to £301 million in the prior period for the half year. Profits attributable to share owners were £112 million, compared to a profit of £258 million in the prior period for the half year.

Diluted earnings per share was 10.3p, compared to diluted earnings per share of 22.7p in the prior period.

For 2023, the Board is declaring an interim dividend of 15.0p per ordinary share (2022: 15.0p). The record date for the interim dividend is 13 October 2023, and the dividend will be payable on 3 November 2023.

Reportable segments review

The following tables give details of revenue and revenue less pass-through costs by reportable segment, as well as applicable percentage changes from the corresponding prior year periods, for the second quarter and first half of 2023. Headline operating profit and headline operating profit margin by reportable segment for the first half of 2023 are also provided below.

Revenue analysis


	Three months ended 30 June 2023	Reported change three months ended 30 June 2023		Like-for-like change three months ended 30 June 2023		Six months ended 30 June 2023	Reported change six months ended 30 June 2023		Like-for-like change six months ended 30 June 2023
	£m					£m
Global Integrated Agencies	3,211	3.3	%	2.9	%	6,107	7.2	%	4.0	%
Public Relations	311	2.2	%	1.7	%	618	7.6	%	2.7	%
Specialist Agencies	239	-4.7	%	-4.6	%	496	3.0	%	-1.3	%
Total Group	3,761	2.7	%	2.3	%	7,221	6.9	%	3.5	%

Prior year figures have been re-presented to reflect the reallocation of a number of businesses between Global Integrated Agencies and Public Relations. This increases Public Relations’ Q2 and H1 2022 revenue by £1.1 million and £2.2 million respectively and reduces Global Integrated Agencies’ by the same amount.

Revenue less pass-through costs1 analysis


	Three months ended 30 June 2023	Reported change three months ended 30 June 2023		Like-for-like change three months ended 30 June 2023		Six months ended 30 June 2023	Reported change six months ended 30 June 2023		Like-for-like change six months ended 30 June 2023
	£m					£m
Global Integrated Agencies	2,474	1.8	%	1.5	%	4,782	5.4	%	2.2	%
Public Relations	292	2.3	%	2.0	%	584	6.7	%	2.1	%
Specialist Agencies	216	-1.8	%	-1.6	%	445	4.5	%	0.2	%

Note

1Revenue less pass-through costs is revenue less media and other pass-through costs. Pass-through costs comprise fees paid to external suppliers where they are engaged to perform part or all of a specific project and are charged directly to clients, predominantly media costs. This includes the cost of media where the Group is buying digital media for its own account on a transparent opt-in basis and, as a result, the subsequent media pass-through costs have to be accounted for as revenue, as well as billings. See note 4 to the Company's unaudited condensed consolidated interim financial statements, which appears in Exhibit 2, for more details of the pass-through costs.

Prior year figures have been re-presented to reflect the reallocation of a number of businesses between Global Integrated Agencies and Public Relations. This increases Public Relations’ Q2 and H1 2022 revenue less pass-through costs by £1.1 million and £2.2 million respectively and reduces Global Integrated Agencies’ by the same amount.

Headline operating profit analysis


	Headline operating profit six months ended 30 June 2023	Headline operating profit margin1 six months ended 30 June 2023	Headline operating profit six months ended 30 June 2022	Headline operating profit margin1 six months ended 30 June 2022
	£m	%	£m	%
Global Integrated Agencies	541	11.3	507	11.2
Public Relations	88	15.0	83	15.2
Specialist Agencies	38	8.6	49	11.4
Total Group	666		639

Note

1Headline operating profit margin is calculated as headline operating profit as a percentage of revenue less pass-through costs.

Prior year figures have been re-presented to reflect the reallocation of a number of businesses between Global Integrated Agencies and Public Relations. This increases Public Relations’ H1 2022 headline operating profit by £0.5 million and reduces Global Integrated Agencies’ by the same amount.

Global Integrated Agencies: GroupM, our media planning and buying business, grew consistently during the half and across all regions, benefiting from continued client investment in media with like-for-like growth in revenue less pass-through costs of 6.1% (Q2 2023: growth of 6.1%), partially offset by a 0.8% like-for-like decline at other Global Integrated Agencies (Q2 2023: decline of 2.3%). Ogilvy grew well, supported by recent new business wins including Verizon and SC Johnson. Hogarth, our creative production agency, continued to deliver good growth as it expands its collaboration with other WPP agencies. Other Global Integrated Agencies, Wunderman Thompson, VMLY&R and AKQA Group, felt the greatest impact from reduced spend across the technology sector and delays in technology-related projects. As anticipated, revenue less pass-through costs in the retail sector was impacted by known 2022 client losses. As a result, headline operating profit was up £34 million from £507 million for the six months ended 30 June 2022 to £541 million for the six months ended 30 June 2023.

Public Relations: FGS Global continued to grow strongly in the first half. H+K Strategies delivered solid growth, lapping double-digit growth in the first half of 2022. BCW saw a small decline in revenue less pass-through costs in the first half. As a result, headline operating profit was up £4 million from £83 million for the six months ended 30 June 2022 to £88 million for the six months ended 30 June 2023.

Specialist Agencies: Good growth in design agency Landor & Fitch and our specialist healthcare media planning and buying agency, CMI Media Group, was offset by declines at smaller agencies affected by delays in client projects. As a result, headline operating profit was down £10 million from £49 million for the six months ended 30 June 2022 to £38 million for the six months ended 30 June 2023.

Regional review

The following tables give details of revenue and revenue less pass-through costs by region, as well as applicable percentage changes from the corresponding prior year periods, for the second quarter and first half of 2023. Headline operating profit by region is provided in note 7 of Exhibit 2.

Revenue analysis


	Three months ended 30 June 2023	Reported change three months ended 30 June 2023		Like-for-like change three months ended 30 June 2023		Six months ended 30 June 2023	Reported change six months ended 30 June 2023		Like-for-like change six months ended 30 June 2023
	£m					£m
N. America	1,376	-1.6	%	-2.1	%	2,744	6.1	%	0.4	%
United Kingdom	567	14.6	%	12.7	%	1,065	11.3	%	10.4	%
W. Cont. Europe	781	6.8	%	4.3	%	1,477	9.3	%	5.0	%
AP, LA, AME, CEE1	1,037	-0.2	%	2.3	%	1,935	4.0	%	3.6	%
Total Group	3,761	2.7	%	2.3	%	7,221	6.9	%	3.5	%

Note

1Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe.

Revenue less pass-through costs1 analysis


	Three months ended 30 June 2023	Reported change three months ended 30 June 2023		Like-for-like change three months ended 30 June 2023		Six months ended 30 June 2023	Reported change six months ended 30 June 2023		Like-for-like change six months ended 30 June 2023
	£m					£m
N. America	1,134	-3.3	%	-4.1	%	2,284	4.4	%	-1.2	%
United Kingdom	419	9.0	%	9.0	%	796	8.0	%	8.2	%
W. Cont. Europe	621	7.3	%	3.9	%	1,179	8.5	%	3.7	%
AP, LA, AME, CEE2	808	1.2	%	4.3	%	1,552	3.6	%	3.1	%

Notes

2Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe.

North America: Revenue less pass-through costs declined by 1.2% on a like-for-like basis in the first half reflecting the lower revenues from technology clients, which predominantly impacted our integrated creative agencies, and the expected impact of 2022 client losses in the retail sector. This was partially offset by growth in spending from consumer packaged goods, healthcare and financial services. GroupM continued to grow well in the region.

United Kingdom: Grew strongly led by GroupM. CPG and healthcare were the strongest client sectors.

Western Continental Europe: Strong performances in Germany and Spain offset declines in France due to client losses.

In Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe: Good growth in the half. China grew 4.8% in the second quarter, as that market continued to recover from COVID-related impacts, albeit at a slower pace than anticipated. India moved into growth in Q2 against a strong comparative of 48% growth in Q2 2022.

Cash Flow and Balance Sheet

The Group’s unaudited condensed consolidated interim cash flow statement, balance sheet and notes as at 30 June 2023 are provided in Exhibit 2.

Net cash outflow from operating activities was £444 million in the first half of 2023, compared to a cash outflow of £1,133 million in the first half of 2022.

In the first half of 2023, operating profit was £306 million, depreciation and amortisation was £259 million, impairment charges included within adjusting items were £140 million, non-cash share-based incentive charges were £76 million, goodwill impairment was £53 million, investment and other impairment charges were £11 million, earnout payments were £12 million, working capital and provisions outflow was £1,045 million, net interest paid was £47 million, tax paid was £171 million, lease liabilities (including interest) paid were £184 million, capital expenditure was £104 million and other net cash outflows were £37 million. Adjusted free cash flow was, therefore, an outflow of £755 million.

This adjusted free cash flow outflow was partially offset by £13.7 million disposal proceeds (of which £10.3 million was disposals of investments and subsidiaries net of cash disposed, and £3.4 million was proceeds on disposal of property, plant and equipment) and increased by £202.7 million in net initial acquisition payments and £37 million of share purchases.

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.

As at 30 June 2023 we had cash and cash equivalents of £1.5 billion (H1 2022: £1.5 billion) and total liquidity, including undrawn credit facilities, of £3.6 billion. Debt financing at 30 June 2023 was £5.4 billion, compared to £5.0 billion as of 31 December 2022. Average adjusted net debt in the first half of 2023 was £3.6 billion, compared to £2.6 billion in the prior period, at 2023 exchange rates. On 30 June 2023 adjusted net debt was £3.5 billion, against £3.1 billion on 30 June 2022, an increase of £0.3 billion on reported basis and at 2023 exchange rates.

Our bond portfolio at 30 June 2023 had an average maturity of 5.8 years.

In May 2023, we refinanced the November 2023 €750m bond as planned, issuing a May 2028 €750m bond priced at 4.125%.

Summarised financial information about Guarantors and Issuers of Guaranteed Securities

As at 30 June 2023, WPP Finance 2010 had in issue $93 million ($28 million was repaid in 2018 and $179 million was repaid in 2019 from the $300 million initially issued) of 5.125% bonds due September 2042 with WPP plc as parent guarantor and WPP Air 1, WPP 2008 Limited, WPP 2005 Limited, WPP 2012 Limited and WPP Jubilee Limited as subsidiary guarantors.

In the event that WPP Finance 2010 fails to pay the holders of the securities, thereby requiring WPP plc, WPP Air 1, WPP 2008 Limited, WPP 2005 Limited, WPP 2012 Limited or WPP Jubilee Limited to make payment pursuant to the terms of their full and unconditional, and joint and several guarantee of those securities, there is no impediment to WPP plc, WPP Air 1, WPP 2008 Limited, WPP 2005 Limited, WPP 2012 Limited or WPP Jubilee Limited obtaining reimbursement for any such payments from WPP Finance 2010.

Summarised income statement information for WPP Finance 2010 (issuer), WPP plc and Subsidiary Guarantors


	For the six months ended 30 June 2023	For the year ended 31 December 2022
	£m	£m
Revenue	—	—
Costs of services	—	—
Gross profit	—	—
Administrative income/(expenses) due from/to non-guarantors	67.3	187.6
Finance and investment income from non-guarantors	53.9	46.4
Finance costs to non-guarantors	(638.3)	(574.2)
Loss for the period	(802.1)	(976.6)

Summarised balance sheet information for WPP Finance 2010 (issuer), WPP plc and Subsidiary Guarantors


	At 30 June 2023	At 31 December 2022
	£m	£m
Due from Non-Guarantors-long term	2,402.8	1,803.7

Non-current assets	2,587.8	1,991.7
Due from Non-Guarantors-short term	1,090.9	1,795.4
Current assets	1,717.3	2,383.0
Due to Non-Guarantors-short term	(26,137.5)	(26,723.2)
Current Liabilities	(26,275.6)	(26,860.3)
Due to Non-Guarantors-long term	(2,951.5)	(1,357.0)
Non-current liabilities	(3,886.2)	(2,330.5)

As at 30 June 2023, WPP Finance 2010 had in issue $750 million of 3.750% bonds due September 2024 and $220 million ($50 million was repaid in 2018 and $230 million was repaid in 2019 from the $500 million initially issued) of 5.625% bonds due November 2043, with WPP plc as parent guarantor and WPP Jubilee Limited and WPP 2005 Limited as subsidiary guarantors.

In the event that WPP Finance 2010 fails to pay the holders of the securities, thereby requiring WPP plc, WPP Jubilee Limited or WPP 2005 Limited to make payment pursuant to the terms of their full and unconditional, and joint and several guarantee of those securities, there is no impediment to WPP plc, WPP Jubilee Limited or WPP 2005 Limited obtaining reimbursement for any such payments from WPP Finance 2010.

Summarised income statement information for WPP Finance 2010 (issuer), WPP plc and Subsidiary Guarantors


	For the six months ended 30 June 2023	For the year ended 31 December 2022
	£m	£m
Revenue	—	—
Costs of services	—	—
Gross profit	—	—
Administrative income/(expenses) due from/to non-guarantors	67.3	187.6
Finance and investment income from non-guarantors	53.9	46.4
Finance costs to non-guarantors	(638.3)	(574.2)
Loss for the period	(802.1)	(976.6)

Summarised balance sheet information for WPP Finance 2010 (issuer), WPP plc and Subsidiary Guarantors


	At 30 June 2023	At 31 December 2022
	£m	£m
Due from Non-Guarantors-long term	2,402.8	1,803.7

Non-current assets	2,587.8	1,991.7
Due from Non-Guarantors-short term	1,087.3	1,792.5
Current assets	1,713.7	2,380.1
Due to Non-Guarantors-short term	(26,137.5)	(26,723.8)
Current Liabilities	(26,275.6)	(26,860.8)
Due to Non-Guarantors-long term	(2,951.5)	(1,357.0)
Non-current liabilities	(3,886.2)	(2,330.5)

The issuer and guarantors of the bonds (issuer and subsidiary guarantors are 100% owned by WPP plc) are consolidated subsidiaries of WPP plc and are each subject to the reporting requirements under section 15(d) of the Securities Exchange Act of 1934. The summarised financial information for WPP Finance 2010 and the guarantors is presented on a combined basis with intercompany balances and transactions between the entities in the issuer and guarantors group eliminated. The summarized financial information is prepared in accordance with IFRS as issued by the IASB and is intended to provide investors with meaningful financial information, and is provided pursuant to Rule 13-01 of Regulation S-X which allows for alternative financial disclosures or narrative disclosures in lieu of the separate financial statements of WPP Finance 2010 and the guarantors. The financial information presented is that of the issuers and guarantors of the guaranteed security, and the financial information of non-issuer and non-guarantor subsidiaries has been excluded.

NON-GAAP INFORMATION

As introduced on page 1, the following are the Group’s Non-GAAP performance measures.

Constant currency

The condensed consolidated interim financial statements are presented in pounds sterling. However, the Group’s significant international operations give rise to fluctuations in foreign exchange rates. To neutralise foreign exchange impact and illustrate the underlying change in revenue, profit, and other relevant financial statement line items from one year to the next, the Group has adopted the practice of discussing results in both reportable currency (local currency results translated into pounds sterling at the prevailing foreign exchange rate) and constant currency.

The Group uses US dollar-based, constant currency models to measure performance. These are calculated by applying budgeted 2023 exchange rates to local currency reported results for the current and prior year which excludes any variances attributable to foreign exchange rate movements.

Like-for-like

Management believes that discussing like-for-like contributes to the understanding of the Group’s performance and trends because it allows for meaningful comparisons of the current period to that of prior periods.

Like-for-like 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, and the reclassification of certain businesses to associates in 2022. Both periods exclude results from Russia.

The following table reconciles reported revenue growth for the three month and six month periods ended 30 June 2023 and 2022, to like-for-like revenue growth for the same periods.


	Three months ended 30 June		Six months ended 30 June
	Revenue		Revenue
	£m	%	£m	%
2022 Reported	3,664.0		6,755.3
Impact of exchange rate changes	(26.9)	(0.7)	168.7	2.5
Impact of acquisitions and disposals	40.3	1.1	60.8	0.9
Like-for-like growth	84.3	2.3	236.4	3.5
2023 Reported	3,761.7	2.7	7,221.2	6.9

Headline operating profit

Headline operating profit is one of the measures that management uses to assess the performance of the business.

Headline operating profit is calculated as profit/(loss) before finance income/costs and revaluation and retranslation of financial instruments, taxation, earnings/(loss) from associates - after interest and taxation, gains/losses on disposal of investments and subsidiaries, investment and other charges/reversals, goodwill impairment, amortisation and impairment of acquired intangible assets, intangible asset impairment, restructuring and transformation costs, property related costs, litigation settlement, and gains/losses on remeasurement of equity interests arising from a change in scope of ownership.

Adjustments to operating profit described above are included in costs of services and general administrative costs as provided in note 4 of the unaudited condensed consolidated interim financial statements, which appears in Exhibit 2, and are components of operating profit.

A tabular reconciliation of profit before taxation to headline operating profit is provided in note 20 of the unaudited condensed consolidated interim financial statements of the Company, which appears in Exhibit 2.

Headline PBIT

Headline PBIT is one of the measures that management uses to assess the performance of the business.

Headline PBIT is calculated as profit before finance and investment income/costs and revaluation and retranslation of financial instruments, taxation, gains/losses on disposal of investments and subsidiaries, investment and other charges/(reversals), goodwill impairment, amortisation and impairment of acquired intangible assets, intangible asset impairment, restructuring and transformation costs, property related costs, litigation settlement, share of adjusting items of associates and gains/losses on remeasurement of equity interests arising from a change in scope of ownership.

A tabular reconciliation of profit before interest and taxation to headline PBIT is shown below.


	Six months ended 30 June 2023	Six months ended 30 June 2022
	£m	£m
Profit before taxation	204.3	418.6
Finance and investment income	(102.4)	(55.5)
Finance costs	230.7	144.9
Revaluation and retranslation of financial instruments	(25.5)	(33.1)
Profit before interest and taxation	307.1	474.9
Amortisation and impairment of acquired intangible assets	36.6	31.5
Goodwill impairment	52.9	—
Losses on disposal of investments and subsidiaries	2.9	48.1
Gains on remeasurement of equity interests arising from a change in scope of ownership	—	(60.4)
Investment and other impairment charges	11.0	—
Litigation settlement	(10.0)	—
Restructuring and transformation costs	86.8	81.2
Property related costs	180.0	—
Share of adjusting items of associates	6.6	76.1
Headline PBIT	673.9	651.4

Headline PBT

Headline PBT is one of the measures that management uses to assess the performance of the business.

Headline PBT is calculated as profit before taxation, gains/losses on disposal of investments and subsidiaries, investment and other charges/(reversals), goodwill impairment, amortisation and impairment of acquired intangible assets, intangible asset impairment, restructuring and transformation costs, property related costs, litigation settlement, share of adjusting items of associates, gains/losses arising from the revaluation and retranslation of financial instruments and gains/losses on remeasurement of equity interests arising from a change in scope of ownership.

A tabular reconciliation of profit before taxation to headline PBT is shown below.


	Six months ended 30 June 2023	Six months ended 30 June 2022
	£m	£m
Profit before taxation	204.3	418.6
Amortisation and impairment of acquired intangible assets	36.6	31.5
Goodwill impairment	52.9	—
Losses on disposal of investments and subsidiaries	2.9	48.1
Gains on remeasurement of equity interests arising from a change in scope of ownership	—	(60.4)
Investment and other impairment charges/(reversals)	11.0	—
Restructuring and transformation costs	86.8	81.2
Share of adjusting items of associates	6.6	76.1
Property related costs	180.0	—
Litigation settlement	(10.0)	—
Revaluation and retranslation of financial instruments	(25.5)	(33.1)
Headline PBT	545.6	562.0

Billings and estimated net new business/billings

Billings and estimated net new business/billings are metrics that management uses to assess the performance of the business.

Billings comprise the gross amounts billed to clients in respect of commission-based/fee-based income together with the total of other fees earned. Net new business/billings represent the estimated annualised impact on billings of new business gained from both existing and new clients, net of existing client business lost. The estimated impact is based upon initial assessments of the clients’ marketing budgets, which may not necessarily result in actual billings of the same amount.

Adjusted free cash flow

The Group bases its internal cash flow objectives on adjusted free cash flow. Management believes adjusted free cash flow is meaningful to investors because it is the measure of the Group’s funds available for acquisition related payments, dividends to shareholders, share repurchases and debt repayment. The purpose of presenting adjusted free cash flow is to indicate the ongoing cash generation within the control of the Group after taking account of the necessary cash expenditures of maintaining the capital and operating structure of the Group (in the form of payments of interest, corporate taxation and capital expenditure). This computation may not be comparable to that of similarly titled measures presented by other companies.

Adjusted free cash flow is calculated as net cash flow from operating activities including share option proceeds less earnout payments, purchases of property, plant and equipment, purchases of other intangible assets, repayment of lease liabilities and dividends paid to non-controlling interests in subsidiary undertakings.

A tabular reconciliation of net cash flow from operating activities to adjusted free cash flow is shown below:


	Six months ended 30 June 2023	Six months ended 30 June 2022
	£m	£m
Net cash (outflow)/inflow from operating activities	(444.1)	(1,132.5)

Share option proceeds	0.7	1.1
Earnout payments	(11.2)	(41.6)
Purchases of property, plant and equipment	(80.7)	(102.4)
Purchases of other intangible assets (including capitalised computer software)	(23.1)	(14.6)
Repayment of lease liabilities	(135.1)	(146.3)
Dividends paid to non-controlling interests in subsidiary undertakings	(61.2)	(37.2)
Adjusted free cash flow	(754.7)	(1,473.5)

Adjusted net debt and average adjusted net debt

Management believes that adjusted net debt and average adjusted net debt are appropriate and meaningful measures of the debt levels within the Group.

Adjusted net debt at a period end consists of cash and short-term deposits, bank overdraft, bonds and bank loans due within one year and bonds and bank loans due after one year. Average adjusted net debt is calculated as the average monthly net borrowings of the Group. Adjusted net debt excludes lease liabilities.

The following table is an analysis of adjusted net debt:


	30 June 2023	31 December 2022	30 June 2022
	£m	£m	£m
Cash and short-term deposits	1,962.6	2,491.5	1,775.0
Bank overdrafts, bonds and bank loans due within one year	(1,092.9)	(1,169.0)	(289.1)


Bonds and bank loans due after one year	(4,338.0)	(3,801.8)	(4,620.7)

Adjusted net debt	(3,468.3)	(2,479.3)	(3,134.8)

Components of earnings/(loss) from associates - after interest and tax

Management reviews the earnings/(loss) from associates - after interest and tax by assessing the underlying component movements including share of profit before interest and taxation of associates, share of adjusting items of associates, share of interest and non-controlling interests of associates, and share of taxation of associates, which are derived from the income statements of the associate undertakings.

The following table is an analysis of earnings/(loss) from associates - after interest and tax and underlying component movements:


	Six months ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Share of profit before interest and taxation	65.9	93.3
Share of adjusting items of associates	(6.6)	(76.1)
Share of interest and non-controlling interests	(55.1)	(58.9)
Share of taxation	(3.2)	(22.1)
Earnings/(loss) from associates - after interest and tax	1.0	(63.8)

Share of adjusting items of associates of £6.6 million (2022: £76.1 million). In 2022, this includes £46.7 million of amortisation and impairment of acquired intangible assets, and £24.8 million of restructuring and one-off transaction costs within Kantar.

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Exhibit 2

Unaudited Condensed Consolidated Interim Financial Statements of WPP plc

WPP plc

Unaudited condensed consolidated interim income statement

for the six months ended 30 June 2023 and 2022


	Notes	Six months ended 30 June 2023		Six months ended 30 June 2022
		£m		£m
Revenue	7	7,221.2		6,755.3
Costs of services	4	(6,157.0)		(5,708.1)
Gross profit		1,064.2		1,047.2
General and administrative costs	4	(758.1)		(508.5)
Operating profit		306.1		538.7
Earnings/(loss) from associates - after interest and tax	5	1.0		(63.8)
Profit before interest and taxation		307.1		474.9
Finance and investment income	6	102.4		55.5
Finance costs	6	(230.7)		(144.9)
Revaluation and retranslation of financial instruments	6	25.5		33.1
Profit before taxation		204.3		418.6
Taxation	8	(55.0)		(117.5)
Profit for the period		149.3		301.1

Attributable to:
Equity holders of the parent		112.0		257.9
Non-controlling interests		37.3		43.2
		149.3		301.1

Earnings per share
Basic earnings per ordinary share	10	10.5	p	23.1	p
Diluted earnings per ordinary share	10	10.3	p	22.7	p

Note

The accompanying notes form an integral part of this unaudited condensed consolidated interim income statement.

WPP plc

Unaudited condensed consolidated interim statement of comprehensive income

for the six months ended 30 June 2023 and 2022


	Six months ended 30 June 2023	Six months ended 30 June 2022
	£m	£m
Profit for the period	149.3	301.1
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on translation of foreign operations	(285.0)	459.7
Gain/(loss) on net investment hedges	77.8	(129.9)
Cash flow hedges:
Fair value (loss)/gain arising on hedging instruments	(23.8)	18.7
Less: gain/(loss) reclassified to profit or loss	24.4	(18.7)
Share of other comprehensive income of associates undertakings	—	30.7
	(206.6)	360.5
Items that will not be reclassified subsequently to profit or loss:


Movements on equity investments held at fair value through other comprehensive income	(3.8)	(5.2)
	(3.8)	(5.2)
Other comprehensive (loss)/income relating to the period	(210.4)	355.3
Total comprehensive (loss)/income relating to the period	(61.1)	656.4

Attributable to:
Equity holders of the parent	(76.0)	593.3
Non-controlling interests	14.9	63.1
	(61.1)	656.4

Note

The accompanying notes form an integral part of this unaudited condensed consolidated interim statement of comprehensive income.

WPP plc

Unaudited condensed consolidated interim cash flow statement

for the six months ended 30 June 2023 and 2022


	Notes	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
		£m	£m
Net cash outflow from operating activities1	11	(444.1)	(1,132.5)
Investing activities
Acquisitions1	11	(197.9)	(81.0)
Disposals of investments and subsidiaries	11	10.3	29.2
Purchases of property, plant and equipment		(80.7)	(102.4)
Purchases of other intangible assets (including capitalised computer software)		(23.1)	(14.6)
Proceeds on disposal of property, plant and equipment		3.4	4.5
Net cash outflow from investing activities		(288.0)	(164.3)
Financing activities
Repayment of lease liabilities		(135.1)	(146.3)
Share option proceeds		0.7	1.1

Cash consideration for purchase of non-controlling interests	11	(16.0)	(6.2)
Share repurchases and buy-backs	11	(37.0)	(680.5)
Proceeds from borrowings and issue of bonds	11	1,044.5	247.2
Repayment of borrowings	11	(469.8)	(220.6)
Financing and share issue costs		(5.7)	—

Dividends paid to non-controlling interests in subsidiary undertakings		(61.2)	(37.2)
Net cash inflow/(outflow) from financing activities		320.4	(842.5)
Net decrease in cash and cash equivalents		(411.7)	(2,139.3)
Translation of cash and cash equivalents		(59.0)	88.0
Cash and cash equivalents at beginning of period		1,985.8	3,540.6
Cash and cash equivalents at end of period	12	1,515.1	1,489.3

Note

The accompanying notes form an integral part of this unaudited condensed consolidated interim cash flow statement.

1Earnout payments in excess of the amount determined at acquisition are recorded as operating activities. Prior year excess amounts were recorded as investing activities and have been re-presented as operating activities. See note 11.

WPP plc

Unaudited condensed consolidated interim balance sheet

as at 30 June 2023 and 31 December 2022


	Notes	30 June 2023	31 December 2022
		£m	£m
Non-current assets
Intangible assets:
Goodwill	13	8,296.8	8,453.4
Other		1,500.9	1,451.9
Property, plant and equipment		942.7	1,000.7
Right-of-use assets		1,454.2	1,528.5
Interests in associates and joint ventures		248.1	305.1
Other investments		332.9	369.8
Deferred tax assets		287.8	322.1
Corporate income tax recoverable		102.4	74.1
Trade and other receivables	14	156.8	218.6
		13,322.6	13,724.2
Current assets
Corporate income tax recoverable		110.8	107.1
Trade and other receivables	14	11,058.1	12,499.7
Cash and short-term deposits		1,962.6	2,491.5
		13,131.5	15,098.3
Current liabilities
Trade and other payables	15	(13,155.8)	(15,834.9)
Corporate income tax payable		(324.1)	(422.0)
Short-term lease liabilities		(298.2)	(282.4)
Bank overdrafts, bonds and bank loans		(1,092.9)	(1,169.0)
		(14,871.0)	(17,708.3)
Net current liabilities		(1,739.5)	(2,610.0)
Total assets less current liabilities		11,583.1	11,114.2
Non-current liabilities
Bonds and bank loans		(4,338.0)	(3,801.8)
Trade and other payables	16	(517.4)	(490.9)
Deferred tax liabilities		(339.1)	(350.8)
Provisions for post-employment benefits		(133.8)	(137.5)
Provisions for liabilities and charges		(283.8)	(244.6)
Long-term lease liabilities		(1,905.9)	(1,928.2)
		(7,518.0)	(6,953.8)
Net assets		4,065.1	4,160.4
Equity
Called-up share capital		114.1	114.1
Share premium account		576.6	575.9
Other reserves		104.9	285.2
Own shares		(1,012.9)	(1,054.1)
Retained earnings		3,854.5	3,759.7
Equity shareholders’ funds		3,637.2	3,680.8
Non-controlling interests		427.9	479.6
Total equity		4,065.1	4,160.4

Note

The accompanying notes form an integral part of this unaudited condensed consolidated interim balance sheet.

WPP plc

Unaudited condensed consolidated interim statement of changes in equity

for the six months ended 30 June 2023 and 2022


	Called-up share capital	Share premium account	Other reserves	Own shares	Retained earnings1	Total equity shareholders’ funds	Non- controlling interests	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2023	114.1	575.9	285.2	(1,054.1)	3,759.7	3,680.8	479.6	4,160.4
Ordinary shares issued	—	0.7	—	—	—	0.7	—	0.7
Share cancellations	—	—	—	—	—	—	—	—
Treasury shares used for share option schemes	—	—	—	55.2	(55.2)	—	—	—
Profit for the period	—	—	—	—	112.0	112.0	37.3	149.3
Foreign exchange differences on translation of foreign operations	—	—	(262.6)	—	—	(262.6)	(22.4)	(285.0)
Gain on net investment hedges	—	—	77.8	—	—	77.8	—	77.8
Cash flow hedges:
Fair value loss arising on hedging instruments	—	—	(23.8)	—	—	(23.8)	—	(23.8)
Less: gain reclassified to profit or loss	—	—	24.4	—	—	24.4	—	24.4
Share of other comprehensive income of associates undertakings	—	—	—	—	—	—	—	—
Movements on equity investments held at fair value through other comprehensive income	—	—	—	—	(3.8)	(3.8)	—	(3.8)
Other comprehensive loss	—	—	(184.2)	—	(3.8)	(188.0)	(22.4)	(210.4)
Total comprehensive (loss)/income	—	—	(184.2)	—	108.2	(76.0)	14.9	(61.1)
Dividends paid	—	—	—	—	—	—	(61.2)	(61.2)
Non-cash share-based incentive plans (including share options)	—	—	—	—	75.5	75.5	—	75.5
Tax adjustment on share-based payments	—	—	—	—	2.4	2.4	—	2.4
Net movement in own shares held by ESOP Trusts	—	—	—	(14.0)	(23.0)	(37.0)	—	(37.0)
Recognition/derecognition of liabilities in respect of put options	—	—	3.9	—	(1.8)	2.1	—	2.1


Acquisition and disposal of subsidiaries2	—	—	—	—	(11.3)	(11.3)	(5.4)	(16.7)
Balance at 30 June 2023	114.1	576.6	104.9	(1,012.9)	3,854.5	3,637.2	427.9	4,065.1

	Called-up share capital	Share premium account	Other reserves	Own shares	Retained earnings	Total equity shareholders’ funds	Non- controlling interests	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2022	122.4	574.7	(335.9)	(1,112.1)	4,367.3	3,616.4	452.6	4,069.0
Ordinary shares issued	—	1.1	—	—	—	1.1	—	1.1
Share cancellations	(6.2)	—	6.2	—	(637.3)	(637.3)	—	(637.3)

Treasury shares used for share option schemes	—	—	—	—	—	—	—	—
Profit for the period	—	—	—	—	257.9	257.9	43.2	301.1
Foreign exchange differences on translation of foreign operations	—	—	439.8	—	—	439.8	19.9	459.7
Loss on net investment hedges	—	—	(129.9)	—	—	(129.9)	—	(129.9)
Cash flow hedges:
Fair value gain arising on hedging instruments	—	—	18.7	—	—	18.7	—	18.7
Less: loss reclassified to profit or loss	—	—	(18.7)	—	—	(18.7)	—	(18.7)
Share of other comprehensive income of associates undertakings	—	—	24.0	—	6.7	30.7	—	30.7
Movements on equity investments held at fair value through other comprehensive income	—	—	—	—	(5.2)	(5.2)	—	(5.2)
Other comprehensive income	—	—	333.9	—	1.5	335.4	19.9	355.3
Total comprehensive income	—	—	333.9	—	259.4	593.3	63.1	656.4
Dividends paid	—	—	—	—	—	—	(37.2)	(37.2)
Non-cash share-based incentive plans (including share options)	—	—	—	—	67.3	67.3	—	67.3
Tax adjustment on share-based payments	—	—	—	—	(15.2)	(15.2)	—	(15.2)
Net movement in own shares held by ESOP Trusts	—	—	—	28.8	(72.0)	(43.2)	—	(43.2)
Recognition/derecognition of liabilities in respect of put options	—	—	58.1	—	(47.3)	10.8	—	10.8
Share purchases – close period commitments3	—	—	211.7	—	—	211.7	—	211.7
Acquisition and disposal of subsidiaries2	—	—	—	—	(13.0)	(13.0)	—	(13.0)
Balance at 30 June 2022	116.2	575.8	274.0	(1,083.3)	3,909.2	3,791.9	478.5	4,270.4

Notes

The accompanying notes form an integral part of this unaudited condensed consolidated interim statement of changes in equity.

1Accumulated losses on existing equity investments held at fair value through other comprehensive income are £347.2 million at 30 June 2023 (31 December 2022: £343.4 million).

2Acquisition and disposal of subsidiaries represents movements in retained earnings and non-controlling interests arising from changes in ownership of existing subsidiaries and recognition of non-controlling interests on new acquisitions.

3During 2021, the Company entered into an arrangement with a third party to conduct share buybacks on its behalf in the close period commencing on 16 December 2021 and ending on 18 February 2022, in accordance with UK listing rules. The commitment resulting from this agreement constituted a liability at 31 December 2021 and was recognised as a movement in other reserves in the year ended 31 December 2021. After the close period ended on 18 February 2022, the liability was settled and the amount in other reserves was reclassified to retained earnings.

Notes to the unaudited condensed consolidated interim financial statements

1. Basis of accounting

The unaudited condensed consolidated interim financial statements are prepared under the historical cost convention, except for the revaluation of certain financial instruments as disclosed in our accounting policies.

2. Accounting policies

The unaudited condensed consolidated interim financial statements comply with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and with the accounting policies of WPP plc and its subsidiaries (the Group), which were set out on pages F-3 to F-11 of the 2022 Annual Report on 20-F. No changes have been made to the Group’s accounting policies in the period ended 30 June 2023.

The Group does not consider that the amendments to standards adopted during the period have a significant impact on the financial statements.

The unaudited condensed consolidated interim financial statements were approved by the board of directors and authorized for issue on 4 August 2023.

3. Currency conversion

The presentation currency of the Group is pounds sterling and the unaudited condensed consolidated interim financial statements have been prepared on this basis. The period ended 30 June 2023 unaudited condensed consolidated interim income statement is prepared using, among other currencies, average exchange rates of US$1.23 to the pound (period ended 30 June 2022: US$1.30) and €1.14 to the pound (period ended 30 June 2022: €1.19). The unaudited condensed consolidated interim balance sheet as at 30 June 2023 has been prepared using the exchange rates on that day of US$1.27 to the pound (31 December 2022: US$1.21) and €1.16 to the pound (31 December 2022: €1.13).

4. Costs of services and general and administrative costs


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Costs of services	6,157.0	5,708.1
General and administrative costs	758.1	508.5
	6,915.1	6,216.6

Costs of services and general and administrative costs include:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Staff costs	4,141.5	3,930.7
Establishment costs	272.1	262.8
Media pass-through costs	1,022.8	1,016.7
Other costs of services and general and administrative costs1	1,478.7	1,006.4
	6,915.1	6,216.6

Note

1Other costs of services and general and administrative costs include £387.2 million (period ended 30 June 2022: £229.1 million) of other pass-through costs.

Notes to the unaudited condensed consolidated interim financial statements (continued)

4. Costs of services and general and administrative costs (continued)

Staff costs include:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Wages and salaries	2,944.0	2,718.5
Cash-based incentive plans	91.7	93.5
Share-based incentive plans	75.5	67.3


Severance	40.1	17.4
Other staff costs	990.2	1,034.0
	4,141.5	3,930.7

Other costs of services and general and administrative costs include:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Amortisation and impairment of acquired intangible assets	36.6	31.5
Goodwill impairment	52.9	—
Investment and other impairment charges	11.0	—
Losses on disposals of investments and subsidiaries	2.9	48.1
Gains on remeasurement of equity interests arising from a change in scope of ownership	—	(60.4)
Restructuring and transformation costs	86.8	81.2
Property related costs	180.0	—
Litigation settlement	(10.0)	—

Amortisation and impairment of acquired intangible assets of £36.6 million (2022: £31.5 million) includes an impairment charge in the year of £1.7 million (2022: £1.3 million) in regard to certain brand names that are no longer in use.

The goodwill impairment charge of £52.9 million in the period ended 30 June 2023 (2022: £nil) relates to two businesses in the Group where the current, local economic conditions and trading circumstances are sufficiently severe to indicate impairment to the carrying value.

Investment and other impairment charges of £11.0 million (2022: £nil) relate to the same macro-economic factors noted above.

Losses on disposal of investments and subsidiaries of £2.9 million in the period ended 30 June 2023 (2022: £48.1 million) mainly relates to a disposal of the Group's investment in Astus Australia, which completed in May 2023. The prior period primarily includes a loss of £65.1 million on the divestment of the Group's Russian interests which completed in May 2022.

In the prior period, gains on remeasurement of equity interests arising from a change in scope of ownership of £60.4 million comprises a gain in relation to the reclassification of the Group’s interest in Imagina in Spain from interests in associates to other investments. There were no remeasurements of equity interest in the period ended 30 June 2023.

Restructuring and transformation costs of £86.8 million (2022: £81.2 million) include £53.9 million (2022: £59.5 million) in relation to the Group's IT transformation programme. It includes costs of £23.8 million (2022: £46.3 million) in relation to the rollout of new ERP systems in order to drive efficiency and collaboration throughout the Group and £15.2 million (2022: £nil) incurred related to a transition programme to move to a multi vendor environment. Included within restructuring and transformation costs is £7.0 million (2022: £5.9 million) of ongoing property costs, related to impairments the Group recognised in response to the COVID-19 pandemic. The remaining £25.9 million (2022: £15.8 million) relates to the continuing restructuring plan. As part of that plan, restructuring actions have been taken to right-size under-performing businesses, address high-cost severance markets and simplify operational structures.

Notes to the unaudited condensed consolidated interim financial statements (continued)

4. Costs of services and general and administrative costs (continued)

Property related costs of £180.0 million (2022: £nil) have been incurred related to a review of the Group’s property requirements, following the stabilisation of return-to-work practices post the COVID-19 pandemic and campus strategy. This identified a number of properties that are surplus to requirements and opportunities to further consolidate Agencies within the existing Campus portfolio.

£10.0 million (2022: £nil) has been received by the Group related to a previous litigation matter that settled in the period.

5. Earnings/(loss) from associates - after interest and tax

Earnings/(loss) from associates - after interest and tax for the period ended 30 June 2023 was £1.0 million (2022: loss of £63.8 million). In 2022 this includes £46.7 million of amortisation and impairment of acquired intangible assets, and £24.8 million of restructuring and one-off transaction costs within Kantar.

6. Finance and investment income, finance costs and revaluation and retranslation of financial instruments

Finance and investment income includes:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Income from equity investments	3.4	20.1
Interest income	99.0	35.4
	102.4	55.5

Finance costs include:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m


Interest payable and similar charges1	180.2	98.9
Interest expense related to lease liabilities	50.5	46.0
	230.7	144.9

Note

1Interest expense and similar charges are payable on bank overdrafts, bonds and bank loans held at amortised cost.

Revaluation and retranslation of financial instruments include:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Movements in fair value of treasury instruments	4.4	1.9

Revaluation of investments held at fair value through profit or loss	(24.2)	9.0
Revaluation of put options over non-controlling interests	7.1	19.6
Revaluation of payments due to vendors (earnout agreements)	25.7	(1.1)
Retranslation of financial instruments	12.5	3.7
	25.5	33.1

Notes to the unaudited condensed consolidated interim financial statements (continued)

7. Segmental analysis

Substantially all of the Group's revenue is from contracts with customers. Reported contributions by reportable segments were as follows:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Revenue1,2
Global Integrated Agencies	6,107.0	5,698.8
Public Relations	618.0	574.6
Specialist Agencies	496.2	481.9
	7,221.2	6,755.3
Revenue less pass-through costs1,3
Global Integrated Agencies	4,781.6	4,536.0
Public Relations	584.4	547.6
Specialist Agencies	445.2	425.9

Headline operating profit1,4
Global Integrated Agencies	540.5	507.0
Public Relations	87.5	83.5
Specialist Agencies	38.3	48.6
	666.3	639.1

Notes

1Prior year figures have been re-presented to reflect the reallocation of a number of businesses between Global Integrated Agencies and Public Relations.

2Intersegment sales have not been separately disclosed as they are not material.

3Revenue less pass-through costs is revenue less media, and other pass-through costs. Pass-through costs comprise fees paid to external suppliers where they are engaged to perform part or all of a specific project and are charged directly to clients, predominantly media costs. See note 4 for more details of the pass-through costs.

4A reconciliation from reported profit before taxation to headline operating profit is provided in note 20.

Notes to the unaudited condensed consolidated interim financial statements (continued)

7. Segmental analysis (continued)

Reported contributions by geographical area were as follows:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Revenue1
North America2	2,744.0	2,586.5
United Kingdom	1,064.6	956.1
Western Continental Europe	1,477.1	1,352.0
Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe	1,935.5	1,860.7
	7,221.2	6,755.3
Revenue less pass-through costs3
North America2	2,284.6	2,188.9
United Kingdom	796.2	737.0
Western Continental Europe	1,178.7	1,086.1
Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe	1,551.7	1,497.5

Headline operating profit4
North America2	287.1	299.7
United Kingdom	97.8	67.3
Western Continental Europe	111.1	98.7
Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe	170.3	173.4
	666.3	639.1

Notes

1Intersegment sales have not been separately disclosed as they are not material.

2North America includes the United States with revenue of £2,578.7 million (2022: £2,440.9 million), revenue less pass-through costs of £2,144.2 million (2022: £2,052.1 million) and headline operating profit of £268.1 million (2022: £280.9 million).

3Revenue less pass-through costs is revenue less media and other pass-through costs. Pass-through costs comprise fees paid to external suppliers where they are engaged to perform part or all of a specific project and are charged directly to clients, predominantly media costs. See note 4 for more details of the pass-through costs.

4A reconciliation from reported profit before taxation to headline operating profit is provided in note 20.

8. Taxation

The tax charge for the Group is calculated in accordance with IAS 34, by applying management's best estimate of the effective tax rate (excluding discrete items) expected to apply to total annual earnings to the profit for the six month period ended 30 June 2023. This is then adjusted for certain discrete items which occurred in the interim period.

The tax rate on profit before tax was 26.9% (2022: 28.1%).

The tax charge may be affected by the impact of acquisitions, disposals and other corporate restructuring, the resolution of open tax issues, and the ability to use brought forward tax losses. Changes in local or international tax rules, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, and changes arising from the application of existing rules or challenges by tax or competition authorities, may expose the Group to additional tax liabilities or impact the carrying value of deferred tax assets, which could affect the future tax charge.

Liabilities relating to open and judgemental matters are based upon an assessment of whether the tax authorities will accept the position taken, after taking into account external advice where appropriate. Where the final tax outcome of these matters is different from the amounts which were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. The Group does not currently consider that judgements made in assessing tax liabilities have a significant risk of resulting in any material additional charges or credits in respect of these matters, within the next financial year, beyond the amounts already provided.

9. Ordinary dividends

The Board has recommended an interim dividend of 15.0p (2022: 15.0p) per ordinary share. This is expected to be paid on 3 November 2023 to shareholders on the register at 13 October 2023. The Board recommended a final dividend of 24.4p per ordinary share in respect of 2022. This was paid on 7 July 2023.

Notes to the unaudited condensed consolidated interim financial statements (continued)

10. Earnings per share

Basic EPS

The calculation of basic EPS is as follows:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
Earnings1 (£ million)	112.0	257.9
Weighted average shares used in basic EPS calculation (million)	1,071.2	1,115.2
EPS	10.5p	23.1p

Note

1Earnings is equivalent to profit for the period attributable to equity holders of the parent.

Diluted EPS

The calculation of diluted EPS is as follows:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
Diluted earnings1 (£ million)	112.0	257.9
Weighted average shares used in diluted EPS calculation (million)	1,090.8	1,137.8
Diluted EPS	10.3p	22.7p

Note

1Diluted earnings is equivalent to profit for the period attributable to equity holders of the parent.

A reconciliation between the shares used in calculating basic and diluted EPS is as follows:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	m	m
Weighted average shares used in basic EPS calculation	1,071.2	1,115.2
Dilutive share options outstanding	0.8	1.4
Other potentially issuable shares	18.8	21.2
Weighted average shares used in diluted EPS calculation	1,090.8	1,137.8

At 30 June 2023 there were 1,141,513,196 (30 June 2022: 1,162,563,018) ordinary shares in issue, including treasury shares of 66,675,497 (30 June 2022: 70,489,953).

Notes to the unaudited condensed consolidated interim financial statements (continued)

11. Analysis of cash flows

The following tables analyse the items included within the main cash flow headings on page 3:

Net cash outflow from operating activities:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Profit for the period	149.3	301.1
Taxation	55.0	117.5
Revaluation and retranslation of financial instruments	(25.5)	(33.1)
Finance costs	230.7	144.9
Finance and investment income	(102.4)	(55.5)
(Earnings)/loss from associates - after interest and tax	(1.0)	63.8
Adjustments for:
Non-cash share-based incentive plans (including share options)	75.5	67.3
Depreciation of property, plant and equipment	83.7	79.9
Depreciation of right-of-use assets	129.3	129.9
Impairment charges included within adjusting items1	140.4	8.1
Goodwill impairment	52.9	—
Amortisation and impairment of acquired intangible assets	36.6	31.5
Amortisation of other intangible assets	9.0	13.6
Investment and other impairment charges	11.0	—
Losses on disposal of investments and subsidiaries	2.9	48.1
Gains on remeasurement of equity interests arising from a change in scope of ownership	—	(60.4)
Gains on sale of property, plant and equipment	(0.5)	(1.1)
Movements in trade working capital2,3	(521.9)	(1,015.3)
Movements in other working capital and provisions4	(522.7)	(725.9)
Corporation and overseas tax paid	(171.3)	(162.7)

Interest and similar charges paid	(155.9)	(86.8)
Interest paid on lease liabilities	(48.8)	(44.1)
Interest received	108.5	26.9
Investment income	3.4	20.1
Dividends from associates	18.9	21.4
Earnout payments recognised in operating activities5	(1.2)	(21.7)
Net cash outflow from operating activities	(444.1)	(1,132.5)

Notes

1Impairment charges included within restructuring costs includes impairments for right-of-use assets and property, plant and equipment.

2Trade working capital represents trade receivables, work in progress, accrued income, trade payables, and deferred income.

3The 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.

4Other working capital represents other receivables and other payables.

5Earnout payments in excess of the amount determined at acquisition are recorded as operating activities. Prior year excess amounts were recorded as investing activities and have been re-presented as operating activities.

Notes to the unaudited condensed consolidated interim financial statements (continued)

11. Analysis of cash flows (continued)

Acquisitions and disposals:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Initial cash consideration	(202.0)	(35.0)
Cash and cash equivalents acquired	23.0	0.7
Earnout payments1	(11.2)	(41.6)
Purchase of other investments (including associates)	(7.7)	(5.1)
Acquisitions	(197.9)	(81.0)
Proceeds on disposal of investments and subsidiaries2	10.5	41.7
Cash and cash equivalents disposed	(0.2)	(12.5)
Disposals of investments and subsidiaries	10.3	29.2

Cash consideration for purchase of non-controlling interests	(16.0)	(6.2)
Cash consideration for non-controlling interests	(16.0)	(6.2)
Net acquisition payments and disposal proceeds	(203.6)	(58.0)

Notes

1Earnout payments in excess of the amount determined at acquisition are recorded as operating activities. Prior period excess amounts were recorded as investing activities and have been re-presented as operating activities.

2Proceeds on disposal of investments and subsidiaries includes return of capital from investments in associates.

Share repurchases and buybacks:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Purchase of own shares by ESOP Trusts	(37.0)	(43.2)
Shares purchased into treasury	—	(637.3)
	(37.0)	(680.5)

Proceeds from borrowings:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Proceeds from €750 million bonds	644.5	—
Draw down from revolving credit facility	400.0	—
Increase in drawings on bank loans	—	247.2
	1,044.5	247.2

Repayments of borrowings:


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Repayment of bank loans	—	(11.3)
Repayment of revolving credit facility	(400.0)	—
Repayment of debt assumed on acquisition	(69.8)	—
Repayment of €250 million bonds	—	(209.3)
	(469.8)	(220.6)

Notes to the unaudited condensed consolidated interim financial statements (continued)

12. Cash and cash equivalents and debt financing


	30 June 2023	31 December 2022
	£m	£m
Cash at bank and in hand	1,682.8	2,271.6
Short-term bank deposits	279.8	219.9
Overdrafts1	(447.5)	(505.7)
Cash and cash equivalents	1,515.1	1,985.8

Note

1 Bank overdrafts are included in cash and cash equivalents because they form an integral part of the Group’s cash management.

The Group estimates that the fair value of corporate bonds is £4,565.0 million at 30 June 2023 (31 December 2022: £4,049.1 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:


	30 June 2023	31 December 2022
	£m	£m
Within one year	(779.7)	(791.6)
Between one and two years	(1,129.2)	(724.3)
Between two and three years	(99.1)	(524.2)
Between three and four years	(1,376.0)	(740.3)
Between four and five years	(711.6)	(719.9)
Over five years	(1,904.9)	(1,963.7)
Debt financing (including interest) under the Revolving Credit Facility and in relation to unsecured loan notes	(6,000.5)	(5,464.0)
Short-term overdrafts – within one year	(447.5)	(505.7)
Future anticipated cash flows	(6,448.0)	(5,969.7)
Effect of discounting/financing rates	1,017.1	998.9
Debt financing	(5,430.9)	(4,970.8)

13. Goodwill and acquisitions

Goodwill in relation to subsidiary undertakings decreased by £156.6 million in the period. This movement primarily relates to the impact of currency translation of £320.8 million and impairment charges of £52.9 million. This is offset by the recognition of goodwill and fair value adjustments arising from M&A activity in the current and prior year of £217.1 million.

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 ended 30 June 2023 or between 30 June 2023 and the date the interim financial statements were approved.

Notes to the unaudited condensed consolidated interim financial statements (continued)

14. Trade and other receivables

Amounts falling due within one year:


	30 June 2023	31 December 2022
	£m	£m
Trade receivables (net of loss allowance)	6,167.8	7,403.9
Work in progress	292.7	352.4
VAT and sales taxes recoverable	425.5	448.1
Prepayments	305.7	236.6
Accrued income	3,193.4	3,468.3
Fair value of derivatives	2.4	5.1
Other debtors	670.6	585.3
	11,058.1	12,499.7

Amounts falling due after more than one year:


	30 June 2023	31 December 2022
	£m	£m
Prepayments	2.2	3.9

Fair value of derivatives	15.3	0.6
Other debtors	139.3	214.1
	156.8	218.6

The Group has applied the practical expedient permitted by IFRS 15 to not disclose the transaction price allocated to performance obligations unsatisfied (or partially unsatisfied) as of the end of the reporting period as contracts typically have an original expected duration of a year or less.

Other debtors falling due after more than one year for 30 June 2023 includes £16.0 million (31 December 2022: £15.4 million) in relation to pension plans in surplus.

Impairment losses on work in progress, accrued income and other debtors were immaterial for the periods presented.

The Group considers that the carrying amount of trade and other receivables approximates their fair value.

A bad debt credit of £5.4 million (period ended 30 June 2022: expense of £11.5 million) on the Group’s trade receivables in the period is a result of the decrease in expected credit losses since 31 December 2022. The loss allowance is equivalent to 0.8% (31 December 2022: 1.0%) of gross trade receivables.

15. Trade and other payables: amounts falling due within one year


	30 June 2023	31 December 2022
	£m	£m
Trade payables	9,351.1	11,182.3
Deferred income	1,310.5	1,599.0
Payments due to vendors (earnout agreements)	73.3	62.0
Liabilities in respect of put option agreements with vendors	14.9	18.8
Fair value of derivatives	40.2	58.0
Other creditors and accruals	2,365.8	2,914.8
	13,155.8	15,834.9

The Group considers that the carrying amount of trade and other payables approximates their fair value.

Notes to the unaudited condensed consolidated interim financial statements (continued)

16. Trade and other payables: amounts falling due after more than one year


	30 June 2023	31 December 2022
	£m	£m
Payments due to vendors (earnout agreements)	114.6	98.1
Liabilities in respect of put option agreements with vendors	305.9	323.3
Fair value of derivatives	12.6	—
Other creditors and accruals	84.3	69.5
	517.4	490.9

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 contingent consideration and the Directors’ best estimates of future earnout-related obligations:


	30 June 2023	31 December 2022
	£m	£m
Within one year	73.3	62.0
Between 1 and 2 years	37.8	19.5
Between 2 and 3 years	34.8	27.6
Between 3 and 4 years	28.8	28.6
Between 4 and 5 years	13.2	22.4
	187.9	160.1

The Group’s approach to payments due to vendors is outlined in note 19.

The Group does not consider there to be any material contingent liabilities as at 30 June 2023.

17. Related party transactions

The Group enters into transactions with its associate undertakings. The Group has continuing transactions with Kantar, including sales, purchases, the provision of IT services, subleases and property related items.

In the period ended 30 June 2023, revenue of £111.8 million (period ended 30 June 2022: £82.7 million) was reported in relation to Compas, an associate in the USA, and revenue of £6.6 million (period ended 30 June 2022: £7.4 million) was reported in relation to Kantar. All other transactions in the periods presented were immaterial.

The following amounts were outstanding at 30 June 2023:


	30 June 2023	31 December 2022
	£m	£m
Amounts owed by related parties
Kantar	24.7	26.1
Other	50.5	62.4
	75.2	88.5
Amounts owed to related parties
Kantar	(7.4)	(10.5)
Other	(55.2)	(65.2)
	(62.6)	(75.7)

Notes to the unaudited condensed consolidated interim financial statements (continued)

18. Going concern and liquidity risk

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 Group modelled a range of revenue less pass-through costs compared with the year ended 31 December 2022 and a number of mitigating cost actions that are available to the Group. Considering the Group’s bank covenant and liquidity headroom and cost mitigation actions which could be implemented, the Group would be able to operate with appropriate liquidity and within its banking covenants and be able to meet its liabilities as they fall due with a decline in revenue less pass-through costs up to 18% in 2023 and up to 12% in 2024 compared to the corresponding prior periods. The likelihood of such a decline is considered remote. The Directors have concluded that the Group will 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 and that there are no material uncertainties which gives rise to a significant going concern risk.

Given its debt maturity profile and available facilities, the Directors believe the Group has sufficient liquidity to match its requirements for the foreseeable future.

19. Financial instruments

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, or based on observable inputs:


	Level 1	Level 2	Level 3
	£m	£m	£m
30 June 2023
Derivatives in designated hedge relationships
Derivative assets	—	14.8	—
Derivative liabilities	—	(51.0)	—
Held at fair value through profit or loss
Other investments	0.4	—	257.5
Derivative assets	—	2.9	—
Derivative liabilities	—	(1.8)	—
Payments due to vendors (earnout agreements)	—	—	(187.9)
Liabilities in respect of put options	—	—	(320.8)
Held at fair value through other comprehensive income
Other investments	7.2	—	67.8

Reconciliation of level 3 fair value measurements:


	Payments due to vendors (earnout agreements)	Liabilities in respect of put options	Other investments
	£m	£m	£m
1 January 2023	(160.1)	(342.1)	358.5
Gains/(losses) recognised in the income statement	25.7	7.1	(24.7)
Gains recognised in other comprehensive income	—	—	0.1
Additions	(66.7)	(2.4)	1.8
Disposals	—	—	(10.4)
Cancellations	—	2.8	—
Settlements	12.4	1.8	—
Exchange adjustments	0.8	12.0	—
30 June 2023	(187.9)	(320.8)	325.3

Notes to the unaudited condensed consolidated interim financial statements (continued)

19. Financial instruments (continued)

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 available information from outside sources. There have been no movements between level 3 and other levels.

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 IFRS 9. 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 2023, the weighted average growth rate in estimating future financial performance was 11.6%, which reflects the prevalence of recent acquisitions in the faster growing markets and new media sectors. The weighted average risk adjusted discount rate applied to these obligations at 30 June 2023 was approximately 7.4%.

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 £8.6 million and £8.3 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 £6.3 million and £6.5 million, respectively. An increase in the liability would result in a loss in the revaluation and retranslation of financial instruments (note 6), while a decrease would result in a gain.

Other investments

The fair value of 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 information from outside sources using the most appropriate valuation technique, including all external funding rounds, revenue and EBITDA multiples, the share of fund net asset value and discounted cash flows. The sensitivity to changes in unobservable inputs is specific to each individual investment. A change to one or more of these unobservable inputs to reflect a reasonably possible alternative assumption would not result in a significant change to the fair value.

20. Reconciliation of profit before taxation to headline operating profit


	Six Months Ended 30 June 2023	Six Months Ended 30 June 2022
	£m	£m
Profit before taxation	204.3	418.6
Finance and investment income	102.4	55.5
Finance costs	(230.7)	(144.9)
Revaluation and retranslation of financial instruments	25.5	33.1
Profit before interest and taxation	307.1	474.9
(Earnings)/loss from associates - after interest and tax	(1.0)	63.8
Operating profit	306.1	538.7
Goodwill impairment	52.9	—
Amortisation and impairment of acquired intangible assets	36.6	31.5
Investment and other impairment charges	11.0	—
Restructuring and transformation costs	86.8	81.2

Property related costs	180.0	—
Losses on disposal of investments and subsidiaries	2.9	48.1
Gains on remeasurement of equity interests arising from a change in scope of ownership	—	(60.4)
Litigation settlement	(10.0)	—
Headline operating profit	666.3	639.1

Headline operating profit is one of the metrics that management uses to assess the performance of the business. Reconciling items in the above table are components of operating profit, which are included in note 4.