Strong first half across the business:
returned to 2019 levels a year ahead of plan; full-year guidance
raised; good progress on transformation; £350 million buyback
planned for H2
WPP (NYSE: WPP) today reported its 2021 Interim Results.
Key figures – continuing operations
£ million
H1 2021
+/(-) %
reported1
+/(-) %
LFL2
H1 20203
Revenue
6,133
9.8
16.1
5,583
Revenue less pass-through
costs
4,899
5.0
11.0
4,668
Reported:
Operating profit/(loss)
484
n/m4
-
(2,751)
Profit/(loss) before tax
394
n/m
-
(3,177)
Diluted EPS (p)
20.6
n/m
-
(262.0)
Dividends per share (p)
12.5
25.0
-
10.0
Headline5:
Operating profit
590
54.4
-
382
Operating profit margin
12.1%
3.9pt*
-
8.2%
Profit before tax
502
81.9
-
276
Diluted EPS (p)
28.7
86.4
-
15.4
* Margin points
H1 and Q2 financial highlights
- H1 reported revenue 9.8%, LFL revenue 16.1% (Q2
26.4%)
- H1 revenue less pass-through costs 5.0%, LFL revenue less
pass-through costs 11.0% (up 0.5% on H1 2019)
- Q2 LFL revenue less pass-through costs 19.3%: US 12.6%, UK
31.8%, Germany 20.3%, Greater China 1.4%, Australia 8.4%, India
30.0%
- Q2 LFL revenue less pass-through costs on 2019 1.3%: US
1.8%, UK 1.1%, Germany 6.3%, Greater China -1.7%, Australia -13.6%,
India -2.6%
- Strong new business performance: $2.9 billion net new
billings in H1
- H1 headline operating margin 12.1%, up 3.9 pt on prior year
with strong top-line growth supporting significant reinvestment in
incentives
- H1 headline operating margin pre incentives up 7.8 pt to
17.0%
- Net debt at 30 June 2021 £1.5 billion, down £1.2 billion
year-on-year reflecting good working capital management
Strategic progress, shareholder returns and outlook
- Shifting business mix: growth areas of experience, commerce
and technology represented 26% of revenue less pass-through costs
in H1
- Launch of Choreograph, future-ready data and analytics
company
- M&A to simplify and grow: buy-in of WPP AUNZ minorities;
technology acquisitions in Brazil and UK; Kantar agreed to acquire
Numerator
- Continued recognition of creativity and effectiveness: most
creative company at Cannes, collecting 190 Lions including 12 Grand
Prix, 1 Titanium, 28 Gold, 57 Silver and 92 Bronze
- Industry-leading commitment to net zero carbon emissions
across entire supply chain by 2030
- £248m share buyback in H1, £350m planned for H2; 12.5p 2021
interim dividend declared, +25%
- Full year 2021 LFL revenue less pass-through costs growth
now expected to be 9-10%; headline operating margin towards the
upper end of the 13.5-14.0% range
Mark Read, Chief Executive Officer, WPP:
“I’m delighted with our performance in the first six months of
the year, at a time when COVID continues to take a toll on many
countries. The like-for-like revenue less pass-through costs growth
rate of 19.3% in the second quarter is our highest on record, as
clients reinvest in marketing, particularly in digital media,
ecommerce and marketing technology. We have returned to 2019 levels
in 2021, a year ahead of our plan, with good momentum into
2022.
“We’ve also made very good strategic progress. Our recognition
as the most awarded company at the 2021 Cannes Lions Festival
reflects our investment in creative talent and the strength of our
creative work over the past two years. Our focus on data, commerce
and technology, through strategic acquisitions, organic investments
and the launch of Choreograph, has supported a strong new business
performance. Key assignment wins include AstraZeneca, Bumble, JP
Morgan Chase and Pernod Ricard.
“In procurement, property and shared services, we are making
strong progress as part of our overall transformation programme. We
have significantly increased our incentive pools in the first half,
to reflect the tremendous contribution of our people in these
challenging times, and in line with our intention to reinvest in
talent announced at our Capital Markets Day in December 2020.
“We expect our strategy to translate into benefits for all of
our stakeholders: a powerful, modern offer to support our clients’
growth; a great place for our people to work; a positive
contribution to communities and the environment; and good financial
returns for shareholders, with the interim dividend raised 25% and
£600 million of share buybacks planned in 2021.”
To access WPP's 2021 interim results financial tables, please
visit: www.wpp.com/investors
First half overview
Market environment
The market recovery in the first half of the year has been much
faster than expected. Successful vaccination programmes in our
major markets have accelerated the easing of restrictions,
stimulating economic activity. As the global recovery gathered
pace, GroupM made a significant upward revision of its advertising
forecasts, predicting that the global advertising economy will grow
by 19% in 2021 (excluding US political advertising).
Much of this growth is expected to be captured by digital media,
as the underlying trends accelerated by the pandemic, such as the
shift to ecommerce and digitisation of media, have continued in the
first half of 2021. GroupM forecasts show digital media spend
increasing by 26% in 2021, a major uplift from the 15% estimated in
December 2020. Spend on television advertising is expected to grow
by 9%, as marketers continue to rely on the medium’s reach
advantage to reinforce the strength of their brands. Most other
advertising channels are expected to stabilise or grow during 2021,
aside from magazines and newspapers where spend is expected to
decline.
The recovery has been broad-based across all major markets as
economies have begun to stabilise, supported by government stimulus
and vaccination roll-outs. Based on GroupM forecasts, advertising
spend in the UK will grow by 24% in 2021 driven by the economic
recovery. Better than 20% growth in advertising spend is also
forecast in Brazil and China. The US advertising market is expected
to grow by 17% in 2021, or 22% excluding political spend.
Performance and progress
Revenue in the first half was £6.1 billion, up 9.8% from £5.6
billion in the first half of 2020, and up 16.1% like-for-like.
Revenue less pass-through costs was £4.9 billion, up 5.0% from £4.7
billion in the first half of 2020, and up 11.0% like-for-like.
We have seen a strong recovery in the first half of the year,
with LFL growth in revenue less pass-through costs across all
sectors and most major markets. On a two-year basis we are 0.5%
ahead of 2019 performance for the first half in terms of LFL
revenue less pass-through costs, having been slightly below 2019
levels in the first quarter of the year.
The nature of our work for clients has continued to evolve. We
have seen very strong demand from clients for commerce services.
GroupM commerce billings increased 61% year-on-year in the first
half. Our expertise in commerce was recognised in March, when
Forrester named WPP a Leader among commerce services providers in
the Forrester Wave™: Commerce Services, Q1 2021 report. Further
highlighting our pivot to digital, GroupM’s proportion of digital
billings has increased from 41% in 2020 to 43% in the first half of
2021.
Our PR business has performed strongly (LFL revenue less
pass-through costs +7.4%), as WPP agencies remain a critical
partner and advisor to our clients. We have seen high demand for
purpose-related communications, as our clients have sought advice
on how to engage with their own stakeholders on sustainability
issues, and we see this as a significant opportunity for
growth.
In terms of client sector performance, we have seen a sustained
strong performance from our clients in the consumer packaged goods,
technology and healthcare & pharma sectors, which together
represent around 54% of our revenue less pass-through costs for
designated clients. In the first half these sectors saw LFL revenue
less pass-through costs growth of 11.3%, 14.5% and 13.4%
respectively. Compared to 2019, their growth rates were 7.2%, 12.7%
and 10.8%.
We have had a good performance in terms of new business, with
$2.9 billion of net new business billings won in the first half.
The performance of our integrated agencies, the strength and scale
of our global footprint and the collaboration between agencies have
continued to attract and retain clients. Key assignment wins
include AstraZeneca, Bumble, Hyatt, JP Morgan Chase, L’Oréal,
Pernod Ricard and Sam’s Club, and key retentions include the US
Navy.
During the period, we continued to invest in strategically
important areas. We announced the acquisitions of DTI, a digital
innovation and software engineering business in Brazil, and NN4M, a
leading mobile commerce partner for global brands. In addition, our
40% associate Kantar agreed to acquire Numerator, a
technology-driven consumer and market intelligence company.
Our commitment to creativity is now being reflected more widely
in our work and awards. WPP was named the most creative company of
the year at the Cannes Lions International Festival of Creativity
in June, reflecting the investments we have made in creativity and
the strength of our talent. Our agencies collected a total of 190
Lions, including a Titanium Lion and 12 Grand Prix, with winners
representing 38 different countries. We announced the appointment
of Rob Reilly as Global Chief Creative Officer in January 2021,
reinforcing our commitment to drive creativity across WPP.
We are making good progress on our transformation programme, as
we lay the foundations for realising structural efficiencies in a
number of areas. In property, where our campus strategy is
well-advanced, we are on track to occupy 32 campuses by the end of
2021, with new cities this year including Detroit, Jakarta and
Milan. The adoption of more hybrid working practices will further
amplify the benefits of our campuses, and total establishment costs
are expected to be below 6% of revenue less pass-through costs this
year. In shared services, we are establishing global and regional
hubs, and have already deployed units from four markets into these
locations. In Enterprise IT, our benchmarking work has identified
significant opportunities as we develop plans to reduce the gap
between our cost of IT and the industry benchmark. In procurement,
we are pursuing an extensive programme to consolidate our supplier
base and re-tender existing supply arrangements to tackle the
significant opportunities within our £2 billion of annual indirect
spend.
We have also made further structural and organisational changes
which simplify WPP and improve the way we go to market and serve
clients. We have established Choreograph, a new global data
company, bringing together the specialist data units of GroupM and
Wunderman Thompson into a single company with global reach,
accessible to all WPP clients and companies, and recently announced
the appointment of Brendan Moorcroft as CEO. In addition, we have
combined separate operations into a single brand research and
analytics platform under BAV, creating the leading source of brand
analytics on over 60,000 brands worldwide. This will enable us to
better integrate brand data into our data analytics offer across
WPP companies. Finally, we completed the transaction to take 100%
ownership of WPP AUNZ, further simplifying the group structure.
Purpose and ESG
Environmental, social and governance issues are an increasingly
important topic for all our stakeholders, particularly our clients
and our people. WPP is at the heart of many of the pressing issues
that we face as a society and the actions and judgements we make as
a business are critically important.
WPP’s purpose is to use the power of creativity to build better
futures for our people, our planet, our clients and our
communities. In June, we hosted an ESG event for stakeholders, to
set out our commitments and highlight the progress we have made
across the four pillars of our purpose statement.
Putting purpose at the heart of our business makes WPP a more
attractive employer for our people. In order to attract, retain and
grow top talent we have continued to invest in our people strategy
to ensure WPP is an employer of choice for all. This year we
launched our first quarterly Pulse survey, an employee listening
tool designed to better understand the sentiment of our people and
highlight the areas we need to focus on. WPP is committed to real
progress on diversity, equity and inclusion, and this year for the
first time we have incorporated diversity and sustainability
metrics into the compensation schemes for senior leaders. We have
also increased our incentive pools, as part of our plan to reinvest
savings in attracting and retaining talent.
Earlier this year, we announced our new commitments to reduce
carbon emissions from our own operations to net zero by 2025 and
across our supply chain by 2030. Our net zero pledges are backed by
equally ambitious science-based reduction targets, which have been
verified by the Science-Based Targets initiative. We have committed
to reducing our absolute Scope 1 and 2 emissions by at least 84% by
2025 and reduce Scope 3 emissions by at least 50% by 2030, both
from a 2019 base year.
Many of our clients are making great progress on reducing their
own emissions and we will continue to support them to reach their
targets. We have been recognised for our creativity in ESG-related
work at the Cannes Lions International Festival of Creativity
including a Titanium Grand Prix for Telenor work by Ogilvy in the
mobile category, using technology to alleviate inequalities in
Pakistan. In addition we won two design Grand Prix for AKQA’s work
with H&M pioneering an in-store recycling system and
Superunion’s work with Notpla, designing a sustainable alternative
to plastic packaging.
WPP’s global scale and reach puts us in a unique position to
build global partnerships and make a positive contribution to the
communities in which we operate. This year, through the WPP India
Foundation we set up a COVID relief fund, providing ambulances on
call, organising oxygen concentrators, and supporting a vaccination
drive for all our people and their families across India.
2021 guidance
Performance in the first half of 2021 has been strong, and we
are confident of further good growth in the second half. As a
result, we are raising our guidance for 2021 as follows:
- Organic growth (defined as like-for-like revenue less
pass-through costs growth) of 9-10% (previously mid-single-digits
%), returning to 2019 levels a year ahead of plan
- Headline operating margin towards the upper end of the range of
13.5-14.0%
- Capex £450-500 million
In addition, our current projections for foreign exchange
movements imply 4-5 percentage point drag to reported revenue less
pass-through costs from the strength of sterling year-on-year. We
also anticipate a net working capital outflow for 2021 of £200-300
million, reflecting some normalisation from the very strong
position at the end of 2020.
Medium-term guidance
At our Capital Markets Day in December 2020, we set out our new
medium-term financial targets that will allow us to invest in
talent, incentives and technology, improve our competitive position
and deliver sustainable long-term growth. These were:
- 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
- Dividend: intention to grow annually with a pay-out ratio
around 40% of headline diluted EPS
- Average net debt/EBITDA maintained in the range 1.5-1.75x
We now expect to recover to 2019 levels of revenue less
pass-through costs on a like-for-like basis in the current year.
The rest of these targets remain unchanged.
Financial results
Unaudited headline income statement:
Six months ended (£ million)
30 June
2021
30 June
2020
+/(-) %
reported
+/(-) % LFL
Continuing operations
Revenue
6,133
5,583
9.8
16.1
Revenue less pass-through costs
4,899
4,668
5.0
11.0
Operating profit
590
382
54.4
Operating margin %
12.1%
8.2%
3.9pt
Income from associates
29
-
-
PBIT
619
382
62.0
Net finance costs
(117)
(106)
(10.4)
Profit before tax
502
276
81.9
Tax
(115)
(64)
(78.9)
Profit after tax
387
212
82.8
Non-controlling interests
(34)
(21)
(64.0)
Profit attributable to shareholders
353
191
85.0
Diluted EPS
28.7p
15.4p
86.4
Reconciliation of operating profit/(loss) to headline
operating profit:
Six months ended (£ million)
30 June 2021
30 June 20206
Continuing operations
Operating profit/(loss)
484
(2,751)
Amortisation and impairment of acquired
intangible assets
30
53
Goodwill impairment
-
2,813
Losses/(gains) on disposal of investments
and subsidiaries
1
(16)
Investment and other write-downs
-
226
Litigation settlement
22
-
Restructuring and transformation costs
34
18
Restructuring costs in relation to
COVID-19
19
39
Headline operating profit
590
382
Reported billings were £23.4 billion, up 12.2%, and up 19.3%
like-for-like.
Reported revenue from continuing operations was up 9.8% at £6.1
billion. Revenue on a constant currency basis was up 15.8% compared
with last year. Net changes from acquisitions and disposals had a
negative impact of 0.3% on growth, leading to a like-for-like
performance, excluding the impact of currency and acquisitions, of
16.1%.
Reported revenue less pass-through costs was up 5.0%, and up
10.8% on a constant currency basis. Excluding the impact of
acquisitions and disposals, like-for-like growth was 11.0%. In the
second quarter, like-for-like revenue less pass-through costs was
up 19.3%.
Regional review
Revenue analysis
Q2
H1
£m
+/(-) %
reported
+/(-) %
LFL
£m
+/(-) %
reported
+/(-) %
LFL
N. America
1,121
4.2
16.7
2,184
0.3
10.2
United Kingdom
493
42.2
40.5
927
22.4
21.7
W Cont. Europe
728
37.1
41.1
1,341
22.7
23.5
AP, LA, AME, CEE7
893
14.2
22.7
1,681
8.1
16.0
Total Group
3,235
18.3
26.4
6,133
9.8
16.1
Revenue less pass-through costs analysis
Q2
H1
£m
+/(-) %
reported
+/(-) %
LFL
£m
+/(-) %
reported
+/(-) %
LFL
N. America
931
1.5
13.7
1,817
(2.1)
7.5
United Kingdom
359
31.7
31.8
680
16.1
16.9
W Cont. Europe
559
23.4
27.1
1,050
14.2
15.0
AP, LA, AME, CEE
716
8.8
16.1
1,352
3.5
10.5
Total Group
2,565
11.5
19.3
4,899
5.0
11.0
Headline operating profit analysis
£ million
2021
% margin*
2020
% margin*
N. America
271
14.9%
215
11.6%
United Kingdom
83
12.3%
35
6.0%
W Cont. Europe
104
9.9%
44
4.8%
AP, LA, AME, CEE
132
9.7%
88
6.7%
Total Group
590
12.1%
382
8.2%
* Headline operating profit as a percentage of revenue less
pass-through costs
North America like-for-like revenue less pass-through
costs was up 7.5% in the first half and up 13.7% in the second
quarter. On a two-year basis, North America was up 0.9%
like-for-like for the first half, with an improving trend in the
second quarter. VMLY&R was consistently strong throughout the
first half, and GroupM and Ogilvy led the recovery in the second
quarter.
United Kingdom like-for-like revenue less pass-through
costs was up 16.9% in the first half and up 31.8% in the second
quarter. On a two-year basis, the UK was up 0.3% like-for-like for
the first half, returning to growth in the second quarter. Of our
major agencies, GroupM and AKQA Group showed the biggest
improvements in the two-year trend in the second quarter.
Western Continental Europe like-for-like revenue less
pass-through costs was up 15.0% in the first half and up 27.1% in
the second quarter. We saw a strong performance in Germany, and
Italy returned to two-year growth in the second quarter, but France
and Spain are yet to recover to 2019 levels.
In Asia Pacific, Latin America, Africa & the Middle East
and Central & Eastern Europe, like-for-like revenue less
pass-through costs was up 10.5% in the first half and up 16.1% in
the second quarter. All regions grew strongly, with Latin America
the best-performing, followed by Central & Eastern Europe.
Business sector review
Revenue analysis8
Q2
H1
£m
+/(-) %
reported
+/(-) %
LFL
£m
+/(-) %
reported
+/(-) %
LFL
Global Int. Agencies
2,734
17.6
26.4
5,170
9.4
16.0
Public Relations
236
5.4
14.1
450
0.7
7.5
Specialist Agencies
265
42.1
40.6
513
24.9
25.8
Total Group
3,235
18.3
26.4
6,133
9.8
16.1
Revenue less pass-through costs analysis
Q2
H1
£m
+/(-) %
reported
+/(-) %
LFL
£m
+/(-) %
reported
+/(-) %
LFL
Global Int. Agencies
2,135
10.8
19.2
4,069
4.4
10.9
Public Relations
224
4.3
12.9
429
0.7
7.4
Specialist Agencies
206
28.6
27.8
401
16.1
17.1
Total Group
2,565
11.5
19.3
4,899
5.0
11.0
Headline operating profit analysis
£ million
2021
% margin*
2020
% margin*
Global Int. Agencies
483
11.9%
282
7.2%
Public Relations
63
14.8%
72
16.9%
Specialist Agencies
44
11.0%
28
8.1%
Total Group
590
12.1%
382
8.2%
* Headline operating profit as a percentage of revenue less
pass-through costs
Global Integrated Agencies like-for-like revenue less
pass-through costs was up 10.9% in the first half and up 19.2% in
the second quarter. GroupM, representing 36% of revenue less
pass-through costs, was the strongest performer, up 17.0%
like-for-like in the half and up 28.6% in the second quarter.
VMLY&R also recorded double-digit growth for the first half,
and both businesses recorded encouraging two-year growth. Wunderman
Thompson, Ogilvy and AKQA Group all showed a strong recovery in the
second quarter.
Public Relations like-for-like revenue less pass-through
costs was up 7.4% in the first half and up 12.9% in the second
quarter. All parts of the business grew double-digits like-for-like
in the second quarter, with Finsbury Glover Hering being the
strongest performer.
Specialist Agencies like-for-like revenue less
pass-through costs was up 17.1% in the first half and up 27.8% in
the second quarter. We saw a very strong recovery in all our brand
consulting businesses, with resurgent demand for our services. CMI,
our specialist healthcare media business, also continued to perform
well.
Operating profitability
Reported profit before tax was £394 million, compared to a loss
of £3,177 million in the prior period, principally reflecting the
£2.8 billion of impairment charges and £57 million of restructuring
and transformation costs in the prior period (see table on page
8).
Reported profit after tax was £287 million compared to a loss
last year of £3,188 million.
Headline EBITDA (including IFRS 16 depreciation) for the first
half was up 45.8% to £699 million, and up 57.6% in constant
currency. Headline operating profit was up 54.4% to £590 million.
The strong improvement in profitability year-on-year reflects the
recovery in revenue less pass-through costs after the significant
impact of COVID-19 in the comparable period.
Headline operating margin was up 390 basis points to 12.1%.
Total operating costs were up 0.5% to £4.3 billion. Staff costs,
excluding incentives, were down 1.6% year-on-year to £3.2 billion,
reflecting lower headcount. Establishment costs were down 15.8% at
£265 million as we continued to benefit from our campus roll-out.
IT costs were up 1.1% at £277 million and other operating expenses
were down 13.4% at £242 million. Personal costs fell 40.7% to £52
million, reflecting very low travel costs. Excluding incentive
payments as outlined below, operating costs were down 4.1%
year-on-year.
The Group’s headline operating margin is after charging £15
million of severance costs, compared with £19 million in the first
half of 2020 and £244 million of incentive payments, compared to
£48 million in the first half of 2020. Excluding incentive
payments, headline operating margin improved by 780 basis points to
17.0%.
On a like-for-like basis, the average number of people in the
Group in the first half was 102,000 compared to 105,000 in the
first half of 2020. The total number of people as at 30 June 2021
was 104,000 compared to 102,000 as at 30 June 2020.
Exceptional items
The Group incurred exceptional items of £107 million in the
first half of 2021, mainly relating to restructuring and
transformation costs and the amortisation and impairment of
acquired intangibles, partially offset by the Group’s share of
gains in relation to a disposal made by Kantar. This compares with
a net exceptional loss in the first half of 2020 of £3.1 billion,
which included impairments of £2.8 billion.
Interest and taxes
Net finance costs (excluding the revaluation of financial
instruments) were £117 million, an increase of £11 million
year-on-year, with the full impact of the coupons on the bonds
issued in May 2020 offset by lower average net debt and foreign
exchange movements.
The headline tax rate (excluding associate income) was 24.1%
(2020: 23.1%) and on reported profit before tax was 27.2% (2020:
-0.3%), with the difference in the reported tax rate in 2021
principally due to impairments in 2020. Given the Group’s
geographic mix of profits and the changing international tax
environment, the tax rate is expected to increase slightly over the
next few years.
Earnings and dividend
Headline profit before tax was up 81.9% to £502 million.
Profits attributable to share owners were £253 million, compared
to a loss of £3.2 billion in the prior period.
Headline diluted earnings per share from continuing operations
rose by 86.4% to 28.7p. Reported diluted earnings per share, on the
same basis, was 20.6p, compared to a loss per share of 262.0p in
the prior period.
For 2021, the Board is declaring an interim dividend of 12.5p,
an increase of 25% year-on-year. The record date for the interim
dividend is 15 October 2021, and the dividend will be payable on 1
November 2021.
Further details of WPP’s financial performance are provided in
Appendix 1.
Cash flow highlights
Six months ended (£ million)
30 June 2021
30 June 20209
Operating profit/(loss) of continuing
and discontinued operations
484
(2,740)
Depreciation and amortisation
250
306
Impairments and investment write-downs
8
3,039
Lease payments (inc interest)
(202)
(203)
Non-cash compensation
44
31
Net interest paid
(65)
(32)
Tax paid
(163)
(201)
Capex
(138)
(141)
Earnout payments
(14)
(88)
Other
(44)
(45)
Trade working capital
(464)
(456)
Other receivables, payables and
provisions
(41)
(295)
Free cash flow
(345)
(825)
Disposal proceeds
43
207
Net initial acquisition payments
(252)
(46)
Share purchases
(298)
(286)
Net cash flow
(852)
(950)
Net cash outflow for the first half was £852 million, compared
to £950 million in the first half of 2020. The main drivers of the
cash flow performance year-on-year were the higher operating profit
and the improved working capital performance year-on-year, offset
by higher consideration for acquisitions (relating mainly to the
buy-in of the WPP AUNZ minorities and the equity contribution to
Kantar’s acquisition of Numerator), lower net disposal proceeds and
the £298 million of share purchases in the first half. A summary of
the Group’s unaudited cash flow statement and notes for the six
months to 30 June 2021 is provided in Appendix 1.
Balance sheet highlights
As at 30 June 2021 we had cash of £3.3 billion and total
liquidity, including undrawn credit facilities, of £5.2 billion.
Average net debt in the first half was £1.5 billion, compared to
£2.5 billion in the prior period, at 2021 exchange rates. On 30
June 2021 net debt was £1.5 billion, against £2.7 billion on 30
June 2020, a reduction of £1.2 billion, or a reduction of £1.1
billion at 2021 exchange rates.
During the period, we converted the majority of our cash pool
arrangements to zero-balancing cash pools, whereby the cash and
overdrafts within these cash pools are physically swept to the
header accounts on a daily basis, resulting in a reduction of the
large gross cash and overdraft positions at 31 December 2020.
We spent £298 million on share purchases in the first half of
the year, of which £248 million related to share buybacks.
Our bond portfolio at 30 June 2021 had an average maturity of
6.9 years. In June 2021 we served notice to repay the $500 million
3.625% September 2022 bond in July 2021. There are no further
maturities until 2022.
The average net debt to EBITDA ratio in the 12 months to 30 June
2021 is 1.07x, which excludes the impact of IFRS 16. We also expect
to end the year below our target leverage range of average net
debt/EBITDA of 1.5-1.75x.
A summary of the Group’s unaudited balance sheet and notes as at
30 June 2021 is provided in Appendix 1.
________________________________ 1 Percentage change in reported
sterling. 2 Like-for-like growth at constant currency exchange
rates and excluding the effects of acquisitions and disposals. 3
Prior year figures have been restated as described in note 2 of
Appendix 1. 4 Not meaningful. 5 In this press release not all of
the figures and ratios used are readily available from the
unaudited interim results included in Appendix 1. Management
believes these non-GAAP measures, including constant currency and
like-for-like growth, revenue less pass-through costs and headline
profit measures, are both useful and necessary to better understand
the Group’s results. Where required, details of how these have been
arrived at are shown in Appendix 2. 6 Prior year figures have been
restated as described in note 2 of Appendix 1. 7 Asia Pacific,
Latin America, Africa & Middle East and Central & Eastern
Europe. 8 AKQA, Geometry, GTB and International Healthcare have
been reassigned from Specialist Agencies to Global Integrated
Agencies from Q1 2021. 2020 figures have been restated to reflect
this change. 9 Prior year figures have been restated as described
in note 2 of Appendix 1.
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