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 March 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:
Form
20-F X
Form 40-F ___
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1): ___
Note: Regulation S-T Rule 101(b)(1) only permits the
submission in paper of a Form 6-K if submitted solely to provide an
attached annual report to security holders.
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7): ___
Note: Regulation S-T Rule 101(b)(7) only permits the
submission in paper of a Form 6-K if submitted to furnish a report
or other document that the registrant foreign private issuer must
furnish and make public under the laws of the jurisdiction in which
the registrant is incorporated, domiciled or legally organized (the
registrant’s “home country”), or under the rules
of the home country exchange on which the registrant’s
securities are traded, as long as the report or other document is
not a press release, is not required to be and has not been
distributed to the registrant’s security holders, and, if
discussing a material event, has already been the subject of a Form
6-K submission or other Commission filing on EDGAR.
Forward-Looking Statements
In
connection with the provisions of the 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 ‘anticipate’,
‘estimate’, ‘expect’, ‘intend’,
‘will’, ‘project’, ‘plan’,
‘believe’, ‘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 outbreaks, epidemics or pandemics, such as the Covid-19 pandemic
and ongoing challenges and uncertainties posed by the Covid-19
pandemic for businesses and governments around the world; 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; 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; 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; 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,” 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
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Exhibit No.
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Description
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1
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Annual Report 2022 and AGM Notice dated 23 March 2023, prepared by
WPP plc.
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FOR IMMEDIATE RELEASE
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23 March 2023
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WPP PLC ("WPP" or "the Company")
Publication of Annual Report 2022, Sustainability Report and 2023
Notice of Annual General Meeting
WPP has today published on its website its Annual Report for
the year ended 31 December 2022 ('Annual Report
2022', www.wpp.com/investors/annual-report-2022)
together with its Sustainability Report. WPP has also today
published its 2023 Notice of Annual General Meeting (the '2023 AGM
Notice', www.wpp.com/investors/shareholder-centre/shareholder-meetings),
which will be distributed to shareholders
shortly.
The Company's AGM will be held on 17 May 2023 at 11.00am at Rose
Court, 2 Southwark Bridge Road, London SE1 9HS, with facilities to
follow the business of the AGM virtually.
In compliance with 9.6.1 of the Listing Rules, copies of the
Annual Report 2022 and 2023
AGM Notice will
be submitted to the UK Listing Authority and will shortly
be available for inspection at the National Storage
Mechanism https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
A hard copy version of the Annual Report 2022 will be sent to those
shareholders who have elected to receive paper communications on or
about 3 April 2023.
The information included in the unaudited preliminary results
announcement released on 23 February 2023, together with the
information in the Appendices to this announcement which is
extracted from the Annual Report 2022, constitute the materials
required by the FCA's Disclosure Guidance and Transparency Rule
6.3.5R. This announcement is not a substitute for reading the
Annual Report 2022 in full. Page and note references in the
Appendices below refer to page and note references in the Annual
Report 2022.
Balbir Kelly-Bisla
Company Secretary
Further information
|
Chris Wade, WPP
Richard Oldworth,
Buchanan Communications
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+44 (0)20 7282 4600
+44 (0)20 7466 5000
|
About WPP
WPP is the creative transformation company. We use the power of
creativity to build better futures for our people, planet, clients
and communities. For more information, visit www.wpp.com.
APPENDIX A: PRINCIPAL RISKS AND UNCERTAINTIES
PRINCIPAL RISKS
The Board has carried out a robust assessment of the principal
risks and uncertainties affecting the Group and the markets we
operate in and strategic decisions taken by the Board as at 31
December 2022 and up to the date of this report - including any
adverse effects of the pandemic and the geopolitical situation
following the Russian invasion of Ukraine - which are described in
the table on the following pages.
ECONOMIC RISK
Risk definition
Adverse economic conditions, including those caused by the
pandemic, the conflict in Ukraine, severe and sustained inflation
in key markets where we operate, supply chain issues affecting the
distribution of our clients' products and/or disruption in credit
markets, pose a risk our clients may reduce, suspend or cancel
spend with us or be unable to satisfy obligations.
Potential impact
Economic conditions, including inflation and increasing interest
rates, among others, have a direct impact on our business, results
of operations and financial position.
In the past, clients have responded to weak economic and financial
conditions by reducing or shifting their marketing budgets which
are easier to reduce in the short term than their other operating
expenses.
How it is managed and reflected in our strategic
priorities
Our account teams work proactively with our clients to understand
the challenges they are facing, determine general trends in
marketing spend and develop plans in advance to help us prepare,
redeploy resources and manage costs accordingly.
Our client portfolio is diverse, consisting of organisations
operating in different industry sectors and across a broad
geographical spread which further helps mitigate the impact of any
specific challenges individual clients or markets might be
facing.
GEOPOLITICAL RISK
Risk definition
Growing geopolitical tension and conflicts continue to have a
destabilising effect in our markets and across geographical
regions.
This rise in geopolitical activity continues to have an adverse
effect upon the economic outlook, the general erosion of trust and
an increasing trend of national ideology and regional convergence
over global cooperation and integration.
Such factors and economic conditions may be reflected in our
clients' confidence in making longer-term investments and
commitments in marketing spend.
Potential impact
Actual or threatened geopolitical tension and conflicts lead to
greater uncertainty, economic instability and a general lack of
confidence for many of our clients who are inclined to scale back,
delay or cancel their marketing plans and budgets.
How it is managed and reflected in our strategic
priorities
We work closely with our in-country teams, third-party advisors,
clients and other agencies in monitoring the level and nature of
geopolitical issues, events and developments across all markets and
regions.
Our primary focus is the safety and security of our people, and for
extreme events or periods of disruption we have developed a series
of crisis and response plans with clear lines of escalation to the
Board and Executive Committee that focuses upon the wellbeing of
our people and their families.
We have detailed operational and financial plans, developed through
the consideration of a range of potential scenarios and outcomes
that are continuously monitored and, if required, used to make
interventions and support decision making over our operations,
investments and advice to clients.
PANDEMIC
Risk definition
The impact of a pandemic on our business will depend on numerous
factors that we are not able to accurately predict, including the
duration and scope of a pandemic, any existing or new variants,
government actions to mitigate the effects of a pandemic and the
continuing and long-term impact of a pandemic on our clients'
spending plans.
Potential impact
A pandemic and any new variants and the measures to contain its
spread may have an adverse effect on our business, revenues,
results of operations and financial condition and
prospects.
How it is managed and reflected in our strategic
priorities
A pandemic and any new variants and the measures to contain its
spread may have an adverse effect on our business, revenues,
results of operations and financial condition and
prospects.
STRATEGIC PLAN
Risk definition
The failure to successfully complete the strategic plan updated in
December 2020 to simplify our structure, continue to introduce
market-leading products and services, identify cost savings and
successfully integrate acquisitions, may have a material adverse
effect on the Group's market share and its business revenues,
results of operations, financial condition or
prospects.
Potential impact
A failure or delay in implementing or realising the benefits from
the transformation plan and/or returning the business to sustained
growth may have a material adverse effect on our market share and
our business, revenues, results of operations, financial condition
or prospects.
How it is managed and reflected in our strategic
priorities
Board oversight of the implementation of the strategic plan and
regular briefings on the Group's response to the pandemic and the
economic and geopolitical consequences of the invasion of Ukraine
by Russia.
The Executive Committee regularly reviews progress against the
strategic plan and actions required to deliver against the plan and
convenes regularly to discuss the Group's response to and
implementation of the measures highlighted above to mitigate the
impact of the pandemic and the economic and geopolitical
consequences of the invasion of Ukraine by Russia on the Group's
operations, people, clients and financial condition.
The focus on managing cost and changes in ways of working have
accelerated aspects of the transformation as we move faster towards
a simplified company structure and enhanced use of technology by
our people as a consequence of adapting to remote
working.
IT TRANSFORMATION
Risk definition
We are undertaking a series of IT transformation programmes to
support the Group's strategic plan. The programme has been devised
so that it prioritises the most critical changes necessary to
support the overall strategic plan whilst maintaining the
operational performance and security of core systems.
The Group is reliant on third parties for the performance of a
significant portion of our worldwide information technology and
operations functions.
A failure to provide these functions could have an adverse effect
on our business.
Potential impact
Any failure or delay in implementing the IT transformation
programmes may have a material adverse effect upon the overall
strategic plan and the realisation of key targeted benefits and
savings.
Disruption and unavailability of critical system availability may
lead to disruption in our operations and client service
delivery.
How it is managed and reflected in our strategic
priorities
The Board and management team provides oversight and governance of
the most important change transformation initiatives the business
is pursuing.
Detailed plans have been prepared for each major transformation
initiative and overall progress, challenges and risks to the
initiative are monitored as part of our project management
processes and discussed in dedicated steering committees who also
agree upon any corrective action that may be required.
Progress reports are also completed as part of regular briefings
that the Board receives on the overall implementation of the
strategic plan.
CLIENT LOSS
Risk definition
We compete for clients in a highly competitive industry which has
been evolving and undergoing structural change.
Client net loss to competitors or as a consequence of client
consolidation, insolvency or a reduction in marketing budgets due
to a geopolitical change or shift in client spending would have a
material adverse effect on our market share, business, revenues,
results of operations, financial condition and
prospects.
Potential impact
The competitive landscape in our industry is constantly evolving
and the role of more traditional services and operators in our
sector who have not successfully diversified is being challenged.
Competitors include multinational advertising and marketing
communication groups, marketing services companies, database
marketing information and measurement and professional services and
consultants and consulting internet companies.
Client contracts can generally be terminated on 90 days' notice or
are on an assignment basis and clients put their business up for
competitive review from time to time.
The ability to attract new clients and to retain or increase the
amount of work from existing clients may be impacted if we fail to
react quickly enough to changes in the market and to evolve our
structure, and by loss of reputation, and may be limited by
clients' policies on conflicts of interest.
How it is managed and reflected in our strategic
priorities
The transformation plan updated in December 2020 places emphasis on
providing faster, more agile and more effectively integrated
solutions that are data and technology led for our clients as part
of a continuous improvement of our creative capability and
reputation of our businesses.
The plan is also delivering a simplification of our organisational
structure by reducing the number of legal entities in the Group,
the disposal of non-core minority holdings and more collaborative
working through the launch of further campus co-locations including
in Brazil and Canada.
The Board is focused on the importance of a positive and inclusive
culture across our business to attract and retain talent and
clients. Work continues on diversity and inclusion across the Group
including focus from the work of the WPP Global Inclusion
Council.
Continuous improvement of our creative capability and reputation of
our businesses. The development and implementation of senior
leadership incentives to align more closely with our strategy and
performance.
Business review at every Board, management and Executive Committee
meeting to identify client loss. Monthly updates to the management
team on the status of the Group's major clients and upcoming
pitches for potential new clients.
Continuous engagement with our clients and suppliers through this
period of uncertainty and reduction in economic
activity.
CLIENT CONCENTRATION
Risk definition
We receive a significant portion of our revenues from a limited
number of large clients and the net loss of one or more of these
clients could have a material adverse effect on our prospects,
business, financial condition and results of
operations.
Potential impact
A relatively small number of clients contribute a significant
percentage of our consolidated revenues. Our ten largest clients
accounted for 18% of revenue less pass-through costs in the year
ended 31 December 2022.
Clients can reduce their marketing spend, terminate contracts or
cancel projects on short notice. The loss of one or more of our
largest clients, if not replaced by new accounts or an increase in
business from existing clients, would adversely affect our
financial condition.
How it is managed and reflected in our strategic
priorities
Increased flexibility in the cost structure (including incentives,
consultants and freelancers).
Business review at every Board meeting and regular engagement at
executive level with our clients.
A monthly 'new and existing business' tracker is reviewed by the
Executive Committee on a monthly basis with regular updates
provided to the Board.
REPUTATION
Risk definition
Increased reputational risk associated with working on client
briefs perceived to be environmentally detrimental and/or
misrepresenting environmental claims.
Potential impact
As consumer consciousness around climate change rises, our sector
is seeing increased scrutiny of its role in driving consumption.
Our clients seek expert partners who can give recommendations that
take into account stakeholder concerns around climate change.
Additionally, WPP serves some clients whose business models are
under increased scrutiny, for example, energy companies or
associated industry groups. This creates both a reputational and
related financial risk for WPP if we are not rigorous in our
content standards as we grow our sustainabilityrelated
services.
How it is managed and reflected in our strategic
priorities
Our climate crisis training seeks to ensure that our people
recognise the importance of our sector's role in addressing the
climate crisis. It is part of a broader sustainability training
programme being run in multiple markets with localised content in
key regions.
We have developed internal tools to help our people identify
environmentally harmful briefs. These tools embed climate-related
issues within existing content review procedures across the
organisation. The misrepresentation of environmental issues is
governed by our Code of Conduct. We also ensure our policies reduce
the risk that any client brief undermines the implementation of the
Paris Agreement. In 2022, we introduced the revised Assignment
Acceptance Policy and Framework and the Green Claims Guide to
provide further guidance about how to conduct additional due
diligence in relation to clients and any work we are asked to
undertake.
PEOPLE, CULTURE AND SUCCESSION
Risk definition
Our performance could be adversely affected if we do not react
quickly enough to changes in our market and fail to attract,
develop and retain key creative, commercial, technology and
management talent, or are unable to retain and incentivise key and
diverse talent, or are unable to adapt to new ways of working by
balancing home and office working.
Potential impact
We are highly dependent on the talent, creative abilities and
technical skills of our people as well as their relationships with
clients.
We are vulnerable to the loss of people to competitors (traditional
and emerging) and clients, leading to disruption to the
business.
How it is managed and reflected in our strategic
priorities
Our incentive plans are structured to provide retention value, for
example, by paying part of annual incentives in shares that vest
two years after grant date.
We are working across the businesses to embed collaboration and
investing in training and development to retain and attract
talented people. The investment in co-located campus properties is
increasing the cooperation across our companies and provides
extremely attractive and motivating working
environments.
Focus on the mental health of our people by providing access to
wellbeing resources, the establishment of support networks, funded
events, discussion forums and additional time off.
All In survey completed by two-thirds of our people in 2022,
providing an opportunity for the Board, Executive Committee and
senior leaders across the business to understand the general
sentiment, views, opinions and concerns of employees.
Findings from the survey highlighted general and local views on
cultural, wellbeing and other matters, which have formed the basis
of people change projects and further plans for
remediation.
Succession planning for the Chief Executive Officer, the Chief
Financial Officer and key executives of the Company is undertaken
by the Board and Nomination and Governance Committee on a regular
basis and a pool of potential internal and external candidates is
identified in emergency and planned scenarios.
The Compensation Committee provides oversight for the Group's
incentive plans and compensation.
Our real estate teams work closely with people teams across the
business to consider how space is being utilised to support
collaboration and innovation.
CYBER AND INFORMATION SECURITY
Risk definition
The Group has in the past and may in the future experience a cyber
attack that leads to harm or disruption to our operations, systems
or services.
Such an attack may also affect suppliers and partners through the
unauthorised access, manipulation, corruption or the destruction of
data.
Potential impact
We may be subject to investigative or enforcement action or legal
claims or incur fines, damages or costs and client loss if we fail
to adequately protect data.
A system breakdown or intrusion could have a material adverse
effect on our business, revenues, results of operations, financial
condition or prospects and have an impact on long-term reputation
and lead to client loss.
The imposition of sanctions following the ongoing conflict in
Ukraine has triggered an increase in cyber attacks
generally.
How it is managed and reflected in our strategic
priorities
We monitor and log our network and systems and keep raising our
people's security awareness through our WPP Safer Data training and
mock phishing attacks.
Heightened focus on monitoring our network and systems and raising
awareness of the potential for phishing and other cyber attacks
during the period of remote working and the geopolitical situation
and an increased focus on our control environment.
CREDIT RISK
Risk definition
We are subject to credit risk through the default of a client or
other counterparty.
Challenging economic conditions, heightened geopolitical issues,
shocks to consumer confidence, disruption in credit markets and
challenges in the supply chain disrupting our client operations can
lead to a worsening of the financial strength and outlook for our
clients who may reduce, suspend or cancel spend with us, request
extended payment terms beyond 60 days or be unable to satisfy
obligations.
Potential impact
We are generally paid in arrears for our services. Invoices are
typically payable within 30 to 60 days.
We commit to media and production purchases on behalf of some of
our clients as principal or agent depending on the client and
market circumstances. If a client is unable to pay sums due, media
and production companies may look to us to pay those amounts and
there could be an adverse effect on our working capital and
operating cash flow.
How it is managed and reflected in our strategic
priorities
Evaluating and monitoring clients' ongoing creditworthiness and in
some cases requiring credit insurance or payments in
advance.
We are working closely with our clients during this period of
economic uncertainty to ensure timely payment for services in line
with contractual commitments and with vendors to maintain the
settlement flow on media.
Our treasury position and compliance with lending covenants is a
recurring agenda item for the Audit Committee and
Board.
Increased management processes to manage working capital and review
cash outflows and receipts.
INTERNAL CONTROLS
Risk definition
Our performance could be adversely impacted if we failed to ensure
adequate internal control procedures are in place.
We have previously identified material weaknesses in our internal
control over financial reporting. If we failed to properly
remediate these material weaknesses or new material weaknesses are
identified, they could adversely affect our results of operations,
investor confidence in the Group and the market price of our ADSs
and ordinary shares.
Potential impact
Failure to ensure that our businesses have robust control
environments, or that the services we provide and trading
activities within the Group are compliant with client obligations,
could adversely impact client relationships and business volumes
and revenues.
As previously disclosed, for the year ended 31 December 2020, we
identified certain material weaknesses in our internal control over
financial reporting. During 2021, we finished implementing
previously reported plans to remediate such material weaknesses and
concluded that as at 31 December 2021, such material weaknesses had
been remediated. We have also concluded that our internal control
over financial reporting is again effective as of 31 December 2022,
as disclosed in our Form 20-F.
If the remedial measures were ultimately insufficient to address
the material weaknesses, or if additional material weaknesses in
internal control are discovered or occur in the future, our ability
to accurately record, process and report financial information and,
consequently, our ability to prepare financial statements within
required time periods, could be adversely affected.
In addition, the Group may be unable to maintain compliance with
the federal securities laws and NYSE listing requirements regarding
the timely filing of periodic reports. Any of the foregoing could
cause investors to lose confidence in the reliability of our
financial reporting, which could have a negative effect on the
trading price of the Group's ADSs and ordinary shares.
How it is managed and reflected in our strategic
priorities
Transparency and contract compliance are embedded through the
networks and reinforced by audits at a WPP and network
level.
Regular monitoring of key performance indicators for trading are
undertaken to identify trends and issues.
An authorisation matrix on inventory trading is agreed with the
Company and the Audit Committee.
In 2021, our then new controls function continued to review and
enhance controls across the Group, under the direction of our
Global Director of Risk and Controls. As part of this effort, we
significantly enhanced the staffing, capabilities and resources of
our technical accounting function, which supported the
retrospective review efforts and will continue to provide ongoing
support in regards to complex accounting matters and judgment and
changes in accounting standards.
Management is committed to maintaining a strong internal control
environment, with appropriate oversight from our Audit Committee.
We have made significant enhancements to our controls through the
implementation of the remediation and continue to evaluate further
opportunities to improve our control environment. We have engaged
an independent valuation specialist, on an ongoing basis with
oversight by management, to assist us as an integral part of the
discount rate and cash flow determination process in the impairment
assessment of intangible assets and goodwill.
This has included such items as: updating our discount
determination methodology for a current market participant
approach; enhancing the level of review and controls related to the
selection of the variables underpinning the discount rate
calculation, the discount rate methodology and annual refresh; and
implementing additional validation controls and additional reviews
of the selection of cash flow periods and net working capital
assumptions.
In the case of complex accounting matters and hedging arrangements,
we performed a comprehensive retrospective review of our controls
and procedures and implemented enhanced periodic controls into our
control framework and have engaged outside advisors with specialist
expertise in the respective subject matter areas to assist with the
performance of the comprehensive retrospective review.
DATA PRIVACY
Risk definition
We are subject to strict data protection and privacy legislation in
the jurisdictions in which we operate and rely extensively on
information technology systems. We store, transmit and rely on
critical and sensitive data such as strategic plans, personally
identifiable information and trade secrets:
-
Security
of this type of data is exposed to escalating external threats that
are increasing in sophistication, as well as internal data
breaches
-
Data
transfers between our global operating companies, clients or
vendors may be interrupted due to changes in law (for example, EU
adequacy decisions, CJEU Schrems II decision)
Potential impact
We may be subject to investigative or enforcement action or legal
claims or incur fines, damages, or costs and client loss if we fail
to adequately protect data or observe privacy legislation in every
instance:
-
The
Group has in the past and may in the future experience a system
breakdown or intrusion that could have a material adverse effect on
our business, revenues, results of operations, financial condition
or prospects
-
Restrictions
or limitations on international data transfers could have an
adverse effect on our business and operations
How it is managed and reflected in our strategic
priorities
We develop principles on privacy and data protection and compliance
with local laws. We also monitor pending changes to regulations and
identify changes to our processes and policies that would need to
be implemented. In the case of data transfers, we also identify
alternative approaches, including using other permitted transfer
mechanisms, in order to limit any potential disruption (for
example, SCCs instead of Privacy Shield following the CJEU Schrems
II decision).
We implemented extensive training ahead of GDPR and CPPA
implementation and the roll-out of toolkits to assist our people to
prepare for implementation and will do the same as new legislation
is adopted in other markets.
A Chief Privacy Officer and Data Protection Officer are appointed
at the Company and Data Protection Officers are in place at a
number of our companies.
Our people must take Privacy & Data Security Awareness training
and understand the WPP Data Code of Conduct and WPP policies on
data privacy and security.
The Data Health Checker survey is performed annually to understand
the scale and breadth of data we collect so the level of risk
associated with this can be assessed.
TAXATION
Risk definition
We may be subject to regulations restricting our activities or
effecting changes in taxation.
Potential impact
Changes in local or international tax rules, for example, as a
consequence of the financial support programmes implemented by
governments during the Covid-19 pandemic, 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 us to significant additional
tax liabilities or impact the carrying value of our deferred tax
assets, which would affect the future tax charge.
How it is managed and reflected in our strategic
priorities
We actively monitor any proposed regulatory or statutory changes
and consult with government agencies and regulatory bodies where
possible on such proposed changes.
Biannual briefings to the Audit Committee of significant changes in
tax laws and their application and regular briefings to executive
management. We engage advisors and legal counsel to obtain opinions
on tax legislation and principles.
REGULATORY
Risk definition
We are subject to strict anti-corruption, anti-bribery and
anti-trust legislation and enforcement in the countries in which we
operate.
Potential impact
We operate in a number of markets where the corruption risk has
been identified as high by groups such as Transparency
International.
Failure to comply or to create a culture opposed to corruption or
failing to instil business practices that prevent corruption has
previously and could expose us to civil and criminal
sanctions.
How it is managed and reflected in our strategic
priorities
Online and in-country ethics, anti-bribery, anti-corruption and
anti-trust training on a Group-wide basis to raise awareness and
seek compliance with our Code of Conduct and the Anti-Bribery &
Corruption Policy.
A continuously evolving business integrity function to ensure
compliance with our codes and policies and remediation of any
breaches of policy.
Continuous communication of the Right to Speak confidential,
independently operated helpline for our people and stakeholders to
raise any potential breaches of our Code and policies, which are
investigated and reported to the Audit Committee on a regular
basis.
Due diligence on acquisitions and on selecting and appointing
suppliers and restrictions on the use of third-party consultants in
connection with any client pitches. Rolling programme of creating
shared financial services in the markets in which we operate and
the creation of a new controls function in 2020.
Risk Committees are well established at WPP and across the networks
to monitor risk and compliance through all of our businesses and
the enhancement of our business integrity programme across our
markets.
Gift and hospitality register and approvals process.
SANCTIONS
Risk definition
We are subject to the laws of the United States, the EU, the UK and
other jurisdictions that impose sanctions and regulate the supply
of services to certain countries.
The Russian invasion of Ukraine has caused the adoption of
comprehensive sanctions by, among others, the EU, the United States
and the UK, which restrict a wide range of trade and financial
dealings with Russia and Russian persons.
Potential impact
Failure to comply with these laws could expose us to civil and
criminal penalties including fines and the imposition of economic
sanctions against us and reputational damage and withdrawal of
banking facilities which could materially impact our
results.
How it is managed and reflected in our strategic
priorities
Online training to raise awareness and seek compliance and updates
for our companies on any new sanctions.
Regular briefings to the Audit Committee and constant monitoring by
the WPP legal team with assistance from external advisors of the
sanctions regimes. Executive Committee briefed and working with the
WPP legal team to ensure compliance with escalating sanctions as a
consequence of the Russian invasion of Ukraine.
We have taken a number of actions as a consequence of the invasion.
We have announced the discontinuance of our operations in Russia
and ensured compliance with all sanctions as they impact any
clients, suppliers or financial arrangements.
ENVIRONMENT REGULATION AND REPORTING
Risk definition
The Group could be subject to increased costs to comply with the
potential future changes in environmental law and
regulations.
Potential impact
We could be subject to increased costs to comply with potential
future changes in environmental laws and regulations and increasing
carbon offset pricing to meet our net zero
commitments.
Carbon emission accounting for marketing and media is in its
infancy and methodologies continue to evolve. This is particularly
the case for emissions associated with digital media.
How it is managed and reflected in our strategic
priorities
We are developing a net zero roadmap to deliver against our net
zero commitments and aim to disclose more details of that roadmap
in 2023.
As part of this plan and through our work to decarbonise media and
media supply chains, we are exploring opportunities to improve
accounting for emissions from media.
As we seek to limit emissions, we need to reduce the total
footprint of any product or service as far as possible. To manage
the cost and quality of carbon credits purchased to offset
remaining emissions, WPP developed a new offsetting policy and we
are further developing our offsetting strategy as part of our net
zero roadmap.
EMERGING RISKS
Risk definition
The Group's operations could be disrupted by an increased frequency
of extreme weather and climate-related natural
disasters.
Potential impact
This includes storms, flooding, wildfires and water and heat stress
which can damage our buildings, jeopardise the safety and wellbeing
of our people and significantly disrupt our
operations.
How it is managed and reflected in our strategic
priorities
Co-locating our people in fewer, higher-capacity campus buildings
means we can centralise emergency preparedness procedures and
deploy climate mitigation measures more efficiently.
Climate-related risk is considered when we invest in new campus
buildings. In 2023 we will pilot a new ESG scorecard to assess
building performance across a number of climate-related
metrics.
Our hybrid working approach, which incorporates new ways of working
adopted during the pandemic, provides additional resilience by
enabling fully remote working - provided employees and their
families are in safe locations - during extreme weather
events.
The Employee Assistance Programme is activated in response to
climate-related extreme weather events.
EMERGING RISKS
Risk definition
A failure to manage the complexity in carbon emission accounting
for marketing and media or to consider scope 3 emissions in new
technology and business model innovation across the supply chain
could have an adverse effect on our business and
reputation.
Potential impact
Increased investment required in building renovation,
electrification and supplier engagement to meet targets, including
developing internal ESG capacity and capabilities.
Offset prices would likely rise, increasing the overall expenditure
to meet our net zero commitments.
How it is managed and reflected in our strategic
priorities
In 2023, we will publish our first net zero transition plan which
will outline further details on how we intend to deliver against
our net zero targets.
The Board Sustainability Committee was formed in 2019 to give
increased focus on sustainability (see page 128). In 2022, we
updated our Sustainability Policy, and released our first
Environmental Policy which included policy guidance around
offsetting.
Environment, Social and Governance KPIs are included as part of the
scorecard that determines the short-term incentive rewards for
WPP's CEO, CFO and some key members of the Executive Committee.
This includes WPP's performance against carbon reduction
targets.
APPENDIX B: DIRECTORS' RESPONSIBILITY STATEMENT
Each of the current Directors whose names and functions are listed
in the Corporate Governance section of the Annual Report 2022
confirms that, to the best of his or her knowledge:
● the
Group financial statements, which have been prepared in accordance
with IFRS, issued by the International Accounting Standards Board
(IASB) as they apply to the financial statements of the Group for
the year ended 31 December 2022, give a true and fair view of the
assets, liabilities, financial position and profit of the Group.
and
● the
Strategic report and risk sections of the Annual Report, which
represent the management report, include a fair review of the
development and performance of the business and the position of the
Company and the Group taken as a whole, together with a description
of the principal risks and uncertainties that it
faces.
APPENDIX C: 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 year ended 31 December 2022, revenue of
£88.3 million (2021: £117.2 million) was reported in
relation to Compas, an associate in the USA, and revenue of
£42.7 million (2021: £11.3 million) was reported in
relation to Kantar. All other transactions in the years presented
were immaterial.
The following amounts owed by related parties were outstanding at
31 December 2022:
Kantar £26.1 million
Other £62.4 million
The following amounts owed to related parties were outstanding at
31 December 2022:
Kantar £(10.5) million
Other £(65.2) million
END
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
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|
|
(Registrant)
|
|
Date:
23 March 2023.
|
By:
______________________
|
|
|
Balbir
Kelly-Bisla
|
|
|
Company
Secretary
|
WPP (NYSE:WPP)
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