Wpp Plc · LSE:WPP
Wpp — Shareholder Meeting (June 2012)
44 slides from Wpp's shareholder meeting presentation, June 2012
Slide 1: Annual General Meeting 2012
Annual General Meeting 2012
Slide 2: Philip Lader, Chairman
Philip Lader Chairman
Slide 3: Annual General Meeting 2012
Annual General Meeting 2012
Slide 4: Sir Martin Sorrell, CEO, WPP
Sir Martin Sorrell CEO, WPP
Slide 5: Strategic Priorities
Strategic Priorities Short term: to grow revenues and gross margin faster than the industry average and deliver margin objective by managing absolute levels of costs. Long term: to continue to develop our business; – in new markets – in new media – in consumer insight, including data analytics and t
Slide 6: Key Priorities, Objectives and Strategy
Key Priorities, Objectives and Strategy Faster growing markets now to be over one third of total Group (35% - 40%). New media now to be over one third of total Group (35% - 40%). Quantitative disciplines including consumer insight to be over one half of total Group, with focus on digital and consume
Slide 7: Faster Growing Markets to be 35%-40% of Total Group
Key Priorities, Objectives and Strategy Faster Growing Markets to be 35% - 40% of Total Group Today Today including Tomorrow Associates 1 29% 29% 31% ² 34% 36% 38% 37% 35% 31% Revenue $16 bn Revenue $19 bn Revenue $? bn North America UK & Western Continental Europe Asia Pacific, Latin America, Afric
Slide 8: Revenues in Faster Growing Markets 2004-2011
Key Priorities, Objectives and Strategy Revenues in Faster Growing Markets 2004-2011 5.0 4.5 4.0 3.5 Revenue ($'bn) 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2004 2005 2006 2007 2008 2009 2010 2011 WPP OMC PUB IPG 1. WPP reportable US$‟s per WPP results and peer $ revenue as shown in annual results presentations
Slide 9: WPP's Performance Strong in BRIC Markets
Key Priorities, Objectives and Strategy WPP‟s Performance Strong in BRIC Markets – 3rd Largest “Country” Revenue $'m 1,200 3 8 9 16 11 year CAGR 17% 1,000 Associates @ 100% 11 year CAGR 15% 800 600 11 year CAGR 15% 400 11 year CAGR 53% ¹ 200 0 2000 2010 2011 2000 2010 2011 2000 2010 2011 2000 2010 2
Slide 10: WPP's Performance Strong in Other Faster Growing Markets
Key Priorities, Objectives and Strategy WPP‟s Performance Strong in Other Faster Growing Markets Revenue $'m 600 11 year CAGR 19% 500 Associates @ 100% 11 year CAGR 18% 400 300 200 11 year CAGR 31% 100 11 year CAGR 32% 0 2000 2010 2011 2000 2010 2011 2000 2010 2011 2000 2010 2011 Middle East Central
Slide 11: 2011 Revenue by Geography
Key Priorities, Objectives and Strategy 2011 Revenue by Geography $16.1bn Asia Pacific, Latin America, Africa & Middle East, CEE $13.9bn Western Europe N America 4.8 2.4 4.2 $8.2bn 5.9 $7.0bn 1.7 1.4 2.6 1.3 7.3 $2.1bn 5.4 $1.8bn 3.9 4.3 0.2 0.5 1.2 1.0 0.7 0.3 WPP Omnicom Publicis IPG Havas Aegis 1
Slide 12: Media Billings by Geography
Key Priorities, Objectives and Strategy Media Billings by Geography Worldwide Ranking by Group as % of the Six Groups % WPP Omnicom Publicis IPG Aegis Havas 40 35 30 25 20 15 10 5 0 Worldwide Americas Europe Asia Pacific Source: RECMA July 2011 billings report, based on 2010 data.
Slide 13: 2011 Revenue by Discipline
Key Priorities, Objectives and Strategy 2011 Revenue by Discipline $16.1bn Consumer Insight $13.9bn Marketing Services 3.9 Advertising 7.5 5.5 $8.2bn $7.0bn Media 4.1 2.9 3.7 4.7 2.5 2.7 $2.1bn $1.8bn 3.0 0.6 1.7 1.6 1.4 0.9 1.8 0.6 WPP Omnicom Publicis IPG Havas Aegis Source: 1 WPP reportable US $‟
Slide 14: Quantitative Disciplines to be over One Half of Total Group
Key Priorities, Objectives and Strategy Quantitative Disciplines to be over One Half of Total Group Today Today including Tomorrow Associates 48% 46% 49% 52% 54% 51% Advertising, Media Investment Management & Other Marketing Services Consumer Insight and Direct, Digital & Interactive
Slide 15: Strategic Objectives: Digital Strategy
Strategic Objectives Digital Strategy Invest in expansion of the networks and our Kantar Media and GroupM specialist services. Use proprietary technology linked with industry partnerships to improve client campaign effectiveness. Invest in new products to offer specialist services in retail marketin
Slide 16: The Digital Opportunity
The Digital Opportunity Today - 17% of Ad Spend Growth in Global Ad Spend Key Areas of Client Focus 18% Search and display media, 16% particularly audience buying. 14% 12% Mobile for next 4 billion 10% consumers. 8% Social media – 25% of time 6% on Facebook, Twitter, blogs, 4% etc. 2% e-commerce for
Slide 17: Delivering Results: WPP Share of Digital Revenue
Delivering Results Today - 30% of WPP Revenues WPP Share of Digital Revenue 35%- 40% 30% 21% 12% Target in 2000 2006 2011 5 years
Slide 18: Digital In All Our Businesses
Digital In All Our Businesses Global Scale and Quality Digital Revenues ($billion – 2011 Full Year) 4.8 2.5 2.5 1.1 0.4 0.4 WPP Omnicom Publicis IPG Havas Aegis ¹ Peer digital revenue $bn according to Ad Age %‟s applied to FY US$ revenue.
Slide 19: WPP's Digital Strategy
WPP’s Digital Strategy 1. Digital Invest in digital in all of our businesses through training, recruitment, Everywhere acquisitions, etc. Develop new services beyond traditional advertising, e.g, web 2. Specialist Digital development, DSPs, mobile, social, eCommerce and eShopper, etc. Expertise Esta
Slide 20: Digital Businesses – Two Major Global Networks
Key Priorities, Objectives and Strategy Digital Businesses – Two Major Global Networks Revenue $’m 2011 9501 1 900 1 300 3001,2 1001 1251 ¹ In WPP Direct, Digital and Interactive Networks ² In GroupM Digital
Slide 21: WPP's Global Digital Networks
WPP’s Global Digital Networks Dominant position in BRIC Markets Revenue $50m Russia ~450 Revenue $50m Revenue $140m Revenue $170m India ~1200 China ~2000 Brazil ~1300
Slide 22: WPP Position in Direct, Digital and Interactive
Key Priorities, Objectives & Strategy WPP Position in Direct, Digital and Interactive Revenue $’m Direct, Digital and Interactive Networks 2,615 (OgilvyOne, Wunderman, G2 and WPP Digital) % of Group revenue 17% Specialist Direct, Digital and Interactive resources: - Consumer Insight (Millward Brown,
Slide 23: Digital and Faster Growing Markets
Digital and Faster Growing Markets Long-Term Growth Drivers Overall 52% of 2011 Revenue Faster-growing markets Digital 29% 30% of revenue of revenue Digital in faster-growing markets 7% of revenue
Slide 24: We Continue to Focus on Our Key Objectives
Key Priorities, Objectives & Strategy We Continue to Focus on Our Key Objectives Improving operating margins. Increasing flexibility in cost base. Using free cash flow to enhance share owner value, and improve return on capital employed. Developing role of parent company. Emphasising revenue growth
Slide 25: Increasing flexibility in Cost Base
Increasing flexibility in Cost Base We continue to focus on a more flexible cost structure in three key areas; – Staff c. 57% of revenue – Property c. 8% of revenue – Bought-in services c. 21% of revenue Increased flexibility in all areas important to combat any economic slowdown.
Slide 26: Flexibility in Cost Base
Key Priorities, Objectives & Strategy Flexibility in Cost Base Change in Variable Staff Costs % 7.8 8 7.4 7.2 7 6.6 6 5.7 5 4 3 2 1 0 2007 2008 2009 2010 2011 Variable Staff Costs as % of Revenue
Slide 27: Using Free Cash Flow to Enhance Share Owner Value - Acquisitions
Using Free Cash Flow to Enhance Share Owner Value - Acquisitions Significant pipeline of reasonably priced small and medium size potential acquisitions. Continue to focus on faster growing geographical areas and on marketing services, particularly direct, digital & interactive and consumer insight.
Slide 28: Using Free Cashflow to Enhance Share Owner Value
Key Priorities, Objectives & Strategy Using Free Cashflow to Enhance Share Owner Value Distributions to Share Owners¹ £‟m 600 6.6% Buy-backs 500 Dividends paid 4.5% 400 4.8% 415 300 4.7% 182 3.6% 3.0% 258 3.4% 46 112 200 9 152 100 190 201 218 139 162 100 119 0 2005 2006 2007 2008 2009 2010 2011 ¹ Su
Slide 29: Dividend Pay-Out Ratio
Key Priorities, Objectives and Strategy Dividend Pay-Out Ratio Target Maximum 80p 40% 70p 35% 60p 30% 50p 25% 40p 20% 30p 15% 20p 10% 10p 5% 0p 0% 2005 2006 2007 2008 2009 2010 2011 Headline Diluted EPS Dividend Declared/ Share Dividend Pay-Out Ratio Dividend Pay-Out Ratio (Incl. Exceptional Tax Cre
Slide 30: 26 Year History: WPP Reported Revenue
26 Year History WPP Reported Revenue £’m 11,000 10,000 26 year 10,022 9,331 9,000 CAGR 8,684 8,000 7,477 7,000 6,000 35% 5,374 5,908 6,185 5,000 4,300 4,0223,9084,106 4,000 2,981 3,000 1,747 1,9182,173 2,000 1,4311,4271,5551,691 1,0051,2641,2041,273 1,000 24 284 547 4 0
Slide 31: 26 Year History: WPP PBIT and Margins
26 Year History WPP PBIT and Margins PBIT £’m PBIT margin 26 year % 1,600 CAGR 14.5% 15.0% 15.0% 16% 14.0% 14.1% 1,400 14.3% 38% 13.4% 12.8% 13.0% 14% 14.5% 14.3% 11.8% 12.3% 14.0% 1,200 13.2% 10.8% 13.0% 12% 1,000 10.1% 10.5% 9.6% 11.7% 9.7% 10% 8.4% 800 7.5% 7.0% 1430 8% 600 7.0% 1229 1118 5.6% 10
Slide 32: History: WPP Diluted Headline EPS
History WPP Diluted Headline EPS Post 1992 Rights Issue p 17 year 80 CAGR 70 67.7 60 50 16% 45.8 55.5 44.4 56.7 42.0 40 36.0 30.3 30.9 32.3 29.0 27.9 30 23.8 22.7 18.8 20 15.7 13.5 9.4 10 5.0 6.5 0 UK GAAP IFRS Note: 1993 adjusted to reflect 1992 rights issue. Diluted headline EPS
Slide 33: TSR and Share Price performance since 1985 to date
TSR and Share Price performance since 19851 to date Share Price TSR Rank Company CAGR% Rank Company CAGR% 1. Antofagasta 25.4 1. Antofagasta 29.7 2. Weir Group 17.2 2. Weir Group 21.6 5. Morrisons 13.9 5. Johnson Matthey 17.5 7. WPP 13.0 9. WPP 14.8 8. Unilever 10.9 11. Unilever 14.5 £1,000 invested
Slide 34: Financial Model
Financial Model Revenue growth in line with the market (0%-5%). Operating margin up 0.5 margin points each year. PBIT growth of 5%-10% per annum. Use of free cash flow to repay debt and small to mid-sized acquisitions of approximately £300m to £400m. Target EPS growth of 10%-15% per annum.
Slide 35: TSR Performance
TSR Performance Based on 5 years to 31 December 2011 30 25 20 15 10 5 0 WPP FTSE 100 OMC IPG Pub -5 -10 -15 -20 -25
Slide 36: TSR Performance - WPP v Peers
TSR Performance - WPP v Peers Measured from Friday June 8th 120 W PP 100 OM C 80 IPG PUB 60 40 20 0 1 Yea r 3 Yea r 5 Yea r -2 0 -4 0 -6 0 -80
Slide 37: TSR Performance WPP v FTSE 100
TSR Performance WPP v FTSE 100 Measured from Friday June 8th 100 W PP 80 F T SE 1 0 0 60 40 20 0 1 Yea r 3 Yea r 5 Yea r -2 0
Slide 38: Summary
Summary Strong like-for-like gross margin growth of 5.9% and revenue growth of 5.3% in a difficult year, ahead of 2011 budget. Double digit growth in faster growing markets and acceleration in UK, partly offset by slower second half growth in US. Advertising and Media Investment Management and Direc
Slide 39: Outlook
Outlook Our 2012 budgets indicate organic growth at around 4% and the first quarter revised forecast slightly higher. Impact of strong new business wins and progress in Consumer Insight, although euro crisis still a nagging worry. Our 2012 margin target, in line with long-term strategy, is for at le
Slide 40: Outlook
Outlook We will use our substantial cash flow to enhance earnings through small and medium size acquisitions (estimate £300m to £400m), dividend increases and share buy-backs. Our goal is to deliver our financial model target of 10% to 15% EPS growth through organic revenue growth up to 5%, margin i
Slide 41: Conclusions
Conclusions As our 2011 results show, the Group is well placed to benefit from regional and discipline trends, particularly if mature markets show continued slow growth. The investment in digital tools and infrastructure will enable the Group to optimise client campaigns and build unique advantage a
Slide 42: WPP Today
WPP Today Revenue £10.0bn WPP EBITDA £1,640m PBIT £1,429m PBT £1,008m Public Branding Media & Identity, Consumer Relations Advertising Investment Healthcare and WPP Digital Insight & Specialist Management Public Affairs Communications Revenue £4.1bn Revenue £2.5bn Revenue £0.9bn Revenue £2.5bn Reven
Slide 43: WPP's Performance Strong in BRIC Markets
Key Priorities, Objectives and Strategy WPP‟s Performance Strong in BRIC Markets – 3rd Largest “Country” Revenue $'m 1,200 3 8 9 16 11 year CAGR 17% 1,000 Associates @ 100% 11 year CAGR 15% 800 600 11 year CAGR 15% 400 11 year CAGR 53% ¹ 200 0 2000 2010 2011 2000 2010 2011 2000 2010 2011 2000 2010 2
Slide 44: Annual General Meeting 2012
Annual General Meeting 2012