Wpp Plc · LSE:WPP
Wpp — Shareholder Meeting (2006)
18 slides from Wpp's shareholder meeting presentation, Nov 21, 2006
Slide 1: Sir Martin Sorrell, Group chief executive
Sir Martin Sorrell Group chief executive
Slide 2: Strategic Priorities
Strategic Priorities Short term: to capitalise on the 2004 and 2005 up-turn Medium term: to continue to successfully integrate acquired companies Long term: develop our businesses in the faster-growing geographic areas of Asia Pacific, Latin America, Africa and the Middle East, and Central and Easte
Slide 3: Strategy, Structure & Competitive Position
Strategy, Structure & Competitive Position Faster growing markets to be one third of total Group WPP WPP Today incl. associates WPP Tomorrow incl. associates Today Asia Pacific, Latin Asia Pacific, Latin Asia Pacific, Latin America, Africa America, Africa America, Africa & Middle East & Middle East
Slide 4: Strategy, Structure & Competitive Position
Strategy, Structure & Competitive Position Brazil, Russia, India and Greater China (BRIC) account for approximately 7% of WPP revenue today According to Goldman Sachs research, Dreaming with BRICs*, these countries will grow at 10.4% CAGR through 2015 According to Zenith, ad spending as a % of GDP f
Slide 5: Strategy, Structure & Competitive Position
Strategy, Structure & Competitive Position Today 2015 AP,LA,A & ME AP,LA,A & ME 9% 12% North Europe* North America America 15% 39% 36% Europe* 27% 25% 15% 7% 15% BRIC BRIC UK UK * Europe excludes Russia Assumes Brazil, Russia, India and China GDP growth of 10.4% CAGR according to Goldman Sachs Resea
Slide 6: Strategic Priorities
Strategic Priorities Marketing services to be two thirds of total Group Today Today including Tomorrow associates 33% 52% 48% 52% 48% 67% Marketing Services Advertising & Media Investment Management
Slide 7: WPP Today
WPP Today Quantitative disciplines to be one half of total Group Today Today including Tomorrow associates 33% 33% 50% 50% 67% 67% Information, Insight & Consultancy and Direct, Internet & Interactive Advertising, Media Investment Management & Other Marketing Services
Slide 8: Strategy
Strategy We continue to focus on our key objectives Improving operating margins Increasing flexibility in the cost base Using free cash flow to enhance share owner value, and improve return on capital employed Developing the role of the parent company Emphasising revenue growth more as margins impro
Slide 9: Key Priorities, Objectives and Strategy
Key Priorities, Objectives and Strategy Improving Operating Margins¹: History PBIT Margin - 2004 UK GAAP Margin - IFRS PBIT 1 PBIT1 margin % £’m 900 Long-term target 19% 20% 800 15.5% 16.0% 700 15.0% 16% 14.5% 14.0% 14.1% 12.3% 13.0% 15.0% 600 14.0% 14.5% 500 13.0% 12% 400 8% 300 431 561 480 534 608
Slide 10: Financial Model
Financial Model Organic revenue growth 0-5% Margin growth in line with objectives Operating profit growth of 5-10% Incremental profit growth from acquisitions of up to 5% Overall growth in EPS of 10-15%
Slide 11: Historic Financial Record
Historic Financial Record Earnings and EPS* 1998-2005 Earnings 36.0p (£m) 450 2004 WPP GAAP IFRS 400 32.3p* 30.6p* 27.9p 350 29.0 p* 300 30.1p* 23.8p² 250 200 22.5p* 150 18.8p* 100 50 0 1998 1999 2000 2001 2002 2003 2004 2005 ¹ Diluted Headline Earnings and Diluted Headline EPS ² Restated for implem
Slide 12: Increasing flexibility in the cost base
Increasing flexibility in the cost base We continue to focus on a more flexible cost structure in three key areas: – Staff c. 50% of revenue – Property c. 7% of revenue – Bought in services c. 30% of revenue Increased flexibility in all areas important to combat any future economic slowdown
Slide 13: Increasing flexibility in the cost base
Increasing flexibility in the cost base Change in variable staff costs 14 2000 2004 2005 12 10 8 % 6 12.1 13.2 12.8 4 6.6 7.8 7.6 2 0 Variable Staff costs as % of Staff costs Variable Staff costs as % of Revenue
Slide 14: Using Free Cash Flow to Enhance Share Owner Value - Acquisitions
Using Free Cash Flow to Enhance Share Owner Value - Acquisitions Grey acquired with effect from 7 March 2005 Continued focus on small and mid-size strategic acquisitions – a number completed during the first five months Major focus continues to be on information, insight & consultancy and the faster
Slide 15: Using Free Cash Flow to Enhance Share Owner Value - Dividends & Share Purchases
Using Free Cash Flow to Enhance Share Owner Value - Dividends & Share Purchases 2004 dividend Shares Amount % of Share (£) Base raised by 20% 1997 7.2m 31.2m 1.0% to 7.78p per share 1998 15.6m 54.6m 2.1% Share repurchases 1999 3.3m 17.9m 0.4% 2000 10.3m 94.1m 1.3% and buy-backs: 2001 15.4m 103.3m 1.
Slide 16: Strategy
Strategy Emphasise Revenue Growth More as Margins Improve Continue to focus on delivering above-average revenue growth by: – Expanding networks to take advantage of faster growing geographical markets – Re-enforcing competitive advantage in segments where growth is expected to remain higher, eg, Mar
Slide 17: Strategy
Strategy Improving the creative capability and reputation of all our businesses By placing greater emphasis on recruitment By recognizing creative success tangibly and intangibly By acquiring highly regarded creative businesses By placing greater emphasis on awards
Slide 18: WPP Today
WPP Today Revenue by Geography Asia Pacific, Latin America, Africa & Middle East 19% 40% North America 26% Continental Europe 15% UK