Wpp Plc · LSE:WPP
Wpp — Shareholder Meeting (June 2005)
23 slides from Wpp's shareholder meeting presentation, Jun 27, 2005
Slide 1: Annual General Meeting
Annual General Meeting 27 June 2005
Slide 2: Philip Lader, Chairman
Philip Lader Chairman
Slide 3: Annual General Meeting
Annual General Meeting 27 June 2005
Slide 4: Sir Martin Sorrell, Chief Executive
Sir Martin Sorrell Chief Executive
Slide 5: WPP Future Priorities
WPP Future Priorities
Slide 6: Strategic Priorities
Strategic Priorities Short term: successfully integrate Y&R Advertising and Grey Worldwide within WPP Medium term: continue superior like-for-like growth and enhance creative capabilities, particularly in traditional advertising Long term: develop our businesses in faster growing geographic regions
Slide 7: Strategy, Structure and Competitive Position
Strategy, Structure and Competitive Position Faster growing markets to be one third of total group Today Today including associates Tomorrow including associates Asia Pacific, Latin Asia Pacific, Latin Asia Pacific, Latin America, Africa America, Africa America, Africa & Middle East & Middle East &
Slide 8: Strategy, Structure and Competitive Position
Strategy, Structure and Competitive Position Brazil, Russia, India and Greater China (BRIC) account for approximately 5% 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 % of GDP f
Slide 9: Strategy, Structure and Competitive Position
Strategy, Structure and Competitive Position Today 2015 Asia Pacific, Latin Asia Pacific, Latin America, Africa & America, Africa & Middle East Middle East 12% 9% BRIC 6% North North America 36% America 39% BRIC 25% Europe* 26% 17% 15% 15% Europe* UK UK * Europe excludes Russia Assumes Brazil, Russi
Slide 10: Strategic Priorities
Strategic Priorities Marketing services to be two thirds of total group Today Today including associates Tomorrow 33% 46% 47% 54% 53% 67% Marketing Services Advertising & Media Investment Management
Slide 11: WPP Today
WPP Today Quantitative disciplines to be one half of total group Today Today including associates Tomorrow 35% 35% 50% 50% 65% 65% Information, Insight & Consultancy and Direct, Internet & Interactive Advertising & Media Investment Management and Other Marketing Services
Slide 12: Strategy
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 improving return on capital employed Developing the role of parent company Emphasising revenue growth more as margins improve Impr
Slide 13: Strategy
Strategy Historic financial record – PBIT1 and margins BIT (£’m) PBIT margin % 610 20% 20% margin target 510 16% 2006 Target 14.8% 410 13.0% 12.8% 14.5% 12.3% 14.1% 2005 Target 14.3% 11.8% 13.5% 14.0% 12% 310 608 561 534 480 210 433 8% 292 110 245 206 4% 10 1997 1998 1999 2000 2001 2002 2003 2004 -9
Slide 14: 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 15: Historic Financial Record
Historic Financial Record Earnings and EPS* 1997-2004 Earnings (£m) 400 32.3p* 30.9p* 29.0p* 350 24.9p* 300 30.1p* 250 22.5p* 200 18.8p* 150 15.7p* 100 50 0 1997 1998 1999 2000 2001 2002 2003 2004 * Headline Diluted EPS, which are based on UK GAAP prior to the adoption of International Accounting St
Slide 16: Increasing Flexibility in Cost Base
Increasing Flexibility in Cost Base We continue to focus on more flexible cost structure in three key areas: Staff c. 50% of revenue Property c. 10% of revenue Bought-in services c. 30% of revenue Increased flexibility in all areas important to combat any future economic slowdown
Slide 17: Increasing Flexibility in Cost Base
Increasing Flexibility in Cost Base Change in variable staff costs (%) 14 2000 12.1 12.2 12 11.0 2003 10 2004 8 7.1 6.6 6.3 6 4 2 0 Variable staff costs as % of staff costs Variable staff costs as % of revenue
Slide 18: 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 strategic acquisitions – a number completed during the first five months Major focus continues to be on information, insight & consultancy and the faster growing sector
Slide 19: Using Free Cash Flow to Enhance Share Owner Value: Dividends and share purchases
Using Free Cash Flow to Enhance Share Owner Value Dividends and share purchases 2004 dividend raised by 20% to 7.78p per share Share repurchases and buy-backs Shares Amount % of Share Base 1997 7.2m 31.2m 1.0% 1998 15.6m 54.6m 2.1% 1999 3.3m 17.9m 0.4% 2000 10.3m 94.1m 1.3% 2001 15.4m 103.3m 1.4% 20
Slide 20: 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 Market R
Slide 21: Strategy
Strategy Improving creative capabilities 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 22: WPP Today
WPP Today Revenue £4.3bn WPP PBIT £608m Information, Public Relations Branding & Identity, Media Healthcare and Advertising Investment Insight & & Specialist New Technolog Management Consultancy Public Affairs Communications Revenue £2.0bn Revenue £745m Revenue £445m Revenue £1.1bn Revenue; PBIT £31
Slide 23: WPP Today
WPP Today Chairman, Grey Global President & CEO: Group Ed Meyer Grey Grey Grey MediaCom Synchronised GCI Worldwide Healthcare Partners Chairman & CEO CEO: President & CEO: President & CEO: CEO: Ed Meyer Alexander Joe Celia Jeff Hunt Lynn O’Connor Vos Schmidt-Vogel