Wpp Plc · LSE:WPP
Wpp — Shareholder Meeting (June 2009)
29 slides from Wpp's shareholder meeting presentation, June 2009
Slide 1: 1
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Slide 2: Philip Lader, Chairman
Philip Lader Chairman 2
Slide 3: 3
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Slide 4: Sir Martin Sorrell, CEO, WPP
Sir Martin Sorrell CEO, WPP 4
Slide 5: Strategic Priorities
Strategic Priorities Short term: to continue to balance changes in revenues against staff costs and headcount Medium term: to continue the integration of TNS within Kantar Long term: to continue to develop our business in the faster-growing geographic areas of Asia Pacific, Latin America, Africa and
Slide 6: Key Priorities, Objectives and Strategy
Key Priorities, Objectives and Strategy Faster growing markets to be one third of total group against approximately 27%¹ now (31%¹ including 100% of associates) Marketing services including new media to be two thirds of total group against approximately 61%¹ now Quantitative disciplines, basically c
Slide 7: Faster Growing Markets to be One Third of Total Group
Key Priorities, Objectives and Strategy Faster Growing Markets to be One Third of Total Group Today¹ Faster growing Today including associates¹ Tomorrow markets including Central & Eastern Europe 27% North America Europe Asia Pacific, Latin America, Africa & Middle East Central & Eastern Europe ¹ Ba
Slide 8: WPP's Performance Strong in BRIC Markets
Key Priorities, Objectives and Strategy WPP’s Performance¹ Strong in BRIC Markets Revenue $’m 800 700 Associates @ 100% 600 500 400 300 200 100 0 2000 2007 2008 2000 2007 2008 2000 2007 2008 2000 2007 2008 China (including Hong Brazil India Russia Kong and Taiwan) ¹ 2008 adjusted to include a full y
Slide 9: WPP's Performance in Other Faster Growing Markets
Key Priorities, Objectives and Strategy WPP’s Performance¹ in Other Faster Growing Markets Revenue $’m 700 600 Associates @ 100% 500 400 300 200 100 0 2000 2007 2008 2000 2007 2008 2000 2007 2008 2000 2007 2008 Middle East Eastern Europe Indonesia Vietnam ¹ 2008 adjusted to include a full year of TN
Slide 10: Revenue by Geography
Key Priorities, Objectives and Strategy Revenue by Geography $15.4bn Asia Pacific, LatAm, Africa & Middle East $13.4bn 3.6 Europe 1.5 N America 4.8 6.8 $7.0bn $6.9bn 1.3 1.3 1.8 2.6 7.1 $2.3bn $2.3bn 5.1 0.2 3.9 1.7 2.9 1.3 0.7 0.6 WPP Omnicom IPG Publicis Havas Aegis 1 Source: WPP - sterling revenu
Slide 11: Marketing Services to be Two Thirds of Total Group
Key Priorities, Objectives and Strategy Marketing Services to be Two Thirds of Total Group Today¹ Today including associates¹ Tomorrow Marketing Services Advertising & Media Investment Management ¹ Based on full year 2008 reported revenue adjusted to include a full year of TNS 11
Slide 12: Revenue by Discipline
Key Priorities, Objectives and Strategy Revenue by Discipline $15.4bn Marketing Services $13.4bn Advertising Media 9.5 7.6 $7.0bn $6.9bn 2.9 2.5 3.6 4.7 2.6 $2.3bn $2.3bn 2.6 0.8 0.9 2.3 1.8 1.0 1.1 1.4 0.5 1.4 WPP Omnicom IPG Publicis Havas Aegis Source: 1 WPP sterling revenue converted at $1.85=£1
Slide 13: Quantitative Disciplines to be One Half of Total Group
Key Priorities, Objectives and Strategy Quantitative Disciplines to be One Half of Total Group Today¹ Today including associates¹ Tomorrow Information, Insight & Consultancy and Direct, Internet & Interactive Advertising, Media Investment Management & Other Marketing Services ¹ Based on full year 20
Slide 14: Quantitative Disciplines to be One Half of Total Group
Key Priorities, Objectives and Strategy Quantitative Disciplines to be One Half of Total Group Information, Insight & Consultancy to represent over $4 billion including TNS Creates second largest Information, Insight & Consultancy group globally Creates fourth largest business information group glob
Slide 15: WPP Position in Direct, Internet and Interactive
Key Priorities, Objectives and Strategy WPP¹ Position in Direct, Internet and Interactive $’m Digital, Internet and Interactive Networks 2,421 +14% vs (OgilvyOne, Wunderman, rmg:connect, G2 and WPP Digital) 2007 % of Group revenues 16% Specialist Digital, Internet and Interactive resources: - Inform
Slide 16: 2008 Digital Revenue
Key Priorities, Objectives and Strategy 2008 Digital Revenue $ Billions 3.9 2.2 1.3 1.0 0.4 0.3 WPP1 Omnicom2 IPG2 Publicis3 Havas3 Aegis3 Source: ¹ WPP is “wide” definition, adjusted to include a full year of TNS. ² Ad Age %s applied to FY US$ revenue. 16 3 Company Disclosure.
Slide 17: Strategic Objectives
Strategic Objectives 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 role of parent company Emphasising revenue growth more as margins i
Slide 18: Historic Headline PBIT and Margins
Historic Headline PBIT¹ and Margins PBIT1 £’m PBIT1 margin % Long-term IFRS target 19% 2008 including full year of TNS 14.3% 1. Headline PBIT excludes finance income/ costs, taxation, goodwill and intangibles charges, investment gains, and share of exceptional gains of associates. For 2004 onwards,
Slide 19: 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 to repay debt and small to mid sized acquisitions up to £100m in 2009 and 2010 Target EPS growth of 10%-15% per annum 19
Slide 20: Results for 2008 - Earnings and EPS
Results for 2008 - Earnings and EPS¹ Earnings (£m) 2004 UK GAAP IFRS 700 55.5p 21% 600 9% 45.8p 42.0p 17% 500 36.0p 32.3p 29% 400 11% 29.0p 27.9p 300 200 100 0 2003 2004 2005 2006 2007 2008 ¹ Diluted Headline Earnings and Diluted Headline EPS 20
Slide 21: 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. 57% of revenue – Property c. 7% of revenue – Bought in services c. 21% of revenue Increased flexibility in all areas are important to combat economic slowdown 21
Slide 22: Increasing flexibility in the cost base
Increasing flexibility in the cost base Change in variable costs % 22
Slide 23: Using Free Cashflow to Enhance Share Owner Value
Using Free Cashflow to Enhance Share Owner Value Acquisitions Continue to focus on faster growing geographical areas and marketing services, particularly direct, internet & interactive and information, insight & consultancy During 2008 24 small and mid sized acquisitions were completed in executing
Slide 24: Using Free Cashflow to Enhance Share Owner Value
Using Free Cashflow to Enhance Share Owner Value 2008 second interim dividend raised by 12.6% to 10.28p per share Distributions to share owners: Share Repurchases Dividends Paid Amount % of Share Base 2000 £25.6m £94.1m 1.3% 2001 £44.4m £103.3m 1.4% 2002 £55.6m £75.9m 1.1% 2003 £67.0m £23.1m 0.5% 20
Slide 25: Distributions to share owners
Key Priorities, Objectives and Strategy Using Free Cashflow to enhance share owner value distributions to share owners¹ £ millions 6.6% 4.8% 4.7% 3.6% 2.7% 2.0% 1.6% ¹ Sum of share buybacks and dividends paid divided by average shares in issue for the relevant period, as a % of the average share pri
Slide 26: Outlook
Outlook The unprecedented financial crisis has triggered recession across globe Our revised forecasts show mid single-digit like-for-like revenue decline, and it will be difficult to maintain margins at 2008 level (including a full year of TNS) 2009 will be a very difficult year, particularly in fir
Slide 27: Conclusions
Conclusions The Group continues to be well placed by region and discipline to benefit from key industry trends The TNS acquisition represents a major competitive advantage for our Information, Insight & Consultancy or consumer insight business and the Group, as well as a source of margin improvement
Slide 28: WPP Today
WPP Today Revenue £7.5bn¹ WPP PBIT £1,118m Media Information, Public Relations Branding & Identity, Healthcare and Advertising Investment Insight & & Specialist WPP Digital Management Consultancy Public Affairs Communications Revenue £3.3bn Revenue £1.3bn¹ Revenue £752m Revenue £2.1bn Revenue Broade
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