Wpp Plc · LSE:WPP
Wpp — FY2012 Earnings Presentation
111 slides from Wpp's earnings presentation, March 2013
Slide 1: Results for 2012
Results for 2012 London 1
Slide 2: Contents
Contents 1 Results for 2012 2 Four Core Strategic Priorities 3 Key Objectives 4 Conclusions 5 27 Year History (Hard Copy only) 6 Other Financial Information (Hard Copy only) 7 Structure and Competitive Position (Hard Copy only) 2
Slide 3: Results for 2012
1 Results for 2012 WPP
Slide 4: Results for 2012
Results for 2012 Billings decreased slightly to £44.4 billion, on a constant currency basis up 1.6%. Reportable revenues up 3.5%. On a constant currency basis, revenue up 5.8%. Like-for-like revenue up 2.9%. Headline PBIT up 7.1% to £1,531m. Headline operating margin up 0.5 margin points to
Slide 5: Slow Growth in Mature Markets
Results for 2012 Slow Growth in Mature Markets Like-for-like Q1 Q2 Q3 Q4 revenue growth % Total 4.0 3.2 1.9 2.5 Mature¹ 1.9 0.6 -0.1 0.4 Revenue slowdown in Q2 and Q3 with upturn in Q4. Staff cost increases from additions in H2/2011 impacted performance and bonus pools. Restructuring programme
Slide 6: Summary Headline Results at a Glance
Results for 2012 Summary Headline¹ Results at a Glance Year to 31 December 2012 2011 Change % Revenue £m 10,373 10,022 3.5 Gross Margin £m 9,515 9,239 3.0 Operating Profit Margin: % of Revenue 14.8% 14.3% +0.5² % of Gross Margin 16.1% 15.5% +0.6² Diluted EPS 73.4p 67.7p 8.4 Dividend per share 28.5p
Slide 7: Unaudited Headline IFRS Income Statement
Results for 2012 Unaudited Headline¹ IFRS Income Statement % Change Year to 31 December 2012 2011 Constant £m £m Reported Currency Revenue 10,373 10,022 3.5 5.8 Operating profit 1,459 1,365 6.9 10.7 Income from associates 72 64 13.1 19.2 PBIT 1,531 1,429 7.1 11.1 Net finance costs (214) (200) -7.0 -
Slide 8: Unaudited IFRS Income Statement
Results for 2012 Unaudited IFRS Income Statement Constant Year to 31 December 2012 2011 Change Currency £m £m % % Revenue 10,373 10,022 3.5 5.8 Operating Profit pre-goodwill / intangibles 1,459 1,365 6.9 10.7 Goodwill / intangibles charges, net re-measurement gains, (218) (173) -26.1 -26.1 gains on
Slide 9: Overview of Impact of Restructuring Charge and Gains
Results for 2012 Overview of Impact of Restructuring Charge and Gains Revenue Direct Operating Equity PBIT Margin £m Costs Expenses Income Headline¹ 10,373 858 8,056 72 1,531 14.8% Buddy Media sale (31) 31 285 Madison Avenue sale (71) 71 Restructuring charge 93 (93) Adjusted Headline 10,373 858 8,04
Slide 10: Restructuring Charge Analysis
Results for 2012 Restructuring Charge Analysis £m N. America Europe ROW Total Severance 8 49 5 62 Property & Other 3 4 1 8 IT 13 9 1 23 Total 24 62 7 93 Severance focussed on traditional business in mature markets as we deal with multi-year decline in certain European markets. Hurricane Sandy ac
Slide 11: % Growth Versus Prior Year
Results for 2012 % Growth Versus Prior Year Revenue Headline1 Headline1 PBIT EPS Like-for-like 2.9 n/a n/a Acquisitions2 2.9 n/a n/a Constant currency 5.8 11.1 13.1 Foreign exchange -2.3 -4.0 -4.7 Reportable sterling 3.5 7.1 8.4 Reportable US dollars3 2.5 6.9 8.8 Reportable euros4 10.8 14.8 15.7 1 F
Slide 12: Headline Performance Versus Consensus
Results for 2012 Headline¹ Performance Versus Consensus Actual Consensus £ million Results Median +/- Revenue 10,373 10,376 -3 PBIT 1,531 1,535 -4 Net finance costs (214) (201) -13 PBT 1,317 1,334 -17 Diluted EPS 73.4p 73.0p +0.4p PBIT Margin 14.8% 14.8% - 1 Figures before goodwill and intangibles c
Slide 13: Headline Performance Versus Target
Results for 2012 Headline¹ Performance Versus Target Actual Target Like-for-like revenue growth 2.9% c. 4% Reportable operating margin +0.5² +0.5² improvement Like-for-like operating margin +0.7² +0.5² improvement Constant currency fully diluted 13.1% 10%-15% EPS growth 1 Figures before goodwill and
Slide 14: Revenue by Discipline
Results for 2012 Revenue by Discipline % Change 2012 2011 Reported Constant Like-for- £m £m Currency like Advertising, Media Investment 4,273 4,157 2.8 5.2 5.1 Management Consumer Insight 2,460 2,458 0.1 2.8 0.8 Public Relations & Public Affairs 917 886 3.6 4.2 -1.0 Branding & Identity, Healthcare a
Slide 15: Revenue by Region
Results for 2012 Revenue by Region % Change 2012 2011 Reported Constant Like-for- £m £m Currency like North America 3,547 3,388 4.7 3.7 -0.1 UK 1,275 1,184 7.7 7.7 4.0 Western Continental Europe 2,439 2,505 -2.6 3.7 0.1 Asia Pacific, Latin America, Africa & Middle East, Central & Eastern 3,112 2,945
Slide 16: Headline PBIT and Margin by Discipline
Results for 2012 Headline¹ PBIT and Margin by Discipline Headline PBIT Headline Margin 2012 2011 2012 2011 £m £m % % Advertising, Media Investment 755 668 17.7 16.1 Management Consumer Insight 247 258 10.0 10.5 Gross margin margins 13.9 14.3 Public Relations & Public Affairs 136 143 14.9 16.1 Brandi
Slide 17: Headline PBIT and Margin by Region
Results for 2012 Headline¹ PBIT and Margin by Region Headline PBIT Headline Margin 2012 2011 2012 2011 £m £m % % North America 579 526 16.3 15.5 UK 173 165 13.6 14.0 Western Continental Europe 253 284 10.4 11.3 Asia Pacific, Latin America, Africa & 526 454 16.9 15.4 Middle East, Central & Eastern Eu
Slide 18: Revenue Growth by Country
Results for 2012 Revenue Growth by Country Revenue Growth1 Countries >20% Argentina 15% to 20% Thailand 10% to 15% Brazil, Greater China², Mainland China³, South Africa 5% to 10% Belgium, India, Italy, Mexico, Russia, South Korea Australia, Canada, Denmark, France, Germany, Japan, <5% Netherlands, P
Slide 19: Revenue Growth by Category
Results for 2012 Revenue Growth by Category Revenue Growth1 Categories 10% to 15% Government Automotive, Oil, Personal Care & Drugs, Retail, Travel & 5% to 10% Airline Computers, Drinks, Electronics, Entertainment, Financial <5% Services, Food, Telecommunications 1 Like-for-like growth 19
Slide 20: Effects of Strength of Sterling
Results for 2012 Effects of Strength of Sterling Currency movements accounted for a 2.3% decrease in revenue, largely reflecting the strength of the £ sterling against the euro and faster growing market currencies, partly offset by weakness against the US$. Sterling stronger overall as follows:
Slide 21: Trade Estimates of Major New Business Wins (1)
Results for 2012 Trade Estimates of Major New Business Wins (1) WPP Agency Incumbent Account Office Billings($m) Team BofA OMC Bank of America Global 2,000 Equipe L’Oreal PUB L’Oreal DACH 727 MEC AGS Johnson & Johnson EMEA 310 VML PUB Wendy’s USA 273 MediaCom PUB Procter & Gamble Germany 225 Grey In
Slide 22: Trade Estimates of Major New Business Wins (2)
Results for 2012 Trade Estimates of Major New Business Wins (2) WPP Agency Incumbent Account Office Billings($m) Y&R Ind Dell Global 90 OgilvyOne PUB/Others Department of Health UK 80 JWT DEN Aflac Japan 80 JWT/MEC/MediaCom PUB Ministry of Defence UK 80 MEC MEC/Zenith Kingfisher UK 72 MEC HAV/AGS/In
Slide 23: Trade Estimates of Major New Business Wins (3)
Results for 2012 Trade Estimates of Major New Business Wins (3) WPP Agency Incumbent Account Office Billings($m) MediaCom Ind Goodyear & Dunlop UK 48 JWT MDC Shell Global 46 Team News Ind News International UK 44 JWT Ind Premier Foods UK 44 Maxus Zenith Associated British Foods UK 38 MediaCom PUB Ph
Slide 24: Trade Estimates of Major New Business Losses
Results for 2012 Trade Estimates of Major New Business Losses WPP Agency Winning Agency Account Office Billings($m) Mindshare PUB Sprint Global 1,000 Mindshare AGS Kraft Europe 318 MEC AGS Macy’s USA 300 Mindshare OMC Farmer’s USA 160 Grey OMC Aquafresh/GSK Global 158 MediaCom AGS COFCO China 85 MEC
Slide 25: Internal Estimates of Net New Business Wins
Results for 2012 Internal Estimates of Net New Business Wins ($m) Creative Media Total Advertising 1,740 3,437 5,177 Other Businesses 1,054 - 1,054 2012 2,794 3,437 6,231 2011 2,621 2,539 5,160 25
Slide 26: Major New Business Wins/Losses Since January 2013
Results for 2012 Trade Estimates of Major New Business Wins/Losses Since 1 January 2013 WPP Agency Incumbent Account Office Billings($m) Mindshare IPG/Mindshare Lionsgate USA 400 JWT OMC Vonage USA 160 GroupM PUB 360buy.com China 160 WINS MediaCom OMC Fonterra Asia Pac/M East 150 Grey Grey Pringles/
Slide 27: Cash Flow
Results for 2012 Cash Flow £m 2012 2011 Operating Profit 1,241 1,192 Non-cash compensation 93 79 Depreciation & amortisation charges 429 384 Net interest paid & similar charges (172) (178) Tax paid (257) (248) Net cash generation 1,334 1,229 27
Slide 28: Uses of Cash Flow
Results for 2012 Uses of Cash Flow £m 2012 2011 Net cash generation 1,334 1,229 Capital expenditure (330) (253) Acquisition payments (587) (532) - Net initial payments¹ (500) (381) - Earnout payments/loan note redemptions (87) (151) Share repurchases (134) (182) Other 90 37 Net cash inflow before di
Slide 29: Net Debt – 31 December 2012
Results for 2012 Net Debt – 31 December 2012 % £m 2012 2011 Variance YTD average net debt on constant currency basis (3,203) (2,830) -13% YTD average net debt on reportable basis (3,203) (2,811) -14% Net debt at 31 December (2,821) (2,465) -14% Headline finance costs (214) (200) -7% Interest cover o
Slide 30: Historic Average Net Debt/Headline EBITDA
Results for 2012 Historic Average Net Debt/Headline EBITDA £m Average net debt/headline EBITDA 4,000 3.0 Average net debt EBITDA 3,500 Average net debt/EBITDA 2.5 3,000 2.0 2,500 2,000 1.5 1,500 1.0 1,000 0.5 500 0 0.0 2006 2007 2008 2009 2010 2011 2012 30
Slide 31: Uses of Free Cash Flow
Results for 2012 Uses of Free Cash Flow Category Target FY 2012 FY 2011 New acquisitions¹ £300m+ £500m² £381m² Share purchases Minimum 1% 1.3% 2.1% EPS growth + 5.0 Dividend increase 16% 38% percentage points Pay-out ratio 40% 39% 36% Headroom: Undrawn facilities & - £2.4bn £2.4bn surplus cash 1 Inc
Slide 32: Earnings and EPS
Results for 2012 £m Earnings and EPS¹ Pence/ share 1,200 80.0p 73.4p Earnings 67.7p 70.0p EPS 1,000 56.7p 60.0p 55.5p 800 45.8p 50.0p 44.4p 42.0p 600 36.0p 40.0p 30.0p 400 20.0p 200 10.0p 0 0.0p 2005 2006 2007 2008 2009 2010 2011 2012 1 Diluted Headline Earnings and Diluted Headline EPS 32
Slide 33: Taxation
Results for 2012 Taxation Headline tax rate of 21.2%, compared to 22.0% for 2011. Reported tax rate of 18.1% in 2012 (2011 – 9.1%), prior year tax charge reduced by exceptional release of prior year corporate tax provisions. Cash tax paid of £257m compares to £248m paid in 2011. Estimated em
Slide 34: Four Core Strategic Priorities
2 Four Core Strategic Priorities 34
Slide 35: Market Environment
Market Environment New Markets, New Media, Consumer Insight and “Horizontality” Macro Micro Eurozone debt uncertainties holding Client comments not indicating lower back growth across Europe and spend other than in some specific sectors. elsewhere. Redirection of funds supporting growth in I
Slide 36: Key Priorities, Objectives and Strategy
Key Priorities, Objectives and Strategy Over $1.3bn in Social Taxes¹ Group Payroll Taxes Excluding Associates Year to 31 Employers Employees Social Taxes December Social Taxes Social Taxes Per Head 1 1 $m $m $’000 USA 183 134 13 France 117 40 42 UK 115 80 17 Germany 71 71 23 Brazil 52 11 17 Italy 41
Slide 37: Four Core Strategic Priorities
Four Core Strategic Priorities New Markets, New Media, Consumer Insight and “Horizontality” Faster growing markets now to be over one third of total Group (35% - 40%). New media now to be over one third of total Group (35% - 40%). Consumer Insight and quantitative disciplines to be over one ha
Slide 38: New Markets, New Media and Consumer Insight: Today
New Markets, New Media and Consumer Insight Today 1: New Markets 2: New Media 3: Quantitative Today 30% Today 33%1 Today 50% UK & Western Continental Europe Traditional Media North America UK & Western Continental Europe Traditional Media Qualitative Asia Pacific, Latin America, Africa & Middle East
Slide 39: New Markets, New Media and Consumer Insight: Tomorrow
New Markets, New Media and Consumer Insight Tomorrow 1: New Markets 2: New Media 3: Quantitative Target 35-40% Target 35-40% Target 50% UK & Western Continental Europe Traditional Media North America UK & Western Continental Europe Traditional Media Qualitative Asia Pacific, Latin America, Africa &
Slide 40: New Markets: Back to the Future
New Markets Back to the Future 60 50 % Share of Global GDP Share of Global GDP 1870 - 2025 40 30 India China 20 10 0 1820 1870 1913 1950 1973 1998 2011 2025 1. Prof Angus Maddison - The World Economy 1870 - 1998: OECD 2. Conference Board Global Economic Outlook 2011 - 2025: January 2012 40
Slide 41: Revenues in Faster Growing Markets 2004-2012
New Markets Revenues in Faster Growing Markets 2004-2012 5.0 4.5 4.0 3.5 3.0 Revenue ($'bn) 2.5 2.0 1.5 1.0 0.5 0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 WPP OMC PUB IPG 1. WPP reportable US$’s per WPP results and peer $ revenues as shown in annual results presentations 2. Peer data sourced f
Slide 42: WPP's Performance Strong in BRIC Markets
New Markets WPP’s Performance Strong in BRIC Markets Revenue $'m 1,400 12 year CAGR 16% 1,200 Associates @ 100% 1,000 12 year CAGR 13% 800 600 12 year CAGR 12% 400 12 year CAGR 48% 200 0 2000 2011 2012 2000 2011 2012 2000 2011 2012 2000 2011 2012 Greater China (including Brazil India Russia Hong Kon
Slide 43: WPP in Faster Growing Markets
New Markets WPP in Faster Growing Markets Region Market Billings1 % Share1 Rank1 12 month2 People2 $bn Rev $bn ‘000 Asia Pacific: Greater China3 6.7 33% 1 1.3 14 India 2.4 42% 1 0.5 12 Thailand 0.9 40% 1 0.1 2 LatAm: Brazil n/a n/a 14 0.8 5 Mexico 0.6 22% 3 0.2 3 Argentina 0.4 25% 2 0.2 2 Other: Afr
Slide 44: Media Billings by Geography
New Markets Media Billings by Geography Worldwide Ranking by Group as % of the Six Groups % 45 WPP Omnicom Publicis IPG Aegis Havas 40 35 30 25 20 15 10 5 0 Americas Europe Asia Pacific Worldwide Source: RECMA July 2012 billings report, based on 2011 data 44
Slide 45: Media time spent vs. ad spend not aligned
New Media Media time spent vs. ad spend not aligned Internet / Mobile (upside…) vs. Print (downside...) % of Time Spent in Media vs. % of Advertising Spending, USA 2011 50% Time Spent Ad Spend 45% 43% 40% 42% 35% 30% ~$20bn Opportunity 25% 26% in USA 25% 20% 22% 15% 15% 10% 11% 10% 5% 7% 1% 1% 0% Pr
Slide 46: Growth of Digital Advertising Expenditure
New Media Little Slowdown Predicted in Growth of Digital Advertising Expenditure 194 Worldwide digital advertising spend CAGR 176 (US$ billions) 2006-2012: 18% 2012-2017: 14% 154 135 114 99 85 75 64 59 49 37 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: GroupM December 2012 46
Slide 47: Revenue Share Continues to Increase
New Media Revenue Share Continues to Increase WPP Share of Digital Revenue 35%- 33%¹ 40% 30% 21% 12% 2000 2006 2011 2012 Target in 5 years 1 Including AKQA Pro Forma 47
Slide 48: WPP's Digital Strategy
New Media WPP’s Digital Strategy 1. Digital • Invest in digital in all of our businesses through training, Everywhere recruitment, acquisitions, etc. 2. Specialist • Develop new services beyond traditional advertising, e.g, Digital web development, DSPs, mobile, social, eCommerce and Expertise eShop
Slide 49: Proprietary Digital Technology Platform – WPP Advantage
New Media Proprietary Digital Technology Platform – WPP Advantage WPP’s proprietary platform integrates 24/7 Media’s core technology with best of breed partner technologies to create unique digital marketing platform that provides a competitive advantage to WPP advertising clients. Opportunities
Slide 50: Two Major Global Networks – Supported by Strong Specialist Offer
New Media Two Major Global Networks – Supported by Strong Specialist Offer WPP Advantage Revenue $’m People (F) 1 1,000 6,500 (F) 1 950 6,500 1,2 350 1,000 1 300 2,000 (F) 1 200 1,000 1 150 1,000 (F) 1 150 1,000 (F) Forrester Digital Leader Publicis Groupe Digitas/LBi $820m of revenue and 5,000 peop
Slide 51: Dominant position in BRIC Markets
New Media Russia Dominant position in BRIC Markets WPP Advantage Revenue $60m People ~ 600 India China Brazil Revenue $50m Revenue $200m Revenue $200m People ~ 1,200 People ~ 2,500 People ~ 1,400 51
Slide 52: XAXIS – WPP Advantage
New Media XAXIS – WPP Advantage Billings of c. $270 million. 200 employees in 19 markets. Over 318 billion impressions annually. 1,000+ clients. 5,000+ campaigns since inception. 30% revenue growth year over year. 5 channels: display, video, mobile, social, radio. 1 technology platfo
Slide 53: Consumer Insight and Quantitative Disciplines
Consumer Insight and Quantitative Disciplines The Data Explosion 53
Slide 54: Consumer Insight and Quantitative Disciplines
Consumer Insight and Quantitative Disciplines WPP Advantage Marketing becoming more data driven. Clients need simplified better utilisation of existing data and help in managing explosion of new data. Digital campaigns driven by data analytics and feedback to shape new activity. Ability to p
Slide 55: Horizontality
Horizontality 165,000 people in 3,000 offices in 110 countries1 1 Including associates 55
Slide 56: 30+ Account Teams
Horizontality 30+ Account Teams – Over 35,000 WPP employees work on these clients 56
Slide 57: Current Country Managers
Horizontality Current Country Managers – People, Clients, Acquisitions Portugal Italy Mexico Greater ME & N Africa India China South Korea Andina Vietnam Indonesia Australia New Zealand 57
Slide 58: Horizontality
Horizontality People, clients, acquisitions. Ensure our people work across our businesses and geographies to deliver best resources to clients. Deliver specialist skills (eg digital, shopper, analytics, sustainability, retailing, internal communications and “media and entertainment”) to client
Slide 59: Digital and Faster Growing Markets
Digital and Faster Growing Markets Two Key Long-Term Growth Drivers Overall 54% of 2012 FY Actual Revenues Faster growing markets Digital 30% 32% of revenue of revenue¹ Digital in faster growing markets 8% of revenue 1 33% including AKQA with minimal impact on overlap implying 55% combined 59
Slide 60: Key Objectives
3 Key Objectives WPP
Slide 61: We Continue to Focus on Our Key Objectives
Key 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 the role of the parent company. Emphasising revenue growth mo
Slide 62: Improving Operating Margins
Key Objectives Improving Operating Margins PBIT1 PBIT1 margin £’m % 1,600 1,531 20% Revised Objectives: 1,429 Long-term 18.3%* 19% 1,400 2014 15.8% 1,229 18% 2013 15.3% 1,200 1,118 17% 1,017 * Includes 1.0% margin 1,000 928 improvement from 16% operational efficiency 859 programmes 15.0% 15.0% 14.8%
Slide 63: Operational Effectiveness Programmes
Key Objectives Improving Operating Margins Operational Effectiveness Programmes Shared Service Centres to generate scale and improve process efficiency. Offshoring of certain tasks from high cost markets with outsourcing where appropriate to take advantage of scale and skills of major providers.
Slide 64: Increasing Flexibility in The Cost Base
Key Objectives Increasing Flexibility in The Cost Base Change in Variable Costs % 8 7.8 7.2 7 6.6 6.7 6 5.7 5 4 3 2 1 0 2008 2009 2010 2011 2012 Variable Staff Costs as % of Revenue 64
Slide 65: Using Free Cash Flow to Enhance Share Owner Value
Key Objectives Using Free Cash Flow to Enhance Share Owner Value Distributions to Share Owners¹ £’m 600 6.6% Buy-backs 500 Dividends paid 4.3% 4.5% 400 4.8% 134 415 300 182 4.7% 3.0% 70%² 258 112 3.4% 46 200 9 55%² 95%² 81%² 307 59%² 25%² 218 100 32%² 190 201 139 162 119 0 2006 2007 2008 2009 2010 2
Slide 66: Using Free Cash Flow to Enhance Dividend Pay-out Ratio
Key Objectives Using Free Cash Flow to Enhance Dividend Pay-out Ratio 80p 50% 45% 70p 40% 60p 35% 50p 30% 40p 25% 20% 30p 15% 20p 10% 10p 5% 0p 0% 2006 2007 2008 2009 2010 2011 2012 Headline Diluted EPS Dividend Declared/ Share Dividend Pay-Out Ratio Dividend Pay-Out Ratio (Incl. Exceptional Tax Cre
Slide 67: Using Free Cash Flow for Acquisitions
Key Objectives Using Free Cash Flow for Acquisitions Significant pipeline of reasonably priced small and medium-sized potential acquisitions. Continue to focus on the faster growing geographical areas and marketing services, particularly direct, digital & interactive and consumer insight. Duri
Slide 68: Acquisitions and Investments During 2012
Key Objectives Acquisitions and Investments During 2012 Faster Growing Quantitative & 41?29! Media (Turkey) Ace Metrix (USA)¹,² Markets Digital Acceleration (S Africa, UK, USA) ADGOOROO (USA) ASTUS (HONG KONG) Affectiva (USA)¹,² Barrows (S Africa) Activeark Oy (Finland) Cadem (Chile) AKQA (WORLDWIDE
Slide 69: Other Acquisitions During 2012
Key Objectives Other Acquisitions During 2012 Advertising Colmar Brunton (New Zealand)¹ Siboney (USA) Ubachs Wisbrun (Netherlands)¹ Public Relations & Public Affairs ABC (DENMARK) ¹ ASCENTUM (CANADA) CrowdVerb (USA) First Movies (UK) I&E (FRANCE) Ogilvy Impact (Australia)¹ Pohjoisranta (Finland) 1 S
Slide 70: Acquisitions and Investments Since January 2013
Key Objectives Acquisitions and Investments Since 1 January 2013 Faster Growing Quantitative & Markets Digital C-Section (Turkey) Globant (Argentina) Netbooster (Philippines) PLAY (Australia) Rep/Massive (Colombia) Salmon (UK) Strike Media (S. Africa) Public Relations & Public Affairs Burson Marstel
Slide 71: Improving the Creative Capabilities and Reputation
Key Objectives Improving the Creative Capabilities and Reputation of all Our Businesses By placing greater emphasis on recruitment. By recognising creative success tangibly and intangibly. By acquiring highly regarded creative businesses. By placing greater emphasis on awards. 1st as a Gro
Slide 72: Improving the Creative Reputation of all our Businesses
Key Objectives Improving the Creative Reputation of all our Businesses Network Points1 Ogilvy & Mather 1 Ogilvy & Mather 564 Cannes Network of the Year 2012 2 BBDO 539 3 DDB 516 4 Y&R 408 5 Leo Burnett 340 6 JWT 297 7 Publicis 277 8 Saatchi & Saatchi 249 9 TBWA 226 10 Wieden & Kennedy 220 11 DraftFC
Slide 73: Conclusions
4 Conclusions WPP
Slide 74: 2012 Summary
Conclusions 2012 Summary Solid like-for-like revenue growth of 2.9% in a difficult environment. Over 75% of absolute growth from Asia, Latin America, Africa & Middle East, and Central & Eastern Europe underlines importance of group strategic focus. Group margin up 0.5 margin points to 14.8%, a
Slide 75: Outlook
Conclusions Outlook Group budgets indicate 3% revenue growth for 2013 with continued strong growth in faster growing markets and slower growth in mature markets and functionally faster growth in media investment management and digital. January 2013 like-for-like growth over 2% - in line with Q4.
Slide 76: Conclusions
Conclusions 2012 results demonstrate the Group is well placed to benefit from geographic and functional trends as mature markets show continued slow growth. Our investments in digital tools and infrastructure enable the Group to optimise client campaigns and build advantage and differentiation (
Slide 77: 27 Year History (Hard Copy Only)
5 27 Year History (Hard Copy Only) 77
Slide 78: WPP Reported Revenue
27 Year History WPP Reported Revenue £’m 11,000 10,373 10,022 10,000 9,331 9,000 8,684 8,000 7,477 27 year CAGR 34% 7,000 6,185 5,908 6,000 5,374 5,000 4,300 4,022 3,908 4,106 4,000 2,981 3,000 2,173 1,918 2,000 1,747 1,431 1,427 1,555 1,691 1,264 1,204 1,273 1,005 1,000 547 284 4 24 0 78
Slide 79: WPP Organic Growth
27 Year History WPP Organic Growth % 20 18.6 15.0 15 13.9 14.1 11.8 Average: 5.6% 10 8.0 8.3 8.4 8.0 8.0 6.3 5.7 5.2 5.5 5.4 5.0 5.3 5.3 5 4.0 4.0 2.7 2.9 0.7 N/A 0 -3.0 -5 -4.7 -5.9 -8.1 -10 Note: Estimates for 1985-1990 79
Slide 80: WPP PBIT and Margins
27 Year History WPP PBIT and Margins PBIT PBIT margin £’m % 1,600 16% 15.0% 15.0% 14.5% 14.0% 14.1% 14.3% 1,400 14.8% 13.4% 14.5% 14% 14.3% 12.8% 13.0% 14.0% 12.3% 1,200 13.0% 13.2% 27 Year CAGR: 37% 11.8% 12% 10.8% 11.7% 1,000 10.5% 10.1% 9.7% 9.6% 10% 800 8.4% 1531 1429 7.5% 8% 7.0% 7.0% 1229 600
Slide 81: WPP Headline Diluted EPS
History WPP Headline Diluted EPS Post 1992 Rights Issue pence 80 73.4 70 67.7 60 20 Year CAGR: 15% 55.5 56.7 50 45.8 44.4 42.0 40 36.0 32.3 30.3 30.9 29.0 27.9 30 22.7 23.8 18.8 20 15.7 13.5 9.4 10 6.5 5.0 0 UK GAAP IFRS Note: 1993 adjusted to reflect 1992 rights issue. Headline Diluted EPS 81
Slide 82: Other Financial Information (Hard Copy only)
6 Other Financial Information (Hard Copy only) 82
Slide 83: Net Finance Costs
Results for 2012 Net Finance Costs £m 2012 2011 B/(W) Interest on net debt 193 179 (14) Investment income (1) (1) - IAS 19 (Pensions) 13 13 - IAS 32 (Convertibles) 9 9 - Sub-total 21 21 - Headline finance costs 214 200 (14) IAS 39 (Financial Instruments) 5 50 45 Net finance costs 219 250 31 83
Slide 84: Pensions Deficit
Results for 2012 Pensions Deficit £m 2012 2011 Deficit B/F (282) (242) Service cost (24) (24) Deficit interest charge (41) (44) Funding 56 67 Investment returns 70 27 Change in valuation assumptions¹ (124) (66) Other movements (2) (1) Movements in the year excluding FX (65) (41) Foreign exchange imp
Slide 85: Earnout Accrual
Results for 2012 Earnout Accrual 2012 Rollforward £m Expected Payments £m 31 December 2011 234 2012 33 Earnouts paid (86) 2013 36 New acquisitions 61 2014 29 Revised estimates taken to goodwill 9 2015 30 Revaluations of payments (15) 2016 64 Increase excluding FX 203 2017+ 2 Foreign exchange impact
Slide 86: Debt Maturity Profile
Results for 2012 Debt Maturity Profile £m Total Total As at 31 December 2012 2013 2014 2015 2016 2017 2018+ Credit Drawn US bond $300m (5.125% ’42) 185 185 185 US bond $500m (3.625% ’22) 308 308 308 US bond $812m (4.75% ’21) 500 500 500 £ bonds £200m (6.375% ’20) 200 200 200 £ bonds £400m (6% ’17) 4
Slide 87: Ordinary Shares - Basic
Results for 2012 Ordinary Shares - Basic December December 2012 2011 No. of Shares (million) Actual Actual 1 January 1,266 1,264 Share cancellations (7) (7) Option exercise 10 6 Scrip dividend 2 3 Treasury share cancellations (6) - 31 December 1,265 1,266 (0.1%) Weighted Average 1,268 1,267 ESOP, Tr
Slide 88: Ordinary Shares – Diluted
Results for 2012 Ordinary Shares – Diluted December December 2012 2011 No. of Shares (million) Actual Actual Average Basic 1,243 1,243 Share Option Dilution 5 4 Other Potentially Issuable Shares 28 18 Sub-Total 1,276 1,265 0.9% Convertibles: £450m 5.75% bond 77 77 Diluted Shares 1,353 1,342 0.8% 88
Slide 89: Dividends and Share Repurchases
Key Priorities, Objectives and Strategy Using Free Cash Flow to Enhance Share Owner Value Dividends and Share Repurchases 2012 final dividend increased by 15% to 19.71p per share (2011 – 17.14p). Distributions to share owners: Share Repurchases Dividends Paid Amount % of Share Base 2004 £81.7m £88.7
Slide 90: Revenue by Industry
Results for 2012 Revenue by Industry Other 7% Auto T&E 12% 5% Telcom Consumer Products 7% 7% Technology 7% Personal Care Retail 15% 4% Healthcare 9% Government 2% Oil Food & Drink 2% 14% Financial Services 9% Charts represent the amount of revenue attributed to each industry expressed as a percentag
Slide 91: WPP Clear No. in Brazil
Key Priorities, Objectives and Strategy WPP Clear No. 1 in Brazil¹ RECMA does not cover Brazil, IBOPE measures media spend with the “IBOPE Rate Card Monitor”. Agency R$’bn Rank Y&R 6.9 1 Ogilvy/Grey141 4.3 2 WPP PUB IPG OMC Almap/BBDO 3.3 3 W/McCann 2.8 4 JWT 2.3 5 BorghiEhr/Lowe 2.3 6 Giovanni/FC
Slide 92: 2012 Revenue by Geography
Key Priorities, Objectives and Strategy 2012 Revenue by Geography $16.5bn $14.2bn 5.0 2.7 Asia Pacific, Latin America, Africa & Middle East, CEE Western Europe N America 4.0 $8.5bn 5.9 2.0 $7.0bn $6.1bn 1.6 2.4 1.4 7.6 4.4 5.6 $1.8bn 4.1 3.9 0.4 1.0 1.1 0.7 0.8 WPP Omnicom Publicis IPG Aegis/Dentsu
Slide 93: 2012 Revenue by Discipline
Key Priorities, Objectives and Strategy 2012 Revenue by Discipline $16.5 bn 3.9 $14.2bn Consumer Insight Marketing Services Advertising Media 7.54 5.8 $8.5bn $7.0bn $6.1bn 4.4 0.4 2.9 3.7 4.9 2.5 2.6 5.7 $1.8bn 0.7 3.1 1.0 1.8 1.5 1.4 0.7 WPP Omnicom Publicis IPG Aegis/Dentsu Havas Source: 1 WPP rep
Slide 94: Digital In All Our Businesses
Digital In All Our Businesses Global Scale and Quality Digital Revenues ($billion – 2012 Full Year) 5.4 2.8 2.8 1.0 0.6 WPP Omnicom Publicis IPG Havas ¹ Peer digital revenue according to Ad Age %’s applied to FY US$ revenue. 94
Slide 95: 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 2,925 (OgilvyOne, Wunderman, G2 and WPP Digital) % of Group revenues 18% Specialist Direct, Digital and Interactive resources: - Consumer Insight 1,067 (Millward
Slide 96: Structure and Competitive Position (Hard Copy Only)
7 Structure and Competitive Position (Hard Copy Only) 96
Slide 97: WPP Today
WPP Today WPP is the world’s largest communication services group with over 165,000 people (including associates) in over 3,000 offices in 110 countries worldwide. 350 of the Fortune Global 500, all 30 of the Dow Jones 30, 63 of the NASDAQ 100 and 31 of the Fortune e-50 as clients. 479 clients i
Slide 98: WPP has many of the best known brands in the industry
WPP Today WPP has many of the best known brands in the industry Ranked 1 or 2 in all sectors in which it competes Ogilvy & Mather TNS JWT Millward Brown Y&R Advertising BrandAsset Valuator and BRANDZ United OgilvyOne Grey Wunderman OgilvyAction Mindshare G2 MEC 24/7 Media MediaCom POSSIBLE Maxus AKQ
Slide 99: WPP Today: Revenue and PBIT by Discipline
WPP Today Revenue £10.4bn WPP PBIT £1,531m Branding & Identity, Media Public Relations Healthcare and Advertising Investment Consumer Insight & WPP Digital Management Specialist Public Affairs Communications Revenue £4.3bn Revenue £2.5bn Revenue £0.9bn Revenue £2.7bn Revenue Broader £3.4bn PBIT £755
Slide 100: WPP Today: Advertising
WPP Today Advertising Ogilvy & Y&R JWT Grey United Mather Advertising (Global) (Global) (Global) (Global) (Global) Chairman: Shelley Lazarus Chairman and CEO: CEO: Chairman & CEO: CEO: CEO: Miles Young Bob Jeffrey David Sable Jim Heekin Ewen Cameron DY&R Asatsu - DK Chime Joint Venture (Japan) (UK)
Slide 101: WPP Today: Media Investment Management
WPP Today Media Investment Chairman: Irwin Gotlieb Management: President: Dominic Proctor GroupM Mindshare MEC MediaCom Maxus KR Media Xaxis tenthavenue CEO: CEO: CEO: CEO: Joint CEO: CEO: CEO: Rupert Day Nick Emery Charles Courtier Stephen Allan Vikram Sakhuja Bruno Kemoun Brian Lesser Joint CEO: E
Slide 102: Media Investment Management - Competitive Worldwide Ranking
WPP Today Media Investment Management - Competitive Worldwide Ranking Americas EMEA Asia Pacific Worldwide Mindshare 4 6 1 2 MEC 5 4 7 6 MediaCom 8 2 5 3 Maxus 12 13 10 13 GroupM 2 1 1 1 Source: RECMA July 2012 Billings Rankings report, based on 2011 data. 102
Slide 103: WPP Today: Kantar
WPP Today Chairman & CEO: Kantar Eric Salama Kantar Media Millward Brown Kantar Japan Added Value Kantar Retail IMRB Kantar Health The Futures Company Kantar TNS Worldpanel Center Partners Kantar Operations Lightspeed Kantar ITP 103
Slide 104: Consumer Insight – Worldwide Competitive Ranking
WPP Today Consumer Insight – Worldwide Competitive Ranking 1. The Nielsen Company 2. Kantar 3. ipsos 4. GfK 5. SymphonyIRI 6. IMS Health 7. Westat 8. Intage 9. Arbitron 10. The NPD Group Inc Source: ESOMAR 2012 ranking based on 2011 consolidated revenues, adjusted for ipsos acquisition of synovate,
Slide 105: WPP Today: Public Relations & Public Affairs
WPP Today Public Relations & Public Affairs Founding Chairman: Ogilvy Public Harold Burson Hill+Knowlton Burson- Specialist Cohn & Relations CEO: Don Baer Strategies Marsteller Public Relations Wolfe Worldwide Chairman & CEO: CEO: Chris Graves CEO: Donna Imperato Jack Martin Chairman: Roland Rudd Pe
Slide 106: WPP Today: Branding & Identity
WPP Today Branding & Identity BtoD Group CEO: Craig Branigan The Partners Landor The Brand Union FITCH Addison Lambie-Nairn CEO: Mary Zalla VBAT CEO: Simon Bolton CEO: Lois Jacobs Peclers 106
Slide 107: WPP Today: Healthcare
WPP Today Healthcare Ogilvy CommonHealth Grey Healthcare Group Sudler & Hennessey President & CEO: CEO: Chairman & CEO: Matt Geigerich Lynn O’Connor Vos Jed Beitler 107
Slide 108: WPP Today: Direct, Digital and Interactive - Networks
WPP Today Direct, Digital and Interactive - Networks JWT INSIDE Wunderman G2 AKQA OgilvyOne¹ VML CEO: Chairman & CEO: Chairman & CEO: Chairman & CEO: Chairman & CEO: President & CEO: Rob Quish Daniel Morel Joe Celia Ajaz Ahmed Brian Jon Cook Fetherstonhaugh OgilvyAction iconmobile CEO: CEO: Steve Ha
Slide 109: WPP Today: Specialist Communications
WPP Today Specialist Communications Relationship Media, Technology Sports Demographic Industry Sector Marketing and & Production Marketing Marketing Marketing Promotion Services Metro Broadcast JMI¹ EWA The Food Group The Farm Uniworld Group¹ Forward Group Pace Imagina² MJM Creative Services Mando B
Slide 110: WPP Today: New Technology
WPP Today New Technology New Technology Ogilvy WPP Digital Wunderman OgilvyOne Interactive G2 Hogarth CEO: Mark Read Interactive 24/7 Media Neo@Ogilvy POSSIBLE Deliver Syzygy¹ Loyalty & Web Data Mobile Content Portal Search Software Information Sports Rel. Mktg Dev’t Mining ¹ Associate company. 110
Slide 111: London
Results for 2012 London 111