Wpp Plc · LSE:WPP
Wpp — Shareholder Meeting (June 2013)
41 slides from Wpp's shareholder meeting presentation, June 2013
Slide 1: Annual General Meeting 2013
Annual General Meeting 2013
Slide 2: Philip Lader, Chairman
Philip Lader Chairman
Slide 3: Annual General Meeting 2013
Annual General Meeting 2013
Slide 4: Sir Martin Sorrell, CEO, WPP
Sir Martin Sorrell CEO, WPP
Slide 5: WPP Strategy: Where are we?
WPP Strategy Where Where could How do we are we? we be? get there?
Slide 6: Where are we? 27 Year History – Revenue
Where are we? 27 Year History – Revenue £’m 11,000 10,373 10,022 10,000 27 Year CAGR: 34% 9,331 9,000 8,684 8,000 7,477 7,000 6,185 5,908 6,000 5,374 5,000 4,300 4,022 4,106 3,908 4,000 2,981 3,000 2,173 1,918 2,000 1,691 1,747 1,431 1,427 1,555 1,264 1,204 1,273 1,005 1,000 547 284 4 24 0 85 86 87
Slide 7: 27 Year History – PBIT and Margins
Where are we? 27 Year History – PBIT and Margins PBIT Margin - Full Year IFRS Margin - Full Year UK GAAP Margin - Full Year IFRS - Pro forma for TNS Acquisition PBIT margin £’m % 1,600 1531 16% 15.0% 15.0% 14.5% 1429 14.1% 1,400 27 Year CAGR: 37% 13.4% 14.0% 14.3% 14.8% 14% 14.5% 13.0% 14.3% 12.8% 1
Slide 8: 20 Year History – EPS
Where are we? 20 Year History – EPS pence UK GAAP IFRS 80 73.4 67.7 70 20 Year CAGR: 15% 60 56.7 55.5 50 45.8 44.4 42.0 40 36.0 30.9 32.3 30.3 29.0 30 27.9 22.7 23.8 18.8 20 15.7 13.5 9.4 10 6.5 5.0 0 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Slide 9: Where are we? - TSR Performance
Where are we? - TSR Performance Outperformed peer group, FTSE 100 and S&P 500 WPP Peer Avg FTSE 100 S&P 500 1800.0% 1720% 1600.0% 1400.0% 1200.0% 1000.0% 845% ≈ 800.0% 500.0% 450.0% 435% 400.0% 363% 350.0% 300.0% 250.0% 186% 200.0% 124% 133% 150.0% 113% 108% 88% 100.0% 51% 39% 50.0% 28 % 27% 31% 30%
Slide 10: £1,000 invested in WPP since 1985
Where are we? 1985 2013 £1,000 invested in WPP = £41,500 £1,000 invested in FTSE = £3,860 $1,000 invested in WPP = $61,250 $1,000 invested in S&P 500 = $7,600
Slide 11: Strategic Priorities
Where could we be? Strategic Priorities New markets New media Consumer insight, including application of technology and big data ‘Horizontality’ and creativity
Slide 12: New Markets: Target 35% - 40%
Where could we be? - New Markets Target 35% - 40% 2002 - 19% 2012 - 30% (37%) Tomorrow - 38% North America UK & Western Continental Europe Asia Pacific, Latin America, Africa & Middle East, Central & Eastern Europe
Slide 13: 2012 Revenue by Geography
Where could we be? - New Markets 2012 Revenue by Geography Asia Pacific, Latin America, Africa & Middle East, CEE Western Europe N America $16.5bn $14.2bn 5.0 2.7 4.0 $8.5bn 5.9 2.0 $7.0bn $6.1bn 1.6 2.4 1.5 7.5 4.4 5.6 $2.3bn 4.1 3.9 0.4 1.0 1.1 0.7 0.8 WPP Omnicom Publicis IPG Dentsu Havas
Slide 14: New Markets: growth widened gap against competition
Where could we be? - New Markets Strategy of growth in faster growing markets widened gap against competition WPP OMC PUB IPG 5.0 4.5 4.0 Revenue ($'bn) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 15: Growth driven by strong performance in BRIC markets
Where could we be? - New Markets Growth driven by strong performance in BRIC markets Revenue $'m Associates @ 100% 1,400 12 year CAGR 16% 1,200 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 (includ
Slide 16: And in other faster growing markets
Where could we be? - New Markets And in other faster growing markets Revenue $’m Associates @ 100% 700 12 year CAGR 17% 600 500 12 year CAGR 16% 400 300 12 year CAGR 15% 200 12 year CAGR 26% 12 year CAGR 30% 12 year CAGR 30% 100 0 2000 2011 2012 2000 2011 2012 2000 2011 2012 2000 2011 2012 2000 2011
Slide 17: New Media: Target 35% - 40%
Where could we be? - New Media Target 35% - 40% 2002 - 17% 2012 - 33% (33%) Tomorrow - 38% Traditional Media New Media
Slide 18: WPP is 7th biggest digital media company in world
Where could we be? WPP is 7th biggest digital media company in world Position Company Name Sector Digital Revenue ($bn) 1 Google Search $36.4 2 China Mobile Telco $7.6 3 Bloomberg Business information $7.0 4 Reed Elsevier Business information $5.9 5 Apple Diversified $5.4 6 Yahoo Diversified $5.0 7
Slide 19: 2012 Revenue by Discipline
Where could we be? - New Media 2012 Revenue by Discipline Consumer Insight Marketing Services Advertising Media $16.5bn 3.9 $14.2bn 7.5 5.8 $8.5bn $7.0bn 4.5 $6.1bn 0.4 3.0 3.7 4.9 2.5 2.6 5.7 $2.3bn 0.7 3.1 1.8 1.5 1.0 1.4 0.6 WPP Omnicom Publicis IPG Dentsu Havas
Slide 20: Digital in all our businesses
Where could we be? Digital in all our businesses - global scale and quality Digital Revenues ($bn – 2012 full year) 5.4 2.8 2.8 1.0 0.6 WPP Omnicom Publicis IPG Havas
Slide 21: Digital key areas
Where could we be? 7 key areas Search Display Video Social Mobile eCommerce Data
Slide 22: Strong relationships with global new media owners
Where could we be? Strong relationships with global new media owners ✓ >1B accounts ✓ >1B monthly unique 400M users ✓ ✓ 360M active users visitors ✓ 200M active users 200M ✓ 110M ✓ 100M users ✓ members registered users
Slide 23: WPP's Digital Strategy
Where could we be? WPP’s Digital Strategy Digital Need for “traditional” businesses to embrace digital faster Everywhere Exploit New Need for digital businesses to grow faster Opportunities Investments to explore new digital opportunities through mergers, Partner with acquisitions, collaborations, a
Slide 24: Strong global digital businesses
Where could we be? Strong global digital businesses - 4 out of 7 Forrester’s digital leaders 2012 Revenue Network People $’m (F) 1,000 6,500 (F) 950 6,500 350 1,000 300 2,000 (F) 200 1,000 150 1,000 (F) 150 1,000
Slide 25: Quantitative - Consumer Insight
Where could we be? Quantitative - Consumer Insight 2002 - 32% 2012 - 50% (48%) Tomorrow - 50% Qualitative Quantitative
Slide 26: Consumer Insight: Strategic Advantage
Where could we be? - Consumer Insight Strategic Advantage Marketing more data driven Clients need simplified, better utilisation of existing data and help managing explosion of data Digital campaigns driven by data analytics and feedback Ability to provide continuous updated data in real time WPP’s
Slide 27: Brands
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Slide 28: 'Horizontality': 30+ Account Teams
Where could we be? - ‘Horizontality’ 30+ Account Teams – over 35,000 of our people work on these clients
Slide 29: Country Managers
Where could we be? - ‘Horizontality’ Country Managers – people, clients, acquisitions ITALY PORTUGAL GREATER CHINA SOUTH KOREA ME & N AFRICA INDIA MEXICO VIETNAM ANDINA INDONESIA AUSTRALIA NEW ZEALAND
Slide 30: 'Horizontality' across businesses and geographies
Where could we be? - ‘Horizontality’ Ensure people work across businesses and geographies to deliver best resources to clients Deliver specialist skills (eg digital, shopper, analytics, sustainability, internal communications and media and entertainment) to clients irrespective of lead agency Focus
Slide 31: How do we get there? - Financial Model
How do we get there? - 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 up to approx £300m - £400m Target EPS growth of 10% - 15%
Slide 32: We continue to focus on our key objectives
How do we get there? 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 more as margins impro
Slide 33: Improving Operating Margins
How do we get there? Improving Operating Margins Operational Efficiencies Sharpened focus Shared service centres Offshoring Consolidation of IT infrastructure To deliver in excess of 1.0 margin point 3-5 years to deliver full benefit
Slide 34: Increasing flexibility in cost base
How do we get there? Increasing flexibility in cost base - change in variable costs % Variable Staff Costs as % of Revenue 8 7.8 7 7.2 6.6 6.7 6 5.7 5 4 3 2 1 0 2008 2009 2010 2011 2012
Slide 35: Using free cash flow to enhance dividend pay-out ratio
How do we get there? Using free cash flow to enhance dividend pay-out ratio Headline Diluted EPS Dividend Declared/ Share Dividend Pay-Out Ratio Consensus Pay-Out 2015 80p 50% Range 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
Slide 36: Using free cash flow to enhance share owner value
How do we get there? Using free cash flow to enhance share owner value £’m Buy-backs Dividends paid 600 6.6% 500 4.3% 4.5% 400 4.8% 134 415 300 4.7% 182 3.0% 258 112 3.4% 46 200 9 70% 81% 55% 307 95% 25% 59% 218 100 32% 190 201 139 162 119 0 2006 2007 2008 2009 2010 2011 2012
Slide 37: Using free cash flow for acquisitions
How do we get there? Using free cash flow for acquisitions Significant pipeline of small and medium-sized acquisitions. Focus on the faster growing geographical areas and marketing services 65 acquisitions completed in 2012 Acquisitions in advertising to address specific needs Opportunities at earni
Slide 38: Improving the creative capabilities and reputation
How do we get there? 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
Slide 39: Outlook
Outlook 3% revenue growth budgeted 2013. Stronger in faster growing geographical markets and in media investment management and digital First 4 months of 2013 like-for-like growth well over 2%, similar pattern to Q4 2012 Well positioned with headcount flat over 2012 and steps taken to address struct
Slide 40: Conclusion
Conclusion Group well placed to meet goals for 2013. Positioned strategically in new markets, new media and consumer insight, having taken steps to develop ‘horizontality’ and creativity and deal with tough environment in mature markets
Slide 41: WPP today
WPP today Revenue £10.4bn WPP PBIT £1,531m Branding & Identity, Media Public Relations Healthcare and Advertising Investment Consumer Insight & WPP Digital Specialist Management Public Affairs Communications Revenue £4.3bn Revenue £2.5bn Revenue £0.9bn Revenue £2.7bn Revenue PBIT £755m PBIT £247m PB