Wpp Plc · LSE:WPP
Wpp — Shareholder Meeting (2004)
23 slides from Wpp's shareholder meeting presentation, 2004
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Slide 2: Philip Lader, Chairman
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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; capitalise on 2004 growth opportunities – Medium-term; continue to successfully integrate Y&R Brands, Tempus and Cordiant – Long-term; develop our businesses in the faster growing geographic regions and functional areas
Slide 7: Strategy, Structure and Competitive Position
Strategy, Structure and Competitive Position WPP Today WPP Today WPP Tomorrow incl. associates incl. associates 17% 24% 35% 33% 34% 42% 41% 41% 33% North America Europe Asia Pacific, Latin America, Africa & 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 a 10.4% CAGR through 2015 – According to Zenith, ad spending as a
Slide 9: Strategy, Structure and Competitive Position
Strategy, Structure and Competitive Position WPP Today WPP BRIC Pro Forma* 12% 10% 33% 42% 32% 41% 5% 25% North America Europe excluding Russia Asia Pacific, Latin America, Africa & Middle East** BRIC * Illustrative purposes only to isolate the effect of BRIC growing faster than the other regions **
Slide 10: Strategic Priorities
Strategic Priorities Revenue by discipline (%) Today Today including Tomorrow associates 33% 47% 47% 53% 53% 67% Advertising & Media Investment Management Marketing Services
Slide 11: WPP Today
WPP Today Quantitative aids to decision making (%) Today Today including Tomorrow associates 35% 35% 50% 50% 65% 65% Direct, Internet, Interactive and Information, Insight & Consultancy Advertising, Media Investment Management & Other Marketing Services
Slide 12: 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 improving return on capital employed – Developing the role of the parent company – Emphasising revenue growth more as ma
Slide 13: Strategy: Historic financial record, EBIT and operating margins
Strategy Historic financial record – EBIT* and operating margins EBIT (£’m) Operating margin (%) 600 20% 20% margin target 500 14.5% 16% 13.4% 14.0% 12.3% 12.8% 13.0% 400 2004 Target 13.8% 11.8% 12% 300 561 534 480 8% 200 431 291 245 4% 100 205 0 0% 1997 1998 1999 2000 2001 2002 2003 * 2001, 2002 an
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* 1997-2003 Earnings (£m) 400 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 * Diluted EPS (2000 and 2001 restated to exclude goodwill and impairment, fixed asset gains, investment write-down
Slide 16: Increasing flexibility in the cost base
Increasing flexibility in the cost base – Continue to focus on a 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 economic slowdown
Slide 17: Increasing flexibility in the cost base
Increasing flexibility in the cost base Change in variable staff costs (%) 14 2000 12.1 12 11.0 2002 10 9.2 2003 8 6.6 6.3 6 5.3 4 2 0 Variable staff costs Variable staff costs as a % of staff costs as a % of revenue
Slide 18: Using Free Cashflow to Enhance Share Owner Value
Using Free Cashflow to Enhance Share Owner Value Acquisitions – Cordiant acquired with effect from 1 August 2003 – 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 grow
Slide 19: Using Free Cashflow to Enhance Share Owner Value
Using Free Cashflow to Enhance Share Owner Value Dividends and share purchases – 2003 dividend raised by 20% to 6.48p per share – Share repurchases and buy-backs Shares Amount % of Share Base 1997 7.2m £ 31.2m 1.0% 1998 5.7m £ 54.6m 0.8% 1999 3.3m £ 17.9m 0.5% 2000 9.4m £ 94.1m 1.1% 2001 3.8m £ 103.
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 Ma
Slide 21: Strategy
Strategy Improving creative capabilities and reputation of all our businesses – 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 WPP Information, Public Relations Branding & Identity, Media Healthcare and Advertising Investment Insight & & Specialist New Technology Management Consultancy Public Affairs Communications Revenue £1.9bn Revenue £703m Revenue £426m Revenue £1.0bn Revenue; PBIT £295m PBIT £50m PBIT £55m PB
Slide 23: WPP Today
WPP Today Young & Rubicam Chairman & CEO Ann Fudge Brands Robinson Burson- Cohn & Sudler & Y&R Lerer & Landor Wunderman Marsteller Wolfe Hennessey Montgomery Chairman & CEO Founding Chairman CEO Chairman & CEO CEO Chairman & CEO CEO Ann Fudge Harold Burson Donna Imperato Linda Robinson Jed Beitler C