Wpp Plc · LSE:WPP
Wpp — FY2010 Earnings Presentation
95 slides from Wpp's earnings presentation, March 2011
Slide 1: Results for 2010
Results for 2010 L d London March 2011 1
Slide 2: Contents
Contents 1 Results for 2010 2 Key Priorities, Objectives and Strategy 3 Conclusions 4 Other Financial Information (Hard (H d CCopy only) l ) 5 Structure and Competitive Position (Hard Copy only) 6 25 Y Year Hi History t (Hard Copy only) 2
Slide 3: Results for 2010
1 R Results lt ffor 2010 3
Slide 4: Results for 2010
Results for 2010 Billings up 12.6% to £42.7 billion. Reported revenue up 7.4%. On a constant currency basis, revenue up 5.6%. Like-for-like revenue up 5.3%. Headline operating margin of 13.2%, with 15.8% in second half, 0.4 margin points above the second half pro-forma margin for 2008 and 2009
Slide 5: Headline Results at a Glance (1)
Results for 2010 Summary Headline¹ Results at a Glance (1) Year to 31 December 2010 2009 Change £m £m % R Revenue 9 331 0 9,331.0 8 684 3 8,684.3 74 7.4 Gross Margin 8,560.5 7,980.7 7.3 Staff Costs pre Severance and Bonus 5,022.1 4,813.6 -4.3 Staff Costs 5,438.7 5,117.0 -6.3 Other Expenses 1,893.1 1
Slide 6: Headline Results at a Glance (2)
Results for 2010 Summary Headline¹ Results at a Glance (2) Year to 31 December 2010 2009 Change % Operating Profit Margin: % off Revenue 13.2% % 11.7% % +1.5² % of Gross Margin 14.4% 12.7% +1.7² Diluted EPS p pence p per share 56.7p p 44.4p p 27.7 Average Net Debt £m (3,056) (3,448) 11.4 Average Net
Slide 7: Unaudited IFRS Income Statement
Results for 2010 Unaudited IFRS Income Statement Constant Year to 31 December 2010 2009 Change Currency £m £m % % Revenue 9,331.0 8,684.3 7.4 5.6 Operating Profit pre-goodwill / intangibles 1,173.2 958.6 22.4 18.8 Goodwill / intangibles charges, FA gains / losses (200.2) (196.9) -1.7 1.7 -1.7 1.7 Op
Slide 8: % Growth vs Prior Year
Results for 2010 % Growth vs Prior Year Revenue Headline³ Headline³ PBIT EPS Like-for-like 5.3 n/a n/a Acquisitions4 0.3 n/a n/a Constant currency 5.6 16.8 22.5 Foreign exchange 1.8 4.0 5.2 p Reportable sterling g 7.4 20.8 27.7 Reportable US dollars¹ 6.0 16.7 22.2 Reportable euros² 11.7 26.3 33.9 ¹
Slide 9: 2010 Organic Revenue Growth by Quarter
Results for 2010 2010 Organic Revenue Growth by Quarter 9% 8.5% 8% 7 5% 7.5% 7% 6% 5% 4.7% 4% 3% 2% 1% 0.0% 0% Q1 2010 Q2 Q3 Q4 9
Slide 10: Headline Performance Versus Consensus
Results for 2010 Headline¹ Performance Versus Consensus Actual Consensus Results Median +/(-) Revenue £9,331m £9,263m £68m PBIT £1,229m £1,220m £9m Net finance costs £(195m) £(195m) - PBT , £1,034m £1,025m , £9m Fully Diluted EPS 56.7p 56.4p 0.3p PBIT Margin 13.2% 13.2% - Fully Diluted Shares 1,339m
Slide 11: Unaudited Headline IFRS Income Statement
Results for 2010 Unaudited Headline¹ IFRS Income Statement Constant C t t Year to 31 December 2010 2009 Change Currency £m £m % % Revenue 9 331 0 9,331.0 8 684 3 8,684.3 74 7.4 56 5.6 Operating profit 1,173.2 958.6 22.4 18.8 Income from associates 55.5 58.6 -5.3 -15.4 PBIT 1,228.7 1,017.2 20.8 16.8
Slide 12: Operating Costs Well Controlled
Results for 2010 Operating Costs¹ Well Controlled St li ² £’m) (lik f lik Sterling (like-for-like £’ ) 2010 2009 % B/(W) Revenue 9,331 8,861 5.3 Gross Margin 8 561 8,561 8 138 8,138 52 5.2 Staff Cost 5,439 5,210 (4.4) Staff Cost/ Revenue % 58 3% 58.3% 58 8% 58.8% Establishment 659 701 6.0 Establishm
Slide 13: Revenue by Discipline
Results for 2010 Revenue by Discipline % Change 2010 2009 Reported Constant Like-for- £m £m Currency like Advertising, Media Investment 3,733.3 3,420.5¹ 9.1 7.0 7.1 Management Consumer Insight 2,430.2 2,297.1 5.8 4.4 3.9 Public Relations & Public Affairs 844.5 795.7 6.1 4.3 3.7 Branding & Identity,
Slide 14: Organic Revenue Growth Trends by Discipline
Results for 2010 Organic Revenue Growth Trends by Discipline 2009-2010 Quarter by Quarter 15.0% 10.0% 5.0% 0.0% -5.0% -10 10.0% 0% -15.0% Q1 2009 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Advertising, Media Investment Management Consumer Insight based on Gross Margin Public Relations & Public Affairs Branding & Ide
Slide 15: Revenue by Region
Results for 2010 Revenue by Region % Change 2010 2009 Reported Constant Like-for- £m £m Currency like North America 3,299.8 3,010.0 9.6 7.7 7.6 UK 1,087.6 1,029.0 5.7 5.7 5.9 Western Continental Europe 2,325.3 2,327.8 -0.1 2.7 1.9 Asia Pacific, Latin America, Africa & Middle East, Central & Eastern
Slide 16: Organic Revenue Growth Trends by Region
Results for 2010 Organic Revenue Growth Trends by Region 2009-2010 Quarter by Quarter 15 0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% Q1 2009 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 North America UK Western Continental Europe Asia Pacific, Latin America, Africa & Middle East, Central & Eastern Europe 16
Slide 17: Headline PBIT and Margin by Discipline
Results for 2010 Headline PBIT¹ and Margin¹ by Discipline Headline PBIT Headline Margin 2010 2009 2010 2009 £m £m % % Advertising, Media Investment 573.0 472.8 15.3 13.8 Management Consumer Insight 234.8 196.9 9.7² 8.6² Public Relations & Public Affairs 133.1 122.1 15.8 15.3 Branding & Identity, Hea
Slide 18: Headline PBIT and Margin by Region
Results for 2010 Headline PBIT¹ and Margin¹ by Region Headline PBIT Headline Margin 2010 2009 2010 2009 £m £m % % North America 484.6 397.9 14.7 13.2 UK 147.9 131.5 13.6 12.8 Western Continental Europe 221.6 193.4 9.5 8.3 Asia Pacific, Africa & Middle East, Central & Eastern Europe 374.6 294.4 14.3
Slide 19: Revenue Growth by Country
Results for 2010 Revenue Growth by Country Revenue Growth1 Countries >15% 5% Argentina², ge t a , Mainland a a dC China a 10% to 15% Brazil², Russia, India, Greater China 5% to 10% Germany, Italy, Poland, Singapore, UK, USA Australia, A t li B Belgium, l i C Canada, d D Denmark, k France, F <5% Japa
Slide 20: Revenue Growth by Category
Results for 2010 Revenue Growth by Category Revenue Growth1 Categories >15% 5% Financial a c a Se Services ces Automotive, Computers, Electronics, Entertainment, 10% to 15% Travel & Airline 5% to 10% Drinks, Oil Food, Government, Personal Care & Drugs, Retail, <5% Telecommunications 1 Like-for-like
Slide 21: Effects of Sterling Weakness
Results for 2010 Effects of Sterling Weakness Currency movements accounted for a 1.8% increase in revenue, largely reflecting the weakness of the £ sterling against most currencies other than the euro. Sterling weaker on average as follows: 2010 2009 Sterling weaker/ (stronger) US$ 1.546 1.567 1
Slide 22: Trade Estimates of Major New Business Wins
Results for 2010 Trade Estimates of Major New Business Wins Agency Incumbent Account Office Billings ($m) Mindshare PUB L’Oreal China 1,000 GroupM IPG/OMC Bayer Worldwide 600 M4C AGS/PUB/Ind COI UK 375 Grey Ind Sony Bravia Worldwide 300 Ogilvy VCCP¹/ Other Coke Zero Worldwide 300 Team Mazda Ind Mazd
Slide 23: Trade Estimates of Major New Business Wins
Results for 2010 Trade Estimates of Major New Business Wins Agency Incumbent Account Office Billings ($m) Mindshare IPG CVS USA 150 Mindshare AGS Radio Shack USA 150 g y Ogilvy PUB IHG Worldwide 120 Maxus PUB BT UK 120 MediaCom AGS EA Games Europe 115 Grey Ind Red Lobster USA 115 Mindshare AGS/PUB K
Slide 24: Trade Estimates of Major New Business Wins
Results for 2010 Trade Estimates of Major New Business Wins Agency Incumbent Account Office Billings ($m) Ogilvy JWT Kimberly-Clark USA 70 Team Detroit IPG Sports Authority USA 70 p GroupM None Microsoft China 64 Ogilvy Ind Expedia Europe 62 Maxus PUB L’Oreal Thailand 60 MEC OMC Reliance Communicati
Slide 25: Trade Estimates of Major New Business Wins
Results for 2010 Trade Estimates of Major New Business Wins Agency Incumbent Account Office Billings ($m) Maxus IPG L’Oreal India 30 MEC PUB South Australian Government Australia 27 GroupM AGS BNP Paribas Italy 25 MEC In house Telkomsel Indonesia 25 Bravo Ind Wendy’s USA 25 Shaded figures are Q4 win
Slide 26: Trade Estimates of Major New Business Losses
Results for 2010 Trade Estimates of Major New Business Losses WPP Agency Winning Agency Account Office Billings ($m) MediaCom OMC GSK USA 700 MediaCom PUB Darden Olive Garden USA 160 MediaCom AGS Diageo USA 130 RKCR/Y&R OMC Virgin Media UK 105 JWT IPG Microsoft Worldwide 100 O il Ogilvy G Grey GSK W
Slide 27: Trade Estimates of Major New Business Losses
Results for 2010 Trade Estimates of Major New Business Losses WPP Agency Winning Agency Account Office Billings ($m) Y&R Ind MetLife USA 56 Mindshare PUB Telefonica/O2 Europe 48 Mindshare/Neo PUB Yahoo! Worldwide 45 MEC Ind Weight Watchers Worldwide 40 JWT HAV Granini Europe 30 Grey Ind Diageo World
Slide 28: Internal Estimates of Net New Business Wins in 2010
Results for 2010 Internal Estimates of Net New Business Wins in 2010 ($m) Creative Media Total Advertising 1,325 2,455 3,780 Other Businesses 1 022 1,022 - 1 022 1,022 Total 2,347 2,455 4,802 28
Slide 29: Major New Business Wins/Losses Since January 2011
Results for 2010 Trade Estimates of Major New Business Wins/ Losses Since 1 January 2011 Billings WPP Agency Incumbent Account Office ($m) Ogilvy PUB Claro Brazil 500 WINS Mindshare IPG Unilever Australia 80 RKCR/Y&R Ind Dreams UK 55 Billings WPP Agency g y Winning g Agency g y Account Office ($ ) (
Slide 30: Cash Flow
Results for 2010 Cash Flow £m 2010 2009 Headline Operating Profit 1,173 959 Non-cash compensation 71 55 Depreciation & amortisation charges 210 226 Net interest paid & similar charges (165) (148) Tax paid (207) (217) Net cash generation 1,082 875 30
Slide 31: Uses of Cash Flow
Results for 2010 Uses of Cash Flow £ £m 2010 2009 Net cash generation 1,082 875 Capital p expenditure p ((217)) ((253)) Acquisition payments (215) (145) - Net initial payments¹ (97) (63) - Earnout Earno t payments/ pa ments/ loan note redemptions (118) (82) Share repurchases (46) (9) Other 37 (4) Ne
Slide 32: Net Finance Costs/(Income)
Results for 2010 Net Finance Costs/ (Income) £m 2010 2009 B/(W) Interest on net debt 177.4 189.0 11.6 Investment income (9.3) (10.2) (0.9) IAS 19 ((Pensions)) 17.2 18.7 1.5 Earnout interest 0.9 2.0 1.1 IAS 32 (Convertibles) 8.9 5.5 (3.4) Sub-total 17.7 16.0 (1.7) Headline finance costs 195.1 205.0 9
Slide 33: Net Debt – December 2010
Results for 2010 Net Debt – 31 December 2010 % £m 2010 2009 Variance YTD average g net debt on constant currency y basis ((3,056) , ) ((3,403) , ) +10% % YTD average net debt on reportable basis (3,056) (3,448) +11% Net debt at 31 December (1,888) (2,640) +29% YTD average net debt for first 7 weeks
Slide 34: Historic Average Net Debt/Headline EBITDA
Results for 2010 Historic Average Net Debt/Headline EBITDA £m 4,000 3.0 Average net debt EBITDA 3,500 A Average nett d debt/EBITDA bt/EBITDA 2.5 3,000 20 2.0 2,500 2,000 1.5 1,500 1.0 1,000 0.5 500 0 0.0 2004 2005 2006 2007 2008 2009 2010 34
Slide 35: Uses of Free Cash Flow
Results for 2010 Uses of Free Cash Flow Category Target FY 2010 FY 2009 New acquisitions¹ Up to £100m £97m² £63m² Share purchases Up to 1% 0.5% 0.2% Dividends Growth up to 15% 15% Flat Headroom: Undrawn £2.8bn £2.2bn facilities & surplus cash ¹ Includes investments and step-ups in subsidiaries equit
Slide 36: Earnings and EPS
Results for 2010 £m Earnings and EPS¹ Pence/ share 800 60.0p 56.7p p 55 5 55.5p Earnings 700 EPS 45.8p 44.4p 50.0p 42 0 42.0p 600 36.0p 40.0p 500 27.9p 400 30.0p 300 20.0p 200 10.0p 100 0 0.0p 2004 2005 2006 2007 2008 2009 2010 ¹ Diluted Headline Earnings and Diluted Headline EPS 36
Slide 37: Ordinary Shares - Basic
Results for 2010 Ordinary Shares - Basic December December 2010 2009 No of Shares (million) No. Actual Actual 1 January 1,256 1,255 Option exercise 8 1 31 December 1,264 1,256 0.6% Weighted Average 1,259 1,256 ESOP, Treasury & Other (26) (37) Average Basic 1,233 1,219 1.1% 37
Slide 38: Ordinary Shares – Diluted
Results for 2010 Ordinary Shares – Diluted December December 2010 2009 No of Shares (million) No. Actual Actual Average Basic 1,233 1,219 Share Option p Dilution 7 2 Other Potentially Issuable Shares 22 17 Sub-Total Sub Total 1,262 1,238 1.9% Convertibles: £450m 5.75% bond 77 - Fully Diluted Shares
Slide 39: Key Priorities, Objectives and Strategy
2 Key P K Priorities, i iti Objectives Obj ti and Strategy 39
Slide 40: New Markets, New Media and Consumer Insight
Key Priorities, Priorities Objectives and Strategy New markets, New Media and Consumer Insight Macro Micro Gathering momentum and growth in Client comments indicate increased global GDP particularly outside the spend for various reasons Western markets Efficiency, effectiveness and Cautious
Slide 41: New Markets, New Media and Consumer Insight
Key Priorities, Priorities Objectives and Strategy New Markets, New Media and Consumer Insight 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%). Quantitative disciplines including consumer insight to be ov
Slide 42: Faster Growing Markets to be 35% - 40% of Total Group
Key Priorities, Priorities Objectives and Strategy Faster Growing Markets to be 35% - 40% of Total Group Today Today including Tomorrow Associates 28% 30% 31% 35% 35% 38% ¹ 37% 35% 31% North America UK & Western Continental Europe Asia Pacific, Latin America, Africa & Middle East, Central & Eastern
Slide 43: Revenues in Faster Growing Markets 2004-2010
Key Priorities, Priorities Objectives and Strategy Revenues in Faster Growing Markets 2004-2010 4.5 4.0 35 3.5 3.0 ue ($'bn) 2.5 Revenu 2.0 1.5 1.0 0.5 00 0.0 2004 2005 2006 2007 2008 2009 2010 WPP IPG PUB OMC 1. WPP reportable US$’s per WPP results and peer $ revenues as shown in annual results pre
Slide 44: WPP's Performance Strong in BRIC Markets
Key Priorities, Priorities Objectives and Strategy WPP’s Performance Strong in BRIC Markets Revenue $'m 900 10 year CAGR 16% 800 Associates @ 100% 700 600 10 year CAGR 13% 500 400 10 year CAGR 14% 300 10 year CAGR 57% 200 100 0 2000 2009 2010 2000 2009 2010 2000 2009 2010 2000 2009 2010 Greater Chin
Slide 45: WPP's Performance Strong in Other Faster Growing Markets
Key Priorities, Priorities Objectives and Strategy WPP’s Performance Strong in Other Faster Growing Markets Revenue $'m 600 10 year CAGR 20% 500 Associates @ 100% 10 year CAGR 21% 400 300 200 100 10 year CAGR 31% 10 year CAGR 35% 0 2000 2009 2010 2000 2009 2010 2000 2009 2010 2000 2009 2010 Middle E
Slide 46: 2010 Revenue by Geography
Key Priorities, Priorities Objectives and Strategy 2010 Revenue by Geography $14.4bn $12.5bn 4.0 1.7 Asia Pacific, LatAm, Africa & Middle East, CEE Western Europe N America 3.9 5.3 $7.2bn $6.5bn 1.4 1.4 2.3 1.3 6.9 51 5.1 $2 2 bn $2.2 $2 0bn $2.0bn 3.8 0.5 0.2 3.5 1.1 1.3 0.4 0.7 WPP Omnicom Publici
Slide 47: Media Billings by Geography
Key y Priorities, Objectives j and Strategy gy Media Billings by Geography Worldwide Ranking by Group as % of the Six Groups 45 WPP Publicis Omnicom IPG Aegis Havas 40 35 30 25 20 15 10 5 0 Americas Europe Asia Pacific Worldwide Source: RECMA July 2010 billings report, based on 2009 data. 47
Slide 48: 2010 Revenue by Discipline
Key Priorities, Priorities Objectives and Strategy 2010 Revenue by Discipline $14.4bn $12.5bn 3.6 Consumer Insight Marketing Services Advertising Media 6.8 4 50 5.0 $7.2bn $6.5bn 35 3.5 2.7 3.4 4.1 2.3 2.5 $2 2bn $2.2bn $2.0bn 0.9 0.6 2.4 0.8 1.6 1.4 1.3 1.3 0.6 WPP Omnicom Publicis IPG Aegis Havas
Slide 49: Quantitative Disciplines to be One Half of Total Group
Key Priorities, Priorities Objectives and Strategy Quantitative Disciplines to be One Half of Total Group Today Today including Tomorrow Associates 51% 49% 47% 50% 50% 53% Consumer Insight and Direct, Digital & Interactive Advertising Media Investment Advertising, Management & Other Marketing Servic
Slide 50: Digital In All Our Businesses
Digital In All Our Businesses Global Scale and Quality 4.2 Most significant resource in peer group (geographic spread, strength of brands and size). GroupM is No. 1 search and digital media buyer. y 2.3 Strong Kantar digital businesses – eg Compete, Cymfony, Dynamic 2.0 Logic, Lightspeed. Pr
Slide 51: WPP Position in Direct, Digital and Interactive
Key Priorities, Priorities Objectives & Strategy WPP Position in Direct, Digital and Interactive $m $’m Direct, Digital and Interactive Networks 2,319 (OgilvyOne, Wunderman, G2 and WPP Digital) % of Group revenues 16% Specialist Direct, Digital and Interactive resources: - Consumer Insight 941 (Mill
Slide 52: WPP Position in Direct, Digital and Interactive
Key Priorities, Priorities Objectives & Strategy WPP Position in Direct, Digital and Interactive WPP with three “digital leaders” (Leading Independent Research Firm interactive ranking) Key criteria for inclusion: - mentioned as a “top three competitor” by peers - covering at least 7 of 9 key serv
Slide 53: Digital Businesses
Key Priorities, Priorities Objectives and Strategy Digital Businesses $’m Wunderman 900¹ OgilvyOne 800¹ G2 275¹ 24/7 Real Media 150¹ GroupM Search 125³ Possible Worldwide 100¹ VML 100² ¹ In WPP Direct, Digital and Interactive Networks. ² In “Other Digital”. ³ In GroupM Digital. 53
Slide 54: Digital Strategy
Key Priorities, Priorities Objectives & Strategy Digital Strategy Invest in expansion of the networks and our Kantar Media and GroupM specialist services such as: - tenthavenue engagement network primarily focussed on out-of-home media. - GroupM Search and 24/7 Real Media partnership focused on DS
Slide 55: We Continue to Focus on Our Key Objectives
Key Priorities, Priorities Objectives & 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 improve return on capital employed employed. Developing the role of the par
Slide 56: We Continue to Focus on Our Key Objectives
Key Priorities, Priorities Objectives & Strategy PBIT1 PBIT1 margin £’m We Continue to Focus on Our Key Objectives % 1,400 , 20% Revised Objectives: 19% 1,200 Long-term 18.3% 1,229 18% 2012 14.2% 1,118 1,000 17% 2011 13.7% 1,017 928 16% 800 859 15.0% 15.0% 755 14.5% 15% 600 14.0% 3%² 14.3% 14 14% 13
Slide 57: Increasing Flexibility in The Cost Base
Key Priorities, Priorities Objectives & Strategy Increasing Flexibility in The Cost Base Change in Variable Costs % 9 8 77 7.7 78 7.8 7.4 7 6.6 6 57 5.7 5 4 3 2 1 0 2006 2007 2008 2009 2010 Variable Staff Costs as % of Revenue 57
Slide 58: Using Free Cashflow to Enhance Share Owner Value
Key Priorities, Priorities Objectives & Strategy Using Free Cashflow to Enhance Share Owner Value Distributions to Share Owners¹ £’m 600 6.6% Buy-backs 500 Dividends paid 400 4 8% 4.8% 415 300 4.7% 3 6% 3.6% 3 0% 3.0% 258 112 3.4% 46 200 2.7% 9 152 89 100 190 201 162 119 139 82 100 0 2004 2005 2006
Slide 59: Dividend Pay-Out Ratio
Key Priorities, Priorities Stategy and Objectives Dividend Pay-Out Ratio 60p 40.0% 35.0% 50p 30.0% 40p 25.0% 30p 20.0% 15.0% 20p 10.0% 10p 5.0% 0p 0.0% 2004 2005 2006 2007 2008 2009 2010 Headline Diluted EPS Dividend Declared/ Share Dividend Pay-Out Ratio 59
Slide 60: Acquisitions
Key Priorities, Priorities Objectives and Strategy We Continue to Focus on Our Key Objectives Acquisitions Continue to focus on the faster growing geographical areas and marketing k ti services, i particularly ti l l didirect, t di digital it l & iinteractive t ti and d consumer insight. During
Slide 61: Acquisitions and Investments During 2010
Key y Priorities, Objectives j and Strategy gy Acquisitions and Investments During 2010 Faster Growing Ace Metrix (USA)² Quantitative and Markets Digital BLUE STATE DIGITAL (USA) BUDDY MEDIA (USA)² Comwerks (Singapore) Digitaria (USA) DPI (China) E-Commera (UK)² Expert Monitor (Poland)¹ I-BEHAVIOR (
Slide 62: Acquisitions and Investments During 2010
Key Priorities, Priorities Objectives and Strategy Acquisitions and Investments During 2010 Advertising TAXI (CANADA/ USA/ NETHERLANDS) Healthcare Geoff Howe (UK/ USA/ Czech Republic) Public Relations & Public Affairs Hering Schuppener¹ (Germany) GLOBAL COUNSEL² (UK) ¹ Step-ups in investments, assoc
Slide 63: Acquisitions and Investments Since 1 January 2011
Key Priorities, Priorities Objectives and Strategy Acquisitions and Investments Since 1 January 2011 Advertising Ogilvy South Africa¹ Media Investment Management Mindshare South Africa¹ Africa Consumer Insight Spring und Pischke (Germany) ¹ Step-ups in investments, associates and subsidiaries’ equit
Slide 64: Improving the Creative Capabilities and Reputation of all Our Businesses
Key Priorities, Priorities Objectives and Strategy Improving the Creative Capabilities and Reputation of all Our Businesses B placing By l i greater emphasis h i on recruitment. i By recognising creative success tangibly and intangibly. By acquiring highly regarded creative businesses. B pla
Slide 65: Conclusions
3 C Conclusions l i 65
Slide 66: 2010 Summary
Conclusions 2010 Summary Industry has demonstrated remarkable rebound with strong and increasing momentum through 2010. The Group showed strong and increasing organic growth – up 5 5.3% 3% for the year and 8.5% in the fourth quarter. Headline PBIT Margin up 1.5 margin points and pre-incentive
Slide 67: Outlook
Conclusions Outlook The US and traditional media have shown the sharpest turnaround and were the biggest sources of growth in 2010.... ...but in the fourth quarter faster growing markets accelerated with organic growth of 12.1%, overtaking the US which grew at 9.5%. Our 2011 budgets indicate o
Slide 68: Conclusions
Conclusions The Group is well placed by region and discipline to benefit from industry trends. The investment in digital tools and infrastructure will enable the Group to optimise client campaigns and build unique advantage for clients. In Wunderman and OgilvyOne, WPP has the two leading globa
Slide 69: Other Financial Information (Hard Copy Only)
4 Other Financial Oth Fi i l Information (Hard Copy Only) 69
Slide 70: Pensions Deficit
Results for 2010 Pensions Deficit £m 2010 2009 Deficit B/F (252) (272) Service cost (23) (22) Deficit interest charge (46) (46) F di Funding 53 3 48 Investment returns (net) 31 22 Other movements (1) (4) Movements in the year excluding FX 14 (2) Foreign exchange impact (4) 22 Deficit C/F (242) (252)
Slide 71: Earnout Accrual
Results for 2010 Earnout Accrual 2010 Rollforward £m Expected Payments £m 31 December 2009 262 2011 207 Earnouts paid (113) 2012 40 Revised estimates 82 2013 12 N New acquisitions i iti 33 2014 4 Increase excluding FX 2 2015+ 12 Foreign exchange impact 11 Total 275 31 December 2010 275 71
Slide 72: Debt Maturity Profile
Results for 2010 Debt Maturity Profile £m Total Total As at 31 December 2010 2011 2012 2013 2014 2015 2016 2017 . 2020 Credit Drawn £ bonds £200m (6.375% ’20) 200 200 200 £ bonds £400m (6% ’17) 400 400 400 Eurobonds €750m (6.625% ’16) 643 643 643 Eurobonds €500m (5.25% ’15) 429 429 429 £ convertible
Slide 73: Using Free Cash Flow to Enhance Share Owner Value
Key Priorities, Priorities Objectives and Strategy Using Free Cash Flow to Enhance Share Owner Value Dividends and Share Repurchases 2010 second interim dividend increased by 15% to 11.82p per share (2009 - 10 28p) Distributions to share owners: 10.28p). Share Repurchases Dividends Paid Amount % of
Slide 74: Revenue by Industry
Results for 2010 Revenue by Industry Other Auto T&E 7% 10% 5% Consumer Products 7% Telcom 8% Personal Care Technology 14% 8% Retail 3% Healthcare 9% Food & Drink Government 16% 1% Oil O 2% Financial Services 10% Charts represent the amount of revenue attributed to each industry expressed as a percen
Slide 75: Structure and Competitive Position (Hard Copy Only)
5 Structure St t and d Competitive Position (Hard Copy Only) 75
Slide 76: WPP Today
WPP Today WPP is the world’s largest communication services group with over 146,000 people (including associates) in almost 2,400 offices in 107 countries worldwide. 336 of the Fortune Global 500, 29 of the Dow Jones 30, 61 of the Nasdaq 100 and 35 of the Fortune e-50 as clients. 467 clients in
Slide 77: WPP Today
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 Worldwide TNS JWT Millward Brown Y&R Advertising BrandAsset Valuator and BRANDZ United OgilvyOne Grey Wunderman OgilvyAction Mindshare G2 MEC 24/7 Real Media MediaCom P P
Slide 78: WPP Today
WPP Today Revenue £9.3bn WPP PBIT £1,229m Branding & Identity, Media M di Public Relations Healthcare and Advertising Investment Consumer Insight & WPP Digital Management Specialist Public Affairs Communications Revenue £3.7bn Revenue £2.4bn Revenue £0.9bn Revenue £2.3bn Revenue Broader £2.7bn £2 7b
Slide 79: WPP Today – Advertising
WPP Today Advertising Ogilvy & Y&R Mather JWT Grey United Advertising Worldwide (Global) (Global) (Global) (Global) (Global) CEO: Chairman and CEO: Chairman: Chairman & CEO: CEO: Miles Young Bob Jeffrey Hamish McLennan Jim Heekin Ewen Cameron CEO: David Sable DY&R Asatsu - DK Chime Joint Venture (Ja
Slide 80: WPP Today – Media Investment Management
Media WPP Today Investment Management: CEO: Irwin Gotlieb GroupM KR Media Mindshare MEC MediaCom Maxus tenthavenue (49 9%) (49.9%) CEO: Dominic Proctor Chairman: Charles Courtier CEO: Stephen Allan CEO: Kelly Clark Joint CEO: Bruno Kemoun CEO: Rupert Day CEO: Dominic Grainger Joint CEO: Eryck Rebbou
Slide 81: Media Investment Management - Competitive Worldwide Ranking
WPP Today Media Investment Management - Competitive Worldwide Ranking Americas EMEA Pacific Worldwide Mindshare 4 5 1 3 MEC 5 4 8 7 MediaCom 6 3 5 5 Maxus 12 13 9 13 GroupM 2 1 1 1 Source: RECMA July 2010 Billings Rankings report, based on 2009 data. 81
Slide 82: WPP Today – Kantar
WPP Today Kantar Chairman Ch i & CEO: CEO Eric Salama K t Media Kantar M di Mill Millward d Brown B Kantar Japan Added Value IMRB Kantar Retail The Futures Company Kantar Health TNS Kantar Center Partners Worldpanel Kantar Shared Services Kantar Operations Lightspeed Kantar ITP Kantar Video 82
Slide 83: Consumer Insight – Worldwide Competitive Ranking
WPP Today Consumer Insight – Worldwide Competitive Ranking 1. The Nielsen Company 2. Kantar 3. IMS 4. GfK 5. Ipsos 6. Synovate 7. SymphonyIRI Source: ESOMAR 2010, published Sept 2010. 83
Slide 84: WPP Today – Public Relations & Public Affairs
WPP Today Public Relations Executive Vice President, & Public Relations/Public Affairs: Public Affairs Howard Paster Ogilvy Public Hill & Burson- Burson Specialist Cohn & Relations Knowlton Marsteller Public Relations Wolfe Worldwide Chairman & CEO: CEO: Chris Graves Founding Chairman: CEO: Donna Im
Slide 85: WPP Today – Branding & Identity
WPP Today Branding & Identity Bt D Group BtoD G CEO: Craig Branigan The Partners Landor The Brand Union Fitch Addison Lambie-Nairn CEO: Charlie Wrench VBAT CEO: Simon Bolton CEO: Lois Jacobs Peclers 85
Slide 86: 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 86
Slide 87: WPP Today – Direct, Digital and Interactive Networks
WPP Today Direct, Digital and Interactive - Networks JWT Specialised Wunderman G2 OgilvyOne¹ VML Communications President & CEO: Chairman & CEO: Chairman & CEO: Chairman & CEO: President & CEO: Tim Gibbon Daniel Morel Joe Celia Brian Jon Cook Fetherstonhaugh OgilvyAction CEO: Steve Harding ¹ Include
Slide 88: 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 Imagina² The Geppetto Group EWA The Food Group The Farm Uniworld Group¹ Forward Group Pace MJM Creative Se
Slide 89: WPP Today – WPP Digital
WPP Today New Technology New Technology Ogilvy WPP Digital Wunderman W d OgilvyOne Interactive G2 Hogarth CEO: Mark Read Interactive 24/7 Real Media Neo@Ogilvy Possible Worldwide Deliver Syzygy¹ Loyalty y y& Web Data Mobile C Content P Portal l S Search h S f Software I f Information i S Sports Rel.
Slide 90: 25 Year History (Hard Copy Only)
6 25 Y Year Hi History t (Hard Copy Only) 90
Slide 91: WPP Reported Revenue
25 Year History WPP Reported Revenue £’m £ m 10,000 9,000 25 Year CAGR: 38% 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 91
Slide 92: WPP Organic Growth
25 Year History WPP Organic Growth % 20 18.6 15.0 15 13.9 14.1 11.8 Average: 5.9% 10 8.0 8.3 8.4 8.0 8.0 6.3 5.7 5.5 5.4 5.3 5.2 5.0 5 4.0 4.0 2.7 0.7 N/A 0 -3.0 -5 -4.7 4.7 -5.9 -8.1 -10 Note 1. Estimates for 1985-1990 92
Slide 93: WPP PBIT and Margins
25 Year History WPP PBIT¹ and Margins PBIT £’m PBIT margin % 1,400 20% Margin - Full Year IFRS 25 Year CAGR: 41% Margin -Full Full Year UK GAAP 1,200 16% 14.5% 14.0% 14.1% 1,000 13.4% 15.0%15.0% 12 8% 12.8% 13 0% 13.0% 14 5% 14.5% 12.3% 14.0% 11.8% 13.2% 13.0% 12% 800 10.5% 10.8% 10.1% 11.7% 9.7% 9.
Slide 94: WPP Fully Diluted Headline EPS Post Rights Issue
History WPP Fully Diluted Headline EPS Post Rights Issue p 60.0 17 Year CAGR: 31% 56.7 UK GAAP IFRS 55.5 50.0 45.8 44.4 42.0 40.0 36.0 32.3 30.3 30.9 29.0 30 0 30.0 27 9 27.9 23.8 22.7 20.0 18.8 15.7 13.5 9.4 10.0 6.5 5.0 0.0 Note 1. 1993 adjusted to reflect rights issue. Diluted earnings and dilute
Slide 95: Results for 2010
Results for 2010 L d London March 2011 95