Wpp Plc · LSE:WPP
Wpp — FY2009 Earnings Presentation
95 slides from Wpp's earnings presentation, March 2010
Slide 1: Results for 2009
WPP Results R l ffor 2009 London March 2010 1
Slide 2: Agenda
WPP 1 Results for 2009 2 Key Priorities, Objectives and Strategy 3 Conclusions 4 Other Financial Information ((Hard Copy py Only) y) 5 Structure and Competitive Position (Hard Copy Only) 2
Slide 3: 1 Results for 2009
WPP 1 Results for 2009 3
Slide 4: Results for 2009
Results for 2009 Billings up 2.7% to £37.9 billion. Reported R t d revenue up 16 16.1%. 1% OOn a constant t t currency bbasis, i revenue up 44.9%. 9% Like-for-like revenue down 8.1%, with like-for-like gross margin down 7.9%. Headline PBIT down 9% to £1,017m from £1,118m. Headline operating margin o
Slide 5: Results for 2009
Results for 2009 Headline PBT down 16.1% to £812m from £968m. Diluted headline EPS down 20% to 44.4p from 55.5p. pp Second interim dividend flat at 10.28p per share,, making g total for yyear of 15.47p, p, the same as 2008. Payment date for second interim dividend 1 April. Estimated net new business
Slide 6: Unaudited IFRS Income Statement
Results for 2009 Unaudited IFRS Income Statement Year to 31 December 2009 2008 Change £ £m £ £m % Revenue 8,684.3 7,476.9 16.1 Operating Profit pre-goodwill/ intangibles 958.6 1,071.7 -10.6 Goodwill/ intangibles charges, FA gains (196.9) (195.7) -0.6 Operating Profit 761.7 876.0 -13.0 I Income from
Slide 7: % Growth vs Prior Year
Results for 2009 % Growth vs Prior Year Revenue Headline² Headline² PBIT EPS Like-for-like -8.1 n/a n/a Acquisitions 13.0 n/a n/a Constant currency 4.9 -16.7 -28.5 Foreign exchange 11.2 7.7 8.5 R Reportable t bl sterling t li 16 1 16.1 -9.0 90 -20.0 20 0 Reportable US dollars¹ dollars - -18 18.2 2 -
Slide 8: Headline Performance Versus Consensus
Results for 2009 Headline¹ Performance Versus Consensus Median Actual Consensus Results +/(-) Revenue £8,729m £8,684m £(45)m PBIT £1 017 £1,017m £1 017 £1,017m - Net finance costs £(195m) £(205)m £(10)m PBT £822m £812m £(10)m Fully Diluted EPS 43.6p 44.4p 0.8p PBIT Margin 11.7% 11.7% - Fully Diluted
Slide 9: Unaudited Headline Income Statement
Results for 2009 Unaudited Headline¹ IFRS Income Statement Year to 31 December 2009 2008 Change Constant £m £m % Currency % Revenue 8,684.3 7,476.9 16.1 4.9 Headline operating profit 958.6 1,071.7 -10.6 -17.8 I Income from f associates i t 58 6 58.6 46 5 46.5 PBIT 1,017.2 1,118.2 -9.0 -16.7 Net fina
Slide 10: Unaudited Headline Income Statement by Half
Results for 2009 Unaudited Headline¹ IFRS Income Statement First Half Second Half 2009 2008 Change 2009 2008 Change £m £m % £m £m % Revenue 4,288.7 3,339.1 28.4 4,395.6 4,137.8 6.2 Headline operating profit 322.7 432.7 -25.4 635.9 639.0 -0.5 Income from associates 19.5 20.7 39.1 25.8 PBIT 342.2 453.
Slide 11: Full Year Operating Expenses
Results for 2009 Full Year Operating Expenses (like-for-like Sterling1 £’m) 2009 2008 % B/(W) Revenue 8,684 9,449 -8.1 Gross Margin 7,981 8,666 -7.9 Staff Cost 5,117 5,444 6.0 Establishment 692 637 -8.7 Other G&A 1,213 1,333 9.0 Total Operating Expenses 7 022 7,022 7 414 7,414 53 5.3 • Property impa
Slide 12: Revenue and Headcount now more balanced
Results for 2009 R Revenue and dHHeadcount d t now more b balanced l d Cumulative Organic Change – March, June, September and December 2009 0.0% March YTD June YTD September YTD December YTD -0.8% 0 8% -2.0% -2.7% -2.8% 4.0% -4.0% -4.9% -5.2% -6.0% -5.8% -6.7% 6 7% -8.0% -8.3% -8.1% -8.4% -10 10.0%
Slide 13: Revenue by Discipline
Results for 2009 Revenue by Discipline 2009 2008 % Change £m £m Reported p Constant Like-for- Currency like Advertising, g, Media Investment Management 3,358.9 3,329.5 0.9 -8.6 -8.5 Consumer Insight 2,297.1 1,301.8 76.5 62.9 -9.5 Public Relations & Public Affairs 795.7 752.3 5.8 -6.5 -7.4 Branding &
Slide 14: Organic Revenue Growth Trends by Sector
Results for 2009 Organic Revenue Growth Trends by Sector 2008-2009 Quarter by Quarter 10% 5% 0% Q1 2008 Q2 Q3 Q4 Q1 2009 Q2 Q3 Q4 -5% -10% -15% 15% Advertising, Media Investment Management Consumer Insight based on Gross Margin Public Relations & Public Affairs Branding & Identity, Healthcare and Sp
Slide 15: Revenue by Region
Results for 2009 R Revenue b by R Region i 2009 2008 % Change £m £m Reported Constant Like-for- Like for Currency like North America 3,010.0 2,603.2 15.6 -0.7 -8.1 UK 1,029.0 954.2 7.8 7.8 -6.0 Western Continental Europe 2,327.8 1,879.1 23.9 12.8 -10.2 Asia Pacific Pacific, Latin America, America Af
Slide 16: Organic Revenue Growth Trends by Region
Results for 2009 Organic Revenue Growth Trends by Region 2008-2009 Quarter by Quarter 15% 10% 5% 0% Q1 2008 Q2 Q3 Q4 Q1 2009 Q2 Q3 Q4 -5% -10% -15% 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 2009 Headline PBIT¹ and Margin¹ by Discipline Headline PBIT Headline Margin 2009 2008 2009 2008 £m £m % % Advertising, Media Investment 472.8 581.3 14.1 17.5 Management Consumer Insight 196.9 147.6 8.62 11.32 Public Relations & Public Affairs 122.1 124.9 15.3 16.6 Branding & Identity, He
Slide 18: Headline PBIT and Margin by Region
Results for 2009 Headline PBIT PBIT¹ and Margin¹ Margin by Region Headline PBIT Headline Margin 2008 2008 £m % North America 397 9 397.9 438 3 438.3 13 2 13.2 16 8 16.8 UK 131.5 124.1 12.8 13.0 Western Continental Europe 193.4 247.0 8.3 13.1 Asia Pacific Pacific, Latin America, America Africa & Midd
Slide 19: Revenue growth by Country
Results for 2009 Revenue growth by Country Revenue Growth¹ Countries Above 0% Argentina, India, Poland 0% to -5% Brazil, Russia, Singapore, South Africa -5% to -10% Canada, Denmark, France, Germany, Greater China, Italy, UK, US > -10% Australia, Japan, Netherlands, Spain, Sweden 1 Like-for-like grow
Slide 20: Revenue Growth by Category
Results for 2009 Revenue Growth by Category Revenue Growth Growth¹ Categories 0% to 5% Computers p 0% to -5% Drinks, Electronics, Entertainment, Government, Personal Care & Drugs -5% to -10% Food, Retail, Telecommunications > -10% Automotive, Financial Services, Oil, Travel & Airline 1 Like-for-like
Slide 21: Effects of Sterling Weakness
Results for 2009 Effects of Sterling Weakness Currency movements accounted for a 11.2% increase in revenue, reflecting the weakness of the £ sterling against the US dollar, the euro and the Japanese yen. Sterling weaker on average as follows: 2009 2008 Sterling weaker US$ 1 567 1.567 1 852 1.852 -15
Slide 22: Trade Estimates of Major New Business Wins
Results for 2009 Trade Estimates of Major New Business Wins Agency Account Office Billings ($m) Grey Allianz Worldwide 300 mec Activision Blizzard USA 225 Mindshare Boehringer-Ingelheim USA 225 Mindshare Abbott Labs Worldwide 205 mec Mercedes Benz Germany 200 Wunderman Microsoft Worldwide 200 Ogilvy
Slide 23: Trade Estimates of Major New Business Wins
Results for 2009 Trade Estimates of Major New Business Wins Agency Account Office Billings ($m) O il O OgilvyOne LVMH E Europe 100 JWT Microsoft Worldwide 100 JWT/ Mindshare Egyptian gyp Tourist Authority y EMEA 100 Grey ANGA USA 80 Mindshare Boehringer-Ingelheim Worldwide 80 M di C MediaCom U i Uni
Slide 24: Trade Estimates of Major New Business Losses
Results for 2009 Trade Estimates of Major New Business Losses Agency Account Office Billings ($m) Mindshare Bristol-Myers Squibb Worldwide 420 MediaCom Nokia Worldwide 260 Mindshare Wrigley USA 250 Mindshare Unilever China 225 MediaCom LVMH USA 180 mec Monster.com Worldwide 150 JWT K ll Kellogg E Eu
Slide 25: Internal Estimates of Net New Business Wins in 2009
Results for 2009 Internal Estimates of Net New Business Wins in 2009 Billings ($m) Creative Media Total Advertising 1,214 2,857 4,071 Other Businesses 776 - 776 Total 1,990 2,857 4,847 The Group p came first in two of the three leading g industry y new business tables for 2009. 25
Slide 26: Major New Business Wins & Losses Since 1 January
Results for 2009 T d Estimates Trade E ti t off Major M j New N Business B i Wi Wins & L Losses Si Since 1 JJanuary Agency Account Off Office Billings ($m) ($ ) GroupM Bayer Worldwide 600 M4C (GroupM/MediaCom) COI UK 375 Team Bayer Bayer Worldwide 200 WINS GroupM Amway Artistry China 200 mec Bacardi
Slide 27: Cash Flow
Results for 2009 C h Fl Cash Flow 2009 2008 £m £m Headline Operating profit 959 1,072 Non-cash Non cash compensation 55 62 Depreciation & amortisation charges 226 173 Net interest p paid & similar charges g ((148)) ((134)) Tax paid (217) (182) Net cash generation 875 991 27
Slide 28: Uses of Cash Flow
Results for 2009 Uses of Cash Flow 2009 2008 £m £m Net cash ggeneration 875 991 Capital expenditure - IT (85) (104) - Property p y ((168)) ((253)) ((117)) ((221)) Acquisition payments: - Net initial payments¹ TNS - (736) Other (63) (63) (242) (978) - Earnout payments/loan note redemptions (82) (71)
Slide 29: Net Finance Costs / (Income)
Results for 2009 Net Finance Costs / (Income) £m 2009 2008 B/(W) Interest on net debt 189.0 155.9 (33.1) Investment income (10.2) (9.7) 0.5 IAS 19 (Pensions) 18.7 9.2 (9.5) Earnout interest 2.0 0.5 (1.5) IAS 32 (Convertibles) 55 5.5 (6 1) (6.1) (11 6) (11.6) 16.0 (6.1) (22.1) Headline finance costs
Slide 30: Net Debt - December 2009
Results for 2009 N t Debt Net D bt - 31 D December b 2009 2009 2008 % £m £m Variance YTD average nett debt d bt on constant t t currency basis (3,448) (2,448) -41% g net debt on reportable YTD average p ((3,448) , ) ((2,206) , ) -56% currency basis Net debt at 31 December (2,640) (3,068) 14% YTD ave
Slide 31: Use of Free Cash Flow
Results for 2009 Use of Free Cash Flow Category Target Actual New acquisitions Up to £100m £63m Share buy back Up to 1% 0.2% or £9m Dividends Growth up to 15% Flat Headroom Undrawn facilities and £2.2 bn at 31/12/09 surplus cash 31
Slide 32: Historic Average Net Debt/EBITDA
Results for 2009 Hi t i Average Historic A Net N t Debt/EBITDA D bt/EBITDA £ million Average net debt/ EBITDA 4,000 3.0 3,500 2.5 3,000 20 2.0 2,500 2,000 1.5 1,500 1.0 1,000 05 0.5 500 0 0.0 2003 2004 2005 2006 2007 2008 2009 32 Average net debt EBITDA Average net debt/EBITDA
Slide 33: Earnings and EPS
Results for 2009 Earnings and EPS¹ EPS Earnings (£m) EPS pence/ share 700 60.0p 55.5p p Earnings 600 21% -20% EPS 50.0p 45.8p 44.4p 42.0p 9% 500 17% 40.0p 36.0p 400 29% 27.9p 30.0p 300 20.0p 200 10.0p 100 0 0 0p 0.0p 2004 2005 2006 2007 2008 2009 ¹ Diluted Headline Earnings and Diluted Headline EPS
Slide 34: 2 Key Priorities, Objectives and Strategy
WPP 2 Key Priorities, Objectives and Strategy 34
Slide 35: New markets, new media and consumer insight
Key Priorities, Objectives and Strategy N New markets, k t new media di and d consumer iinsight i ht Faster growing markets to be one third of total Group. Marketing M k ti services i including i l di new media di tto b be ttwo thi thirds d off ttotal t lGGroup. Quantitative disciplines including co
Slide 36: Faster Growing Markets to be One Third of Total Group
Key Priorities, Objectives and Strategy F t Growing Faster G i Markets M k t to t be b One O Third Thi d off Total T t l Group G Today Today Including Associates Tomorrow 27% 34% 33% 30% 34% 33% 39% 37% 33% North America UK & Western Continental Europe Asia Pacific, Latin America, Africa & Middle Ea
Slide 37: Revenues in Faster Growing Markets 2003-2009
Key Priorities, Objectives and Strategy Revenues in Faster Growing Markets 2003-2009 4 3.5 3 nue ($'bn)) 2.5 WPP IPG 2 PUB Reven 1.5 OMC 1 0.5 0 2003 2004 2005 2006 2007 2008 2009 1. WPP reportable US $’s per WPP results and peer $ revenues as shown in annual results presentations 2. Peer data sourc
Slide 38: WPP's Performance in Strong BRIC Markets
Key Priorities, Objectives and Strategy WPP’ Performance WPP’s P f Strong St in i BRIC Markets M k t Revenue $'m 800 700 Associates @ 100% 600 500 400 300 200 100 0 2000 2008 2009 2000 2008 2009 2000 2008 2009 2000 2008 2009 China (including Hong Brazil India Russia Kong and Taiwan) 38
Slide 39: WPP's Performance in Other Faster Growing Markets
Key Priorities, Objectives and Strategy WPP’ss Performance in Other Faster Growing Markets WPP Revenue $'m 600 500 Associates @ 100% 400 300 200 100 0 2000 2008 2009 2000 2008 2009 2000 2008 2009 2000 2008 2009 Middle East Central & Eastern Europe Indonesia Vietnam 39
Slide 40: 2009 Revenue by geography
Key Priorities, Objective and Strategy 2009 Revenue by geography $13.6bn $11 7b $11.7bn 3.6 Asia Pacific, La tAm, Africa & Middle Ea st, CEE 1.4 Weste rn Europe N America 3.9 5.3 $6.0bn $6.3bn 1.2 1.2 1.4 2.2 6.4 $2.0bn $2.1 bn 4.7 3.4 0.3 1.5 2 9 2.9 1.1 1 1 0.6 0.6 WPP ¹ Omnicom IPG Publicis Havas
Slide 41: Media Billings by Geography
Key Priorities, Objectives and Strategy Media Billings by Geography Worldwide ranking by Group as % of the Six Groups 40 35 WPP 30 Publicis Omnicom 25 IPG 20 Aegis Havas 15 10 5 0 Americas Europe Asia Pacific Worldwide 41 Source: RECMA July 2009 billings report, based on 2008 data.
Slide 42: Marketing Services to be Two Thirds of Total Group
Key Priorities, Objectives and Strategy Marketing Services to be Two Thirds of Total Group Today Today including associates Tomorrow 39% 33% 41% 59% 67% 61% Marketing Services Advertising & Media Investment Management 42
Slide 43: 2009 Revenue by Discipline
Key Priorities, Objective and Strategy 2009 Revenue by Discipline $13.6bn $11.7bn Consumer Insight 3.6 Marketing Services Advertising Media 6.5 4.8 $6.0bn $6.3bn 2.5 2.8 3.1 3.9 $2.5bn 2.3 2.2 $2.0bn 1 0.7 2.1 0.8 1.5 1.4 1.2 1.3 0.5 WPP ¹ Omnicom IPG Publicis Havas Aegis Source: 1 WPP reportable US
Slide 44: Quantitative Disciplines to be One Half of Total Group
Key Priorities, Objectives and Strategy Quantitative Disciplines to be One Half of Total Group Today Today including associates Tomorrow 50% 50% 50% 48% 52% 50% Consumer Insight and Direct, Digital & Interactive Advertising, Media Investment Management & Other Marketing Services 44
Slide 45: WPP Position in Direct, Digital and Interactive
Key Priorities, Objectives and Strategy WPP Position in Direct, Direct Digital and Interactive $’m Direct, Digital and Interactive Networks 2,112 (OgilvyOne, Wunderman, G2 and WPP Digital) % of Group revenues 15% Specialist Direct, Digital and Interactive resources: - Consumer Insight ((Millward Bro
Slide 46: WPP's digital Strategy
WPP’s digital Strategy: Creativity Media and Technology Creativity, 1 Digital in all our businesses 1. 2. Specialist digital expertise and resource 3. Global integrated technology platforms – a competitive advantage for clients and WPP Cli Client 4. Technology Investments and Partnerships: open appr
Slide 47: Digital in all our businesses
Digital in all our businesses Gl b l scale Global l and d quality lit Revenues $’billion 36 3.6 • M Mostt significant i ifi t resource in i peer group (geographic spread, strength of brands and size) • O Only l Group G with ith more than th one “L “Leader” d ” iin Forrester’s Interactive Agency Repo
Slide 48: WPP Digital Specialist and Network Resources
WPP Digital Specialist and Network Resources Gl b l reach Global h and d strong t llocall b brands d 48
Slide 49: Technology Changing Marketing
Technology Changing Marketing Hundreds of Companies Clutter the Market Networks Publishers Data Providers Technology Vendors 49
Slide 50: Integrated Technology
Integrated Technology Proprietary tools order the digital ecosystem Networks Publishers Data Providers Technology Vendors 50
Slide 51: Integrated Technology: The ZEUS Advertising Platform
Integrated Technology P Proprietary i t technology t h l d drives i new b business i opportunities t iti The ZEUS Advertising Platform (ZAP) integrates providers of: Technology Search Engine B3 New Research & Data Demand Side Data Management Analytics Platform Businesses Inventory Unified agency int
Slide 52: Proprietary Technology Drives Client Success
Proprietary Technology Drives Client Success Search spend under management exceeds $500m run rate (in US$ Millions) $600 $500 $400 $300 $200 $100 $‐ 52 Jan‐07 Apr‐07 Jul‐07 Oct‐07 Jan‐08 Apr‐08 Jul‐08 Oct‐08 Jan‐09 Apr‐09 Jul‐09 Oct‐09
Slide 53: Proprietary Technology Drives Client Success
Proprietary Technology Drives Client Success B3 is most successful DSP launch (in US$ Millions) $120 110 Annualized Spend Monthly Campaigns 100 $100 90 80 $80 70 60 $60 50 40 $40 30 $20 20 10 $- 0 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-0
Slide 54: Proven at Scale
Key Priorities, Objectives and Strategy P Proven att Scale S l ZAP 3B impressions per month; 70+ campaigns 2,400 campaigns; 3.9M survey respondents 3m websites, 16m search terms each month Managing $520m annualised search billings at end of ‘09 09 80+ clients; hundreds of campaigns 160m unique 160 i
Slide 55: Digital Strategy
Key Priorities, Objectives and Strategy Digital Strategy $3 6b iin di $3.6bn digitally it ll ddriven i revenues – strongest t t position iti ini interactive i t ti agency space Proprietary technology combined with industry partnerships improves client campaign effectiveness: – $680m in digital spend
Slide 56: TNS Integration
Key Priorities, Objectives and Strategy TNS Integration TNS has been integrated with Kantar during 2009 with TNS Custom business merged with RI. Other TNS businesses merged with other Kantar businesses to form Kantar Media, Kantar Worldpanel, Kantar Retail and Kantar Health. At December 2009 the ann
Slide 57: We continue to focus on our key objectives
Key Priorities, Objectives and Strategy We continue contin e to foc focus s on o ourr ke key objecti objectives es Improving operating margins margins. Increasing flexibility in the cost base. Using free cash flow to enhance share owner value, and improve return on capital employed. Developing the r
Slide 58: Historic Headline PBIT and Margins
Key Priorities, Objectives and Strategy PBIT1 PBIT1 margin £’m Historic Headline PBIT¹ and Margins % 1200 20% Revised Objectives: 1 118 1,118 2011 13.2% 1000 15.0% 14.5% 15.0% 1,017 16% 2010 12.7% 14.0% 13.0% 928 800 859 11 7% 11.7% 755 12% 600 560 8% 400 4% 200 0 0% 2004 2005 2006 2007 2008 2009 PB
Slide 59: Increasing flexibility in the cost base
Key Priorities, Objectives and Strategy Increasing flexibility in the cost base Change in variable costs % 14 2002 12.8 2007 2008 12 11.4 2009 9.7 10 9.2 8 7.4 66 6.6 5.7 6 5.3 4 2 0 Variable Staff costs as a % of Staff costs Variable Staff costs as a % of Revenue 59
Slide 60: Using Free Cashflow to Enhance Share Owner Value
Key Priorities, Objectives and Strategy Using Free Cashflow to Enhance Share Owner Value £ millions Distributions to share owners¹ 600 6.6% Buybacks 500 Dividends paid 400 4.8% 415 300 4.7% 3.6% 258 112 3.4% 200 2.7% 9 152 1.6% 89 100 190 23 139 162 100 119 67 82 0 2003 2004 2005 2006 2007 2008 2009
Slide 61: Using Free Cashflow: Acquisitions
Key Priorities, Objectives and Strategy Using g Free Cashflow to Enhance Share Owner Value Acquisitions Continue to focus on the faster growing geographical areas and marketing services, particularly direct, digital & interactive and consumer insight. During D i 2009 2009, 13 smallll and d mid id si
Slide 62: Acquisitions and Investments
Key Priorities,Objectives and Strategy Acquisitions¹ and Investments Faster Growing Quantitative and Markets Digital H&K Feedback (Poland) CBC² (China) Danone CRM (France) Jupiter Drawing Room (S. Africa) M-INTERACTION (Thailand) H-art (Italy) MDS (China) Saffron Hill (Singapore) Index Ventures² (UK
Slide 63: Improving the Creative Capabilities and Reputation
Key Priorities, Objectives and Strategy Improving the Creative Capabilities and Reputation of all our Businesses Byy placing p gggreater emphasis p on recruitment. By recognising creative success tangibly and intangibly. By acquiring highly regarded creative businesses. By placing greater emphasis o
Slide 64: 3 Conclusions
WPP 3 Conclusions 64
Slide 65: Conclusions: 2009 Summary
Conclusions 2009 S Summary Businesses us esses reacted eacted too sslowly o y to tthe e rapid ap d Q Q2 revenue e e ue dece deceleration e at o to -10.5% 0 5% in Q Q2 from -5.8% in Q1. In H2 headcount reductions and cuts in discretionary spend exceeded the revenue decline and costs came into line. l
Slide 66: Conclusions: Outlook
Conclusions Outlook Industry dust y has as moved o ed from o dec decline e du duringg 2009 009 to stab stabilisation sat o for o 2010. 0 0 GroupM forecasts global advertising will rise 0.8% in 2010 (fall of 6.6% in 2009) and marketing spending will fall 2% (fall of 8% in 2009). WPP Group G January J
Slide 67: Conclusions
Conclusions TheeGGroup oup is s well e pplaced aced by region eg o aand dd discipline sc p e to bebenefit e t from o industry dust y ttrends. e ds Digital structure and tools will enable Group to help clients optimise activity in the digital ecosystem and build unique advantage. 2009 costt reduction
Slide 68: 4 Other Financial Information (Hard Copy Only)
WPP 4 Other Financial Information (Hard Copy Only) 68
Slide 69: Second Half Operating Expenses
Results for 2009 Second Half Operating Expenses (like-for-like Sterling1 £’m) 2009 2008 % B/(W) Revenue 4,395 4,762 -7.7 Gross Margin 4,026 4,374 -8.0 Staff Cost 2,454 2,693 8.9 Establishment 342 319 -7.2 Other G&A 595 661 10.0 Total Operating Expenses 3 391 3,391 3 673 3,673 74 7.4 Severance charge
Slide 70: Pensions Deficit
Results for 2009 Pensions Deficit £m 2009 2008 Deficit B/F (272) (135) Service cost (22) (17) Deficit interest charge g ((46)) ((39)) Funding 48 44 Investment returns ((net)) 22 ((50)) Acquisitions (TNS) - (16) Other movements (4) (4) Movements in the year excluding FX (2) (82) Foreign exchange impa
Slide 71: Earnout Accrual
Results for 2009 E Earnout t Accrual A l 2009 Rollforward £m Expected Payments £m 31 Dec 08 376 2010 122 Earnouts paid (82) 2011 93 Revised estimates (11) 2012 40 New acquisitions 8 2013 5 Reduction excluding FX (85) Foreign exchange impact (29) 2014 2 31 Dec 09 262 Total 262 71
Slide 72: Ordinary Shares - Basic
Results for 2009 Ordinary Shares - Basic December December 2009 2008 No. of Shares (million) Actual Actual 1 January 1,255 1,191 Share buybacks1 - (19) Option exercise 1 2 TNS - 81 31 December 1,256 1,255 -0.0% Weighted Average 1,256 1,187 ESOP Treasury & Other ESOP, (37) (43) Average Basic 1,219 1,
Slide 73: Ordinary Shares - Diluted
Results for 2009 Ordinary Shares – Diluted December December 2009 2008 No. of Shares (millions) Actual Actual Average Basic 1,219 1,144 -6.6% Share Option Dilution 2 3 Other Potentially Issuable Shares 17 16 Sub-Total 1,238 1,163 Convertibles: Grey $150m1 - 7 Fully Diluted Shares 1,238 1,170 -5.8% ¹
Slide 74: Debt Maturity Profile
Results for 2009 Debt Maturity Profile £m As at 31 December 2009 Total Total 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)) 665 665 665 Eurobonds €500m (5.25% ’15) 444 444 444 £ conv
Slide 75: Dividends and Share Repurchases
Key Priorities, Objectives and Strategy Using g Free Cash Flow to Enhance Share Owner Value Dividends and Share Repurchases 2009 second interim dividend unchanged at 10.28p per share. Distributions to share owners: Share Repurchases Dividends Paid Amount % of Share Base 2003 £67.0m £23.1m 0.5% 2004
Slide 76: Revenue by Industry
Results for 2009 Revenue by Industry Other Auto T&E 8% 9% 5% Consumer Products 6% Telcom 9% Personal Care FMCG 15% Technology 36% 8% Retail 3% Healthcare Food & Drink 10% 15% Government Financial Services 1% Oil 9% 2% 76 Charts represent the amount of revenue attributed to each industry expressed as
Slide 77: 5 Structure and Competitive Position (Hard Copy Only)
WPP 5 Structure and Competitive Position (Hard Copy Only) 77
Slide 78: WPP Today
WPP Today y WPP is the world’s largest communication services group with over 138,000 people (including associates) in over 2,400 offices in 107 countries worldwide. 354 of the Fortune Global 500 500, 28 of the Dow Jones 30 30, 60 of the Nasdaq 100 and 33 of the Fortune e-50 as clients. 443 clients
Slide 79: WPP has many of the best known brands in the industry
WPP Today WPP has manyy of the best known brands in the industryy Ranked 1 or 2 in all sectors in which it competes TNS/ Research International Ogilvy & Mather Worldwide Millward Brown JWT BrandAsset Valuator and BRANDZ Y&R Advertising United / Red Cell Grey OgilvyOne Mindshare Wunderman Mediaedge:c
Slide 80: WPP Today
WPP Today y Revenue £8.7bn WPP PBIT £1 £1,017m 017 Branding & Identity, Media Public Relations Healthcare and Advertising Investment Consumer Insight & WPP Digital Management Specialist Public Affairs Communications Revenue £3.4bn Revenue £2.3bn Revenue £796m Revenue £2.2bn Revenue Broader £2.3bn PB
Slide 81: 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 & CEO: Chairman & CEO: CEO: Miles Young Bob Jeffrey Hamish McLennan Jim Heekin Ewen Cameron DY&R Asatsu - DK Chime Joint Venture (Japan) (UK) R
Slide 82: WPP Today: Media Investment Management
WPP Today y Media Investment CEO Irwin CEO: I i Gotlieb G tli b Management: GroupM KR Media Mindshare Mediaedge:cia MediaCom Maxus (49.9%) CEO: Dominic Proctor Chairman: Charles Courtier CEO: Stephen Allan CEO: Kelly Clark Joint CEO: Bruno Kemoun CEO: Dominic Grainger Joint CEO: Eryck Rebbouh Kineti
Slide 83: Media Investment Management - Competitive Worldwide Ranking
WPP Today M di IInvestment Media t t Management M t - Competitive C titi W Worldwide ld id RRanking ki Americas EMEA Asia Pacific Worldwide Mindshare 5 4 1 4 Mediaedge:cia 4 2 7 7 MediaCom 6 3 6 6 Maxus 12 13 10 13 G GroupM M 2 1 1 1 Source: RECMA Billings & Rankings 2008 Actual Actual, published Ju
Slide 84: WPP Today: Kantar
WPP Today y Chairman & CEO: Kantar Eric Salama Kantar Media Millward Brown Added Value Saffron Hill Kantar Japan IMRB AMRB, TAM 50% Red Dot Square Kantar Retail The Futures Th F t Company Kantar Health TNS/ Research International Kantar Worldpanel Center Partners Kantar Operations Lightspeed 84
Slide 85: Consumer Insight - Worldwide Competitive Ranking
WPP Today C Consumer IInsight i ht – Worldwide W ld id C Competitive titi R Ranking ki 1. The Nielsen Company p y 2. Kantar 3. IMS 4. GfK 5. Ipsos 6. Synovate 7. IRI 85 Source: ESOMAR 2008, published Sept 2009.
Slide 86: WPP Today: Public Relations & Public Affairs
WPP Today Public Relations Executive Vice President, & Public Relations/Public Affairs: Howard Paster Public Affairs Ogilvy Public Hill & Burson- Specialist Cohn & Relations Knowlton Marsteller Public Relations Wolfe Worldwide Chairman & CEO: CEO: Chris Graves Founding Chairman: CEO: Donna Imperato
Slide 87: Public Relations & Public Affairs - Competitive Worldwide Ranking
WPP Today Public Relations & Public Affairs - Competitive Worldwide Ranking Worldwide Hill & Knowlton 3 Burson-Marsteller 4 GCI 9 Ogilvy Public Relations Worldwide 10 Source: Advertising Age, April 2002. 87
Slide 88: WPP Today: Branding & Identity
WPP Today Branding g & Identity y BtoD Group CEO: Craig Branigan The Partners Landor The Brand Union Fitch Addison Lambie-Nairn CEO: Charlie Wrench CEO: Simon Bolton CEO: Lois Jacobs VBAT Walker Group 88
Slide 89: WPP Today: Healthcare
WPP Today y Healthcare CommonHealth Ogilvy Healthworld Grey Healthcare Group Sudler & Hennessey President & CEO: Chairman & CEO: CEO: Chairman & CEO: Matt Geigerich Donna Tuths Lynn O’Connor Vos Jed Beitler 89
Slide 90: Direct, Digital and Interactive - Networks
WPP Today y Direct, Digital and Interactive - Networks JWT Specialised Wunderman G2 OgilvyOne¹ 141 Communications President & CEO: Chairman & CEO: Chairman & CEO: Chairman & CEO: CEO: Tim Gibbon Daniel Morel Joe Celia Brian Rick Roth Fetherstonhaugh ¹ Includes Neo@Ogilvy 90
Slide 91: WPP Today: Specialist Communications
WPP Today y Specialist Communications Relationship Media, Technology Sports Demographic Industry Sector Marketing and & Production Marketing Marketing Marketing Promotion Services 91
Slide 92: WPP Today: Specialist Communications
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Slide 93: WPP Today: Specialist Communications
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Slide 94: WPP Today: New Technology
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Slide 95: Results for 2009
WPP Results R l ffor 2009 London March 2010 95