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Penny Machines

Cherries
oil on canvas
22 x 20 in
1981

Penny Machines
oil on canvas
23¾ x 29¾ in
1961

Stack of Books
oil on canvas
30 x 24 in
n.d.

Seven Suckers
oil on canvas
19 x 23 in
1970

Twin Jackpots
oil on canvas
30 x 46 in
1962

Ties
oil on canvas
20 x 26 in
1980

Cake Slices
oil on canvas
20 x 16 in
n.d.

Financial summary charts

Revenue

Reported revenue growth of over 16% reflected the strength of the euro and US dollar against sterling, as well as the impact of TNS. On a constant currency basis, revenues were up almost 5% and on a like-for-like basis, revenues were down 8.1%.

Headline EBITDAchart

Headline EBITDA (headline earnings before interest, taxation, depreciation and amortisation) fell by less than 4% to £1.2 billion ($1.9 billion).

Headline PBIT

Headline PBIT margin was 11.7% in 2009 against 15.0% last year (or against 14.3% if TNS were included for the whole of 2008). Headline PBIT fell 9% to £1,017 million, remaining above £1 billion for the second consecutive year.

Headline diluted earnings

Diluted headline earnings per share were down 20% to 44.4p. Dividends were maintained at 15.47p.

After tax return

After-tax return on average capital employed fell to 8.9%, with the weighted average cost of capital falling to 7.2%.

Relative TSR

Despite under-performing the FTSE 100 Index, WPP continued to do well against its US-based competitors.

1
The calculation of ‘headline’ measurements of performance (including headline EBITDA, headline PBIT and headline earnings) is shown in note 31 of the financial statements.
2
Calculated gross of goodwill and using profit after taxation before goodwill impairment and other goodwill write-downs, revaluation of financial instruments, amortisation and impairment of acquired intangible assets, share of exceptional losses/gains of associates, costs incurred in 2008 in changing the corporate structure of the Group and investment gains/losses and write-downs, and adjusted to reflect taxes and net finance costs paid.
3
Measured on a common currency basis.
Average net debt

Net debt averaged £3.4 billion in 2009, up exactly £1.0 billion from £2.4 billion in 2008 at 2009 exchange rates, principally reflecting the net acquisition cost of TNS and other acquisitions. Headline interest cover in 2009 was 5.0 times.

Debt maturity

The Group continues to work to achieve continuity and flexibility of funding. Undrawn committed borrowing facilities are maintained in excess of peak net-borrowing levels and debt maturities are monitored closely.

2009 revenue by geography

Markets outside North America now account for over 65% of our revenues, up from 61% five years ago. The influence of the faster-growing markets outside North America is increasing rapidly.

2009 headline PBIT by geography

The recession was most keenly felt in North America and Western Continental Europe, particularly in the first six months. It was least felt in the UK and Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe.

2009 revenue by sector

Marketing services rose to over 61% of our revenues in 2009, up from 56% in 2008, largely due to the impact of TNS on Consumer Insight. It is no longer accurate to call us an advertising agency, we are a communications services company.

2009 headline PBIT by sector

PBIT contributions were broadly in line with revenues, with Branding & Identity, Healthcare and Specialist Communications (including direct, digital and interactive) least affected by the recession.

1
Percentages are calculated on a constant currency basis. See definition in the Glossary.
2
The calculation of headline PBIT is set out in note 31 of the financial statements.
3
Interest excludes the revaluation of financial instruments.
4
Average net debt for 2005 includes amounts drawn down in that year on the Group’s working capital facility (the advance of cash financing against which certain trade debts were assigned). This facility was repaid and cancelled on 31 August 2005.
5
Includes corporate bonds, convertible bonds and bank loans payable at par value, excluding any redemption premium due, by due date.
6
The Group previously reported Continental Europe separately. Western Continental Europe is now reported separately, with Central & Eastern Europe included with Asia Pacific, Latin America, Africa & Middle East.
7
Consumer Insight was previously reported as Information, Insight & Consultancy.

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