Financial summary

  2013 2012 Change %

The financial statements have been prepared under International Financial Reporting Standards (IFRS).

1 Billings and gross margin are defined in the Financial glossary.

2 The calculation of ‘headline’ measurements of performance (including headline EBITDA, headline operating profit, headline PBIT, headline gross margin margin, headline PBT and headline earnings) is set out in note 31 of the financial statements.

3 One American Depositary Receipt (ADR) represents five ordinary shares. These figures have been translated for convenience purposes only using the income statement exchange rates. This conversion should not be construed as a representation that the pound sterling amounts actually represent, or could be converted into, US dollars at the rates indicated.

4 Earnings per share is calculated in note 9 of the financial statements.

5 Average net debt is defined in the Financial glossary.

Billings 1 £46,209m £44,405m +4.1
Revenue £11,019m £10,373m +6.2
Gross margin 1 £10,076m £9,515m +5.9
Headline EBITDA 2 £1,896m £1,756m +8.0
Headline operating profit 2 £1,583m £1,459m +8.5
Reported operating profit £1,410m £1,241m +13.6
Headline PBIT 2 £1,662m £1,531m +8.5
Headline PBIT margin 2 15.1% 14.8% +0.3
Headline gross margin margin 2 16.5% 16.1% +0.4
Headline PBT 2 £1,458m £1,317m +10.7
Reported PBT £1,296m £1,092m +18.7
Headline earnings 2 £1,088m £966m +12.6
Reported earnings £937m £823m +13.8
 
Headline diluted earnings per share 2,4 80.8p 73.4p +10.1
Reported diluted earnings per share 4 69.6p 62.8p +10.8
Ordinary dividend per share 34.21p 28.51p +20.0
Ordinary dividend per ADR 3 $2.68 $2.26 +18.6
 
Net debt at year-end £2,240m £2,821m -20.6
Average net debt 5 £2,989m £3,203m -6.7
Ordinary share price at year-end 1,380.0p 888.0p +55.4
ADR price at year-end $114.86 $72.90 +57.6
Market capitalisation at year-end £18,613m £11,237m +65.6

At 15 April 2014

     
Ordinary share price 1,218.0p    
ADR price $101.86    
Market capitalisation £16,430m

Financial summary

Revenue £m

11,019m

Bar chart representing revenue: 2009 - £8,684m, 2010 - £9,331m, 2011 - £10,022m, 2012 - £10,373m, 2013 - £11,019m

Reported revenue was up 6.2% at £11,019 million. On a constant currency basis, revenues were up 5.7% and, on a like-for-like basis, revenues were up 3.5% and gross margin (or net sales) up 3.4%.

Headline EBITDA1 £m

1,896m

Bar chart representing Headline EBITDA: 2009 - £1,243m, 2010 - £1,439m, 2011 - £1,640m, 2012 - £1,756m, 2013 - £1,896m

Headline EBITDA (headline earnings before interest, taxation, depreciation and amortisation) rose by 8.0% to £1.9 billion ($3.0 billion).

Headline PBIT1 £m

  • Headline PBIT1 margin %
  • Headline gross margin margin1 %

1,662m

Bar chart representing Headline PBIT: 2009 - £1,017m, 2010 - £1,229m, 2011 - £1,429m, 2012 - £1,531m, 2013 - £1,662m

Headline PBIT margin was 15.1% in 2013 against 14.8% in 2012. Headline PBIT was up 8.5% to £1,662 million.

Headline diluted earnings per share1 p

  • Dividends per share p

80.8p
34.2p(dividend)

Bar chart representing Headline diluted earnings per share: 2009 - 44.4p, 2010 - 56.7p, 2011 - 67.7p, 2012 - 73.4p, 2013 - 80.8p

Headline diluted earnings per share were up over 10% to 80.8p. Dividends were up 20% to 34.21p per share, a record level.

After-tax return on average capital employed2 %

  • Weighted average cost 11.5 of capital (WACC)

11.5%

Bar chart representing After-tax return on average capital employed: 2009 - 8.9%, 2010 - 10.1%, 2011 - 11.3%, 2012 - 11.6%, 2013 - 11.5%

After-tax return on average capital employed was 11.5%, with the weighted average cost of capital rising to 6.5%.

Relative TSR Rebased to 31 December 2008

Measured on a common currency basis (using daily TSR)

  • WPP
  • Publicis
  • Interpublic
  • Omnicom
  • FTSE 100
Bar chart representing Relative TSR (Rebased to 31 December 2008)

WPP out-performed all its major competitors and the FTSE 100.

1 The calculation of ‘headline’ measurements of performance (including headline EBITDA, headline PBIT, headline gross margin margin and headline earnings) is shown in note 31 of the financial statements.

2 Calculated gross of goodwill and using profit after taxation before investment gains/losses and write-downs, goodwill impairment and other goodwill writedowns, revaluation of financial instruments, amortisation and impairment of acquired intangible assets, share of exceptional losses/gains of associates, Group restructuring costs and, in 2012, the gain on sale of freehold property in New York and costs incurred in changing the corporate structure of the Group, and adjusted to reflect taxes and net finance costs paid.



Average net debt £m

  • Average net debt to headline EBITDA2 ratio

2,989m

Bar chart representing Average net debt: 2009 - £3,448m, 2010 - £3,056m, 2011 - £2,811m, 2012 - £3,203m, 2013 - £2,989

Net debt averaged £3.0 billion in 2013, down £0.2 billion at 2013 exchange rates. The average net debt to headline EBITDA ratio was 1.6 times, well within the Group’s current target range of 1.5-2.0 times.

Debt maturity3 £m

Bar chart representing Debt maturity: 14 - 600, 15 - 416, 16 - 624, 17 - 400, 18 --, 19 --, 20 - 200, 21 - 490, 22 - 302, 23+ - 1,107

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.

2013 revenue by geography %

  • North America 34
  • UK 13
  • Western Continental Europe 23
  • Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe 30
Bar chart representing 2013 revenue by geography: North America - 34%, UK - 13%, Western Continental Europe - 23%, Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe - 30%

In 2013, 30% of the Group's revenues (30.5% on a constant currency basis) came from Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe.

2013 headline PBIT1 by geography %

  • North America 38
  • UK 12
  • Western Continental Europe 16
  • Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe 34
Bar chart representing 2013 headline PBIT: North America - 38%, UK - 12%, Western Continental Europe - 16%, Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe - 34%

Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe showed strong margin growth in 2013 and now account for 34% of the Group’s headline PBIT.

2013 revenue by sector %

  • Advertising and Media Investment Management 42
  • Data Investment Management4 23
  • Public Relations & Public Affairs 8
  • Branding & Identity, Healthcare and Specialist Communications 27
Bar chart representing 2013 revenue by sector: North America - 42%, UK - 23%, Western Continental Europe - 8%, Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe - 27%

Marketing services comprised almost 60% of our revenues in 2013, a similar proportion to 2012. The strongest performing sector was Advertising and Media Investment Management with like-for-like revenue growth of well over 5%.

2013 headline PBIT1 by sector %

  • Advertising and Media Investment Management 50
  • Data Investment Management4 16
  • Public Relations & Public Affairs 8
  • Branding & Identity, Healthcare and Specialist Communications 26
Bar chart representing 2013 headline PBIT by sector: Advertising and Media Investment Management - 42%, Data Investment Management - 23%,Public Relations & Public Affairs - 8%, Branding & Identity, Healthcare and Specialist Communications - 27%

PBIT contributions were broadly in line with revenues, with Advertising and Media Investment Management showing significant margin growth.

1 The calculation of headline PBIT is set out in note 31 of the financial statements.

2 The calculation of headline EBITDA is set out in note 31 of the financial statements.

3 Includes corporate bonds and bank loans payable at par value, excluding any redemption premium due, by due date.

4 Data Investment Management was previously reported as Consumer Insight.



Chapter 6 of 13

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