Fast Read

A quick, pre-digested, highly-compressed version of the 2013 Annual Report.

The full story

Get the complete report and financial statements here

Who we are

WPP is the world leader in communications services. It comprises leading companies in all these disciplines:

  • Advertising
  • Media Investment Management
  • Data Investment Management
  • Public Relations & Public Affairs
  • Branding & Identity
  • Healthcare Communications
  • Direct, Digital, Promotion & Relationship Marketing
  • Specialist Communications

There are more than 155 companies within the Group – and each is a distinctive brand in its own right. Each has its own identity, commands its own loyalty, and is committed to its own specialist expertise. That is their individual strength. Clients seek their talent and their experience on a brand-by-brand basis. Between them, our companies work with 351 of the Fortune Global 500, all 30 of the Dow Jones 30, 69 of the NASDAQ 100 and 31 of the Fortune e-50.

It is also of increasing value to clients that WPP companies and their people can work together, as increasingly they do: providing a tailor-made range of integrated communications services. Almost 770 clients are now served in three distinct disciplines. Some 490 clients are served in four disciplines, and these clients account for 57.5% of Group revenues. Group companies also work with nearly 400 clients across six or more countries.

Collectively, almost 175,000 people (including associates) work for WPP companies, out of over 3,000 offices in 110 countries.

Why we exist

Our mission

To develop and manage talent;
to apply that talent,
throughout the world,
for the benefit of clients;
to do so in partnership;
to do so with profit.

Within WPP, our clients have access to companies with all the necessary marketing and communications skills; companies with strong and distinctive cultures of their own; famous names, many of them. WPP, the parent company, complements these companies in three distinct ways.

First, it relieves them of much administrative work. Financial matters (such as planning, budgeting, reporting, control, treasury, tax, mergers, acquisitions, investor relations, legal affairs and internal audit) are co-ordinated centrally.

Second, the parent company encourages and enables operating companies of different disciplines to work together for the benefit of clients. It also plays an across-the-Group role in the management of talent, property, procurement, IT, knowledge sharing, practice development and sustainability.

And, finally, WPP itself can function as the 21st-century equivalent of the full-service agency. For some clients, predominantly those with a vast geographical spread and a need for a wide range of marketing services, WPP can act as a portal to provide a single point of contact and accountability.

Four strategic priorities

Our goal remains to be the world’s most successful communications services advisor to multinational, regional and local companies. To that end, we have four core strategic priorities:

1

Increase the share of revenues from faster-growing markets of Asia Pacific, Latin America, Africa and the Middle East, and Central and Eastern Europe to 40-45%.

2

Increase the share of revenues of new media to 40-45%.

3

Maintain the share of more measurable marketing services – such as Data Investment Management and direct, digital and interactive – at 50% of revenues, with a focus on the application of new technology, big data and digital.

4

Achieve ‘horizontality’ by ensuring our people work together for the benefit of clients, primarily through two horizontal integrators: Global Client Leaders and Country Managers.

How we're doing

Financial summary

2013, our twenty-eighth year, was another record one, with revenue, profitability, headline margins and earnings per share all reaching new highs.

Billings1

£46,209m

2012: £44,405m (+4.1%)

Revenue

£11,019m

2012: £10,373m (+6.2%)

Gross margin1

£10,076m

2012: £9,515m (+5.9%)

Headline PBIT2

£1,662m

2012: £1,531m (+8.5%)

Headline PBIT margin2

15.1%

2012: 14.8% (+0.3%)

Headline diluted EPS 2, 3

80.8p

2012: 73.4p (+10.1%)

Ordinary dividend per share

34.21p

2012: 28.51p (+20.0%)

Ordinary share price at year end

1,380p

2012: 888.0p (+55.4%)

1 Billings and gross margin are defined on page 246 of the full report.

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

2013 results

Reported billings increased by over 4% to £46.2 billion and were up well over 3% in constant currencies, driven by a strong leadership position in all net new business league tables. Revenues were up over 6% to £11.0 billion and up well over 5% in constant currencies.

Headline PBIT margins increased by 0.3 margin points to a new high of 15.1% and, on a constant currency basis, were up 0.5 margin points, in line with target. On gross margin, or net sales, the headline PBIT margin was 16.5%, up 0.4 margin points on 2012 and up 0.5 margin points in constant currency.

Headline EBITDA increased by 8% to £1.896 billion. Headline profit before tax was up well over 10% to £1.458 billion and reported profit before tax was up well over 18% to £1.296 billion. Diluted headline earnings per share were up over 10% to 80.8p and diluted reported earnings per share rose by almost 11% to 69.6p.

Dividends were increased by 20% to 34.21p, a record level. This represents a dividend pay-out ratio of 42% on headline diluted earnings per share.

Free cash flow and net debt

Free cash flow strengthened to £1.220 billion in the year, over £1 billion for the third consecutive year. Net debt averaged £3.0 billion in 2013, a decrease of £0.2 billion at 2013 exchange rates, and net debt at 31 December 2013 was £2.2 billion, £0.6 billion less than 2012, reflecting improvements in working capital and the redemption of the £450 million Convertible Bond, reinforced by lower acquisition spending in 2013. Average net debt was around 1.6 times headline EBITDA in 2013 compared with 1.8 times in 2012, and well within the Group’s current target range of 1.5-2.0 times.

Revenue growth

Our reported revenue growth for the year was 6.2%, and on a constant currency basis, which excludes the impact of currency movements, revenues were up 5.7%.

On a like-for-like basis, which excludes the impact of currency and acquisitions, revenues were up 3.5%, with gross margin or net sales up 3.4%. In Q4, like-for-like revenues were up over 4%, following like-for-like growth in Q3 of 5%, reflecting stronger growth in North America and Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe, offset by lower growth in the UK.

Like-for-like growth in the second half was therefore well over 4% compared with over 2% in the first.

Geographic performance

2013 revenue by geography %

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

2013 headline PBIT1 by geography %

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

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

Our strongest regions in 2013 were again Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe, with constant currency growth of almost 8% and like-for-like growth of over 6%.

In the UK, full year revenue growth was almost 11% in constant currencies and almost 5% like-for like. Western Continental Europe, like the UK, slowed slightly in Q4, with both constant currency and like-for-like growth of over 1%.

Like-for-like revenue growth in North America improved as the year progressed, from -1% in Q1 to up over 5% in Q4.

Sector performance

2013 revenue by sector %

Bar chart representing 2013 revenue by sector
  • Advertising and Media Investment Management 42
  • Data Investment Management2 23
  • Public Relations & Public Affairs 8
  • Branding & Identity, Healthcare and Specialist Communications 27

2013 headline PBIT1 by sector %

Bar chart representing 2013 headline PBIT by sector
  • Advertising and Media Investment Management 50
  • Data Investment Management2 16
  • Public Relations & Public Affairs 8
  • Branding & Identity, Healthcare and Specialist Communications 26

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

2 Data Investment Management was previously reported as Consumer Insight.

Advertising and Media Investment Management revenues were up almost 7% for the year in constant currencies and well over 5% like-for-like, the strongest-performing sector on this basis. In Q4, constant currency revenues were up almost 8% and like-for-like revenues were up well over 6%.

Data Investment Management (formerly Consumer Insight) revenues grew 3% on a constant currency basis, with like-for-like revenues up well over 1%, and the second half much stronger than the first half. More significantly, gross margin (or net sales) was up over 2% like-for-like, a turnaround of the trend seen in 2012. The Group's Public Relations & Public Affairs businesses had a difficult year. However, although revenues for the year fell by almost 1% on a constant currency basis and by almost 2% like-for-like, top-line growth returned in Q4 with constant currency revenues up over 2% and like-for like growth of over 1%.

At the Group's Branding & Identity, Healthcare and Specialist Communications businesses (including direct, digital and interactive), constant currency revenues grew strongly at over 8% with like-for-like growth of almost 4%.

Almost 35% of the Group's 2013 revenues came from direct, digital and interactive, up over two percentage points from the previous year and growing well over 7% like-for-like.

What we think

Grey swans and Chinese innovation

by Sir Martin Sorrell

2014 will be tough but manageable. Clients remain cautious post-Lehman but spending on marketing services should be bolstered by the mini-quadrennial events of the Sochi Winter Olympics, the FIFA World Cup in Brazil and the US mid-term Congressional elections.

Although a number of them have whitened, the ‘grey swans’ or known unknowns – the Eurozone's potential fragility, developments in the Middle East, the BRICs hard or soft landing, the US budget and deficit issues, the UK referenda, the crisis in Ukraine and the Sino-Japanese dispute in the East China Sea – create ongoing economic uncertainty.

Our business continues its transformation in line with wider societal, behavioural and technological changes. While so-called ‘traditional’ media and marketing disciplines remain critically important, Don Draper would hardly recognise as much as 70% of what we do today.

Digital marketing, media investment management and data investment management now account for about $12 billion of our $17.3 billion of revenues.

Strategically, we continue to focus on our four priorities: new markets, new media, data investment management and, last but not least, horizontality.

Why it's Time to Say Goodbye to IKTHTMISOAIW*
(*I know that half the money I spend on advertising is wasted ...)

by Jeremy Bullmore

One of the world’s most widely-held beliefs about advertising is based on a remark, allegedly made a hundred years ago, by one of four men, none of whom may have made it, and which, when examined, makes little sense.

Who runs WPP

Non-executive chairman

Philip Lader
Chairman of the Nomination and Governance Committee

Executive directors

Sir Martin Sorrell
Chief executive

Paul Richardson
Finance director
Chairman of the Sustainability Committee

Mark Read
Chief executive, WPP Digital

Non-executive directors

Roger Agnelli
Member of the Audit Committee, Compensation Committee and Nomination and Governance Committee

Jacques Aigrain
Member of the Audit Committee and Compensation Committee

Charlene Begley
Member of the Audit Committee and Nomination and Governance Committee

Colin Day
Chairman of the Audit Committee and member of the Compensation Committee

Esther Dyson
Member of the Nomination and Governance Committee

Orit Gadiesh
Member of the Nomination and Governance Committee

Dr John Hood
Member of the Compensation Committee

Ruigang Li
Member of the Compensation Committee and Nomination and Governance Committee

Daniela Riccardi
Member of the Compensation Committee

Jeffrey Rosen
Chairman of the Compensation Committee Member of the Audit Committee and Nomination and Governance Committee Senior independent director

Nicole Seligman
Member of the Compensation Committee

Hugo Shong
Member of the Audit Committee, Compensation Committee and Nomination and Governance Committee

Timothy Shriver
Member of the Compensation Committee and Nomination and Governance Committee

Sally Susman
Member of the Nomination and Governance Committee

Sol Trujillo
Member of the Audit Committee and Compensation Committee

Members of the Advisory Board

Jeremy Bullmore
John Jackson
Bud Morten
Koichiro Naganuma
John Quelch
Richard Rivers
Cuneyd Zapsu

Company Secretary

Marie Capes

Sustainability

Our areas of focus are:

The impact of our work for clients

Our companies help clients integrate sustainability into their business strategy and communications. Client business supported by our sustainability credentials was worth at least £1.26 billion out of total revenues of £11.02 billion to the Group in 2013.

Marketing standards

We strive for high ethical standards in our conduct and work for clients and we protect consumer data used for marketing purposes.

Employment practices

Our talent strategy includes competitive remuneration, high-quality training and a focus on diversity and inclusion.

Environmental performance

We have reduced our carbon footprint per person by 31% since 2006. Our target is a 47% reduction by 2020.

Supply chain

We monitor key supplier performance.

Social investment, including pro bono work

Our total social contribution (including the value of free media space) was worth £39.4 million in 2013.

Contact points

Parent company centres

WPP New York
100 Park Avenue
New York NY 10017
Tel +1 (212) 632 2200

WPP London
27 Farm Street
London W1J 5RJ
Tel +44 (0)20 7408 2204

WPP Asia Pacific
Yebisu Garden Place Tower, 25/F
4-20-3 Ebisu
Shibuya-ku
Tokyo 150-6025
Tel +813 3280 9506

WPP China
Room 3101, 31/F The Center
989 Changle Road
Shanghai 2000 31
Tel +86 21 2405 0096

Investor relations

Paul Richardson
Group finance director
Tel +1 (212) 632 2200
prichardson@wpp.com

Chris Sweetland
Deputy Group finance director
Tel +44 (0)20 7408 2204
csweetland@wpp.com

Fran Butera
Investor relations director
Tel +1 (212) 632 2235
fbutera@wpp.com

Corporate communications and media relations

Feona McEwan
Group communications director
Tel +44 (0)20 7408 2204
fmcewan@wpp.com

North America
Kevin McCormack
Tel +1 (212) 632 2239
kmccormack@wpp.com

Asia Pacific
Belinda Rabano
Tel +86 10 8520 3066
brabano@wpp.com

EMEA
Chris Wade
Tel +44 (0)20 7408 2204
cwade@wpp.com

Sustainability

Vanessa Edwards
Head of sustainability
Tel +44 (0)20 7408 2204
vedwards@wpp.com