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WPP. Trading Statement for the Third Quarter 2008 October 2008. Third Quarter 2008 Summary – Q3. Like-for-like growth was 3.0%, with acquisitions adding 3.0% to give constant currency growth of 6.0%.

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slide1

WPP

Trading Statement for the Third

Quarter 2008

October 2008

third quarter 2008 summary q3
Third Quarter 2008Summary – Q3

Like-for-like growth was 3.0%, with acquisitions adding 3.0% to give constant currency growth of 6.0%.

Currency movements increased revenue growth by 10.2%, resulting in reported revenues of 16.2%.

Geographically,

Asia Pacific, Latin America, Africa and the Middle East continues to be the fastest growing region.

Continental Europe strengthened compared with the first half.

The UK saw some softening.

North America was flat.

Advertising and media investment management and public relations and public affairs showed the strongest growth.

third quarter 2008 summary revenue growth
Third Quarter 2008Summary – Revenue Growth

¹ Average Q3 2008 exchange rate for US$/ £ was $1.891 (Q3 2007 $2.021), €/£ was €1.259 (Q3 2007 €1.470) and Japanese Yen/£ was Y203.6 (Q3 2007 Y238.0).

third quarter 2008 advertising media investment management
Third Quarter 2008Advertising, Media Investment Management

Constant currency revenue growth over 7%. Like-for-like growth over 6%.

This sector performed well with strong like-for-like growth in both Advertising and Media Investment Management.

On a like-for-like basis Asia Pacific, Latin America, Africa and the Middle East, Continental Europe and the UK showed above average growth.

third quarter 2008 information insight and consultancy
Third Quarter 2008Information, Insight and Consultancy

Constant currency revenue growth up 4.0%, with like-for-like growth up 2.0%.

Strong organic growth from Millward Brown, IMRB, Lightspeed and Kantar Media Research.

Above average like-for-like growth in the UK, Asia Pacific, Latin America, Africa and the Middle East .

Offer for TNS became wholly unconditional on 29 October 2008 and will be included in the Group’s 2008 results from 1 November.

third quarter 2008 public relations public affairs
Third Quarter 2008Public Relations & Public Affairs

Continued strong growth with constant currency revenue up over 7%. Like-for-like growth over 5%.

Strong performances at Burson-Marsteller, Hill & Knowlton, Clarion and Public Strategies.

Geographically, Continental Europe, Asia Pacific, Latin America and the Middle East performed well above the average like-for-like growth.

Acquisition in India completed in the quarter.

third quarter 2008 branding identity healthcare and specialist communications
Third Quarter 2008Branding & Identity, Healthcare and Specialist Communications

Constant currency revenue growth up over 4%. Like-for-like growth down over 1%.

Strong performances at Wunderman, VML, Schematic, 24/7 Real Media, the Blue Group, Quasar, The Brand Union, Lambie Nairn, The Partners and The Food Group.

Continuing pressure at some of the Group’s healthcare and specialist communications businesses, particularly in the USA and the UK.

Geographically, strong like-for-like growth in all regions except the US and UK.

Acquisitions in the United States, France, the Netherlands, Russia and the Czech Republic.

third quarter 2008 growth by region third quarter
Asia Pacific, Latin America, Africa and the Middle East, fastest growing region, with like-for-like growth almost 11%.

The Middle East, again became the fastest growing area, with like-for-like revenue up 23.6%, ahead of Central and Eastern Europe at 15.2% and Latin America at 13.6%.

Asia Pacific remains strong, up almost 8%, the same as the first half, with stronger growth in SE Asia and weaker growth in Japan and ANZ. Like-for-like growth in mainland China slowed to almost 15% in the first nine months, with India up almost 30% in the third quarter and up almost 27% in the first nine months.

Western Continental Europe strengthened in the third quarter, with like-for-like growth of almost 3%, with the UK up 1.9%. North America like-for-like growth down 2.5%, mainly as a result of softness in the Group’s branding and identity, healthcare and some of the Group’s specialist communications businesses.

Third Quarter 2008Growth by Region – Third Quarter
third quarter 2008 growth by country year to date
Third Quarter 2008Growth by Country – Year to Date

1 Constant currency

² Like-for-like growth

slide15

WPP 2008 – Revenue by Industry

Third Quarter

September YTD

Charts represent the amount of revenue attributed to each industry expressed as a percentage of the total revenue from WPP’s designated clients (1,934 with Sept YTD revenue) for the period ended September 30, 2008.

third quarter 2008 effects of strength of sterling
Third Quarter 2008 Effects of Strength of Sterling
  • Currency movements accounted for a 10.2% increase in revenue, largely reflecting the weakness of the £ sterling against the US dollar and the euro.
  • The average US dollar exchange rate for the third quarter of 2008 was $1.891/£1 compared to $2.021/£1 for the same period last year, a change of almost 7%. The average euro exchange rate for the third quarter was €1.259/£1 compared to €1.470/£1 for the same period last year, a change of over 14%.
third quarter 2008 uses of cashflow
Average net debt in the first nine months up £508 million to £1,955 million, compared to £1,447 million in 2007, at 2008 exchange rates.

Net debt at 30 September 2008 up £85 million to £2,172 million, compared to £2,087 million last year, at 2008 exchange rates.

Operating cash flow in the last 12 months was £940 million. In the same period, cash outflow on capital expenditure, acquisitions, share repurchases and dividends was £838 million.

Third Quarter 2008Uses of Cashflow
third quarter 2008 uses of cashflow18
In the first nine months 18.8 million ordinary shares, equivalent to 1.6% of the share capital, were purchased at an average price of £5.96 per share and total cost of £112.2 million.

No further shares have been repurchased as the Group was required to withdraw from the market during the TNS bid.

The TNS offer became wholly unconditional on 29 October 2008.

Based on the WPP closing share price on 29 October of £3.325 per share, WPP’s offer values a TNS share at £2.358 and values the TNS equity at approximately £1.0 billion.

Third Quarter 2008Uses of Cashflow
third quarter 2008 trade estimates of major new business wins year to date
Third Quarter 2008Trade Estimates of Major New Business Wins – Year to Date

¹ Estee Lauder transferred from Maxus to MindShare Underlinedfigures are Q3 wins

² Playtex transferred from MediaCom to mec ³ Novartis transferred from MindShare to mec

third quarter 2008 trade estimates of major new business losses year to date
Third Quarter 2008Trade Estimates of Major New Business Losses – Year to Date

¹ Estee Lauder transferred from Maxus to MindShare Underlined figures are Q3 wins

² Playtex transferred from MediaCom to mec ³ Novartis transferred from MindShare to mec

slide22

Third Quarter 2008Acquisitions¹ and Investments – Year to Date

Faster Growing Markets

Quantitative and Digital

¹ Excludes equity step ups ² Investment³ October 2008 acquisitionsCAPITALS ARE Q3 ACQUISITIONS

third quarter 2008 banking facility covenants
Third Quarter 2008Banking Facility Covenants

No covenants or ratings triggers on public bonds (of which only 30% is swapped into variable rates).

Bank Revolver and new TNS facilities subject to the following covenants:

Net Debt/EBITDA ≤ 3.5 measured half yearly

EBITDA/net interest ≥ 5.0 measured half yearly

The covenant definitions for EBITDA and net interest exclude non-cash and non-operating items. In 2007 the bank covenant ratio for EBITDA/net interest was 10.8x compared to 9.7x on a reported basis

On a proforma basis at current rates, including TNS at 31st December 2008, based on analysts’ forecasts, the ratios indicated are

Net Debt/EBITDA ≤ 2.5

EBITDA/interest ≥ 6.0 - 7.0x

slide26

WPP

Trading Statement for the Third

Quarter 2008

October 2008