WPP 2015 Preliminary Results

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• The Company celebrated its thirtieth birthday with another record year, despite strong currency headwinds in the second half
• Reported billings up 3.1% at £47.632 billion, and up 4.9% in constant currency
• Reported revenue up 6.1% at £12.235 billion, down 1.4% at $18.693 billion, up 17.8% at €16.874 billion and up 12.4% at ¥2.264 trillion
• Constant currency revenue up 7.5%, like-for-like revenue up 5.3%
• Constant currency net sales up 5.8%, like-for-like net sales up 3.3%
• Reported net sales margin of 16.9%, up 0.2 margin points against last year, up 0.4 margin points on a constant currency basis, ahead of the full year margin target of 0.3 margin points improvement in constant currency
• Headline profit before interest and tax £1.774 billion, up 5.6% and up 8.7% in constant currency
• Headline profit before tax £1.622 billion, up 7.3% and up 11.2% in constant currency
• Profit before tax £1.493 billion, up 2.8%, up 7.3% in constant currency
• Profit after tax £1.245 billion, up 8.1%, up 11.9% in constant currency
• Headline EBITDA £2.002 billion, crossing £2 billion for the first time
• Headline diluted earnings per share of 93.6p, up 10.2%, up 13.3% in constant currency
• Return on equity at 16.3% in 2015, up 1.3 percentage points on 2014 versus a weighted average cost of capital of 6.7% in 2015
• Dividends per share of 44.69p, up 17.0%, pay-out ratio of 47.7% versus 45.0% last year, effectively one year ahead of the newly targeted dividend pay-out ratio of 50% in 2017
• Net debt £3.211 billion at 31 December 2015, an increase of £936 million on same date in 2014, with average net debt in 2015 at £3.562 billion against £3.073 billion in 2014
• Net new business of £5.557 billion ($8.613 billion) in the year with the Group first overall in new business league tables for the fourth year in a row and GroupM topping both the RECMA media tsunami net new business and retentions tables
• Above budget start to 2016, with January like-for-like revenue up 4.2% and net sales up 2.3%, against strong comparative last year
• Including associates and investments, revenue totals over $27 billion annually and people average over 194,000

Key figures

£ Million	2015	Δ reported1	Δ constant2	2014
Billings	47,632	3.1%	4.9%	46,186
Revenue	12,235	6.1%	7.5%	11,529
Net Sales	10,524	4.6%	5.8%	10,065
Headline EBITA3	2,002	4.9%	7.7%	1,910
Headline PBIT4	1,774	5.6%	8.7%	1,681
Net sales margin5	16.9%	0.2*	0.4%	16.7%
Profit before tax	1,493	2.8%	7.3%	1,452
Profit after tax	1,245	8.1%	11.9%	1,152
Headline diluted EPS6	93.6p	10.2%	13.3%	84.9p
Diluted EPS7	80.4p	9.8%	12.4%	80.5p
Dividends per share	44.69p	17.0%	17.0%	38.20p

* Margin points

Full Year highlights

• Reported billings at £47.632 billion, up 4.9% in constant currency and up 4.0% like-for-like, driven by a strong overall leadership position in net new business league tables
• Revenue growth of 6.1%, with like-for-like growth of 5.3%, 2.2% growth from acquisitions and -1.4% from currency
• Like-for-like revenue growth in all regions, led by strong growth in North America, and in all sectors, except data investment management, with particularly strong growth in advertising and media investment management and branding and identity, healthcare and specialist communications (including direct, digital and interactive)
• Like-for-like net sales growth at 3.3%, with the gap compared to revenue growth less than the first half, as the proportionate scale of digital media purchases in media investment management and data investment management revenue decreased
• Headline EBITDA crossing £2 billion for the first time, up 4.9%, and up 7.7% in constant currency, reflecting currency headwinds and 19.0% net sales margin, slightly up on last year, with like-for-like operating costs (+2.6%) rising less than net sales
• Headline PBIT increase of 5.6% to £1.774 billion, up 8.7% in constant currency
• Net sales margin, a more accurate competitive comparator, up 0.2 margin points to an industry leading 16.9%, up 0.4 margin points in constant currency, ahead of the targeted constant currency increase of 0.3 margin points
• Exceptional gains of £296 million, largely representing gains on the sale of certain Kantar internet measurement businesses to comScore Inc., the sale of the Group’s interests in e-Rewards and Chime Communications plc, together with re-measurement gains of £165 million, primarily the gain of £132 million in relation to the acquisition of a majority stake in IBOPE in Latin America. These are partly offset by £106 million of restructuring costs, including £37 million of IT transformation costs, investment write-downs of £79 million and by £29 million of IT asset write-downs, resulting in a net exceptional gain of £82 million
• Headline diluted EPS up 10.2%, up 13.3% in constant currency and reported diluted EPS up 9.8%, up 13.4% in constant currency, reflecting strong like-for-like revenue and net sales growth, margin improvement and acquisitions
• Final ordinary dividend of 28.78p up 8.3% and full year dividends of 44.69p per share up 17.0%
• Dividend pay-out ratio of 47.7%, in 2015 versus 45.0% in 2014, and possibly to achieve the newly targeted pay-out ratio of 50% in 2016, one year ahead of schedule
• Return on equity⁸ up to 16.3% in 2015, up 1.3 percentage points from 15.0% in 2014, versus a weighted average cost of capital of 6.7% in 2015 and 6.1% in 2014. During 2015 the value of the Group’s non-controlled investments rose by £490 million, to £1.159 billion from £669 million, primarily reflecting the increasing value of its content businesses, chiefly Vice, and the partnership formed during the year with comScore
• Average net debt up £489 million, at £3.562 billion compared to last year, at 2015 exchange rates, reflecting the significant incremental net acquisition spend, share re-purchases and dividends of £361 million
• Creative and effectiveness excellence recognised again in 2015 with the award of the Cannes Lion to WPP for the most creative Holding Company, for the fifth successive year, since the award’s inception and another to Ogilvy & Mather Worldwide, for the third consecutive year, as the most creative agency network. In another rare occurrence in our industry, in 2015 Grey was named Global Agency of the Year 2014 by both US trade magazines Ad Age and Ad Week. For the third consecutive year, WPP was awarded the EFFIE as the most effective Holding Company and WARC’s most effective Holding Company for the second year in a row
• Strategy implementation accelerated in a pre- and post-POG (Publicis Omnicom Group) world, as sector targets for fast growth markets and digital raised from 35-40% to 40-45% over the next five years and horizontality across clients, countries and regions raised to the number one strategic priority

Current trading and outlook

• January 2016 | Like-for-like revenue up 4.2% for the month, ahead of budget, with like-for-like net sales, up 2.3%, also ahead of budget and against strong comparatives
• FY 2016 budget | As in 2015, like-for-like revenue growth of well over 3% and net sales growth of over 3% and headline operating margin target improvement on net sales of 0.3 margin points, excluding the impact of currency
• Dual focus in 2016 | 1. Revenue growth from leading position in horizontality, faster growing geographic markets and digital, premier parent company creative and effectiveness position, new business and strategically targeted acquisitions; 2. Continued emphasis on balancing revenue growth with headcount increases and improvement in staff costs/net sales ratio to enhance operating margins   
• Long-term targets | Above industry revenue growth, due to effective implementation of horizontality, geographically superior position in new markets and functional strength in new media and data investment management, including data analytics and the application of new technology; improvement in staff costs/net sales margin ratio of 0.2 to 0.4 margin points p.a. depending on net sales growth; operating margin expansion of 0.3 margin points or more on a constant currency basis; and headline diluted EPS growth of 10% to 15% p.a. from revenue growth, margin expansion, strategically targeted small- and medium-sized acquisitions and share buy-backs

_{1 Percentage change in reported sterling
2 Percentage change at constant currency exchange rates
3 Headline earnings before interest, tax, depreciation and amortisation
4 Headline profit before interest and tax
5 Headline profit before interest and tax, as a percentage of net sales
6 Diluted earnings per share based on headline earnings
7 Diluted earnings per share based on reported earnings
8 Return on equity is headline diluted EPS divided by equity share owners funds per share}



In this press release not all of the figures and ratios used are readily available from the unaudited preliminary results included in Appendix 1. Where required, details of how these have been arrived at are shown in the Appendices.


Download Appendix 1: Preliminary results for the year ended 31 December 2015 (pdf)



For further information:
Sir Martin Sorrell }
Paul Richardson }
Chris Sweetland } +44 20 7408 2204
Feona McEwan }
Chris Wade }

Kevin McCormack }
Fran Butera } +1 212 632 2235
Belinda Rabano } +86 1360 1078 488 
www.wppinvestor.com 
 
^{This announcement has been filed at the Company Announcements Office of the London Stock Exchange and is being distributed to all owners of Ordinary shares and American Depository Receipts. Copies are available to the public at the Company’s registered office. The following cautionary statement is included for safe harbour purposes in connection with the Private Securities Litigation Reform Act of 1995 introduced in the United States of America. This announcement may contain forward-looking statements within the meaning of the US federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially including adjustments arising from the annual audit by management and the Company’s independent auditors. For further information on factors which could impact the Company and the statements contained herein, please refer to public filings by the Company with the Securities and Exchange Commission. The statements in this announcement should be considered in light of these risks and uncertainties.}

wpp_preliminary_results_mar16.pdf