WPP records revenue growth of 4.6%, with like-for-like growth of 8.2% in 2014 preliminary results

WPP has announced its 2014 preliminary results. Reported billings are at £46.186 billion, up 6.8% in constant currency. Reported revenue is up 4.6% at £11.529 billion, up 9.9% at $18.956 billion in dollars and up 10.4% at €14.323 billion in euros. Constant currency revenue is up 11.3%, like-for-like revenue is up 8.2%. Constant currency net sales are up 6.3%, like-for-like net sales are up 3.3%. Reported net sales margin is of 16.7%, up 0.2 margin points vs last year, up 0.3 margin points, on a constant currency basis in line with full year margin target.

Headline profit before interest and tax is £1.681 billion, up 1.1% and up 8.0% in constant currency. Headline profit before tax is at £1.513 billion, up 3.7% and up 11.6% in constant currency, crossing £1.5 billion for the first time. Profit before tax £1.452 billion, up 12.0%, up 21.3% in constant currency. Profit after tax £1.152 billion, up 13.8%, up 23.1% in constant currency. Headline diluted earnings per share of 84.9p, up 5.1%, up 12.6% in constant currency. Return on equity is up to 15.0% in 2014, up 0.6 percentage points on 2013 versus a weighted average cost of capital of 6.1% in 2014. Dividends per share of 38.2p, up 11.7%, pay-out ratio of 45% versus 42% last year, in line with the re-targeted dividend pay-out ratio for 2014 one year ahead of original schedule.

Constant currency net debt stands at £2.275 billion at 31 December 2014, down £21 million on same date in 2013, with average net debt in 2014 flat at £3.001 billion against 2013. Net new business is of £5.831 billion ($9.330 billion) in the year with the Group first in new business league tables for the third year in a row. It was a good start to 2015 with January like-for-like revenue up 6.7% and net sales up 3.9%. Including associates and investments, revenue totals almost $27 billion annually and people average over 188,000.

Full Year highlights

•  Reported billings at £46.186 billion, up 6.8% in constant currency driven by a strong leadership position in net new business league tables
• Revenue growth of 4.6%, with like-for-like growth of 8.2%, 3.1% growth from acquisitions and -6.7% from currency
• Like-for-like revenue growth in all regions, led by strong growth in North America, United Kingdom and Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe, and by all sectors, 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 more than the first half, as the scale of digital media purchases in media investment management and data investment management revenue continues to increase
• Headline EBITDA growth of 0.7%, and up 7.5% in constant currency, reflecting currency headwinds, but giving 0.2 margin points improvement, to 19.0% on net sales, with like-for-like operating costs (+3.1%) rising slower than net sales
• Headline PBIT increase of 1.1% to £1.681 billion, up 8.0% in constant currency
• Net sales margin, a more accurate competitive comparator, up 0.2 margin points to an industry leading 16.7%, up 0.3 margin points in constant currency, in line with target
• Exceptional gains of £196 million largely representing gains on the AppNexus and Rentrak transactions completed in the second half, together with other gains of £45 million, including gains on the re-measurement of the Group’s equity interests, partly offset by £89 million of restructuring costs, £39 million of IT transformation costs and £7 million of investment writedowns, giving a net exceptional gain of £61 million
• Headline diluted EPS up 5.1%, up 12.6% in constant currency and reported diluted EPS up 15.7%, up 24.9% in constant currency, reflecting strong like-for-like revenue growth, acquisitions and margin improvement
• Final ordinary dividend of 26.58p up 12.4% and full year dividends of 38.20p per share up 11.7%
• Targeted dividend pay-out ratio of 45%, achieved in 2014, one year ahead of original schedule
• Return on equity up to 15.0% in 2014, up 0.6 percentage points from 14.4% in 2013, versus a weighted average cost of capital of 6.1% in 2014 and 6.5% in 2013. During 2014 the value of the Group’s non-controlled investments rose by £398 million, to £669 million from £271 million, reflecting the increasing value of its content businesses, primarily Vice, and the technology partnerships formed during the year with AppNexus and Rentrak
• Average net debt flat, at £3.001 billion compared to last year, at 2014 exchange rates, reflecting the significant incremental net acquisition spend and share re-purchases of £588 million, offsetting the improvements in working capital at the period end
• Creative and effectiveness excellence recognised again in 2014 with the award of the Cannes Lion to WPP for the most creative Holding Company, for the fourth successive year, since the awards 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 2014 Grey was named Global Agency of the Year 2013 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
• 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

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