First-half and Q2 highlights
Billings increased by 5.0% to £22.7bn
Revenue growth of 7.1%, with like-for-like growth of 2.4%, 3.1% growth from acquisitions and 1.6% from currency, reflecting a weaker £ sterling. Quarter two has seen significant improvement over the first quarter of the year
Constant currency growth in all regions and business segments, except public relations and public affairs, with Q2 improvement in the USA and the UK, partly offset by slower rates of growth in the faster growing markets and the mature markets of Western Continental Europe. Continuing double-digit growth from Latin America and Africa
Like-for-like gross margin growth in line with revenue growth at 2.4%, with data investment management (formerly consumer insight) and the United Kingdom growing faster than revenue
Headline EBITDA growth of 10.6% delivered through organic revenue growth and by 0.4 margin point improvement, with operating costs up 6.3%, rising less than revenues
Headline PBIT increase of 11.8% with PBIT margin rising by 0.5 margin points
Gross margin margins, probably a more accurate competitive comparator, also up 0.5 margin points to 13.0%
Headline diluted EPS up 10.1% driving a 20% higher interim ordinary dividend of 10.56p, in line with the Company's previous objective of reaching a 40% pay-out ratio, in the medium term
Targeted dividend pay-out ratio raised to 45%, to be reached in two years
Average net debt increased by £205m (+7%) to £3.128bn compared to last year, at 2013 constant rates, an improvement over the first four months figure. The higher average net debt figure continues to reflect the timing of significant acquisition payments, largely offset by the conversion, at 30 June, of £390 million of the £450 million Convertible Bond, but with a significant improvement in working capital in July and onwards
Creative and effectiveness excellence recognised again in 2013 with the award of the Cannes Lion to WPP for the most creative Holding Company for the third successive year since its initiation, another to Ogilvy & Mather Worldwide for the second consecutive year as the most creative agency network and another to Ogilvy Brazil as the most creative agency. For the second 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 new media raised from 35-40% to 40-45% over next five years
Current trading and outlook
July 2013 HTMLPIPESYMBOL Revenues up stronger than the first half at 5.0% like-for-like for the month, the highest monthly growth rate this year, with year-to-date like-for-like revenue growth of 2.8%
FY 2013 quarter 2 revised forecast HTMLPIPESYMBOL Slight increase in like-for-like revenue growth from the quarter 1 revised forecast, which was itself over 3%, with the second half and third quarter stronger than first half and headline operating margin target, as previously, of 15.3% up 0.5 margin points
Focus in 2013 nt increases and improvement in staff costs/revenue ratio to enhance operating margins
Long-term targets reaffirmed HTMLPIPESYMBOL Above industry revenue growth due to geographically superior position in new markets and functional strength in new media and data investment management, including data analytics and application of new technology; improvement in staff cost/revenue ratio of 0.3 to 0.6 points p.a. depending on revenue and gross margin growth; operating margin expansion of 0.5 margin points or more; and PBIT growth of 10% to 15% p.a. from margin expansion and from strategically targeted small and medium-sized acquisitions
