LORNA TILBIAN NUMIS
We have long been supportive of WPP management's focus on digital and emerging markets. Digital now accounts for 30 per cent of group revenues (with a five year target of 35-40 per cent), and absolute digital revenues are $4.6bn, well ahead of the nearest competitor at $2.5bn. We believe that, as the wider industry moves towards digital maturity (defined as percentage of budget spent on digital moving nearer percentage of consumer time spent online) then WPP’s scale in this discipline will begin to translate into margin growth.
STEVE LIECHTI INVESTEC
Full year figures look good with like-for-like sales up 5.3 per cent as expected but margin better at 14.3 per cent vs our 14.1 per cent. Higher base numbers imply modest upgrades though outlook looks in line with our forecasts. We note poor US growth which is again worse than 'disappointing' nine month figures. Overall, decent figures and slight upgrades, so shares should go better, but we feel upside is mostly discounted currently post strong share price performance.
JONATHAN JACKSON KILLIK & CO
During 2011, the group continued to benefit from consolidation trends in the industry, winning assignments from existing and new clients. Estimated net new business billings of £3.2bn were 7 per cent higher than last year, placing the group first or second in all leading net new business tables. There was a big surprise on the dividend, which was raised by 38 per cent to 24.6p. Although the shares have had a strong run, earnings momentum remains good and the current valuation of 10.4 times consensus 2013 earnings is attractive.