REG - WPP PLC - 2015 Preliminary Results <Origin Href="QuoteRef">WPP.L</Origin> - Part 2
04/03/2016 07:10
- Part 2: For the preceding part double click ID:nRSD0558Ra
share dilution from issues of options or restricted stock.
However, given the operating and net sales margin targets of 0.3 margin points, the targeted level of share buy-backs will
be 2-3% of the outstanding share capital. If achieved, the impact on headline EPS would be equivalent to an incremental
improvement of 0.2 margin points. In addition, the Company does also have considerable free cash flow to take advantage of
any anomalies in market values, as the average 2015 net debt to EBITDA ratio is under 1.8 times, at the mid-point of our
market guidance of 1.5-2.0 times.
Acquisition strategy
There is still a very significant pipeline of reasonably priced small- and medium-sized potential acquisitions, with the
exception of Brazil and India and digital in the United States, where prices seem to have got ahead of themselves because
of pressure on competitors to catch up. This is clearly reflected in some of the operational issues that are starting to
surface elsewhere in the industry, particularly in fast growing markets like China, Brazil and India. Transactions will be
focused on our strategy of new markets, new media and data investment management, including the application of new
technology and big data. Net acquisition spend is currently targeted at around £300 to £400 million per annum, excluding
slightly more significant "one-offs", like IBOPE in Latin America and comScore. We will continue to seize opportunities in
line with our strategy to increase the Group's exposure to:
n Faster growing geographic markets and sectors
n New media and data investment management, including the application of technology and big data
A further 15 acquisitions and investments were made in the first two months of 2016, with 1 in advertising and media
investment management; 2 in data investment management; 3 in public relations and public affairs; 7 in direct, digital and
interactive; 1 in healthcare; and 1 in sports marketing.
Last but not least………
WPP companies have always been conscious of the need for diversity in the workplace; and not just out of a sense of moral
responsibility, which we take very seriously. On behalf of their clients, our companies' people are responsible for
understanding, and appealing to, just about every one of the world's 7 billion citizens. And while we have never believed
that only a teenager can understand a teenager or only a pensioner can understand a pensioner, there can be no doubt that
diversity among our people is a professional necessity. For us, diversity is not simply a question of race, colour or
gender; at least as important is a diversity of attitude, of mind-set, of ways of approaching problems. Uniform,
conventional thinking will never of itself meet the demands of our clients.
The results reported here, presented in dispassionate numbers, are all the product of the inventive work of tens of
thousands of talented individuals - and with no two alike. They come from countless different backgrounds and have
countless different ways of looking at the world. They embody skills that range from the statistician to the screenwriter.
They represent perhaps the most diverse example of diversity of any single organisation.
We welcome this opportunity to salute them all and thank them for everything they have done to make 2015 as good a year as
it has been.
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
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.
Appendix 1: Preliminary results for the year ended 31 December 2015
Unaudited preliminary consolidated income statement for the year ended
31 December 2015
£ million Notes 2015 2014 +/(-)% Constant Currency1+/(-)%
Billings 47,631.9 46,186.3 3.1 4.9
Revenue 6 12,235.2 11,528.9 6.1 7.5
Direct costs (1,710.9) (1,464.1) (16.9) (18.8)
Net sales 6 10,524.3 10,064.8 4.6 5.8
Operating costs 4 (8,892.3) (8,557.5) (3.9) (4.8)
Operating profit 1,632.0 1,507.3 8.3 11.8
Share of results of associates 4 47.0 61.9 (24.1) (19.2)
Profit before interest and taxation 1,679.0 1,569.2 7.0 10.6
Finance income 5 72.4 94.7 (23.5) (17.3)
Finance costs 5 (224.1) (262.7) 14.7 15.0
Revaluation of financial instruments 5 (34.7) 50.7 - -
Profit before taxation 1,492.6 1,451.9 2.8 7.3
Taxation 7 (247.5) (300.4) 17.6 10.6
Profit for the year 1,245.1 1,151.5 8.1 11.9
Attributable to:
Equity holders of the parent 1,160.2 1,077.2 7.7 11.3
Non-controlling interests 84.9 74.3 (14.3) (20.4)
1,245.1 1,151.5 8.1 11.9
Headline PBIT 6,19 1,774.0 1,680.6 5.6 8.7
Net sales margin 6,19 16.9% 16.7% 0.22 0.42
Headline PBT 19 1,622.3 1,512.6 7.3 11.2
Earnings per share
Basic earnings per ordinary share 9 90.0p 82.4p 9.2 12.9
Diluted earnings per ordinary share 9 88.4p 80.5p 9.8 13.4
1 The basis for calculating the constant currency percentage changes shown above and in the notes to this appendix are
described in the glossary attached to this appendix.
2 Margin points.
Unaudited preliminary consolidated statement of comprehensive income for the year ended 31 December 2015
£ million 2015 2014
Profit for the year 1,245.1 1,151.5
Items that may be reclassified subsequently to profit or loss:
Exchange adjustments on foreign currency net investments (275.9) (221.2)
Gain on revaluation of available for sale investments 206.0 64.6
(69.9) (156.6)
Items that will not be reclassified subsequently to profit or loss:
Actuarial gain/(loss) on defined benefit pension plans 33.5 (86.6)
Deferred tax on defined benefit pension plans (5.2) 62.1
28.3 (24.5)
Other comprehensive loss relating to the year (41.6) (181.1)
Total comprehensive income relating to the year 1,203.5 970.4
Attributable to:
Equity holders of the parent 1,121.6 893.0
Non-controlling interests 81.9 77.4
1,203.5 970.4
Unaudited preliminary consolidated cash flow statement for the year ended
31 December 2015
£ million Notes 2015 2014
Net cash inflow from operating activities 10 1,359.9 1,703.7
Investing activities
Acquisitions and disposals 10 (669.5) (489.1)
Purchase of property, plant and equipment (210.3) (177.9)
Purchase of other intangible assets (including capitalised computer software) (36.1) (36.5)
Proceeds on disposal of property, plant and equipment 13.4 5.9
Net cash outflow from investing activities (902.5) (697.6)
Financing activities
Share option proceeds 27.6 25.0
Cash consideration for non-controlling interests 10 (23.6) (5.6)
Share repurchases and buybacks 10 (587.6) (510.8)
Net increase in borrowings 10 492.0 465.2
Financing and share issue costs (11.4) (27.5)
Equity dividends paid (545.8) (460.0)
Dividends paid to non-controlling interests in subsidiary undertakings (55.2) (57.7)
Net cash outflow from financing activities (704.0) (571.4)
Net (decrease)/increase in cash and cash equivalents (246.6) 434.7
Translation differences (54.4) (70.3)
Cash and cash equivalents at beginning of year 2,247.6 1,883.2
Cash and cash equivalents at end of year 10 1,946.6 2,247.6
Reconciliation of net cash flow to movement in net debt:
Net (decrease)/increase in cash and cash equivalents (246.6) 434.7
Cash inflow from increase in debt financing (480.5) (437.7)
Other movements (124.0) 23.8
Translation differences (84.3) (55.8)
Movement of net debt in the year (935.4) (35.0)
Net debt at beginning of year (2,275.4) (2,240.4)
Net debt at end of year 11 (3,210.8) (2,275.4)
Unaudited preliminary consolidated balance sheet as at 31 December 2015
£ million Notes 2015 2014 2013
Non-current assets
Intangible assets:
Goodwill 12 10,670.6 9,979.4 9,472.8
Other 13 1,715.4 1,668.9 1,667.8
Property, plant and equipment 797.7 772.5 773.3
Interests in associates and joint ventures 758.6 759.9 792.8
Other investments 1,158.7 669.2 270.6
Deferred tax assets1 94.1 108.8 89.5
Trade and other receivables 14 178.7 148.6 158.5
15,373.8 14,107.3 13,225.3
Current assets
Inventory and work in progress 329.0 327.3 304.5
Corporate income tax recoverable 168.6 145.6 136.0
Trade and other receivables 14 10,495.4 9,530.0 9,088.1
Cash and short-term deposits 2,382.4 2,512.7 2,221.6
13,375.4 12,515.6 11,750.2
Current liabilities
Trade and other payables 15 (12,685.0) (11,784.0) (10,710.7)
Corporate income tax payable2 (598.5) (599.8) (482.7)
Bank overdrafts and loans (932.0) (653.2) (941.4)
(14,215.5) (13,037.0) (12,134.8)
Net current liabilities (840.1) (521.4) (384.6)
Total assets less current liabilities 14,533.7 13,585.9 12,840.7
Non-current liabilities
Bonds and bank loans (4,661.2) (4,134.9) (3,520.6)
Trade and other payables 16 (891.5) (624.9) (457.6)
Deferred tax liabilities1 (552.3) (536.7) (620.8)
Provisions for post-employment benefits (229.3) (296.2) (247.5)
Provisions for liabilities and charges (183.6) (166.4) (147.7)
(6,517.9) (5,759.1) (4,994.2)
Net assets 8,015.8 7,826.8 7,846.5
Equity
Called-up share capital 17 132.9 132.6 134.9
Share premium account 535.3 508.0 483.4
Shares to be issued - 0.3 0.5
Other reserves (9.7) 36.2 317.3
Own shares (719.6) (283.7) (253.0)
Retained earnings 7,698.5 7,106.7 6,903.7
Equity share owners' funds 7,637.4 7,500.1 7,586.8
Non-controlling interests 378.4 326.7 259.7
Total equity 8,015.8 7,826.8 7,846.5
1 The Group has restated prior year balance sheets to reduce both the deferred tax assets and the deferred tax liabilities
shown in 2014 and 2013 by £130.9 million and £29.9 million respectively. This is consistent with the current year
presentation.
2 As described in Note 2, the Group has restated prior year balance sheets to reclassify certain income tax creditors from
non- current liabilities to current liabilities.
Unaudited preliminary consolidated statement of changes in equity for the year ended 31 December 2015
£ million Called-up share capital Share Shares tobe issued Other reserves Own shares Retained earnings Total equity share owners' funds Non- controlling interests Total
premium
account
Balance at 1 January 2015 132.6 508.0 0.3 36.2 (283.7) 7,106.7 7,500.1 326.7 7,826.8
Ordinary shares issued 0.3 27.3 (0.3) - - 0.2 27.5 - 27.5
Treasury share additions - - - - (406.0) - (406.0) - (406.0)
Treasury share allocations - - - - 3.6 (3.6) - - -
Net profit for the year - - - - - 1,160.2 1,160.2 84.9 1,245.1
Exchange adjustments on foreign currency net investments - - - (272.9) - - (272.9) (3.0) (275.9)
Gain on revaluation of available for sale investments - - - 206.0 - - 206.0 - 206.0
Actuarial gain on defined benefit pension plans - - - - - 33.5 33.5 - 33.5
Deferred tax on defined benefit pension plans - - - - - (5.2) (5.2) - (5.2)
Comprehensive (loss)/income - - - (66.9) - 1,188.5 1,121.6 81.9 1,203.5
Dividends paid - - - - - (545.8) (545.8) (55.2) (601.0)
Non-cash share-based incentive plans (including share options) - - - - - 99.0 99.0 - 99.0
Tax adjustment on share-based payments - - - - - 18.0 18.0 - 18.0
Net movement in own shares held by ESOP Trusts - - - - (33.5) (148.1) (181.6) - (181.6)
Recognition/remeasurement of financial instruments - - - (59.0) - (0.7) (59.7) - (59.7)
Share purchases - close period commitments - - - 80.0 - 2.9 82.9 - 82.9
Acquisition of subsidiaries1 - - - - - (18.6) (18.6) 25.0 6.4
Balance at 31 December 2015 132.9 535.3 - (9.7) (719.6) 7,698.5 7,637.4 378.4 8,015.8
Total comprehensive income relating to the year ended 31 December 2015 was £1,203.5 million (2014: £970.4 million)
1 Acquisition of subsidiaries represents movements in retained earnings and non-controlling interests arising from
increases in ownership of existing subsidiaries and recognition of non-controlling interests on new acquisitions.
Unaudited preliminary consolidated statement of changes in equity for the year ended 31 December 2015 (continued)
£ million Called-up share capital Share Shares tobe issued Other reserves Own shares Retained earnings Total equity share owners' funds Non- controlling interests Total
premium
account
Balance at 1 January 2014 134.9 483.4 0.5 317.3 (253.0) 6,903.7 7,586.8 259.7 7,846.5
Ordinary shares issued 0.4 24.6 (0.2) - - 0.2 25.0 - 25.0
Treasury share additions - - - - (412.5) - (412.5) - (412.5)
Treasury share allocations - - - - 0.6 (0.6) - - -
Treasury share cancellations (2.7) - - 2.7 332.5 (332.5) - - -
Net profit for the year - - - - - 1,077.2 1,077.2 74.3 1,151.5
Exchange adjustments on foreign currency net investments - - - (224.3) - - (224.3) 3.1 (221.2)
Gain on revaluation of available for sale investments - - - 64.6 - - 64.6 - 64.6
Actuarial loss on defined benefit pension plans - - - - - (86.6) (86.6) - (86.6)
Deferred tax on defined benefit pension plans - - - - - 62.1 62.1 - 62.1
Comprehensive (loss)/income - - - (159.7) - 1,052.7 893.0 77.4 970.4
Dividends paid - - - - - (460.0) (460.0) (57.7) (517.7)
Non-cash share-based incentive plans (including stock options) - - - - - 102.2 102.2 - 102.2
Tax adjustment on share-based payments - - - - - (0.6) (0.6) - (0.6)
Net movement in own shares held by ESOP Trusts - - - - 48.7 (147.0) (98.3) - (98.3)
Recognition/remeasurement of financial instruments - - - (44.1) - (4.1) (48.2) - (48.2)
Share purchases - close period commitments - - - (80.0) - (3.9) (83.9) - (83.9)
Acquisition of subsidiaries1 - - - - - (3.4) (3.4) 47.3 43.9
Balance at 31 December 2014 132.6 508.0 0.3 36.2 (283.7) 7,106.7 7,500.1 326.7 7,826.8
1 Acquisition of subsidiaries represents movements in retained earnings and non-controlling interests arising from
increases in ownership of existing subsidiaries and recognition of non-controlling interests on new acquisitions.
Notes to the unaudited preliminary consolidated financial statements
1. Basis of accounting
The unaudited preliminary consolidated financial statements are prepared under the historical cost convention, except for
the revaluation of certain financial instruments as disclosed in our accounting policies.
2. Accounting policies
The unaudited preliminary consolidated financial statements comply with the recognition and measurement criteria of
International Financial Reporting Standards (IFRS) as adopted by the European Union and issued by the International
Accounting Standards Board (IASB) and with the accounting policies of the Group which were set out on pages 181 to 188 of
the 2014 Annual Report and Accounts.
The Group has revised its tax accounting policy to reclassify certain income tax creditors as current liabilities. The
Group believes this provides a more relevant presentation, whilst having no impact on the timing of expected cash flows.
Accordingly, the consolidated balance sheets at 31 December 2014 and 31 December 2013 have been restated to reclassify
£441.2 million and £362.6 million respectively of corporate income tax payable from non-current liabilities to current
liabilities. No other changes have been made to the Group's accounting policies in the year ended 31 December 2015.
Whilst the financial information included in this preliminary announcement has been computed in accordance with IFRS, this
announcement does not itself contain sufficient information to comply with all IFRS disclosure requirements. The Company's
2015 Annual Report and Accounts will be prepared in compliance with IFRS. The unaudited preliminary announcement does not
constitute a dissemination of the annual financial report and does not therefore need to meet the dissemination
requirements for annual financial reports. A separate dissemination announcement in accordance with Disclosure and
Transparency Rules (DTR) 6.3 will be made when the annual report and audited financial statements are available on the
Company's website.
Statutory Information
The financial information included in this preliminary announcement does not constitute statutory accounts. The statutory
accounts for the year ended 31 December 2014 have been delivered to the Jersey Registrar and received an unqualified
auditors' report. The statutory accounts for the year ended 31 December 2015 will be finalised on the basis of the
financial information presented by the directors in this unaudited preliminary announcement and will be delivered to the
Jersey Registrar following the Company's General Meeting. The audit report for the year ended 31 December 2015 has yet to
be signed. The announcement of the preliminary results was approved on behalf of the board of directors on 4 March 2016.
Notes to the unaudited preliminary consolidated financial statements (continued)
3. Currency conversion
The reporting currency of the Group is pound sterling and the unaudited preliminary consolidated financial statements have
been prepared on this basis.
The 2015 unaudited preliminary consolidated income statement is prepared using, among other currencies, average exchange
rates of US$1.5288 to the pound (2014: US$1.6475) and E1.3782 to the pound (2014: E1.2410). The unaudited preliminary
consolidated balance sheet as at 31 December 2015 has been prepared using the exchange rates on that day of US$1.4734 to
the pound (2014: US$1.5581) and E1.3559 to the pound (2014: E1.2874).
The basis for calculating the constant currency percentage changes, shown on the face of the unaudited preliminary
consolidated income statement, is described in the glossary attached to this appendix.
4. Operating costs and share of results of associates
£ million 2015 2014
Staff costs 6,652.6 6,440.5
Establishment costs 726.3 711.3
Other operating costs 1,513.4 1,405.7
Total operating costs 8,892.3 8,557.5
Staff costs include:
£ million 2015 2014
Wages and salaries 4,578.4 4,467.8
Cash-based incentive plans 231.8 210.7
Share-based incentive plans 99.0 102.2
Social security costs 578.4 567.8
Pension costs 160.0 148.9
Severance 24.0 37.4
Other staff costs 981.0 905.7
6,652.6 6,440.5
Staff cost to net sales ratio 63.2% 64.0%
Notes to the unaudited preliminary consolidated financial statements (continued)
4. Operating costs and share of results of associates (continued)
Other operating costs include:
£ million 2015 2014
Amortisation and impairment of acquired intangible assets 140.1 147.5
Goodwill impairment 15.1 16.9
Gains on disposal of investments and subsidiaries (131.0) (186.3)
Gains on remeasurement of equity interest on acquisition of controlling interest (165.0) (9.2)
Investment write-downs 78.7 7.3
Restructuring costs 106.2 127.6
IT asset write-downs 29.1 -
The goodwill impairment charge of £15.1 million (2014: £16.9 million) relates to a number of under-performing businesses in
the Group (in 2014, £8.8 million was in relation to associates). In certain markets, the impact of current, local economic
conditions and trading circumstances on these businesses is sufficiently severe to indicate impairment to the carrying
value of goodwill. Investment write-downs of £78.7 million (2014: £7.3 million) relate to certain non-core minority
investments in the US where forecast financial performance and/or liquidity issues indicate a permanent decline in the
recoverability of the Group's investment.
Gains on disposal of investments and subsidiaries of £131.0 million in 2015 include £43.6 million of gains arising on the
sale of certain Kantar internet measurement businesses to comScore Inc in consideration for newly issued equity in the
buyer; £29.7 million of gains arising on the sale of the Group's minority stake in e-Rewards; and £30.6 million of gains
arising on the Group's equity interest in Chime Communications plc following its acquisition by Providence Equity Partners
in conjunction with WPP.
Gains on disposal of investments and subsidiaries of £186.3 million in 2014 include £150.6 million of gains arising on the
sale of the Xaxis for Publishers business to AppNexus Inc and the Kantar Media US television measurement business to
Rentrak Inc. In both cases, consideration received was in the form of equity issued by the buyer.
Gains on remeasurement of equity interest on acquisition of controlling interest in 2015 primarily comprise gains of £131.7
million in relation to the acquisition of a majority stake in IBOPE in Latin America.
Restructuring costs of £106.2 million (2014: £127.6 million) comprise £69.5 million (2014: £88.7 million) of costs
(including £52.0 million of severance costs) arising from a structural reassessment of certain of the Group's operations,
primarily in the mature markets of Western Europe; and £36.7 million (2014: £38.9 million) of costs resulting from the
project to transform and rationalise the Group's IT services and infrastructure. In 2015, IT asset write-downs comprise
£29.1 million of accelerated depreciation of IT assets in Asia and Europe.
Operating profit includes credits totalling £31.6 million (2014: £24.9 million) relating to the release of excess
provisions and other balances established in respect of acquisitions completed prior to 2014.
Notes to the unaudited preliminary consolidated financial statements (continued)
4. Operating costs and share of results of associates (continued)
Share of results of associates include:
£ million 2015 2014
Share of profit before interest and taxation 95.2 101.8
Share of exceptional losses (21.8) (7.6)
Share of interest and non-controlling interests (1.7) (3.1)
Share of taxation (24.7) (29.2)
47.0 61.9
5. Finance income, finance costs and revaluation of financial instruments
Finance income includes:
£ million 2015 2014
Income from available for sale investments 18.9 26.0
Interest income 53.5 68.7
72.4 94.7
Finance costs include:
£ million 2015 2014
Net interest expense on pension plans 7.3 8.0
Interest on other long-term employee benefits 2.5 1.9
Interest payable and similar charges 214.3 252.8
224.1 262.7
Revaluation of financial instruments include:
£ million 2015 2014
Movements in fair value of treasury instruments (3.7) 31.3
Movements in fair value of other derivatives 15.9 15.0
Revaluation of put options over non-controlling interests (11.3) (8.8)
Revaluation of payments due to vendors (earnout agreements) (35.6) 13.2
(34.7) 50.7
Notes to the unaudited preliminary consolidated financial statements (continued)
6. Segmental analysis
Reported contributions by operating sector were as follows:
£ million 2015 2014
Revenue
Advertising and Media Investment Management 5,552.8 5,134.3
Data Investment Management 2,425.9 2,429.3
Public Relations & Public Affairs 945.8 891.9
Branding & Identity, Healthcare and Specialist Communications 3,310.7 3,073.4
12,235.2 11,528.9
Net sales
Advertising and Media Investment Management 4,652.0 4,502.0
Data Investment Management 1,768.1 1,748.9
Public Relations & Public Affairs 929.7 880.4
Branding & Identity, Healthcare and Specialist Communications 3,174.5 2,933.5
10,524.3 10,064.8
Headline PBIT1
Advertising and Media Investment Management 855.6 836.2
Data Investment Management 286.1 272.7
Public Relations & Public Affairs 155.4 139.2
Branding & Identity, Healthcare and Specialist Communications 476.9 432.5
1,774.0 1,680.6
Net sales margin2
Advertising and Media Investment Management 18.4% 18.6%
Data Investment Management 16.2% 15.6%
Public Relations & Public Affairs 16.7% 15.8%
Branding & Identity, Healthcare and Specialist Communications 15.0% 14.7%
16.9% 16.7%
1 Headline PBIT is defined in note 19.
2 Net sales margin is defined in note 19.
Notes to the unaudited preliminary consolidated financial statements (continued)
6. Segmental analysis (continued)
Reported contributions by geographical area were as follows:
£ million 2015 2014
Revenue
North America1 4,491.2 3,899.9
United Kingdom 1,777.4 1,640.3
Western Continental Europe 2,425.6 2,568.8
Asia Pacific, Latin America, Africa & Middle East andCentral & Eastern Europe 3,541.0 3,419.9
12,235.2 11,528.9
Net sales
North America1 3,882.3 3,471.7
United Kingdom 1,504.5 1,396.0
Western Continental Europe 2,016.2 2,142.6
Asia Pacific, Latin America, Africa & Middle East andCentral & Eastern Europe 3,121.3 3,054.5
10,524.3 10,064.8
Headline PBIT2
North America1 728.2 621.8
United Kingdom 243.1 221.2
Western Continental Europe 277.2 277.2
Asia Pacific, Latin America, Africa & Middle East andCentral & Eastern Europe 525.5 560.4
1,774.0 1,680.6
Net sales margin3
North America1 18.8% 17.9%
United Kingdom 16.2% 15.8%
Western Continental Europe 13.7% 12.9%
Asia Pacific, Latin America, Africa & Middle East andCentral & Eastern Europe 16.8% 18.3%
16.9% 16.7%
1 North America includes the US with revenue of £4,257.4 million (2014: £3,664.9 million), net sales of £3,674.3 million
(2014: £3,254.2 million) and headline PBIT of £697.3 million (2014: £588.2 million).
2 Headline PBIT is defined in note 19.
3 Net sales margin is defined in note 19.
Notes to the unaudited preliminary consolidated financial statements (continued)
7. Taxation
The headline tax rate was 19.0% (2014: 20.0%). The tax rate on reported PBT was 16.6% (2014: 20.7%). The reported tax rate
is lower than the headline tax rate and is due to most of the gains on disposals of investments and subsidiaries and the
gains on remeasurement of equity interests not being taxable. The cash tax rate on headline PBT1 was 18.6% (2014: 19.2%).
The tax charge comprises:
£ million 2015 2014
Corporation tax
Current year 403.0 394.9
Prior years (108.4) 4.4
294.6 399.3
Deferred tax
Current year (35.8) (93.2)
Prior years (11.3) (5.7)
(47.1) (98.9)
Tax charge 247.5 300.4
The calculation of the headline tax rate is as follows:
£ million 2015 2014
Headline PBT1 1,622.3 1,512.6
Tax charge 247.5 300.4
Tax charge relating to gains on disposal of investments and subsidiaries (1.1) (21.4)
Deferred tax impact of the amortisation of acquired intangible assets and other goodwill items 35.4 23.2
Tax credit relating to restructuring costs 26.5 14.1
Deferred tax relating to gains on disposal of investments and subsidiaries - (13.8)
Headline tax charge 308.3 302.5
Headline tax rate 19.0% 20.0%
8. Ordinary dividends
The Board has recommended a final dividend of 28.78p (2014: 26.58p) per ordinary share in addition to the interim dividend
of 15.91p (2014: 11.62p) per share. This makes a total for the year of 44.69p (2014: 38.2p). Payment of the final dividend
of 28.78p per ordinary share will be made on 4 July 2016 to holders of ordinary shares in the Company on 10 June 2016.
1 Headline PBT is defined in note 19.
Notes to the unaudited preliminary consolidated financial statements (continued)
9. Earnings per share
Basic EPS
The calculation of basic reported and headline EPS is as follows:
2015 2014 +/(-)% ConstantCurrency+/(-)%
Reported earnings1 (£ million) 1,160.2 1,077.2
Headline earnings (£ million) (note 19) 1,229.1 1,135.8
Average shares used in basic EPS calculation (million) 1,288.5 1,307.4
Reported EPS 90.0p 82.4p 9.2 12.9
Headline EPS 95.4p 86.9p 9.8 12.8
Diluted EPS
The calculation of diluted reported and headline EPS is as follows:
2015 2014 +/(-)% ConstantCurrency+/(-)%
Diluted reported earnings (£ million) 1,160.2 1,077.2
Diluted headline earnings (£ million) 1,229.1 1,135.8
Average shares used in diluted EPS calculation (million) 1,313.0 1,337.5
Diluted reported EPS 88.4p 80.5p 9.8 13.4
Diluted headline EPS 93.6p 84.9p 10.2 13.3
A reconciliation between the shares used in calculating basic and diluted EPS is as follows:
million 2015 2014
Average shares used in basic EPS calculation 1,288.5 1,307.4
Dilutive share options outstanding 3.5 4.8
Other potentially issuable shares 21.0 25.3
Shares used in diluted EPS calculation 1,313.0 1,337.5
At 31 December 2015 there were 1,329,366,024 (2014: 1,325,747,724) ordinary shares in issue.
1 Reported earnings is equivalent to profit for the year attributable to equity holders of the parent.
Notes to the unaudited preliminary consolidated financial statements (continued)
10. Analysis of cash flows
The following tables analyse the items included within the main cash flow headings on page 22:
Net cash inflow from operating activities:
£ million 2015 2014
Profit for the year 1,245.1 1,151.5
Taxation 247.5 300.4
Revaluation of financial instruments 34.7 (50.7)
Finance costs 224.1 262.7
Finance income (72.4) (94.7)
Share of results of associates (47.0) (61.9)
Operating profit 1,632.0 1,507.3
Adjustments for:
Non-cash share-based incentive plans (including share options) 99.0 102.2
Depreciation of property, plant and equipment 194.7 197.3
Goodwill impairment 15.1 16.9
Amortisation and impairment of acquired intangible assets 140.1 147.5
Amortisation of other intangible assets 33.7 31.6
Investment write-downs 78.7 7.3
Gains on disposal of investments and subsidiaries (131.0) (186.3)
Gains on remeasurement of equity interest on acquisition of controlling interest (165.0) (9.2)
Losses/(gains) on sale of property, plant and equipment 1.1 (0.8)
Operating cash flow before movements in working capital and provisions 1,898.4 1,813.8
Movements in working capital and provisions (164.1) 295.0
Cash generated by operations 1,734.3 2,108.8
Corporation and overseas tax paid (301.2) (289.9)
Interest and similar charges paid (212.0) (249.1)
Interest received 61.3 69.8
Investment income 4.9 11.9
Dividends from associates 72.6 52.2
1,359.9 1,703.7
Notes to the unaudited preliminary consolidated financial statements (continued)
10. Analysis of cash flows (continued)
Acquisitions and disposals:
£ million 2015 2014
Initial cash consideration (463.5) (382.7)
Cash and cash equivalents acquired (net) 57.7 74.4
Earnout payments (43.9) (34.3)
Purchase of other investments (including associates) (283.2) (188.8)
Proceeds on disposal of investments 63.4 42.3
Acquisitions and disposals (669.5) (489.1)
Cash consideration for non-controlling interests (23.6) (5.6)
Net acquisition payments and investments (693.1) (494.7)
Share repurchases and buybacks:
£ million 2015 2014
Purchase of own shares by ESOP Trusts (181.6) (98.3)
Shares purchased into treasury (406.0) (412.5)
(587.6) (510.8)
Net increase in borrowings:
£ million 2015 2014
Increase in drawings on bank loans 128.9 -
Proceeds from issues of E600 million bonds 858.7 -
Repayment of E500 million bonds (481.9) -
Premium on exchange of E252 million bonds (13.7) -
Proceeds from issue of E750 million bonds - 588.7
Proceeds from issue of $750 million bonds - 460.1
Repayment of $369 million bonds - (235.3)
Repayment of $600 million bonds - (333.7)
Repayment of $25 million TNS private placements - (14.6)
492.0 465.2
Cash and cash equivalents:
£ million 2015 2014
Cash at bank and in hand 2,227.8 1,967.0
Short-term bank deposits 154.6 545.7
Overdrafts1 (435.8) (265.1)
1,946.6 2,247.6
1 Bank overdrafts are included in cash and cash equivalents because they form an integral part of the Group's cash
management.
Notes to the unaudited preliminary consolidated financial statements (continued)
11. Net debt
£ million 2015 2014
Cash and short-term deposits 2,382.4 2,512.7
Bank overdrafts and loans due within one year (932.0) (653.2)
Bonds and bank loans due after one year (4,661.2) (4,134.9)
(3,210.8) (2,275.4)
The Group estimates that the fair value of corporate bonds is £5,207.4 million at 31 December 2015 (2014: £4,944.8
million). The Group considers that the carrying amount of bank loans approximates their fair value.
The following table is an analysis of future anticipated cash flows in relation to the Group's debt, on an undiscounted
basis which, therefore, differs from the carrying value:
£ million 2015 2014
Within one year (541.7) (578.4)
Between one and two years (548.2) (748.4)
Between two and three years (325.4) (533.7)
Between three and four years (581.6) (125.7)
Between four and five years (335.0) (125.7)
Over five years (4,459.5) (4,192.3)
Debt financing (including interest) under the Revolving Credit Facility and in relation to unsecured loan notes (6,791.4) (6,304.2)
Short-term overdrafts - within one year (435.8) (265.1)
Future anticipated cash flows (7,227.2) (6,569.3)
Effect of discounting/financing rates 1,634.0 1,781.2
Debt financing (5,593.2) (4,788.1)
Cash and short-term deposits 2,382.4 2,512.7
Net debt (3,210.8) (2,275.4)
Notes to the unaudited preliminary consolidated financial statements (continued)
12. Goodwill and acquisitions
Goodwill in relation to subsidiary undertakings increased by £691.2 million (2014: £506.6 million) in the year. This
movement includes both goodwill arising on acquisitions completed in the year and adjustments to goodwill relating to
acquisitions completed in prior years, net of impairment charges and the effect of currency translation.
The contribution to revenue and operating profit of acquisitions completed in the year was not material. There were no
material acquisitions completed during the year or between 31 December 2015 and the date these preliminary consolidated
financial statements were approved.
13. Other intangible assets
The following are included in other intangibles:
£ million 2015 2014
Brands with an indefinite useful life 968.1 969.3
Acquired intangibles 667.6 596.9
Other (including capitalised computer software) 79.7 102.7
1,715.4 1,668.9
14. Trade and other receivables
Amounts falling due within one year:
£ million 2015 2014
Trade receivables 6,799.4 6,337.6
VAT and sales taxes recoverable 154.9 116.0
Prepayments 235.0 222.1
Accrued income 2,853.8 2,401.5
Fair value of derivatives 4.6 11.4
Other debtors 447.7 441.4
10,495.4 9,530.0
Amounts falling due after more than one year:
£ million 2015 2014
Prepayments 1.5 1.9
Accrued income 5.8 7.0
Other debtors 131.7 97.8
Fair value of derivatives 39.7 41.9
178.7 148.6
The Group considers that the carrying amount of trade and other receivables approximates their fair value.
Notes to the unaudited preliminary consolidated financial statements (continued)
15. Trade and other payables: amounts falling due within one year
£ million
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