Filed by WPP Group Plc
Pursuant to Rule 425 under the Securities Act
Subject Company, Young & Rubicam Inc.
Commission File No. 001-14093
WPP
May 2000
1
<PAGE>
WPP
1 Summary of Strategic and Financial Benefits
2 Key Facts
3 Strategy, Structure and Competitive Position
4 WPP and Y&R 1999 and Q1 2000
5 Transaction
6 Conclusions
2
<PAGE>
WPP
1 Summary of Strategic and Financial Benefits
3
<PAGE>
SUMMARY OF STRATEGIC AND FINANCIAL BENEFITS
o Philosophy and culture
o Client fit
o Functional strength
o Geographical strength
o Synergies, accretion and margin improvement
4
<PAGE>
WPP
2 Key Facts
5
<PAGE>
KEY FACTS
o The world's leading advertising and marketing services company with
revenues in 1999 of $5.2bn and capitalized billings of c.$56bn*
o 55,000 people (including affiliates) in approximately 1,300 offices
in 92 countries worldwide
o Over 300 of the Fortune 500 as clients, more than 60 clients in all
four disciplines, over 140 clients in six or more countries
o Quoted in London and on NASDAQ with implied market capitalisation of
c.$14bn. Member of FTSE 100 Index, Euro FT 300, Business Week 1000,
Forbes 800 and MSCI Index
o Group includes many of the best known brands in the industry
Advertising Age, 24 April 2000
6
<PAGE>
KEY FACTS
MANY OF THE BEST KNOWN BRANDS IN THE INDUSTRY
o Ogilvy & Mather Worldwide o Hill and Knowlton
o J. Walter Thompson Company o Burson-Marsteller
o Y&R Advertising o Ogilvy Public Relations Worldwide
o Conquest o Cohn & Wolfe
o MindShare o OgilvyOne
o The Media Edge o impiric (Wunderman Cato Johnson)
o Research International o CommonHealth
o Millward Brown o Sudler & Hennessey
o BrandAsset Valuator o Enterprise IG
o Landor Associates
7
<PAGE>
KEY FACTS
GLOBAL STRENGTH IN ADVERTISING
MARKET POSITION WPP
(GROSS INCOME) PRO FORMA OMC IPG HAVAS BCom3
- ---------------------------------------------------------------------------
US 1= 3 1= 7 4
Europe 2 1 3 4 7
Asia ex-Japan 1 2 3 9 5
Japan 3 6 7 [GREATER THAN] 10 14
Latin America 2 3 1 11 6
Source: Advertising Age, 24 April 2000. Based on gross income for agency
brands. All data pro forma for this transaction
8
<PAGE>
KEY FACTS
WORLDWIDE ADVERTISING RANK BY MARKET
WPP* OMC IPG BCom3
---- --- --- -----
Australia 2 1 4 5
Brazil 2 3 1 6
France 4 1 5 12
Germany 2 1 3 9
Greater China 1 6 2 3
India 1 4 2 -
Italy 1 4 2 5
Japan 3 6 7 1
Mexico 2 3 1 10
Netherlands 2 1 3 9
Spain 1 3 2 10
UK 1 3 2 5
USA 1= 3 1= 4
* Includes Y&R
Source: Advertising Age, 24 April 2000
9
<PAGE>
KEY FACTS
BLUE-CHIP CLIENT BASE WITH LONG TERM RELATIONSHIPS
<TABLE>
<CAPTION>
Advertising
and Media Information Public Branding & Identity,
Length of Investment & Relations & Healthcare & Specialist
Client Relationship Management Consultancy Public Affairs Communications
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ford 52 years [CHECK] [CHECK] [CHECK] [CHECK]
Amex 33 years [CHECK] [CHECK] [CHECK] [CHECK]
AT&T 18 years [CHECK] X [CHECK] [CHECK]
Citibank 3 years [CHECK] X [CHECK] [CHECK]
Colgate 16 years [CHECK] [CHECK] [CHECK] [CHECK]
IBM 5 years [CHECK] [CHECK] [CHECK] [CHECK]
Johnson & Johnson 15 years X [CHECK] [CHECK] [CHECK]
Philip Morris 75 years [CHECK] [CHECK] [CHECK] [CHECK]
Unilever 93 years [CHECK] [CHECK] [CHECK] [CHECK]
Warner Lambert 33 years [CHECK] [CHECK] [CHECK] [CHECK]
</TABLE>
10
<PAGE>
KEY FACTS
BLUE-CHIP CLIENT BASE WITH LONG TERM RELATIONSHIPS
<TABLE>
<CAPTION>
Advertising
and Media Information Public Branding & Identity,
Length of Investment & Relations & Healthcare & Specialist
Client Relationship Management Consultancy Public Affairs Communications
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Danone 28 years [CHECK] X [CHECK] [CHECK]
DeBeers 35 years [CHECK] [CHECK] [CHECK] X
Eastman Kodak 5 years [CHECK] [CHECK] [CHECK] [CHECK]
Ericsson 6 years [CHECK] X X [CHECK]
Kellogg 70 years [CHECK] [CHECK] [CHECK] [CHECK]
Kimberly-Clark 73 years [CHECK] [CHECK] X [CHECK]
Nestle 40 years [CHECK] [CHECK] X [CHECK]
Schering Plough 14 years [CHECK] X X [CHECK]
Sears [CHECK] X [CHECK] [CHECK]
SmithKline Beecham 25 years [CHECK] [CHECK] [CHECK] [CHECK]
</TABLE>
11
<PAGE>
WPP
3. STRATEGY, STRUCTURE AND COMPETITIVE POSITION
12
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
CLIENTS - GEOGRAPHICAL EXPANSION AND BRAND DIFFERENTIATION
STIMULUS RESPONSE
- -------- --------
o Low population growth )
o Improved communications ) Geographical expansion
o Free trade )
o Stable growth and low inflation )
o Technology transfer )
Brand differentiation
o Growing retail power )
o New competitors )
13
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
WORLD POPULATION GROWTH
WORLD POPULATION GROWTH RATE: 1950-2050
[GRAPH SHOWING DECLINING WORLD POPULATION GROWTH RATE]
Source: U.S. Census Bureau, International Data Base 5-10-00.
14
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
IMPROVED COMMUNICATIONS
Mobile Cellular Subscribers
Internet users
[GRAPH SHOWING INCREASING NUMBERS OF USERS AND SUBSCRIBERS, 1995 to 2001]
Source: Morgan Stanley & Forbes Magazine
15
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
FREE TRADE ASSOCIATIONS
[IMAGE OF WORLD MAP SHOWING GENERAL GEOGRAPHIC LOCATIONS
OF NORTH AMERICAN FREE TRADE ASSOCIATIONS (NAFTA)
CARIBBEAN COMMON MARKET (CARICOM)
CENTRAL AMERICAN COMMON MARKET, ANDEAN
COMMUNITY, THE LATIN AMERICAN
FREE TRADE ASSOCIATION, MERCOSUR
ASSOCIATES, EUROPEAN FREE TRADE
ASSOCIATION (EFTA), EUROPEAN
UNION (EU), THE SOUTHERN AFRICAN
CUSTOMS UNION (SACU) AND
ASIA-PACIFIC ECONOMIC CO-OPERATION (APEC)]
16
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
STABLE GROWTH AND LOW INFLATION
[GRAPH SHOWING WORLDWIDE GROWTH RATES AND WORLDWIDE INFLATION RATES:
2000 TO 2010. WORLDWIDE GROWTH RATES GENERALLY BETWEEN 6.0% AND
7.0%. WORLDWIDE INFLATION RATES GENERALLY 4.0%.]
Source: Goldman Sachs
17
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
TECHNOLOGY TRANSFER - NUMBER OF YEARS TO REACH 50 MILLION USERS
[BAR CHART]
Automobiles: 80 years
Telephone: 70 years
Electricity: 50 years
Radio: 38 years
Television: 13 years
Cable: 10 years
Internet: 5 years
Source: Morgan Stanley & Forbes Magazine
18
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
GROWING RETAIL POWER
[BAR CHART SHOWING GROWTH FOR TOP 25, TOP 100 and TOP 200 RETAIL COMPANIES]
Top Top Top
25 100 200
--- --- ---
1994.......... 12% 22% 27%
2000.......... 16% 27% 31%
2009E......... 40% 45% 50%
Source: Management Ventures Inc. a WPP Company
19
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
NEW COMPETITORS
. Asda Financial services and Petrol retailing
. BAT Formula 1 motor-racing
. Disney Retail outlets for own brand products
. easyJet Automotive hire and internet cafes
. General Motors Hughes Electronics (69% ownership)
. Marks & Spencer Financial services
. Nike Own brand retailing
. P&O Stena Automotive importing
. Smart Automotive manufacture and Retail outlets
. Virgin Records Airline, Cola, Banking, Fund management
services, Railway operator
20
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
CLIENTS - THREE KEY CHALLENGES
Background - Americanisation not Globalisation
o Overcapacity in production, importance of branding and
differentiation, shortage of human capital
o New channels of distribution
o disintermediation
o disintermediation by lower cost business models
o talent retention
o Internal communication, making sure internal audiences on-side
21
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
OUR MISSION
To develop and manage talent; to
------
apply that talent, throughout
the world, for the benefit of
-----
clients; to do so in partnership;
-----------
to do so with profit.
------
22
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
OUR GOALS
o To be the preferred provider of multinational communications
services
o To understand and satisfy the increasingly complex needs of the
client at every level from local to worldwide
o To provide clients with a comprehensive and, when appropriate, integrated
range of marketing services of the highest quality; both
strategically and tactically
o To ensure that each service provided to every client returns added
value
o To grow and maintain companies of such excellence that they provide
the most stimulating career opportunities for talented
professionals in all disciplines
o To provide those professionals with rewards and incentives which
encourage a sense of ownership
o Last but not least, to enhance share owner value
23
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
THE ROLE OF THE PARENT COMPANY
We are increasingly complementing the
professional activities of our individual
operating companies through cross-Group
initiatives and programs which provide greater
value to clients as well as opportunities and
rewards for our people
24
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
[CHART SHOWING REVENUE AND EBIT FIGURES FOR PRO FORMA COMBINED
FINANCIAL INFORMATION FOR WPP AND Y&R]
<TABLE>
<CAPTION>
WPP
---
<S> <C>
Revenue........ $5.2bn
EBIT........... $704m
<CAPTION>
Branding &
Advertising Identity,
& Public Relations Healthcare and
Media Investment Information & & Specialist
Management Consultancy Public Affairs Communications
---------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C>
Revenue......... $2.469bn $679m $606.3m $1.477bn
EBIT............ $384.5m $68.1m $ 70.7m $180.4m
<CAPTION>
New Technology Revenue
- ----------------------
<S> <C>
Wide...... $850m
Narrow.... $140m
</TABLE>
Revenue and EBIT figures are illustrative Pro Forma combined financial
information for WPP and Y&R
25
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION ADVERTISING
[CHART SHOWING COMPANIES, GEOGRAPHICAL SCOPE OF OPERATIONS, WPP'S
OWNERSHIP INTEREST IN _____ COMPANY AFTER CLOSING AND CHAIRPERSON AND CEO]
Ogilvy & J. Walter Thompson Young & Rubicam
Mather Worldwide Company Advertising
(Global) (Global) (Global)
Chairman & CEO: Chairperson: Charlotte Beers Chairman & CEO:
Shelly Lazarus CEO: Chris Jones Ed Vick
(100%) (100%) (100%)
Conquest Asatsu - DK Batey
(Europe) (Japan) (Asia Pacific)
Chairman: Chairman & CEO: Chairman: Ian Batey
Dominique Simonin Masao Inagaki (30%-80%)
CEO: Luca Lindner (20%)
(100%)
DYR Chime
Joint Venture (UK)
(Asia Pacific) Chairman:
Chairman & CEO: Lord Bell
Peter Steigrad (30%)
(49%-67% owned
by Y&R Advertising)
26
<PAGE>
STRATEGY, STRUCTUE AND COMPETITIVE POSISION
ADVERTISING - COMPETITIVE WORLDWIDE RANKING
Worldwide
---------
Ogilvy & Mather 4
J. Walter Thompson 10
Y&R Advertising 11
Source: Advertising Age, 24 April 2000
27
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
MEDIA INVESTMENT MANAGEMENT
[CHART SHOWING MEDIA INVESTMENT MANAGEMENT
COMPANIES AS WPP'S OWNERSHIP INTEREST AFTER CLOSING]
MindShare The Media Edge Tempus Group
- --------- -------------- ------------
Chairman & CEO: Chairman & CEO: (18%)
Irwin Gotlieb Beth Gordon
(100%) (100%)
TMP Portland Outdoor
- --- ----------------
(Europe) (65%)
(50%)
28
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
MEDIA INVESTMENT MANAGEMENT - COMPETITIVE WORLDWIDE RANKING
USA OUTSIDE USA WORLDWIDE
--- ----------- ---------
MindShare 1 1 1
The Media Edge 6 6 4
Source: Advertising Age, 24 April 2000
29
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
INFORMATION & CONSULTANCY
[CHART SHOWING COMPANIES AND WPP OWNERSHIP INTEREST AFTER CLOSING]
Kantar Brand Asset Valuator
- ------ --------------------
Co-Chairmen: BRANDZ
Phil Barnard (non Exec)
Martin Goldfarb
CEO: David Jenkins
(100%)
Research International
(100%)
Millward Brown
(100%)
Center Partners
(100%)
IMRB International
(100%)
Winona Group
(100%)
Goldfarb Consultants
(100%)
Kantar Media Research
- ---------------------
AGB
(35%)
IBOPE Media Information
(31%)
Symmetrical Resources/Simmons
(25%)
BMRB International
(100%)
30
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
INFORMATION & CONSULTANCY - WORLDWIDE COMPETITIVE RANKING
1. ACNielsen (*)
2. Cognizant (*)
3. The Kantar Group
4. Taylor Nelson/Sofres
5. IRI
Source: ESOMAR (*) Syndicated Research
31
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
PUBLIC RELATIONS & PUBLIC AFFAIRS
[CHART SHOWING WPP COMPANIES AFTER CLOSING AND
THEIR CHAIRPERSONS, CEOs AND PRESIDENTS]
Hill and Knowlton
Chairman & CEO:
Howard Paster
Ogilvy Public Relations Worldwide
Chairman & CEO:
Robert Seltzer
Burson-Marsteller
President & CEO:
Chris Komisarjevsky
Cohn & Wolfe
President & CEO:
Stephen Aiello
Robinson Lerer & Montgomery
Chairman & CEO:
Linda Robinson
The Wexler Group
Chairperson Executive Board:
Anne Wexler
Chairman & CEO: Robert Walker
Timmons & Company
Chairman: William E. Timmons
President: Tom C. Korologos
Buchanan Communications
CEO: Richard Oldworth
32
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
PUBLIC RELATIONS & PUBLIC AFFAIRS - COMPETITIVE WORLDWIDE RANKING
Worldwide
---------
Burson-Marsteller 1
Hill and Knowlton 2
Ogilvy Public Relations Worldwide 9
Source: Council of Public Relations
33
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
BRANDING & IDENTITY, HEALTHCARE AND SPECIALIST COMMUNICATIONS
[CHART SHOWING COMPANIES]
Branding, Identity & Corporate Consultancy Direct, Promotional &
- ------------------------------------------ Relationship Marketing
Addison ----------------------
Banner McBride A. Eicoff & Co.
BDG McColl Brierley & Partners
Brand Union Einson Freeman
Brindfors EWA
Bronillard HighCo
Coley Porter Bell impiric
Enterprise IG -------
Landor Associates KnowledgeBase Marketing
- ----------------- -----------------------
BPRI Mando Marketing
SBG Enterprise Oakley Young
JWT Specialized Communications OgilvyOne Worldwide
Scott Stern Perspectives
Horniak & Canny Primary Contact
Springham Anderson Promotional Campaigns Group
RMG International
RTC Direct
The Grass Roots Group
Thompson Connect Worldwide
Strategic Marketing Consulting Sector Marketing Media & Technology Services
- ------------------------------ ----------------- ---------------------------
The Henley Centre The Clever Group
Management Ventures Savatar
MSI Consulting/Charles The Farm
River Strategies
P Four
Planners
Quadra Advisory
34
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
BRANDING & IDENTITY, HEALTHCARE AND SPECIALIST COMMUNICATIONS
[CHART SHOWING SECTOR MARKETING COMPANIES]
Demographic
Marketing Foodservice Healthcare Investor Relations
- --------------------- ----------- ---------- ------------------
The Bravo Group The Food Group The CommonHealth International
The Geppetto Group Shire Hall Presentations
The Intuition Group Sudler & Hennessey
Kang & Lee
- ----------
Mendoza Dillon
MSRC
PR & Sports Marketing Real Estate Retail Technology
- --------------------- ----------- ------ ----------
PRISM Pace Walker Group/CNI AlexanderOgilvy
Blanc & Otus
Smith and Jones
35
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
NEW TECHNOLOGY
[CHART SHOWING NEW TECHNOLOGY COMPANIES. CHAIRPERSON:
ESTHER DYSON. CEO: ERIC SALAMA]
Companies
- ---------
WPP.com
OgilvyInteractive
Concept! GmbH
Digital@JWT
impiric
Y&R2.1
[Business Sectors]
- ------------------
Content
Portal
Loyalty & Rel. Mktg.
Web Dev't
Software
Information
Data Mining
Sports
36
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
NEW TECHNOLOGY
[CHART SHOWING NEW TECHNOLOGY COMPANIES]
Web Data
Development Software Content Portal Mining
- ----------- -------- ------- ------ --------
Syzygy Broad Vision Wired NetKing HyperParallel
United Media Roundarch Spydre KnowledgeBase
-------------
Net Force Marketing
---------
Luminant
- --------
Loyalty & Relationship
Sports Marketing Information
- ------ ---------------------- -----------
TWI Interactive E-Rewards News Edge Corp.
Visible World
Digital Impact
--------------
37
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
WPP.COM
[CHART SHOWING PYRAMID STRUCTURE FROM BOTTOM TO TOP:
DOTCOMS NEEDING HELP WITH THEIR INTERNET STRATEGY; TRADITIONAL CLIENTS
BUILDING CLICKS AND MORTAR OPERATIONS; DOTCOMS BUILDING THEIR BRAND;
AND COMPETITION-DRIVEN INCREASED SPEND ON BRANDING]
38
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
WPP.COM
[CHART SHOWING NAMES OF COMPANIES ON
PYRAMID STRUCTURE FROM BOTTOM TO TOP]
o Dotcoms needing help with their interenet strategy: Freeserve, QXL,
Ariba, Healtheon/WebMD, Medscope, Ameritrade, Streamline, Double
Click, Mypoints, El Sitio, onhealth, WWF, Net Value, Webstakes,
MVP.com, CyberRebate, Wine.com, Harrods
o Traditional clients building clicks and mortar operations: IBM, Lotus,
Ford, Sears, Unilever, SAP, Telefonica, Nestle, Kodak, Merrill Lynch,
China Telcom, Boots, Siemens, UDV, Mastercard, AT&T, Mars, DeBeers,
Lincoln-Mercury, Taco Bell, Sony, Keycorp, Ericsson, Star Alliance,
Swiss Telecom, Xerox
o Dotcoms building their brand: E-trade, Ameritrade, TiVO, WebMD,
Medscape, e.piphhany, Chemdex, Instinet, Excite, Yahoo, iPlanet,
first-e, idealab, Nextcard, BrassRing, Barpoint.com, intuit,
imotors.com, grainger.com, ourhouse.com, priceline.com, mypoints.
o Competition-driven increased spend an branding: IBM, Ford, Merrill,
Amex, Quest, Sony, AT&T, Unilever
39
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
WPP.COM
[CHART SHOWING PYRAMID STRUCTURE FROM BOTTOM TO TOP:
DOTCOMS NEEDING HELP
TO COMPETITION-DRIVEN INCREASED SPEND,
TOTALING $850m IN 1999, AND
DESCRIBED FROM BOTTOM TO TOP AS $140M
IN 1999, WITH BUDGETS FOR 2000
UP 50%+; TYPICALLY 80% OF MARKETING BUDGET
IS OFF-LINE; AND INCREASED
BUDGETS AND SHIFT IN MESSAGES]
40
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
WPP.COM
o "Enable" existing core businesses, organically and by acquisition
(e.g. Ogilvy Interactive, impiric, JWT Specialised, Kantar
Interactive, Hill & Knowlton, Burson-Marsteller)
o Acquire companies with capabilities which are core and superior to our
own (e.g. Alexander, Blanc & Otus, IntelliQuest, KnowledgeBase
Marketing)
o Invest in venture funds (e.g. MTV, WitCapital, Spydre) to keep abreast
of the market and identify companies with whom we may want to partner
and, establish us as the preferred marketing services provider to
appropriate clients
o Invest directly in leading edge companies with whom we want to partner
o Take groupwide approach to key issues e.g. recruitment and retention
where we have set up "cyberfund" and are looking at flotations and
"equity-for-fee" arrangements
o Share best practice and participate in key industry groups e.g. MIT
Media Lab
41
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
CORE INTERACTIVE CAPABILITIES
o PR: AlexanderOgilvy, Blanc and Otus, Hill and Knowlton, OgilvyPR,
Burson-Marsteller
o CRM and e-CRM: impiric, OgilvyInteractive
o Web development: OgilvyInteractive, Syzygy, Concept!, Luminant
o Research: MBInteractive, IntelliQuest, KnowledgeBase Marketing
o On-line media: MindShare, The Media Edge
o Branding: digital@jwt, Y&R 2.1, Landor Associates, Enterprise IG,
Ogilvy
42
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
INVESTMENTS VIA MEDIA TECHNOLOGY VENTURES
PARTNERS FUNDED BY MEDIA TECHNOLOGY VENTURES
- -------- -----------------------------------
American Express Infogear (internet phone)
Dow Jones Protozoa (web-based animation)
Comcast Virage (database search technology)
Diageo Pensare (web based education)
Fujitsu Medscape (healthcare portal)
Hearst eveo (digital entertainment)
JPMorgan Quokka (digital sports)
Mattel Sandpiper (content distribution)
M&S Bizrate (online e-commerce research)
MediaOne Trading Edge (broker/dealer)
Motorola iBEAM (satellite based network)
Siemens Talk City (community/chat)
Sun Microsystems Vitessa (e-commerce infrastructure)
Telecom Italia eHow (consumer portal)
Thomson/RCA COBALTcard (internet payment)
WPP Mergent Systems (e-commerce application)
43
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
DIRECT MINORITY INVESTMENTS
o Internet research: Lightspeed, Red Sheriff, Harris Interactive,
CyberDialogue
o e-CRM: iWeb, Mediaplex, Imagine, Visible World, Digital convergence,
Naviant, Digital Impact
o Applications: Intraspect (knowledge management), emotion (digital
asset management), Gamut Interactive
o Services: Metapack, Steampipe, Roundarch
o Content: TWIi, NetKing, BigWords
44
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
WE CONTINUE TO FOCUS ON OUR KEY OBJECTIVES
o Improving operating margins
o Increasing flexibility in the cost base
o Using free cash flow to enhance share owner value
o Developing the role of the parent company
o Emphasising revenue growth more as margins improve
o Improving the creative capabilities and reputation of all our
businesses
45
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
FOUR YEAR FINANCIAL RECORD - EBIT AND EBIT MARGINS
[BAR CHARTING SHOWING COMBINED EBIT AND EBIT MARGINS
OF WPP AND Y&R. Y&R FIGURES EXCLUDE THE IMPACT OF EXCEPTIONAL
CHARGES AND GOODWILL AMORTISATION]
1996 1997 1998 1999
---- ---- ---- ----
EBIT ((pound)M)........ 243 286 355 435
EBIT margins........... 9.8% 11.0% 12.5% 13.4%
2002 Target (15.5)
2001 Target (15.0)
2000 Target (14.0)
46
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
FINANCIAL MODEL - 2000 TO 2002
o Organic revenue growth of 5-10%
o Margin growth in line with objectives including fifth plan
o Operating profit growth of 10-15%
o Incremental profit growth from acquisitions of 5-10%
o Overall growth in EPS of 15-20%
47
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
INCREASING FLEXIBILITY IN THE COST BASE
o We continue to focus on a more flexible cost structure in three key
areas:
- Staff c. 50% of revenue
- Property c. 10% of revenue
- Bought in services c. 30% of revenue
o Increased flexibility in all areas will be important to combat any
economic slowdown
48
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
INCREASING FLEXIBILITY IN THE COST BASE - CHANGE IN VARIABLE COSTS
[BAR CHART SHOWING VARIABLE STAFF COSTS
AS A PERCENT OF STAFF COSTS AND
VARIABLE STAFF COSTS AS A PERCENT OF REVENUE]
Y&R
1992 1999 1999
---- ---- ----
Variable Staff costs as a % of Staff costs......... 7.9 11.5 5.8*
Variable Staff costs as a % of Revenue............. 4.3 5.8 3.3*
- ---------------------------
* Excludes freelance costs
49
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
USING FREE CASHFLOW TO ENHANCE SHAREHOLDER VALUE - ACQUISITIONS
o Continued focus on strategic acquisitions - a number were completed in
1999 and should continue in 2000
o Major focus continues to be on Information and Consultancy and the
faster growing sectors within Branding & Identity, Healthcare and
Specialist Communications
o Acquisitions in advertising used to address specific client or local
agency needs
o Continue to find attractive opportunities particularly outside the US
50
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
ACQUISITIONS - ADVERTISING
OGILVY & MATHER J. WALTER THOMPSON Y&R ADV. MINDSHARE
- --------------- ------------------ -------- ---------
Mark Line, Spain Soares Gache, Argentina DYR, Asia Portland, UK
Office, Netherlands Grill & Gull, Austria Rainey, Kelly, SMK, Sweden
Herald, Italy Campbell,
Dazai, USA Roalfe, UK
SCPF, Spain
KSM, Netherlands
RADA, UK
Tamir Cohen, Israel
International Marketing
Concepts, Canada
TMI, Middle East
51
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
ACQUISITIONS - INFORMATION AND CONSULTANCY
Research
International Millward Brown Kantar
- ------------- -------------- ------
SIFO, Sweden Computerised Media Center Partners, USA
Services, UK Steve Perry Consulting, UK
IntelliQuest(R) Information SMG/KRC, Poland
Group, USA
Diagnostic Research
International, UK
52
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
ACQUISITIONS - PUBLIC RELATIONS AND PUBLIC AFFAIRS
o Alexander, B/W/R, Enterainment and Feinstein Kean in the US, and
Sector and Magellan in the UK for Ogilvy Public Relations Worldwide
o Blanc & Otus, Technology PR in the US, Captiva SA in Chile, Premio in
Mexico and Hiller Wust in Germany and Feedback in Poland for Hill and
Knowlton
o Robinson Lerer & Montgomery for Y&R Inc.
53
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
ACQUISITIONS - SPECIALIST COMMUNICATIONS
PROMOTION DIRECT, RELATIONSHIP SECTOR MARKETING
- --------- -------------------- ----------------
Mark Line, Spain & INTERACTIVE Technology Ethnic
------------- Dazai, US MSRC, US
P Four, UK Brierley, US
DataSearch, Brazil Sports
AUDIO VISUAL Herald, Italy Prism, UK KBM
- ------------ HighCo, France ---
Tyrell, UK MTEP, US Direct Impact
International Mediaquest, France Healthcare -------------
Presentations, UK NoHo, UK Shire Hall, UK Banner
------
IDENTITY Perspectives, UK
- --------
BPRI, UK GoDirect, Canada
Brand Union, UK
Brindfors, Sweden
Horniak & Canny, Australia
Springham Anderson, Singapore
54
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
ACQUISITIONS - INCREASED EQUITY INTERESTS IN ASSOCIATES
OGILVY & MATHER J. WALTER THOMPSON OTHER MEDIA
- --------------- ------------------ -----------
O & M Portugal France Direct Portland Outdoor
France BF&A Advertising, UK
Grill & Gull, Austria
Kantar
Credit Call Research, UK
55
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
RECENT INTERNET DIRECT INVESTMENTS
WPP Y&R
--- ---
COMPANY SECTOR COMPANY SECTOR
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Syzygy Web development KnowledgeBase Marketing Database/CRM
Concept! Web development Luminant e-Commerce
Lightspeed Internet panel Digital Convergence Media convergence
NetKing Portal Mediaplex Internet services
e-Rewards Loyalty Harris Interactive Internet research
TWIi B2B sports content Cyber Dialogue Internet research
Intraspect Knowledge Management Naviant Internet marketing
Broadvision e-Commerce application IWEb Targeted advertising
Visible World Video personalisation Streampipe Internet boardcasting
Big Words College based e-Commerce Emotion Digital media
Red Sheriff Internet research management
Metapack e-Fullfilment Gamut Interactive TV
Roundarch e-Commerce consulting
Imagine e-CRM
</TABLE>
56
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
DEVELOPING THE ROLE OF THE PARENT COMPANY - INCENTIVE COMPENSATION
STRATEGY
1 Short-Term Incentive Plan
o For annual performance in 5 key areas:
WPP Target
--- ------
1 Operating profit growth 15%
2 Margin improvement 1%
3 Staff cost to revenue improvement 0.6%
4 Revenue growth and revenue conversion above industry
average,
5 Strategic and non-financial objectives 25-33% revenue
conversion
Y&R
---
1 Operating profit improvement 20% minimum
2 Revenue growth Specific to
sector
3 Personal goals
o Approximately 4,500 or 10% of our people participate
o $129 million provided in 1999
57
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
DEVELOPING THE ROLE OF THE PARENT COMPANY - INCENTIVE COMPENSATION
STRATEGY
2 Long-Term Incentive Plan
o Phantom Plans for each Operating Company
- 3-year performance periods
- based on operating profit and margin improvement
- $16m payable in 1997-1999
- 50% in cash and 50% in 2 year restricted stock
- Y&R Inc. existing 2000-2002 plan based on free cashflow of 8%
of revenue reintroduced based on WPP style performance criteria
3 Stock Option Programs - extended to include Y&R executives
- 100 Club for senior executives
- 400 Club for next generation of leadership
- High Potential 500 Club for rising stars
- Worldwide stock ownership program
58
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
DEVELOPING THE ROLE OF THE PARENT COMPANY - INCENTIVE COMPENSATION
STRATEGY
4 Leadership Equity Acquisition Program (LEAP)
o Now 22 key executives (including 7 Y&R) will invest $30 million,
one-third in cash and two-thirds in committed equity in 3.5m WPP
ordinary shares
o Matching shares will be granted in 2004 on the basis of relative
shareholder return against a comparator group of 14 companies
o If WPP ranks 1st or 2nd a 5x match will be awarded
o At the median level (8th position) a 2x match will be awarded
o Below median a 1/2x match will be awarded for retention purposes
o Cost of program shown on income statement (some shares purchased by
ESOP at 370p per share)
59
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
DEVELOPING THE ROLE OF THE PARENT COMPANY - KEY AREAS FOR GROUP
CO-OPERATION
o Media Investment o Internal Communications
Management
o Retailing
o Healthcare
o Hi-Tech
o New Technologies
o Financial Services
o Emerging Markets
o Entertainment & Media
o Privatisation
60
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
EMPHASIZE REVENUE GROWTH MORE AS MARGINS IMPROVE
o Continue to focus on delivering above average revenue
growth by:
- Expanding networks to take advantage of faster growing
geographical markets
- Re-enforcing competitive advantage in segments where growth is
expected to remain higher, e.g. Market Research, Direct,
Interactive, Hi-tech, Retail, Healthcare, etc.
- Taking advantage of consolidation trends to gain market share
61
<PAGE>
STRATEGY, STRUCTURE AND COMPETITIVE POSITION
IMPROVING THE CREATIVE CAPABILITIES AND REPUTATION OF ALL OUR BUSINESSES
o By placing greater emphasis on recruitment
o By recognizing creative success tangibly and intangibly
o By acquiring highly regarded creative businesses
o By placing greater emphasis on awards
62
<PAGE>
WPP
4 WPP and Y&R 1999 and Q1 2000
63
<PAGE>
WPP AND Y&R 1999 AND Q1 2000
RESULTS FOR 1999 - PROGRESS CONTINUES
o Revenues up 11.3% on a reported basis with acquisitions accounting
for approximately 3-4%
o PBIT up 27% on a reported basis with acquisitions accounting for
approximately 10%
o Margins up 0.9% to 13.4% from 12.5%
o Full year dividend of 2.56p per share
o Share repurchases of $175m and cash acquisition payments of $555m
o Net new business billings of over $4.9 billion
64
<PAGE>
WPP AND Y&R 1999 AND Q1 2000
ILLUSTRATIVE PRO FORMA COMBINED FINANCIAL INFORMATION
PROFIT & LOSS ACCOUNT ($M)
Y&R Y&R COMBINED
YEAR ENDED DEC 1999 WPP AS REPORTED UK GAAP UK GAAP
Revenues 3,514.8 1,717.2 1,717.2 5,232.0
EBITDA 538.8 279.3(a) 286.8(a)(b) 825.6
EBIT 470.5 208.1(a) 233.2(a)(b)(c) 703.7
EBIT margin % 13.4% 12.1% 13.6% 13.4%
(a) Excludes other income of $85m
(b) Adjusted to include $7.5m of equity income, gross of
tax at assumed 40% rate
(c) Adjusted to eliminate $17.6m goodwill amortisation
65
<PAGE>
<TABLE>
<CAPTION>
WPP AND Y&R 1999 AND Q1 2000
ILLUSTRATIVE PRO FORMA COMBINED FINANCIAL INFORMATION
PROFIT & LOSS ACCOUNT BY DISCIPLINE ($M)
YEAR ENDED DEC 1999 WPP Y&R COMBINED
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
- --------
Advertising, Media Investment Management 1,639.0 830.3 2,469.3
Information & Consultancy 679.0 - 679.0
Public Relations & Public Affairs 289.4 316.9 606.3
Branding and Identity, Healthcare & Specialist Comm. 907.4 570.0 1,477.4
-------------------------------
3,514.8 1,717.2 5,232.0
-------------------------------
UK GAAP EBIT
- ------------
Advertising, Media Investment Management 252.2 132.3 384.5
Information & Consultancy 68.1 - 68.1
Public Relations & Public Affairs 38.7 32.0 70.7
Branding and Identity, Healthcare & Specialist Comm. 111.5 68.9 180.4
-------------------------------
470.5 233.2 703.7
-------------------------------
66
</TABLE>
<PAGE>
WPP AND Y&R 1999 AND Q1 2000
PROFILE - BY DISCIPLINE
<TABLE>
<CAPTION>
[PIE CHARTS OF THE 4 SECTORS AS: ADVERTISING,
MEDIA INVESTMENT MANAGEMENT;
INFORMATION & CONSULTANCY;
PUBLIC RELATIONS & PUBLIC AFFAIRS; BRANDING & IDENTITY,
HEALTHCARE AND SPECIALIST COMMUNICATIONS]
WPP NET Y&R NET COMBINED NET
REVENUES REVENUES REVENUES
$3.5bn $1.7bn $5.3bn
------- -------- -----------
<S> <C> <C> <C>
Advertising, Media Investment Management.............................. 48% 47% 46%
Information & Consultancy............................................. 19% -- 13%
Public Relations & Public Affairs..................................... 8% 18% 12%
Branding & Identity, Healthcare and Specialist Communications......... 25% 35% 29%
</TABLE>
67
<PAGE>
<TABLE>
<CAPTION>
WPP AND Y&R 1999 AND Q1 2000
ILLUSTRATIVE PRO FORMA COMBINED FINANCIAL INFORMATION
PROFIT & LOSS ACCOUNT BY GEOGRAPHY ($M)
YEAR ENDED DEC 1999 WPP Y&R COMBINED
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
- --------
North America 1,543.3 937.7 2,481.0
UK 703.3 153.3 856.6
Continental Europe 689.5 429.0 1,118.5
Asia Pacific, Latin America, Africa & Middle East 578.7 197.2 775.9
---------------------------------
3,514.8 1,717.2 5,232.0
---------------------------------
UK GAAP EBIT
- ------------
North America 229.3 151.8 381.1
UK 83.3 8.0 91.3
Continental Europe 90.3 51.6 141.9
Asia Pacific, Latin America, Africa & Middle East 67.6 21.8 89.4
---------------------------------
470.5 233.2 703.7
---------------------------------
</TABLE>
68
<PAGE>
<TABLE>
<CAPTION>
WPP AND Y&R 1999 AND Q1 2000
PROFILE - BY GEOGRAPHY
[PIE CHARTS OF THE 4 SECTORS AS: NORTH AMERICA; UK; CONTINENTAL EUROPE;
ASIA PACIFIC, LATIN AMERICA, AFRICA & MIDDLE EAST]
WPP NET Y&R NET COMBINED NET
REVENUES REVENUES REVENUES
$3.5bn $1.7bn $5.3bn
------- -------- -----------
<S> <C> <C> <C>
North America............................................. 43% 52% 47%
UK........................................................ 20% 12% 17%
Continental Europe........................................ 20% 24% 21%
Asia Pacific, Latin America, Africa & Middle East......... 17% 12% 15%
</TABLE>
69
<PAGE>
WPP AND Y&R 1999 AND Q1 2000
ILLUSTRATIVE PRO FORMA COMBINED FINANCIAL INFORMATION
CASHFLOW ($M)
Y&R COMBINED
YEAR ENDED DEC 1999 WPP UK GAAP UK GAAP
- -----------------------------------------------------------------------
Operating profit 426 226 652
Depreciation 68 54 122
Interest paid (53) (15) (68)
Tax paid (94) (30) (124)
Other cashflows 35 40 75
-- -- --
NET CASH GENERATION 382 275 657
- -----------------------------------------------------------------------
70
<PAGE>
WPP AND Y&R 1999 AND Q1 2000
ILLUSTRATIVE PRO FORMA COMBINED FINANCIAL INFORMATION
CASHFLOW ($M)
Y&R COMBINED
YEAR ENDED DEC 1999 WPP UK GAAP UK GAAP
- -----------------------------------------------------------------------
Net Cash Generation 382 275 657
Capital expenditure (105) (86) (191)
---- ---- -----
FREE CASH FLOW 277 189 466
Acquisition payments (339) (216) (555)
Shares Repurchases (29) (146) (175)
Dividends (34) (5) (39)
---- --- ---
NET CASH OUTFLOW (125) (178) (303)
- -----------------------------------------------------------------------
71
<PAGE>
WPP AND Y&R 1999 AND Q1 2000
SHARE BUY BACKS
WPP Y&R COMBINED
--- --- --------
1997 $46m 2.0% - - $46m
1998 $82m 2.0% $51m 2.1% $133m
1999 $29m 0.5% $146m 3.8% $175m
2000 YTD $32m 0.25% $80m 2.0% $112m
2001 Forecast 1%-2% $120-$220m
Both companies have been active in share buy back programs
This will continue in 2001 and based on a pro forma share count of
1.15 bilion shares, 1% - 2% share repurchase program is expected
72
<PAGE>
WPP AND Y&R 1999 AND Q1 2000
ILLUSTRATIVE PRO FORMA COMBINED FINANCIAL INFORMATION
BALANCE SHEET ($M)
Y&R UK
Y&R GAAP COMBINED
WPP US GAAP ADJUSTMENTS UK GAAP
- -----------------------------------------------------------------------------
Tangible Assets 318.3 194.6 - 512.9
Intangible Assets(a) 1,230.3 353.9 (353.9) 1,230.3
Investments(b) 577.5 402.6 (237.6) 742.5
Other Long-Term Assets(c) - 89.1 (89.1) -
---------------------------------------------
FIXED ASSETS 2,126.1 1,040.2 (680.6) 2,485.7
Current Assets(d) 3,062.5 1,374.1 3.9 4,440.5
Current Liabilities (3,475.9) (1,699,5) - (5,175.4)
Long-Term Liabilities (1,184.0) (276.4) - (1,460.4)
----------------------------------------------
NET ASSETS 528.7 438.4 (676.7) 290.4
----------------------------------------------
NET FUNDS/(DEBT)(e) 148.6 (14.8) (88.6) 45.2
- -----------------------------------------------------------------------------
(a) Adjusted to eliminate $353.9m goodwill
(b) Adjusted to reverse a $237.6m unrealised gain on marketable
securities gross of tax
(c) Adjusted to eliminate $34.9m long term deferred tax assets and to
reclassify $54.2m accounts receivable [GREATER THAN] 1 year from long
term assets to current assets
(d) Adjusted to eliminate $50.3m current deferred tax assets and to
reclassify $54.2m accounts receivable [GREATER THAN] 1 year from long
term assets to current assets
(e) Adjusted to reclassify $88.6m of overdrafts from accounts payable
73
<PAGE>
WPP AND Y&R 1999 AND Q1 2000
RESULTS FOR 1999 - WPP REVENUE GROWTH BY COUNTRY
REVENUE GROWTH COUNTRIES
- -------------- ---------
15%+ Austria, Canada, Greece, Mexico, Spain, USA
10-15% Belgium, France, China, Eastern Europe, Germany,
India, Japan, Philippines, Thailand, UK, Venezuela
5-10% Italy, Taiwan
[LESS THAN] 5% Argentina, Australia*, Brazil**, Hong Kong,
Netherlands, Portugal, Singapore, Switzerland
Notes
- -----
* due to de-consolidation
** reported dollar after major devaluation
74
<PAGE>
WPP AND Y&R 1999 AND Q1 2000
RESULTS FOR 1999 - Y&R REVENUE GROWTH BY COUNTRY
REVENUE GROWTH COUNTRIES
- -------------- ---------
20%+ Canada, Czech Republic, France, Portugal, Spain,
Turkey
15-20% Austria, Japan, Mexico, Singapore
10-15% Hungary, Poland, USA
5-10% Australia & New Zealand, Belgium, Germany, Italy,
Netherlands, UK
[LESS THAN] 5% Switzerland
75
<PAGE>
WPP AND Y&R 1999 AND Q1 2000
RESULTS FOR 1999 - NET NEW BUSINESS WINS IN 1999
Agency Account Office Billings($m)
- ------------------------------------------------------------------------------
MindShare Unilever, Germany Germany 330
MindShare Telecom Italia, TIM Italy 300
JWT UDV (Smirnoff, Malibu, Baileys) London 200
O&M BP - Amoco London 200
The Media Edge Campbells (AOR) New York 200
WINS
MindShare Unilever, Italy Italy 150
JWT Kimberly-Clark Worldwide 150
O&M SAP Worldwide 100
O&M Novartis (Gerber) New York 100
Y&R AT&T New York 100
Y&R Barilla (Foods) Italy 80
Y&R Migros Switzerland 75
(All billings figures are based on trade press estimates, where available)
76
<PAGE>
WPP AND Y&R 1999 AND Q1 2000
RESULTS FOR 1999 - NET NEW BUSINESS WINS IN 1999
Agency Account Office Billings($m)
- ------------------------------------------------------------------------------
O&M Novartis (Gerber) New York 100
O&M Miller Lite New York 95
O&M BAT UK 80
O&M Mattel New York 75
WINS
AGB Australian TV ratings Italy 60
JWT Miller Draft Chicago 60
O&M Wings Alliance New York 50
JWT Qwest New York 50
(All billings figures are based on trade press estimates, where available)
77
<PAGE>
WPP AND Y&R 1999 AND Q1 2000
RESULTS FOR 1999 - NET NEW BUSINESS WINS IN 1999
Agency Account Office Billings($m)
- ------------------------------------------------------------------------------
OTHER
-----
Enterprise IG Ford New York n/a
Hill and Knowlton Compaq US n/a
WINS
Hill and Knowlton Johnson & Johnson (Benecol) EMEA n/a
OgilvyOne FedEx Toronto n/a
Research Shell London n/a
International
Y&R USPS New York 100
O&M Starwood/Sheraton Worldwide 65
Y&R Clorox New York 55
Y&R Ford Brazil 50
LOSSES
JWT Barclays London 30
JWT Warner Lambert London 30
Intuition Bristol Myers-Squibb (Clairol) New York 20
(All billings figures are based on trade press estimates, where available)
78
<PAGE>
WPP AND Y&R Q1 2000
ILLUSTRATIVE PRO FORMA COMBINED FINANCIAL INFORMATION
FIRST QUARTER REVENUE BY DISCIPLINE ($M)
2000 1999 GROWTH
Quarter ended 31 March $M $M %
- -----------------------------------------------------------------------------
REVENUES
- --------
Advertising, Media Investment Management 608 525 15.8
Information & Consultancy 184 143 28.7
Public Relations & Public Affairs 177 132 34.1
Branding and Identity, Healthcare &
Specialist Communications 379 319 18.8
------------------------------
1,348 1,119 20.5
------------------------------
79
<PAGE>
WPP AND Y&R Q1 2000
ILLUSTRATIVE PRO FORMA COMBINED FINANCIAL INFORMATION
FIRST QUARTER REVENUE BY GEOGRAPHY ($M)
2000 1999 GROWTH
Quarter ended 31 March $M $M %
- -----------------------------------------------------------------------------
REVENUES
- --------
North America 666 565 17.9
Continental Europe 490 405 21.0
Asia Pacific, Latin America,
Africa & Middle East 192 149 28.9
------------------------------
1,348 1,119 20.5
------------------------------
80
<PAGE>
WPP
5 Transaction
81
<PAGE>
TRANSACTION
OVERVIEW
o Transaction - [RIGHT ARROW] All stock merger with Young & Rubicam
o Consideration - [RIGHT ARROW] 0.835 WPP ADRs or 4.175 WPP common
shares per Y&R share
o Offer value - [RIGHT ARROW] $4.7 billion (based on 89m FD shares)
o Ownership - [RIGHT ARROW] 2/3 WPP 1/3 Y&R
o Board - [RIGHT ARROW] 11 WPP / 5 Y&R
o Tax - [RIGHT ARROW] Tax-free to Y&R shareholders
o Closing - [RIGHT ARROW] Expected fall 2000
82
<PAGE>
TRANSACTION
MANAGEMENT TEAM
o Tom Bell to be Chairman of Young & Rubicam Inc. for transition
o Mike Dolan to be Chief Executive Officer of Young & Rubicam Inc.
o Ed Vick to be Chairman and CEO of Y&R Advertising
o Four person Transition Committee chaired by Tom Bell and including
Martin Sorrell, Michael Dolan and Paul Richardson
o 11 senior operating heads of Y&R have signed new employment
agreements (relacing change of control agreements), additional
employees expected to sign before closing
o 17 key Y&R employees signed lock-ups over 5m (almost 6% of FD
share capital) of their 8m share equivalents. Additional commitments
expected before closing
83
<PAGE>
TRANSACTION
SHARE FLOW BACK
o Supply-side:
- - Some passive selling at closing as Y&R comes out of S&P 500
- - WPP stock well known by US fund managers
- Between 30% and 40% of WPP stock already owned by US institutions
- Some overlap between Y&R and WPP shareholder bases
- - Significant management lock-up will reduce flow back:
- Further employee holders to be signed up pre-closing - total
employee ownership 23m share equivalents (26% of fully diluted)
84
<PAGE>
TRANSACTION
SHARE FLOW BACK
o Demand-side:
- At closing WPP weighting will increase in FTSE-100, FTSE-All
Share, MSCI and FTSE-Eurotop 300 indices, generating the
demand to counterbalance US index selling
- In addition, signficant active demand expected in UK and
Continental Europe as investors maintain or increase weightings
o Investors able to select ADRs or ordinary shares at no cost to themselves
85
<PAGE>
TRANSACTION
TOP 20 SHARE OWNERS
WPP Y&R
--- ---
1 LeggMason 5.3% Fidelity* 7.5%
2 Asatsu 4.0% Putnam Investments* 4.9%
3 ESOP 3.7% Oppenheimer* 3.4%
4 Barclays/BZW 2.8% Capital Guardian Trust 2.7%
5 Fidelity 2.8% American Century* 2.2%
6 Putnam Investments 2.7% AIM Management Group* 2.1%
7 Standard Life 2.5% Dresdner RCM Global 1.7%
8 Friends Provident 2.4% MFS 1.7%
9 Legal & General 2.3% The Vanguard Group 1.5%
10 Clerical Medical 2.3% State Street* 1.5%
11 Henderson AMP 2.1% Fred Alger Management 1.5%
12 Morgan Stanley 2.0% MSDW Advisors* 1.5%
13 Chase Manhattan 2.0% John Bristol & Co 1.4%
14 CGU 1.7% US Trust Co 1.3%
15 Norwich Union 1.5% TIAA Cref* 1.2%
16 Royal & Sun Alliance 1.3% Amex Financial Services 1.2%
17 Citibank 1.1% Smith Barney Asset Mgmnt 1.0%
18 Unibank 1.0% Invesco* 0.9%
19 Co-operative Insurance 1.0% Prudential Investments 0.7%
20 State Street 1.0% Bel Air Investment Advisors 0.7%
* Shareholder of both WPP and Y&R
86
<PAGE>
WPP
6 Conclusions
87
<PAGE>
CONCLUSIONS
This transaction creates the leading communications services company in the
world: with revenues of over $5 billion and a combined operating cashflow
of over $650 million:
o With a well-balanced portfolio of several leading brands in each
of the service areas of advertising, media investment management,
information and consultancy (market research), public relations
and public affairs, branding and identity, healthcare and
specialist communications (including direct and interactive)
o with a well-balanced geographic portfolio in North America,
Europe, Asia Pacific and Latin America
o with a well-balanced client portfolio in both the traditional and
new economies
o with scope for significant cost synergies of over $30 million and
an opportunity to reach WPP's operating margin objective of 15%
one year earlier in 2001
o with scope for additional revenue opportunities through the new
group's existing and potential client base
88
<PAGE>
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR
STATEMENT
These materials include "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements include financial projections and estimates and their underlying
assumptions; statements regarding plans, objectives and expectations with
respect to future operations, products and services; and statements
regarding future performance.
The forward-looking statements contained in these materials are
subject to various risks and uncertainties, many of which are difficult to
predict and generally beyond the control of WPP Group plc (WPP) and Young &
Rubicam Inc. (Y&R), that could cause actual results to differ materially
from those expressed in, or implied by, the forward- looking statements.
These risks and uncertainties include those discussed or identified in the
public filings with the U.S. Securities and Exchange Commission (SEC) made
by WPP and Y&R risks and uncertainties with respect to the parties'
expectations regarding the timing, completion and tax treatment of the
merger, the value of the merger consideration, strategic opportunities,
growth, expansion and sales opportunities, market positions, the conduct of
worldwide operations, earnings accretion, cost savings, earnings targets,
revenue enhancements, synergies, economies of sale, efficiencies and other
benefits anticipated from the transaction, retention of employees, loss of
business as a result of client conflicts and other factors.
89
<PAGE>
BASIS OF PREPARATION OF FINANCIAL INFORMATION
All adjustments referred to in this appendix have been made solely on
the basis of publicly available information and the assumptions listed
above. No other adjustments have been made to present the Y&R
financisi information on a basis consistent with the accounting
policies and practices of WPP, nor to reflect the fair value of the
assets and liabilities of Y&R to be acquired by WPP. No assurance can
be given as to the fair presentation of the illustrative pro forma
combined financial information nor that all adjustments required have
been identified or properly calculated. Prior to shareholder votes on
the transaction Pro Forma financial information will be prepared as
required by both the UK Listing Authority and the Securities and
Exchange Commission which could be materially different from the
illustrative pro forma combined financial information presented above.
The presentation of the illustrative pro forma combined financial
information is based upon the simple underlying assumptions listed
above and is not necessarily indicative of the results or the
financisl position that would have been attained had the combined
entities actually operated as a Group for the period presented.
(1) Illustrative pro forma combined pound sterling financial information
has been prepared by aggregating the WPP sterling financial
information and the Y&R dollar financial information (adjusted as
described below translating the profit and loss account and cash flow
information at the average rate for the year ended 31 December 1999 of
(pound)1:$1.6178 and translating the balance sheet information at the
year end rate 31 December 1999 of(pound)l:$1.6182.
(2) WPP figures are sourced from the unaudited preliminary announcement of
results for the year to 31 December 1999 dated February 16, 2000
prepared in accordance with United Kingdom Generally Accepted
Accounting Principles ("UK GAAP").
(3) Except as noted below Y&R figures are sourced from the audited 10-K
filed on March 30, 2000 prepared in accordance with United States
Generally Accepted Accounting Principles ("US GAAP"). The results for
the year to 31 December 1999 do not constitute statutory accounts.
Statutory accounts for the year ended 31 December 1999 will be
delivered to the Registrar of Companies in England & Wales in due
course.
(4) Y&R segmental information and certain cash flow information presented
has not been previously published and has been sourced from
information provided by Y&R.
(5) In the preparation of the illustrative pro forma combined profit and
loss account information the following adjustments have been made in
an attempt to conform Y&R US GAAP financial information to UK GAAP:
o Goodwill amortization ($17.6m/(pound) 10.9m in year ended 31
December 1999) has been eliminated on the basis that the
goodwill is assumed to have an indefinite life and hence is
not amortized but is subject to an annual impairment
review;
o Income from associate investments ($7.5m/(pound)4.6m in
year ended 31 December 1999) has been included within EBIT
in line with UK GAAP(gross of tax at an assumed rate of
40%.);
o Y&R EBIT has been adjusted to exclude exceptional income of
$85m (pound 52.2m) arising on the disposal of fixed asset
investments.
(6) Illustrative pro forms combined US dollar financial information has
been prepared by aggregating the Y&R dollar financial information
(adjusted as described in the notes above) and the WPP sterling
financial information, translating the profit and loss account and
cash flow information at the average rate for the year ended 31
December 1999 of (pound)1:$1.6178 and translating the balance sheet
information at the year end rate 31 December 1999 of (pound)
1:$l.6182.
(7) In the preparation of the illustrative pro forma combined balance
sheet the following adjustments have been made in an attempt to
conform Y&R US GAAP financial information to UK GAAP:
o Deferred sax assets have been eliminated as it is assumed
that under UK GAAP recognition criteria they would not be
recorded;
o Marketable securities held on a long term basis are stated
at cost by elimination of the revaluation of such securities;
o Goodwill recorded within Y&R's balance sheet has been
eliminated as this would be subsumed within WPP's goodwill
arising on the acquisition of Y&R. No recognition has been
given to goodwill arising on the acquisition of Y&R by WPP;
o Various balance sheet reclassificasions have been made to
conform the US GAAP reporting format to UK GAAP reporting
format. These include the reclassification of overdrafts
which are included within trade creditors under Y&R's US
GAAP format, whuich increases net debt.
(8) The transaction will be accounted for using purchase accounting and
additional goodwill will arise on the WPP balance sheet. The amount
will be established as at closing of the transaction. Based on recent
stock prices and the assumption that 31 December 1999 book net assets
of Y&R equal fair value it would be in the range of (pound)3 to
(pound)4 billion.
(9) In the preparation of the illustrative pro forma combined cashflow
information the Y&R cash flow information has been conformed to a UK
GAAP presentation format. The cash flows presented do not include
working capital movements.
90
<PAGE>
INVESTOR INFORMATION
WPP and Y&R will be filing a proxy statement/prospectus and other relevant
documents concerning the transaction with the SEC. INVESTORS ARE URGED TO
READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY
OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Investors will be able to obtain the documents free
of charge at the SEC's website (www.sec.gov). In addition, documents filed
with the SEC by WPP may be obtained free of charge by contacting WPP c/o WPP
Group USA, Inc., Worldwide Plaza, 309 West 49th Street, New York, NY
10019-7399, (212) 632-2200. Documents filed with the SEC by Y&R will be
available free of charge by contacting Young & Rubicam Inc., Legal
Department, 285 Madison Avenue, New York, NY 10017, (212) 210-3000.
INVESTORS SHOULD READ THE PROXY STATEMENT/PROSPECITUS CAREFULLY WHEN IT
BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS.
Information regarding the identity of the persons who may, under SEC rules,
be deemed to be participants in the solicitation of stockholders of Y&R in
connection with the merger, and their interests in the solicitation, are
set forth in a schedule 14A filed on the date of this press release with
the SEC.
91
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WPP
MAY 2000
92
