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Company Report

& Profile

WRSX
GLOBAL ADVERTISING & MARKETING
COMMUNICATIONS

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WRSX
GLOBAL ADVERTISING &
MARKETING COMMUNICATIONS

CONTENTS: (click to view page)


Company History
Mission Statement
Company Timeline
Board of Directors
Corporate Governance
Group Structure
Operating Units
Financial Performance Measures
Share Price / Market Capitalisation
Financials
Non-financial Performance Measures
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WRSX Company History / 1
Global Advertising

Introduction:
WRSX (Waldron Roux Silberstein Xao) was founded 15 years ago with the merger of
three agencies: a long-established London-based advertising agency, WWMV and new
partner agencies in New York (Silberstein & Lord) and Paris (Roux Toussaint Berthe).

The London agency:


Westcott Waldron Morrissey Vickers (WWMV) was one of the new-wave creative London
agencies of the late 1970’s but as three of the original founding partners Westcott,
Morrissey and Vickers cashed-out, the last remaining founding partner, Juliette Waldron,
saw the opportunity to take advantage of global opportunities and grow the agency
network by merging with the New York agency Silberstein & Lord and the Paris agency
Roux, Toussaint, Berthe.

The New York agency:


Silberstein & Lord is on Madison Avenue and Lloyd Silberstein is both president and
creative director. He was described in Ad Age as “one of those old-style advertising
mavens who would go onto the ledge of his 50th floor office to fight for a creative idea”.
The agency dates back to the 1980’s when it established its reputation as a highly
creative boutique and attracted some of the top Fortune 500 companies as clients. Its
reputation was set in stone when it won a slice of the General Motors automotive
business. Robert Lord, the second founding partner and previously director of client
services, left the agency due to failing health, leaving Lloyd Silberstein in charge. A large
personality, Lloyd Silberstein has the reputation of not being able to keep his top staff.
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WRSX Company History / 2
Global Advertising

The Paris agency:


Roux, Toussaint, Berthe (or RTB as they were known) is based in Paris. Raphael Roux,
who had a highly successful career with a major cosmetics firm as international
marketing director teamed up with two of the agency team who serviced the company’s
business: Serge Toussaint and Philippe Berthe. RTB soon had an enviable reputation and
produced highly creative award-winning work in the French tradition of “risque
iconoclasm” as it was referred to in an advertising survey in Le Monde.

The merged new agency – WRSX / WaldronRouxSilbersteinXao:


These three companies merged 15 years ago and decided upon the name of WRSX /
WaldronRouxSilbersteinXao, which a majority of the founding partners believed reflected
the size and reputation of the merging companies. The founding partners and
shareholders consisted of: Juliette Waldron of WWMV, Lloyd Silberstein of Silberstein &
Lord, Raphael Roux of Roux, Toussaint, Berthe and Victor Xao, a senior director in the
London agency. Their stated strategy at the time was:

Creative quality and a range of advertising and marketing


communications services to support targeted clients globally.

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WRSX Company History / 3
Global Advertising

WRSX LSE Listing

WRSX went public through an Initial Public Offering 8 years ago on the London Stock
Exchange (LSE) where its shares are traded. The company is a diversified advertising
agency offering advertising, media, direct marketing, PR and speciality
communications services across a range of disciplines.

While WRSX is quoted on the LSE “big board”, through significant account gains in
France, the centre of gravity of the company is largely in Paris, where Board meetings
are held. Concurrent with these account gains in Paris, Raphael Roux was appointed
CEO five years ago and is now retiring as global CEO and you, as one of a new Board
of Directors, have recently been appointed to take over the strategic and business
management of the WRSX Group. The WRSX share price has been underperforming in
the advertising sector for the past 18 months and analysts have written of “strategic
drift” and “lack of strategic focus in low-margin subsidiaries”. Because of your strong
strategic track record in a related industry, you have been brought in to help redirect
the fortunes of the company.

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WRSX Mission Statement
Global Advertising

Mission Statement
We exist to make our clients successful through differentiating and strengthening
their brands.

How we add value:


WRSX is a creative, innovative, customer-driven communication company built
around highly specialised business units. Due to the way the Group has developed
historically, mainly through merger and acquisition, the structure of the business
contributes to the independence of the various business units with a great deal of
autonomy that we believe contributes to the effectiveness of the service we offer
our customers. Local service and local account management are what drive our
customer excellence.

Sector Specialism
WRSX has developed its reputation as a leading advertising agency through its
expertise in the following sectors:

• Automotive & transport

• Health & pharmaceuticals

• Telecoms

• Beauty & fragrances

• Government & public sector


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WRSX Company Timeline / 1
Global Advertising

The WWMV timeline:

31 years ago – Youthful talent and drive


At this time, the present-day WRSX chairman Juliette Waldron gets together with
Richard Westcott, Sean Morrissey and John Vickers to found one of the new-wave
London creative agencies. Creative directors Morrissey and Vickers have many
awards between them. Campaign magazine calls it a “marriage made in creative
heaven”. Many client accounts follow the talent to the new agency.
30 years ago – First big win
WWMV wins a slice of an international airline account from one of the larger, more
established agency groups.
29 years ago – First diversification
PR division started. Leading PR person joins and starts new division.
27 years ago – WWMV goes west
New York contact office opened through client pressure.
24 years ago – Consumer advertising agency of the year
WWMV confirmed as the fast moving consumer goods agency of the year.
21 years ago – Retail advertising unit established
WWMV offered the advertising account of the second largest retailer in the UK if
they set up a retail unit. WWMV agrees to do this.
19 years ago – WWMV on the continent
Paris contact office opened through client pressure.
17 years ago – Waldron buys out partners
Three founding partners bought out by Juliette Waldron.

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WRSX Company Timeline / 2
Global Advertising

The Silberstein & Lord timeline:

28 years ago – The Big Apple


Lloyd Silberstein and Robert Lord join forces to establish their agency in New York.
Lloyd Silberstein has a background in copywriting with a top agency in Chicago but
his ambition was always “to be on Madison Avenue”. He is approached by Robert
Lord, something of a father figure and a famous marketing name – and they
decide to start their own agency.
27 years ago – First creative award
Copywriters Association of New York votes S&L top consumer advertising agency.
26 years ago – Direct Marketing Unit
S&L acquires a Direct Marketing company with a large downstream mailing
services operation.
25 years ago – DM Agency of the Year
S&L Direct Communications named DM agency of the year.
21 years ago – Car account win
S&L main agency wins the launch of a new GM car model.
19 years ago – Robert Lord retires
Due to ill health, Robert Lord retires. Lloyd Silberstein becomes president, S&L NY.
17 years ago – Approach by WWMV
Invited to merge and found a large international agency grouping by Juliette
Waldron of WWMV to form WRSX.

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WRSX Company Timeline / 3
Global Advertising

The Roux, Touissaint, Berthe timeline:

21 years ago – French Flair


Raphael Roux always believed that you never do things by halves, so he persuades
his new agency partners, Serge Toussaint and Philippe Berthe to launch the
agency with a bang by stopping the traffic on the Champs Elysee with a parade
and being featured on the evening TV news. The agency has always had a high
profile ever since.
20 years ago – FMCG account wins
The major competitor to Roux’s former employer appoints the agency to handle a
portfolio of brands through EMEA.
19 years ago – New Creative Director
Pierre-Jean Xavier (P-J) creative high-flier, joins the agency as creative director.
18 years ago – PR and Film Production Unit
RTB starts a PR company and the new creative director persuades the board to
invest in a film production unit.
17 years ago – Consumer Agency of the Year
RTB names consumer agency of the year in France.
17 years ago – Financial services account win
RTB wins the account of Europe’s largest insurance company.
17 years ago – Approach by WWMV
Invited to merge and found a large international agency grouping by Juliette
Waldron of WWMV to form WRSX.

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WRSX Company Timeline / 4
Global Advertising

17 years ago – WRSX - The new integrated agency is born


Present day WRSX chairman, Juliette Waldron gets together with Raphael Roux,
Lloyd Silberstein and Victor Frederick Xao to re-invigorate the business and
restructure the equity with personal investments. This is billed by Campaign
magazine in London and Ad Age in New York as “an integration of massive talents
– watch this space”.
17 years ago – NY offices combined
The WWMV contact office closes and personnel transfer to the S&L offices.
15 years ago – More account gains
The new management team brings in new business gains.
13 -14 years ago – Fastest Growing Agency
30% growth per annum.
10 years ago – Advertising Age Agency of the Year Award
Judges vote WRSX Ad Age International Agency of the year.
9 years ago – WRSX makes public offering
Shares traded for the first time on the London Stock Exchange.
8 years ago – Big account wins in France
Paris office expanded. Range of services widened.
7 years ago – New York account losses
Lloyd Silberstein had to announce the loss of a big account. New York office re-
structure necessary.

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WRSX Company Timeline / 5
Global Advertising

6 years ago – Raphael Roux appointed as global CEO


Juliette Waldron appoints Raphael Roux as CEO and herself as Chairman.
5 years ago – Singapore office opened
With Victor Xao’s experience and encouragement from an FMCG client wanting to
launch in Thailand, Malaysia, Philippines, Hong Kong and Singapore, an office in
Singapore is opened.
4 years ago – Diversification
The board decides to widen the range of disciplines and makes acquisitions in
research.
3 years ago – Revenue tops £200 million
The Group’s revenue topped the £200 million mark this year.
2 years ago – The Group makes further acquisitions
The Group diversifies into brand identity and digital media.
Current year – Raphael Roux is temporarily suspended from duties
Following allegations in the Paris office of bribery to gain business, Raphael Roux is
temporarily suspended pending enquiries into allegations of corruption by a former
employee of WRSX Paris.

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WRSX Board Directors –
Global Advertising Executive

The Main Board of Executive Directors:


Executive Chairman Juliette Waldron

Global CEO Raphael Roux

Paris office MD Serge Toussaint

London & Singapore office MD Victor Frederick Xao

New York office President Lloyd Silberstein

Chief Financial Officer Leena Chakrabati

Group HR / Talent Director Francoise Mellier

Group Market Insights Director Bjorn Krog-Jensen

Juliette Raphael Leena Victor Lloyd Serge


Waldron Roux Chakrabati Frederick Xao Silberstein Toussaint

Picture
yourself
here… …because you are also a main
board director
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Francoise Bjorn
Mellier Krog Jensen

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WRSX Board Directors
Global Advertising Non-Executive

Non-Executive Directors:
There are also three non-executive directors who advise the board. These three
non-executive directors are up for re-election within the next year.

Sandrine Mauret Director, GDF Industries, Brussels

Mervyn Hill-Lewis Director, RLT Financial Services, London

Rod Raoul Saurez Director, Telecoms Worldwide Inc, New York

Sandrine Mervyn Rod Raoul


Mauret Hill-Lewis Saurez

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WRSX Biographies:
Non-Executive
Global Advertising
Directors

Non-Executive Directors:

Below are summary biographies of the three current Non-Executive Directors of WRSX:

Sandrine Mauret Director, GDF Industries, Brussels.


Sandrine Mauret is seen as a rising star at GDF where she
is Director of Operations (Brussels). GDF is a major utility
supplier of gas and electricity to the commercial and
residential sector. Mauret obtained her MBA at IMD in
Switzerland where she met Raphael Roux. Roux invited
Sandrine Mauret to join the WRSX Board as a Non-Exec
three years ago. Mauret is also a Non-Exec of three other
companies, a trustee of the Opera House in Paris, a
UNICEF Special Envoy for Humanitarian needs in Africa and
a prospective member of the European Parliament. So far
Sandrine Mauret has attended one Board Meeting
and a meeting called by Roux where he announced his
suspension from duties pending investigations.

Mervyn Hill-Lewis Director, RLT Financial Services, London.


RLT were major clients of WRSX during Mervyn Hill-
Lewis’ time as Marketing Director of RLT. RLT are the UK’s
seventh largest financial services company. Mervyn retired
from RLT when it was acquired by Spanish financial
Services Group, Santos four years ago. He has been a
Non-Executive Director of WRSX for six years. He has
attended every Board meeting convened during his tenure
to date.

Rod Raoul Saurez Director, Telecoms Worldwide Inc, New York.


Telecoms Worldwide Inc is a major player in the telecoms
industry in the USA. He has an astute brain and is seen as
giving “wise counsel” to the Board – although the Board has
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chosen to ignore some of his more radical ideas in the past.

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WRSX Corporate
Global Advertising Governance

Corporate Governance

There have been reporting irregularities in the past. The problem was the way
certain offices reported revenues and associated costs. There have been
allegations of bribes to win business which have come from the Paris office and
while an internal investigation was conducted no charges were made.

This occurred despite the appointment of three non-executive directors, all of


whom are up for re-election this year. There is a move among shareholders to ask
for the appointment of new non-executive directors who are strong in corporate
governance.

The Group does not currently have a stated code of corporate governance as this
issue is managed at a local level.

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WRSX Group Structure
Global Advertising

WRSX Group
Main Board
Company Secretary
Chairman’s PA

Paris Office New York Office London Office Singapore Office

OfficeCentral
Office Central Services Office CentralServices
Services Office Central Services Office Central Services

Consumer
Consumer Advertising
Advertising Consumer Advertising Consumer Advertising
Consumer Advertising

Media Services Media Services Retail Advertising Media Services

PR Company
PR Direct Marketing Media Services Branding & Identity

Film Production Photographic Studio PR Company


Exhibitions &
Mail Handling Conferences
Photographic Studio Consumer Research
Services

Web Design Company Digital Media/ New Media Outdoor Media


Web Design
Relationship Marketing/ New Media/Digital
CRM Research & Information Branding &
Identity
Sports Promotions
Lobbying Consultancy
Research & Insight
Audio Visual
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Consultancy
Branding Productions
Branding &
& Identity
Identity

Office Central Services = Planning & Finance, HR, Marketing, Procurement & IT
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WRSX Operating Units / 1
Global Advertising

Paris Consumer Advertising Agency Photographic studio


Name: WRSX Paris Name: Atelier Photographique
MD: Serge Toussaint MD: Jean-Luc Breton
Specialisation: Consumer advertising Specialisation: Packaging and food
photography
Media Services
Name: WRSX MediaCom Web design company
MD: Dominic de la Noe Name: InterDessin
Specialisation: Media planning and buying MD: Pierre Rousset
Specialisation: Interactive websites
PR
Name: Publicitas Relationship marketing / CRM
MD: Sylvie Tourre Name: WRSX 121
Specialisation: Consumer PR MD: Daniel Auchan
Specialisation: Direct marketing
Film production
Name: Cine FX Research and Insight consultancy
MD: Jean-Luc Breton Name: PerspectivesConsommateur
Specialisation: Animation and digital MD: Ghiselle Briant
effects Specialisation: Behaviourial research

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WRSX Operating Units / 2
Global Advertising

New York Consumer Advertising Agency Digital Media / web design


Name: WRSX New York Name: Quazar
MD: Lloyd Silberstein MD: Rick la Motta
Specialisation: Consumer advertising Specialisation: Corporate websites

Media Services Photographic studio


Name: WRSX MediaCom Name: Drive-In Studios
MD: Ronald Rosenshine MD: Rick la Motta
Specialisation: Media planning and buying Specialisation: Automotive photography

Direct Marketing Agency Research and Information


Name: WRSX Direct Name: A. W. Sorensen
MD: John Soares MD: Liz-Anne Botma
Specialisation: Classic DM Specialisation: Direct marketing

Mail Handling Services Lobbying consultancy


Name: FastTrak Mailings Name: Smith Inc
MD: John Soares MD: Bradley W. Smith
Specialisation: Mailings Specialisation: Political lobbying & PR

Branding & Identity


Name: Identica2000 New York
MD: Lloyd Silberstein
Specialisation: Design & corporate identity

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WRSX Operating Units / 3
Global Advertising

London Consumer Advertising Agency Consumer research


Name: WRSX London Name: Synergy Insight
MD: Victor Frederick Xao MD: Penny Alder
Specialisation: Consumer advertising Specialisation: Consumer behaviour

Retail Advertising New Media


Name: WRSX Retail Name: Silverfish
MD: John Hooper MD: Jay Bravura
Specialisation: Specialist retail advertising Specialisation: Digital media channels

Media Services Branding & Identity


Name: WRSX MediaCom Name: Bellamy Borthwick Jones/Pentagraph
MD: Adrian de Bock MD: Matt de Wolff
Specialisation: Media planning and buying Specialisation: Corporate identiity

PR Company Audio Visual Productions


Name: BTP Name: Audio Image
MD: Rosie Burton-Taylor MD: Grahame Edmunds
Specialisation: Consumer PR Specialisation: Product launches

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WRSX Operating Units / 4
Global Advertising

Singapore Consumer Advertising Agency Outdoor media


Name: WRSX AsiaPacific Name: Impact Media
MD: Victor Frederick Xao MD: J. N. Wang
Specialisation: Consumer advertising Specialisation: Poster sites

Branding & Identity New Media / digital


Name: ImageMedia Name: The Tube
MD: Stephen Lim MD: Victor Frederick Xao
Specialisation: Corporate identiity Specialisation: Digital media channels

Exhibitions & Conferences


Name: PromoCo Sports Promotions
MD: Deena Patel Name: Sports World
Specialisation: Exhibitions & Conferences MD: Royce Moon
Specialisation: Brand sports promotions
Media Services
Name: MediaCom AsiaPacific
MD: John Read
Specialisation: Media planning and buying

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WRSX Financial Performance
Global Advertising Measures

How we judge our performance

Our objective is to create value for our shareholders in both the short and
long-term through effective strategies that deliver year-on-year growth in
our existing markets and sectors as well as sound investment in developing
markets and emerging sectors.

WRSX key financial performance ratios (Start Position Period 0) are:

RATIOS: WRSX Industry


Group average

• PBIT Margin 16.5% 19%


calculated as PBIT/Revenue:

• Staff Costs Ratio: 63% 58%


calculated as Staff Costs/Revenue

• Return on Capital Employed: 12.9% 15%


calculated as PBIT/Total Assets – Current Liabilities

• Gearing Ratio: 45.5% 42%


calculated as Non Current Liabilities/Total Equity

Note: An Income Statement and the PBIT and Staff Costs Ratio only will be displayed
at the end of each decision period in Phase 3 - Strategy in Action - of the simulation.
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WRSX Share Price & Market
Global Advertising Capitalisation

Share price & Market Capitalisation:

Following the unproven allegations of bribery in the Paris office and the resignation of
the CEO the share price has been in a long term decline over a number of quarters
and is now trading in a narrow band around 230p and shows the average share price
per quarter over the past 9 quarters.

With 125,000,000 issued shares in circulation, this puts WRSX market capitalisation at
approximately £285m.

Earning per share (pence) last dividend was 15.23p

WRSX Share Price - £'s

4.00
3.71
3.50 3.51
3.25
3.00
2.77 2.78
2.50 2.52 2.52
2.32 2.28
2.00

1.50

1.00

0.50

0.00
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9
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WRSX Financials/ 1
Global Advertising

Please note:
Period 0 denotes the position for all WRSX finances at the start of the simulation.

INCOMESTATEMENT
INCOME STATEMENTforfor Period
Period n 0 £m €m

Revenue 200.0 240.0


Direct costs (10.0) (12.0)

Gross profit 190.0 228.0

Operating costs:
Staff costs (126.0) (151.2)
Establishment costs (16.0) (19.2)
Other operating costs (15.0) (18.0)
Total operating costs (157.0) (188.4)

Profit before interest and taxation 33.0 39.6

Finance income 5.0 6.0


Finance costs (10.0) (12.0)

Profit before taxation 28.0 33.6


Taxation (9.0) (10.8)

Profit for the year 19.0 22.8

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WRSX Financials/ 2
Global Advertising

SEGMENTAL ANALYSIS for Period 0

By region Revenue PBIT Revenue PBIT


£m £m €m €m

North America 100.0 19.0 120.0 22.8


Western Europe 50.0 8.0 60.0 9.6
Central & Eastern Europe 30.0 3.9 36.0 4.7
Asia Pacific 20.0 2.1 24.0 2.5
200.0 33.0 240.0 39.6

By division Revenue PBIT Revenue PBIT


£m £m €m €m

Advertising & media 76.0 10.8 91.2 13.0


Information, insight & consulting 48.0 7.7 57.6 9.3
Public relations 28.0 6.8 33.6 8.1
Branding & identity 22.0 4.0 26.4 4.8
Specialised communications 14.0 2.1 16.8 2.5
New media & digital 12.0 1.6 14.4 1.9
200.0 33.0 240.0 39.6

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WRSX Financials/ 3
Global Advertising

BALANCE SHEET as at end of Period 0 £m €m

Non-current assets
Intangible assets
Goodwill 215.0 258.0
Other intangible assets 50.0 60.0
Property, plant and equipment 15.0 18.0
Other investments 10.0 12.0
Other non-current assets 5.0 6.0
295.0 354.0

Current assets
Inventories and work in progress 10.0 12.0
Trade and other receivables 175.0 210.0
Cash and short-term deposits 70.0 84.0
255.0 306.0

Current liabilities
Trade and other payables (275.0) (330.0)
Corporation tax payable (2.0) (2.4)
Bank overdrafts (17.0) (20.4)
(294.0) (352.8)

Net current assets/(liabilities) (39.0) (46.8)

Total assets less current liabilities 256.0 307.2

Non-current liabilities
Bank loans (75.0) (90.0)
Provisions for liabilities and charges (5.0) (6.0)
(80.0) (96.0)

NET ASSETS 176.0 211.2

Equity
Called up share capital 8.0 9.6
Share premium 5.0 6.0
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Retained earnings 163.0 195.6

TOTAL EQUITY 176.0 211.2

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WRSX Financials/ 4
Global Advertising

CASH FLOW
CASH FLOWSTATEMENT
STATEMENTforfor Period
Period n 0 £m €m

Profit before interest and taxation 33.0 39.6


Adjustments for non-cash items:
Depreciation 4.0 4.8
Impairment of intangible assets 2.0 2.4
Profit/loss on disposals 1.5 1.8

Operating cash flow before movements


in working capital 40.5 48.6
Movements in working capital 12.0 14.4

Cash generated by operations 52.5 63.0

Taxation paid (5.0) (6.0)


Interest paid (7.0) (8.4)
Interest received 3.0 3.6

Net cash flow from operating activities 43.5 52.2

Investing activities:
Acquisitions and disposals of subsidiaries (12.0) (14.4)
Purchases of property, plant and equipment (5.0) (6.0)
Purchases of other intangible assets (1.0) (1.2)
Proceeds on disposal of property, plant and equipment 0.5 0.6
Net cash flow from investing activities (17.5) (21.0)

Financing activities:
Net movement in long-term borrowings 20.0 24.0
Proceeds from share issues 2.0 2.4
Equity dividends paid (5.0) (6.0)
Net cash flow from financing activities 17.0 20.4

Net movement in cash and cash equivalents 43.0 51.6


Cash and cash equivalents at start of period 10.0 12.0

Cash and cash equivalents at end of period 53.0 63.6


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Non-Financial
WRSX Performance
Global Advertising
Measures / 1

WRSX key Non-Financial Performance Measures are divided into six major
categories, each with sub-categories, which are those used in the ADCOM
Industry Benchmark Survey:

1. Management of Growth:
Entrepreneurial capability & management of organic growth
Competence in acquisition management
International/global market positioning
Branding, trade names and intellectual property rights

2. Management of Risk:
Management of Financial Risk: Forex, liquidity, creditworthiness
Management of Legal & Reputational Risk
Management of Operational & Business Risk

3. Leadership Capability
Strategic leadership
Excellence in operations, information management, admin etc
Ability to lead and manage change
Retention of key personnel
Attraction of next generation / new talent

4. Corporate Social Responsibility (CSR)


Corporate Governance
Ethics
Social profile
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Sustainability profile/Carbon footprint

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WRSX Non-Financial
Performance
Global Advertising
Measures/2

5. Client Attraction and Retention


Market research/understanding market segments & channels
Breadth of services & disciplines
Creativity & Innovation
Account management structure
Value-added to client businesses

6. Procurement and Supplier Management


Media buying effectiveness
Exploitation of synergies that deliver economies of scale
Effective production buying & management of suppliers / spend control

NOTE:
Please see the next page for the results of the latest ADCOM Industry
Benchmark Survey to see how WRSX has performed in the last year compared to
the industry average.

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WRSX Non-Financial
Performance
Global Advertising
Measures/3

ADCOM Industry Benchmark Survey Results


& Impact on Share Price

Twice a year this survey is carried out that benchmarks companies in the
Advertising and Marketing Communications Industry. The survey is
conducted through research with all key stakeholders in the industry: Clients,
suppliers, employees, the financial community, shareholders, relevant
government and quasi-government departments, activist groups, competitors
and trade associations.

The survey uses a selection of Non-Financial Performance Indicators to


measure the perceived performance of each company in the survey against
its peers. This survey is important because it has a direct impact on the
projected P/E Ratio of each business and through this the Share Price of each
company in this industry.

In general, a high P/E suggests that investors are expecting higher


earnings growth in the future compared to companies with a lower P/E in the
same industry. A higher P/E also reflects the quality and reliability of those
earnings and their perceived risk. Therefore two companies with identical
forecast future earnings may well trade at different P/Es if the market
perceives significant differences in their business strategies, their long-term
growth prospects or the capability of their management teams.

Each of the scores for the Non-Financial Performance Indicators (NFPI’s) is


driven by how WRSX performs in the Industry Benchmark Survey.
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Industry Average Score each NFPI 50

WRSX Scores:
1 Management of Growth 43.5

2. Management of Risk 41.3

3. Leadership Capability 39.2

4. Corporate Social Responsibility (CSR) 38.5

5. Client Attraction & Retention 52.0

6. Procurement and Supplier Management 38.7

Average of All Six NFPI’s for WRSX 42.2

What the Survey Results Mean:


Management of Growth: WRSX is perceived as just below average in
terms of its Entrepreneurial Capability & Management of Organic Growth
but well below average in terms of the way it has managed Acquisitions
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to date. According to the survey, it is not seen as a Global player


measured against competitors. The WRSX Brand is quite well known but
it is not a Top 20 Brand in the industry. Equally, it’s ownership of Trade
Names and Intellectual Property Rights is below the industry average.

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Management of Risk: Traditionally WRSX has performed well in


benchmark surveys in terms its management of Financial Risk but it has
dropped below average as a result of a sustained investment in
acquisitions in recent years. Some acquisitions have not been perceived
as financially astute. The recent corruption scandal involving Raphael
Roux has damaged WRSX Group’s Reputational Risk score. Equally, the
way the business is structured and managed, i.e. local autonomy and a
“light-handed approach” by the WRSX Group Board, results in a low score
in terms of Management of Operational, Market and Business Risk against
the industry average.

Leadership Capability: Some offices perform well but others perform


badly in terms of Management of Operations, Information Management
and Administration - so that across the Group scores average out at
below the Industry average. WRSX performs well below the industry
average in terms of its Strategic Leadership Capability, its Ability to Lead
and Manage Change and its ability to attract and retain high quality
personnel in key positions in its businesses.

Corporate Social Responsibility (CSR)


Previous surveys have shown high scores for WRSX in terms of its ethical
stance and its social profile (its social contribution to the communities in
which it trades) but lower for corporate governance (the set of processes,
customs and policies affecting the way the Group is administered or
controlled). All three scores have dropped dramatically following the
corruption scandal involving Raphael Roux and concerns about the
strength of the WRSX Board. WRSX also scores well below industry
average in terms of its sustainability profile/carbon footprint.
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Client Attraction & Retention


WRSX scores highly on its market research capability and its
understanding of market segments and channels. It also scores very
highly in terms of its creativity and innovation but this masks a poor score
for this factor in the USA. The breadth of services and disciplines WRSX
offers matches the industry average being neither a specialist provider
nor one of the Top Four that provides a full range of services to clients.
Its account management structure is perceived as providing a below
average service. Value added to clients’ businesses is seen currently as
very slightly below industry average. This is an improvement on some
previous surveys.

Procurement and Supplier Management


WRSX performs badly in terms of the way it manages production buying
and how well it builds and exploits good relationships with suppliers. It
performs particularly badly in terms of the synergies it achieves through
exploiting economies of scale across the Group and it also fails to use its
Group buying power in terms of buying media for clients.

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