Q3 Revenues Up Almost 12% in Constant Currencies

WPP GROUP PLC 25 October 1999 WPP GROUP PLC QUARTERLY TRADING UPDATE THIRD QUARTER REVENUES UP ALMOST 12% IN CONSTANT CURRENCIES OPERATING MARGINS ON PLAN TO IMPROVE BY 0.6% IN 1999 Revenue Growth - Third Quarter In constant currencies, third quarter revenues rose by almost 12%. Sterlings weakness against the United States dollar and the Japanese Yen was only partially offset by strength against major European currencies and as a result reported revenues rose by over 14%. As shown in the Appendix to this release, on a constant currency basis, the geographical pattern of revenue growth varied in the third quarter. In North America, revenues were up almost 14%. In Europe, the United Kingdom and Continental Europe were both up over 12%. Asia Pacific, Latin America, Africa, and the Middle East was up over 7%, better than the first half, reflecting an improvement in economic conditions in Asia Pacific and an easier year-to-year comparison for Latin America. By function, advertising, media planning, buying and research was up almost 5% reflecting the Groups improved new business performance in the first half of the year. Information and consultancy was up almost 9%, public relations and public affairs up almost 32% and branding & identity, healthcare and specialist communications up almost 23%. Net new business billings of £730 million ($1.2 billion) were won during the third quarter. This compares to £330 million ($545 million) for the comparable quarter last year. The Group continues to benefit from consolidation trends in the industry winning several large assignments from existing and new clients such as FiNet, Ford, Mattel, Mazda, Miller, SAP, Tele 2, Thepavement.com, Unilever, WebMD and Wings Alliance. Revenue Growth - Nine Months In the first nine months of 1999, revenues rose by almost 12% and gross profit by 11% in constant currencies. On average, sterling weakened by just under 2% against all other currencies and the same period last year. As a result reported revenues rose by over 13%. As shown in the appendix, in the first nine months constant currency revenue growth was almost 15% in North America. United Kingdom revenues were up almost 13% and Continental Europe over 12%. Asia Pacific, Latin America, Africa and the Middle East revenues were up over 1%, chiefly reflecting the economic difficulties facing Latin America. By function, advertising, media planning, buying and research revenue growth was up over 4%, information and consultancy up almost 14%, public relations and public affairs up over 28% and branding & identity, healthcare and specialist communications up by almost 20%. Current trading For the first nine months of 1999, the Groups profitability was well ahead of last year. The first nine months performance indicates that the Group will achieve its objective of a further 0.6% improvement in 1999 in reported operating margins from 12.8% to 13.4%. Balance sheet and cashflow The Group continues to implement its strategy of using free cashflow to enhance shareowner value through a combination of strategic acquisitions and share purchases. In the third quarter of 1999 the Group completed acquisitions in advertising, media planning, buying and research in Continental Europe and Latin America; in public relations and public affairs in the United Kingdom and Latin America; in information and consultancy in the United States and Europe; in branding & identity, healthcare and specialist communications in Continental Europe and Latin America. 2.5 million WPP shares were purchased during the third quarter at an average price of £5.43 and total cost of almost £14 million. In the first nine months of 1999 the Group has purchased 3.3 million WPP shares at a total cost of £17.9 million. The rolling share re-purchase and buy-back programme continues at a target level of £50 million per annum, equivalent to approximately 1% of the current market capitalisation. Average net debt rose during the third quarter to £226 million from £206 million in the same period last year in constant currencies and compares to a market capitalisation of approximately £5 billion. This reflects the £220 million spent on capital expenditure, acquisitions and share purchases in the previous twelve months. Free cashflow over the same period was £208 million. Future objectives The Group continues to focus on its key objectives of improving operating profits and margins, increasing cost flexibility (particularly in the areas of staff and property costs), using free cashflow to enhance shareowner value, continuing to develop the role of the parent company in adding value to our clients and people, improving our creative quality and capabilities and developing our portfolio in high revenue growth geographic and functional areas. For further information: Martin Sorrell ) Paul Richardson ) (44) 020 7 408 2204 Feona McEwan ) Andrew Hall (1) 212 632 2314 Appendix: Revenue and revenue growth by region and sector 3 months ended September 30, 1999 Revenue Revenue Revenue Constant 1999 1998 growth currency Region £m £m report growth1 99/98 99/98 % % North America 238.4 203.4 17.2 13.7 United Kingdom 110.3 98.3 12.2 12.2 Continental Europe 6.4 88.2 9.3 12.5 Asia Pacific, Latin America, Africa, Middle East 92.7 81.1 14.3 7.1 Total Group 537.8 471.0 14.2 11.9 Marketing Revenue Revenue Revenue Constant Services 1999 1998 growth currency Sector £m £m reported growth1 99/98 99/98 % % Advertising, Media Planning, Buying & Research 242.0 225.2 7.5 4.9 Information & Consultancy 107.1 97.5 9.8 8.6 Public Relations & Public Affairs 46.3 34.2 35.4 31.8 Branding & Identity, Healthcare and Specialist Communications 142.4 114.1 24.8 22.9 Total Group 537.8 471.0 14.2 11.9 1 Constant currency revenue growth excludes the effect of currency movements. Appendix: Revenue and revenue growth by region and sector 9 months ended September 30, 1999 Revenue Revenue Revenue Constant 1999 1998 growth currency Region £m £m reported growth1 99/98 99/98 % % North America 690.4 587.9 17.4 14.8 United Kingdom 322.3 285.6 12.9 12.9 Continental Europe 295.5 262.9 12.4 12.3 Asia Pacific, Latin America, Africa, Middle East 246.9 234.5 5.3 1.5 Total Group 1,555.1 1,370.9 13.4 11.6 Marketing Revenue Revenue Revenue Constant Services 1999 1998 growth currency Sector £m £m reported growth1 99/98 99/98 % % Advertising, Media Planning, Buying & Research 719.2 675.6 6.5 4.3 Information & Consultancy 299.0 260.8 14.6 13.7 Public Relations & Public Affairs 129.1 98.9 30.5 28.1 Branding & Identity, Healthcare and Specialist Communications 407.8 335.6 21.5 19.8 Total Group 1,555.1 1,370.9 13.4 11.6 1 Constant currency revenue growth excludes the effect of currency movements.

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