12th Oct 2009 07:00
12 October 2009
YouGov plc
Preliminary results for the year ended 31 July 2009
Results in line with expectations
Key Financials
Turnover up 10% to £44.3m (2008: £40.4m)
Normalised operating profit of £3.1m (2008 £8.7m)
Normalised profit before tax of £3.9m (2008: £9.5m)
Reported loss before tax of £0.7m (2008: profit £4.0m)
Normalised earnings per share of 2.7p (2008: 9.1p)
Good operating cash generation - improved to £5.3m (2008: £3.1m)
Balance sheet remains strong - net cash increased to £12.5m as at 31 July 2009 from £12.3m as at 31 July 2008
Revenue per head increased by 20% to £107,000 from £89,000
Operational Highlights
Good progress in developing the business, despite tough market conditions
Recent US acquisition performing well
BrandIndex now available in all geographies and gaining traction with major brand owners. This reflects benefits offered by real time research data
Ongoing innovation with launches of new syndicated products - Recession Tracker, Debt Tracker and Dongle Tracker
Roll out of global technology platform will improve operational capabilities and support development of next generation of products
Reputation for accuracy further reinforced by polling results for the US Presidential Elections
Group management team strengthened
Actions taken to reduce costs in areas which were not delivering expected revenue growth
Well positioned to benefit from continuing growth in online research
Commenting on the results, Nadhim Zahawi, Chief Executive, said:
"During a year that has been very challenging for the research industry as a whole, we have re-focused the business on our core revenue generating areas and cut costs. Importantly, we believe that YouGov has continued to grow its market share compared to the incumbents.
As the online research pioneer, we continue to innovate and invest to ensure that we are best placed to capitalise on industry trends, in particular, the transition towards real time research. Our development is supported by a strong balance sheet and good cash generation. We are confident in YouGov's prospects for the future."
Enquiries:
|
YouGov plc |
|
|
Nadhim Zahawi / Alan Newman |
020 7012 6000 |
|
Financial Dynamics |
|
|
Charles Palmer / Nicola Biles |
020 7831 3113 |
|
Grant Thornton UK Corporate Finance - Nominated Advisor |
|
|
Gerry Beaney / Colin Aaronson |
020 7383 5100 |
|
Numis |
|
|
James Serjeant/ Nick Westlake |
020 7260 1000 |
YouGov plc
Chairman's Statement and Preliminary Announcement
Introduction
The twelve months to 31 July 2009 (YouGov's financial year) has clearly been a very challenging period both for the economy as a whole and specifically for the market research industry which has experienced revenue declines to a greater degree than in previous recessions.
Against this difficult background, our business succeeded in growing reported revenue by 10% to £44m in this last financial year although this represented a fall of 3% in constant currency terms. This performance, when compared to the sector's larger research groups who reported revenue declines in 2009, suggests that we have continued to gain market share reflecting the compelling nature of the YouGov offering.
Our normalised operating profit was £3.1 m compared to £8.7m in the prior year. Although this performance was in line with the expectations set at the time of the interim results, it is nonetheless disappointing to report a fall in profit after eight years of continued revenue and profit growth. The primary reason for this was the expansion of our headcount during 2007/8 in anticipation of higher revenue growth which did not materialise due to the subsequent economic slowdown. In simple terms we let our cost base get ahead of our income.
As announced in April, we have been implementing measures to improve profitability by scaling back investment in non-core activities and reducing costs in areas which were not delivering expected revenue growth. We expect annual savings of £2.5m from these actions.
The Group's balance sheet remains strong and at the year-end our net cash balances were £12.5m, compared to £12.3m at 31July 2008. This will allow us to support ongoing investment in new market research products.
The Board remains committed to growing YouGov's market share and focused on investment for future growth. It therefore does not recommend the payment of a dividend.
YouGov is a relatively young company which has been a pioneer in the field of on-line market research. We have grown very rapidly and the shock of the credit crunch and recession has caused us to pause and take stock.
Over the past year we have had three main goals:
• to improve financial controls and forecasting;
• to focus on specific geographies and market sectors; and
• to invest in improved technology, panel engagement and management.
In pursuit of these objectives we have made a number of senior management appointments and investments which are detailed in the attached Chief Executive's Review
In the UK, YouGov has a very strong brand which is widely recognised for successful, accurate political opinion polling and this has opened the doors for our much larger commercial market research activity. We are investing to build similar levels of brand recognition in our other markets with a view to repeating the successful UK model on an international basis.
Roger Parry
Chairman
Chief Executive's Review
YouGov has made good progress in developing its business despite the tough market conditions. We are now a leading global research provider as recognised by our being ranked for the first time in the industry's listing: Honomichl Global Top 25. In pursuing our strategy we have focused on four key themes in the development of our global capabilities. These are:
establishing an integrated global technology platform;
leveraging our geographic spread with clients and our range of skills and experience;
improving financial controls and strengthening Group management; and
innovating in real-time research.
Over the last two years, we have invested approximately £1.8m in developing and rolling out our global technology platform. Its unique survey and panel management applications were developed originally by our US business and will be in use in all our hubs by the middle of 2010. We believe that this will give YouGov a "best of breed" integrated online research platform and will support seamless global research operations enabling, for example, a researcher in Cologne or London directly to organise and run a survey across all of YouGov's panels without local manual interventions.
Taking the best elements from each of our hubs has allowed us to enhance our ability to innovate and to provide accurate and fast data to clients around the world. Consistent with this, BrandIndex, our proprietary tracker of brand performance, is now available in the USA, Germany, Middle East and Scandinavia as well as the UK. We recently launched an enhanced version which combines the technological and survey expertise of our US hub with the customer experience and feedback gained in the UK. Having a US presence has also enabled us to grow BrandIndex sales significantly with a number of US based international brand owners and advertising agencies becoming subscribers this year. We plan further enhancement and internationalisation of this product in response to demand from global companies.
We have extended our highly successful Omnibus service beyond the UK with an international version which has already proved popular with clients. We are also planning to follow the successful UK model by launching local Omnibus services in several of our hubs.
Our new branding brings together all of our hubs under the YouGov banner and describes our customer proposition as being to tell our clients "what the world thinks". Our wider geographical reach has also allowed us to tender for and win larger, international mandates that would not previously have been available to the Group. Recent such projects include surveys for a global digital media business, a South-East Asian government and the European Commission.
YouGov's successful UK model is based on using our polling skills to build our brand and technical credibility, develop innovative research products and our sector expertise so as to address the strategic research needs of large corporate and public sector organisations. Our acquisitions have extended our geographical coverage and in the case of Germany, added existing sector capability, notably in financial services. We have begun to apply our model to the US market where we enhanced our reputation for accurate political polling in the 2008 Presidential elections and continue to run a weekly poll on behalf of The Economist. We also took a first step to extend our commercial custom research capability in the US through the acquisition of Clear Horizons. The business is performing well and has been renamed YouGov Marketing Insights, reflecting its focus on providing clients with information which helps them to plan and deliver their marketing strategy.
These developments over the last two years have together succeeded in expanding the scale and complexity of research projects that the YouGov Group can bid for and win.
We also focussed this year on improving our financial controls and the quality of our reporting and forecasting as well as on harmonising the Group's key business processes. Although this could not prevent external factors, such as the deterioration of market conditions, from affecting our business, these improved systems and controls made us better able to respond to challenges when they arose and to plan and implement corrective actions.
To help us to improve operating performance across the Group and deliver the benefits of scale we appointed Lars Lund-Nielsen, the former CEO of our Scandinavian business, to the new role of Group Operations Director. We have also appointed Ted Marzilli, head of our US BrandIndex team, to the new position of Global BrandIndex Director so as to drive the product's sales to global clients and co-ordinate regional sales through our hubs around the world.
As we continue to integrate the previously acquired businesses, we have further strengthened our management team through internal promotions. Andreas Schubert has been appointed as CEO of our German business and Ms Iman Annab has become CEO of our Middle East business. The head of our UK data products business, Sundip Chahal, has moved to the Middle East as its Chief Operating Officer to help accelerate the development of our online products business there. These moves were in line with the succession plans made at the time that both businesses were acquired. We are nurturing the talent pool within the Group and aim to provide our people with exciting career development opportunities within the YouGov family. A long term incentive plan has been put in place to ensure that the interests of all senior staff are focused on delivering shareholder value.
Panel development
The YouGov panel is at the heart of all of our businesses and we have continued to invest in and develop it to ensure that we maintain a representative, high quality international panel. We have drawn on nearly 10 years of panel engagement in the UK as well as the skills and experiences of our acquired hubs to improve and internationalise our research products and services.
The development of multiple ways that people can exchange opinions and join communities online makes engagement with proprietary panels even more critical to delivering high quality market research. This will become an increasing differentiator in the future and thus we continue to enhance our panels to increase our research capabilities, both in new geographies and specialist panels.
As at 31 July 2009, the Group's online panels comprised a total of 2,216,000 panellists (defined as the number of panel registrations), an increase of 24% over the total of 1,780,000 as at 31 July 2008. The panel sizes by region were:
|
Region |
Panel Size at 31 July 2009 |
Panel Size at 31 July 2008 |
|
UK |
266,000 |
222,000 |
|
Middle East & North Africa |
197,000 |
142,000 |
|
Germany & Central Europe |
122,000 |
52,000 |
|
Scandinavia & Northern Europe |
143,000 |
126,000 |
|
USA |
1,488,000 |
1,238,000 |
Our US panel was increased significantly ahead of the 2008 Presidential elections allowing us to be able to provide a representative sample for polling in each of the 50 States. We continue to expand our panel in the Middle East to establish critical mass in each of the territories allowing us to support our data products across the region. The German panel has been created from nothing in little over eighteen months. It is already more than capable of supporting BrandIndex and Omnibus and is being further developed to support the transition online of more of our business.
Current trading and prospects
The Board expects that the current challenging economic conditions will continue as clients keep a tight hold of expenditure. However, the Group is now operating with a lower cost base and a greater level of focus. We are also confident that the innovations we are bringing to market will enhance our prospects.
Over the past year, we have built the foundation on which we will now launch the next stage of online research. Dynamic sampling will greatly increase the efficiency of our data collection allowing us to extend the breadth and detail of what we measure. Advanced data mining will yield greater practical value from that, combining this real-time flow of data with in-depth knowledge of our two million strong panel. This will allow us to provide clients with new analytical tools with which to understand their markets and inform their strategies, even as their campaigns are in progress.
This is YouGov 2.0, marking a significant advance in action-focused research with a suite of tools to manage brands in an ever faster moving world. We are as excited about this next phase as we were when we first set out to challenge the old methodologies.
So we believe that YouGov's brand, ability to innovate and proven online research skills will enable us to grow our customer base and continue to win market share. In the short term, we will also ensure that we exploit the individual strengths and market position of each of our hubs.
With a cash generative business model, cash on the balance sheet and an excellent and growing professional reputation, YouGov is well positioned to deliver growth and generate attractive future returns.
Nadhim Zahawi
Chief Executive Officer
Financial Performance
Income Statement Review
Group turnover for the year to 31 July 2009 increased by 10% to £44.3m, compared to £40.4m in the prior year. On a constant currency basis, revenues declined by 3%. Details of each hub's performance are given in the operational review below.
The Group's gross margin fell from 83% to 76%. This was due in part to more intense price pressure in a number of geographies resulting from the economic environment and to a higher proportion of projects involving external suppliers. Operating expenses increased by 22% largely due to the recruitment of additional staff which took place over the preceding year. These costs represented 70% of revenue compared to 63% in the year to 31 July 2008. As a result, normalised operating profit 1 fell by 65% to £3.1m compared to £8.7m in the previous year. Normalised profit before taxation 2, which includes net interest income, fell to £3.9m from £9.4m. Normalised earnings per share3 correspondingly fell to 2.8p from 9.2p. The reported result before taxation, after charging amortisation and exceptional items showed a loss of £0.7m compared to a profit of £4.0m in the year ended 31 July 2008.
Cost Reductions
In our Interim statement in April 2009, we announced a range of cost saving initiatives. These included reductions in the sales and back office resources in Scandinavia, closure of the office running the Austrian and Central European online development and restructuring of the UK custom research teams. These measures led to a reduction of some 30 posts across the Group which are taking effect between April and December 2009. In addition, in Germany, staff working time was reduced under the Government's "Kurzarbeitergeld" scheme for a period. These measures will together reduce costs on an annual basis by approximately £2.5m with £0.3m of these savings having already been achieved in the year to 31 July 2009. Associated restructuring costs of £0.8 m have been incurred in the year under review and classified as exceptional costs.
These initiatives contributed to the Group's staff numbers (full time equivalent) falling to 413 at 31 July 2009 compared to 452 at 31 July 2008. As a result, revenue per head increased by 20% to £107,000 from £89,000 in the year ended 31 July 2008.
1. Normalised operating profit is defined as group operating profit (before amortisation and exceptional items) after adding back one-off costs associated with the integration of acquired entities and IFRS transition costs.
2. Normalised profit before tax is defined as group profit before tax after adding back amortisation, share based payments, imputed interest, exceptional items and one-off costs associated with the integration of acquired entities and IFRS transition costs.
3. Normalised earnings per share is calculated based on the post tax result derived from the normalised profit before tax.
Analysis of Operating Profit and Earnings per Share:
|
31 July |
31 July |
|||
|
2009 |
2008 |
|||
|
Normalised operating profit |
£'000 |
£'000 |
||
|
Group operating profit before amortization of intangibles & exceptional costs |
2,715 |
7,867 |
||
|
Normalisation adjustments: |
||||
|
One- off IFRS transition costs |
-- |
288 |
||
|
Integration costs |
371 |
540 |
||
|
|
||||
|
Normalised operating profit |
3,086 |
8,695 |
||
|
Share based payments |
271 |
311 |
||
|
Imputed interest |
158 |
318 |
||
|
Net finance income |
404 |
108 |
||
|
Share of post tax (loss)/profit in joint venture |
(47) |
23 |
||
|
Normalised profit before tax |
3,872 |
9,455 |
||
|
Basic (loss)/earnings per share |
(0.6) |
5.8 |
||
|
Diluted (loss)/earnings per share |
(0.6) |
5.3 |
||
|
Normalised earnings per share |
2.7 |
9.1 |
Integration costs are one-off in nature and relate to the global rebranding undertaken for all of the acquired entities and the cost in association with aligning the German business to the YouGov model.
Cash flow
The Group generated £5.3m in cash from operations (before paying interest and tax) (2008: £3.1m) and paid out £4.8m in investing activities (2008: £19.3m) (including £0.6m on the acquisition of Clear Horizons, £2.2m in deferred consideration payments for previous acquisitions and £2.8m on capital expenditure).
Taxation
The Group had an overall tax credit of £0.8m compared to £2.1m (after prior year adjustment of £0.8m in respect of schedule 23 share option deductions) in the year ended 31 July 2008. The total tax credit comprised a current tax charge of £0.4m (2008: credit of £0.1m) and a deferred tax credit of £1.2m (2008: £2.0m).
Balance Sheet
Net Assets have increased by £6.4m to £67.1m at 31 July 2009 compared to £60.7m at 31 July 2008. £5.3m of this increase was due to the effect of currency appreciation compared to £ sterling. Current Assets fell by £3.9m largely due to a reduction in trade receivables. Debtor days fell significantly to 70 days from 88 days due especially to improved collections on some large contracts. Current liabilities also fell by £8.2m due mainly to a reduction in deferred consideration of £5.6m of which £1.6m related to a payment made in November 2008 in respect of Zapera. At the year end, our net cash balances were £12.5m, compared to £12.3m at 31 July 2008.
The acquisition of the trade and assets of C. Horizons LLC ("Clear Horizons") was finalised on 24 April 2009. The initial consideration paid was $0.8m (£0.6m). This could rise to a maximum total purchase price of $2.8m (£1.9m) if certain financial targets are met over the three years ending 30 April 2012.
Review of operations
UK
Our UK business achieved revenues of £11.1m. Although this represented a 12% reduction compared to the previous year, the revenue mix achieved this year represents a firmer base for future growth. A significant factor was the much lower revenue from the provision of primary data to investment fund managers due to the crisis in the financial markets. However, our Omnibus service continued to grow and expanded its range with international and UK regional services. The newer area of sector-focussed research has developed its reputation further and added new clients so that its revenue grew by 21% on a like-for-like basis.
A number of new syndicated products were introduced. These include "Debt Tracker", which helps financial institutions to understand how consumers are managing their personal finances and "Dongle Tracker", which tracks users and purchasers of mobile broadband products and services. We were also appointed to the Central Office of Information roster which will provide further opportunities for growth in our public sector business. Major clients this year included Asda, BBC, Costa Coffee, News International and P&O.
In the UK, our brand is already well recognised and the focus for the current year is to use this to increase our market share of research projects that address customers' strategic needs while also continuing to grow our data products business.
Middle East
In the Middle East, overall revenues grew by 10% to £8.4m from £7.7m in the previous year. They fell by 13% in local currency terms due to the previously anticipated reduction in a major long term contract. The regionally generated business continued to develop as planned and achieved revenue growth of 42% in £ terms, 13% in local currency. We continued to develop our online panel, now covering 18 countries in the region. This is helping us to become a leader in online Arabic language research and to bring our international products to the region. BrandIndex was launched this year and will soon be followed by a regional online Omnibus. Following the successful UK model, partnerships with leading regional media in the United Arab Emirates, including the National newspaper, have helped to increase awareness of the YouGov brand in the region. We are also expanding geographically. Our operation in Saudi Arabia has gained significant new clients for both quantitative and qualitative research and we are also well positioned to assist international businesses to exploit the growing commercial opportunities in Iraq.
The Middle Eastern market offers many opportunities as further geographic research markets open up for us to increase our brand presence and use our online products to generate more revenue from our panel.
Germany
Revenue in Germany grew by 23% to £14.8m from £12.0m the previous year with 6% growth achieved in local currency terms. This was a strong performance in a market where many competitors suffered real revenue declines and demonstrated the strength of our customer base, especially in the retail financial services sector and our specialist employee research and satisfaction practices. Our online offering is developing rapidly supported by strong panel recruitment with the German and Central European panel more than doubling since this time last year. Approximately 25% of revenue is now derived from online surveys.
Improving margins remains a priority in Germany. Pricing pressure in the market and investment in the new online teams meant that the net margin remained static this year although the Government's scheme for subsidising reduced working hours enabled us to reduce costs in the short term. Longer term savings will result from restructuring of the back office and the decision to focus on the core German market and cease development of the online business in Central and Eastern Europe. The Group's customer management and financial systems applications are being rolled out in Germany. In September, Andreas Schubert stepped up to the role of CEO from COO in succession to Professor Horst Müller-Peters, the co-founder of the German business.
In Germany, the use of online research has been held back by incumbent suppliers promoting offline methods. We will continue to apply YouGov's experience and learning so as to provide lower cost, faster research in a market which will be moving online.
Scandinavia
Revenues in our Scandinavian operations grew by 14% to £7.4m from £6.5m but fell by 2% in local currency terms. Although the business continued to win new international clients such as Coca Cola and Kellogg's, market conditions were very tough with strong price competition impacting gross margins. In addition, the relative depreciation of the Swedish and Norwegian currencies compared to the Danish currency further reduced profitability as most of the operating costs are incurred in Denmark. This led to the regional business making an operating loss in the year. Significant measures have been taken to reduce costs in the sales teams and the back office so as to improve future profitability.
In Scandinavia, where the market is already largely online we aim to increase the proportion of larger and higher value projects as well as to improve margins through further operational efficiencies.
USA
Our US operations grew revenue by 25% to £3.5m from £2.8m. In local currency terms, the revenue fell slightly by 4% as second half performance was affected by recessionary budget cutbacks following a strong first half performance which had benefited from the US Presidential elections. Our new US BrandIndex team, based in New York has been actively promoting the product's benefits among the advertising and marketing community and their trade media. This has led to significant sales among US based global agencies and brand owners such as OMD (part of Omnicom), Universal McCann, Domino's Pizza and Microsoft. Given that this is a subscription product these sales should be reflected in revenue growth next year.
The acquisition of Clear Horizons in April 2009 has been a successful first step in our strategy of building up our commercial market research practice by acquiring businesses with established client bases so as to strengthen our brand among US research buyers and generate synergy benefits from the use of our US panel. Clear Horizons is a Princeton, New Jersey based research firm specialising in branding, customer satisfaction, and new product market research. The business is profitable and combines strong technology sector expertise with advanced analytics skills and a commitment to online research. Its contribution in the first four months after acquisition was in line with its business plan.
Our US IT development team has been instrumental in the development of our new "G" technology platform and works closely with our UK IT team under the leadership of the Group Chief Technology Officer, who is based in our Palo Alto office.
In the USA, where we have now established an excellent research engine and a reputation for quality and accuracy among the academic community, we will continue to seek opportunities to scale up our commercial market research business.
Publication of Non-Statutory Accounts
The financial information relating to the year ended 31 July 2009 set out below does not constitute the Group's statutory accounts for that year but has been extracted from the statutory accounts, which received an unqualified auditors' report and which have not yet been filed with the Registrar of Companies.
YOUGOV PLC
CONSOLIDATED INCOME STATEMENT
For the year ended 31 July 2009
|
Note |
31 July 2009 |
31 July 2008 |
|
|
£'000 |
£'000 |
||
|
(Restated) |
|||
|
Group revenue |
1 |
44,322 |
40,390 |
|
Cost of sales |
(10,557) |
(7,037) |
|
|
Gross profit |
33,765 |
33,353 |
|
|
Operating expenses |
(31,050) |
(25,486) |
|
|
Group operating profit before amortisation of intangibles and exceptional costs |
1 |
2,715 |
7,867 |
|
Amortisation of intangibles |
(3,145) |
(2,822) |
|
|
Exceptional costs |
2 |
(610) |
(1,200) |
|
Group operating (loss)/profit |
(1,040) |
3,845 |
|
|
Finance income |
1,054 |
500 |
|
|
Finance costs |
(650) |
(392) |
|
|
Share of post tax (loss)/profit in joint ventures |
(47) |
23 |
|
|
Group (loss)/profit before taxation |
1 |
(683) |
3,976 |
|
Tax credit |
3 |
842 |
2,078 |
|
Group profit after taxation |
1 |
159 |
6,054 |
|
Attributable to: |
|||
|
Equity holders of the parent company |
(544) |
5,282 |
|
|
Minority interests |
703 |
772 |
|
|
159 |
6,054 |
||
|
Earnings per share |
|||
|
Basic earnings per share attributable to equity holders of the company |
4 |
(0.6) |
5.8 |
|
Diluted earnings per share attributable to equity holders of the company |
(0.6) |
5.3 |
YOUGOV PLC
CONSOLIDATED BALANCE SHEET
As at 31 July 2009
|
31 July 2009 |
31 July 2008 |
||
|
Note |
£'000 |
£'000 |
|
|
Assets |
(Restated) |
||
|
Non current assets |
|||
|
Goodwill |
6 |
33,482 |
33,500 |
|
Other intangible assets |
7 |
17,940 |
17,118 |
|
Property, plant and equipment |
8 |
2,629 |
2,217 |
|
Investments accounted for using the equity method |
23 |
194 |
|
|
Deferred tax assets |
2,510 |
1,567 |
|
|
Total non current assets |
56,584 |
54,596 |
|
|
Current assets |
|||
|
Trade and other receivables |
9 |
13,678 |
17,239 |
|
Other short term financial assets |
211 |
35 |
|
|
Current tax assets |
1,066 |
936 |
|
|
Cash and cash equivalents |
12,718 |
13,406 |
|
|
Total current assets |
27,673 |
31,616 |
|
|
Total assets |
84,257 |
86,212 |
|
|
Liabilities |
|||
|
Current liabilities |
|||
|
Lease liabilities |
4 |
3 |
|
|
Provisions |
1,738 |
1,375 |
|
|
Deferred consideration |
317 |
5,898 |
|
|
Trade and other payables |
7,942 |
10,165 |
|
|
Borrowings |
224 |
1,127 |
|
|
Current tax liabilities |
158 |
53 |
|
|
Total current liabilities |
10 |
10,383 |
18,621 |
|
Net current assets |
17,290 |
12,995 |
|
|
Non current liabilities |
|||
|
Lease liabilities |
4 |
6 |
|
|
Provisions |
- |
15 |
|
|
Deferred consideration |
651 |
1,152 |
|
|
Long term borrowings |
18 |
- |
|
|
Deferred tax liabilities |
6,105 |
5,760 |
|
|
Total non current liabilities |
11 |
6,778 |
6,933 |
|
Total liabilities |
17,161 |
25,554 |
|
|
Total net assets |
67,096 |
60,658 |
YOUGOV PLC
CONSOLIDATED BALANCE SHEET
As at 31 July 2009
|
31 July 2009 |
31 July 2008 |
||
|
£'000 |
£'000 |
||
|
(Restated) |
|||
|
Equity |
|||
|
Issued share capital |
193 |
190 |
|
|
Share premium |
30,811 |
29,156 |
|
|
Merger reserve |
9,239 |
9,239 |
|
|
Deferred consideration reserve |
- |
1,438 |
|
|
Foreign exchange reserve |
9,780 |
4,465 |
|
|
Profit and loss reserve |
13,665 |
13,938 |
|
|
Total equity attributable to shareholders of the parent company |
63,688 |
58,426 |
|
|
Minority interests in equity |
3,408 |
2,232 |
|
|
Total equity |
67,096 |
60,658 |
|
Attributable to equity holders of the Company |
YOUGOV PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 31 July 2009
|
Share capital |
Share premium account |
Foreign exchange reserve |
Merger reserve |
Deferred consideration reserve |
Profit and loss account |
TOTAL |
Minority interest |
Total Equity |
||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||
|
Balance previously reported at 1 August 2007 |
135 |
3,026 |
(360) |
- |
- |
7,953 |
10,754 |
1,460 |
12,214 |
|
|
Prior period adjustment for the year ended 31 July 2007 |
- |
- |
- |
- |
- |
279 |
279 |
- |
279 |
|
|
Restated balance at 1 August 2007 |
135 |
3,026 |
(360) |
- |
- |
8,232 |
11,033 |
1,460 |
12,493 |
|
|
Changes in equity for 2008 |
||||||||||
|
Exchange differences on translating foreign operations |
- |
- |
4,825 |
- |
- |
- |
4,825 |
- |
4,825 |
|
|
Net income recognised directly in equity |
- |
- |
4,825 |
- |
- |
- |
4,825 |
- |
4,825 |
|
|
- |
- |
- |
- |
- |
4,525 |
4,525 |
772 |
5,297 |
|
|
Prior period adjustment for the year ended 31 July 2008 |
- |
- |
- |
- |
- |
757 |
757 |
- |
757 |
|
|
Total recognised income for the period |
- |
- |
4,825 |
- |
- |
5,282 |
10,107 |
772 |
10,879 |
|
|
Expenses offset against share premium |
- |
(1,076) |
- |
- |
- |
- |
(1,076) |
- |
(1,076) |
|
|
Issue of share capital through exercise of share options |
4 |
245 |
- |
- |
- |
- |
249 |
- |
249 |
|
|
Issue of share capital through fundraising |
39 |
26,961 |
- |
- |
- |
- |
27,000 |
- |
27,000 |
|
|
Issue of share capital through allotment of shares in satisfaction of acquisition consideration |
12 |
- |
- |
9,239 |
- |
- |
9,251 |
- |
9,251 |
|
|
Deferred consideration as part consideration for acquisition |
- |
- |
- |
- |
1,438 |
- |
1,438 |
- |
1,438 |
|
|
Share based payments |
- |
- |
- |
- |
- |
424 |
424 |
- |
424 |
|
|
Balance at 31 July 2008 |
190 |
29,156 |
4,465 |
9,239 |
1,438 |
13,938 |
58,426 |
2,232 |
60,658 |
|
|
Changes in equity for 2009 |
||||||||||
|
Exchange differences on translating foreign operations |
- |
- |
5,315 |
- |
- |
- |
5,315 |
500 |
5,815 |
|
|
Dividends |
- |
- |
- |
- |
- |
- |
- |
(27) |
(27) |
|
|
Net income recognised directly in equity |
- |
- |
5,315 |
- |
- |
- |
5,315 |
473 |
5,788 |
|
|
- |
- |
- |
- |
- |
(544) |
(544) |
703 |
159 |
|
|
Total recognised income for the period |
- |
- |
5,315 |
- |
- |
(544) |
4,771 |
1,176 |
5,947 |
|
|
Expenses offset against share premium |
- |
(13) |
- |
- |
- |
- |
(13) |
- |
(13) |
|
|
Issue of share capital through exercise of share options |
1 |
232 |
- |
- |
- |
- |
233 |
- |
233 |
|
|
Deferred consideration as part consideration for acquisition |
2 |
1,436 |
- |
- |
(1,438) |
- |
- |
- |
- |
|
|
Share based payments |
- |
- |
- |
- |
- |
271 |
271 |
- |
271 |
|
|
Balance at 31 July 2009 |
193 |
30,811 |
9,780 |
9,239 |
- |
13,665 |
63,688 |
3,408 |
67,096 |
YOUGOV PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year end 31 July 2009
|
Note |
31 July 2009 |
31 July 2008 |
||
|
£'000 |
£'000 |
|||
|
Cash flows from operating activities |
||||
|
Profit after taxation |
1 |
159 |
6,054 |
|
|
Adjustments for: |
||||
|
Depreciation |
1 |
557 |
522 |
|
|
Amortisation |
1 |
3,145 |
2,822 |
|
|
Loss on disposal of property, plant and equipment and other intangible assets |
1 |
53 |
1 |
|
|
Foreign exchange loss |
1 |
132 |
53 |
|
|
Share option expense |
1 |
271 |
311 |
|
|
Taxation credit recorded in profit and loss |
3 |
(842) |
(2,078) |
|
|
Net finance income |
(404) |
(108) |
||
|
Decrease/(increase) in trade and other receivables |
5,265 |
(7,046) |
||
|
(Decrease)/increase in trade and other payables |
(3,040) |
2,611 |
||
|
Cash generated from operations |
5,296 |
3,142 |
||
|
Interest paid |
(109) |
(74) |
||
|
Foreign exchange losses |
(515) |
- |
||
|
Income taxes paid |
(520) |
(675) |
||
|
Net cash generated from operating activities |
4,152 |
2,393 |
||
|
Cash flow from investing activities |
||||
|
(685) |
(16,044) |
||
|
Settlement of deferred considerations |
(2,215) |
(588) |
||
|
Other investments made |
(175) |
(77) |
||
|
Proceeds from sale of property, plant and equipment |
- |
8 |
||
|
Purchase of property, plant and equipment |
(732) |
(1,694) |
||
|
Purchase of intangible assets |
(2,020) |
(1,441) |
||
|
Interest received and foreign exchange gains |
329 |
500 |
||
|
Foreign exchange gains |
725 |
- |
||
|
Net cash used in investing activities |
(4,773) |
(19,336) |
||
|
Cash flows from financing activities |
||||
|
Proceeds from issue of share capital |
220 |
26,174 |
||
|
Loan repayments |
(1,043) |
(15) |
||
|
Financing drawn down |
- |
172 |
||
|
Proceeds from sale of financial assets |
- |
75 |
||
|
Dividends paid to minority interests |
(12) |
- |
||
|
Net cash (used in)/generated from financing activities |
(835) |
26,406 |
||
|
Net (decrease)/increase in cash, cash equivalents and overdrafts |
(1,456) |
9,463 |
||
|
Cash and cash equivalents at beginning of year |
13,406 |
4,061 |
||
|
Exchange gain/(loss) on cash and cash equivalents |
768 |
(118) |
||
|
Cash, cash equivalents and overdrafts at end of year |
12,718 |
13,406 |
YOUGOV PLC
BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 July 2009
Nature of operations
YouGov plc and subsidiaries' ('the Group') principal activity is the provision of market research.
YouGov plc is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The address of YouGov plc's registered office is 50 Featherstone Street, London, EC1Y 8RT United Kingdom. YouGov plc's shares are listed on the Alternative Investment Market of the London Stock Exchange.
YouGov plc's annual consolidated financial statements are presented in Pounds Sterling (£), which is also the functional currency of the parent company.
These annual consolidated financial statements have been approved for issue by the Board of Directors on 9 October 2009.
Basis of preparation
The consolidated financial statements of YouGov plc are for the year ended 31 July 2009. They have been prepared under the historical cost convention with the exception of certain non-current assets that are carried at fair value in accordance with the accounting policies set out below. The consolidated financial statements have been prepared in accordance with applicable International Financial Reporting Standards as adopted by the European Union (EU). All references to IFRS in these statements refer to IFRS as adopted by the EU.
The policies set out below have been consistently applied to all years presented and comparative information has been restated and represented under IFRS.
The Parent company financial statements are prepared under UK GAAP.
The principal accounting policies of the Group are set out below and have been applied consistently with the prior year in presenting the consolidated financial information.
Basis of consolidation
The group financial statements consolidate those of the company and all of its subsidiary undertakings drawn up to 31 July 2009. Subsidiaries are entities controlled by the Group. Control is achieved where the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The group obtains and exercises control through voting rights.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the group.
Acquisitions of subsidiaries are dealt with by the purchase method. The purchase method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with the group accounting policies. Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition.
The group applies a policy of treating transactions with minority interests as transactions with parties external to the group. Disposals to minority interests result in gains and losses for the group that are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary.
YOUGOV PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 July 2009
1 REVENUE AND PROFIT BEFORE TAXATION
Segmental Analysis
For internal reporting purposes the Group is organised into five operating divisions based on geographic lines - UK, Middle East & North Africa, Germany & Central Europe, Scandinavia & Northern Europe & North America. These divisions are the basis on which the Group reports its segmental information. The Group only undertakes one class of business, that of market research.
|
UK |
Middle East & North Africa |
Germany & Central Europe |
Scandin-avia & Northern Europe |
North America |
Consolidation eliminations |
Consolid-ated |
|
|
2009 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Revenue |
|||||||
|
External sales |
10,470 |
8,398 |
14,606 |
7,393 |
3,455 |
- |
44,322 |
|
Inter-segment sales |
619 |
2 |
199 |
35 |
23 |
(878) |
- |
|
Total revenue |
11,089 |
8,400 |
14,805 |
7,428 |
3,478 |
(878) |
44,322 |
Inter-segment sales are priced on an arm's length basis that would be available to unrelated third parties.
|
Segment result |
|||||||
|
Gross profit |
8,465 |
5,602 |
11,195 |
5,555 |
2,836 |
112 |
33,765 |
|
Operating profit/(loss) |
1,992 |
2,848 |
696 |
(178) |
184 |
82 |
5,624 |
|
Unallocated corporate expenses |
(2,909) |
||||||
|
Operating profit |
2,715 |
||||||
|
Amortisation of intangibles |
(3,145) |
||||||
|
Exceptional items |
(610) |
||||||
|
Finance income |
1,054 |
||||||
|
Finance costs |
(650) |
||||||
|
Share of results of joint ventures |
(47) |
||||||
|
Loss before taxation |
(683) |
||||||
|
Tax credit |
842 |
||||||
|
Profit after taxation |
159 |
||||||
|
Other segment information |
|||||||
|
Capital additions |
1,226 |
427 |
390 |
169 |
540 |
- |
2,752 |
|
Depreciation |
132 |
77 |
262 |
38 |
44 |
4 |
557 |
|
Amortisation |
364 |
73 |
89 |
60 |
88 |
2,471 |
3,145 |
|
Share based payments |
100 |
- |
- |
- |
171 |
- |
271 |
|
Assets |
|||||||
|
Segment assets |
15,901 |
15,139 |
27,735 |
16,830 |
19,881 |
(12,119) |
83,367 |
|
Investments in joint ventures |
- |
- |
23 |
- |
- |
- |
23 |
|
Unallocated corporate assets |
- |
- |
- |
- |
- |
- |
867 |
|
Total assets |
84,257 |
||||||
|
Liabilities |
|||||||
|
Segment liabilities |
8,896 |
411 |
7,110 |
5,251 |
5,045 |
(9,552) |
17,161 |
|
Total liabilities |
8,896 |
411 |
7,110 |
5,251 |
5,045 |
(9,552) |
17,161 |
|
UK |
Middle East & North Africa |
Germany & Central Europe |
Scandin-avia & Northern Europe |
North America |
Consolidation eliminations |
Consolid-ated |
|
|
2008 (Restated) |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Revenue |
|||||||
|
External sales |
11,962 |
7,670 |
11,960 |
6,488 |
2,310 |
- |
40,390 |
|
Inter-segment sales |
612 |
1 |
32 |
19 |
520 |
(1,184) |
- |
|
Total revenue |
12,574 |
7,671 |
11,992 |
6,507 |
2,830 |
(1,184) |
40,390 |
Inter-segment sales are priced on an arm's length basis that would be available to unrelated third parties.
|
Segment result |
|||||||
|
Gross profit |
10,778 |
5,673 |
8,835 |
5,540 |
2,234 |
293 |
33,353 |
|
Operating profit |
3,918 |
3,814 |
740 |
964 |
(73) |
426 |
9,789 |
|
Unallocated corporate expenses |
(1,922) |
||||||
|
Operating profit |
7,867 |
||||||
|
Amortisation of intangibles |
(2,822) |
||||||
|
Exceptional items |
(1,200) |
||||||
|
Finance income |
500 |
||||||
|
Finance costs |
(392) |
||||||
|
Share of results of joint ventures |
23 |
||||||
|
Profit before taxation |
3,976 |
||||||
|
Tax credit |
2,078 |
||||||
|
Profit after taxation |
6,054 |
||||||
|
Other segment information |
|||||||
|
Capital additions |
697 |
1,153 |
625 |
113 |
115 |
16,769 |
19,472 |
|
Depreciation |
158 |
40 |
254 |
31 |
47 |
(8) |
522 |
|
Amortisation |
115 |
33 |
81 |
199 |
12 |
2,382 |
2,822 |
|
Share based payments |
64 |
- |
- |
- |
247 |
- |
311 |
|
Assets |
|||||||
|
Segment assets |
17,291 |
11,049 |
29,367 |
18,065 |
16,818 |
(7,048) |
85,542 |
|
Investments in joint ventures |
133 |
- |
- |
- |
- |
- |
133 |
|
Unallocated corporate assets |
- |
- |
- |
- |
- |
- |
537 |
|
Total assets |
86,212 |
||||||
|
Liabilities |
|||||||
|
Segment liabilities |
7,826 |
1,115 |
10,591 |
8,719 |
3,642 |
(6,339) |
25,554 |
|
Total liabilities |
7,826 |
1,115 |
10,591 |
8,719 |
3,642 |
(6,339) |
25,554 |
Differences between the origin and destination of revenue is material to the Group. Revenue by destination is presented below.
|
UK |
Middle East & North Africa |
Germany & Central Europe |
Scandin-avia & Northern Europe |
North America |
Consolidation eliminations |
Consolid-ated |
|
|
2009 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Revenue by destination |
|||||||
|
External sales |
15,547 |
2,094 |
15,416 |
7,202 |
4,063 |
- |
44,322 |
|
Inter-segment sales |
235 |
610 |
13 |
- |
20 |
(878) |
- |
|
Total revenue |
15,782 |
2,704 |
15,429 |
7,202 |
4,083 |
(878) |
44,322 |
Inter-segment sales are priced on an arm's length basis that would be available to unrelated third parties.
|
UK |
Middle East & North Africa |
Germany & Central Europe |
Scandin-avia & Northern Europe |
North America |
Consolidation eliminations |
Consolid-ated |
|
|
2008 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Revenue by destination |
|||||||
|
External sales |
15,760 |
1,149 |
12,185 |
6,190 |
5,106 |
- |
40,390 |
|
Inter-segment sales |
555 |
581 |
3 |
33 |
12 |
(1,184) |
- |
|
Total revenue |
16,315 |
1,730 |
12,188 |
6,223 |
5,118 |
(1,184) |
40,390 |
Inter-segment sales are priced on an arm's length basis that would be available to unrelated third parties.
|
31 July2009 |
31 July2008 |
|
|
£'000 |
£'000 |
|
|
The profit before taxation is stated after charging: |
||
|
Auditors' remuneration: |
||
|
Audit of the Group's annual report and accounts (including subsidiaries) pursuant to legislation (including outside the UK) |
100 |
115 |
|
Other services pursuant to such legislation (including outside the UK) |
15 |
22 |
|
Taxation |
25 |
28 |
|
Corporate finance transactions and proposed transactions |
- |
400 |
|
Other advisory services |
35 |
10 |
|
Depreciation and amortisation: |
||
|
Plant, property and equipment, owned |
545 |
509 |
|
Plant, property and equipment, held under finance lease |
12 |
13 |
|
Amortisation of intangibles |
1,005 |
346 |
|
Amortisation of intangibles acquired on acquisition |
2,140 |
2,476 |
|
Loss on disposal of property, plant and equipment and other intangible fixed assets |
53 |
1 |
|
Other operating lease rentals: |
||
|
Plant and machinery |
79 |
59 |
|
Land and buildings |
1,312 |
1,046 |
|
Other expenses: |
||
|
Exchange differences |
132 |
53 |
|
Share based payment expenses |
271 |
311 |
|
Research and development expenditure expensed |
310 |
433 |
|
Charitable & political donations |
1 |
16 |
2 EXCEPTIONAL ITEMS
|
31 July 2009 |
31 July 2008 |
|
|
£'000 |
£'000 |
|
|
Aborted acquisition costs |
(173) |
1,064 |
|
Restructuring costs |
783 |
136 |
|
610 |
1,200 |
Restructuring costs arose due to the termination of operations of certain divisions within the UK, German and Scandinavian businesses. The aborted acquisition cost credit in 2009 relates to an over accrual in the prior year.
3 INCOME TAXES
The taxation charge represents:
|
31 July 2009 |
31 July 2008 |
|
|
£'000 |
£'000 |
|
|
(Restated) |
||
|
Income tax |
157 |
(57) |
|
Adjustments in respect of prior periods |
258 |
(49) |
|
Total income tax charge |
415 |
(106) |
|
Origination and reversal of temporary differences: |
||
|
Current year |
(1,463) |
(1,972) |
|
Prior year |
206 |
- |
|
Total deferred tax |
(1,257) |
(1,972) |
|
Total income statement tax credit |
(842) |
(2,078) |
The tax assessed for the year is lower (2008: lower) than the standard rate of corporation tax in the UK.
The differences are explained below:
|
31 July 2009 |
31 July 2008 |
|||
|
£'000 |
% |
£'000 |
% |
|
|
(Restated) |
||||
|
(Loss)/profit before tax |
(683) |
3,976 |
||
|
(Loss)/profit before tax multiplied by standard rate of corporation tax in the UK of 28% (2008: 28%) |
(191) |
28% |
1,113 |
28% |
|
Impact of change in tax rate in the period |
- |
0% |
61 |
1% |
|
Expenses not deductible for tax purposes |
616 |
(90%) |
546 |
14% |
|
Depreciation in excess of capital allowances |
66 |
(10%) |
- |
0% |
|
Capital allowances in excess of depreciation |
- |
0% |
(24) |
(1%) |
|
Other temporary differences |
(33) |
5% |
26 |
1% |
|
Tax deduction in respect of share options exercised |
(44) |
6% |
(809) |
(20%) |
|
Share based payments charge |
63 |
(9%) |
85 |
2% |
|
Deferral of tax losses |
597 |
(87%) |
137 |
3% |
|
Overseas earnings not assessable to corporation tax |
(864) |
126% |
(1,078) |
(27%) |
|
Variation in overseas tax rates |
31 |
(4%) |
(40) |
(1%) |
|
Adjustment in respect of prior periods |
258 |
(38%) |
(49) |
(1%) |
|
Research & development tax deduction |
(73) |
11% |
(74) |
(2%) |
|
Share of tax loss of joint venture |
(11) |
1% |
- |
0% |
|
Total income tax charge for the year |
415 |
(61%) |
(106) |
(3%) |
|
Current year deferred tax adjustment |
(1,257) |
184% |
(1,972) |
(49%) |
|
Total income statement tax charge for the year |
(842) |
123% |
(2,078) |
(52%) |
The Group had an overall tax credit of £0.8m compared to £2.1m (after prior year adjustment of £0.8m in respect of schedule 23 share option deductions) in the year ended 31 July 2008.
4 EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. Shares held in employee share trusts are treated as cancelled for the purposes of this calculation.
The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares.
The adjusted earnings per share has been calculated to reflect the underlying profitability of the business by excluding the amortisation of intangible assets, share based payments, imputed interest, exceptional items and any related tax effects.
|
31 July 2009 |
31 July 2008 |
|
|
£'000 |
£'000 |
|
|
(Restated) |
||
|
Group (loss)/profit after taxation attributable to |
||
|
equity holders of the parent company |
(544) |
5,282 |
|
Add: amortisation of intangible assets |
3,145 |
2,822 |
|
Add: share based payments |
271 |
311 |
|
Add: imputed interest |
158 |
318 |
|
Add: exceptional items |
610 |
1,200 |
|
Tax effect of the above adjustments |
(1,384) |
(2,133) |
|
Adjusted retained profit |
2,256 |
7,800 |
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
|
31 July 2009 |
31 July 2008 |
|
|
Number of shares |
(Restated) |
|
|
Weighted average number of shares during the period: ('000 shares) |
||
|
- Basic |
96,244 |
91,688 |
|
- Dilutive effect of share options |
3,517 |
7,829 |
|
- Diluted |
99,761 |
99,517 |
|
Basic earnings per share (in pence) |
(0.6) |
5.8 |
|
Adjusted basic earnings per share (in pence) |
2.3 |
8.5 |
|
Diluted earnings per share (in pence) |
(0.6) |
5.3 |
|
Adjusted diluted earnings per share (in pence) |
2.3 |
7.8 |
|
The adjustments have the following effect: |
||
|
Basic (loss)/earnings per share |
(0.6) |
5.8 |
|
Amortisation of intangible assets |
3.3 |
3.1 |
|
Share based payments |
0.3 |
0.3 |
|
Imputed interest |
0.1 |
0.3 |
|
Exceptional items |
0.6 |
1.3 |
|
Tax effect of the above adjustments |
(1.4) |
(2.3) |
|
Adjusted earnings per share |
2.3 |
8.5 |
|
Diluted (loss)/earnings per share |
(0.6) |
5.3 |
|
|
||
|
Amortisation of intangible assets |
3.3 |
2.8 |
|
Share based payments |
0.3 |
0.3 |
|
Imputed interest |
0.1 |
0.3 |
|
Exceptional items |
0.6 |
1.2 |
|
Tax effect of the above adjustments |
(1.4) |
(2.1) |
|
|
||
|
Adjusted diluted earnings per share |
2.3 |
7.8 |
5 BUSINESS COMBINATIONS
Acquisition of C. Horizons LLC
The acquisition of the trade and assets of C. Horizons LLC ("Clear Horizons") was finalised on 24 April 2009. Clear Horizons is a Princeton, New Jersey based research firm specialising in branding, customer satisfaction, and new product market research. The business is profitable and combines strong technology sector expertise with advanced analytics skills and a commitment to online research.
The fair value of the consideration payable for the trade and assets of Clear Horizons was $0.6m (£0.41m) with a further $0.06m (£0.04m) of professional fees bringing the total consideration to $0.66m (£0.45m). This was satisfied by an initial cash payment of $0.6m (£0.41m).
An earn-out has also been put in place for the three financial years ending 30 April 2012. Under this earn-out, if certain financial targets are met, a maximum of a further $2.1m (£1.4m) will be payable in cash. Earn-out consideration of £1.0m, being the Directors' estimate of earn out most likely to be achieved, has been discounted to a net present value of £0.9m with the resulting discounting charge of £0.1m being taken to the income statement over the earn-out period. In addition to the purchase price payable, a loan of $0.2m (£0.15m) has been extended to the sellers of Clear Horizons. This remains repayable unless certain financial targets are met in the period to 30 April 2012.
Professional fees of $0.06m (£0.04m) were incurred during the completion of the transaction.
The amounts recognised for each class of Clear Horizons assets recognised at the acquisition date are as follows:
|
Acquiree's carrying |
|||
|
amount before |
Fair value |
Fair |
|
|
combination |
adjustments |
value |
|
|
£'000 |
£'000 |
£'000 |
|
|
Net assets acquired: |
|||
|
Intangible assets |
- |
686 |
686 |
|
Property, plant and equipment |
7 |
- |
7 |
|
Deferred tax liability |
- |
(293) |
(293) |
|
Net assets |
7 |
393 |
400 |
|
Goodwill arising on acquisition |
1,124 |
||
|
Total consideration |
1,524 |
Fair value adjustments have been made to align Clear Horizons accounting policies with those of YouGov and to account for the intangible assets and attributable deferred taxation of the business which are recognised upon acquisition.
|
£'000 |
|||
|
Total consideration, analysed as:
|
|||
|
Cash |
410 |
||
|
Loan |
153 |
||
|
Deferred consideration |
921 |
||
|
Acquisition expenses |
40 |
||
|
1,524 |
|||
|
Net cash outflow arising on acquisition: |
|||
|
Cash consideration paid |
410 |
||
|
Loan extended |
153 |
||
|
563 |
Ownership and control passed to YouGov plc on 24 April 2009 and Clear Horizons has been consolidated within the Group financial statements from that date.
The goodwill arising on the acquisition of Clear Horizons is attributable to the anticipated synergies expected to be derived from the combination and value of the workforce of Clear Horizons which cannot be recognised as an intangible asset under IAS38 "Intangible Assets".
Intangible assets recognised on acquisition relate to the customer relationships and order backlog of Clear Horizons. Since the acquisition, Clear Horizons has contributed £0.4m to Group revenue and £0.1m to the Group profit after taxation for the year ended 31 July 2009. If Clear Horizons had been consolidated from the start of the financial year, management estimate it would have contributed a further £0.5m to Group revenue and a further £nil to profit after taxation.
6 GOODWILL
Goodwill can be summarised as follows:
|
Middle East & North Africa |
North America |
Scandi-navia & Northern Europe |
Germany & Central Europe |
North America |
UK |
||
|
Poli- |
Zapera |
psycho- |
C. Hori- |
||||
|
Siraj |
metrix |
.com |
nomics |
zons |
Other |
||
|
FZ LLC |
Inc |
AS |
AG |
LLC |
LLC |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Carrying amount at 1 August 2007 |
1,090 |
- |
- |
- |
- |
5 |
1,095 |
|
Carrying amount at 31 July 2008 |
1,113 |
7,172 |
9,808 |
15,388 |
- |
19 |
33,500 |
|
Carrying amount at 31 July 2009 |
1,319 |
8,498 |
8,420 |
14,226 |
939 |
80 |
33,482 |
|
Carrying amount at 1 August 2007 |
1,090 |
- |
- |
- |
- |
5 |
1,095 |
|
Additions: |
|||||||
|
Through business combinations |
- |
7,030 |
8,495 |
13,313 |
- |
- |
28,838 |
|
Entity creation costs |
- |
- |
- |
- |
- |
14 |
14 |
|
Net exchange differences |
23 |
142 |
1,313 |
2,075 |
- |
- |
3,553 |
|
Carrying amount at 31 July 2008 |
1,113 |
7,172 |
9,808 |
15,388 |
- |
19 |
33,500 |
|
Additions: Through business combinations |
- |
- |
- |
- |
1,124 |
- |
1,124 |
|
Entity creation costs |
- |
- |
- |
- |
- |
61 |
61 |
|
Revision to contingent deferred consideration |
- |
- |
(2,213) |
(2,507) |
- |
- |
(4,720) |
|
Net exchange differences |
206 |
1,326 |
825 |
1,345 |
(185) |
- |
3,517 |
|
Carrying amount at 31 July 2009 |
1,319 |
8,498 |
8,420 |
14,226 |
939 |
80 |
33,482 |
Other goodwill represents legal fees incurred in the establishment of new subsidiaries.
Revisions in the year ended 31 July 2009 to the initial carrying value of goodwill related to the non-achievement of earn out targets (psychonomics £2.5m, Zapera £0.6m and Receptor £0.3m), the budgeted non-achievement of earn out targets (Zapera £0.6m) and reduction in deferred consideration paid in respect of Zapera (£0.7m).
In accordance with the Group's accounting policy, the carrying values of goodwill and other intangible assets are reviewed annually for impairment. The cash generating units (CGU's) are consistent with those segments shown in note 1. The 2009 impairment was undertaken as at 31 July 2009. The review as at 31 July 2009 assessed whether the carrying value of goodwill was supported by the net present value of future cash flows derived from assets using an initial projection period of three years for each cash generating unit based on approved budget numbers. After the initial budgeted, period projections have been assumed at 5% (10% for Polimetrix Inc and 6% for Clear Horizons LLC) for years four and five which is conservative both in comparison with historical performance (across all geographies) and annual growth rates in the internet based market research sector. Annual growth rates of 3% have been assumed in perpetuity beyond year five. The weighted average cost of capital used by the group to discount the future cash flows to their present value is 11.5% (2008: 9.25%).
To ensure the robustness of our impairment review we have also conducted sensitivity analyses on our assumptions including the impact of a 0.5% movement in our chosen WACC rate, a 0.5% movement in our chosen perpetual growth rate, the impact of a 5% reduction in profitability in the initial projection period and a 1% variance in our growth assumptions in years four and five.
The impairment reviews supported the carrying values of goodwill, and no impairment was required when applying the sensitivity.
7 OTHER INTANGIBLE ASSETS
The following table shows the significant additions and disposals of intangible assets.
|
Con-sumer panel |
Software & software develop-ment |
Customer contracts & lists |
Patents & trade marks |
Order backlog |
Development costs |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Gross carrying amount |
124 |
208 |
- |
28 |
- |
- |
360 |
|
Accumulated amortisation |
(9) |
(8) |
- |
- |
- |
- |
(17) |
|
Net carrying amount at 1 August 2007 |
115 |
200 |
- |
28 |
- |
- |
343 |
|
Gross carrying amount |
6,252 |
1,698 |
5,276 |
6,168 |
390 |
218 |
20,002 |
|
Accumulated amortisation |
(1,147) |
(443) |
(436) |
(456) |
(390) |
(12) |
(2,884) |
|
Net carrying amount at 31 July 2008 |
5,105 |
1,255 |
4,840 |
5,712 |
- |
206 |
17,118 |
|
Gross carrying amount |
7,183 |
3,205 |
6,275 |
6,672 |
48 |
347 |
23,730 |
|
Accumulated amortisation |
(2,624) |
(1,196) |
(958) |
(911) |
(48) |
(53) |
(5,790) |
|
Net arrying amount at 31 July 2009 |
4,559 |
2,009 |
5,317 |
5,761 |
- |
294 |
17,940 |
|
Con-sumer panel |
Software & software develop-ment |
Customer contracts & lists |
Patents & trade marks |
Order backlog |
Development costs |
Total |
|||||||||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||
|
Net carrying amount at 1 August 2007 |
115 |
200 |
- |
28 |
- |
- |
343 |
||||||||
|
Additions: |
|||||||||||||||
|
Separately acquired |
523 |
328 |
- |
23 |
- |
3 |
877 |
||||||||
|
Internally developed |
- |
349 |
- |
- |
- |
215 |
564 |
||||||||
|
Through business combinations |
5,303 |
719 |
4,671 |
5,448 |
390 |
- |
16,531 |
||||||||
|
Amortisation |
(1,138) |
(390) |
(436) |
(456) |
(390) |
(12) |
(2,822) |
||||||||
|
Reclassification |
- |
38 |
- |
- |
- |
- |
38 |
||||||||
|
Net exchange differences |
302 |
11 |
605 |
669 |
- |
- |
1,587 |
||||||||
|
Net carrying amount at 31 July 2008 |
5,105 |
1,255 |
4,840 |
5,712 |
- |
206 |
17,118 |
||||||||
|
Additions: |
|||||||||||||||
|
Separately acquired |
447 |
787 |
- |
42 |
- |
28 |
1,304 |
||||||||
|
Internally developed |
- |
590 |
- |
- |
- |
126 |
716 |
||||||||
|
Through business combinations |
- |
- |
638 |
- |
48 |
- |
686 |
||||||||
|
Amortisation |
(1,447) |
(709) |
(445) |
(455) |
(48) |
(41) |
(3,145) |
||||||||
|
Disposals |
- |
- |
- |
- |
- |
(37) |
(37) |
||||||||
|
Net exchange differences |
454 |
86 |
284 |
462 |
- |
12 |
1,298 |
||||||||
|
Net carrying amount at 31 July 2009 |
4,559 |
2,009 |
5,317 |
5,761 |
- |
294 |
17,940 |
||||||||
Consumer panels are the core asset from which our internet based revenues are generated. These are being amortised over their useful economic life which is between three and five years. The key component of the balance at 31 July 2009 relates to those panels acquired through acquisition, the remaining amortisation period for these acquired panels is three years.
Software development costs represent the web based infrastructure which supports both our online panels and the portals for our online products such as BrandIndex. These are being amortised over their useful lives which are estimated at between one and five years. The balance at 31 July 2009 is equally split between development which was acquired through acquisition, the remaining amortisation period for this is three years, and development on our current IT infrastructure, the remaining amortisation period for which is up to three years.
Customer contracts and lists only arise on the acquisition of an entity and are the valuation of the client relationships that have been built prior to acquisition. These are being amortised over their useful lives which are estimated at between ten and eleven years. The remaining amortisation periods for these assets are between eight and nine years.
Patents and trademarks represent the costs of acquiring brands, protecting our existing brands from copyright and the intellectual property which supports our products and methodologies. Amortisation rates range from non amortisation up to fifteen years. The key component of the balance at 31 July 2009 relates to those patents and trademarks acquired through business combinations. The remaining amortisation periods for these are between three and thirteen years.
8 PROPERTY, PLANT AND EQUIPMENT
The following table shows the significant additions and disposals of property, plant and equipment.
|
Freehold property |
Leasehold property improve-ments |
Computer equipment |
Fixtures & fittings |
Motor vehicles |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Gross carrying amount |
- |
196 |
174 |
215 |
50 |
635 |
|
Accumulated depreciation |
- |
(21) |
(42) |
(56) |
(17) |
(136) |
|
Carrying amount at 1 August 2007 |
- |
175 |
132 |
159 |
33 |
499 |
|
Gross carrying amount |
946 |
273 |
651 |
861 |
102 |
2,833 |
|
Accumulated depreciation |
- |
(70) |
(259) |
(250) |
(37) |
(616) |
|
Carrying amount at 31 July 2008 |
946 |
203 |
392 |
611 |
65 |
2,217 |
|
Gross carrying amount |
1,147 |
303 |
1,202 |
1,179 |
116 |
3,947 |
|
Accumulated depreciation |
- |
(143) |
(637) |
(454) |
(84) |
(1,318) |
|
Carrying amount at 31 July 2009 |
1,147 |
160 |
565 |
725 |
32 |
2,629 |
|
Carrying amount at 1 August 2007 |
- |
175 |
132 |
159 |
33 |
499 |
|
Additions: |
||||||
|
Separately acquired |
946 |
77 |
277 |
380 |
14 |
1,694 |
|
Acquired through acquisitions |
- |
2 |
263 |
265 |
60 |
590 |
|
Disposals |
- |
- |
- |
- |
(7) |
(7) |
|
Depreciation |
- |
(51) |
(242) |
(194) |
(35) |
(522) |
|
Reclassified |
- |
- |
(38) |
- |
- |
(38) |
|
Net exchange differences |
- |
- |
- |
1 |
- |
1 |
|
Carrying amount at 31 July 2008 |
946 |
203 |
392 |
611 |
65 |
2,217 |
|
Additions: |
||||||
|
Separately acquired |
28 |
16 |
414 |
274 |
- |
732 |
|
Acquired through acquisitions |
- |
- |
7 |
- |
- |
7 |
|
Disposals |
- |
(8) |
(1) |
(7) |
- |
(16) |
|
Depreciation |
- |
(65) |
(281) |
(172) |
(39) |
(557) |
|
Net exchange differences |
173 |
14 |
34 |
19 |
6 |
246 |
|
Carrying amount at 31 July 2009 |
1,147 |
160 |
565 |
725 |
32 |
2,629 |
Included within motor vehicles are assets held under lease purchase agreements with a net book value of £9k (2008 £34k). The depreciation charge on these assets for the year was £12k (2008: £13k).
All property, plant and equipment disclosed above, with the exception of those items held under lease purchase agreement, is free from restrictions on title. No property, plant and equipment either in 2009 or 2008 has been pledged as security against the liabilities of the Group.
9 TRADE AND OTHER RECEIVABLES
|
31 July 2009 |
31 July 2008 |
|
|
£'000 |
£'000 |
|
|
Trade receivables |
8,502 |
11,802 |
|
Amounts owed by related parties |
116 |
210 |
|
Other receivables |
519 |
898 |
|
Prepayments and accrued income |
4,673 |
4,329 |
|
13,810 |
17,239 |
|
|
Provision for trade and other receivables |
(132) |
- |
|
13,678 |
17,239 |
|
The ageing of the current trade receivables is as follows:
|
31 July 2009 |
31 July 2008 |
|
|
£'000 |
£'000 |
|
|
Within payment terms |
2,584 |
6,853 |
|
Not more than three months overdue |
3,405 |
2,325 |
|
More than three months but not more than six months overdue |
1,016 |
1,543 |
|
More than six months but not more than one year overdue |
20 |
935 |
|
More than one year overdue |
777 |
146 |
|
8,502 |
11,802 |
|
The average credit period taken is 70 days (2008: 88 days). The Group's trade receivables are stated before allowances for bad and doubtful debts. This allowance is determined by considering all past due balances and by reference to past default experience.
|
£'000 |
£'000 |
|
|
Movement on the Group provision for impairment of trade receivables is as follows: |
||
|
Provision for receivables impairment at 1 August 2008 |
- |
10 |
|
Provision created/(released) in the year |
132 |
(10) |
|
Provision for receivables impairment at 31 July 2009 |
132 |
- |
The creation and release of the provision for impaired receivables has been included in the income statement. The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the carrying value or each class of receivable mentioned above. The Group does not hold any collateral as security.
The Directors consider that the carrying value of trade and other receivables approximates their fair value. Concentrations of credit risk do exist with certain clients with which we have trading relationships but none has a history of default and all command a certain stature within the marketplace which minimises any potential risk of default. Material balances (defined as >£250k (2008: >£250k)) represent 36% of trade receivables (2008: 41%).
At 31 July 2009 £352k (DKK 3.1m) (2008: £433k (DKK 4.1m)) of the trade and other receivables of YouGov Nordic & Baltic A/S was used as security against a loan and revolving overdraft facility held by YouGov Nordic & Baltic A/S.
At 31 July 2009 YouGovPsychonomics AG had the option to borrow €300k (£256k) (2008: €300k (£236k)) which is secured against the trade and other receivables of the business. At 31 July 2009 £nil (2008: £nil) had been drawn down.
YouGovPsychonomics AG has secured a value of up to €280k (£239k) (2008: €280k (£220k)) in the event of default on rental payments against its trade and other receivables.
10 CURRENT LIABILITIES
|
31 July 2009 |
31 July 2008 |
|
|
£'000 |
£'000 |
|
|
(Restated) |
||
|
Lease liabilities |
4 |
3 |
|
Provisions |
1,738 |
1,375 |
|
Deferred consideration on acquisition of subsidiary |
317 |
5,898 |
|
Trade payables |
858 |
1,538 |
|
Accruals and deferred income |
5,509 |
6,792 |
|
Other payables |
1,575 |
1,835 |
|
Bank loan and overdraft |
224 |
1,127 |
|
Current tax liabilities |
158 |
53 |
|
10,383 |
18,621 |
The average credit period taken for trade purchases is 19 days (2008: 34 days). The Directors consider that the carrying amount of trade payables approximates to their fair value.
The Group has sufficient financial risk management policies in place to ensure that all trade payables are settled within the respective credit period.
11 NON-CURRENT LIABILITIES
|
31 July 2009 |
31 July 2008 |
|
|
£'000 |
£'000 |
|
|
Lease liabilities |
4 |
6 |
|
Provisions |
- |
15 |
|
Deferred consideration on acquisition of subsidiary |
651 |
1,152 |
|
Long term borrowings |
18 |
- |
|
Deferred tax liabilities |
6,105 |
5,760 |
|
6,778 |
6,933 |
12 PROVISIONS
|
Panel incentives |
Staff gratuity |
Total |
|
|
£'000 |
£'000 |
£'000 |
|
|
At 1 August 2007 |
1,193 |
62 |
1,255 |
|
Provided during the year |
2,009 |
89 |
2,098 |
|
Utilised during the year |
(1,102) |
(40) |
(1,142) |
|
Released during the year |
(820) |
(3) |
(823) |
|
Net foreign exchange differences |
- |
2 |
2 |
|
At 31 July 2008 |
1,280 |
110 |
1,390 |
|
Included within current liabilities |
1,265 |
110 |
1,375 |
|
Included within non-current liabilities |
15 |
- |
15 |
|
1,280 |
110 |
1,390 |
|
|
Provided during the year |
2,456 |
70 |
2,526 |
|
Utilised during the year |
(1,887) |
(29) |
(1,916) |
|
Released during the year |
(284) |
(63) |
(347) |
|
Net foreign exchange differences |
65 |
20 |
85 |
|
At 31 July 2009 |
1,630 |
108 |
1,738 |
|
Included within current liabilities |
1,630 |
108 |
1,738 |
|
1,630 |
108 |
1,738 |
The panel incentive provision represents the Directors best estimate of the future liability in relation to the value of panel incentives that have accrued in the panelists' virtual accounts by 31 July 2009. The provision of £1.6m represents 25% of the maximum potential liability of £6.6m (2008: £1.3m representing 29% of the total liability of £4.5m). Variables considered when arriving at an appropriate percentage of the total liability are panel churn rates, panel activity rates, current payment volume and the time value of money. Whilst each geographical panel is considered separately a consolidated provision of 25% (2008: 29%) is consistent with our internal historical data and the breadth of maturities of panels within the Group.
An incremental movement of 1% movement in the panel incentive provision would give rise to an additional expense to the income statement of £66k.
The staff gratuity provision is a statutory obligation under UAE labour law, whereby each employee on termination of their contract is due a payment dependent upon their number of years service and nature of the termination. The liability of £0.1m at 31 July 2009 (2008: £0.1m) represents the liability that the company is obliged to pay as at the balance sheet date weighted against historical rates of resignation and redundancy.
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