10th Apr 2007 07:02
YouGov PLC10 April 2007 10 April 2007 YouGov plc Interim Results for the period ended 31 January 2007 Structured for further growth Highlights Financial highlights * Strong focus on topline growth - turnover up 61% from £3.8 million to £6.1 million, mainly organic * Operating profit up 57% from £1.4 million to £2.2 million * Profit before tax up 64% from £1.4 million to £2.3 million (adjusted PBT increased from £1.4m to £2.4m (71%) after allowing for amortisation and exceptionals) * Earnings per share have increased by 59% from 8.0 pence to 12.7 pence per share (adjusted EPS increased from 8.0 pence to 13.9 pence (74%)) Operational highlights * UK business has performed strongly growing revenue by 68% compared with the same period last year * YouGov Middle East has now been re-branded as YouGovSiraj following the successful acquisition of Siraj and continues to show excellent revenue growth rates of 53% * Entered US market through acquisition of 32% stake in Polimetrix Inc in December 2006 * Successful launch of YouGovHealthcare and its products PatientsOnline and NHSOpinions * Continued panel investment and growth in the UK panel (from 115,000 to 146,000) * Investment in people with Group headcount increasing from 41 at 31 January 2006 to 76 at 31 January 2007 * Creation of Organisational Consulting department in January 2007 opens up the Human Resources research and consulting market. Commenting on the results Nadhim Zahawi, Co-Founder and CEO of YouGov said; "YouGov's strong growth during the first half reflects the benefits of oursuccessful strategy of combining innovative product development withgeographical expansion and selective acquisitions. The UK business has continuedto deliver good organic growth. The integration of acquisitions is going wellwith the benefits of the acquisition of Siraj coming through and our stake inPolimetrix opening up the important US market. The momentum seen in the year to date has continued to build in the second half.All of our businesses are performing well and we have increased our investmentin people and infrastructure to ensure that we can capitalise on theopportunities we have identified for new product development and internationalexpansion. Turning to the outlook, the Board is confident that 2007 will beanother successful year both financially and operationally." Enquiries: YouGov plc Nadhim Zahawi (CEO) Tel: 020 7012 6000 Katherine Lee (CFO) Numis Securities Limited Jag Mundi Tel: 020 7260 1000 David Poutney Financial Dynamics Charles Palmer Tel: 020 7831 3113 Nicola Biles CHAIRMAN'S STATEMENT Introduction YouGov's growth continued during the first half reflecting the benefits of itssuccessful strategy combining product development with geographical expansionand selective acquisition. The UK business has continued to expand organicallywhilst in the Middle East we are benefiting from the acquisition of Siraj at theend of July 2006. We have also entered the important US market through thepurchase of a 32% stake in Polimetrix Inc in December 2006. Since the end of thefirst half we have also set up a joint venture in the UK with Centaur plc givingus a major presence in the marketing, legal, financial and engineering sectors. Together with our focus on growing turnover, we have been actively investing inour core assets - our people and our infrastructure. Staff numbers haveincreased from a Group headcount of 59 at 31 July 2006 to 76 at 31 January 2007.Recruitment has taken place across all divisions including our sales team, ourkey accounts and insight teams and service delivery and operations. The UKbusiness relocated to new offices in mid-February 2007 and we are positive thatthe new larger premises, which are four times larger than our previous office,will be the base from which the company can continue to grow. Financial performance Turnover has increased by 61% to £6.1 million in the period (£3.8 million in thesix months to 31 January 2006). Profit before tax rose 64% to £2.3 million (£1.4million in the six months to 31 January 2006) and earnings per share increasedfrom 8.0 pence to 12.7 pence. Cash generated by operations was £2.8 million(£704k in the six months to 31 January 2006) mainly from organic growth. The growth in the business has been driven by all areas of the business: The UKhas experienced 68% revenue growth to £3.2m (£1.9m for the same period lastyear) whilst the Middle Eastern operation has seen a 53% increase in revenue to£2.9m (£1.9m for the same period last year). Our joint venture, YouGovExecutionLimited has also contributed £93k in revenues in the period to 31 January 2007. The growth in the UK demonstrates our ongoing commitment to delivering fast,accurate market research through our omnibus and bespoke offerings. Oursyndicated product stream continues to do well; BrandIndex revenues are becomingan ever more significant part (5%) of total revenues. Growth in the Middle East combines the benefits of the successful acquisition ofSiraj in July 2006 and the organic growth of the underlying Middle Eastbusiness. Our portfolio of blue chip clients in the region continues to grow. On 31 January 2007, YouGov Group's fixed assets totalled £5.4 million (£0.1million at 31 January 2006). This includes intangible fixed assets of £3.6million and £1.4 million representing our share of the net assets of ourassociates and joint ventures. Tangible fixed assets stand at £0.4 million (£0.1million at 31 January 2006) reflecting our ongoing investment in ourinfrastructure. Current assets total £7.6 million (£6.8 million at 31 January2006), including £4.3 million in cash or on deposit (£4.5 million at 31 January2006). Current liabilities stood at £3.2 million (£1.9 million at 31 January2006). Overall net assets stood at £9.4 million (£5.0 million at 31 January2006). The Directors are not recommending the payment of a dividend at this stage ofthe Company's development, which is consistent with statements made at the timeof flotation and reflects the growth of the Company and the considerableopportunities available. The Board has a carefully defined plan to manage the implementation ofInternational Financial Reporting Standards (IFRS). Review of operations YouGov has clearly established its position as a full-service online researchagency with strong client relationships generating a high level of repeatbusiness. UK The strong organic growth in the UK has once again been driven by a combinationof increasing the amount of research provided to current clients and the winningof new clients. Our top twenty customers continue to increase the amount theyspend with us whilst our client base for the six months to 31 January 2007 hasincreased to 263 from 180 for the same period last year. The profile of ourcustomer base is also increasing as more household names choose to use ourproducts. BrandIndex is twelve months older and has built up a client base of its own.This has been aided by greater exposure through the products column in MarketingWeek. Since preliminary results we have appointed a BrandIndex Managing Directorto develop the product and drive revenue growth. Further development of theproduct has led to a more user-friendly experience for the customer. Additionalfunctionality allows subscribers the ability to manipulate and adjust the outputreports and charts. BrandIndex attracts customers that include some of Britain'slargest and best known companies and these customers are presented with theentire YouGov offering and frequently commission bespoke surveys from us. Two examples of the work undertaken in the first half are Costa Coffee and P&OCruises. For Costa Coffee we provide a monthly survey which assesses customersatisfaction levels for recent customers of Costa and their key competitors inthe sector. For P&O Cruises we provided a survey of more than 12,000 respondentswhich measured the size of the cruise market within the UK holiday market anddetailed analyses of the key customers allowing P&O to strategically plan anddevelop their business. Panel and product development YouGov continues to devote significant investment and resources to thedevelopment of new products. We have recently created an Innovations Departmentwhich will be the hub of this activity within the Company. We hope to be able tolaunch the first of these products to the market in the second half of thefinancial year. We have also launched an Organisational Consulting Division which offersresearch and consulting specifically to CEOs and HR Directors of largeorganisations on employee engagement and leadership engagement. YouGov, under its YouGovHealthcare brand, has also launched PatientsOnline andNHSOpinions. PatientsOnline (in association with Patientline) offers a web basedsurvey platform that operates via patients bedside entertainment systems. Thesurvey platform is designed to collect patients' opinions, attitudes andexperiences during their hospital stay. NHSOpinions (in partnership with BrincLtd, the UK's number one provider of NHS employee benefits throughNHSDiscounts.com) offers online surveys of staff working at all levels withinpublic healthcare and the NHS. We have invested in our UK panel which has expanded from 115,000 activepanelists at 31 January 2006 to 146,000 at the end of January 2007. Panel churnremains low and response rates remain high. We continue to invest in our otherpanels worldwide. Primarily these are North America, Canada, Germany and theMiddle East. International Business continues to grow in the Middle East which is borne out by the resultsposted for the first six months of the current financial year. As Siraj wasacquired in the financial year ended 31 July 2006 (30 July 2006) this is thefirst full reporting period which includes trading from this acquisition. Thetwo businesses have successfully integrated and have been re-branded asYouGovSiraj. To further increase our presence within the region we are committedto establishing a base in Saudi Arabia. As always, the ad-hoc nature of a smallnumber of large contracts in the Middle Eastern business makes it difficult topredict revenue and profitability into the next financial year at this time;however, over the past 18 months, the record has been one of rapid expansion inboth turnover and profits as we win new clients. In December 2006, YouGov announced a strategic investment in Polimetrix Inc, aUS based online political and social research agency. The initial investment of£3.8 million was for a 32% stake in the business with the option to buy theremaining outstanding shares and options within 30 months. Under the agreement we will be able to sell Polimetrix's productsinternationally (outside the US & Canada) whilst Polimetrix will be able to sellour products within the US & Canada. We hope that there will be substantialopportunity to market BrandIndex and other YouGov services in the region. Market conditions Worldwide online research spending reached $2.6 billion in 2006 (Europe $407million, 15.5%) up from $2.1 billion in 2005 (Europe $263 million, 12.5%).Inside Research forecast this to increase yet further in 2007 to $3.1 billion(Europe $545 million, 17.3%). The UK remains the largest single market withinEurope. Board changes As announced at the time of the preliminary results in October 2006, I amstepping down as Chairman. As of 26 April 2007 I will assume the role ofPresident of YouGov. Our new non-executive Chairman will be Roger Parry. Untilthen Mr Parry will remain a non-executive director. Mr Parry began his career asa journalist working at the BBC and ITV. He then went on to work at McKinseybefore moving to WCRS and Aegis Group plc. He was Chief Executive of More Groupplc when it was sold to Clear Channel and went on to become Chairman and CEO ofClear Channel International. The appointment of an independent non-executive Chairman is consistent with ourplans to ensure that the management structure will support our growth ambitions.In doing so, we have confirmed our commitment to innovation by creating a ChiefInnovations Officer role for Stephan Shakespeare (previously Joint CEO). Inaddition we have created an operational board which will free up the plc boardto focus on the strategic direction of the group. The operational board consistsof Nadhim Zahawi (CEO), Stephan Shakespeare (CIO), Katherine Lee (CFO), PanosManolopoulos (UK MD), Nassim Ghrayeb (YouGovSiraj CEO), Doug Rivers (President &CEO, Polimetrix Inc), Andy Brown (Director of Organisational Consulting) andmyself. I am certain that now is the right time to hand the Chairman's baton to RogerParry, whose skills and experience are ideally suited to the next stage inYouGov's expansion. I will concentrate more on the development of YouGov'spolling work and methods, both in Britain and abroad - demands that have grownconsiderably in recent times, and which show no signs of abating. Meanwhile, Ishould like to thank YouGov's staff, our clients, our shareholders and our panelmembers for their contribution to the Company's success, and to making my timeas Chairman so stimulating and enjoyable. Current trading and outlook The Group has delivered another strong performance during the first six monthsof the year and the momentum has continued to build into the second half. Allbusinesses continue to perform well and we have increased our investment inpeople and infrastructure to ensure that we can capitalize on the opportunitieswe have identified for new product development and international expansion.Turning to the outlook, the Board is confident that 2007 will be anothersuccessful year both financially and operationally. As the benefits of online research become increasingly recognised among ourclients so the opportunities for YouGov continue to grow. We relish thechallenges of this dynamic environment, and believe we are well-placed tocontinue to deliver innovative research tools that meet our clients changingneeds. We are particularly excited about the imminent launch of BrandIndex inAmerica and later this year, the Gulf. Consistent with this, since the period end, YouGov launched a 50:50 jointventure with Centaur Media plc (one of the UK's largest independent businesspublishing and information companies) on 1 March 2007. The joint venture, calledYouGovCentaur Limited, aims to develop specialist panels covering Centaur's keymarkets, which include marketing, legal, financial services and engineering. YouGov today announces two new developments. The Group has created YouGovStone,a 51:49 joint venture in YouGov's favour, which will enhance YouGov's existing"opinion former" offer through the addition of Carole Stone's network of leadingbusiness executives, academics, politicians and media commentators. YouGov hasalso agreed the terms of an exclusive deal with Susquehanna International Group(SIG). SIG is a leading US financial institution focusing on trading, investmentbanking, private equity, venture capital, institutional sales and research.YouGov through Polimetrix, will provide SIG with access to American BrandIndexsubscription data, as well as a number of bespoke research projects with a view toa long-term strategic relationship. This re-affirms the Board's view that the value of real-time research insights is of increasing value to users of market research. After a little over five years as Chairman, I am proud to hand over to RogerParry with the Company in rude health. In that time it has grown from a staff ofeight to a staff of 80; our annual sales back in 2001 are now achieved everyfortnight. YouGov's online research, which then was widely regarded withscepticism is now generally accepted to offer speed, accuracy and excellentvalue. The interim report was approved by the Board on 10 April 2007. YOUGOV PLC CONSOLIDATED SUMMARISED PROFIT AND LOSS ACCOUNT For the period ended 31 January 2007 Note 6 months 6 months 12 months to 31/1/07 to 31/1/06 to 31/7/06 £'000 £'000 £'000 Turnover: group and share of joint 2 6,176 3,841 9,567ventures Less: share of joint ventures' (93) - (95)turnover Group turnover 6,083 3,841 9,472 Cost of sales (1,215) (926) (2,153) Gross profit 4,868 2,915 7,319 Other operating charges (2,581) (1,551) (3,466) Group operating profit before 2,287 1,364 3,853amortisation of intangible fixed assets Amortisation of intangible fixed (114) - -assets Group operating profit 2,173 1,364 3,853 Share of operating profit in joint 18 - 9venture Share of operating loss in associate (38) - - 2 2,153 1,364 3,862 Interest receivable 110 84 192Interest payable (1) - (1)Share of interest receivable in joint 1 - -venture Share of interest receivable in 5 - -associate Profit on ordinary activities before 2,268 1,448 4,053taxation Tax on profit on ordinary activities 3 (231) (183) (542)Share of tax on profit on ordinary (10) - -activities of joint venture Profit on ordinary activities after 2,027 1,265 3,511taxation Minority interests (324) (194) (521) Profit retained and transferred to 1,703 1,071 2,990reserves Earnings per share - basic 4 12.7 8.0 22.4- diluted 12.1 7.6 21.1 YOUGOV PLC CONSOLIDATED SUMMARISED BALANCE SHEET At 31 January 2007 31/1/07 31/1/06 31/7/06 Note £'000 £'000 £'000 Fixed assets Intangible assets Goodwill 1,012 - 1,171Tangible assets 372 107 158Investment in joint venture Share of gross assets 135 - 123Share of gross liabilities (16) - (13) 119 - 110 Investment in associate 5 3,856 - - 5,359 107 1,439 Current assets Debtors 3,302 2,288 3,699Cash at bank and in hand 4,287 4,544 5,546 7,589 6,832 9,245 Creditors: amounts falling due within (3,167) (1,885) (2,796)one year Net current assets 4,422 4,947 6,449 Total assets less current liabilities 9,781 5,054 7,888 Creditors: amounts falling due after (347) - (365)more than one year Provisions for liabilities and (19) (11) (12)charges 9,415 5,043 7,511 Capital and reserves Called up share capital 134 134 134Share premium account 2,987 2,941 2,943Profit and loss account 5,264 1,772 3,691 Total attributable to equity 8,385 4,847 6,768shareholders Minority interests 1,030 196 743 Shareholders funds 9,415 5,043 7,511 YOUGOV PLC CONSOLIDATED SUMMARISED CASH FLOW STATEMENT At 31 January 2007 Note 6 months 6 months 12 months to 31/1/07 to 31/1/ to 31/7/ 06 06 £'000 £'000 £'000 Net cash inflow from operating 6 2,737 704 2,896activities Returns on investments and servicing of finance Interest received 114 73 181Interest paid (1) - (1) Net cash inflow from returns on 113 73 180investments and servicing of finance Taxation - - (318) Capital expenditure and financial investment Purchase of intangible fixed assets (8) - (806)Purchase of tangible fixed assets (256) (60) (133)Cost of investment in joint venture - - (100)Cost of investment in associate (3,889) - - Net cash outflow from capital (4,153) (60) (1,039)expenditure and financial investment Financing Issue of shares 1 1 1Premium on issue of shares 50 30 30Offset expense against share premium (7) - -account Net cash inflow from financing 44 31 31(Decrease)/increase in cash 7 (1,259) 748 1,750 YOUGOV PLC Other primary statements For the period ended 31 January 2007 STATEMENT OF RECOGNISED GAINS AND LOSSES RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 6 months 6 months 12 months to 31/1/07 to 31/1/06 to 31/7/06 £'000 £'000 £'000 Profit attributable to shareholders 1,703 1,265 2,990 Other recognised gains and losses relating (130) - -to the period Net issue of share capital 1 1 1Premium on issue of share capital 50 30 30Offset expense against share premium (7) - -account 44 31 31 Net increase in shareholders' funds 1,617 1,296 3,021 Opening shareholders' funds 6,768 3,747 3,747 Closing shareholders' funds 8,385 5,043 6,768 YOUGOV PLC NOTES TO THE INTERIM REPORT For the period ended 31 January 2007 1 BASIS OF PREPARATION The interim financial statements have been prepared in accordance withapplicable accounting standards and under the historical cost convention. The interim financial information in this report has been neither audited norreviewed by the company's auditors. The principal accounting policies of the Group, as set out in the 31 July 2006annual report and financial statements have remained unchanged except for theadoption of Financial Reporting Standard 20, ''share-based payments''. Theimpact of this change in accounting policy has been reflected in the profit andloss account and did not give rise to a material charge. A prior year adjustmenthas not been made as the adjustment was not material. The change in policy didnot result in any change in shareholders equity. Basis of consolidation The group reports its interests using the acquisition method of consolidationand combines all of the assets, liabilities, income and expense with theequivalent items in the consolidated financial statements on a line by linebasis. The minority interests in the net assets of the consolidated subsidiary areidentified separately from the Group's equity and consist of the amount of thoseinterests at the date of the original business combination plus their share ofchanges in equity since that date. A joint venture is a contractual arrangement whereby the Group and other partiesundertake an economic activity that is subject to joint control whereby thestrategic and operating policy decisions require the unanimous consent of theparties sharing control. The arrangements the Group has entered in to involvethe establishment of a separate entity in which each venturer has an interest.The group reports its interest using the gross equity method. An Associate is an entity in which the Group has a participating interest. Aparticipating interest is defined as exercising significant influence and beingsignificantly involved in the direction of the investee through participation inpolicy decisions which include but are not limited to strategy and the balancebetween reinvestment and dividends. The group reports its interest using theequity method. 2 SEGMENTAL REPORTING The group only undertakes one class of business, that of market research. The group only supplies two geographical segments that are deemed significant,the UK and the Middle East. Turnover by origin and destination are not materially different. Turnover by origin 6 months 6 months 12 months to 31/1/07 to 31/1/06 to 31/7/06 £'000 £'000 £'000 UK 3,216 1,941 4,849Middle East 2,867 1,900 4,623Share of turnover of joint venture 93 - 95 Group turnover 6,176 3,841 9,567 Operating profit 6 months 6 months 12 months to 31/1/07 to 31/1/06 to 31/7/06 £'000 £'000 £'000 UK 1,147 638 1,898Middle East 1,026 726 1,955Share of operating profitof joint venture 18 - 9Share of operating loss of associate (38) - - Group operating profit 2,153 1,364 3,862 Net assets 6 months 6 months 12 months to 31/1/07 to 31/1/06 to 31/7/06 £'000 £'000 £'000 UK 1,569 3,935 4,809Middle East 2,841 912 1,698Middle East acquisition - - 151Share of net assets of joint venture 119 - 110Share of net assets of associate 3,856 - - Group net assets 8,385 4,847 6,768 3 TAX ON PROFIT ON ORDINARY ACTIVITIES 6 months 6 months 12 months to 31/1/07 to 31/1/06 to 31/7/06 £'000 £'000 £'000 The tax charge represents: United Kingdom corporation tax at 30% (2006: 241 183 54230%) The tax assessed for the period is lower than the standard rate of corporation tax in the UK 30% (2006: 30%). The differences are explained as follows: Profit on ordinary activities before tax 2,285 1,448 4,053 Profit on ordinary activities multiplied by 434 1,216standard rate of corporation tax in the period 686 Effects of: Overseas earnings not assessable to UK (265) (710)corporation tax (433) Adjustments to tax charge in respect of (15) 14 14prior periods Expenses not deductible for tax purposes 1 - 17Depreciation in excess of capital allowances (5) - 4Movement in deferred tax 7 - 1 241 183 542 4 earnings per share The calculation of the basic earnings per share is based on the earningsattributable to ordinary shareholders divided by the weighted average number ofshares in issue during the year. Shares held in employee share trusts aretreated as cancelled for the purposes of this calculation. The calculation of diluted earnings per share is based on the basic earnings pershare, adjusted to allow for the issue of shares and the post tax effect ofdividends and/or interest, on the assumed conversion of all dilutive options andother dilutive potential ordinary shares. The adjusted earnings per share removes the effect of the amortisation ofgoodwill, exceptional items and any related tax effects from the calculation asfollows: 6 months 6 months 12 months to 31/1/07 to 31/1/06 to 31/7/06 £'000 £'000 £'000 Retained profit 1,703 1,071 2,990 Add: amortisation of goodwill 114 - - Add: exceptional items 65 - - Tax effect of the above adjustments (20) - - Adjusted retained profit 1,862 1,071 2,990 Reconciliations of the earnings and weighted average number of shares used inthe calculations are set out below. 6 months 6 months 12 months to 31/1/07 to 31/1/06 to 31/7/06 £'000 £'000 £'000 Weighted average number of shares during the period: - Basic 13,371,737 13,346,757 13,358,157 - Dilutive effect of share options 766,173 669,267 807,986 - Diluted 14,137,910 14,016,024 14,166,143 Basic earnings per share (in pence) 12.7 8.0 22.4 Adjusted basic earnings per share (in 13.9 8.0 22.4 pence) Diluted earnings per share (in pence) 12.1 7.6 21.1 Adjusted diluted earnings per share 13.2 7.6 21.1 (in pence) The adjustments have the following effect: Basic earnings per share 12.7 8.0 22.4 Amortisation of goodwill 0.9 - - Exceptional items 0.5 - - Tax effect of the above adjustments (0.2) - - Adjusted earnings per share 13.9 8.0 22.4 Diluted earnings per share 12.1 7.6 21.1 Amortisation of goodwill 0.8 - - Exceptional items 0.4 - - Tax effect of the above adjustments (0.1) - - Adjusted diluted earnings per share 13.2 7.6 21.1 5 INVESTMENT IN ASSOCIATE Share of Goodwill Total net assets £'000 £'000 £'000 Cost or valuation At 1 August 2006 - - -Additions 1,261 2,595 3,856At 31 January 2007 1,261 2,595 3,856 Amounts written off At 1 August 2006 - - -Provided in the period - - -At 31 January 2007 - - - Net book amount at 31 January 2007 1,261 2,595 3,856 Net book amount at 1 August 2006 - - - 6 NET CASH INFLOW FROM OPERATING ACTIVITIES 6 months 6 months 12 months to 31/1/07 to 31/1/06 to 31/7/06 £'000 £'000 £'000 Operating profit 2,173 1,364 3,862Depreciation 40 15 38Amortisation of goodwill 114 - -Decrease/increase in debtors 465 (1,507) (2,930)Increase in creditors 57 832 1,926Exchange adjustments (112) - - 2,737 704 2,896 7 RECONILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 6 months 6 months 12 months to 31/1/07 to 31/1/06 to 31/7/06 £'000 £'000 £'000 (Decrease)/increase in cash in the period (1,259) 748 1,750 Movement in net cash in the period (1,259) 748 1,750Net cash at beginning of the period 5,546 3,796 3,796Net cash at end of the period 4,287 4,544 5,546 8 PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thefigures for the year ended 31 July 2006 have been extracted from the statutoryfinancial statements which have been filed with the Registrar of Companies. Theauditors' report on those financial statements was unqualified and did notcontain a statement under Section 237(2) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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