3rd Apr 2006 07:02
YouGov PLC03 April 2006 3 April 2006 YOUGOV PLC INTERIM RESULTS FOR THE PERIOD ENDED 31 JANUARY 2006 DRIVEN BY STRONG ORGANIC GROWTH AND NEW INTERNATIONAL OPPORTUNITIES £'000 Six months ended 31 Six months ended 31 Growth January 2006 January 2005 Turnover 3,841 1324 190% Operating profit 1,364 607 124% Profit before tax 1,448 602 141% Basic earnings per share 8.0 3.7 116% Highlights • Performance ahead of market expectations • UK business performs strongly - all organic • Expansion of blue chip client base with new wins in the UK travel and leisure, media, pharmaceutical, financial and public sectors • YouGov Middle East performing significantly ahead of initial expectations - recent new business performance remains strong • Successful launch of BrandIndex in October 2005 • Continued panel investment and growth • Momentum continues into the second half - confident of outlook for the full year Commenting on the results, Nadhim Zahawi, Joint Chief Executive Officer ofYouGov, said; "The Group's better than expected performance in the first half confirms thestrength of our business model. The core UK business has delivered good organicgrowth and continues to capitalise on the trend toward online research andpolling. The scalability and adaptability of our online research model has alsobeen demonstrated by the significant contribution from our Middle Easternoperations and the successful launch of BrandIndex. "The first half momentum has continued into the second half and the UK andMiddle East businesses are trading well. As a result, the Board is confident ofdelivering a significant advance in the Group's financial performance for thecurrent year compared to last." Enquiries: Nadhim Zahawi, Joint Chief Executive 020 7618 3010YouGov Charlie Palmer / Tim Spratt 020 7831 3113Financial Dynamics CHAIRMAN'S STATEMENT For the six months ended 31 January 2006 Introduction By every measure - turnover, profits, staff numbers - YouGov's growth continuedto accelerate during the six months to 31 January 2006, the period covered bythese interim results. The core UK business has continued to expand and one yearon from the flotation we have delivered two significant developments thatprovide us with a solid platform for further growth in the future. We launchedour first syndicated subscription product, BrandIndex; and we have opened andestablished active control over our Dubai-based subsidiary, YouGov ME FZ LLC. As the benefits of online research - speed, accuracy and efficiency - becomeincreasingly recognised among clients so the opportunities continue to grow.YouGov's strategy going forward is to grow through a combination of productdevelopment and geographical expansion as well as through selective acquisition. We have been actively investing in our core asset - our people. Staff numbershave increased from 20 to a Group headcount of 41. Recruitment has taken placeacross all divisions including our sales team, our key accounts and insightteams and our service delivery and operations. Financial performance Turnover has increased by 192% to £3.8 million in the period (£1.3 million inthe six months to 31 January 2005), already exceeding that reported for the fullyear to 31 July 2005. Profits before tax rose 141% to £1.4 million and earningsper share increased from 3.7 pence to 8.0 pence. Cash generated by operationswas £704,000 (£483,000 in the six months to 31 January 2005). The growth in the business has been driven by two factors: the 47% revenuegrowth in the UK compared with the same period last year, and the strongperformance from the Middle Eastern operation. Revenues generated by the MiddleEastern business total £1.9 million in the period. The growth in the UKdemonstrates our ongoing commitment to the omnibus product and a renewed focuson our bespoke business. Revenues have also started coming in from our newsubscription based syndicated research product, BrandIndex, which is performingin line with our expectations. During the first six months, YouGov has invested in its Middle East operationsand BrandIndex. Despite these factors, margins remain strong, and have been maintained. Our Middle East operations commenced in September 2005. In agreement with ourlocal partners, less capital was required from them than was originally expectedand as such YouGov's share has increased to 78% of the issued ordinary sharecapital. Since launch we have successfully tendered for a number of largecontracts with governments, large multinationals and media partners. On 31 January 2006, YouGov Group's fixed assets totaled £107,000 (£50,000 at 31January 2005) reflecting our ongoing investment in our infrastructure. Currentassets total £6.8 million (£1.6 million at 31 January 2005), including £4.5million in cash or on deposit. Current liabilities stood at £1.9 million (£0.7million at 31 January 2005). Overall net assets stood at £5.0 million (£0.9million at 31 January 2005). The Directors are not recommending the payment of a dividend at this point,which is consistent with statements made at the time of flotation and reflectsthe age of the Company and the opportunities available. The board may considerpayment of a dividend at year end. Operational highlights 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 been driven by a combination ofincreasing the amount of research that we provide to our existing clients andwinning new clients. YouGov is now increasingly short listed againsttraditional top 10 research agencies for end-client business and is recording agood new-business success rate. During the first six months of the year, the Group has strengthened its skillset and product range through the recruitment of new staff and with the ongoingdevelopment of BrandIndex. Perception of YouGov as a pioneering marketresearcher has strengthened considerably, from earlier perceptions of it asprimarily a political pollster. Key projects completed in the first six months include work on pre-ad testing,pricing and service comparison, consumer usage and attitudes, concept andpackage testing, in-home product usage tests, savings and pensions, consumerconfidence and key business decision-maker research. New and existing clients for whom some of our key projects were completed arefrom the advertising, marketing communications, retail, FMCG and financialsectors. Other repeat and new project work was completed for media (both printand broadcast) as well as central and local government clients andnon-governmental organisations. At the same time an even wider range of YouGov project work is published in themedia reflecting the agency's extending client audience and increasing businessin sectors other than political and opinion polling. New Product development and international expansion Consistent with the strategy outlined at the time of the listing in 2005, YouGovhas successfully exploited its online market research expertise to develop newproducts and extend its business internationally. During the period YouGov launched a new research product, BrandIndex. Thisprovides daily tracking of approximately 1,100 consumer brands in 32 sectorsacross seven different measures of brand perception. Sales of BrandIndexsubscriptions are accelerating following the launch period and are now in doublefigures. Sales have mainly been to blue-chip clients in a number of sectors. The data is delivering just the sort of brand specific insights we expected bymeasuring public response to observable outside events and showing shifts inconsumer sentiment. We believe that as we gain more historical data, including acomplete yearly cycle, we will be able to forecast change with greaterconfidence. The BrandIndex is also gaining strong exposure and credibility in the media. Aweekly column in the Daily Telegraph business section discusses BrandIndex data,and there are other regular bulletins in Media Week and other trade press.Alongside our focus on sales, we plan to increase our efforts to generateincreased and sustained media exposure to demonstrate the strength of theproduct. We continue to expect our new product BrandIndex to break evenin its first full year and to be a significant contributor to YouGov profits inthe future. We have invested in our panel which has expanded from 98,000 active panelists at31 July 2005 to 145,000 at the end of January 2006. Panel churn remains low andresponse rates remain high. We have expanded our panel footprint by venturinginto Canada, in time for the Canadian general election. Since the period end, YouGov launched a 50:50 joint venture with ExecutionLimited (one of Europe's leading full-service agency stockbrokers) on 6 February2006 called YouGovExecution Limited (YGX). YGX combines Execution Ltd'sfinancial market understanding with the speed and accuracy of YouGov's onlinesurveying capabilities to provide financial institutions with a competitive edgethrough primary research into consumer and business trends. The initialinvestment made is £100,000. We are optimistic about the synergisticopportunities for the joint venture. International These are the first reported results which include our subsidiary YouGov ME FZLLC, which conducts market research and polling across the Middle East as wellas providing its media partners with detailed monthly surveys. The new companyis based in Dubai, the commercial hub of the region. However we are alreadyproviding a range of clients across the region with primarily ad-hoc researchsolutions. As the results for the six month period to 31 January 2006 confirm,trading has been very successful with revenues exceeding our initialexpectations. The success of our Middle Eastern business demonstrates the scalability ofYouGov's core expertise and intellectual property. While the current focus forthe time being is on growing this business we shall continue to look at othermarkets. Market conditions Demand for online market research continues to grow. Inside Research forecaststhat the European market is now valued at $326million, up from $170million in2005. It is estimated that at least 60% of this will be generated in the UKthrough a combination of single and multi-country research projects. As the benefits of online research become increasingly recognised among theclients 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. Current trading and outlook The Group has performed strongly during the first six months of the year andthis momentum has continued into the second half. The UK and Middle Eastbusinesses are trading well and while the ad-hoc nature of the Middle Easternbusiness makes it difficult to predict revenue and profitability into the nextfinancial year at this time, the Board is confident of delivering a significantadvance in the Group's financial performance for the current year compared tolast. CONSOLIDATED SUMMARISED PROFIT AND LOSSFor the ended 31 January 2006 Note 6 months to 6 months 12 months 31/1/06 to 31/1/05 to 31/7/05 £'000 £'000 £'000 Group Turnover 3,841 1,324 2,942 Cost of sales (926) (87) (476) Gross Profit 2,915 1,237 2,466 Other operating income and charges (1,551) (630) (1,505) Operating profit 1,364 607 961 Interest receivable 84 11 51Interest payable - (16) (16) Profit on ordinary activities before taxation 1,448 602 996 Tax on profit on ordinary activities 2 (183) (188) (305) Profit on ordinary activities after taxation 1,265 414 691 Minority interests (194) 0 0 Equity dividends 3 - (436) (436) Profit/(loss) retained and transferred to reserves 1,071 (22) 255 Earnings per share- basic 4 8.0 3.7 5.8- diluted 7.6 3.5 5.5 There are no other historical cost, profits or other recognised gains and lossesin the year. CONSOLIDATED SUMMARISED BALANCE SHEET At 31 January 2006 31/1/06 31/1/05 31/7/05 £'000 £'000 £'000 Fixed assets 107 50 63 Current assets Debtors 2,288 716 769Cash at bank and in hand 4,544 880 3,796 6,832 1,596 4,565 Creditors: amounts falling due within one year (1,885) (735) (870) Net current assets 4,947 861 3,695 Total assets less current liabilities 5,054 911 3,758 Provisions for liabilities and charges (11) (3) (11) 5,043 908 3,747 Capital and reservesCalled up share capital 134 113 133Share premium account 2,941 371 2,913Profit and loss account 1,772 424 701 Total attributable to equity shareholders 4,847 908 3,747 Minority interests 196 - - Total equity 5,043 908 3,747 CONSOLIDATED SUMMARISED CASH FLOW STATEMENT For the ended 31 January 2006 Note 6 months to 6 months 12 months 31/1/06 to 31/1/05 to 31/7/05 £'000 £'000 £'000 Net cash inflow from operating activities 5 704 483 1,149 Returns on investments and servicing of financeInterest received 73 10 51Interest paid - (16) (16) Net cash inflow/(outflow) from returns on investments 73 (6) 35and servicing of finance Taxation - - (202) Capital expenditure and financial investmentPurchase of tangible fixed assets (60) (5) (28) Net cash inflow 717 472 954 Equity dividends paid - (385) (436) Issue of shares - - 3,038Cost of issue - - (306)Exercise of share options 31 - -Payments to repurchase own share capital - - (167)Repayment of loans - (264) (264)Amount introduced by directors - 269 -Amount withdrawn by directors - (190) - Net cash inflow/(outflow) from financing 31 (185) 2,301 Increase/(decrease) in cash 748 (98) 2,819 OTHER PRIMARY STATEMENTS For the ended 31 January 2006 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 6 months to 6 months 12 months 31/1/06 to 31/1/05 to 31/7/05 £'000 £'000 £'000 Profit on ordinary activities after taxation 1,265 414 691Dividends and other appropriations - (436) (436) 1,265 (22) 255Net issue of share capital 31 - 2,732Repurchase of own share capital - - (170) Net increase/(decrease) in shareholders' funds 1,296 (22) 2,817Opening shareholders' funds 3,747 930 930Closing shareholders' funds 5,043 908 3,747 NOTES TO THE INTERIM REPORT For the ended 31 January 2006 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 are set out in the 31 July 2005annual report and financial statements. The policies have remained unchangedfrom the previous annual report with the exception of the basis ofconsolidation. Basis of consolidation The consolidated financial statements incorporate the accounts of the Companyand all of its subsidiaries Minority interests in the net assets of the consolidated subsidiaries 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. The period to 31 January 2006 is the first in which the Middle East operationhas been consolidated. The company has a controlling interest in that operationunder the terms of Companies Act legislation and FRS 2. 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 31/1/06 to 31/1/05 to 31/7/05 £'000 £'000 £'000 UK 1,941 1,324 2,942Middle East 1,900 - -Group turnover 3,841 1,324 2,942 Operating profit 6 months to 6 months 12 months 31/1/06 to 31/1/05 to 31/7/05 £'000 £'000 £'000 UK 638 607 961 Middle East 726 - - Operating Profit 1,364 607 961 3 TAX ON PROFIT/LOSS ON ORDINARY ACTIVITIES 6 months 6 months 12 months to 31/1/06 to 31/1/05 to 31/7/05 £'000 £'000 £'000 The tax charge represents:United Kingdom corporation tax at 30% (2005: 30%) 183 188 305 The tax assessed for the period is lower than the standard rate of corporation tax in the UK 30% (2005: 30%). The differences are explained as follows: Profit on ordinary activities before tax 1,448 602 996 Profit on ordinary activities multiplied by standard rate of corporation tax in the period 434 181 299 Effects of:Overseas earnings not assessable to UK corporation tax (265) - - Adjustments to tax charge in respect of prior periods 14 7 6 183 188 305 4 DIVIDENDS 6 months 6 months 12 months to 31/1/06 to 31/1/05 to 31/7/05 £'000 £'000 £'000 'A' Ordinary Shares of 1p - 200 200'B' Ordinary Shares of 1p - 92 92'C' Ordinary Shares of 1p - 95 95'D' Ordinary Shares of 1p - 49 49 - 436 436 5 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. Reconciliations of the earnings and weighted average number of shares used inthe calculations are set out below. Diluted Earnings per share Profit Earnings Dilutive attributable to attributable to effect of shareholders ordinary securities Adjusted shareholders (Options) earnings6 months to 31/1/06Earnings £'000 1,071 1,071 1,071Weighted average number of shares 13,346,757 669,267 14,016,024Per Share amount pence 8.0 7.6 6 months to 31/1/05Earnings £'000 414 414 414Weighted average number of shares 11,338,207 463,344 11,801,551Per Share amount pence 3.7 3.5 12 months to 31/7/05Earnings £'000 691 691 691Weighted average number of shares 11,998,561 661,578 12,660,139Per Share amount pence 5.8 5.5 6 NET CASH INFLOW/OUTFLOW FROM OPERATING ACTIVITIES 6 months 6 months 12 months to 31/1/06 to 31/1/05 to 31/7/05 £'000 £'000 £'000 Operating profit 1,364 607 961Depreciation 15 8 17(Increase) in debtors (1,507) (211) (263)Increase in creditors 832 79 434 704 483 1,149 7 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 6 months 6 months 12 months to 31/1/06 to 31/1/05 to 31/7/05 £'000 £'000 £'000 Increase in cash in the period 748 (97) 2,819Change in net funds resulting from cash flows 748 (97) 2,819Repayment of loans - 264 264Movement in net debt/funds in the period 748 167 3,083Net funds at start of the period 3,796 713 713Net funds at end of the period 4,544 880 3,796 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 2005 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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