10th Oct 2005 07:00
YouGov PLC10 October 2005 10 October 2005 YOUGOV PLC AUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JULY 2005 STRONG PERFORMANCE REFLECTS GOOD ORGANIC GROWTH AND TRENDS IN ONLINE RESEARCH MARKET YouGov plc ("YouGov" or "the Company") announces its preliminary results for the year ended 31 July 2005. £'000 Year ended 31 Year ended 31 Growth July 2005 July 2004Turnover 2,942 1,992 48%Operating profit 961 670 43%Profit before tax 996 678 47%Basic earningsper share 5.8p 4.2p 38% Highlights • Performance exceeds expectations at time of float • Strong growth in sales and operating profits • Successful flotation provides capital for growth and product development • Strong balance sheet with net cash of £3.8m • Benefits of online research attracting wider and increased client base • Growth in online panel from 65,000 to 98,000 respondents • First overseas expansion - launch of YouGov Middle East and online panels in US • Outlook for online market research is strong Commenting, Nadhim Zahawi, Joint Chief Executive Officer of YouGov said; "The Company performed well throughout the year, exceeding our expectations.YouGov made good progress both financially and operationally, achievingsignificant growth in both turnover and profits. "Our flotation secured new capital to support the company's growth and we haveclear expansion criteria. We intend to grow the business organically and byacquisition expand our client base, our research services and our geographicfootprint. The online research market has good growth potential and we are wellpositioned to capitalise on it." Enquiries: Nadhim Zahawi, Joint Chief ExecutiveYouGov 020 7618 3010 Tim Spratt/Charlie PalmerFinancial Dynamics 020 7831 3113 John Llewellyn-LloydNoble & Company 0207 763 2200 Preliminary Results Introduction In the financial year ended 31 July 2005, YouGov made good progress bothoperationally and financially, achieving significant growth in both turnover andprofits. YouGov's business performance throughout the year has been ahead of ourexpectation. Sales have grown almost 50% compared with the prior year. The biggest single financial event for the company was its flotation on theLondon Stock Exchange's Alternative Investment Market (AIM) on 25 April 2005.The flotation secured £3m of new money, which will support YouGov's expansionboth organically and through acquisition. Financial Performance Turnover increased by 48% to £2.94m (£1.99m in 2003-04). Profits before tax rose47% to £996,000 and basic earnings per share improved by 38% to 5.8 pence. Thebusiness remains highly cash generative and during the year operations generated£1.1m in cashflow. On 31 July 2005, YouGov's fixed assets totalled £63,000 (2004: £51,000) and itscurrent assets £4.6m (2004: £1.5m), including £3.8m in cash or on deposit.Current liabilities stood at £870,000 (2004: £603,000). Overall net assets stoodat £3.7m (2004: £930,000). The directors are not recommending the payment of a dividend, which isconsistent with statements made at the time of flotation and reflects the age ofthe company and the opportunities for further development. All dividends chargedin the profit and loss account were paid prior to the float. Operational highlights Key projects during the year For the May 2005 general election, the prestigious academic British ElectionStudy (BES) had two components, face-to-face and online research. YouGov won thecontract for the online research and provided daily tracking surveys throughoutthe campaign, as well as major studies of political attitudes before thecampaign started and after election day. YouGov conducted more surveys for themedia than any other company. Its final election-day survey reported eachparty's share accurately to within one percentage point and, importantly,YouGov's figures for both Labour and the Conservatives were also consistentlyaccurate to within one point in each of the nine surveys conducted during thefinal 20 days of the campaign. Although YouGov's political surveys achieved a high profile, these contributedonly a small share of the company's turnover. Overall, two-thirds of YouGov'swork in the financial year was commercial market research, while just onequarter was opinion research (including political surveys). One-tenth ofYouGov's turnover was stakeholder research. Working for more than 130 clients during the year, up from 100 last year,YouGov's client base was wide and varied, reflected by four particular projects: - The ABI Pensions and Savings Index, which was launched in October 2003, is a quarterly barometer of the public's confidence and attitudes towards saving. During the year, YouGov produced quarterly quantitative research for the ABI. - The work for the Commission for Racial Equality (CRE) reflected YouGov's ability to understand sensitive issues and interpret complex and subtle data. - YouGov was asked by the London Borough of Lewisham to set up an online and branded website and proprietary panel to engage Lewisham residents in an ongoing consultation with the Council on issues covering satisfaction with service, attitudes and opinion about a range of topical issues and new Council proposals. - YouGov was engaged by ASDA to perform research designed to investigate consumer purchasing behaviour and attitudes towards in-store promotions and the effectiveness of pricing and promotions strategy. Both the omnibus and bespoke research projects were core areas of performanceimprovement for YouGov, with revenues increased revenues per survey. Panel expansion At the heart of YouGov's work is its panel of respondents - recruited to enableYouGov to draw representative research samples. During the course of the year,the number of panel members for whom YouGov had extensive demographicinformation grew from around 65,000 to more than 98,000. The company hasdevoted, and will continue to devote, substantial resources to maintaining andexpanding the panel, and to keeping the level of "churn" - the proportion ofpanel members lost through non-participation in a 12 month period - as low aspossible. In the last year, the degree of "churn" was just 15%. In addition,YouGov also established online panels in the United States and the Middle East. Future development Products YouGov expects to launch at least one new product per year. Before the end of2005, YouGov will be launching a new research product, BrandIndex, which willprovide daily tracking of around 1,100 consumer brands in 32 sectors acrossseven different measures of brand perception. This will be the first time thatshort and long-term effects on brand profile are measured and reported on adaily basis - a response to the greater focus both on the importance of brandequity and up-to-the-moment data. The product, which reports using aneasy-to-use online tool, is aimed at CEOs, brand managers, the researchcommunity, fund managers and financial investors. YouGov has been actively developing BrandIndex over the past 14 months. TheBoard believes that the product has the potential to significantly change theway companies, marketers and investors measure brand equity. Most trackingstudies currently available are conducted on a quarterly basis, sometimesmonthly and rarely on a weekly basis with none tracking perception of brands ona daily basis. Overseas expansion We continue to explore opportunities in new markets, both to establish newpanels and consider new business opportunities. The Middle East is one of theworld's most exciting growth markets and YouGov believes there are goodopportunities for its online market research techniques in the region. In 2004,at the request of HSBC Middle East, YouGov built a specialist panel of businessmen and women across the GCC countries (Gulf Co-operation Council) andestablished the first Middle East Business Confidence Index (MEBCI) for thebank. On the back of the success of MEBCI YouGov established a joint venturewith a majority stake and has subsequently launched YouGov ME Fz LLC, based inDubai Media City, which will have the first online consumer panel in the region. Acquisitions Following its flotation, the company is actively looking at acquisitions ofcompanies with expertise in those areas which would complement and enhanceYouGov's offering. Four criteria will inform our decisions: • the acquisition will be earnings enhancing • the companies we acquire will have an expertise and track record in certain sectors of market research including fast-moving consumer goods (fmcg), healthcare and the financial sector • the acquisition will allow exploitation of YouGov's methodology for the company's existing customers and their work will be enhanced by their association with YouGov and • the acquisition will help YouGov build a full service offering and consultancy agency based on its core strength of online panel-based research. Prospects and outlook Total Internet research spending worldwide is expected to reach over $1.6bn($1.1bn in the US) in 2005, of which $170 million is expected to arise in theUK. Worldwide expenditure is scheduled to reach $4bn by 2008. Total onlineresearch expenditure is forecast to account for around 7.5% of total marketresearch expenditure of £1.2 billion in 2005 in the UK. The UK is expected toremain the largest market for online research in Europe, with anticipated growthover the next three years of some 25% year on year. The UK market estimates are supported by the following: • buyers of research envisage spending over 1/3 of their research budget on online research by 2006 (MRS and ESOMAR) • two thirds of marketing companies now conduct research online and of those who do not, two thirds plan to do so over the next three years (Research and Cambiar reports) • increased adoption of online research techniques by the SME sector • the range of both research types and sectors for which the Internet is used to collect data will increase Statistics also suggest changes in the way that online research is commissioned,as an increasing number of end-clients are investing in their own panels andself-sufficiency in collecting, processing, analysing and reporting on datacollected online. As a full service panel company with an online business model,there is an opportunity for YouGov to utilise its expertise in panel managementand online data collection methods to advise and work with blue chip clients whowish to invest in their online research self-sufficiency. The company is trading in line with the Board's expectations and has made asound start to its current financial year. There is a growing demand foraccurate online research and YouGov is well positioned to capitalise on thistrend. Our intention is to expand both organically and by acquisition. We willlook to grow our client base, especially bespoke customers; expand our servicesand research products; extend our geographical reach; and continue to manage ourpanel. The company is well placed to achieve all of these objectives. SUMMARISED PROFIT AND LOSS ACCOUNT For the year ended 31 July 2005 2005 2004 (Audited) (Audited) Note £'000 £'000Turnover 2,942 1,992 Cost of sales (476) (221)Gross profit 2,466 1,771 Other operating income and charges (1,505) (1,101)Operating profit 961 670 Interest receivable 51 8Interest payable (16) -Profit on ordinary activities before taxation 996 678 Tax on profit on ordinary activities (305) (204)Profit on ordinary activities after taxation 691 474 Equity dividends 3 (436) (129) Profit retained and transferred to reserves 255 345 Basic earnings per share (p) 2 5.8 4.2Diluted earnings per share (p), 2 5.5 4.0 SUMMARISED BALANCE SHEET As at 31 July 2005 2005 2004 (Audited) (Audited) £'000 £'000Fixed assetsTangible assets 63 52Other investments - 1 63 53Current assets Debtors 769 506Cash at bank and in hand 3,796 977 4,565 1,483 Creditors: amounts falling due within one year (870) (603) 3,695 880Total assets less current liabilities 3,758 933 Provisions for liabilities and charges (11) (3) 3,747 930 Capital and reservesCalled up share capital 133 113Share premium account 2,913 371Profit and loss account 701 446 3,747 930 SUMMARISED CASH FLOW STATEMENT For the year ended 31 July 2005 Note 2005 2004 (Audited) (Audited) £'000 £'000 Net cash inflow from operating activities 4 1,149 852 Returns on investments and servicing of financeInterest received 51 7Interest paid (16) - Net cash inflow from returns on investments andservicing of finance 35 7 Taxation (202) (44) Capital expenditure and financial investmentPurchase of tangible fixed assets (28) (62)Cash received for disposal of assets - 2Net cash inflow from capital expenditureandfinancial investment (28) (60) Equity dividends paid (436) (194) FinancingIssue of shares 3,038 35Cost of Issue 306) -Payments to repurchase own share capital (167) -Repayment of loans (264) -Net cash inflow from financing 2,301 35 Increase in cash 5 2,819 596 Notes to the preliminary results for the year ended 31 July 2005 1. Basis of Preparation and additional information The preliminary results have been prepared under the historical cost convention and in accordance with applicable United Kingdom accounting standards. 2. Earnings per share 2005 2004 Weighted Per Weighted Per average Share average Share number amount number amount Earnings of shares pence Earnings of shares pence £'000 £'000 Profitattributableto ordinaryshareholders 691 474 BasicEarnings pershareEarningsattributableto ordinaryshareholders 11,998,561 5.8 11,312,033 4.2 Dilutiveeffect ofsecuritiesOptions 661,578 434,814 DilutedEarnings pershareAdjustedearnings 12,660,139 5.5 11,746,847 4.0 3. Dividends 2005 2004 (Audited) (Audited) £'000 £'000Equity dividends: 'A' Ordinary shares of 1 pence 200 -'B' Ordinary shares of 1 pence 92 52'C' Ordinary shares of 1 pence 95 53'D' Ordinary shares of 1 pence 49 24 436 129 All dividends charged in the profit and loss account were paid prior to the Company's admission to AIM. 4. Net cash inflow from operating activities 2005 2004 (Audited) (Audited) £'000 £'000 Operating profit 961 670Depreciation 17 11Impairment of intangible fixed assets 87Profit on sale of tangible fixed assets - (1)Increase/ (decrease) in debtors (263) 135(Increase)/ decrease in creditors 434 (50)Net cash inflow from operating activities 1,149 852 5. Reconciliation of net cash flow to movement in net cash 2005 2004 (Audited) (Audited) £'000 £'000 Increase in cash in the year 2,819 596 Repayment of loans 264 -Movement in net cash in the year 3,083 596Net cash at 1 August 2004 713 117Net cash at 31 July 2005 3,796 713 6. Publication of non-statutory accounts The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The summarised balance sheet at 31 July 2005 and the summarised profit and lossaccount, summarised cashflow statement and associated notes for the year thenended have been extracted from the company's 2005 statutory financial statementsupon which the auditors opinion is unqualified and does not include anystatement under section 237 of the Companies Act 1985. These statements have not yet been delivered to the registrar of companies. The statutory accounts for the period will be posted to shareholders on orbefore 17 November 2005 and copies will be available, free of charge, for aperiod of one month following posting to shareholders from the registered officeof the Company. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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