Interim Results
YouGov PLC
31 March 2008
31 March 2008
YouGov plc
Interim Results for the period ended 31 January 2008
Transforming YouGov - Acquisitions accelerate development
Highlights
Financial highlights
• Strong focus on topline growth - turnover up 208% to £18.8 million in
the six months to 31 January 2008 from £6.1 million in the same period in
2007
• Organic growth of 43% reflecting continued investment in technology,
products and people
• Adjusted Operating profit before amortisation and exceptional items up 87%
from £2.3 million in the six months to 31 January 2007 to £4.3 million
• Profit before tax up 30% from £2.3 million in the six months to 31 January
2007 to £3.0 million (Normalised Profit before tax increased 117% from
£2.4 million to £5.2 million)
• Successful £27.0 million placing (19,285,714 shares issued) and issue of
5,929,829 (£9.3 million) shares to support significant international
expansion
• £14 million of cash on balance sheet
Operational highlights
• Completed three transformational acquisitions providing us with enlarged
global reach and sector expertise
• Integration focussing on products, systems, financial reporting and people,
is on track
• Acquisitions allow us to accelerate YouGov's organic expansion and core
product roll out
• Moving up the value chain - UK refocusing undertaken, concentrating on
data services, (including BrandIndex and Omnibus) and YouGovConsulting and
the appointment of a new management team
• EMEA panel expanded considerably to 476,337 at 31 January 2008 against
199,047 at 31 January 2007
• North American panel now 1,034,437 against 832,111 at this point last year
• Group marketing and branding of companies underway
• Benefits of acquisitions coming through evidenced in cross border wins
• Products rollout scheduled and underway
• Investment in people with Group headcount increasing from 76 at 31 January
2007 to a Group headcount of 425 at 31 January 2008
• Confident of another successful year for the enlarged Group
Commenting on the results Nadhim Zahawi, Co-Founder and CEO of YouGov plc said:
'At YouGov we are all very proud of how we have handled this period of growth
and change, and the challenges these bring. Challenges include: growth and
integration whilst maintaining profitability. We are continuing to build the
platform to allow us to achieve our ambition to be one of the dominant players
in this industry.
'The first half of the financial year has been a period of transformation for
YouGov. While the good organic growth demonstrates the strength of our model and
commitment to research excellence, the acquisitions announced in August have
accelerated our international expansion considerably. As planned, the three
companies have been largely integrated and the benefits are coming through as we
rollout our core products.
'We are benefitting from the considerable investment we are making across the
Group which, combined with the international opportunities we have identified,
make us confident that 2008 will be another successful year. The second half has
started well with the momentum seen in the first half continuing and trading in
line with the Board's expectations.'
Enquiries:
YouGov plc
Nadhim Zahawi / Katherine Lee 020 7012 6000
Financial Dynamics
Charles Palmer / Nicola Biles 020 7831 3113
Nomad - Grant Thornton UK LLP
Gerry Beaney / Colin Aaronson 020 7383 5100
Chief Executive's Statement
Introduction
YouGov's growth over the past six months has been significant with the
acquisition of Zapera (Scandinavia), psychonomics (Germany) and the remaining
stake in Polimetrix (USA) supplementing its good organic growth. We have been
committed in our focus to bringing these two existing research groups and a US
version of YouGov into our enlarged Group. Good headway has been made in
integrating all acquired businesses and rolling out core products across the
Group, such as BrandIndex and Omnibus. Cross border project wins are already
demonstrating the success of this integration and product roll out.
During the first half YouGov's growth continued both organically (43%) in EMEA
and USA and through acquisitions (165%). This reflects the strength of our
strategy of combining product development with geographical expansion and
selective acquisition.
Alongside the focus on growing turnover and profits, we have been actively
investing in our core assets - our people and our infrastructure. A number of
high calibre appointments have been made following the refocusing of the UK
business, to create specialist sector verticals. This, coupled with the
acquisitions of lower margin businesses has resulted in the expected softening
of operating margins. However, this provides the business with a strong platform
to continue to deliver growth. Staff numbers have increased from a Group
headcount of 76 at 31 January 2007 to 425 at 31 January 2008. Recruitment has
taken place across all business areas.
Acquisitions
On 27 July 2007 we announced the first in a series of transactions; our German
expansion through the acquisition of the psychonomics Group AG. This was
followed, post year end, with the acquisition of the remaining 68% stake in
Polimetrix, our US associate and the acquisition of Zapera, a Group based in
Scandinavia.
These acquisitions were funded through a share placing, which our shareholders
approved on 3 September 2007. These acquisitions will allow us to accelerate our
growth and are consistent with the strategy to establish key geographic hubs to
provide us with an enhanced global presence. All acquisitions will be earnings
enhancing in the first full year. Integration plan is well underway, and
integration will continue to be our focus in the second half of the financial
year.
Financial performance
Turnover has increased by 208% to £18.8 million in the period (£6.1 million in
the six months to 31 January 2007). Profit before tax rose 30% to £3.0 million
(£2.3 million in the six months to 31 January 2007) and earnings per share
increased from 2.6 pence to 3.1 pence. Adjusted earnings per share (after
allowing for non cash adjustments) is 4.2 pence, an increase of 56% from 2.7
pence. Cash generated by operations was £1.8 million due to an extension in
debtor days (£2.7 million in the six months to 31 January 2007).
Analysis of Adjusted Profit Before Tax:
6 months to 6 months to 12 months to
31/1/08 31/1/07 31/7/07
£'000 £'000 £'000
Profit before tax 2,977 2,316 5,605
Amortisation 1,308 58 -
Share based payments 161 21 47
Imputed interest 165 - -
Adjusted profit before tax 4,611 2,395 5,652
One off costs
One off IFRS transition costs 48 - -
Holiday pay accrual 242 8 47
Integration costs 266 - -
Normalised profit before tax 5,167 2,403 5,699
Basic earnings per share 3.1 2.6* 6.2*
attributable to equity holders of
the company
Adjusted earnings per share 4.2 2.7* 6.3*
Normalised earnings per share 4.8 2.7* 6.4*
* Restated assuming 5:1 share split on 10 April 2007 had been effective
throughout the period.
On 31 January 2008, YouGov Group's non current assets totaled £50.7 million
(£5.4 million at 31 January 2007), this includes goodwill £30.5 million (£1.1
million at 31 January 2007), intangible assets of £16.2 million, and property,
plant and equipment £2.2 million (£0.4 million at 31 January 2007) reflecting
our ongoing investment in our infrastructure. Current assets total £29.0 million
(£7.6 million at 31 January 2007) including £14 million in cash or on deposit
(£4.3 million at 31 January 2007). Current liabilities stood at £15.0 million
(£3.1 million at 31 January 2007). Overall net assets stood at £52.3 million
(£9.5 million at 31 January 2007).
The Directors are not recommending the payment of a dividend at this stage of
the Company's development, which is consistent with statements made at the time
of flotation and reflects the growth of the Company and the considerable
opportunities still available to us.
Review of operations
YouGov continues to develop and strengthen its position as a global full-service
online research agency with strong client relationships and product offerings
generating a high level of repeat business.
Europe, Middle East and Africa (EMEA)
Each of the Group companies in EMEA has achieved strong organic growth driven by
a combination of increasing the amount of research provided to current clients
and the winning of new clients.
Client numbers have increased from 306 at 31 January 2007 to 1,215 at 31 January
2008. The profile of our customer base includes household names across all
sectors such as Google, Marks & Spencer, Costa and the European Union
Commission.
The core service offering focuses on data services (Omnibus and BrandIndex being
the key lines from this suite) and consulting services utilising qualitative and
quantitative research. We have already seen the initial successes of the
integration process coming through as planned with collaborative cross border
projects and the rollout of BrandIndex in Germany and Omnibus in the Middle
East. The re-focusing of the UK business allows the Group to increase its
value-add proposition as well as dovetail with the German business which has
similar sector specialism.
We are poised to launch BrandIndex in Scandinavia, in the first half of calendar
2008, which will cover the Nordic region.
Headcount in the region has increased from 76 at 31 January 2007 to 399 at 31
January 2008.
YouGovAlpha was created in August, building on YouGov's success in the financial
services sector, and has rapidly established an offering of consulting services,
buy-side and sell-side research and data services (Clothing Retail Index and
Consumer Retail Index). The team has established traction within the investment
community and we are excited by future opportunities.
United States of America (USA)
Sales growth in the USA continues to be strong. There were 63 clients at 31
January 2008. The volume of research provided to these clients over the period
has risen as have average project values. The profile of the customer base is
still skewed towards the higher education market (which is Polimetrix's
heritage) but this is becoming less so as other markets such as healthcare are
targeted.
The product offering in the region now includes BrandIndex and Omnibus whilst
the qualitative and quantitative offerings have also been significantly
enhanced.
There have been a number of new hires across all divisions and revenue
generating headcount has increased from 21 at 31 January 2007 to 26 at 31
January 2008.
Polimetrix has worked directly or indirectly for seven primary campaigns in the
current USA presidential elections, and are engaged in a long term polling
arrangement for the 2008 elections for a national organisation. Since the
beginning of November 2007, Polimetrix has been working with The Economist to
track public opinion on a variety of topics leading up to the presidential
election on a weekly basis.
Panel and product development
We have continued to broaden our global capabilities through investment in
existing panels and establishing new geographic and specialist panels. The
panels continue to support the growth achieved by all Group companies.
Panel sizes at 31 January 2008 are:
• EMEA 476,337 (up from 199,047 at 31 January 2007)
• USA 1,034,437 panellists (up from 832,111 at 31 January 2007)
Cross border research
All three acquisitions provide potential revenue synergies through increasing
our global reach. We are already seeing the benefits of Group members working
closely together demonstrated by winning our recent joint pitch for a long term
project with the European Commission.
The project will involve YouGov undertaking consumer research across seven
member countries to develop a standard format for the disclosure of information
of financial services products. This is the first time the EU Commission has
engaged in consumer research within the financial services sector and is a
hugely exciting project to be involved in.
The project will include online quantitative research completed by YouGov
complemented by offline qualitative research. YouGov was able to create a cost
effective and innovative solution to the online element of the project by
bringing in the complementary expertise and geographic coverage of Zapera and
psychonomics.
The success of the pitch was based on the deep sector knowledge of the YouGov
Group teams, the online research methodology and the geographic coverage across
Europe. This high profile project demonstrates the enhanced offering which
YouGov is now able to provide clients.
YouGov's ability to provide cross border research opens up an important and
lucrative part of the research market that we could not access prior to the
recent acquisitions.
Market conditions
According to Inside Research, the online research market continues to grow at a
faster pace (23%) than the total world wide research market (4%). Worldwide
online research spend increased to US$3.6bn in 2007 from US$2.9bn in 2006. The
growth in online research for 2008 is forecast to be 21%, in line with 2007
growth.
International Financial Reporting Standards (IFRS)
YouGov adopted International Financial Reporting Standards effective from 1
August 2006 and these are our first reported interim results under the
standards. Key changes are in the accounting for share based payments,
reclassification of fixed assets, accounting for acquisitions, non-amortisation
of goodwill, accounting for holiday pay, accounting for rent free periods and
deferred tax.
YouGovAlpha JV
YouGov plc announced on 6 March 2008 that it has signed heads of agreement with
Numis Corporation plc and FOUR Capital Partners Limited to form a joint venture
hedge fund designed to exploit investment opportunities identified by YouGov's
proprietary, real-time consumer research capability. This joint venture will
build on the success of YouGovAlpha, the UK's only dedicated market research
agency with services tailored to the specific needs of fund managers and
investment professionals. The joint venture will build on YouGov's UK and US
success. At a time when market conditions are difficult, the joint venture
partners believe that the fund's distinctive approach will be attractive to a
broad range of investors and plan to raise a first fund later in the year.
Board Change
On 6 March 2008 Peter Kellner stood down as President and Non-Executive Director
from the YouGov plc Board. Peter will remain as emeritus President and will
continue working with the Company's media, political and other clients, on a
part time basis. Additionally he will continue to represent YouGov in the media
and at academic and other conferences.
Current trading and outlook
The enlarged Group has delivered a strong performance during its first six
months of trading. We are confident that the investments made and the planning
undertaken in the first part of the year will allow us to continue the momentum
into the second half, through additional integration activities. The initial
rollout of YouGov products is on track and the three businesses are delivering
the expected benefits and synergies. The business continues to trade in line
with our expectations and the Board is confident that 2008 will be a successful
year both financially and operationally. Our strategy remains focused on
innovation, investment and internationalisation with recently acquired
businesses accelerating this strategy and providing YouGov with international
scale in key market research territories.
The first six months has been a period of considerable change with many new
people joining the YouGov team. While this has lead to a number of associated
execution challenges, the integration is progressing well and there continue to
be many exciting opportunities that are being pursued by our immensely talented
teams.
I take this opportunity on behalf of the Board to thank all of our teams for
their hard work and I look forward to our continued success in the remainder of
the year to July 2008 and beyond.
I would also like to thank our clients, our shareholders and our panel members
for their contribution to the Company's success.
The interim report was approved by the Board on 31 March 2008.
Nadhim Zahawi
Chief Executive Officer
YouGov plc
Independent Review report to YouGov plc
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-
yearly financial report for the six months ended 31 January 2008 which comprises
the condensed consolidated interim income statement, the condensed consolidated
interim balance sheet, the condensed consolidated interim statement of changes
in equity, the condensed consolidated interim cashflow statement and related
explanatory notes. We have read the other information contained in the interim
report which comprises only the Chairman's report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the company in accordance with guidance contained
in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information
performed by the Independent Auditor of the Entity'. Our review work has been
undertaken so that we might state to the company those matters we are required
to state to them in a review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company, for our review work, for this report, or for the
conclusion we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. As disclosed in note 1, the next annual financial statements
of the Group will be prepared in accordance with International Financial
Reporting Standards as adopted by the European Union.
This interim report has been prepared in accordance with International
Accounting Standard 34 'Interim Financial Reporting' and the requirements of
IFRS 1 'First-time Adoption of International Financial Reporting Standards'
relevant to interim reports.
The accounting policies are consistent with those that the directors intend to
use in the next annual financial statements.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 31 January 2008 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union.
GRANT THORNTON UK LLP
CHARTERED ACCOUNTANTS
London
31 March 2008
The maintenance and integrity of the YouGov website is the responsibility of the
directors: the interim review does not involve consideration of these matters
and, accordingly, the company's reporting accountants accept no responsibility
for any changes that may have occurred to the interim report since it was
initially presented on the website. Legislation in the United Kingdom governing
the preparation and dissemination of the interim report differ from legislation
in other jurisdictions.
YOUGOV PLC
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
For the period ended 31 January 2008
Note 6 months to 6 months 12 months
31/1/08 to 31/1/07 to 31/7/07
£'000 £'000 £'000
Continuing operations
Revenue 3 18,843 6,083 14,303
Cost of sales (3,197) (1,215) (2,647)
Gross profit 15,646 4,868 11,656
Administrative expenses (11,380) (2,586) (6,083)
Group operating profit before amortisation and 4,266 2,282 5,573
exceptional items
Amortisation of intangibles (16) (61) (15)
Amortisation of intangibles identified on (1,292) - -
acquisition
Group operating profit 3 2,958 2,221 5,558
Finance income 271 110 188
Finance costs (52) (1) (2)
Imputed finance cost (165) - -
Share of post tax loss in joint ventures (35) (14) (139)
Profit before taxation 2,977 2,316 5,605
Taxation 9 255 (243) (613)
Profit for the year 3,232 2,073 4,992
Attributable to:
Equity holders of the parent company 2,731 1,749 4,198
Minority interests 501 324 794
3,232 2,073 4,992
Earnings per share
Basic earnings per share attributable to equity 7 3.1 2.6* 6.2*
holders of the company
Diluted earnings per share attributable to equity 2.8 2.5* 5.9*
holders of the company
Adjusted earnings per share attributable to equity 4.2 2.7* 6.3*
holders of the company
* Restated assuming 5:1 share split on 10 April 2007 had been effective
throughout the period.
The accompanying accounting policies and notes form an integral part of these
financial statements.
YOUGOV PLC
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
For the period ended 31 January 2008
31/01/2008 31/01/2007 31/07/2007
Note £'000 £'000 £'000
Assets
Non Current Assets
Goodwill 30,538 1,068 1,090
Intangible assets 6 16,174 22 343
Property, plant and equipment 5 2,166 350 499
Investment accounted for using the equity method 29 3,975 4,539
Deferred tax assets 9 1,747 9 20
50,654 5,424 6,491
Current Assets
Inventories 2,521 - -
Trade and other receivables 11,612 3,296 5,693
Other current assets 816 - -
Cash and cash equivalents 14,049 4,287 4,061
Total current assets 28,998 7,583 9,754
Total assets 79,652 13,007 16,245
Liabilities
Current liabilities
Lease liabilities 21 29 24
Deferred consideration 4,157 - -
Trade and other payables 10,501 2,336 3,470
Short term borrowings 104 - -
Current tax liability 250 752 147
Total current liabilities 15,033 3,117 3,641
Net current assets / liabilities 13,965 4,466 6,113
Non current liabilities
Deferred consideration 3,652 347 334
Long term borrowings 2,305 - -
Deferred tax liability 9 6,353 19 56
Total non current liabilities 12,310 366 390
Total liabilities 27,343 3,483 4,031
Total net assets 3 52,309 9,524 12,214
Equity
Issued share capital 4 190 134 135
Share premium 29,158 2,987 3,026
Merger reserve 9,240 - -
Deferred consideration reserve 1,085 - -
Foreign exchange reserve 29 - -
Profit and loss reserve 10,646 5,373 7,593
Total parent shareholder's equity 50,348 8,494 10,754
Minority interests in equity 1,961 1,030 1,460
Total equity 52,309 9,524 12,214
Katherine Lee, Chief Financial Officer
YOUGOV PLC
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
For the period ended 31 January 2008
Profit
Share Foreign Deferred and
Share premium exchange Merger consideration loss Minority Total
capital account reserve reserve reserve account TOTAL Interest Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 August 2006 134 2,943 - - - 3,735 6,812 743 7,555
Changes in equity for first
half 2006/07
Net income recognised
directly in equity
Expenses offset against
share premium - (7) - - - - (7) - (7)
Foreign exchange difference
on the retranslation of
overseas entities - - - - - (130) (130) (37) (167)
Profit for the period - - - - - 1,749 1,749 324 2,073
Total recognised income and
expense for the period - (7) - - - 1,619 1,612 287 1,899
Issue of share capital for
exercise of share options - 51 - - - - 51 - 51
Issue of share options - - - - - 19 19 - 19
Balance at 31 January 2007 134 2,987 - - - 5,373 8,494 1,030 9,524
Changes in equity for second
half 2006/07
Net income recognised directly
in equity
Expenses offset against
share premium - (12) - - - - (12) - (12)
Foreign exchange difference
on the retranslation of
overseas entities - - - - - (230) (230) (40) (270)
Profit for the period - - - - - 2,449 2,449 470 2,919
Total recognised income and
expense for the period - (12) - - - 2,219 2,207 430 2,637
Dividends - - - - - (12) (12) - (12)
Issue of share capital
through exercise of share
options 1 51 - - - - 52 - 52
Issue of share options - - - - - 13 13 - 13
Balance at 31 July 2007 135 3,026 - - - 7,593 10,754 1,460 12,214
Profit
Share Foreign Deferred and
Share premium exchange Merger consideration loss Minority Total
capital account reserve reserve reserve account TOTAL Interest Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Changes in equity for
first half 2007/08
Balance at 1 August 2007 135 3,026 - - - 7,593 10,754 1,460 12,214
Net income recognised
directly in equity
Expenses offset against
share premium - (1,068) - - - - (1,068) - (1,068)
Foreign exchange difference
on the retranslation of
overseas entities - - 29 - - - 29 - 29
Profit for the period - - - - - 2,731 2,731 501 3,232
Total recognised income and
expense for the period - (1,068) 29 - - 2,731 1,692 501 2,193
Issue of share capital
through exercise of share
options 4 239 - - - - 243 - 243
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 - - 9,240 - - 9,252 - 9,252
Deferred consideration as
part consideration for
acquisition - - - - 1,085 - 1,085 - 1,085
Issue of share options - - - - - 322 322 - 322
Balance at 31 January 2008 190 29,158 29 9,240 1,085 10,646 50,348 1,961 52,309
YOUGOV PLC
CONDENSED CONSOLIDATED INTERIM CASHFLOW STATEMENT
For the period ended 31 January 2008
6 months 6 months 12 months
to to to
Note 31/1/08 31/1/07 31/7/07
£'000 £'000 £'000
Cash flows from operating activities
Profit after taxation 3,232 2,073 4,992
Adjustments for:
Depreciation 367 37 111
Amortisation 1,308 61 15
Foreign exchange gain (36) (112) -
Share option expense 166 - -
Taxation expense recorded in
profit and loss (270) 243 613
Loan revaluation (42) - -
Investment income (51) (113) (232)
(Increase)/decrease in trade and
other receivables (3,930) 459 (2,000)
Increase in trade and other
payables 1,071 89 1,307
Cash generated from operations 1,815 2,737 4,806
Interest paid (220) (1) (2)
Income taxes paid (554) - (960)
Net cash generated from operating
activities 1,041 2,736 3,844
Cashflow from investing activities
Acquisition of subsidiaries
(net of cash acquired) (15,765) - (681)
Acquisition of associate - (3,889) (3,727)
Acquisition of joint venture - - (34)
Proceeds from sale of property,
plant and equipment 22 - -
Purchase of property, plant and
equipment (1,630) (242) (467)
Purchase of intangible assets (544) (22) (383)
Interest received 271 114 234
Net cash used in investing activities (17,646) (4,039) (5,058)
Cash flows from financing activities
Proceeds from issue of share capital 26,211 44 84
Repayment of debt (2) - -
Net cash used in financing activities 26,209 44 84
Net increase / (decrease) in cash,
cash equivalents and overdrafts 9,604 (1,259) (1,130)
Cash and cash equivalents at beginning
of year 4,061 5,546 5,546
Exchange gain on cash and cash
equivalents 384 - (355)
Cash, cash equivalents and overdrafts
at end of year 14,049 4,287 4,061
YOUGOV PLC
NOTES TO THE INTERIM REPORT
For the period ended 31 January 2008
1 PRINCIPAL ACCOUNTING POLICIES
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, United Kingdom. YouGov plc's shares are listed on
the Alternative Investment Market of the London Stock Exchange.
YouGov plc's consolidated interim financial statements are presented in Pounds
Sterling (£), which is also the functional currency of the parent company.
These consolidated condensed interim financial statements have been approved for
issue by the Board of Directors on 28 March 2008.
The financial information set out in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
figures for the year ended 31 July 2006 have been extracted from the statutory
financial statements which have been filed with the Registrar of Companies. The
auditors' report on those financial statements was unqualified and did not
contain a statement under Section 237(2) of the Companies Act 1985.
Basis of preparation
These interim condensed consolidated financial statements are for the six months
ended 31 January 2008. They have been prepared in accordance with International
Accounting Standard 34 'Interim Financial Reporting' and the requirements of
International Financial Reporting Standards 1 'First-time Adoption of
International Financial Reporting Standards' relevant to interim reports. They
have been prepared on this basis as they will form part of the period covered by
the Group's first IFRS financial statements for the year ended 31 July 2008.
They do not include all of the information required for full annual financial
statements, and should be read in conjunction with the consolidated financial
statements for the year ended 31 July 2007.
These condensed consolidated interim financial statements (the interim financial
statements) have been prepared in accordance with the accounting policies set
out below which are based on the recognition and measurement principles of IFRS
in issue and as adopted by the European Union (EU) and are effective at 31 July
2008 or are expected to be adopted and effective at 31 July 2008, our first
annual reporting date at which we are required to use IFRS accounting standards
adopted by the EU.
The financial statements have been prepared under the historical cost
convention.
The policies have changed from the previous year when the financial statements
were prepared under applicable United Kingdom Generally Accepted Accounting
Principles (UK GAAP). The comparative information has been restated in
accordance with IFRS. The changes to accounting policies are explained in note
9 with the transition statement which shows the reconciliation of opening
balances. The date of transition to IFRS was 1 August 2006.
The group has taken advantage of certain exemptions available under IFRS1
First-time adoption of International Financial Reporting Standards. The
exemptions used are explained under the respective accounting policy.
The accounting policies have been applied consistently throughout the Group for
the purposes of preparation of these condensed consolidated interim financial
statements.
Basis of consolidation
The group financial statements consolidate those of the company and all of its
subsidiary undertakings drawn up to 31 January 2008. 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.
Business combinations completed prior to date of transition to IFRS
The group has elected not to apply IFRS 3 Business Combinations retrospectively
to business combinations prior to the date of transition at 1 August 2006.
Accordingly the classification of the combination (acquisition) remains
unchanged from that used under UK GAAP. Assets and liabilities are recognised
at date of transition if they would be recognised under IFRS, and are measured
using their UK GAAP carrying amount immediately post-acquisition as deemed cost
under IFRS, unless IFRS requires fair value measurement. Deferred tax and
minority interest are adjusted for the impact of any consequential adjustments
after taking advantage of the transitional provisions.
The transitional provisions used for past business combinations apply equally to
past acquisitions of interests in associates and joint ventures.
Associates and joint ventures
Entities whose economic activities are controlled jointly by the group and by
other ventures independent of the group are accounted for using the equity
method. Associates are those entities over which the group has significant
influence (defined as the power to participate in the financial and operating
decisions of the investee but not control or joint control over those policies)
but which are neither subsidiaries nor interests in joint ventures. The results
and assets and liabilities of associates are incorporated in these financial
statements using the equity method of accounting, which under investments in
associates are carried in the consolidated balance sheet at cost as adjusted for
post-acquisition changes in the Group's share of net assets of the associate
less any impairment in the value of individual investments.
However, when the group's share of losses in an associate equals or exceeds its
interest in the associate, including any unsecured receivables, the group does
not recognise further losses, unless it has incurred obligations or made
payments on behalf of the associate. If the associate subsequently reports
profits, the investor resumes recognising its share of those profits only after
its share of the profits equals the share of losses not recognised.
Unrealised gains on transactions between the group and its associates are
eliminated to the extent of the group's interest in the associates. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Amounts reported in the financial
statements of associates have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the group.
Goodwill
Goodwill representing the excess of the cost of acquisition over the fair value
of the group's share of the identifiable net assets acquired, is capitalised and
reviewed annually for impairment. Goodwill is carried at cost less accumulated
impairment losses. Negative goodwill is recognised immediately after
acquisition in the income statement.
Goodwill written off to reserves prior to date of transition to IFRS remains in
reserves. There is no re-instatement of goodwill that was amortised prior to
transition to IFRS. Goodwill previously written off to reserves is not written
back to profit or loss on subsequent disposal.
Impairment reviews are performed annually.
Revenue
Revenue is measured by reference to the fair value of consideration received or
receivable by the group for services provided, excluding VAT and trade
discounts.
Sale of products
Revenue from the sale of goods is recognised when all the following conditions
have been satisfied:
• the group has transferred to the buyer the significant risks and rewards of
ownership of the goods which is generally when projects have been delivered or
access passwords have been sent to the customer
• the group retains neither continuing managerial involvement to the degree
usually associated with ownership nor effective control over the goods sold
which is generally when a project is delivered
• the amount of revenue can be measured reliably
• it is probable that the economic benefits associated with the transaction
will flow to the group, and
• the costs incurred or to be incurred in respect of the transaction can be
measured reliably.
Rendering of services
When the outcome of a transaction involving the rendering of services can be
estimated reliably, revenue associated with the transaction is recognised by
reference to the stage of completion of the transaction at the balance sheet
date. The outcome of the transaction is deemed to be able to be estimated
reliably when all the following conditions are satisfied:
• the amount of revenue can be measured reliably, usually based on a status
of project completion based on each project manager's estimates and time
records,
• it is probable that the economic benefits associated with the transaction
will flow to the entity, and
• the stage of completion of the transaction at the balance sheet date can be
measured reliably and is estimated by reference to the number of hours assigned
and completed on an individual project.
Panel incentive costs
The company invites Polling Club members to fill out surveys for a cash or
points based incentive. Although these amounts are not paid until a
predetermined target value has accrued on a polling club member's account, an
assessment of incentives likely to be paid (present obligation) is made based
upon the result of past panellist behaviour and is recognised as a cost of sale
in the period in which the service is provided where settlement is expected to
result as an outflow of resources (payment).
Interest
Interest is recognised using the effective interest method which calculates the
amortised cost of a financial asset and allocates the interest income over the
relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset
to the net carrying amount of the financial asset.
Dividends
Dividends are recognised when the shareholders right to receive payment is
established.
Exceptional items
Items are highlighted as exceptional in the income statement when separate
disclosure is considered helpful in understanding the underlying performance of
the business.
Property, plant and equipment and depreciation
Property, plant and equipment is stated at cost or valuation, net of
depreciation and any provision for impairment. No depreciation is charged
during the period of construction. Leasehold property is included in property,
plant and equipment only where it is held under a finance lease. Borrowing
costs on property, plant and equipment under construction are capitalised during
the period of construction based on specific funds borrowed. Depreciation is
calculated to write down the cost less estimated residual value of all tangible
fixed assets by annual installments over their estimated useful economic lives.
Asset Depreciation rate
Freehold property 50 years
Leasehold property and improvements Straight line over the life of the lease
Fixtures and fittings 25% on a reducing balance
Computer equipment 33% per annum straight line
Motor vehicles 25% or the life of the lease
Intangible assets
Intangible assets represent identifiable non-monetary assets without physical
substance. Intangible assets are valued at either the directly attributable
costs or using valuation methods such as discounted cashflows and replacement
cost in the case of acquired intangible assets.
The Directors estimate the useful economic life of each asset and use these
estimates in applying amortisation rates. The Directors periodically review
economic useful life estimates.
Directors conduct an impairment review of intangible assets where necessary.
Where an impairment arises, losses are recognised in the income statement.
Panel acquisition costs
Panel acquisition costs reflect the direct cost of recruiting new panel members.
Only the proportion of expenditure that contributed to growth of the panel is
capitalised which is based on management estimates of panel churn. Amortisation
is charged to write off the panel acquisition costs over a 5 year period, this
being the Director's estimate of the average active life of a panellist.
Recognition criteria include validity testing to ensure that specific and
measurable costs relate to a completed enhancement of the panel which can be
fruitfully utilised by the business and generate future probably economic
benefits.
Panels acquired through business combinations are recognised at an independently
valued fair value.
Software development
Where software is developed internally, directly attributable costs including
employee costs incurred on software development along with an appropriate
portion of relevant overheads. The costs of internally generated software
developments are recognised as intangible assets and are subsequently measured
in reference to specific expenditure. However, until completion of the
development project, the assets are subject to impairment testing only.
Amortisation commences upon completion of the asset, and is shown within
amortisation of intangibles.
Careful judgement by the directors is applied when deciding whether the
recognition requirements for development costs have been met. Criteria include
the technological feasibility of the software, and that it is going to be of
beneficial use to the business, thereby generating future economic benefits.
Adequate reporting procedures exist to capture the expenditure.
Judgements are based on the information available at each balance sheet date.
In addition, all internal activities related to the research and development of
new software products are continuously monitored by the directors.
Software acquired through acquisition is independently fair valued.
Customer Contract and Lists
Where a customer contract or list is acquired as part of a business combination
the cost of the asset is recognised at its fair value to the Group at the date
of acquisition. The fair value is calculated by an independent expert.
Customer contracts and lists are amortised over a useful economic life based on
Directors' estimates.
Patents and trademarks
Patents and trademarks acquired to protect the YouGov brand and it's products
are included at cost and are not amortised, as the trademarks are infinite in
their longevity. The patents are subject to an annual impairment review.
Order backlog
Due to the nature of their businesses, Polimetrix, Zapera and psychonomics all
tend to have a certain level of secured orders (order backlog) or quotations
that have been accepted, and are awaiting commencement, completion or delivery.
The fair value of these assets has been calculated by discounting the present
value of the future anticipated cash inflow at the time of acquisition.
Research and development
Expenditure on research (or the research phase of an internal project) is
recognised as an expense in the period in which it is incurred.
Development costs incurred on specific projects are capitalised when all the
following conditions are satisfied:
• completion of the intangible asset is technically feasible so that it will
be available for use or sale
• the group intends to complete the intangible asset and use or sell it
• the group has the ability to use or sell the intangible asset
• the intangible asset will generate probable future economic benefits.
Among other things, this requires that there is a market for the output from the
intangible asset or for the intangible asset itself, or, if it is to be used
internally, the asset will be used in generating such benefits
• there are adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset, and
• the expenditure attributable to the intangible asset during its development
can be measured reliably.
Development costs not meeting the criteria for capitalisation are expensed as
incurred.
The cost of an internally generated intangible asset comprises all directly
attributable costs necessary to create, produce, and prepare the asset to be
capable of operating in the manner intended by management.
Assets acquired as part of a business combination
In accordance with IFRS 3 Business Combinations, an intangible asset acquired in
a business combination is deemed to have a cost to the group of its fair value
at the acquisition date. The fair value of the intangible asset reflects market
expectations about the probability that the future economic benefits embodied in
the asset will flow to the group. Where an intangible asset might be separable,
but only together with a related tangible or intangible asset, the group of
assets is recognised as a single asset separately from goodwill where the
individual fair values of the assets in the group are not reliably measurable.
Where the individual fair value of the complementary assets are reliably
measurable, the group recognises them as a single asset provided the individual
assets have similar useful lives.
Intangible asset Amortisation period
Consumer panel 5 years
Software development 5 years
Customer relationships 10 - 11 years
Trademarks 5 - 15 years
Order backlog 1 year
Impairment testing of goodwill, other intangible assets and property, plant and
equipment
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating
units). As a result, some assets are tested individually for impairment and
some are tested at cash-generating unit level. Goodwill is allocated to those
cash- generating units that are expected to benefit from synergies of the
related business combination and represent the lowest level within the group at
which management monitors the related cash flows.
Goodwill, other individual assets or cash-generating units that include
goodwill, other intangible assets with an indefinite useful life, and those
intangible assets not yet available for use are tested for impairment at least
annually. All other individual assets or cash-generating units are tested for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or
cash-generating unit's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of fair value, reflecting market conditions
less costs to sell, and value in use based on an internal discounted cash flow
evaluation.
Impairment losses recognised for cash-generating units, to which goodwill has
been allocated, are credited initially to the carrying amount of goodwill. Any
remaining impairment loss is charged pro rata to the other assets in the cash
generating unit. With the exception of goodwill, all assets are subsequently
reassessed for indications that an impairment loss previously recognised may no
longer exist.
Leased assets
In accordance with IAS 17, the economic ownership of a leased asset is
transferred to the lessee if the lessee bears substantially all the risks and
rewards related to the ownership of the leased asset. The related asset is
recognised at the time of inception of the lease at the fair value of the leased
asset or, if lower, the present value of the minimum lease payments plus
incidental payments, if any, to be borne by the lessee.
A corresponding amount is recognised as a finance leasing liability. Leases of
land and buildings are split into land and buildings elements according to the
relative fair values of the leasehold interests at the date of entering into the
lease agreement.
The interest element of leasing payments represents a constant proportion of the
capital balance outstanding and is charged to the income statement over the
period of the lease.
All other leases are regarded as operating leases and the payments made under
them are charged to the income statement on a straight line basis over the lease
term. Lease incentives are spread over the term of the lease.
Taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary
differences. Deferred tax is generally provided on the difference between the
carrying amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of goodwill, nor on the
initial recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit. Deferred tax on
temporary differences associated with shares in subsidiaries and joint ventures
is not provided if reversal of these temporary differences can be controlled by
the group and it is probable that reversal will not occur in the foreseeable
future. In addition, tax losses available to be carried forward as well as
other income tax credits to the group are assessed for recognition as deferred
tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred
tax assets are recognised to the extent that it is probable that the underlying
deductible temporary differences will be able to be offset against future
taxable income. Current and deferred tax assets and liabilities are calculated
at tax rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at the balance
sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statement, except where they relate to items that are
charged or credited directly to equity in which case the related deferred tax is
also charged or credited directly to equity.
Financial assets
Financial assets are divided into the following categories: loans and
receivables; financial assets at fair value through profit or loss;
available-for-sale financial assets; and held-to-maturity investments.
Financial assets are assigned to the different categories by management on
initial recognition, depending on the purpose for which they were acquired. The
designation of financial assets is re-evaluated at every reporting date at which
a choice of classification or accounting treatment is available.
All financial assets are recognised when the group becomes a party to the
contractual provisions of the instrument. Financial assets other than those
categorised as at fair value through profit or loss are recognised at fair value
plus transaction costs. Financial assets categorised as at fair value through
profit or loss are recognised initially at fair value with transaction costs
expensed through the income statement.
Financial assets at fair value through profit or loss include financial assets
that are either classified as held for trading or are designated by the entity
as at fair value through profit or loss upon initial recognition.
Subsequent to initial recognition, the financial assets included in this
category are measured at fair value with changes in fair value recognised in the
income statement. Financial assets originally designated as financial assets at
fair value through profit or loss may not be reclassified.
Financial assets are designated as at fair value through profit or loss where
they are managed and their performance evaluated on a fair value basis in
accordance with the group's documented risk management strategy.
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. Trade
receivables and other financial assets which are classified as loans and
receivables are classified as loans and receivables. Loans and receivables are
measured subsequent to initial recognition at amortised cost using the effective
interest method, less provision for impairment. Any change in their value
through impairment or reversal of impairment is recognised in the income
statement.
Provision against trade receivables is made when there is objective evidence
that the group will not be able to collect all amounts due to it in accordance
with the original terms of those receivables. The amount of the write-down is
determined as the difference between the asset's carrying amount and the present
value of estimated future cash flows.
An assessment for impairment is undertaken at least at each balance sheet date.
Regular purchases and sales are accounted for on settlement date. Where an
entity uses settlement date accounting for an asset that is subsequently
measured at cost or amortised cost, the asset is recognised initially at its
fair value on the trade date.
A financial asset is derecognised only where the contractual rights to the cash
flows from the asset expire or the financial asset is transferred and that
transfer qualifies for derecognition. A financial asset is transferred if the
contractual rights to receive the cash flows of the asset have been transferred
or the group retains the contractual rights to receive the cash flows of the
asset but assumes a contractual obligation to pay the cash flows to one or more
recipients. A financial asset that is transferred qualifies for derecognition
if the group transfers substantially all the risks and rewards of ownership of
the asset, or if the group neither retains nor transfers substantially all the
risks and rewards if ownership but does transfer control of that asset.
Financial liabilities
Financial liabilities are obligations to pay cash or other financial assets and
are recognised when the group becomes a party to the contractual provisions of
the instrument. Financial liabilities categorised as at fair value through
profit or loss are recorded initially at fair value, all transaction costs are
recognised immediately in the income statement. All other financial liabilities
are recorded initially at fair value, net of direct issue costs.
Financial liabilities categorised as at fair value through profit or loss are
remeasured at each reporting date at fair value, with changes in fair value
being recognised in the income statement. All other financial liabilities are
recorded at amortised cost using the effective interest method, with
interest-related charges recognised as an expense in finance cost in the income
statement. Finance charges, including premiums payable on settlement or
redemption and direct issue costs, are charged to the income statement on an
accruals basis using the effective interest method and are added to the carrying
amount of the instrument to the extent that they are not settled in the period
in which they arise.
Financial liabilities are categorised as at fair value through profit or loss
where they are classified as held-for- trading or designated as at fair value
through profit or loss on initial recognition. Financial liabilities are
designated as at fair value through profit or loss where they are managed and
their performance evaluated on a fair value basis in accordance with the group's
documented risk management.
A financial liability is derecognised only when the obligation is extinguished,
that is, when the obligation is discharged or cancelled or expires.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together
with other short-term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an insignificant risk of
changes in value. In addition, bank overdrafts which are repayable on demand
are included.
Equity
Equity comprises the following:
• Share capital represents the nominal value of equity shares.
• Share premium represents the excess over nominal value of the fair value of
consideration received for equity shares, net of expenses of the share issue.
• Merger reserve represents the excess over nominal value of the fair value
of consideration received for equity shares issued/allotted directly to acquire
another entity meeting the specific requirements of section 131 of the Companies
Act 1985. The conditions of the relief include:
o Securing at least 90% of the nominal value of equity of another company
o The arrangement provides for allotment of equity shares in the issuing
company
• Deferred consideration reserve represents the total value of equity that
may be issued should specific earn-out agreements be achieved.
• Foreign exchange reserve represents the differences arising from
translation of investments in overseas subsidiaries.
• Profit and loss reserve represents retained profits.
Foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling at
the date of the transaction.
Monetary assets and liabilities in foreign currencies are translated at the
rates of exchange ruling at the balance sheet date. Non-monetary items that are
measured at historical cost in a foreign currency are translated at the exchange
rate at the date of the transaction. Non-monetary items that are measured at
fair value in a foreign currency are translated using the exchange rates at the
date when the fair value was determined.
Any exchange differences arising on the settlement of monetary items or on
translating monetary items at rates different from those at which they were
initially recorded are recognised in the profit or loss in the period in which
they arise.
Exchange differences on non-monetary items are recognised in the statement of
recognised income and expenses to the extent that they relate to a gain or loss
on that non-monetary item taken to the statement of recognised income and
expenses, otherwise such gains and losses are recognised in the income
statement.
The assets and liabilities in the financial statements of foreign subsidiaries
and associates and related goodwill are translated at the rate of exchange
ruling at the balance sheet date. Income and expenses are translated at the
actual rate. The exchange differences arising from the retranslation of the
opening net investment in subsidiaries and associates are taken directly to the
'Foreign currency reserve' in equity.
Employee benefits
Equity settled share-based payment
All share-based payment arrangements granted after 7 November 2002 that had not
vested prior to 1 August 2006 are recognised in the financial statements.
This fair value is appraised at the grant date and excludes the impact of
non-market vesting conditions.
All equity-settled share-based payments are ultimately recognised as an expense
in the income statement with a corresponding credit to 'other reserve'.
If vesting periods or other non-market vesting conditions apply, the expense is
allocated over the vesting period, based on the best available estimate of the
number of share options expected to vest. Estimates are subsequently revised
if there is any indication that the number of share options expected to vest
differs from previous estimates. Any cumulative adjustment prior to vesting is
recognised in the current period.
No adjustment is made to any expense recognised in prior periods if share
options ultimately exercised are different to that estimated on vesting.
Upon exercise of share options the proceeds received net of attributable
transaction costs are credited to share capital, and where appropriate share
premium.
Contingent consideration
Future anticipated payments to vendors in respect of earnouts are based on the
directors' best estimates of future obligations, which are dependent on the
future performance of the interests acquired and assume the operating companies
improve profits in line with directors' estimates. When consideration payable
is deferred, the fair value of the consideration is obtained by discounting to
present value the amounts expected to be payable in the future at a rate
equivalent to a UK 10 year treasury gilt.
Imputed interest
When the outflow of cash or cash equivalents is deferred, and the arrangement
constitutes a financing transaction, the fair value of the consideration is the
present value of all future payments determined using an imputed rate of
interest. The imputed rate of interest used is the UK 10 year treasury gilt.
The difference between the present value of all future payments and the nominal
amount of the consideration is recognised as an interest charge.
Critical accounting estimates and judgements
Estimates and judgements are evaluated on a regular basis and are based on
historical experience and other factors, such as expectations of future events
that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. These
estimates, by definition, will rarely equal the related actual results. The
estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Goodwill
The Group tests annually whether goodwill has suffered any impairment, in
accordance with the accounting policy. The recoverable amount of
cash-generating units has been determined based on discounted future cashflows.
These calculations require estimates to be made.
Income taxes
The Group is subject to income taxes in various jurisdictions. Judgement is
required in determining the worldwide provision for income taxes. There are many
transactions/calculations for which the ultimate tax determination is uncertain
during the ordinary course of business. Where the final tax outcome is different
to what is initially recorded, such differences will impact the income tax and
deferred tax provisions.
Intangible assets
The Group is required to identify and assess the useful life of intangible
assets and determine if there is a finite or indefinite life. Judgement is
required in determining if an intangible asset has a finite life and the extent
of this finite life in order to calculate the amortisation charge on the asset.
The Group tests at each reporting date whether intangible assets have suffered
any indicators of impairment, in accordance with the accounting policy. The
recoverable amount of cash-generating units have been determined based on
discounted future cashflows. These calculations require estimates to be made.
Where there is no method of valuation for an intangible asset, management will
make use of a valuation technique to determine the value of an intangible if
there is no evidence of a market value. In doing so certain assumptions and
estimates will be made.
Share based payments
The Group is required to measure the fair value of equity settled transactions
with employees at the grant date of the equity instruments. The fair value is
determined by using the Black-Scholes method. This requires assumptions
regarding interest free rates, share price volatility and expected life of an
employee share option. The volatility of the Company's share price on each date
of grant was calculated as the average of volatilities of share prices of
companies in the Peer Group on the corresponding dates.
Deferred taxation
Judgement is required by management in determining whether the Group should
recognise a deferred tax asset. Management considered whether there is
sufficient certainty its tax losses available to carry forward would ultimately
be offset against future earnings, this judgement impacts on the degree to which
deferred tax assets are recognised.
Contingent consideration
As part of the acquisitions, contingent consideration is payable to selling
shareholders groups based on the future performance of the businesses.
Judgement is required in estimating the magnitude of contingent consideration
and the likelihood of payment.
2. SEASONAL FLUCTUATIONS
The market research industry is subject to seasonal fluctuations, with peak
demand in the second half of the Group's financial year. For the six months to
31 January 2008 the level of sales represented 132% of the annual level of
research sales in the year ended 31 July 2007. For the 6 months ended 31
January 2007 the level of sales represented 43% of the annual level of research
sales in the year ended 31 July 2007.
3 SEGMENTAL ANALYSIS
The group only undertakes one class of business, that of market research.
The group supplies two geographical segments that are deemed significant, EMEA
and USA.
Turnover by origin and destination are not materially different.
Revenue 6 months 6 months 12 months
to 31/1/08 to 31/1/07 to 31/7/07
£'000 £'000 £'000
EMEA 17,785 6,083 14,303
USA 1,058 - -
Group turnover 18,843 6,083 14,303
Segment operating profit 6 months to 6 months 12 months
31/1/08 to 31/1/07 to 31/7/07
£'000 £'000 £'000
EMEA 4,183 2,886 6,953
USA (731) - -
Central corporate expenses (494) (665) (1,395)
Group operating profit 2,958 2,221 5,558
Net assets 6 months to 6 months 12 months
31/1/08 to 31/1/07 to 31/7/07
£'000 £'000 £'000
EMEA 37,703 5,668 8,487
USA 14,606 3,856 3,727
Group net assets 52,309 9,524 12,214
All of the segment revenue reported above is from external customers.
Segment profit represents the profit earned by each segment before interest tax
and minority interest, and without allocation of central administration costs
and directors' salaries.
4 SHARE ISSUE
Shares issued and authorised for the period to 31 January 2008 can be summarised
as follows:
Number £'000
6 months to 31 January 2008
At 1 August 2007 67,422,570 135
Issue of shares 27,411,983 55
At 31 January 2008 94,834,553 190
6 months to 31 January 2007*
At 1 August 2006 66,847,785* 134
Issue of shares 283,455* 0
At 31 January 2007 67,131,240* 134
Year to 31 July 2007
At 1 August 2006 66,847,785 134
Issue of shares 574,785 1
At 31 July 2007 67,422,570 135
* Restated assuming 5:1 share split on 10 April 2007 had been effective
throughout the period.
During the period to 31 January 2008, 25,215,543 shares were issued to satisfy
consideration for the acquisitions of Polimetrix, psychonomics and Zapera.
2,196,440 shares were also issued to satisfy share options previously granted
under YouGov plc's employee share option scheme.
The shares relating to the acquisitions were issued in three tranches, on 3, 6
and 10 of September 2007. Of the total issue, 19,285,714 shares yielded £26.2m
in cash (net of expenses) and 5,929,829 shares were issued as acquisition
shares. The issues increased shareholders equity by £36.3m. The weighted
average share price was £1.44.
The 2,196,440 shares issued to satisfy share options yielded £0.2m in cash and
increased shareholders equity by £0.2m. The weighted average share price was
£0.11.
5 ADDITIONS AND DISPOSALS OF PROPERTY, PLANT AND EQUIPMENT
The following table shows the significant additions and disposals of property,
plant and equipment.
Freehold Leasehold Computer Fixtures and Motor
property property equipment fittings vehicles Total
£'000 £'000 £'000 £'000 £'000 £'000
Carrying amount at 1 - 175 132 159 33 499
August 2007
Additions 942 30 227 268 - 1,467
Acquired through - - 91 476 567
acquisitions
Disposals - - - - - -
Depreciation - (21) (130) (211) (5) (367)
Reclassified - - - - - -
Carrying amount at 31 942 184 320 692 28 2,166
January 2008
Carrying amount at 1 - 41 60 36 18 155
August 2006
Additions - 5 106 103 28 242
Acquired through - - - - - -
acquisitions
Disposals - - (10) - - (10)
Depreciation - (8) (15) (8) (6) (37)
Reclassified - (18) - 18 - -
Carrying amount at 31 - 20 141 149 40 350
January 2007
Carrying amount at 1 - 41 60 36 18 155
August 2006
Additions - 189 114 137 27 467
Acquired through - - - - - -
acquisitions
Disposals - (11) - (1) - (12)
Depreciation - (26) (42) (31) (12) (111)
Reclassified - (18) - 18 - -
Carrying amount at 31 - 175 132 159 33 499
July 2007
6 ADDITIONS AND DISPOSALS OF INTANGIBLE ASSETS
The following table shows the significant additions and disposals of intangible
assets.
Customer
contracts & Trade Order Research and
Panel Software lists marks backlog development Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Carrying amount at 115 200 - 28 - - 343
1 August 2007
Additions 165 943 - 7 - 286 1,401
Acquired through 5,301 - 4,621 5,430 386 - 15,738
acquisitions
Disposals - - - - - - -
Amortisation (548) (64) (216) (287) (193) - (1,308)
Carrying amount at 5,033 1,079 4,405 5,178 193 286 16,174
31 January 2008
- - -
Carrying amount at - 3 - - - - 3
1 August 2006
Additions - 22 - - - - 22
Acquired through - - - - - - -
acquisitions
Disposals - - - - - - -
Amortisation - (3) - (3)
Carrying amount at - 22 - - - - 22
31 January 2007
- - -
Carrying amount at - 3 - - - - 3
1 August 2006
Additions 124 203 - 28 - - 355
Acquired through - - - - - - -
acquisitions
Disposals - - - -
Amortisation (9) (6) - - - - (15)
Carrying amount at 115 200 - 28 - - 343
31 July 2007
7 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 removes the effect of the amortisation of
intangible assets, share based payments and imputed interest and any related tax
effects from the calculation as follows:
6 months 6 months 12 months
to 31/1/08 to 31/1/07 to 31/7/07
£'000 £'000 £'000
Earnings 2,731 1,749 4,198
Add: amortisation of intangible assets 1,308 61 15
Add: share based payments 161 21 47
Add: imputed interest 165 - -
Tax effect of the above adjustments (645) (6) (14)
Adjusted retained profit 3,720 1,825 4,246
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below.
6 months 6 months 12 months
to 31/1/08 to 31/1/07 to 31/7/07
Number of shares
Weighted average number of shares during the period:
('000 shares)
- Basic 88,501 66,859* 67,351
- Dilutive effect of share options 8,959 3,831* 3,462
- Diluted 97,460 70,690* 70,813
Basic earnings per share (in pence) 3.1 2.6 6.2
Adjusted basic earnings per share (in pence) 4.2 2.7 6.3
Diluted earnings per share (in pence) 2.8 2.5 5.9
Adjusted diluted earnings per share (in pence) 3.8 2.6 6.0
The adjustments have the following effect:
Basic earnings per share 3.1 2.6 6.2
Amortisation of intangible assets 1.5 0.1 -
Share based payments 0.2 - 0.1
Imputed interest 0.2 - -
Tax effect of the above adjustments (0.8) - -
Adjusted earnings per share 4.2 2.7 6.3
Diluted earnings per share 2.8 2.5 5.9
Amortisation of intangible assets 1.3 0.1 -
Share based payments 0.2 - 0.1
Imputed interest 0.2 - -
Tax effect of the above adjustments (0.7) - -
Adjusted diluted earnings per share 3.8 2.6 6.0
* Restated for 5:1 share split on 10 April 2007.
8 BUSINESS COMBINATIONS
Acquisition of psychonomics
The acquisition of 100% of the issued share capital of psychonomics AG ('
psychonomics') was announced on 7 August 2007. psychonomics is a leading market
research agency incorporated in 1992 and has its head office in Cologne with
offices in Vienna and Berlin.
The consideration payable for the entire issued share capital of psychonomics
was £17.5m and was satisfied by the issue of shares to the value of £3.5m
(priced at the average mid-market closing price over the 30 day period to 31
August 2007 being the final trading day prior to shareholder approval), with the
balance at completion being paid in cash, of £10.7m. The psychonomics sellers
are entitled to be paid the pre completion profits of psychonomics for the
current year calculated in proportion to the number of months elapsed prior to
completion. Such amount is capped at £1m. An earn-out has also been put in
place for the 2 financial years ending 31 December 2008. Under this earn-out,
based on financial targets being met, a maximum of a further £1.9m will be
payable, either in cash or shares (priced at the average price of trading over
the 30 dealing day period following publication of the audited financial
statements for the financial year ending 31 December 2008). In addition to the
purchase price payable, shares to the value of €500,000 will be issued for a
psychonomics employee incentivisation programme. This payment is not presently
included in the financial statements as the shares have not been issued.
Professional fees of £25k for due diligence, and £387k for other professional
fees were incurred.
The allocation of the purchase price to the assets and liabilities of
psychonomics was only provisionally completed at 31 January 2008. The amounts
provisionally recognised for each class of psychonomics assets, liabilities, and
contingent liabilities recognised at the acquisition date are as follows:
Acquiree's carrying Provisional fair Fair value
amount before Value
combination Adjustments
£'000 £'000 £'000
Net assets acquired:
Goodwill 15 - 15
Intangible assets 47 - 47
Property, plant and equipment 423 - 423
Work in progress 2,367 - 2,367
Trade and other receivables 1,881 - 1,881
Cash and cash equivalents 355 - 355
Other current assets 139 - 139
Trade and other payables (4,171) - (4,171)
Short term borrowings (99) - (99)
Current tax liability (33) - (33)
Deferred tax liability (71) - (71)
Minority interest (18) - (18)
Net assets 835 - 835
Goodwill arising on acquisition 9,333
Intangibles arising on acquisition 7,341
17,509
Total consideration, analysed as: 10,684
Cash
Equity 3,532
Deferred consideration 2,881
Acquisition expenses 412
17,509
Net cash outflow arising on acquisition:
Cash consideration paid 10,684
Cash and cash equivalents acquired (355)
10,329
Ownership and control passed to YouGov plc on 7 August 2007 and psychonomics has
been consolidated within the Group financial statements from August 2007.
As at 31 January 2008, the fair value exercise was not completed. The fair
value exercise had not been completed by the reporting date due to the timing of
receiving audited accounts. Under IFRS the fair value exercise can be completed
within 12 months of acquisition and this will be completed prior to 31 July
2008.
The goodwill arising on the acquisition of psychonomics is attributable to the
anticipated synergies expected to be derived from the combination and value of
the workforce of psychonomics which cannot be recognised as an intangible asset
under IAS38 'Intangible Assets'.
Since the acquisition psychonomics has contributed £6m to Group revenue and
£0.5m to the Group profit for the period to 31 January 2008.
Acquisition of Zapera
Zapera.com A/S ('Zapera') is an online research agency with offices in Denmark,
Sweden and Norway and specialises in healthcare, pharmaceutical and brand
research. The consideration payable for the acquisition of 100% of the issued
share capital of Zapera on 7 August 2007 was cash of £4.9m and the allotment of
264,026 shares to the value of £412,000 (priced at 151.5p per Ordinary Share).
In addition, YouGov applied £1.9m towards the repayment of loan capital, the
acquisition of bank debt and the payment of deferred consideration pursuant to a
previous acquisition made by Zapera. Additional consideration of £2.25m will
become payable to the sellers subject to certain financial hurdles for the 12
month period to 31 July 2008 being met by Zapera. The earn out will be settled
with equity priced at the average mid-market closing price of trading of the
YouGov shares over the 10 day period to the date falling 1 working day prior to
that on which the Earn Out Equity is to be issued. The 2 original founders are
entitled to an earnout payment of (in aggregate) £1.25m depending on the
financial performance for the 12 month periods to each of 31 July 2009 and 2010,
both discounted to present value of £3.3m. Any such earn-out payment to the
founders will be satisfied 50% in cash and 50% in Ordinary Shares priced in the
same manner as the initial earn out. Professional fees of £86k for due
diligence, and £32k for other professional fees were incurred.
The allocation of the purchase price to the assets and liabilities of Zapera was
only provisionally completed at 31 January 2008. The amounts provisionally
recognised for each class of Zapera assets, liabilities, and contingent
liabilities recognised at the acquisition date are as follows.
Acquiree's carrying Provisional fair Fair value
amount before value
combination Adjustments
£'000 £'000 £'000
Net assets acquired:
Goodwill 2,466 (2,466) -
Property, plant and equipment 95 - 95
Deferred tax asset 139 103 242
Inventories 130 - 130
Trade and other receivables 505 (10) 495
Cash and cash equivalents 123 - 123
Trade and other payables (987) (335) (1,322)
Short term borrowings (117) - (117)
Long term borrowings (2,041) - (2,041)
Net assets 313 (2,708) (2,395)
Goodwill arising on acquisition 9,472
Intangibles arising on acquisition 3,556
10,633
Total consideration, analysed as: 4,930
Cash
Equity 412
Deferred consideration 3,260
Acquired liabilities 1,913
Acquisition expenses 118
10,633
Net cash outflow arising on acquisition:
Cash consideration paid 4,930
Cash and cash equivalents acquired (123)
4,807
The acquired liabilities have been discounted to arrive at a present value as
follows:
£'000
Shareholders loan 731
Bank loan 754
Deferred consideration 555
2,040
Ownership and control passed to YouGov plc on 7 August 2007 and Zapera has been
consolidated within the Group financial statements from August 2007.
The allocation of purchase prices to the assets and liabilities was only
provisionally completed at 31 January 2008 due to pressures on subsidiary
financial reporting and associated management time. Under IFRS, acquiring
companies have a period of 12 months in which to finalise the allocation and
this will be completed by 31 July 2008.
The goodwill arising on the acquisition of Zapera is attributable to the
anticipated profitability of the distribution of the Group's products in the new
markets and the anticipated future operating synergies from the combination.
Since the acquisition Zapera has contributed £3m to Group revenue and £0.2m to
the Group profit for the period to 31 January 2008.
Acquisition of Polimetrix
Polimetrix Inc ('Polimetrix') is an online market research agency. Under the
terms of a pre-existing option surviving from the time that we acquired our
initial stake in Polimetrix, YouGov and YouGovAmerica had the right to purchase
the 68% of Polimetrix not owned by YouGovAmerica. The merger of Polimetrix and
YouGovAmerica, effected on 7 August 2007, resulted in the acquisition of such
68% at a price of $2.10 per share. For tax structuring purposes the acquisition
was effected by merging Polimetrix with a YouGov acquisition vehicle. The total
consideration payable was £14.7m of which £8.1m was satisfied in cash, £5.3m in
equity in YouGov. The value of the equity at completion was based on the average
mid-market closing prices of the shares over the 30 day period to 31 August
2007, being the final day of trading prior to the EGM. £1.1m of the shares will
only be issued one year following completion provided there are no claims made
by YouGov under the merger agreement based on the average mid-market closing
price used to calculate the initial payment. The Acquisition Shares are subject
to selling restrictions for a period of 12 months from the date of completion.
Professional fees of £122k were incurred.
The allocation of the purchase price to the assets and liabilities of Polimetrix
was only provisionally completed at 31 January 2008. The net assets acquired in
the transaction, and the goodwill arising, are as follows:
Acquiree's carrying Provisional fair Fair value
amount before value
combination adjustments
£'000 £'000 £'000
Net assets acquired:
Property, plant and equipment 82 (30) 52
Deferred tax asset - 1,031 1,031
Trade and other receivables 202 - 202
Cash and cash equivalents 3,565 - 3,565
Trade and other payables (360) - (360)
Net assets 3,489 1,001 4,490
Goodwill arising on acquisition 4,992
Intangibles arising on acquisition 5,262
14,744
Total consideration, analysed as: 8,108
Cash
Equity 5,306
Deferred consideration 1,086
Acquired liabilities 122
Acquisition expenses 122
14,744
Net cash outflow arising on acquisition:
Cash consideration paid 4,260
Cash and cash equivalents acquired (3,565)
695
Ownership and control passed to YouGov plc on 7 August 2007 and Polimetrix has
been consolidated within the Group financial statements from August 2007.
The allocation of purchase prices to the assets and liabilities was only
provisionally completed at 31 January 2008 as audited financial statements were
not available. Under IFRS, acquiring companies have a period of 12 months in
which to finalise the allocation and this will be completed by 31 July 2008.
The goodwill arising on the acquisition of Polimetrix Inc is attributable to the
anticipated profitability of the distribution of the Group's products in the new
markets and the anticipated future operating synergies from the combination.
Since the acquisition Polimetrix has contributed £1.2m to Group revenue and
(£0.1m) to the Group profit for the period to 31 January 2008.
9 TAXATION
6 months 6 months 12 months
to 31/1/08 to 31/1/07 to 31/7/07
£'000 £'000 £'000
Current Taxation 633 234 585
Deferred Taxation (903) 7 37
Group taxation (270) 241 622
Deferred tax on JV loss disclosed within
'share of post tax loss in joint ventures' 15 - -
Taxation per the income statement (255) 241 622
6 months 6 months 12 months
to 31/1/08 to 31/1/07 to 31/7/07
Profit before tax per the income statement 2,977 2,316 5,599
Deferred tax on JV loss disclosed within
'share of post tax loss in joint ventures' (15) - -
Group profit before tax 2,962 2,316 5,599
Weighted average tax rate 17% 11% 11%
Tax calculated at domestic tax rates applicable
to profits in the respective countries 517 254 630
Adjustment in respect of prior period 36 (15) (19)
Expenses not deductible for tax purposes 80 (5) (26)
Deferred taxation asset on losses (256) - -
Deferred tax on timing differences 5 7 37
Deferred taxation on IFRS adjustments
(intangibles arising on acquisition) (600) - -
Deferred taxation on IFRS adjustments (other) (52) - -
Group taxation (270) 241 622
Deferred tax on JV loss disclosed within
'share of post tax loss in joint ventures' 15 - -
Taxation per the income statement (255) 241 622
The weighted average applicable tax rate has changed due to the acquisition of
businesses operating under different tax regimes.
The movement in deferred tax assets and liabilities during the year, without
taking into account the consideration of offsetting of balances within the same
tax jurisdiction is as follows:
Deferred Tax Asset Accelerated Tax Fair Value Tax
Depreciation Gain Losses Total
£'000 £'000 £'000 £'000
At 1 August 2006 - - - -
At 31 January 2007 - - - -
At 31 July 2007 - - - -
Acquisition Of Subsidiary 118 273 1,000 1,391
Credited to the income statement 100 - 256 356
At 31 January 2007 218 273 1,256 1,747
Deferred Tax Liability Accelerated Tax Fair Value
Depreciation Loss Other Total
£'000 £'000 £'000 £'000
At 1 August 2006 (12) - - (12)
(Credited) to the income statement (7) - - (7)
At 31 January 2007 (19) - - (19)
(Credited) to the income statement (37) - - (37)
At 31 July 2007 (56) - - (56)
Acquisition Of Subsidiary (6,844) - - (6,844)
Charged to the income statement 547 - - 547
At 31 January 2007 (6,353) - - (6,353)
10 EXPLANATION OF TRANSITION TO IFRS
As stated in the Basis of Preparation, these are the Group's first condensed
consolidated interim financial statements for part of the period covered by the
first IFRS annual consolidated financial statement prepared in accordance with
IFRS.
An explanation of how the transition from UK GAAP to IFRS has affected the
Group's financial position, financial performance is set out below.
IFRS 1 permits companies adopting IFRS for the first time to take certain
exemptions from the full requirements of IFRS in the transition period. These
interim financial statements have been prepared on the basis of taking the
following exemptions:
• business combinations prior to 1 August 2006, the Group's date of
transition to IFRS, have not been restated to comply with IFRS3 'Business
Combinations'. Goodwill arising from these business combinations of £1.2m has
not been restated other than as set out below.
• Cumlative translation differences on foreign operations are deemed to
be nil at 1 August 2006. Any gains and losses recognised in the consolidated
income statement on subsequent disposal of foreign operations will exclude
translation differences arising prior to the transition date.
• The entity has elected not to apply IAS21 'the effects of Changes in
Foreign Exchange Rates' retrospectively to goodwill and fair value adjustments
arising on business combinations before the Group's date of transition to IFRS.
Such goodwill and fair value adjustments are not treated as foreign currency
assets and so are not retranslated at each reporting date.
Reconciliation Of Equity as at 1 August 2006
UK GAAP A B C D E F IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non Current Assets
Goodwill 1,171 1,171
Intangible assets 0 3 3
Property, plant & equipment 158 (3) 155
Investment accounted for using the equity 110 110
method
Deferred tax assets 0 11 11
1,439 1,450
Current Assets
Inventories 0 0
Trade and other receivables 3,699 3,699
Current tax receivable 0 0
Other current assets 0 0
Cash and cash equivalents 5,546 5,546
9,245 9,245
Current Liabilities
Lease liabilities (18) (18)
Deferred consideration 0 0
Trade and other payables (2,251) (42) 75 (2,218)
Short term borrowings 0 0
Current tax liability (527) (527)
(2,796) (2,763)
Non Current Liabilities
Deferred consideration (365) (365)
Long term borrowings 0 0
Deferred tax liability (12) (12)
(377) (377)
Net Assets 7,511 0 (42) 75 11 0 0 7,555
Reconciliation Of Equity as at 1 August
2006
UK GAAP A B C D E F IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Equity
Issued share capital 134 134
Share premium 2,943 2,943
Merger reserve 0 0
Deferred consideration reserve 0 0
Foreign exchange reserve 0 0
Retained earnings 3,691 (42) 75 11 3,735
Minority interests in equity 743 743
Total Equity 7,511 0 (42) 75 11 0 0 7,555
Reconciliation Of Equity as at 31 January 2007
UK GAAP A B C D E F IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non Current Assets
Goodwill 1,012 56 1,068
Intangible assets 0 22 22
Property, plant & equipment 372 (22) 350
Investment accounted for using the equity 3,975 3,975
method
Deferred tax assets 0 9 9
5,359 5,424
Current Assets
Inventories 0 0
Trade and other receivables 3,302 (6) 3,296
Current tax receivable 0 0
Other current assets 0 0
Cash and cash equivalents 4,287 4,287
7,589 7,583
Current Liabilities
Lease liabilities (29) (29)
Deferred consideration 0 0
Trade and other payables (2,386) (44) 94 (2,336)
Short term borrowings 0 0
Current tax liability (752) (752)
(3,167) (3,117)
Non Current Liabilities
Deferred consideration (347) (347)
Long term borrowings 0 0
Deferred tax liability (19) (19)
(366) (366)
Net Assets 9,415 0 (44) 94 9 56 (6) 9,524
Reconciliation Of Equity as at 31 January
2007
UK GAAP A B C D E F IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Equity
Issued share capital 134 134
Share premium 2,987 2,987
Merger reserve 0 0
Deferred consideration reserve 0 0
Foreign exchange reserve 0 0
Retained earnings 5,264 (44) 94 9 56 (6) 5,373
Minority interests in equity 1,030 1,030
Total Equity 9,415 0 (44) 94 9 56 (6) 9,524
Reconciliation Of Equity as at 31 July 2007
UK GAAP A B C D E F IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non Current Assets
Goodwill 1,034 56 1,090
Intangible assets 143 200 343
Property, plant & equipment 699 (200) 499
Investment accounted for using the equity 4,463 76 4,539
method
Deferred tax assets 0 20 20
6,339 6,491
Current Assets
Inventories 0 0
Trade and other receivables 5,699 (6) 5,693
Current tax receivable 0 0
Other current assets 0 0
Cash and cash equivalents 4,061 4,061
9,760 9,754
Current Liabilities
Lease liabilities (24) (24)
Deferred consideration 0 0
Trade and other payables (3,494) (83) 107 (3,470)
Short term borrowings 0 0
Current tax liability (147) (147)
(3,665) (3,641)
Non Current Liabilities
Deferred consideration (334) (334)
Long term borrowings 0 0
Deferred tax liability (56) (56)
(390) (390)
Net Assets 12,044 0 (83) 107 20 132 (6) 12,214
Reconciliation Of Equity as at 31 July 2007
UK GAAP A B C D E F IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Equity
Issued share capital 135 135
Share premium 3,026 3,026
Merger reserve 0 0
Deferred consideration reserve 0 0
Foreign exchange reserve 0 0
Retained earnings 7,423 (83) 107 20 132 (6) 7,593
Minority interests in equity 1,460 1,460
Total Equity 12,044 0 (83) 107 20 132 6 12,214
Reconciliation Of Profit For The 6 Months Ended 31 January 2007
UK GAAP A B C D E F IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 6,083 6,083
Cost of sales (1,215) (1,215)
Gross Profit 4,868 4,868
Administrative expenses (2,581) (2) (6) (2,589)
Management fee 0 0
Group Operating Profit Pre Amortisation 2,287 2,279
Amortisation of intangibles (114) 56 (58)
Group Operating Profit 2,173 2,221
Finance income 110 110
Finance costs (1) (1)
Share of post tax loss in joint ventures (14) (14)
Profit Before Taxation 2,268 2,316
Taxation - excluding deferred tax on (241) (2) (243)
goodwill
Profit For The Year 2,027 2,073
Attributable to:
Equity holders of the parent company 1,703 1,749
Minority interests 324 324
2,027 2,073
Reconciliation Of Profit For The 6 Months Ended 31 July 2007
UK GAAP A B C D E F IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 14,303 14,303
Cost of sales (2,647) (2,647)
Gross Profit 11,656 11,656
Administrative expenses (6,061) (41) (6) (6,108)
Management fee 10 10
Group Operating Profit Pre Amortisation 5,605 5,558
Amortisation of intangibles (132) 132 -
Group Operating Profit 5,473 5,558
Finance income 188 188
Finance costs (2) (2)
Share of post tax loss in joint ventures (139) (139)
Profit Before Taxation 5,520 5,605
Taxation - excluding deferred tax on (622) 9 (613)
goodwill
Profit For The Year 4,898 4,992
Attributable to:
Equity holders of the parent company 4,104 4,198
Minority interests 794 794
4,898 4,992
11 EXPLANATION OF TRANSITION TO IFRS
A) Under UK GAAP software costs were included as part of tangible fixed assets.
These have been reclassified as intangible assets under IFRS as they meet the
recognition criteria defined by IAS 38. The result of this is to increase
intangible assets and decrease property, plant and equipment in the periods to
31 July 2006, 31 January 2007 and 31 July 2007 by £3k, £22k and £200k
respectively.
B) IAS 19 requires the recording of a holiday pay accrual. This has been
included for each of the reporting periods. For the 12 months to 31 July 2006
the impact on the Profit & Loss was £42k (accrual included within trade and
other payables £42k), for the 6 months to 31 January 2007 the impact on the
Profit & Loss was £2k (accrual included within trade and other payables £44k)
and for the 6 months to 31 July 2007 the impact on the Profit and Loss was £41k
(accrual included within trade and other payables £83k).
C) The liability in relation to share based payments in all periods to 31 July
2007 was included within trade and other payables. This adjustment correctly
discloses the amounts within the share based payment reserve. The Profit and
Loss entry of a £19k charge in the period to 31 July 2006 adjusts the accounting
treatment between UITF 17 under UK GAAP and IFRS 2.
D) Under FRS 19 deferred tax was recognised only on timing differences; in
contrast IAS12 'Income Taxes' requires the recognition of deferred tax on all
temporary differences. The recognition of a holiday pay accrual under IAS19 has
led to the occurrence of temporary differences. The effect of this adjustment is
to create a deferred tax asset of £11k at 31 July 2006, £9k at 31 January 2007
and £20k at 31 July 2007. The tax charge in the Profit and Loss was increased by
£2k in the 6 months to 31 January 2007 and reduced by £9k in the 6 months to 31
July 2007.
E) Goodwill recognised by the Group on the acquisition of Siraj and Polimetrix
(32% stake) under UK GAAP was amortised over a period of 5 years. Under IFRS
goodwill is not amortised, but tested annually for impairment. The goodwill
amortisation charge recognised in accordance with UK GAAP in 2007 has been
written back. The result of these adjustments is to reduce the cost of
amortisation in the Profit and Loss by £56k in the 6 months to 31 January 2007
and £132k in the 12 months to 31 July 2007 and increase the carrying value of
the goodwill by the same amounts.
F) Under UK GAAP, rent free periods are recognised in the income statement over
a period of the shorter of either the length of the lease or period to the
prevailing date at which market rent becomes payable. Under IFRS rent free
periods are amortised over the length of the lease. This has resulted in an
additional Profit and Loss charge of £6k being recognised in each of the periods
ending 31 January 2007 and 31 July 2007 respectively. The corresponding balance
sheet entry reduces trade and other receivables by an equal amount.
12 RELATED PARTY TRANSACTIONs
There have been no transactions with directors during the period.
During the period to 31 January 2008 sales were made to Endemol UK totalling
£1,500 (period to 31 January 2007: £2,600). Endemol UK is a company which Peter
Bazalgette, a non-executive director of YouGov plc, was a director during the
period. The sales were made at arms length and on usual commercial terms. As at
31 January 2008 Endemol UK owed YouGov plc £nil (31 January 2007: £nil).
During the period to 31 January 2008 goods and services were procured from IIR
Limited totalling £nil (period to 31 January 2007: £5,293). IIR Limited is a
company which Anthony Foye, a non-executive director of YouGov plc, was a
director during the period. The purchase was made at arms length and on usual
commercial terms. As at 31 January 2008 YouGov plc owed IIR Limited £nil (31
January 2007: £nil).
During the period to 31 January 2008 YouGov plc provided research services
totalling £762,500 (period to 31 January 2007: £nil) to Privero Capital, a US
based investment fund. A minority stake in this fund is partially owned by
Stephan Shakespeare and Balshore Investments (the family trust of Nadhim
Zahawi's family), each of whom control 18.75% of the fund. At 31 January 2008
Privero owed YouGov plc £145,256 (31 January 2007: £nil).
During the period to 31 January 2008 sales were made to YouGovExecution
totalling £4,300 (period to 31 January 2007: £138,961). At 31 January 2008
YouGovExecution owed YouGov plc £51,240 (31 January 2007: £33,488).
During the period to 31 January 2008 sales were made to YouGovCentaur totalling
£17,100 (period to 31 January 2007: £nil). At 31 January 2008 YouGovCentaur owed
YouGov plc £10,405 (31 January 2007: £nil).
Trading between YouGov plc and subsidiary companies is excluded from the related
party note as this has been eliminated on consolidation.
13 EVENTS AFTER THE BALANCE SHEET DATE
Research-driven hedge fund launch
YouGov plc announced on 6 March 2008 that it has signed heads of agreement with
Numis Corporation plc and FOUR Capital Partners Limited to form a joint venture
hedge fund designed to exploit investment opportunities identified by YouGov's
proprietary, real-time consumer research capability.
Board Change
On 6 March 2008 Peter Kellner, President and Executive Director, is standing
down from the YouGov plc Board. Peter will remain as emeritus President and will
continue working with the Company's media, political and other clients, on a
part time basis. Additionally he will continue to represent YouGov in the media
and at academic and other conferences.
Employee Benefit Trust
Under the terms of the psychonomics sale and purchase agreement, €500,000 of
YouGov shares was to be issued to employees as an incentive programme. An
employee benefit trust will be created on to hold these shares until the
distribution date.
This information is provided by RNS
The company news service from the London Stock Exchange