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RNS
YouGov PLC  -  YOU   

Preliminary Results

Released 07:00 09-Oct-2017

RNS Number : 9996S
YouGov PLC
09 October 2017
 

9 October 2017 

 

YouGov plc

Preliminary Results for the year ended 31 July 2017 

 

Financial Highlights

 

Year to

31 July 2017

£m

Year to

31 July 2016

£m

% change

 

Revenue

107.0

88.2

21%

Adjusted Operating Profit1

14.5

10.9

33%

Adjusted Operating Profit Margin

14%

12%

-

Adjusted Profit before Tax1

16.4

13.3

24%

Adjusted Earnings per Share1

10.9p

8.8p

24%

Dividend per Share

2.0p

1.4p

43%

Statutory Operating Profit

7.6

4.3

74%

Statutory Profit before Tax

7.9

5.5

43%

Statutory Earnings per Share

4.4p

3.3p

35%

 

 

Highlights

·      Group revenue increased by 21% (9% on a constant currency basis)

·      Data Products and Services revenue up by 37% to £47m (24% on a constant currency basis); now represents 44% of Group total (2016: 38%) 

BrandIndex revenue increased by 36% (20% at constant currency) to £20m

Profiles revenue increased by 165% (144% at constant currency) to £4m

Omnibus revenue increased by 33% (23% at constant currency) to £22m

·      Data Products and Services operating profit increased by 32%

·      Custom Research revenue up by 11% (static at constant currency) to £60m and operating profit increased by 30%

·      Adjusted operating profit up by 33%, adjusted profit before tax up 24% and adjusted earnings per share up by 24%

·      Cash generated from operations (before paying interest and tax) increased by 37% to £19m (2016: £14m)

·      Excellent cash conversion1 of 130% of adjusted operating profit (2016: 130%)

·      Net cash balances of £23.2m (2016: £15.6m)

·      Recommended dividend increased by 43% to 2.0p per share

·      US becomes largest profit generator with operating profit increasing 54%

·      Current trading in line with the Board's expectations

  

1.       Defined in the explanation of alternative performance measures on page 16.
 

Commenting on the results, Stephan Shakespeare, Chief Executive, said:

 

"This is the third consecutive year in which YouGov has delivered growth significantly above the market, both in revenue and profit. We have made further progress in our strategic shift to data products and services sold on subscription and this is bringing increased margin and greater visibility. Our systematic approach to market research which combines our syndicated data with new proprietary analytic methodologies to deliver greater granularity and accuracy, points to an exciting future. Trading in the current financial year has started in line with our expectations and we expect continued growth consistent with our ambition to become a leading player in the global data and analytics market."

 

                                               

Enquiries:

 

YouGov plc

 

Stephan Shakespeare / Alan Newman

020 7012 6000

 

 

FTI Consulting

 

Charles Palmer / Harry Staight

020 3727 1000

 

 

Numis Securities

 

Nick Westlake (NOMAD) / Toby Adcock (Broker)

020 7260 1000

 

 

 

Chairman's Statement

 

We are pleased to report that in the financial year just ended, YouGov has once again achieved strong organic revenue growth and significantly increased its profitability. This performance is in line with the long-term plan we have been following since 2015. As shareholders will be aware, this plan set ambitious goals for the company based on rapid growth in the higher margin Data Products and Services parts of our business and on raising the profit margins in our Custom Research business.

 

Group revenue of £107m increased by 21% in reported terms, and 9% in constant currency terms, compared to the prior year. This organic growth rate is once again well above that of the global research market. Our adjusted operating profit increased by 33% to £14.5m and the operating margin increased by 2% points to 14%.This reflects the benefits of the continuing planned shift in our product mix from traditional market research to subscription-based Data Products and Services. The latter accounted for 44% of total Group revenue in the year, an increase of 6% points in its share from 2015/16.

 

YouGov is a pioneer of the market's shift towards rich, single-source, connected data. Our proprietary multi-dimensional database, the YouGov Cube, allows fast large-scale analysis of many thousands of variables. This has allowed us to create innovative syndicated data products and services that are helping to grow our market share among key users of data on public behaviour and attitudes. These users include brand owners, advertising and media agencies focussing on marketing, as well as public agencies wishing to understand the populations that they serve.

 

YouGov's ability to provide accurate, in-depth data was demonstrated during the 2017 UK General Election. We applied our ground-breaking MRP (Multi-level Regression and Post-stratification) model which produced highly accurate seat-by-seat projections and predicted a hung parliament. The model's combination of connected data and sophisticated analytics is directly applicable to the analysis and monitoring of audiences in many marketing contexts. The model is currently being developed for commercial uses and will allow us to gain advanced statistical insights into micro audiences with greater confidence than ever before.

 

We have continued to expand our global capability, which includes our panel comprising of 5 million people worldwide and a network of 30 offices in 20 countries, making YouGov one of the top ten international market research networks. This year the USA became our largest profit generator having already been our largest revenue source for several years. This reflects our success in winning many US based global leaders as clients and is a strength at a time when the UK and European political and economic outlook remains more uncertain.

 

YouGov's strong cash position has enabled us to continue to invest to support organic growth, including in our product development, technology and panel. It also provides us with the means to consider bolt-on acquisition opportunities that may arise to accelerate our development in line with our strategy.  

 

In keeping with our progressive dividend policy, we are pleased to propose a 43% increase in the annual dividend to 2.0p per share, payable in December 2017.

 

As separately announced, Alan Newman, Chief Financial Officer, will be retiring from the Company at the end of December 2017 after nine years in this role. On behalf of the Board of Directors, I would like to take this opportunity to thank Alan for his service and his contribution to YouGov's successful growth and strong financial momentum.

 

 

Roger Parry

Chairman

9 October 2017

 

 

Chief Executive Officer's Review

Performance in the Year 

YouGov's revenue for the year ended 31 July 2017 increased by 21% to £107m and by 9% on a constant currency basis. In comparison, we estimate the global market growth to be approximately 4%. Our higher margin Data Products and Services accounted for some 68% of the total revenue growth, increasing revenue by 37% (24% in constant currency terms) from £35m to £47m. Custom Research revenue grew in reported terms by 11% from £54m to £60m, although it was static in constant currency terms.

 

The Group's adjusted operating profit increased by 33% from £10.9m to £14.5m and the adjusted operating margin increased by 2% points to 14%.

 

Within Data Products and Services, YouGov BrandIndex revenue grew by 36% to £20m (20% constant currency growth), the newer YouGov Profiles segmentation product increased revenue by 165% (144% in constant currency terms) to £4m, and YouGov Omnibus revenue grew by 33% (23% constant currency growth) to £22m. Data Products and Services operating profit increased by 32% to £13m, although the operating margin was 1% lower at 27% due to planned investment continuing in geographical expansion and in data analytics support.    

 

Our strategy is to focus investment on Data Products and Services while aligning Custom Research with our panel-centric methodology and consequently, improving margins. Progress is encouraging - increasingly, we are selling the in-depth data derived from our digitally interactive panel as a subscription-based service and in custom research through higher margin annual tracker contracts. During this financial year, approximately 31% of the Group's revenue arose from contracts of 12 months duration or longer. This trend enhances visibility over the Group's future revenue and helps to increase cash generation.

 

This strategy resulted in revenue from Custom Research being static (in constant currency terms) while its adjusted operating profit increased by 30% from £6.9m to £8.9m and its operating margin rose by 2% points from 13% to 15%. This improvement comes from moving our focus away from projects which do not benefit from YouGov's core competitive strengths derived from our ability to generate connected and large-scale data for clients. During the year we also reduced, as planned, certain non-core, less profitable parts of the business (notably in Germany and Middle East).

 

Regionally, the USA became the highest profit generator in the Group, with a 54% increase in adjusted operating profit to £9.3m, as well as being the largest region in revenue terms accounting for 38% of the Group's total revenue. The UK increased revenue by 9% to £27.1m and raised its operating profit margin to 32%. The newer markets of Asia Pacific and France continued to grow strongly with their businesses centred on Data Products and Services although the costs of expansion in Asia Pacific led to a higher regional operating loss. In our Germany, Nordic and Middle East units, Data Products and Services revenue also grew well, but the scaling back of their less profitable, non-core Custom Research activities led to lower overall growth. As a result, Nordic revenue rose by only 3%, Middle East by 1% and Germany's fell by 7%, all in underlying terms.

 

Business context

 

Digital technology has created new challenges for marketers. They used to say, "I know half of my advertising works, I just don't know which half". Now they are more likely to say, "A quarter works, but which quarter?" YouGov now has better answers to that question than ever before. Our rich connected data and advanced analytics tools provide new opportunities for us to lead our industry. Our new Data Applications solutions and our performance in the 2017 UK General Election illustrate the application of our data and methodologies to vital challenges in the market. With great efficiency (speed and low cost), we are able to create continuous reliable measures of campaign effectiveness at granular levels which facilitate within-campaign adaptation.

 

 

Advances in methodology

 

YouGov proved itself the world's most advanced statistical analysis team in commercial survey research following the application of MRP to the 2017 UK General Election. This was a genuine breakthrough in methodology and paves the way for increased accuracy and granularity of market research with powerful applications to core marketing functions. MRP (Multi-level Regression and Post-stratification) is a technique developed by the Stan Development Team at Columbia University in part with YouGov collaboration.

 

It allowed us to predict a hung Parliament when nearly everyone else - campaigners, commentators, markets, bookies, academics and other pollsters - was confident of an overwhelming Conservative victory. This was the result of a granular seat-by-seat model that identified unexpected outcomes, even in areas where we had sparse panel samples. MRP's application to market research has great value as it allows us to describe micro audiences (demographic niches or small geographies, such as a single supermarket's customer base) with higher levels of confidence than ever before.

 

Strategy

 

We are successfully implementing our clearly defined strategy of developing smarter alternatives to traditional market research - based on connected data, new analytical tools and innovative applications -  and bringing it all together into a single system, a single dashboard, a single infrastructure for applied research.

 

We are advancing in all parts of the YouGov System to create greater efficiency, accuracy and currency for our clients.

 

These are the parts:

 

An engaged panel

 

We aim to create a fully global panel that is larger, more engaged and more productive than any currently available. We are making it easier to recruit new panellists and making induction to the panel faster and more engaging. The YouGov Take Part mobile app is in its second phase of improvement and we will shortly be introducing a new format for completing surveys that is more rewarding in terms of valuable feedback to panellists.

 

Advanced analytics technology

 

We have made a strong advance in methodology through MRP, as described above. This was made possible by our large panel producing connected data for analysis through Crunch. Crunch is our new online data analytics platform, now being increasingly integrated into our customer-facing online offer. Crunch makes data processing faster and more accurate and enables clients to obtain increased value through easy-to-use analytics tools. Advanced clients are using this new platform to combine and analyse data from other sources as well as data supplied by YouGov.

 

24/7 global data processing and analytics resources

 

Our all-hours data processing and analytics support, provided through our shared services data operations centre in Romania, continues to grow and the services network will soon be supporting research seven days a week.

 

Self-service survey design tool

 

Our new self-service tool, 'Collaborative Insights', is being used in beta by a select number of US and UK clients. The tool speeds up the process of designing and scripting surveys both for the Omnibus service and also for general custom research. We intend for it to grow into a collaborative self-service system that links syndicated data to custom studies on a single dashboard. Additionally, expert researchers will be available to enhance the self-service offering as needed so that even more complex research can be made efficient.

New data applications

 

We have invested in our Data Intelligence Unit to drive future organic growth and the unit is developing new commercial uses for our connected data set (the YouGov Cube). We have packaged a number of the different use cases that go 'beyond the login' of Brandindex and Profiles to create a series of data applications that can be sold to clients as add-ons to their product subscriptions. These new connected data applications are far more advanced than the traditional market research offering, allowing our clients not only to plan marketing campaigns and track performance, but also to build audience segments and execute their programmatic media buys, all using a single-source platform.

 

Product-aligned custom trackers and services

 

Recurring, single or multi-country custom trackers (contracted for one or more years), whose data is delivered through Crunch, are a form of custom research that is highly aligned with YouGov's strategic focus. Trackers meet clients' needs for longitudinal monitoring and can provide company-specific information which even clients using our BrandIndex and Profiles syndicated products may require in order to supplement the information provided by the product. Another form of customised information linked to Profiles data is the re-contact study, usually conducted via the Omnibus platform which enables client specific questions to be addressed to a sample selected using Profiles.

 

Outlook

 

Over the past few years, we have been implementing the strategy that the Board laid out to our shareholders and as a result have delivered consistent recurring revenue and profit growth. In line with that strategy, YouGov has been transforming itself in response to the needs of the market to become increasingly a global data and analytics business. In the coming year, we aim to maintain our progress and continue pursuing the goals that we have set ourselves. 

 

"Brexit" continues to create uncertainty in the economic and political environment, especially for UK and European businesses. However, the international spread of our revenues (with a significant US weighting) positions our business well to cope with potential volatility. The Group can also benefit in the short-term if £ Sterling rates remain relatively low compared to other major trading currencies.

 

In the context of both the macro-environment and our own plans, current financial year trading is in line with the Board's expectations. The Board is confident that YouGov remains well-placed to exploit opportunities for growth, especially in our Data Products and Services business, in both our more mature markets and our newer operations.

 

 

 

Overview of Global Products and Services

 

 

Revenue

Year to

31 July 2017

£m

Year to

31 July 2016

£m

 

%

Change

 

% Change

at

Constant

Currency

Data Products

24.1

16.6

45%

29%

Data Services

23.3

17.9

30%

19%

Total Data Products & Services

47.4

34.5

37%

24%

Custom Research

60.2

54.3

11%

0%

Eliminations

(0.6)

(0.6)

-

-

Group 

107.0

88.2

21%

9%

 

 

 

Adjusted Operating Profit

Year to

31 July 2017

£m

Year to

31 July 2016

£m

 

%

Change

 

Operating Margin %

2017

2016

Data Products

7.0

4.5

56%

29%

27%

Data Services 

5.7

5.2

10%

24%

29%

Total Data Products & Services

12.7

9.7

32%

27%

28%

Custom Research

8.9

6.9

30%

15%

13%

Central Costs

(7.1)

(5.7)

(26%)

-

-

Group 

14.5

10.9

33%

14%

12%

 

 

Data Products

 

Data Products are comprised of YouGov BrandIndex, our flagship brand intelligence tracker (82% of this category's revenue); YouGov Profiles, our newer product for audience segmentation and planning (risen in the year to 15% of the total) and YouGov Reports (3%) which has been scaled down following a product re-configuration.

 

Data products, once they are mature, have a higher profit margin than custom research as the outputs are sold to multiple clients while the input costs, such as data collection and analysis, are incurred only once.

 

The adjusted operating profit from the Data Products segment increased by 56% to £7.0m and the operating margin increased by 2% points to 29%. This partly reflects the growing contribution from YouGov Profiles which is now well developed and required little additional investment in the period.

 

Within Data Products, BrandIndex grew revenue by 36% (20% at constant currency) to £19.7m (2016: £14.5m) and now accounts for 18% of total Group revenue, generated from 650 (2016: 500) subscribers in 32 (2016: 27) markets across the world. The US remained the largest BrandIndex market although becoming less dominant as the newer markets have been growing fast, including Asia Pacific whose revenue increased by 106% in underlying terms and France where it grew by 85%. Versions were added in five new markets during the year: Italy, Spain, Philippines, Taiwan and Vietnam.

 

YouGov Profiles was available in eight markets during the year, following launches in Denmark and Sweden during the second half and is due to be launched in France during the coming year. Profiles continued to make excellent progress achieving sales with a total contract value of some £7 million leading to revenue growth of 144% in constant currency terms to £3.7m. Profiles now has 125 subscribers, many of whom also subscribe to BrandIndex. A recent subscriber is Aegis Dentsu Network, a leading media buying agency, which has adopted Profiles as its main source of research data for media planning purposes, replacing the incumbent TGI product.

 

 

Although the data categories covered by YouGov Profiles are standardised, some data components are tailored for each country version. The UK version of Profiles is based on a database of some 200,000 separate data variables on consumers, collected from more than 300,000 YouGov panellists. The tool connects data on profiles, brand, sector, and media, digital and social data all in one place combining that with attitudes, interests, views and likes. For example, it provides brand usage and perception data for some 1,200 brands (plus usage for thousands more), TV viewing for 5,000 programmes, website usage for the most active commercial websites, thousands of social media likes on music artists, films, personalities and much more.

 

YouGov Profiles and YouGov BrandIndex are complementary products that draw on and provide users with access to different combinations of datasets from the YouGov Cube. In the markets where both products are available (UK, USA, Germany, China, Indonesia and Malaysia, to date) the two are increasingly marketed together under the banner of "Plan and Track". This reflects the fact that Profiles primarily enables marketers, advertisers and media owners to profile their actual and potential customers and plan targeted campaigns while BrandIndex enables them to track and measure the impact of campaigns and other events on consumers' attitudes to their brand, including their likelihood to buy. Our pricing policy incentivises clients to take both data products, and an increasing proportion of them in the markets concerned are buying both. 

 

This year we introduced increased interoperability between the BrandIndex and Profiles reporting tools.  This enhanced linkage allows us to better package the combined BrandIndex-Profiles offering as a single capability with a higher value proposition that can be licensed at a higher price point. The linkages allow clients to drive greater value out of YouGov's underlying Cube data.

 

This enhanced linkage enables our brand, agency and media clients to conduct further value-added analysis, such as advertising campaign effectiveness. For example, a client is able to identify and create a Profiles variable that includes consumers who have watched the relevant TV programs during a particular campaign. That variable can then be ported into BrandIndex, allowing the client to monitor the impact on KPIs such as brand awareness, advertising awareness and purchase consideration among the 'potentially exposed' audience - and compare that to the general population.

 

Similarly, by leveraging the linkages between BrandIndex and Profiles, clients are able to validate that they have reached the correct target audience. A client can isolate a group of consumers in BrandIndex which is aware of a brand's recent advertising. Then in Profiles, the client can analyse the composition of that audience in detail. This analysis can include any of the thousands of variables available in Profiles - demographics, attitudes, behaviours, social media likes, hobbies, etc.

 

We have also introduced a dynamic segmentation offering, allowing clients to run segmentations that are full of colour and continually updated when combined with their Profiles subscription, and an activation offering, allowing clients to use Profiles to create seed audiences which are then scaled using look-alike modelling to enable programmatic advertising buys.

 

Together the campaign effectiveness, audience validation, dynamic segmentation and activation solutions described above make up our initial suite of 'Data Applications'. These applications enhance the value proposition of the BrandIndex-Profiles capability and make it easier to sell-in the underlying subscriptions to prospects, increase our ability to retain clients and represent incremental revenue opportunities for the Data Products business.

 

BrandIndex serves major accounts among both advertising and media planning agencies on the one hand and brand owners and advertisers on the other. Its current clients include OMG, Universal McCann, Viacom, Airbnb, Bank of America and KFC. New client wins in the year included Ikea, Intersport, Ketchum, Mastercard, Monster and Hyundai Motor Company.

 

Profiles new client wins in the year included a number of media agencies such as Dentsu Aegis Network, AMS Media Group, Epiphany Search and Resource Ammirati. Its ongoing clients include MEC, OMG, O2 (Telefónica UK), Universal Music and JCDecaux.

 

 

Data Services

 

Data Services revenue largely comprises YouGov Omnibus our online fast turnaround service, and our related Field & Tab services (together, 94% of the total) with the balance being the provision of sample-only services in the Nordic and Middle East regions.   

 

YouGov Omnibus, increased its revenue globally by 33% (23% in constant currency terms) to £21.9m. Most of this revenue growth was generated in the markets outside the UK following the international expansion of the Omnibus service in recent years. The growing footprint of the Omnibus network is attracting more multi-national clients, leading to more multi-country projects being run across our Group platform.

 

Thus, Asia Pacific grew by 73% in underlying terms and US by 63% and each now accounts for over 10% of total Omnibus revenue. Among the more established markets, Germany grew revenue by 39% in underlying terms and Nordic by 18%. In the UK, which accounts for approximately 40% of global revenue, YouGov Omnibus maintained its market leading position and grew by 7%.

 

Total Data Services operating profit increased by 10% to £5.7m although its operating margin decreased from 29% to 24%. This reflected the planned investment this year in delivery and sales resources to support expansion in the newer markets.  

 

One of the Omnibus strengths is the creation of specialised versions to enable clients to access specific, more narrowly defined segments. The UK already offers a range of these including Children and Parents, Shoppers, Metro Cities and Small and Medium Enterprise owners (SME). The latter now enables Omnibus to support business-to-business as well as consumer research work and this area is one of the expanding areas in the YouGov portfolio. Outside the UK, specialised Omnibus services include; Citybus covering eight major cities in Asia Pacific and multiple others across the Group; Homeowners in the USA; and Pet Owners and Car Drivers in Germany.

 

Profiles subscribers are now able to undertake 're-contact' surveys using Omnibus through which they can obtain additional data tailored to their needs from segments of the panel with specific profile characteristics. These survey results can be imported into the Profiles tool thus enhancing the number of data-points available for that specific respondent group. Re-contact surveys are becoming increasingly popular among Profiles clients and provide a combination of data that is far more advanced than competitive offerings. 

 

We have continued to improve the quality of Omnibus deliverables, with slides now being provided as standard in most markets. As a further development, Omnibus and Field & Tab results are now being delivered to clients through the Crunch analytics application.  

 

We have also continued to develop our self-service survey design tool, Collaborative Insights, which will automate the way that clients submit and approve Omnibus and Custom Research survey questions. The tool is designed to make the turnaround from the client's initial question generation to YouGov's survey results delivery even faster and smoother for both clients and staff. The tool is now being trialled internally and is expected to be rolled out to clients during 2018. 

 

Major New Omnibus client wins in the year included Acer, Bertelsmann, E.ON, Eurowings, Kayak and Allianz Insurance.

 

Custom Research

 

YouGov's Custom Research business conducts a wide range of quantitative and qualitative research, whose scope, scale and complexity varies greatly. It ranges from large-scale national and multinational tracking studies to one-off surveys designed to address clients' specific information needs at a given time.  

 

YouGov's panel-centric methodology and ability to collect and analyse data rapidly have been enhanced by delivery of results through the Crunch analytics platform. This is ideal for meeting clients' needs for faster and more continuous tracking data, for which projects are often contracted on an annual basis. The YouGov Cube also enables survey data to be connected with other data from our library or that forms part of a data product such as BrandIndex or Profiles.

 

During the year, we continued our strategy of harmonising our global Custom Research business and improving its profitability by focussing resources on our core panel-based services and scaling-down the non-core elements largely inherited through acquisitions. This included exiting parts of the German and Middle East businesses with low margins and reorganising the operational support globally. As previously announced, work has been increasingly transferred from most of our units across the world to our shared services centre in Romania where we can provide all-hours data processing and analytics support.

 

This strategy led to global Custom Research revenue remaining static in constant currency terms, although it grew by 11% in reported terms to £60.2m. More importantly, its operating profit increased by 30% to £8.9m and its operating margin rose by 2% points to 15%. 

 

Custom Research continued to grow revenue in its largest markets with the US up by 23% (7% in underlying terms) and UK up by 4% as well as in Asia Pacific which increased by 46% (28% in constant currency terms). Among the markets where the rationalisation strategy has focussed, revenue fell in underlying terms by 37% in Germany, by 6% in Nordic and by 1% in Middle East.

 

The rationalisation initiatives led to the total number of staff engaged in Custom Research across the Group falling year-on-year for the first time (from 297 to 267).

 

YouGov remains firmly committed to developing its differentiated custom research offering globally and to building out the YouGov Cube across all our panels to support this. To reinforce this commitment and lead the continuing global development of our Custom Research business in line with our strategy, the new role of Global CEO of Custom Research was established in November 2016 and Stefan Kaszubowski, a long-standing senior manager of the Group, was appointed to it.

 

New Custom Research client wins in the year included Bausch + Lomb, Mastercard, M&C Saatchi, Sony, SSE and Virgin Money.

 

Central Costs

 

Central costs of £7.1m include the Group management team and central management functions together with the teams responsible for YouGov's online presence and the development and roll-out of the products and services based around the YouGov Cube.   

 

 

Review of Geographic Operations

 

Revenue

Year to

31 July 2017

£m

Year to

31 July 2016

£m

Revenue

Growth

%

Revenue Growth at Constant Currency %

UK

27.1

24.9

9%

9%

USUSA

40.7

31.0

32%

14%

Germany

9.6

9.1

5%

(7%)

Nordic

8.9

7.6

18%

4%

Middle East

16.3

13.9

17%

3%

France

2.7

1.7

62%

42%

Asia Pacific

5.5

2.8

95%

71%

Intra-group Revenues

(3.8)

(2.8)

 

 

Group 

107.0

88.2

21%

9%

 

Adjusted Operating Profit

Year to

31 July 2017

£m

Year to

31 July 2016

£m

Operating

Profit Growth

%

Operating Margin

 

2017

 

2016

UK

8.6

7.2

19%

31%

29%

USA

9.3

6.0

54%

23%

19%

Germany

0.9

0.7

36%

10%

8%

Nordic

1.0

0.9

2%

11%

12%

Middle East

2.4

2.4

1%

15%

17%

France

0.4

0.1

202%

15%

8%

Asia Pacific

(0.9)

(0.6)

-

(16%)

(21%)

Corporate/Unallocated

(7.2)

(5.8)

22%

 

 

Group 

14.5

10.9

33%

14%

12%

 

This year, the USA which was already our largest region in revenue terms, also became the highest profit generator following a 54% increase in its operating profit to £9.3m. This largely reflected the sustained growth (of 27%) in Data Products and Services revenue, as Profiles continued to gain traction especially in the media sector and trebled its revenue, while Omnibus also grew strongly. This performance was supported by the expanding media coverage for YouGov, especially from our polling with CBS during the Presidential Election and expanded marketing to the corporate sector.

 

Data Products growth was also the main factor in the UK's 9% overall revenue increase with Profiles doubling revenue and BrandIndex increasing by 14%. The unit's tightly focussed operating model enabled it to further increase its operating margin to 31%, the highest in the Group.

 

Our Middle East business grew revenue by 3% in constant currency terms and its operating profit rose by 1%. Data Products and Services revenue grew by 20% (in underlying terms) while Custom Research revenue was static due to planned reduction in non-core, lower margin projects in the region.

 

Similarly, in Northern Europe, the mix continued to shift towards data products and services leading to low overall growth. Nordic revenue increased by 18% (4% underlying) with Omnibus and BrandIndex both growing by 17% in underlying terms.

 

In Germany, total revenue fell by 7% (in underlying terms) as Custom Research revenue fell by 36% due to the exit from legacy custom businesses while Data Products and Services revenue grew by 43%, including a 226% increase in Profiles revenue. 

 

The Asia Pacific regional business continued to expand rapidly as anticipated with strong growth in both BrandIndex and Omnibus contributing to a revenue increase of 95% (71% in underlying terms) although investment in regional resources also increased the operating loss.

 

Revenue in France grew by 62% (42% in constant currency) largely due to BrandIndex, which continued to increase its subscriber base among leading French brands. Its operating profit increased by 200% reflecting the growing scale efficiency in this unit as it matures. 

 

Panel Development

 

As at 31 July 2017, the Group's online panel comprised a total of 5.6m panellists, an increase of 30% from the total of 4.8m as at 31 July 2016.

 

We continue to invest in panel growth to support a growing overall workload, and specifically this year in the UK, USA and Germany to support local-level sampling. In addition, within the Middle East, we have invested in growing our India panel. All the panels grew as a result and the panel sizes by region were:

 

Region

Panel Size

at 31 July 2017

Panel Size

at 31 July 2016

UK

1,182,100

882,700

USA

2,152,400

1,972,000

Middle East

859,000

728,500

Germany

299,900

235,500

Nordic

283,800

221,800

France

186,500

163,500

Asia Pacific

673,700

561,500

Total

5,637,400

4,765,500

 

 

 

Stephan Shakespeare

Chief Executive Officer

9 October 2017

 

 

 

Financial Performance

 

Income Statement Review

 

Group revenue for the year to 31 July 2017 of £107.0m was 21% higher than the prior year, 9% higher in constant currency terms. 

 

The Group's gross profit (calculated after deducting costs of panel incentives and external data collection) increased by £17.0m to £85.7m. The Group's adjusted operating profit margin increased by 2% points to 14%, largely due to improved gross margins which rose from 78% to 80%. This reflected the continuing increase in the proportion of revenue generated from data products and survey work undertaken on the Group's own panels. Our business continues to be highly cash generative with the profit conversion rate remaining at 130%.

 

Operating expenses (excluding amortisation and other separately reported items) of £71.2m increased by £13.4m. The operating expense ratio remained at 66% of revenue.

 

The average number of staff (full-time equivalents) employed during the year increased by 87 to 779.  Average revenue per head increased to £137,000 from £128,000 and staff costs as a percentage of revenue remained at 50%.

 

Adjusted group operating profit increased by 33% to £14.5m, compared to £10.9m in the previous year.

 

There was a net finance income of £0.3m compared to £1.2m last year, primarily due to lower foreign exchange translation gains. This resulted in an adjusted profit before taxation of £16.4m, an increase of 24% over the prior year. Adjusted earnings per share for the year rose by 2.1p (24%) to 10.9p.

 

The statutory operating profit (which is after charging amortisation of £6.4m and other separately reported items of £0.5m) increased by £3.3m to £7.6m. This was slightly less than the increase in adjusted group operating profit due to higher amortisation charges. Statutory profit before taxation increased by £2.4m to £7.9m reflecting the increase in operating profit offset by a lower net foreign exchange translation gain of £0.3m compared to £1.2m in the prior year.

 

Amortisation of Intangible Assets

 

Amortisation charges for intangible assets of £6.5m were £1.0m higher than the previous year.  Amortisation of the consumer panel increased by £0.6m to £2.2m reflecting the additional investment made to grow the panel in the past three years. Amortisation of software increased by £0.3m to £3.5m.  £2.7m (2016: £2.5m) of the total charge related to assets created through the Group's own internal development activities, £0.6m (2016: £0.6m) to separately acquired assets and £0.2m (2016: £0.1m) to amortisation on assets acquired through business combinations.

 

Other Separately Reported Items

 

Restructuring costs of £0.6m (2016: £1.1m) were incurred in the year. £0.3m of this related to the reduction of non-core custom operations in the Middle East and £0.3m arose from the development of global operations and finance support functions.

 

As part of the process of exiting non-core business in Germany, Service Rating GmbH was disposed of during the year with a profit on disposal of £0.1m.

 

 

 

 

 

 

 

 

Analysis of Operating Profit and Earnings per Share:

 

 

31 July

31 July

 

2017

2016

 

£'000

£'000

 

 

 

Adjusted operating profit 1

14,528

10,917

 

 

 

Share-based payments

1,488

1,111

Imputed interest

20

27

Net finance income

254

1,199

Share of post-tax (loss)/profit in associates

103

(4)

 

 

 

Adjusted profit before tax 1

16,393

13,250

Adjusted taxation1,

(4,912)

(4,099)

Adjusted profit after tax 1

11,481

9,151

Adjusted earnings per share (pence) 1

10.9

8.8

 

1.     Defined in the explanation of alternative performance measures on page 16.

 

 

Cash Flow

 

The Group generated £18.9m (2016: £14.1m) in cash from operations (before paying interest and tax) including a £2.3m (2016: £2.3m) net working capital inflow. The cash conversion rate (percentage of adjusted operating profit converted to cash) remained at 130% of adjusted operating profit.

Expenditure on investing activities increased to £7.7m (2016: £6.0m) including £7.8m (2016: £6.1m) on capital expenditure as detailed below less £0.1m proceeds from the sale of subsidiaries.

 

31 July

31 July

 

2017

2016

 

£'000

£'000

Internally generated software

3,385

2,555

Panel recruitment

3,471

1,979

Other intangible assets

112

546

Total expenditure on intangible assets

6,968

5,080

Purchase of property, plant and equipment

843

1,003

Total capital expenditure

7,811

6,083

 

Net expenditure on financing activities increased by £0.2m to £1.3m, including the dividend payment of £1.5m (2016: £1.0m).

 

There was a net cash inflow of £7.5m (2016: £4.5m) which combined with an exchange gain of £0.2m (2016: £1.0m) resulted in year-end net cash balances increasing by £7.6m to £23.2m.

 

Currency

 

As well as achieving robust growth in constant currency terms, the Group's results benefitted from the full year effect of the year-on-year depreciation of the £, especially against the US$ and its related currencies and the Euro. The appreciation of the US dollar led to approximately 18% higher reported revenue growth in the US, Middle East and Asia Pacific while the Euro appreciation meant that reported revenue in Germany, France and the Nordics was 14% higher than if calculated in constant currency terms. Conversely, operating expenses were 11% higher than if calculated in constant currency terms.

 

 

Taxation

 

The Group had a tax charge of £3.3m (2016: £2.1m) on a statutory basis, with a deferred tax credit of £nil (2016: £0.2m). On an adjusted basis, the tax charge was £4.9m (2016: £4.1m), which represents a tax rate of 30% on the adjusted profit before tax, 1% lower than the prior year.  The adjusted tax rate is higher than the standard rate of corporation tax in the UK as a result of profits arising in countries with a higher tax rate, notably the US.

 

Balance Sheet

 

Total shareholders' funds and net assets increased to £80.5m from £74.1m at the prior year-end. Net current assets increased to £20.7m from £17.5m. Current assets increased by £9.6m to £54.9, with debtor days decreasing to 58 days from 59 days. Current liabilities increased by £6.4m to £34.2m, with creditor days decreasing to 24 days from 28 days at 31 July 2016. Current liabilities includes £10.1m of deferred revenue in respect of subscriptions (an increase of £2.9m from 31 July 2016), which contributed to the increase in net cash balances in the year. Non-current liabilities decreased by £0.9m to £4.9m.

 

Proposed Dividend

 

The Board is recommending the payment of a final dividend of 2.0 pence per share for the year ended 31 July 2017. If shareholders approve this dividend at the AGM (scheduled for Wednesday 6 December 2017), it will be paid on Monday 11 December 2017 to all shareholders who were on the Register of Members at close of business on Friday 1 December 2017.

 

 

 

Alan Newman

Chief Financial Officer

9 October 2017

 

 

Explanation of Non-IFRS measures

Financial Measure

How we define it

Why we use it

Adjusted operating profit

Operating profit excluding amortisation of intangible assets charged to operating expenses and other separately reported items

Provides a more comparable basis to assess the year-to-year operational business performance

Adjusted operating profit margin

Adjusted operating profit expressed as a percentage of revenue

Adjusted profit before tax

Profit before tax before amortisation of intangible assets charged to operating profit, share based payment charges, imputed interest and other separately reported items.

Adjusted taxation

Taxation due on the adjusted profit before tax, thus excluding the tax effect of amortisation and other separately reported items.

Provides a more comparable basis to assess the underlying tax rate 

 

Adjusted tax rate

Adjusted taxation expressed as a percentage of adjusted profit before tax

Adjusted profit after tax

Adjusted profit before tax less adjusted taxation

Facilitates performance evaluation, individually and relative to other companies

Adjusted profit after tax attributable to owners of the parent

Adjusted profit after tax less profit attributable to non-controlling interests

Adjusted earnings per share

Adjusted profit after tax attributable to owners of the parent divided by the weighted average number of shares.  Adjusted diluted earnings per share includes the impact of share options. 

Constant currency revenue change ("underlying revenue change")

Current year revenue change compared to prior year revenue in local currency translated at the current year average exchange rates.

Shows the underlying revenue change by eliminating the impact of foreign exchange rate movements

Cash conversion

The ratio of cash generated from operations to adjusted operating profit

Indicates the extent to which the business generates cash from  adjusted operating profits

 

Publication of Non-Statutory Accounts

The financial information relating to the year ended 31 July 2017 set out below does not constitute the Group's statutory accounts for that year but has been extracted from the statutory accounts, which received an unqualified auditors' report and which have not yet been filed with the Registrar.

 

 

 

 

YOUGOV PLC          

CONSOLIDATED INCOME STATEMENT

 

For the year ended 31 July 2017

 

Note

2017
£'000

2016
£'000

Revenue

1

107,048

88,202

Cost of sales

 

(21,339)

(19,476)

Gross profit

 

85,709

68,726

Operating expenses

 

(78,152)

(64,395)

Operating profit

1

7,557

4,331

 

 

 

 

Amortisation of intangibles

 

6,483

5,478

Exceptional items

2

488

1,108

Adjusted operating profit

1

14,528

10,917

 

 

 

 

Finance income

 

480

2,144

Finance costs

 

(226)

(945)

Share of post-tax (loss)/profit of associates

 

103

(4)

Profit before taxation

1

7,914

5,526

Taxation

3

(3,273)

(2,111)

Profit after taxation

1

4,641

3,415

Attributable to:

 

 

 

- Owners of the parent

 

4,671

3,401

- Non-controlling interests

 

(30)

14

 

 

4,641

3,415

Earnings per share

 

 

 

Basic earnings per share attributable to owners of the parent

5

4.4p

3.3p

Diluted earnings per share attributable to owners of the parent

5

4.2p

3.2p

 

All operations are continuing.

 

YOUGOV PLC

CONSOLIDATED statement of comrehensive income

                                    

For the year ended 31 July 2017

 

 

 

 

2017
£'000

2016
£'000

Profit for the year

 

4,641

3,415

Other comprehensive income

 

 

 

Items that may be subsequently reclassified to profit or loss

 

 

 

Currency translation differences

 

1,159

8,271

Other comprehensive income for the year

 

1,159

8,271

Total comprehensive income for the year

 

5,800

11,686

Attributable to:

 

 

 

- Owners of the parent

 

5,830

11,667

- Non-controlling interests

 

(30)

19

Total comprehensive income for the year

 

5,800

11,686

 

Items in the statement above are disclosed net of tax.

 

 

YOUGOV PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                    

As at 31 July 2017

 

Assets

Note

31 July 2017
£'000

31 July 2016
£'000

Non-current assets

 

 

 

Goodwill

6

43,746

42,401

Other intangible assets

7

11,214

10,739

Property, plant and equipment

8

3,278

3,568

Investments in associates

 

345

242

Deferred tax assets

 

6,054

5,416

Total non-current assets

 

64,637

62,366

Current assets

 

 

 

Trade and other receivables

9

30,699

28,643

Current tax assets

 

738

1,143

Cash and cash equivalents

 

23,481

15,553

Total current assets

 

54,918

45,339

Total assets

 

119,555

107,705

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

10

29,389

25,839

Borrowings

 

262

-

Current tax liabilities

 

777

392

Provisions

 

3,749

1,592

Total current liabilities

 

34,177

27,823

Net current assets

 

20,741

17,516

Non-current liabilities

 

 

 

Provisions

 

3,222

4,255

Deferred tax liabilities

 

1,683

1,538

Total non-current liabilities

 

4,905

5,793

Total liabilities

 

39,082

33,616

Net assets

 

80,473

74,089

Equity

 

 

 

Issued share capital

 

211

209

Share premium

 

31,261

31,086

Merger reserve

 

9,239

9,239

Foreign exchange reserve

 

14,889

13,730

Retained earnings

 

24,873

19,795

Total shareholders' funds

 

80,473

74,059

Non-controlling interests in equity

 

-

30

Total equity

 

80,473

74,089

 

 

 

 

 

YOUGOV PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                    

For the year ended 31 July 2017

 

 

Attributable to equity holders of the Company

 

 

 

 

Note

Issued share

capital

£'000

Share premium

£'000

Merger reserve

 £'000

Foreign

exchange reserve

£'000

Retained earnings

£'000

Total

£'000

Non-controlling interest in equity

£'000

Total

 equity

£'000

Balance at 1 August 2015

 

206

31,051

9,239

5,464

15,635

61,595

28

61,623

Exchange differences on translating foreign operations

 

-

-

-

8,266

-

8,266

5

8,271

Net loss recognised directly in equity

 

-

-

-

8,266

-

8,266

5

8,271

Profit for the year

 

-

-

-

-

3,401

3,401

14

3,415

Total comprehensive gain/(expense) for the year

 

-

-

-

8,266

3,401

11,667

19

11,686

Issue of shares

 

3

35

-

-

(3)

35

-

35

Dividends paid

4

-

-

-

-

(1,042)

(1,042)

(14)

(1,056)

Consideration for purchase of subsidiary

 

-

-

-

-

(28)

(28)

(3)

(31)

Share-based payments

 

-

-

-

-

1,111

1,111

-

1,111

Tax in relation to share based payments

 

-

-

-

-

721

721

-

721

Total transactions with owners recognised directly in equity

 

3

35

-

-

759

797

(17)

780

Balance at 31 July 2016

 

209

31,086

9,239

13,730

19,795

74,059

30

74,089

Exchange differences on translation

 

-

-

-

1,159

-

1,159

-

1,159

Net gain recognised directly in equity

 

-

-

-

1,159

-

1,159

-

1,159

Profit for the year

 

-

-

-

-

4,671

4,671

(30)

4,641

Total comprehensive gain for the year

 

-

-

-

1,159

4,671

5,830

(30)

5,800

Issue of shares

 

2

175

-

-

(2)

175

-

175

Dividends paid

4

-

-

-

-

(1,470)

(1,470)

-

(1,470)

Share-based payments

 

-

-

-

-

1,488

1,488

-

1,488

Tax in relation to share based payments

 

-

-

-

-

391

391

-

391

Total transactions with owners recognised directly in equity

 

2

175

-

-

407

584

-

584

Balance at 31 July 2017

 

211

31,261

9,239

14,889

24,873

80,473

-

80,473

                           

 

 

 

YOUGOV PLC

CONSOLIDATED STATEMENT OF CASHFLOWS

 

For the year ended 31 July 2017

 

Note

2017
£'000

2016
£'000

 

Cash flows from operating activities

 

 

 

Profit before taxation

 

7,914

5,526

Adjustments for:

 

 

 

Finance income

 

(480)

(2,144)

Finance costs

 

226

945

Share of post-tax loss of associates

 

(103)

4

Amortisation of intangibles

7

6,508

5,567

Depreciation

8

1,174

819

Loss on disposal of property, plant and equipment and other intangible assets

 

7

-

Profit on the disposal of subsidiary undertakings

 

(94)

-

Share-based payments

 

1,488

1,111

Other non-cash items

 

-

(36)

Increase in trade and other receivables

 

(1,531)

(1,925)

Increase in trade and other payables

 

2,779

3,229

Increase in provisions

 

1,026

1,043

Cash generated from operations

 

18,914

14,139

Interest paid

 

(2)

(1)

Income taxes paid

 

(2,487)

(2,365)

Net cash generated from operating activities

 

16,425

11,773

Cash flow from investing activities

 

 

 

Acquisition of interest in associates

 

-

(140)

Proceeds from the sales of subsidiary undertakings net of cash disposed of

 

150

-

Purchase of property, plant and equipment

8

(843)

(1,003)

Purchase of intangible assets

7

(6,968)

(5,080)

Proceeds from sale of plant, property and equipment

 

-

7

Interest received

 

8

12

Dividends received from associates

 

-

28

Net cash used in investing activities

 

(7,653)

(6,176)

Cash flows from financing activities

 

 

 

Acquisition of non-controlling interests

 

-

(31)

Proceeds from the issue of share capital

 

175

35

Repayment of borrowings

 

-

(19)

Dividends paid to shareholders

 

(1,470)

(1,042)

Dividends paid to non-controlling interests

 

-

(14)

Net cash used in financing activities

 

(1,295)

(1,071)

Net increase in cash and cash equivalents

 

7,477

4,526

Cash and cash equivalents at beginning of year

 

15,553

10,017

Exchange gain on cash and cash equivalents

 

189

1,010

Cash and cash equivalents at end of year

 

23,219

15,553

           

 

YOUGOV PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

For the year ended 31 July 2017

 

 

Nature of operations

 

YouGov plc and subsidiaries' ("the Group") principal activity is the provision of market research.

YouGov plc is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The address of YouGov plc's registered office is 50 Featherstone Street, London EC1Y 8RT United Kingdom. YouGov plc's shares are listed on the Alternative Investment Market of the London Stock Exchange.

YouGov plc's annual consolidated financial statements are presented in UK Sterling, which is also the functional currency of the parent company.

 

Basis of preparation

 

The following financial information does not amount to full financial statements within the meaning of Section 434 of Companies Act 2006. The financial information has been extracted from the Group's Annual Report and Financial Statements for the year ended 31 July 2017 on which an unqualified report has been made by the Company's auditors.

 

The consolidated financial statements of YouGov plc are have been prepared under the historical cost convention modified for fair values under International Financial Reporting Standards as adopted by the European Union (IFRS). These consolidated financial statements have been prepared in accordance with IFRS, IFRS Interpretations Committee (IFRS IC) and the Companies Act 2006 applicable to companies reporting under IFRS.

 

Financial statements for the year ended 31 July 2016 have been delivered to the Registrar of Companies; the report of the auditors on those accounts was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The 2017 statutory accounts will be delivered in due course.

 

Copies of the Annual Report and Financial Statements will be posted to shareholders shortly and will be available from the Company's registered office at 50 Featherstone Street, London, EC1Y 8RT.

 

 

 

 

1          Segmental analysis

The Board of Directors (which is the "chief operating decision maker") primarily reviews information based on product lines, Custom Research, Data Products and Data Services, with supplemental geographical information. 

2017

Custom Research
£'000

Data
 Products
£'000

Data
 Services
£'000

Eliminations &

Unallocated Costs

£'000

Group

£'000

Revenue

60,220

24,070

23,296

(538)

107,048

Cost of sales

(14,389)

(3,284)

(4,204)

538

(21,339)

Gross profit

45,831

20,786

19,092

-

85,709

Operating expenses

(36,928)

(13,756)

(13,359)

(7,138)

(71,181)

Adjusted operating profit

8,903

7,030

5,733

(7,138)

14,528

Amortisation of intangible assets

 

 

 

 

(6,483)

Other separately reported items

 

 

 

 

(488)

Operating profit

 

 

 

 

7,557

Finance income

 

 

 

 

480

Finance costs

 

 

 

 

(226)

Share of post-tax loss in joint ventures and associates

 

 

 

 

103

Profit before taxation

 

 

 

 

7,914

Taxation

 

 

 

 

(3,273)

Profit after taxation

 

 

 

 

4,641

Other segment information

 

 

 

 

 

Depreciation

730

138

173

132

1,174

 

2016

Custom Research
£'000

Data
Products
£'000

Data
Services
£'000

Eliminations &

Unallocated Costs £'000

Group

£'000

Revenue

54,318

16,629

17,905

(650)

88,202

Cost of sales

(13,753)

(3,007)

(3,394)

678

(19,476)

Gross profit

40,565

13,622

14,511

28

68,726

Operating expenses

(33,704)

(9,110)

(9,320)

(5,675)

(57,809)

Adjusted operating profit

6,861

4,512

5,191

(5,647)

10,917

Amortisation of intangible assets

 

 

 

 

(5,478)

Other separately reported items

 

 

 

 

(1,108)

Operating profit

 

 

 

 

4,331

Finance income

 

 

 

 

2,144

Finance costs

 

 

 

 

(945)

Share of post-tax loss in joint ventures and associates

 

 

 

 

(4)

Profit before taxation

 

 

 

 

5,526

Taxation

 

 

 

 

(2,111)

Profit after taxation

 

 

 

 

3,415

Other segment information

 

 

 

 

 

Depreciation

506

108

112

93

819

 

 

1          Segmental analysis (Continued)

Supplementary information by geography

Revenue and adjusted operating profit by geography based on the origin of the sale

 

2017

2016

 

Revenue

£'000

Adjusted operating

profit/(loss) £'000

£'000

Revenue

£'000

Adjusted operating profit/(loss) £'000

UK

27,139

8,575

24,927

7,150

USA

Germany

Nordic

Middle East

France

Asia Pacific

Intra-group revenues/unallocated costs

(3,862)

(7,178)

(2,829)

(5,865)

Group

107,048

14,528

88,202

10,917

 

^Operating profit/(loss) before amortisation of intangible assets and exceptional items.

 

 

Revenue by geography based on the destination of the customer

2017

UK

£'000

Middle

East 

£'000

Germany £'000

Nordic £'000

USA

£'000

France £'000

Asia Pacific £'000

Intra-group revenues £'000

Group

£'000

External sales

26,766

13,523

9,406

8,584

42,595

2,136

4,038

-

107,048

Inter-segment sales

1,752

281

772

528

2,764

187

390

(6,674)

-

Total revenue

28,518

13,804

10,178

9,112

45,359

2,323

4,428

(6,674)

107,048

2016

 

 

 

 

 

 

 

 

 

External sales

24,654

10,819

8,722

7,451

32,563

1,789

2,204

-

88,202

Inter-segment sales

1,925

209

512

356

1,922

141

193

(5,258)

-

Total revenue

26,579

11,028

9,234

7,807

34,485

1,930

2,397

(5,258)

88,202

Inter-segment sales are priced on an arm's-length basis that would be available to unrelated third parties.

 

 

2          OTHER SEPARATELY REPORTED ITEMS

 

2017

£'000

2016

£'000

Restructuring costs

582

1,086

Profit on the disposal of subsidiary undertakings

Legal costs

Acquisition-related costs

Change in accounting estimation - contingent consideration

 

488

1,108

 

Restructuring costs in the year included £265,000 in relation to the reduction of non-core custom operations in the Middle East and £317,000 arising from the establishment of centralised global operations and finance support functions.

The profit on the disposal of subsidiary undertakings was in respect of the disposal of Service Rating GmbH.

Restructuring costs in the prior year included £894,000 in relation to the restructuring of the Northern European units.  Restructuring costs of £192,000 were also incurred in reorganising sales and marketing operations in the UK, reorganising the IT Development structure and reorganising the management structure in the US.

Legal costs in the prior year were incurred in connection with establishing operations in Thailand.

Acquisition related income in the prior year comprise the acquisition of Decision Fuel comprising a £53,000 reduction in contingent deemed staff costs and a £77,000 reduction in provisions in respect of transaction costs.

The change in estimated contingent consideration in the prior year is in respect of the Decision Fuel acquisition.

 

3          TAXATION

The taxation charge represents:

 

2017

£'000

2016

£'000

Current tax on profits for the year

2,987

2,083

Adjustments in respect of prior years

305

173

Total current tax charge

3,292

2,256

Deferred tax:

 

 

Origination and reversal of temporary differences

Adjustments in respect of prior years

Impact of changes in tax rates

(38)

79

Total deferred tax credit

(19)

(145)

Total income statement tax charge/(credit)

3,273

2,111

 

The tax assessed for the year is higher (2016: higher) than the standard rate of corporation tax in the UK.

The differences are explained below:

 

2017

£'000

2016

£'000

Profit before taxation

7,914

5,526

 

Tax charge calculated at Group's standard rate of 20% (2015: 20.67%)

Variance in overseas tax rates

Impact of changes in tax rates

Gains not subject to tax

Expenses not deductible for tax purposes

Tax losses for which no deferred income tax asset was recognised

Adjustments in respect of prior years

Associates results reported net of tax

(20)

1

Total income statement tax charge for the year

3,273

2,111

 

On 8 July 2015, the UK corporation tax rate was reduced from 20% to 19% from 1 April 2017 and to 18% from 1 April 2020. On 15 September 2016 further changes to the UK corporation tax rates were made reducing the main rate to 17% from 1 April 2020. These changes have been substantively enacted at the balance sheet date and, therefore, are included in these financial statements.  Deferred taxes at the balance sheet date have been measured using the enacted tax rates reflected in these financial statements.

 

 

4              DIVIDEND

On 12 December 2016, a final dividend in respect of the year ended 31 July 2016 of £1,470,000 (1.4p per share) (2015: £1,042,000 (1.0p per share)) was paid to Shareholders. A dividend in respect of the year ended 31 July 2017 of 2.0p per share, amounting to a total dividend of £2,106,000 is to be proposed at the Annual General Meeting on 6 December 2017. These financial statements do not reflect this proposed dividend payable.

 

 

 

5          EARNINGS PER SHARE

The calculation of the basic earnings per share is based on the earnings attributable to Ordinary Shareholders divided by the weighted average number of shares in issue during the year. Shares held in employee share trusts are treated as cancelled for the purposes of this calculation.

The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post-tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential Ordinary Shares.

The adjusted earnings per share has been calculated to reflect the underlying profitability of the business by excluding the amortisation of intangible assets, share-based payments, imputed interest, impairment charges, other separately reported items and any related tax effects as well as the derecognition of tax losses.

 

2017

£'000

2016

£'000

Profit after taxation attributable to equity holders of the parent company

4,671

3,401

Add: amortisation of intangible assets included in operating expenses

6,483

5,478

Add: share-based payments

1,488

1,111

Add: imputed interest

20

27

Add: : other separately reported items

488

1,108

Tax effect of the above adjustments and adjusting tax items

(1,639)

(1,988)

Adjusted profit after taxation attributable to equity holders of the parent company

11,511

9,137

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

 

2017

2016

Number of shares

 

 

Weighted average number of shares during the year: ('000 shares)

- Basic

- Dilutive effect of share options

4,670

3,361

- Diluted

110,123

107,305

The adjustments have the following effect:

 

 

Basic earnings per share

Amortisation of intangible assets

Share-based payments

Imputed interest

Other separately reported items

Tax effect of the above adjustments and adjusting tax items

(1.6p)

(1.9p)

Adjusted earnings per share

10.9p

8.8p

Diluted earnings per share

4.2p

3.2p

Amortisation of intangible assets

Share-based payments

Imputed interest

Other separately reported items

Tax effect of the above adjustments and adjusting tax items

(1.5p)

(1.8p)

Adjusted diluted earnings per share

10.5p

8.5p

 

 

6          GOODWILL

 

Middle

East

£'000

USA

£'000

Nordic £'000

Germany £'000

CoEditor £'000

Asia Pacific £'000

Total

£'000

Carrying amount at 1 August 2015

1,416

16,945

7,012

9,159

569

692

35,793

Exchange differences

251

2,996

1,417

1,821

-

123

6,608

Carrying amount at 31 July 2016 and 1 August 2016

1,667

19,941

8,429

10,980

569

815

42,401

Exchange differences

15

186

502

640

-

2

1,345

Carrying amount at 31 July 2017

1,682

20,127

8,931

11,620

569

817

43,746

At 31 July 2017

 

 

 

 

 

 

 

Cost

1,682

20,127

8,931

12,343

569

817

44,469

Accumulated impairment

-

-

-

(723)

-

-

(723)

Net book amount

1,682

20,127

8,931

11,620

569

817

43,746

The impairment in the year arose on the closure of BeField GmbH.

In accordance with the Group's accounting policy, the carrying values of goodwill and other intangible assets are reviewed annually for impairment. The cash-generating units ("CGUs") are consistent with those segments shown in Note 1. The 2017 impairment review was undertaken as at 31 July 2017. The recoverable amounts of all CGUs have been determined based on value in use calculations. This review assessed whether the carrying value of goodwill was supported by the net present value of future cash flows derived from assets using a projection period of five years for each CGU based on approved budget numbers.

The sources of the assumptions used in making the assessment are as follows:

·      Growth rates are internal forecasts based on both internal and external market information.

·      Margins reflect past experience, adjusted for expected changes.

·      Terminal growth rates based on management's estimate of future long-term average growth rates.

·      Discount rates based on Group WACC, adjusted where appropriate.

Annual EBITDA growth rates of 2.25% have been assumed in perpetuity beyond year five. The pre-tax weighted average costs of capital used to discount the future cash flows to their present values are Middle East 10% (2016: 10%), USA 17% (2016: 17%), Nordic 13% (2016: 13%), Germany 15% (2016: 15%) and Asia Pacific 12% (2016: 12%).

Management has considered reasonable possible changes in key assumptions and performed sensitivity analyses under these scenarios. This analysis shows that sufficient headroom exists and would not give rise to any further impairment.

 

 

7          OTHER INTANGIBLE ASSETS

 

Consumer panel

£'000

Software and software development £'000

Customer contracts and lists £'000

Patents and trademarks £'000

Product development

costs

£'000 

Total

£'000

At 1 August 2015

 

 

 

 

 

 

Cost

12,182

16,329

4,576

2,869

988

36,944

Accumulated amortisation

(9,985)

(10,740)

(2,727)

(2,403)

(737)

(26,592)

Net book amount

2,197

5,589

1,849

466

251

10,352

Year ended 31 July 2016

 

 

 

 

 

 

Opening net book amount

2,197

5,589

1,849

466

251

10,352

Additions:

 

 

 

 

 

 

  Separately acquired

1,979

391

-

49

106

2,525

  Internally developed

-

2,555

-

-

-

2,555

Amortisation charge:

 

 

 

 

 

 

  Business combinations

-

(128)

(465)

(169)

-

(762)

  Separately acquired

(1,574)

(572)

-

(3)

(166)

(2,315)

  Internally developed

-

(2,490)

-

-

-

(2,490)

Reclassifications

-

80

-

-

(80)

-

Exchange differences

312

211

283

48

20

874

Closing net book amount

2,914

5,636

1,667

391

131

10,739

At 31 July 2016 and 1 August 2016

 

 

 

 

 

 

Cost

16,081

19,901

5,418

3,439

962

45,801

Accumulated amortisation

(13,167)

(14,265)

(3,751)

(3,048)

(831)

(35,062)

Net book amount

2,914

5,636

1,667

391

131

10,739

Year ended 31 July 2017

 

 

 

 

 

 

Opening net book amount

2,914

5,636

1,667

391

131

10,739

Additions:

 

 

 

 

 

 

  Separately acquired

3,471

50

-

26

-

3,547

  Internally developed

-

3,385

-

-

36

3,421

Amortisation charge:

 

 

 

 

 

 

  Business combinations

-

(226)

(562)

(173)

-

(961)

  Separately acquired

(2,219)

(534)

-

(8)

(60)

(2,821)

  Internally developed

-

(2,726)

-

-

-

(2,726)

Disposals

-

-

-

-

(71)

(71)

Exchange differences

34

15

31

4

2

86

Closing net book amount

4,200

5,600

1,136

240

38

11,214

At 31 July 2017

 

 

 

 

 

 

 

Cost

19,768

23,374

5,548

3,581

900

53,171

Accumulated amortisation

(15,568)

(17,774)

(4,412)

(3,341)

(862)

(41,957)

Net book amount

4,200

5,600

1,136

240

38

11,214

                           

 

8          PROPERTY, PLANT AND EQUIPMENT

 

 

Freehold property

£'000

Leasehold property improvements £'000

Computer equipment £'000

Fixtures and fittings

£'000

Motor

vehicles

£'000

Total

£'000

At 31 July 2015

 

 

 

 

 

 

Cost

1,416

1,011

2,376

1,302

103

6,208

Accumulated depreciation

(329)

(333)

(1,705)

(826)

(42)

(3,235)

Net book amount

1,087

678

671

476

61

2,973

Year ended 31 July 2016

 

 

 

 

 

 

Opening net book amount

1,087

678

671

476

61

2,973

Additions:

 

 

 

 

 

 

Separately acquired

-

178

576

249

-

1,003

Disposals

-

(7)

-

-

-

(7)

Depreciation

(75)

(176)

(398)

(144)

(26)

(819)

Exchange differences

184

73

81

72

8

418

Closing net book amount

1,196

746

930

653

43

3,568

At 31 July 2016

 

 

 

 

 

 

Cost

1,667

1,248

3,082

1,692

121

7,810

Accumulated depreciation

(471)

(502)

(2,152)

(1,039)

(78)

(4,242)

Net book amount

1,196

746

930

653

43

3,568

Year ended 31 July 2017

 

 

 

 

 

 

Opening net book amount

1,196

746

930

653

43

3,568

Additions:

 

 

 

 

 

 

Separately acquired

-

61

659

86

37

843

Disposals

-

(1)

-

(6)

-

(7)

Depreciation

(87)

(205)

(609)

(243)

(30)

(1,174)

Exchange differences

14

8

16

10

-

48

Closing net book amount

1,123

609

996

500

50

3,278

At 31 July 2017

 

 

 

 

 

 

Cost

1,682

1,312

3,787

1,788

158

8,727

Accumulated depreciation

(559)

(703)

(2,791)

(1,288)

(108)

(5,449)

Net book amount

1,123

609

996

500

50

3,278

 

All property, plant and equipment disclosed above in both the year ended 31 July 2017 and 3 July 2016, with the exception of those items held under lease purchase agreements, are free from restrictions on title.

 

 

 

 

 

9          TRADE AND OTHER RECEIVABLES

 

31 July 2017

£'000

31 July 2016

£'000

Trade receivables

18,441

16,542

Other receivables

Prepayments

Accrued income

8,549

8,925

 

31,243

29,117

Provision for trade receivables

(544)

(474)

 

30,699

28,643

 

The Directors consider that the carrying amount of trade and other receivables approximate to their fair value.

As at 31 July 2017, trade receivables of £10,660,000 (2016: £10,101,000) were overdue but not impaired. These relate to a number of customers for which there is no recent history of default or any other indication that the receivable should not be fully collectable. The ageing analysis of past due trade receivables which are not impaired is as follows:

 

31 July 2017

£'000

31 July 2016

£'000

Up to three months overdue

6,391

4,752

Three to six months overdue

3,011

4,467

Six months to one year overdue

479

631

More than one year overdue

779

251

 

10,660

10,101

 

Movement on the Group provision for impairment of trade receivables is as follows:

 

2017

£'000

2016

£'000

Provision for receivables impairment at 1 August

474

235

Provision created in the year

206

368

Provision utilised in the year

(140)

(159)

Exchange differences

4

29

Provision for receivables impairment at 31 July

544

474

 

The creation and release of the provision for impaired receivables has been included in the Consolidated Income Statement. The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above.

 

 

9          TRADE AND OTHER RECEIVABLES (CONTINUED)

The average length of time taken by customers to settle receivables is 58 days (2016: 59 days). Concentrations of credit risk do exist with certain clients with which we have trading relationships but none has a history of default and all command a certain stature within the marketplace which minimises any potential risk of default. Material balances (defined as greater than £250,000 (2016: greater than £250,000)) represent 43% of trade receivables (2016: 39%).

At 31 July 2017, £261,000 (2016: £nil) of the trade and other receivables of YouGov Nordic and Baltic A/S were used as security against a loan and revolving overdraft facility held by YouGov Nordic and Baltic A/S.  The Group does not hold any other collateral as security.

 

 

10         TRADE AND OTHER PAYABLES

 

31 July 2017

£'000

31 July 2016

£'000

Trade payables

1,745

1,557

Accruals

Deferred Income

Other payables

4,060

3,588  

 

29,389

25,839

 

Included within other payables are £71,000 (2016: £56,000) of contributions due in respect of defined contribution pension schemes.

 

 

 

 

 

 

 


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