REG - YouGov PLC - Full Year Results for the year ended 31 July 2023
10/10/2023 07:00
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RNS Number : 4940P YouGov PLC 10 October 2023
10 October 2023
YouGov plc
("YouGov" or "the Group" or "the Company")
Full Year Results for the year ended 31 July 2023
- Strong performance amidst a difficult trading environment
- Confident in the Group's prospects for FY24 and meeting current market
expectations
YouGov, the international research and data analytics group, announces its
results for the year ended 31 July 2023.
Summary of Results
Year to Year to Change Underlying
31 July 2023 31 July 2022 % Change¹
£m £m %
Revenue 258.3 221.1 17% 9%
Adjusted Operating Profit(1) 48.3 36.3 33% 23%
Adjusted Operating Profit Margin (%)(1) 18.7% 16.4% 230bps -
Statutory Operating Profit 44.4 30.0 48% -
Adjusted Profit before Tax(1) 56.4 34.7 63% 61%
Statutory Profit before Tax 44.7 25.3 77% -
Adjusted Earnings per Share(1) 40.5p 23.7p 71% 72%
Statutory Basic Earnings per Share 31.5p 15.7p 100% -
1 Defined in the explanation of non-IFRS measures below.
Financial highlights
· Revenue growth of 17% (FY22: 31%) to £258.3m, with underlying¹ business
growth of 9% versus the prior year against a challenging macroeconomic
backdrop and well ahead of the industry.
· Adjusted operating profit(1) up by 33% to £48.3m (FY22: £36.3m), with
underlying¹ business growth of 23% on the back of operational gearing and
disciplined cost management.
· Adjusted operating profit margin(1) up 230 basis points (bps) to 18.7% (FY22:
16.4%).
· Adjusted profit before tax(1) up by 63% to £56.4m (FY22: £34.7m).
· Adjusted earnings per share(1) up by 71% to 40.5p (FY22: 23.7p).
· Statutory operating profit up 48% to £44.4m (FY22: £30.0m).
· Strong cash conversion of 93% (FY22: 113%) enabling ongoing investment in the
business and third strategic growth plan.
· Strong balance sheet position maintained with net cash at period end of
£107.2m (31 July 2022: £37.4m), £49.8m of which relates to net proceeds
from the equity placing completed in July 2023.
Operational highlights
· High-quality data, combined with our global reach and best-in-class analytics
tools drive significant outperformance versus broader market research
industry, demonstrating our customer stickiness and ability to take market
share.
o Data Products revenue increased by 16% (10% from underlying¹ business) to
£85.9m, driven by strong subscription renewal rates.
o Data Services revenue decreased by 6% (8% from underlying¹ business) to
£47.8m, as general market softness continues to impact more discretionary
spend.
o Custom Research revenue increased by 27% (17% from underlying¹ business) to
£121.8m, driven by continued sales momentum globally from both long-term
tracking and ad-hoc projects.
· Strong growth across all geographies despite macroeconomic challenges and
difficult trading conditions in some markets during the period.
o Strong commercial success in the UK through expansion of several client
relationships and good performance in Mainland Europe on the back of new
client wins.
o The US remains the Group's key strategic growth focus with large market
opportunities, however, performance in the region was impacted by a slowdown
in the technology sector in the period.
· Investments made during the period to drive further growth:
o Technology: Continued investment of £9.0m (FY22: £8.0m) in technologies to
drive long term growth, including the completion of the first version of the
YouGov Platform.
o Products: Expanded product suite in response to client demand including the
launch of YouGov Surveys, the Group's self-service survey tool.
o Panel: Ongoing investment of £7.3m (FY22: £8.0m) in the build-out of our
panel, resulting in the number of registered members growing 15% in the period
to approximately 26 million.
o Acquisitions: Announced the Group's intention to acquire the Consumer Panel
Business of GfK SE (GfK CPB), an established leader in household purchase data
across 16 European countries, in July 2023. The acquisition is subject to
regulatory approval and the process remains on track with the deal anticipated
to close in the coming months.
· Announced the appointment of Steve Hatch as Chief Executive Officer following
a comprehensive international search process. Steve joined the Company on 1
August 2023, succeeding Stephan Shakespeare who assumed the role of
Non-Executive Chair.
Current trading and outlook
· We remain confident in the Group's prospects for FY24 and in meeting current
market expectations on a stand-alone basis (pre-GfK CPB).
· Trading for the current financial year has started off in line with
expectations.
· The Group is starting to see sales momentum returning in the technology sector
and expect overall Group performance to build through the course of the year.
· With the Group's proposed acquisition of GfK's Consumer Panel Business yet to
close, we re-state our current medium-term guidance as outlined at the Capital
Markets Day in May, excluding the proposed acquisition:
o Medium-term revenue of £500 million; and
o Medium-term adjusted operating profit margin of 25%.
· The Group will provide a further update on the medium-term guidance following
closing of the acquisition.
Steve Hatch, Chief Executive Officer, said: "Since I joined YouGov in August I
have focused on getting to know my new colleagues as well as talking to our
clients. These conversations have re-affirmed my views on the strength of
YouGov's people, technology and client offering. The Company is in a strong
position with the right focus and strategic direction to realise the full
potential of the business. I look forward to working closely with Stephan, the
wider Board and the full YouGov team in delivering the third strategic growth
plan and am excited about the great opportunities ahead.
"Building on the momentum we saw in the first half of the year, YouGov has
delivered another year of strong performance in FY23 against a challenging
macroeconomic backdrop. We have continued to invest for sustainable growth, in
line with our strategy, while delivering further margin expansion and robust
cash generation.
Demand for YouGov's products and services remains strong with continued new
business momentum, high renewal rates and sticky customer relationships. As a
result, we remain confident in the Group's prospects for FY24 and beyond,
aiming to maintain the strong sales momentum seen over the past year."
Analyst presentation
A copy of the presentation will be available online at
https://corporate.yougov.com/investors/presentations
(https://corporate.yougov.com/investors/presentations) shortly after the
full-year results announcement is live on the Regulatory News Service (RNS).
Forward looking statements
Certain statements in this full year report are forward looking. Although the
Group believes that the expectations reflected in these forward-looking
statements are reasonable, we can give no assurance that these expectations
will prove to have been correct. As these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements.
We undertake no obligation to update any forward-looking statements whether as
a result of new information, future events or otherwise.
Enquiries:
YouGov plc
Steve Hatch, CEO 020 7012 6000
Alex McIntosh, CFO
Hannah Jethwani, Investor Relations Director
FTI Consulting 020 3727 1000
Charles Palmer / Valerija Cymbal / Jemima Gurney
Numis Securities Limited (NOMAD and Joint broker) 020 7260 1000
Nick Westlake / Iqra Amin
Berenberg (Joint Broker) 020 3207 7800
Mark Whitmore / Richard Andrews / Alix Mecklenburg-Solodkoff
About YouGov
YouGov is an international online research data and analytics technology
group.
Our mission is to offer unparalleled insight into what the world thinks.
Our innovative solutions help the world's most recognised brands, media owners
and agencies to plan, activate and track their marketing activities better.
With operations in the UK, the Americas, Europe, the Middle East, India and
Asia Pacific, we have one of the world's largest research networks.
At the core of our platform is an ever-growing source of consumer data that
has been amassed over our twenty years of operation. We call it Living Data.
All of our products and services draw upon this detailed understanding of our
26 million registered panel members to deliver accurate, actionable consumer
insights.
As innovators and pioneers of online market research, we have a strong
reputation as a trusted source of accurate data and insights. Testament to
this, YouGov data is regularly referenced by the global press, and we are the
most quoted market research source in the world.
YouGov. Living Consumer Intelligence.
For further information, visit business.yougov.com (//business.yougov.com)
Chair's Statement
In my first statement as Chair of the YouGov plc Board of Directors, I am
delighted to report that we have had another year of solid trading results for
the 12 months to 31 July 2023 (FY23), delivering strong top-line underlying
growth(1) alongside continued margin expansion. It is an honour to step into
the role of Non-Executive Chair and continue my journey with YouGov in its
strongest ever position.
The challenges and macro uncertainty seen in the previous year persisted into
FY23, and our ability to deliver this market beating performance against that
backdrop further demonstrates the resilience and strength of our business
model. Across our industry, we witnessed a slowdown in momentum which led to
some temporary disruption at the start of the calendar year, particularly with
our technology sector clients. However, momentum has since started to return,
underpinning our confidence in the future, and our teams are hard at work to
ensure we get closer to our clients and innovate with them to achieve our
ambitions.
Results and dividend
In FY23 we achieved strong revenue growth of 17% over the prior year (9% on an
underlying(1) basis), driven by growth across all our geographies. We were
able to maintain disciplined cost management through the year, and benefit
from the investments made in the prior years to build capacity and position
our organisation for a strong finish to our second long-term strategic growth
plan (FYP2). This enabled us to deliver adjusted operating profit(1) of
£48.3m in the year, up 33% over FY22, representing a margin of 18.7% (FY22:
16.4%).
This performance is testament to our resilient model and was largely driven by
the stellar performance of our Custom Research division and the continued
growth of our syndicated data products. While the macro environment has
impacted volumes of our more tactical, fast-turnaround research, clients
continue to dedicate resources to customised strategic research, particularly
large-scale multi-country multi-year trackers, to help them make critical
business decisions. These trackers build on the efficiencies of our data
engine and the richness of our connected data which, combined with our global
coverage and granular audience profiling, is continuing to resonate well with
clients, resulting in several new client wins in the year.
YouGov continues to maintain a progressive dividend policy, and in line with
this, the Board is pleased to recommend a dividend increase of 25% to 8.75p
per share payable on 11 December 2023 to shareholders on the register as at 1
December 2023. This will be tabled for shareholder approval at our Annual
General Meeting ("AGM") on 7 December 2023.
Concluding the second strategic growth plan ("FYP2")
Our vision is for YouGov to be the world's leading provider of marketing and
opinion data. We want YouGov data to be a valued public resource used by
hundreds of millions of people on a daily basis, enabling intelligent
decision-making and informed conversations. To support our realisation of this
vision, we choose to operate using the tool of medium- to long-term strategic
growth plans to enable us to allocate resources, make investment decisions and
to create a close link between corporate performance and executive
remuneration.
This year was the final year of our FYP2 strategic plan which ran from 1
August 2019 to 31 July 2023 (FY19-23). As previously announced, we set the
following ambitious growth targets for the FYP2 plan period:
· Double Group revenue (implying a revenue CAGR of 19%);
· Double Group adjusted operating profit margin(1); and
· Achieve an adjusted basic earnings per share(1) compound annual growth rate in
excess of 30%
It is pleasing that YouGov has delivered a strong performance in the final
year of the strategic plan, resulting in the Company nearly achieving its
stretching targets. Overall, we delivered Group Revenue CAGR of 17% and an EPS
CAGR of 28% over the FYP2 period, which is a remarkable accomplishment and all
the more impressive in the context of the COVID-19 pandemic, political
turbulence and macroeconomic global backdrop during the period.
Based on our vision and strategy, we previously identified five key priorities
that were a focus over the FYP2 period. The key progress made under each of
these priorities during FY23 is set out below:
· Product development and technology: Completed the development of the first
version of the YouGov Platform, a high-quality, self-service research system,
and expanded our product suite with the launch of YouGov Surveys, our
self-service survey tool.
· Panel: Growth in our global research panel of 15% in FY23 to 26 million
registered members, while maintaining strong retention rates. Additionally, we
launched our new member portal with an aim to increase engagement and drive
on-going data sharing globally.
· Global accounts: Our account management teams demonstrated their ability to
elevate client conversations backed by robust market research data and win
several new clients.
· Global infrastructure: Our Centres of Excellence (CenX) teams continue to grow
rapidly as we look to increase efficiencies and shift more standardised
research tasks into our CenX operations.
· Acquisitions: In July 2023 we announced the intention to acquire the Consumer
Panel Business of GfK SE, an established leader in household purchase data
across 16 European countries. The regulatory approval process remains on
track, and we anticipate closing the deal in the coming months.
This was also the final year of the Long-Term Incentive Plan 2019 ("LTIP
2019"), which was introduced in 2019 to run alongside the FYP2 strategic plan.
The LTIP 2019 targets were stretching, with full vesting requiring compound
annual adjusted EPS growth of 35% over the four years to 31 July 2023. Taking
into account the EPS CAGR of 28%, the overall plan vesting level was 74% which
is an excellent result. The LTIP 2019 awards will vest in late-October 2023.
At the forthcoming AGM in December, we will be seeking shareholder approval
for a new scheme, the Long-Term Incentive Plan 2023 ("LTIP 2023"), which has
been designed to allow us to incentivise and reward sustainable performance
over the medium- to long-term. Full details of LTIP 2023 will be shared with
shareholders in early-November when the 2023 Annual Report & Accounts are
published.
Third strategic growth plan ("SP3")
The Board has approved the strategic direction for the third strategic growth
plan. As part of this, we continue to see significant opportunities to grow
our share of wallet through better partnering with existing clients and
increasing market penetration, particularly in the US with multi-national
brands. Additionally, we see strong potential to expand our business through a
digital path to purchase with YouGov Surveys by driving greater usage of the
YouGov Platform.
The proposed acquisition of GfK's Consumer Panel Business (GfK CPB) will add
significant capabilities to the Group and enhance our ability to scale. GfK
CPB is an established leader in household purchase data, with panels across 16
European countries, consisting of over 100,000 households. These capabilities
are strategically aligned, adding highly engaged panels in the European market
and technology to capture and analyse consumer purchasing data. We expect the
acquisition to support our continued growth by expanding our combined offering
to existing clients in our current markets, as well as the opportunity to win
new clients and roll out into new markets, including in the US which remains
our largest growth opportunity.
I am confident that the Board has set the right strategic direction to deliver
another period of sustainable, profitable growth for the business and we have
the right executive team in place to see the plan implemented to its full
potential. Our new CEO, Steve Hatch brings over 30 years of leadership
experience and valuable sector expertise in consumer profiling, e-commerce,
and business transformation with a proven track record in scaling technology
platforms and digital media businesses. These capabilities make Steve
perfectly suited to lead YouGov through its third strategic growth plan and
beyond. See Steve's CEO's Report for more detail on SP3 and our medium-term
growth targets.
Board succession
This year has been a period of significant change for the YouGov Board and
leadership team composition.
As part of the previously disclosed Board succession plan, on 1 August 2023,
Roger Parry stepped down from the role of Non-Executive Chair after a 16-year
tenure with the Company. At the same time, Steve Hatch joined the Company as
Chief Executive Officer, while I assumed the role of Non-Executive Chair.
Additionally, Rosemary Leith stepped down as Senior Independent Director
("SID") after a near nine-year tenure, succeeded by Nick Prettejohn. Rosemary
continues to hold the role of Chair of the Board's Remuneration Committee and
I would like to thank her for her service as SID, particularly during this
Board succession period.
Earlier in the year, on 27 February 2023, we were delighted to welcome Shalini
Govil-Pai and Devesh Mishra to the Board. Shalini's technical and consumer
expertise, and Devesh's operational and engineering experience, both gained
within the US and UK technology industries, bring hugely valuable and relevant
skills to YouGov as we progress into the next strategic growth plan. I am
pleased to announce that Shalini will join the Board's Remuneration Committee
and Devesh will join the Audit & Risk Committee as a member(2).
Also on 1 August 2023, Sundip Chahal's role changed from Chief Operating
Officer to Chief Business Officer with a remit for leading integration and
growth strategies at YouGov. Initially, Sundip is focussed on the planned
integration of GfK's Consumer Panel Business. Sundip is also working closely
with Steve during the leadership transition period to ensure the success of
YouGov's organic growth strategy. Sundip remains on the YouGov Board as an
Executive Director in this new role. Lynda Vivian was promoted to the
non-Board role of Chief Operating Officer with a focus on the delivery of
YouGov's Platform model in line with the Company's strategic growth plan,
while continuing her work ensuring operational excellence across the
business.
I would like to take this opportunity to thank Roger for his tremendous
contribution as Non-Executive Chair over the years. Roger was highly
influential in the growth and success of our business as a trusted advisor,
mentor, and partner to the YouGov leadership team throughout our journey.
With the right Board and executive team now in place, and the transformative
acquisition of GfK's Consumer Panel Business in planning stage, I am excited
by what we can achieve in the next phase of our growth journey.
Conclusion
Our success is a testament to the talent and hard work of all our employees
and their dedication to the YouGov mission. I'd like to thank everyone at
YouGov for their commitment and teamwork during my time as CEO and I look
forward to leading the Board's oversight of the Company's strategic direction
in my role as Non-Executive Chair.
I believe our chosen business model and strategy - to provide high-quality
market research through a connected data proposition - plays to our strengths
and expertise and will enable us to continue to deliver long-term value to our
stakeholders. We have an exciting future ahead of us and I look forward to
working with Steve and the rest of the executive team to make YouGov the
world's number one market research company as the universal infrastructure of
trusted data sharing.
Stephan Shakespeare
Chair
10 October 2023
1 Defined in the explanation of non-IFRS measures below.
2 Following the above changes, the composition of the YouGov plc Board
Committees will be as noted below:
Audit & Risk Committee Nomination Committee Remuneration Committee
Ashley Martin (Chair) Stephan Shakespeare (Chair) Rosemary Leith (Chair)
Rosemary Leith Shalini Govil-Pai Ashley Martin
Nick Prettejohn Rosemary Leith Andrea Newman
Devesh Mishra Ashley Martin Nick Prettejohn
Devesh Mishra Shalini Govil-Pai
Andrea Newman
Nick Prettejohn
Chief Executive Officer's Statement
YouGov is a business I have closely followed and admired for some time, and I
am honoured to have been selected to lead the Company in its next phase of
growth. The quality of YouGov's data and its people is clear and is evidenced
by the fact that some of the world's most data-savvy companies are its major
clients.
Rapid technological evolution, combined with growing concerns over data
integrity and privacy and the turbulent geopolitical landscape have shaped a
complex and ever-changing market environment, bringing both challenges and
opportunities. As the industry evolves and places greater emphasis on
high-quality data to make strategic decisions, YouGov is well positioned to
serve their needs and continue to strengthen its position as a market leader.
This makes it a very exciting time to join YouGov and I look forward to
working with the wider Board and the full YouGov team on the great
opportunities that lie ahead.
From a financial perspective, the business is in a strong position with the
Company having delivered consistent top line growth as well as improved
profitability through higher efficiencies and a focus on higher-margin
projects. Along with the wider market, the business has recently faced
short-term headwinds in the form of longer sales cycles and a slowdown in
client decision-making, however, its resilience and ability to perform ahead
of the market has been clearly demonstrated in the past year.
Factors contributing to our positive performance in the period include:
· Existing clients: our largest clients continue to grow their spend with us,
particularly in Custom Research, despite difficult macroeconomic conditions.
· New products: Recently launched products such as YouGov Safe and YouGov
Surveys are beginning to show promise, and data slices, subsets of our
syndicated data products, are helping us monetise existing datasets and expand
their use among clients.
· Key geographies: The US remains our largest market albeit we have seen some
slowdown compared to prior years, primarily due to the disruption in the
technology sector, the UK has performed well despite the overall negative
sentiment in the market.
· Operational leverage: Investments in recent years to expand our research
capacity, central functions and CenX operations are continuing to drive
operational leverage as our revenue grows.
Third strategic growth plan ("SP3")
YouGov develops medium to long-term strategic growth plans to enable the
business to determine key strategic priorities to work towards and provide
discipline to our investment approach. Our last plan, FYP2, was centred around
expanding our global reach, furthering our product development by building a
self-serve survey tool and the YouGov Platform, and implementing a CenX model
to position ourselves for future growth.
YouGov's next strategic growth plan aims to deepen YouGov's strategy and
complete the final stage of positioning ourselves as a platform business with
a dual go-to-market strategy targeting enterprise sales and a digital path to
purchase. This strategic growth plan is underpinned by three key growth areas:
· Deepening client relations and increasing market penetration through our
syndicated data products and customised research;
· Driving greater usage of our new self-serve platform, the YouGov Platform,
through a digital sales and marketing approach; and
· Targeting greenfield opportunities, such as newer products and M&A, that
will be incremental to the core growth plan.
The Company continues to see significant potential to grow its existing
business lines through several levers for both new and existing clients.
YouGov will work to increase its penetration with brands, particularly in the
US, grow the overall number of subscriptions, target long-term, strategic
tracking projects, and scale fast-turnaround research volumes through the
self-service YouGov Platform.
Prior to the proposed acquisition of GfK's Consumer Panel Business (GfK CPB),
the Group set out two key financial targets, as follows:
· Medium-term revenue (excluding contribution from transformational M&A)
of £500 million; and
· Medium-term adjusted operating profit margin of 25%.
These remain unchanged and the Group expects to revise this medium-term
guidance post the closing of the GfK CPB transaction.
Based on our strategy and my initial observations, we have identified some key
areas that the Company will prioritise over the medium-term:
· Panel: We understand the importance of privacy to our panel members and their
desire to extract more value from their data held by organisations. The
Company will aim to increase data sharing and panel activity, while
continuously looking to improve the member experience.
· Platform: Following the initial launch of the YouGov Platform, we will now
focus on increasing functionality and product availability, driving research
volumes and reducing inefficiencies and in time look to launch a widespread
marketing campaign to increase adoption.
· Commercial teams: Increasing accountability within our commercial teams and
having clear plans to increase share of wallet with key clients through
cross-sell and up-sell opportunities will be a key driver to achieving our
ambitious targets.
· Artificial intelligence (AI): YouGov has long been using machine-learning to
demonstrate the quality of its data through political predictions. We will
look to further the use of AI to build products, improve our research
capabilities and automate detection and removal of suspect respondents. The
continued global adoption of AI capabilities will also create additional
revenue opportunities for YouGov given we have the ideal source data for AI
models.
Environmental, social and governance ("ESG")
Like all aspects of YouGov, our ESG approach is built on core principles of
transparency and trust. We champion responsible, ethical, and sustainable
business practices across our operations, which is reflected in our robust ESG
commitments. From giving a voice to millions of members worldwide to investing
in career development opportunities to support diverse talent in our
workforce, we are driven by shared values and vision to create a positive
impact in the wider community.
This year saw the conclusion of our second ESG Roadmap, encompassing actions
within individual Environmental, Social, and Governance Strategies. In
preparation for our next long-term strategic plan, we conducted our first ESG
materiality assessment in Spring 2023. We invited groups of stakeholders
(including the Board of Directors, employees, panel members, clients,
investors and suppliers) to rank the importance of ESG issues in order of
relevance to the business. The results have validated our existing priorities,
informed our next ESG Roadmap, and ensured that we tailor our communications
appropriately for each of our key stakeholder groups.
While we operate in a naturally low-emission industry, we take a proactive
approach to understanding and mitigating our environmental impact. To meet our
new obligations to align our reporting to Task Force on Climate-Related
Disclosures (TCFD) recommendations, we calculated our global carbon footprint
for the first time and took the important step of conducting a climate
scenario analysis to understand the key climate-related risks and
opportunities relevant to our business. The results of this exercise have been
incorporated into our risk management framework, and in the next year we will
be developing progressive long-term and interim net zero targets.
Our panel is our largest stakeholder group at 26 million registered members.
With the launch of YouGov Plus this year, our dedicated Panel team has been
able to draw on direct member feedback to enhance the member experience and
ensure our panel remains representative, inclusive, and accessible. YouGov
Plus is a new premium tier membership for our most active and committed
members in the UK and the US, and they have been invited to provide valuable
input through designated tasks and video calls that help us make tangible,
positive changes and empowers members by amplifying their voices. The strength
of our panel engagement efforts pairs with the expertise of our researchers to
ensure surveys are designed in an unbiased way with consideration for cultural
and regional sensitivities. This means clients can trust us to deliver
accurate and reliable results that can inform their own ESG agendas.
Governance is fundamental not just to our ESG strategy, but to our success as
a business. Our compliance team ensures we are meeting all regulatory
requirements with transparency and accountability, while our data privacy and
security specialists maintain a rigorous framework to reinforce trust with
anyone who provides us with their personal data. In 2023, we held our second
annual ESG Deep Dive presentation to the Board of Directors, with quarterly,
action-oriented communications to senior leaders, to ensure ESG is led from
the top with a shared understanding of priorities.
People and Culture
To maintain a truly representative and highly engaged panel, it is important
that we champion diversity in our workforce and actively foster an inclusive
workplace. In early 2023 we published our first annual Workforce Diversity
Report, which set a baseline from which to measure progress against our
Diversity & Inclusion goals and communicated the range of initiatives we
have in place to identify and address representation gaps. We are continuously
investing in career development opportunities for our employees, with
specialised training programmes such as YouLead (for aspiring leaders) and
YouManage (for new line managers) to encourage internal progression and foster
support networks across teams and regions.
Our success as a business depends on employees being empowered to thrive in a
rewarding culture, which is defined by a collaborative spirit and a desire to
make an impact. To foster high performance, we appreciate the need for more
open communication and will look to ensure that all our employees have clear
sight of our goals and expectations, and will work to tackle any obstacles as
a more connected team. We are united by shared values and we want to create an
environment for each of us to be fulfilled and deliver career-defining work
that we are proud of, while supporting our social mission to give a voice to
millions of people for the benefit of the wider community.
Current trading and outlook
Early trading in the new financial year is in line with management
expectations. After a temporary pause in the second half of FY23, we are
seeing sales momentum from the technology sector starting to return. We expect
overall Group performance to build through the course of the year as the new
budget year begins for our clients.
We remain confident in the Group's prospects for FY24 and in meeting current
market expectations on a stand-alone basis (pre-GfK CPB). Our initial focus in
FY24 has been on developing detailed commercial plans for our key clients and
increase awareness of the entire YouGov product suite within our existing
clients. We expect the Company to continue to reap operational leverage
benefits from the technological and headcount investments made in FYP2,
leading to ongoing margin expansion as revenue growth continues.
We continue to retain strong cash balances, notwithstanding the funds set
aside for the proposed acquisition of the GfK CPB and aim to maintain capital
expenditures for FY24 in line with the prior year.
YouGov has a clear purpose and great talent that is passionate about the
Company's mission. Combining that purpose and passion with our ongoing
investment in data and technology provides us a strong foundation for
achieving our ambitions.
I would like to thank the Board for trusting me to take the helm at YouGov. I
am committed to delivering stakeholder value to our registered members,
partners, clients, investors and employees and I appreciate their ongoing
commitment and support.
Steve Hatch
Chief Executive Officer
10 October 2023
1 Defined in the explanation of non-IFRS measures below.
Chief Finance Officer's Review
The Group has delivered a strong performance in the 12 months to 31 July 2023,
the final year of FYP2 which ran from FY19-FY23. The business has demonstrated
its ability to consistently deliver growth ahead of the market, with industry
body ESOMAR estimating that the established research segment grew 5% in 2022,
down from 9% in 2021.
Group revenue was up 17% in reported terms to £258.3m during the period (9%
up on an underlying(1) basis), while adjusted operating profit(1) increased by
33% on the prior financial year to £48.3m. This is a strong performance
particularly in the context of difficult macroeconomic conditions and in a
market that has decelerated following the initial post-pandemic recovery
period. Our track record of growth was recognised in the recent ESOMAR list of
top 20 Established Market Research firms globally and we were pleased to be
ranked as the third fastest-growing company in the list.
Adjusted operating margins
Gross margins increased slightly to 86% (FY22: 85%), on the back of
operational leverage and a concerted focus on maximising higher margin
on-panel research.
Group operating costs (excluding separately reported items) of £172.6m (FY22:
£151.1m) increased by 14% in reported terms. Adjusted operating profit(1)
increased by 33% to £48.3m on a reported basis (23% on an underlying(1)
basis), representing an improvement in the adjusted operating margin to 18.7%
(FY22: 16.4%), as a result of disciplined cost management and operational
gearing following a sustained period of investment in the business. The
Group's statutory operating profit increased to £44.4m (FY22: £30.0m), after
charging other separately reported items of £3.9m (FY22: £6.3m).
Performance by division
YouGov's lines of business fall into three divisions: Data Products, Data
Services and Custom Research.
Data Products
Our syndicated data products suite includes YouGov BrandIndex and YouGov
Profiles as well as newer behavioural and transactional data products.
Performance in the Data Products division in H2 FY23 was consistent with the
first half on an underlying(1) basis, as stronger performance in the UK and
Mainland Europe was offset by slower growth in the US. Throughout the year our
sales teams have maintained strong renewal rates, however, lower uptake of new
subscriptions has resulted in slower growth in the year. Revenue from Data
Products increased by 16% (10% growth in underlying(1) terms) in the period.
The adjusted operating profit(1) from Data Products increased by 33% to
£36.0m on the back of higher operational leverage from syndicated products,
resulting in a 560bps improvement in the adjusted operating margin(1) to 42%
(FY22: 36%).
Geographically, the US remains the largest Data Products market and grew by
16% in the period (7% from the underlying(1) business), while the second
largest market, the UK, delivered 20% underlying(1) growth in the period.
Data Services
Our Data Services division consists of our fast-turnaround research services,
including our YouGov RealTime Omnibus service.
As highlighted previously and seen across the industry, demand for
fast-turnaround research has been more muted over the past year as client
research budgets have come under pressure. Revenue decreased by 6% in reported
and 8% in underlying(1) terms to £47.8m, with media agencies and the retail
sector seeing the largest declines. Performance in Mainland Europe was
particularly impacted, as geopolitical conflicts and poor sentiment led to
lower tactical PR work, while performance in the UK was largely flat.
As a result of the division's lower revenue performance, adjusted operating
profit(1) decreased 2% over the prior year to £7.5m and the margin expanded
slightly from 15% to 16%, as the division reaped cost benefits from the shift
of operational delivery of standardised research projects into the CenX.
Custom Research
Our Custom Research division includes tailored research projects and tracking
studies.
During the period, the division's revenue grew by 27% in reported terms to
£121.8m, with growth seen across all regions. On an underlying(1) basis,
revenue growth was 17%, driven by Mainland Europe on the back of major client
wins, and good performance in the UK, particularly in the sports and financial
services sectors. The US continued to perform well, delivering low
double-digit growth on an underlying basis(1), albeit impacted by the slowdown
in the technology sector.
The adjusted operating profit(1) increased by 31% to £27.5m and the adjusted
operating margin expanded to 23% (FY22: 22%), including a full year dilutive
impact from the LINK acquisition, as the focus on project profitability
continues.
Revenue Year to Year to Revenue growth Underlying(1) revenue change %
31 July 2023 31 July 2022 %
£m £m
Data Products 85.9 74.1 16% 10%
Data Services 47.8 50.7 (6%) (8%)
Custom Research 121.8 95.6 27% 17%
Intra-Group and Central revenues 2.8 0.7 - -
Group 258.3 221.1 17% 9%
Adjusted Operating Profit(1) Year to Year to Adjusted Operating Adjusted Operating Margin %
31 July 2023 31 July 2022 Profit growth
£m £m %
Year to Year to
31 July 2023 31 July 2022
Data Products 36.0 27.0 33% 42% 36%
Data Services 7.5 7.7 (3%) 16% 15%
Custom Research 27.5 21.0 31% 23% 22%
Central items (22.7) (19.4) - - -
Group 48.3 36.3 33% 19% 16%
Performance by geography
YouGov's geographic footprint spans the UK, Mainland Europe, the Americas,
Asia Pacific and the Middle East.
Revenue Year to Year to Revenue Underlying(1)
31 July 2023 31 July 2022 growth revenue
£m £m % change %
UK 65.6 57.9 13% 13%
Americas 116.4 99.5 17% 8%
Mainland Europe 58.2 45.7 27% 14%
Middle East 8.8 6.2 42% 32%
Asia Pacific 23.5 20.8 13% 12%
Intra-Group revenues (14.2) (9.0) - -
Group 258.3 221.1 17% 9%
Adjusted Operating Profit(1) Year to Year to Operating Operating Margin %
31 July 2023 31 Jul Profit growth
£m 2022 %
£m
Year to Year to
31 July 2023 31 July 2022
UK 19.5 17.8 10% 30% 31%
Americas 41.1 32.1 28% 35% 32%
Mainland Europe 4.8 3.3 45% 8% 7%
Middle East 2.5 1.7 47% 28% 27%
Asia Pacific 3.6 1.8 100% 15% 9%
Central items (23.2) (20.4) - - -
Group 48.3 36.3 33% 19% 16%
Panel development by geography
We continued to invest in our panel to ensure we are able to meet our clients'
research needs and to deliver nationally representative samples in our newer
markets. As at 31 July 2023, the total number of registered panellists had
increased by 15% to 25.65 million, compared to 22.25 million as at 31 July
2022, as set out in the table below.
Region Panel size at Panel size at Change
31 July 2023 31 July 2022 %
millions millions
UK 2.88 2.67 8%
Americas 9.28 8.05 15%
Mainland Europe 5.88 4.93 19%
MENA 3.07 2.76 11%
Asia Pacific 4.54 3.85 18%
Total 25.65 22.25 15%
Group financial performance
Amortisation of intangible assets
In the 12 months to 31 July 2023, amortisation charges for intangible assets
of £21.0m were £0.6m higher than the previous year. The increase in the
amortisation of our panel assets was limited, growing £0.6m to £10.5m, as
the accelerated amortisation of some of our newer panels has stabilised
following the initial investment in FY21. Amortisation of software increased
by £0.2m to £9.3m. £7.9m (FY22: £7.7m) of the total software development
charge related to assets created through the Group's own internal development
activities, £1.2m (FY22: £0.8m) related to separately acquired assets and
£0.2m (FY22: £0.5m) was for amortisation on assets acquired through business
combinations.
Separately reported items
Acquisition-related costs in the year of £5.0m includes £4.8m of costs in
relation to the planned acquisition of GfK CPB of which £0.4m relates to
bridge debt facility fees and the remaining £4.4m of fees relates to
professional advisory services from banks, lawyers and accountants. There has
also been a net £1.1m release of previously accrued contingent consideration
treated as staff costs in respect of the acquisitions of Portent.io Limited,
Charlton Insights Inc., YouGov Finance Limited (formerly Lean App Limited) and
Faster Horses Pty Limited. The release of the accrual was, primarily, in
relation to Faster Horses where the earn-out performance has not been as
strong as initially expected.
Acquisition related costs in the comparative period comprise £5.2m contingent
consideration treated as staff costs in respect of the acquisitions of
Portent.io Limited, Charlton Insights Inc., YouGov Finance Limited (formerly
Lean App Limited) and Faster Horses Pty Limited and £1.1m of transaction
costs in respect of newly acquired entities.
Reconciliation of adjusted operating profit to adjusted profit after tax and
earnings per share
Adjusted profit before tax(1) of £56.4m was an increase of 63% versus the
prior year, well ahead of adjusted operating profit growth, as the prior year
was impacted by foreign exchange losses related to intercompany loans. The
adjusted tax rate(1) decreased from 24% in FY22 to 21% in the period.
Statutory profit before tax of £44.7m was reported compared to £25.3m in the
year ended 31 July 2022, an increase of 77%.
During the period adjusted earnings per share(1) grew by 71% from 23.7p to
40.5p, and statutory earnings per share increased from 15.7p to 31.5p.
31 July 31 July
2023 2022
£m £m
Adjusted operating profit(1) 48.3 36.3
Share-based payments 7.6 2.9
Imputed interest 0.2 0.1
Net finance income / (expense) 0.3 (4.6)
Adjusted profit before tax(1) 56.4 34.7
Adjusted taxation(1) (12.1) (8.4)
Adjusted profit after tax(1) 44.3 26.3
Adjusted earnings per share (pence)(1) 40.5p 23.7p
Cash flow and capital expenditure
The Group generated £69.0m (FY22: £69.7m) in cash from operations (before
paying interest and tax) including a £4.2m outflow (FY22: £6.6m inflow) from
net working capital and £2.3m payment for deferred consideration; the cash
conversion rate (percentage of adjusted EBITDA(1) converted to cash) decreased
from 113% to 93% of adjusted EBITDA(1). Taxation payments for the year
totalled £9.3m (FY22: £6.9m).
The Group invested £7.8m (FY22: £6.9m) in the continuing development of our
technology platform internally and £1.2m (FY22: £1.1m) was invested on
separately-acquired software tools. Investment in panel recruitment was
largely in line with last year at £7.3m (FY22: £8.0m) as we look to utilise
more cost-effective recruitment methods. In addition, £1.1m (FY22: £1.5m)
was spent on the purchase of property, plant and equipment, resulting in a
total investment in fixed assets of £17.4m (FY22: £17.5m).
Total expenditure on intangible assets and property, plant and equipment is
shown below:
31 July 31 July
2023 2022
£m £m
Software development 9.0 8.0
Panel recruitment 7.3 8.0
Total expenditure on intangible assets 16.3 16.0
Purchase of property, plant and equipment 1.1 1.5
Total capital expenditure 17.4 17.5
Net inflow from financing activities includes £49.8m proceeds from the equity
placing in relation to the proposed acquisition of GfK CPB, the dividend
payment of £7.7m (FY22: £6.7m) and the purchase of treasury shares for
£9.8m to satisfy future employee share option exercises (FY22: £9.9m). The
£20.0m revolving facility remained undrawn during the year and was cancelled
in July 2023. As a result, net cash balances at the year-end increased by
£69.8m to £107.2m.
Currency
The Group's results were impacted by the net depreciation of UK Sterling, as
its average exchange rate was 9% lower against the US Dollar in this period
against the prior period. Movement against the Euro was 3% lower compared to
31 July 2022. The net impact of foreign exchange on the Group's adjusted
operating profit(1) was an increase of £3.2m compared to calculation in
constant currency terms.
Balance sheet
As at 31 July 2023, total shareholders' funds increased from £125.3m to
£196.4m. Net assets increased from £125.0m to £196.2m, with a minority
interest of £0.2m accounting for the difference. Net current assets increased
from £4.5m to £74.1m. Current assets increased from £95.0m to £165.2m,
mainly due to the increased cash balance in relation to the aforementioned
equity placing. Current liabilities balance was similar to the prior year.
Non-current liabilities decreased by £7.5m to £17.0m, mainly due to a
decrease of £3.9m in deferred tax liabilities, and £2.4m in contingent
consideration.
Proposed dividend
The Board is recommending the payment of a final dividend of 8.75p per share
for the year ended 31 July 2023. If shareholders approve the dividend at the
AGM (scheduled for 7 December 2023), it will be paid on Monday 11 December
2023 to all shareholders who were on the Register of Members at close of
business on Friday 1 December 2023.
Alex McIntosh
Chief Finance Officer
10 October 2023
1 Defined in the explanation of non-IFRS measures below.
Explanation of non-IFRS measures
Financial measure How we define it Why we use it
Separately reported items Items that in the Directors' judgement are one-off or need to be disclosed Provides a more comparable basis to assess the year-to-year operational
separately by virtue of their size or incidence business performance
Adjusted operating profit Operating profit excluding separately reported items
Adjusted operating profit margin Adjusted operating profit expressed as a percentage of revenue
Adjusted EBITDA Adjusted operating profit before depreciation and amortisation
Adjusted profit before tax Profit before tax before share-based payment charges, social taxes on
share-based payments, imputed interest and separately reported items
Underlying growth Growth in business excluding impact of current and prior period acquisitions
and business closures, and movement in exchange rates (i.e. current year
performance calculated with exchange rates held constant at prior year rates).
Adjusted taxation Taxation due on the adjusted profit before tax, thus excluding the tax effect Provides a more comparable basis to assess the underlying tax rate
of exceptional items
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 basic 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 dilutive share options
Constant currency revenue change Current year revenue compared to prior year revenue in local currency Shows the underlying revenue change by eliminating the impact of foreign
translated at the current year average exchange rates exchange rate movements
Cash conversion The ratio of cash generated from operations to adjusted EBITDA Indicates the extent to which the business generates cash from adjusted
operating profits
Compound annual growth rate (CAGR) The annualised average rate of growth between two given years, assuming growth Indicates the mean annual growth rate for a specified period of time longer
takes place at a cumulative rate than one year
Reconciliation of non-IFRS measures
Revenue reconciliation Year to Year to Change
31 July 2023 31 July 2022 %
£m £m
Revenue 258.3 221.1 17%
FX impact - 11.1 -
Acquisitions (20.3) (12.9) -
Underlying revenue 238.1 219.3 9%
Operating Profit reconciliation Year to Year to Change
31 July 2023 31 July 2022 %
£m £m
Statutory Operating Profit 44.4 30.0 48%
Acquisition-related costs 3.9 6.3 (38%)
Adjusted Operating Profit 48.3 36.3 33%
FX impact - 3.2 -
Acquisitions 1.1 0.8 38%
Underlying(1) operating profit 49.4 40.3 23%
Adjusted EBITDA(1) reconciliation Year to Year to Change
31 July 2023 31 July 2022 %
£m £m
Adjusted Operating Profit 48.3 36.3 33%
Depreciation 4.3 4.9 (12%)
Amortisation 21.0 20.4 3%
Adjusted EBITDA 73.6 61.6 19%
1 Defined in the explanation of non-IFRS measures above.
Publication of Non-Statutory Accounts
The financial information relating to the year ended 31 July 2023 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.
Consolidated Income Statement
for the year ended 31 July 2023
2023 2022
Note £m £m
Revenue 1 258.3 221.1
Cost of sales (37.4) (33.7)
Gross profit 220.9 187.4
Administrative expenses (176.5) (157.4)
Operating profit 44.4 30.0
Separately reported items 2 3.9 6.3
Adjusted operating profit 48.3 36.3
Finance income 1.0 -
Finance costs (0.7) (4.7)
Profit before taxation 44.7 25.3
Taxation 3 (10.1) (7.8)
Profit after taxation 34.6 17.5
Attributable to:
- Owners of the parent 34.5 17.1
- Non-controlling interests 0.1 0.4
34.6 17.5
Earnings per share
Basic earnings per share attributable to owners of the parent 5 31.5 15.7
Diluted earnings per share attributable to owners of the parent 5 30.8 15.4
All operations are continuing.
Consolidated Statement of Comprehensive Income
for the year ended 31 July 2023
2023 2022
£m £m
Profit for the year 34.6 17.5
Other comprehensive (expense)/income:
Items that will not be reclassified to profit or loss
Actuarial gains 0.4 1.2
Items that may be subsequently reclassified to profit or loss
Currency translation differences (2.9) 7.0
Other comprehensive (expense)/ income for the year (2.5) 8.2
Total comprehensive income for the year 32.1 25.7
Attributable to:
- Owners of the parent 32.0 25.3
- Non-controlling interests 0.1 0.4
Total comprehensive income for the year 32.1 25.7
Items in the statement above are disclosed net of tax.
Consolidated Statement of Financial Position
as at 31 July 2023
2023 2022
(restated)(1)
Note £m £m
Assets
Non-current assets
Goodwill 7 82.4 83.1
Other intangible assets 8 31.9 35.1
Property, plant and equipment 3.6 4.2
Right-of-use assets 10.1 11.3
Deferred tax assets 11.1 11.3
Total non-current assets 139.1 145.0
Current assets
Trade and other receivables 9 55.0 53.5
Current tax assets 3.0 4.1
Cash and cash equivalents 107.2 37.4
Total current assets 165.2 95.0
Total assets 304.3 240.0
Liabilities
Current liabilities
Trade and other payables 10 64.7 66.8
Current tax liabilities 7.0 3.5
Contingent consideration 4.4 6.1
Provisions 11.9 11.2
Lease liabilities 3.1 2.9
Total current liabilities 91.1 90.5
Net current assets 74.1 4.5
Non-current liabilities
Contingent consideration - 2.4
Provisions 6.8 6.7
Defined benefit Pension net liability 1.9 2.0
Lease liabilities 8.1 9.3
Deferred tax liabilities 0.2 4.1
Total non-current liabilities 17.0 24.5
Total liabilities 108.1 115.0
Net assets 196.2 125.0
Equity
Issued share capital 0.2 0.2
Share premium 81.1 31.5
Treasury reserve (19.4) (9.6)
Merger reserve 9.2 9.2
Foreign exchange reserve 11.7 14.6
Retained earnings 113.6 79.4
Total equity attributable to owners of the parent 196.4 125.3
Non-controlling interests in equity (0.2) (0.3)
Total equity 196.2 125.0
1 As required by IFRS3, fair value adjustments have been made during the
measurement period, as explained in the FY22 restatements section below
Consolidated Statement of Changes in Equity
for the year ended 31 July 2023
Attributable to equity holders of the Company
Note Issued share capital Share premium Treasury reserve Merger reserve Foreign exchange reserve Retained earnings Equity attributable to owners of the parent Non- controlling interests in equity Total
£m £m £m £m £m £m £m £m £m
Balance at 1 August 2021 0.2 31.5 (2.3) 9.2 7.6 66.5 112.7 (0.7) 112.0
Actuarial gains - - - - - 1.2 1.2 - 1.2
Exchange differences on translation - - - - 7.0 - 7.0 - 7.0
Net gain recognised directly in equity - - - - 7.0 1.2 8.2 - 8.2
Profit for the year - - - - - 17.1 17.1 0.4 17.5
Total comprehensive income for the year - - - - 7.0 18.3 25.3 0.4 25.7
Issue of shares - - - - - - - - -
Acquisition of treasury shares - - (9.9) - - - (9.9) - (9.9)
Treasury shares used to settle share option exercises - - 2.6 - - (2.6) - - -
Dividends paid 4 - - - - - (6.7) (6.7) - (6.7)
Share-based payments - - - - - 2.9 2.9 - 2.9
Tax in relation to share-based payments - - - - - 1.0 1.0 - 1.0
Total transactions with owners recognised directly in equity - - (7.3) - - (5.4) (12.7) - (12.7)
Balance at 31 July 2022 0.2 31.5 (9.6) 9.2 14.6 79.4 125.3 (0.3) 125.0
Actuarial gains - - - - - 0.4 0.4 - 0.4
Exchange differences on translation - - - - (2.9) - (2.9) - (2.9)
Net (loss)/gain recognised directly in equity - - - - (2.9) 0.4 (2.5) - (2.5)
Profit for the year - - - - - 34.5 34.5 0.1 34.6
Total comprehensive income/(expense) for the year - - - - (2.9) 34.9 32.0 0.1 32.1
Issue of shares - 49.6 - - - - 49.6 - 49.6
Acquisition of treasury shares - - (9.9) - - - (9.9) - (9.9)
Treasury shares used to settle share option exercises - - 0.1 - - (0.1) - - -
Dividends paid 4 - - - - - (7.7) (7.7) - (7.7)
Share-based payments - - - - - 7.6 7.6 - 7.6
Tax in relation to above other items - - - - - (0.5) (0.5) - (0.5)
Total transactions with owners recognised directly in equity - 49.6 (9.8) - - (0.7) 39.1 - 39.1
Balance at 31 July 2023 0.2 81.1 (19.4) 9.2 11.7 113.6 196.4 (0.2) 196.2
Consolidated Statement of Cash Flows
for the year ended 31 July 2023
2023 2022
Note £m £m
Cash flows from operating activities
Profit before taxation 44.7 25.3
Adjustments for:
Finance income (0.3) -
Finance costs 0.7 1.0
Amortisation of intangibles 8 21.0 20.4
Depreciation 4.3 4.9
Share-based payments 7.6 2.9
Other non-cash items(1) (2.5) 8.6
Settlement of deferred consideration (2.3) -
(Increase) in trade and other receivables (0.1) (4.4)
(Decrease)/increase in trade and other payables (3.1) 9.5
(Decrease)/increase in provisions (1,0) 1.5
Cash generated from operations 69.0 69.7
Interest paid (0.5) (0.9)
Income taxes paid (9.3) (6.9)
Net cash generated from operating activities 59.2 61.9
Cash flow from investing activities
Acquisition of subsidiaries (net of cash acquired) - (25.4)
Purchase of property, plant and equipment (1.1) (1.5)
Purchase of intangible assets (16.3) (16.0)
Interest received 0.3 -
Net cash used in investing activities (17.1) (42.9)
Cash flows from financing activities
Proceeds from the issue of share capital 49.8 -
Principal element of lease payments (3.2) (3.4)
Draw down of bank loans - 20.0
Repayment of bank loans - (20.0)
Dividends paid to shareholders (7.7) (6.7)
Purchase of treasury shares (9.8) (9.9)
Net cash generated from / (used) in financing activities 29.1 (20.0)
Net increase/ (decrease) in cash and cash equivalents 71.2 (1.0)
Cash and cash equivalents at beginning of year 37.4 35.5
Exchange (loss)/gain on cash and cash equivalents (1.4) 2.9
Cash and cash equivalents at end of year 107.2 37.4
1 Includes (£1.8m) (2022: £5.2m) of contingent consideration in respect of
acquisitions treated as staff costs and foreign exchange costs.
Notes to the Consolidated Financial Statements
for the year ended 31 July 2023
Nature of operations
YouGov plc and subsidiaries' (the "Group") principal activity is the provision
of digital market research.
YouGov plc (the "Company") is the Group's ultimate Parent Company. It is a
public limited company incorporated and domiciled in the United Kingdom. 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. Figures are rounded to the nearest million UK Sterling, unless
otherwise indicated.
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 2023.
The consolidated financial statements of YouGov plc are for the year ended 31
July 2023. They have been prepared under the historical cost convention
modified for fair values under International Financial Reporting Standards
("IFRS"). Financial assets, such as defined benefit plan assets, and financial
liabilities, such as contingent consideration, are measured at fair value.
These consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards in conformity with the
requirements of the Companies Act 2006 applicable to companies reporting under
IFRS.
The separate financial statements of the Company are presented as required by
the Companies Act 2006.
Financial statements for the year ended 31 July 2022 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. Copies of the 2023 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.
FY22 restatements
In the prior year, the Group acquired LINK Marketing Services AG (LINK), a
Swiss market research business. The Group initially estimated a value of
£7.0m for the customer contract intangible assets, based on forecast revenue
and operating costs for servicing those contracts. Due to information gathered
within the first year of operating LINK, the Group has updated the valuation
of the opening customer contract intangible assets to £4.1m and has reduced
the associated deferred tax liability by £0.4m with a corresponding £2.9m
increase in the goodwill for LINK, net of a £0.2m adjustment in respect of
deferred tax and working capital (see Note 7 and Note 8). This has been
retrospectively adjusted on the consolidated balance sheet as 31 July 2022 as
required by IFRS 3.
Going concern
The Group and Parent Company meets their day-to-day working capital
requirements through their strong cash reserves. At 31 July 2023, the Group
had a healthy liquidity position with £107.2m of cash and cash equivalents
and no debt financing commitments. The Group has net current assets of £74.1m
and net assets of £196.2m as at 31 July 2023.
Management consider it is appropriate to continue to adopt the going concern
basis in preparing the Consolidated and Parent Company financial statements.
In doing so, management has considered:
· The impact of the heightened economic uncertainty resulting in rising
inflation and relatively high interest rates on the Group's operations;
· The Group's revenue sources and operations are well diversified, by country,
currency and sector so there is a track record of growth;
Notes to the Consolidated Financial Statements Continued
for the year ended 31 July 2023
· Strong cashflows in the current year and projected these for the next two
years (based upon the Group's budget for the year ending 31 July 2024);
· Available funding, including the £51m share placing, term loan facility in
place and the related covenants;
· The liquidity impact of the planned acquisition of the Consumer Panel Business
of GfK SE; and
· The Group's ability to flex its cost base in response to any unexpected
reductions in trading activity.
As disclosed in Note 6, the group is in the process of acquiring the Consumer
Panel Business of GfK SE. This will be funded from cash on hand (which arose
from a £51m share placing and strong operating cashflows) and a €240m term
loan facility. The facility includes half-yearly covenant test for EBITDA
leverage and interest cover. The Consumer Panel Business is a division of GfK
and brings with it healthy operating cash flows generated from a high
proportion of steady recurring revenue streams.
A severe but plausible downside scenario has been modelled where revenue
targets are missed by up to 20% (existing YouGov business) and a 10% miss for
the planned acquisition, due to reduced revenue (e.g. from clients' delays and
a slowdown in securing new business). These revenue sensitivities are
considered appropriate given the relative proportion of recurring revenue
streams for each business.
Even in this scenario, the Group has strong liquidity and does not breach any
banking covenants for the new term loan facility. Mitigating actions within
this downside scenario and ll within management's control are:
· Lowering sales commission and bonus payments; and
· Reduced capital expenditure.
The Directors are therefore able to conclude that they have a reasonable
expectation that the Group and Parent Company have adequate resources to
continue in operational existence and meet liabilities as they fall due for at
least the next 12 months. Therefore, the Group and Parent Company continue to
adopt the going concern basis in preparing the Consolidated and Parent Company
financial statements.
Notes to the Consolidated Financial Statements Continued
for the year ended 31 July 2023
1 Segmental analysis
The Board of Directors (which is the "chief operating decision maker")
primarily reviews information based on product lines, being split as
syndicated services such as Data Products and non-syndicated services such as
Custom Research and Data Services - with supplemental geographical
information. Revenue for FY23 included a full year contribution from
businesses acquired in the prior year - Rezonence Limited (acquired 30
September 2021) and LINK Marketing Services AG (acquired 9 December 2021).
Custom Research Data Products Data Services Other revenue, eliminations and unallocated costs
Group
2023 £m £m £m £m £m
Revenue
Recognised over time 40.4 83.7 0.3 2.6 127.0
Recognised at a point in time 81.4 2.2 47.5 0.2 131.3
Total revenue 121.8 85.9 47.8 2.8 258.3
Cost of sales (21.4) (6.1) (7.0) (2.9) (37.4)
Gross profit 100.4 79.8 40.8 (0.1) 220.9
Administrative expenses (72.9) (43.8) (33.3) (22.6) (172.6)
Adjusted operating profit/ (loss) 27.5 36.0 7.5 (22.7) 48.3
Separately reported items - - - (3.9) (3.9)
Operating profit/ (loss) 27.5 36.0 7.5 (26.6) 44.4
Finance income 1.0
Finance costs (0.7)
Profit before taxation 44.7
Taxation (10.1)
Profit after taxation 34.6
Custom Research Data Products Data Services Other revenue, eliminations and unallocated costs
Group
2022 £m £m £m £m £m
Revenue
Recognised over time 31.8 73.1 0.5 2.4 107.8
Recognised at a point in time 63.8 1.0 50.2 (1.7) 113.3
Total revenue 95.6 74.1 50.7 0.7 221.1
Cost of sales (19.1) (6.6) (8.0) - (33.7)
Gross profit 76.5 67.5 42.7 0.7 187.4
Administrative expenses (55.5) (40.5) (35.0) (20.1) (151.1)
Adjusted operating profit/ (loss) 21.0 27.0 7.7 (19.4) 36.3
Separately reported items - - - (6.3) (6.3)
Operating profit/ (loss) 21.0 27.0 7.7 (25.7) 30.0
Finance income -
Finance costs (4.7)
Profit before taxation 25.3
Taxation (7.8)
Profit after taxation 17.5
Notes to the Consolidated Financial Statements Continued
for the year ended 31 July 2023
Supplementary analysis by geography
2023 2022
Adjusted operating profit/ (loss) Adjusted operating profit/ (loss)
Revenue Revenue
£m £m £m £m
UK 65.6 19.5 57.9 17.8
Americas 116.4 41.1 99.5 32.1
Mainland Europe 58.2 4.8 45.7 3.3
Middle East 8.8 2.5 6.2 1.7
Asia Pacific 23.5 3.6 20.8 1.8
Intra-group revenues and other unallocated revenues/ (costs) (14.2) (23.2) (9.0) (20.4)
Group 258.3 48.3 221.1 36.3
2 Separately reported items
2023 2022
£m £m
Acquisition-related costs 3.9 6.3
Acquisition-related costs in the year of £5.0m includes £4.8m of costs in
relation to the planned acquisition of GfK CPB of which £0.4m relates to
bridge debt facility fees and the remaining £4.4m of fees relates to
professional advisory services from banks, lawyers and accountants. There has
also been a net £1.1m release of previously accrued contingent consideration
treated as staff costs in respect of the acquisitions of Portent.io Limited,
Charlton Insights Inc., YouGov Finance Limited (formerly Lean App Limited) and
Faster Horses Pty Limited. The release of the accrual was, primarily, in
relation to Faster Horses where the earn-out performance has not been as
strong as initially expected.
Acquisition-related costs in the comparative period comprise of £5.2m
contingent consideration treated as staff costs in respect of the acquisitions
of Portent.io Limited, Charlton Insights Inc., YouGov Finance Limited
(formerly Lean App Limited) and Faster Horses Pty Limited and £1.1m of
transaction costs in respect of newly acquired entities.
Notes to the Consolidated Financial Statements Continued
for the year ended 31 July 2023
3 Taxation
The taxation charge represents:
2023 2022
£m £m
Current tax on profits for the year 9.0 3.1
Foreign tax 5.5 4.0
Adjustments in respect of prior years (0.1) 0.1
Total current tax charge 14.4 7.2
Deferred tax:
Origination and reversal of temporary differences (4.7) (3.1)
Adjustments in respect of prior years (0.1) 3.5
Impact of changes in tax rates 0.5 0.2
Total deferred tax charge (4.3) 0.6
Total income statement tax charge 10.1 7.8
The tax assessed for the year is higher (2022: higher) than the standard rate
of corporation tax in the UK. The Group's effective tax rate on profit is
22.6% (2022: 30.8%)
The differences are explained below:
2023 2022
£m £m
Profit before taxation 44.7 25.3
Tax charge calculated at Group's standard rate of 21% (2022: 19%) 9.4 4.8
Variance in overseas tax rates (0.4) (1.4)
Impact of change in in tax rates 0.5 0.2
Impact of difference between current and deferred tax rate (0.2) (0.2)
Expenses not deductible for tax purposes 0.5 0.8
Adjustments in respect of prior years (0.2) 3.6
Other differences 0.5 -
Total income statement tax charge for the year 10.1 7.8
Excess tax relief on employee share option schemes of £0.3m (2022: £1.0m)
was recognised as income tax directly in equity, split between current tax of
£0.1m (2022: £0.9m) and deferred tax of £0.3m (2022: (£0.1m).
The UK Government announced that the main UK corporation tax rate would
increase to 25% from 1 April 2023 and had substantively enacted the higher
rate before 31 July 2022. So the effect of that higher rate was first included
in the prior year financial statements.
The Group's net current tax provision of £4.0m relates to management's
judgement of the amount of tax payable on open tax computations where the
liabilities remain to be agreed with tax authorities in the countries that the
group operates, principally the uncertain tax items for which a provision is
made. Due to the uncertainty associated with such tax items, it is possible
that at a future date, on conclusion of open tax matters, the final outcome
may vary significantly. While a range of outcomes is reasonably possible, the
extent of this range is additional liabilities of up to £3m to a reduction in
liabilities of up to £2m.
Notes to the Consolidated Financial Statements Continued
for the year ended 31 July 2023
4 Dividend
On 12 December 2022, a final dividend in respect of the year ended 31 July
2022 of £7,710,000 (7.0p per share) (2021: £6,700,000 (6.0p per share)) was
paid to shareholders. A dividend in respect of the year ended 31 July 2023 of
8.75p per share, amounting to a total dividend of £10,065,000, is to be
proposed at the Annual General Meeting on 7 December 2023. 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
excluded 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, on the assumed
conversion of all dilutive options and other potentially dilutive Ordinary
Shares.
The adjusted earnings per share has been calculated to reflect the underlying
profitability of the business by excluding share-based payments and related
employer's social costs, imputed interest, other separately reported items and
any related tax effects as well as the derecognition of tax losses.
Share-based payments and related social taxes have been excluded from the
adjusted earnings per share as the YouGov plc share price is a key driver of
these costs.
2023 2022
£m £m
Profit after taxation attributable to equity holders of the Parent Company 34.5 17.1
Add: share-based payments 7.6 2.9
Add: imputed interest 0.2 0.1
Add: separately reported items (Note 2) 3.9 6.3
Tax effect of the above adjustments and adjusting tax items (1.9) (0.4)
Adjusted profit after taxation attributable to equity holders of the Parent 44.3 26.0
Company
Notes to the Consolidated Financial Statements Continued
for the year ended 31 July 2023
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below.
2023 2022
Number of shares
Weighted average number of shares during the year: ('m shares)
- Basic 109.6 109.9
- Dilutive effect of share options 2.5 2.3
- Diluted 112.1 112.2
The adjustments have the following effect (pence):
Basic earnings per share 31.5 15.7
Share-based payments 6.9 2.6
Imputed interest 0.3 0.1
Separately reported items 3.5 5.7
Tax effect of the above adjustments and adjusting tax items (1.7) (0.4)
Adjusted basic earnings per share 40.5 23.7
Diluted earnings per share 30.8 15.4
Share-based payments and related social taxes 6.7 2.5
Imputed interest 0.3 0.1
Separately reported items 3.4 5.6
Tax effect of the above adjustments and adjusting tax items (1.7) (0.4)
Adjusted diluted earnings per share 39.5 23.2
6 Business combinations
No acquisitions have completed in the year (2022: 2 acquisitions). The Group
announced on 6 July 2023 that it has entered into an agreement to acquire the
Consumer Panel Business of GfK SE (GfK CPB) for a headline purchase price of
€315 million. The acquisition is expected to complete in the second half of
2023. The completion is subject to customary closing conditions and approvals
from regulatory authorities. The acquisition is expected to be financed by
£51.2 million gross proceeds from the newly issued YouGov ordinary shares,
new term and revolving credit facility of up to €280m and existing cash on
hand.
The Group has already incurred acquisition-related costs such as professional
advisory fees from banks, lawyers and accountants of £4.4 million in FY23.
These have been recognised within separately reported items in the
consolidated income statement. In addition, £1.1m bridge debt facility fee
has been prepaid, of which £0.4m was recognised in FY23. Additional costs of
£6 million are expected to be incurred in FY24.
Contingent consideration charge of £1.1m was incurred in the current year in
relation to acquisitions undertaken in previous years, recognised in the
income statement as separately reported items. This is contingent upon
continuing employment and, therefore, has been treated as staff compensation
under IFRS 3.
Notes to the Consolidated Financial Statements Continued
for the year ended 31 July 2023
7 Goodwill
Americas Rest of Europe DACH Middle East Asia Pacific UK Total
£m £m £m £m £m £m £m
Carrying amount at 1 August 2021 33.9 5.9 11.5 1.6 2.5 5.1 60.5
Additions - - 14.5 - - 4.0 18.5
Remeasurement(1) - - 2.7 - - - 2.7
Exchange differences 2.6 - (1.7) 0.2 0.3 - 1.4
Carrying amount at 31 July 2022 36.5 5.9 27.0 1.8 2.8 9.1 83.1
At 31 July 2022
Cost 36.5 8.0 29.5 1.8 2.8 9.1 87.7
Accumulated impairment - (2.1) (2.5) - - - (4.6)
Net book amount 36.5 5.9 27.0 1.8 2.8 9.1 83.1
Carrying amount at 31 July 2022 36.5 5.9 27.0 1.8 2.8 9.1 83.1
Exchange differences (1.1) 0.1 0.6 (0.1) (0.2) - (0.7)
Carrying amount at 31 July 2023 35.4 6.0 27.6 1.7 2.6 9.1 82.4
At 31 July 2023
Cost 35.4 8.1 30.1 1.7 2.6 9.1 87.0
Accumulated impairment - (2.1) (2.5) - - - (4.6)
Net book amount 35.4 6.0 27.6 1.7 2.6 9.1 82.4
1 The fair value remeasurements for the LINK (Switzerland) opening balance
sheet were made retrospectively at 31 July 2022 resulting in a £2.9m
reclassification from customer relationship intangible assets to goodwill, net
of a £0.2m adjustment in respect of deferred tax and working capital.
In prior reporting periods, the Nordic region was treated as a separate CGU.
In 2023, the Nordics, Spain, France and Italy were combined into the Rest of
Europe (ROE) under one regional CEO. The ROE CEO and Senior Leadership Team
have been optimising operations across the region by pooling resources, such
as people and assets, to service larger clients jointly, and having a
coordinated ROE strategy to targeting larger multi-national European clients.
They have been supported by combined support functions. The goodwill related
to Nordic has, therefore, been absorbed into the ROE CGU, which now represents
the smallest identifiable group that generates independent cashflows.
In accordance with IAS 36, the carrying values of goodwill and other
intangible assets are reviewed annually for impairment. The annual impairment
review is undertaken as at 30 April 2023 to align with the quarterly forecast
process.
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 the forecast
numbers for the year ended 31 July 2023.
The sources of the assumptions used in making the assessment are as follows:
- CGU revenue annual growth rates of 7% to 12% for years 1-5 Growth rates are
forecasts based on both internal and external market information.
- Perpetuity growth rates based on management's estimate of future long-term
average growth rates are 2.5% (2022: 2% to 2.25%).
- Pre-tax weighted average costs of capital of 11% to 14% (2022: 9% to 12%).
Management has performed a sensitivity analysis on the net present value of
the future cash flows by applying reasonably possible adverse effects on the
impairment review variables that could arise individually or collectively.
There were no reasonably possible changes in any of the key assumptions that
would have resulted in an impairment in the Group's CGUs.
Sufficient headroom exists in all CGUs to support the valuation of goodwill.
Notes to the Consolidated Financial Statements Continued
for the year ended 31 July 2023
8 Other intangible assets
Group Consumer panel Software and software development Customer contracts, trademarks, patents and product development Total
£m £m £m £m
At 1 August 2021
Cost 34.1 50.4 7.9 92.4
Accumulated amortisation (20.2) (38.0) (5.0) (63.2)
Net book amount 13.9 12.4 2.9 29.2
Year ended 31 July 2022
Opening net book amount 13.9 12.4 2.9 29.2
Additions:
Separately acquired 9.3 1.1 - 10.4
Internally developed - 6.9 - 6.9
Through business combinations 0.7 1.4 8.1 10.2
Remeasurement(1) - - (2.9) (2.9)
Disposals (1.7) (0.2) - (1.9)
Amortisation:
Amortisation - current year charge (9.9) (9.1) (1.4) (20.4)
Amortisation - disposals 1.7 0.2 - 1.9
Exchange differences 0.9 - 0.8 1.7
Closing net book amount 14.9 12.7 7.5 35.1
At 31 July 2022
Cost 44.8 59.6 14.1 118.5
Accumulated amortisation (29.9) (46.9) (6.6) (83.4)
Net book amount 14.9 12.7 7.5 35.1
Year ended 31 July 2023
Opening net book amount 14.9 12.7 7.5 35.1
Additions:
Separately acquired 9.3 1.2 - 10.5
Internally developed - 7.8 - 7.8
Disposals (7.4) - - (7.4)
Amortisation:
Amortisation - current year charge (10.5) (9.3) (1.2) (21.0)
Amortisation - disposals 7.4 - - 7.4
Exchange differences (0.3) (0.1) (0.1) (0.5)
Closing net book amount 13.4 12.3 6.2 31.9
At 31 July 2023
Cost 45.6 58.6 13.8 118.0
Accumulated amortisation (32.2) (46.3) (7.6) (86.1)
Net book amount 13.4 12.3 6.2 31.9
1 The fair value remeasurements for the LINK (Switzerland) opening balance
sheet were made retrospectively at 31 July 2022 resulting in a £2.9m
reclassification from customer relationship intangible assets to goodwill, net
of a £0.2m adjustment in respect of deferred tax working capital.
Out of the remaining £6.2m (FY22: £7.5m restated) net book amount of other
assets for Group as at 31 July 2023, £5.3m (FY22: £6.2m restated) are
customer contracts and lists with the remaining £0.9m (FY22: £1.3m) for
trademarks, patents and product development.
Notes to the Consolidated Financial Statements Continued
for the year ended 31 July 2023
9 Trade and other receivables
31 July 2023 31 July 2022
£m £m
Trade receivables 28.4 26.1
Expected credit loss (1.0) (0.9)
Net trade receivables 27.4 25.2
Other receivables 6.3 7.3
Prepayments 6.5 6.0
Accrued income 14.8 15.0
55.0 53.5
10 Trade and other payables
31 July 2023 31 July 2022
£m £m
Trade payables 6.1 6.6
Other payables 10.4 15.0
Accruals 21.6 21.5
Deferred income 26.6 23.7
64.7 66.8
11 Events after the reporting year
On 2 October 2023, YouGov has agreed a term and revolving credit facility (the
"Facility'") of up to €280m. The facility is comprised of a €240m
amortising term loan with a tenor of four years and a €40m Revolving Credit
Facility ("RCF") with a tenor of three years (with an option to extend). This
Facility replaces the Group's existing £20m RCF and the €240m acquisition
bridge debt facility, both of which were undrawn and have been cancelled. The
facility will be used to finance the acquisition of GfK CPB and for general
corporate purposes that support the Group's long-term growth strategy. There
have been no other events subsequent to 31 July 2023 that would require an
adjustment to, or disclosure in, these financial statements.
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