REG - YouGov PLC - Preliminary Results <Origin Href="QuoteRef">YOU.L</Origin> - Part 2
12/10/2015 07:01
- Part 2: For the preceding part double click ID:nRSL8871Ba
relating to the recognition of a deferred
tax asset arising from available tax losses in Germany.
Cash Flow
The Group generated £10.4m (2014: £8.9m) in cash from operations (before
paying interest and tax) including a £1.2m (2014: £1.8m) net working capital
inflow, with the cash conversion rate remaining at of 120% of adjusted
operating profit. Expenditure on investing and financing activities reduced to
£6.2m (2014: £6.7m) of which £0.5m (2014: £1.0m) related to acquisitions,
including the payment of deferred consideration, and £5.8m (2014: £5.8m) to
capital expenditure. £1.1m (£2014: £1.0m) of the capital expenditure was spent
on purchasing tangible assets. £4.6m (2014: £4.7m) was spent on intangible
assets, of which £1.5m (2014: £1.7m) was for panel recruitment and £3.1m
(2014: £2.9m) on software development including £2.3m (2014: £2.3m) arising
from internally generated assets.
Taxation
The Group had a tax credit of £0.6m (2014: £0.3m charge) on a reported basis,
the current tax charge was £0.7m (2014: £0.5m) with a deferred tax credit of
£1.3m (2014: £0.2m). On an adjusted basis, the tax charge was £2.0m (2014:
£1.6m), which represents a tax rate of 22% on the adjusted profit before tax,
in line with the prior year.
Balance Sheet
Total shareholders' funds increased to £61.6m from £57.9m at 31 July 2014 and
total net assets increased to £61.6m compared to £58.0m at 31 July 2014. Net
cash balances increased by £2.8m to £10.0m. Net current assets increased to
£10.3m from £8.4m. Current assets increased by £3.5m to £33.3m, with debtor
days reducing to 56 days from 64 days. Current liabilities increased by £1.5m
to £23.0m, with creditor days decreasing to 38 days from 44 days at 31 July
2014.
Panel Development
As at 31 July 2015, the Group's online panel comprised a total of 3.7m
panellists, an increase of 22% from the total of 3.0m as at 31 July 2014.
There was substantial investment in panellist recruitment during the year both
to support development of the newer regional panels such as in France and in
particular Asia Pacific and to extend the coverage of more mature panels. All
the panels grew as a result and the panel sizes by region were:
Region Panel Size at 31 July 2015 Panel Size at 31 July 2014
UK 752,277 600,106
Middle East 481,036 388,546
Germany 199,200 170,775
Nordic 179,589 140,994
USA 1,596,496 1,526,001
France 132,876 108,723
Asia Pacific 312,833 61,862
Total 3,654,307 2,997,007
Corporate Development Activities
As previously reported, the Group acquired 100% of Doughty Media 2 Limited
("DM2"), which owns 68% of CoEditor Limited, the company that developed the
Opigram service, in the year ended 31 July 2014. The purchase consideration
payable for DM2 included an element which was contingent upon certain
performance criteria being achieved over the two years ended 31 January 2015
and on Stephan Shakespeare and one other vendor (the Opigram manager)
remaining in YouGov's employment until 31 January 2015. These conditions were
satisfied and therefore the Board (excluding Stephan Shakespeare) approved on
23 March 2015 the issue and allotment to the vendors of a total of 1,810,226
new YouGov shares in accordance with the terms of the sale and purchase
agreement.
On 9 February 2015, YouGov entered into an agreement with Portent.io Limited,
a start-up business specialising in research and predictive analysis for the
film industry under which YouGov has made an initial investment for a 10%
shareholding, increasing to a maximum of 35% if YouGov provides further
investment in specified tranches over the following year. Portent.io and
YouGov intend also to collaborate through the use of YouGov's opinion data in
the development of Portent's products. As at 31 July 2015, YouGov's
shareholding in Portent.io stood at 25%.
Proposed Dividend
The Board is recommending the payment of a final dividend of 1.0 pence per
share for the year ended 31 July 2015. If shareholders approve this dividend
at the AGM, it will be paid on 14 December 2015 to all shareholders who were
on the Register of Members at close of business on 4 December 2015.
Alan Newman
Chief Financial Officer
12 October 2015
Publication of Non-Statutory Accounts
The financial information relating to the year ended 31 July 2014 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 2015
Note 2015 2014£'000
£'000
Revenue 1 76,110 67,375
Cost of sales (17,472) (15,811)
Gross profit 58,638 51,564
Operating expenses* (50,068) (44,175)
Adjusted operating profit before amortisation of intangible assets and exceptional items 1 8,570 7,389
Amortisation of intangibles (4,633) (3,965)
Exceptional items 2 (1,072) (2,385)
Operating profit 2,865 1,039
Finance income 422 171
Finance costs (643) (463)
Share of post-tax profit/(loss) in joint ventures and associates 42 (14)
Profit before taxation 1 2,686 733
Tax credit/(charge) 3 580 (316)
Profit after taxation 1 3,266 417
Attributable to:
- Owners of the parent 3,240 433
- Non-controlling interests 26 (16)
3,266 417
Earnings per share
Basic earnings per share attributable to owners of the parent 5 3.2p 0.4p
Diluted earnings per share attributable to owners of the parent 5 3.1p 0.4p
*Total Operating Expenses in 2015 are £55.773m, including amortisation of
intangible assets and the items detailed in Note 2 (£2014: £50.525m).
YOUGOV PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
As at 31 July 2015
2015 2014
£'000 £'000
Profit for the year 3,266 417
Other comprehensive expense:
Items that may be subsequently reclassified to profit or loss
Currency translation differences (262) (4,774)
Other comprehensive expense for the year (262) (4,774)
Total comprehensive gain/(expense) for the year 3,004 (4,357)
Attributable to:
- Owners of the parent 2,982 (4,338)
- Non-controlling interests 22 (19)
Total comprehensive gain/(expense) for the year 3,004 (4,357)
Items in the statement above are disclosed net of tax.
YOUGOV PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 July 2015
Assets Note 31 July 31 July
2015 2014
£'000 £'000
Non-current assets
Goodwill 7 35,793 36,329
Other intangible assets 8 10,352 10,321
Property, plant and equipment 9 2,973 2,489
Investments in joint ventures and associates 204 −
Deferred tax assets 4,404 3,120
Total non-current assets 53,726 52,259
Current assets
Trade and other receivables 10 22,507 21,687
Current tax assets 805 757
Cash and cash equivalents 10,017 7,429
Total current assets 33,329 29,873
Total assets 87,055 82,132
Liabilities
Current liabilities
Trade and other payables 11 19,042 17,530
Provisions for other liabilities and charges 3,665 3,127
Borrowings - 184
Current tax liabilities 276 341
Contingent consideration 12 - 298
Total current liabilities 22,983 21,480
Net current assets 10,346 8,393
Non-current liabilities
Trade and other payables 3 23
Provisions for other liabilities and charges 685 684
Contingent consideration 12 36 169
Deferred tax liabilities 1,725 1,824
Total non-current liabilities 2,449 2,700
Total liabilities 25,432 24,180
Net assets 61,623 57,952
Equity
Issued share capital 206 199
Share premium 31,051 31,014
Merger reserve 9,239 9,239
Foreign exchange reserve 5,464 5,722
Retained earnings 15,635 11,755
Total shareholders' funds 61,595 57,929
Non-controlling interests in equity 28 23
Total equity 61,623 57,952
YOUGOV PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 July 2015
Attributable to equity holders of the Company
Share Share premium Merger reserve Foreign Retained earnings Total Non-controlling interest in equity Total equity
capital £'000 £'000 exchange reserve £'000 £'000 £'000 £'000
£'000 £'000
Balance at 31 July 2013 195 30,961 9,239 10,493 10,195 61,083 31 61,114
Changes in equity for 2014
Exchange differences on translating foreign operations − − − (4,771) − (4,771) (3) (4,774)
Net loss recognised directly − − − (4,771) − (4,771) (3) (4,774)
in equity
Profit/(Loss) for the year − − − − 433 433 (16) 417
Total comprehensive (expense)/gain − − − (4,771) 433 (4,338) (19) (4,357)
for the year
Issue of shares 4 53 − − − 57 − 57
Purchase of subsidiary with a minority interest − − − − − − 11 11
Dividends paid − − − − (586) (586) (35) (621)
Purchase of non-controlling interest in subsidiary − − − − (35) (35) 35 −
Consideration for purchase of subsidiary − − − − 700 700 − 700
Share-based payments − − − − 1,048 1,048 − 1,048
Total transactions with owners recognised directly in equity 4 53 − − 1,127 1,184 11 1,195
Balance at 31 July 2014 199 31,014 9,239 5,722 11,755 57,929 23 57,952
Changes in equity for 2015
Exchange differences on translating foreign operations - - - (258) - (258) (4) (262)
Net loss recognised directly - - - (258) - (258) (4) (262)
in equity
Profit for the year - - - - 3,240 3,240 26 3,266
Total comprehensive gain/(expense) for the year - - - (258) 3,240 2,982 22 3,004
Issue of shares 3 37 - - -- 40 - 40
Dividends paid - - - - (804) (804) (17) (821)
Consideration for purchase of subsidiary 4 - - - 500 504 - 504
Share-based payments - - - - 669 669 - 669
Tax in relation to share based payments - - - - 275 275 - 275
Total transactions with owners recognised directly in equity 7 37 - - 640 684 (17) 667
Balance at 31 July 2015 206 31,051 9,239 5,464 15,635 61,595 28 61,623
YOUGOV PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
For the year ended 31 July 2015
Note 2015 2014
£'000 £'000
Cash flows from operating activities
Profit before taxation 2,686 733
Adjustments for:
Finance income (422) (171)
Finance costs 643 463
Share of post-tax (profit)/loss in joint ventures and associates (42) 14
Amortisation of intangibles 4,765 4,120
Depreciation 703 631
Loss on disposal of property, plant and equipment and other intangible assets 49 −
Share based payments 669 547
Other non-cash profit items 94 787
Increase in trade and other receivables (360) (1,088)
Increase in trade and other payables 1,009 2,411
Increase in provisions 518 445
Cash generated from operations 10,312 8,892
Interest paid (14) (4)
Income taxes paid (730) (287)
Net cash generated from operating activities 9,568 8,601
Cash flow from investing activities
Purchase of subsidiary (net of cash acquired) 6 - (643)
Acquisition of non-controlling interest in associates (140) (28)
Settlement of contingent considerations 12 (330) (332)
Purchase of property, plant and equipment 9 (1,123) (1,048)
Purchase of intangible assets 8 (4,631) (4,723)
Proceeds from sale of plant, property and equipment - 12
Interest received 2 1
Dividends received from associates 48 55
Net cash used in investing activities (6,174) (6,706)
Cash flows from financing activities
Proceeds from the issue of share capital 40 57
Repayment of borrowings (28) (32)
Dividends paid to shareholders (804) (586)
Dividends paid to non-controlling interests (17) (35)
Net cash used in financing activities (809) (596)
Net increase in cash and cash equivalents 2,585 1,299
Cash and cash equivalents at beginning of year 7,245 6,656
Exchange gain/(loss) on cash and cash equivalents 187 (710)
Cash and cash equivalents at end of year 10,017 7,245
YOUGOV PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 July 2015
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 2015 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 2014 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 2015 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
During the year ended 31 July 2014 the Board of Directors (which is the "chief
operating decision maker") primarily reviewed information based on geographic
lines but also reviewed information based on product lines. For the year
ending 31 July 2015 the Board primarily reviews information based on product
lines, Custom Research, Data Products and Data Services, with supplemental
geographical information. As a result product lines now form the basis for the
segmental analysis with supplemental geographical information.
2015 Custom Research£'000 Data Products£'000 Data Services£'000 Unallocated£'000 Group£'000
Revenue 49,901 11,908 14,301 - 76,110
Cost of sales (13,181) (2,083) (2,208) - (17,472)
Gross profit 36,720 9,825 12,093 - 58,638
Operating expenses (30,300) (7,563) (7,575) (4,630) (50,068)
Operating profit/(loss) before amortisation of intangible assets and exceptional items 6,420 2,262 4,518 (4,630) 8,570
Amortisation of intangible assets (4,633)
Exceptional items (1,072)
Operating profit 2,865
Finance income 423
Finance costs (643)
Share of post-tax profit in joint ventures and associates 41
Profit before taxation 2,686
Taxation 580
Profit after taxation 3,266
Other segment information
Depreciation 427 83 100 93 703
2014 Custom Research£'000 Data Products£'000 Data Services£'000 Unallocated£'000 Group£'000
Revenue 45,847 9,447 12,081 - 67,375
Cost of sales (11,310) (2,340) (1,981) - (15,811)
Gross profit 34,357 7,107 10,100 - 51,564
Operating expenses (29,178) (5,289) (6,125) (3,583) (44,175)
Operating profit/(loss) before amortisation of intangible assets and exceptional items 5,179 1,818 3,975 (3,583) 7,389
Amortisation of intangible assets (3,965)
Exceptional items (2,385)
Operating profit 1,039
Finance income 171
Finance costs (463)
Share of post-tax-loss in joint ventures and associates (14)
Profit before taxation 733
Taxation (316)
Profit after taxation 417
Other segment information
Depreciation 370 68 68 145 631
Supplementary information by geography
2015 2014
Revenue£'000 Adjusted* operating profit/(loss)£'000 Revenue£'000 Adjusted* operating profit/(loss)£'000
UK 22,857 5,582 19,359 5,007
USA 25,867 4,647 21,858 3,012
Germany 8,904 887 8,945 503
Nordic 7,476 1,001 7,985 823
Middle East 10,718 1,520 10,126 2,246
France 1,158 145 756 (121)
Asia Pacific 1,419 (397) 169 (268)
Intra-group revenues / unallocated costs (2,289) (4,815) (1,823) (3,813)
Group 76,110 8,570 67,375 7,389
*Operating profit/(loss) before amortisation of intangible assets and
exceptional items.
Revenue by destination
2015 UK Middle Germany Nordic USA France Asia Pacific£'000 Consolidation Group
£'000 East £'000 £'000 £'000 £'000 and unallocated £'000
£'000 £'000
External sales 21,669 9,327 8,493 7,373 26,627 1,361 1,260 - 76,110
Inter-segment sales 1,546 160 365 434 1,285 75 79 (3,944) -
Total revenue 23,215 9,487 8,858 7,807 27,912 1,436 1,339 (3,944) 76,110
2014
External sales 18,507 8,770 8,647 7,822 22,634 727 268 - 67,375
Inter-segment sales 1,071 131 334 247 1,302 41 1 (3,127) −
Total revenue 19,578 8,901 8,981 8,069 23,936 768 269 (3,127) 67,375
2 EXCEPTIONAL ITEMS
2015 2014
£'000 £'000
Restructuring costs 650 1,192
Acquisition related costs 431 1,226
Change in accounting estimation - contingent consideration (9) 92
Cost of establishing new entities - 44
Gain on re-measurement of associates on acquisition of control - (169)
1,072 2,385
Restructuring costs in the year are the cost of reorganising the management
structure of the US £294,000, Middle East £127,000, UK £116.000, German
£67,000 and Nordic £46,000 businesses. These reorganisations have now been
completed. Restructuring costs in the prior year were the cost of
reorganising the management structure of the Nordic £498,000, US £302,000,
German £284,000 and UK £108,000 businesses.
Acquisition related costs in the year comprise:
· £501,000 of contingent consideration that is deemed under IFRS to be
staff compensation cost in relation to the acquisition of Doughty Media 2.
· A net credit of £70,000 in relation to the acquisition of Decision
Fuel (now trading as YouGov Asia Pacific) including a £124,000 reduction in
contingent deemed staff costs, £41,000 of transaction costs and a £13,000
reduction in the fair value of acquired net assets.
Acquisition related costs in the prior year comprise:
· £729,000 in relation to the acquisition of Doughty Media 2 including
£699,000 in respect of contingent consideration that is deemed under IFRS to
be staff compensation costs and £30,000 of transaction costs.
· £524,000 in relation to the acquisition of Decision Fuel including
£286,000 of transaction costs, £163,000 of deemed staff costs and £75,000 of
loyalty bonuses.
· A credit of £27,000 in respect of prior year acquisition fees.
The change in estimated contingent consideration in the year is in respect of
the Decision Fuel acquisition. The change in the prior year was in respect of
the Definitive Insights acquisition.
The cost of establishing new entities in the prior year relates to the
professional and regulatory fees incurred in establishing new operations in
Kurdistan, Egypt, Saudi Arabia and Indonesia.
In the prior year, the Group acquired an additional 27% equity interest in
CoEditor Ltd, this additional equity interest resulted in YouGov Plc acquiring
control of CoEditor. Under International Financial Reporting Standard 3,
'Business Combinations' ('IFRS 3'), the interest previously held by the Group
was re-measured to its fair value at the acquisition date. This resulted in a
gain of £169,000 arising on the revaluation of our existing interest which was
included in exceptional items in the income statement.
IFRS 3 requires that the interest should be treated on the same basis as would
be required if the acquirer had disposed directly of the previously held
interest and then required at fair value. Prior to the acquisition, the
interest in CoEditor was proportionally consolidated as disclosed in the 31
July 2013 accounting policies note.
3 TAX CHARGE
The taxation charge represents:
2015 2014
£'000 £'000
Current tax on profits for the year 714 458
Adjustments in respect of prior years (44) 57
Total current tax charge 670 515
Deferred tax:
Origination and reversal of temporary differences 84 (91)
Adjustments in respect of prior years (1,350) (117)
Impact of changes in tax rates 16 9
Total deferred tax credit (1,250) (199)
Total income statement tax (credit)/charge (580) 316
The tax assessed for the year is lower (2014: higher) than the standard rate
of corporation tax in the UK.
The differences are explained below:
2015 2014
£'000 £'000
Profit before taxation 2,686 733
Tax charge calculated at Group's standard rate of 20.67% (2014: 22.33%) 555 164
Variance in overseas tax rates 331 (37)
Impact of changes in tax rates 16 9
Gains not subject to tax (79) −
Expenses not deductible for tax purposes 46 225
Tax losses for which no deferred income tax asset was recognised (86) 12
Adjustments in respect of prior years (1,394) (60)
Asset based and non-income related taxes 40 -
Associates results reported net of tax (9) 3
Total income statement tax charge for the year (580) 316
On 2 July 2013, the UK corporation tax rate was reduced from 23% to 21% from 1
April 2014 and 20% from 1 April 2015. This change has been substantively
enacted at the balance sheet date and, therefore, is included in these
financial statements. Further changes to the UK corporation tax rates were
announced in the Chancellor's Budget on 8 July 2015. These include reductions
to the main rate to 19% from 1 April 2017 and to 18% from 1 April 2020. As
these changes had not been substantively enacted at the balance sheet date
their effects are not included in these financial statements.
Adjustments in respect of prior periods in the year includes the recognition
of £1,206,000 of tax losses incurred in prior years in Germany
4 DIVIDEND
On 15 December 2014, a final dividend in respect of the year ended 31 July
2014 of £804,000 (0.8p per share) (2013: £586,000 (0.6p per share) was paid to
shareholders. A dividend in respect of the year ended 31 July 2015 of 1.0p per
share, amounting to a total dividend of £1,029,000 is to be proposed at the
Annual General Meeting on 10 December 2015. 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,
exceptional items and any related tax effects.
2015 2014
£'000 £'000
Profit after taxation attributable to equity holders of the parent company 3,240 433
Add: amortisation of intangible assets 4,633 3,965
Add: share-based payments 669 547
Add: imputed interest 32 32
Add: exceptional costs 1,072 2,385
Tax effect of the above adjustments and adjusting tax items (2,595) (1,335)
Adjusted profit after taxation 7,051 6,027
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below.
2015 2014
Number of shares
Weighted average number of shares during the period: ('000 shares)
- Basic 100,998 98,044
- Dilutive effect of share options 4,051 5,434
- Diluted 105,049 103,478
The adjustments have the following effect:
Basic earnings per share 3.2p 0.4p
Amortisation of intangible assets 4.6p 4.1p
Share-based payments 0.7p 0.6p
Imputed interest 0.0p 0.0p
Exceptional costs and impairments 1.1p 2.4p
Tax effect of the above adjustments and adjusting tax items (2.6p) (1.4p)
Adjusted earnings per share 7.0p 6.1p
Diluted earnings per share 3.1p 0.4p
Amortisation of intangible assets 4.4p 3.9p
Share-based payments 0.7p 0.5p
Imputed interest 0.0p 0.0p
Exceptional costs and impairment 1.0p 2.3p
Tax effect of the above adjustments and adjusting tax items (2.5p) (1.3p)
Adjusted diluted earnings per share 6.7p 5.8p
6 BUSINESS COMBINATIONS AND DISPOSALS
In the previous financial year the following business combinations occurred:
a) Doughty Media 2 Limited ("DM2")
YouGov acquired 100% of Doughty Media 2 Limited ("DM2") which owned 68% of
CoEditor Limited ("CoEditor"), the company which developed the Opigram service
and in which YouGov already owned a 30% shareholding. This acquisition was
made in two stages: 40% was acquired in September 2013 and the remaining 60%
in December 2013.
Acquisition of 40% shareholding in DM2
On 6 September 2013, YouGov plc purchased a 40% shareholding in DM2 from
Freddie Sayers, an Executive Director of CoEditor, for a maximum purchase
price of £497,000, £37,000 of this was paid in cash on completion. The
remaining balance of £460,000 which had been contingent on Freddie Sayers'
continuing employment (of which £348,000 was also contingent on the
achievement of certain performance criteria) was paid in YouGov shares in
March 2015. All of the contingent consideration was contingent upon continuing
employment and therefore was treated as staff compensation under IFRS with a
charge of £165,000 being recognised in the current financial year.
DM2 has a 68% shareholding in CoEditor and following this purchase, YouGov's
effective interest in CoEditor increased to 57% which constituted control.
Acquisition of 60% shareholding in DM2
On 20 December 2013, YouGov plc purchased the remaining 60% shareholding in
DM2 from Stephan Shakespeare, an Executive Director of YouGov plc on the same
terms and conditions agreed for the prior purchase of the 40% shareholding.
The maximum purchase price of £744,000 was contingent on Stephan Shakespeare's
continuing employment, of which £521,000 was also contingent on the
achievement of certain performance criteria, was paid in YouGov shares in
March 2015.
As a result of this transaction YouGov's effective interest in CoEditor
increased to 97%.
All of the contingent consideration was contingent upon continuing employment
and therefore was treated as staff compensation under IFRS with a charge of
£336,000 being recognised in the current financial year.
b) Acquisition of Decision Fuel ("DF")
On 9 January 2014, YouGov plc purchased a 100% shareholding in Decision Fuel
("DF"), an Asian based research and technology company with offices in Hong
Kong, Shanghai and Singapore. The basic purchase consideration payable is the
sum of six times the EBITDA of DF in the year ending 31 July 2016 and two
times EBITDA (capped at 1.5 times 2016 EBITDA) in the year ending 31 July 2017
less any working capital funding provided by YouGov to DF prior to the end of
the performance period. An initial payment of $1,000,000 (£608,000) was paid
upon completion and the balance will be paid in two instalments in December
2017 and December 2018. Approximately 95% of this contingent consideration is
contingent upon continuing employment and therefore is being treated as staff
compensation under IFRS.
The payments due in 2017 and 2018 are now estimated to total $0.2m (£0.1m)
compared to $1.5m (£0.9m) at 31 July 2014 resulting in a reduction of £9,000
in the amount treated as consideration and £124,000 in the cumulative staff
compensation charge both of these reductions being recognised as exceptional
credits in the current year.
Professional fees of £12,000 and loyalty bonuses of £29,000 were incurred
during the year ended 31 July 2014 relating to the acquisition and in
accordance with IFRS3 (revised) these costs were expensed in that period.
7 GOODWILL
Middle USA Nordic Germany CoEditor£'000 Asia Pacific£'000 Total
East £'000 £'000 £'000 £'000
£'000
Carrying amount at 1 August 2013 1,449 17,337 8,682 11,332 - - 38,800
Additions through business combinations - - - - 569 657 1,226
Exchange differences (143) (1,713) (792) (1,031) - (18) (3,697)
Carrying amount at 31 July 2014 1,306 15,624 7,890 10,301 569 639 36,329
Exchange differences 110 1,321 (878) (1,142) - 53 (536)
Carrying amount at 31 July 2015 1,416 16,945 7,012 9,159 569 692 35,793
At 31 July 2015
Cost 1,416 16,945 7,012 9,722 569 692 36,356
Accumulated impairment - - - (563) - - (563)
Net book amount 1,416 16,945 7,012 9,159 569 692 35,793
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 2015 impairment review was undertaken as at 31 July 2015. 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.
Annual growth rates of 2.25% have been assumed in perpetuity beyond year four.
The pre-tax weighted average costs of capital used to discount the future cash
flows to their present values are Middle East 10% (2014: 10%), USA 17% (2014:
17%), Nordic 13% (2014: 13%), Germany 15% (2014: 15%) and Asia Pacific 12%
(2014: 12%). The compound average revenue growth rates assumed for each CGU
were Middle East 6%, USA 14%, Nordic 5%, Germany 9% and Asia Pacific 50%.
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 impairment.
8 OTHER INTANGIBLE ASSETS
Consumer Software and software development Customer Patents and trademarks Order Product development Total
panel £'000 contracts £'000 backlog costs £'000
£'000 and lists £'000 £'000
£'000
At 1 August 2013
Cost 10,142 10,983 4,963 3,197 232 900 30,417
Accumulated amortisation (9,255) (7,215) (2,022) (2,013) (232) (470) (21,207)
Net book amount 887 3,768 2,941 1,184 − 430 9,210
Year ended 31 July 2014
Opening net book amount 887 3,768 2,941 1,184 − 430 9,210
Additions:
Business combinations − 1,014 − − − − 1,014
Separately acquired 1,743 540 − 2 − 116 2,401
Internally developed − 2,315 − − − 7 2,322
Amortisation charge:
Business combinations − (169) (464) (324) − − (957)
Separately acquired (706) (696) − − − (172) (1,574)
Internally developed − (1,573) − − − (16) (1,589)
Exchange differences (85) (46) (271) (87) − (17) (506)
Closing net book amount 1,839 5,153 2,206 775 − 348 10,321
At 31 July 2014
Cost 10,917 14,106 4,485 2,907 210 969 33,594
Accumulated amortisation (9,078) (8,953) (2,279) (2,132) (210) (621) (23,273)
Net book amount 1,839 5,153 2,206 775 − 348 10,321
Year ended 31 July 2015
Opening net book amount 1,839 5,153 2,206 775 - 348 10,321
Additions:
Separately acquired 1,455 762 - 38 - 41 2,296
Internally developed - 2,335 - - - - 2,335
Amortisation charge:
Business combinations - (206) (465) (317) - - (988)
Separately acquired (1,102) (683)
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