Last checked at 31 Mar 2008 07:01
YouGov PLC31 March 2008 31 March 2008 YouGov plc Interim Results for the period ended 31 January 2008 Transforming YouGov - Acquisitions accelerate development Highlights Financial highlights • Strong focus on topline growth - turnover up 208% to £18.8 million in the six months to 31 January 2008 from £6.1 million in the same period in 2007• Organic growth of 43% reflecting continued investment in technology, products and people• Adjusted Operating profit before amortisation and exceptional items up 87% from £2.3 million in the six months to 31 January 2007 to £4.3 million• Profit before tax up 30% from £2.3 million in the six months to 31 January 2007 to £3.0 million (Normalised Profit before tax increased 117% from £2.4 million to £5.2 million)• Successful £27.0 million placing (19,285,714 shares issued) and issue of 5,929,829 (£9.3 million) shares to support significant international expansion• £14 million of cash on balance sheet Operational highlights • Completed three transformational acquisitions providing us with enlarged global reach and sector expertise• Integration focussing on products, systems, financial reporting and people, is on track• Acquisitions allow us to accelerate YouGov's organic expansion and core product roll out• Moving up the value chain - UK refocusing undertaken, concentrating on data services, (including BrandIndex and Omnibus) and YouGovConsulting and the appointment of a new management team• EMEA panel expanded considerably to 476,337 at 31 January 2008 against 199,047 at 31 January 2007• North American panel now 1,034,437 against 832,111 at this point last year• Group marketing and branding of companies underway• Benefits of acquisitions coming through evidenced in cross border wins• Products rollout scheduled and underway• Investment in people with Group headcount increasing from 76 at 31 January 2007 to a Group headcount of 425 at 31 January 2008• Confident of another successful year for the enlarged Group Commenting on the results Nadhim Zahawi, Co-Founder and CEO of YouGov plc said: "At YouGov we are all very proud of how we have handled this period of growthand change, and the challenges these bring. Challenges include: growth andintegration whilst maintaining profitability. We are continuing to build theplatform to allow us to achieve our ambition to be one of the dominant playersin this industry. "The first half of the financial year has been a period of transformation forYouGov. While the good organic growth demonstrates the strength of our model andcommitment to research excellence, the acquisitions announced in August haveaccelerated our international expansion considerably. As planned, the threecompanies have been largely integrated and the benefits are coming through as werollout our core products. "We are benefitting from the considerable investment we are making across theGroup which, combined with the international opportunities we have identified,make us confident that 2008 will be another successful year. The second half hasstarted well with the momentum seen in the first half continuing and trading inline with the Board's expectations." Enquiries: YouGov plcNadhim Zahawi / Katherine Lee 020 7012 6000 Financial DynamicsCharles Palmer / Nicola Biles 020 7831 3113 Nomad - Grant Thornton UK LLPGerry Beaney / Colin Aaronson 020 7383 5100 Chief Executive's Statement Introduction YouGov's growth over the past six months has been significant with theacquisition of Zapera (Scandinavia), psychonomics (Germany) and the remainingstake in Polimetrix (USA) supplementing its good organic growth. We have beencommitted in our focus to bringing these two existing research groups and a USversion of YouGov into our enlarged Group. Good headway has been made inintegrating all acquired businesses and rolling out core products across theGroup, such as BrandIndex and Omnibus. Cross border project wins are alreadydemonstrating the success of this integration and product roll out. During the first half YouGov's growth continued both organically (43%) in EMEAand USA and through acquisitions (165%). This reflects the strength of ourstrategy of combining product development with geographical expansion andselective acquisition. Alongside the focus on growing turnover and profits, we have been activelyinvesting in our core assets - our people and our infrastructure. A number ofhigh calibre appointments have been made following the refocusing of the UKbusiness, to create specialist sector verticals. This, coupled with theacquisitions of lower margin businesses has resulted in the expected softeningof operating margins. However, this provides the business with a strong platformto continue to deliver growth. Staff numbers have increased from a Groupheadcount of 76 at 31 January 2007 to 425 at 31 January 2008. Recruitment hastaken place across all business areas. Acquisitions On 27 July 2007 we announced the first in a series of transactions; our Germanexpansion through the acquisition of the psychonomics Group AG. This wasfollowed, post year end, with the acquisition of the remaining 68% stake inPolimetrix, our US associate and the acquisition of Zapera, a Group based inScandinavia. These acquisitions were funded through a share placing, which our shareholdersapproved on 3 September 2007. These acquisitions will allow us to accelerate ourgrowth and are consistent with the strategy to establish key geographic hubs toprovide us with an enhanced global presence. All acquisitions will be earningsenhancing in the first full year. Integration plan is well underway, andintegration will continue to be our focus in the second half of the financialyear. Financial performance Turnover has increased by 208% to £18.8 million in the period (£6.1 million inthe six months to 31 January 2007). Profit before tax rose 30% to £3.0 million(£2.3 million in the six months to 31 January 2007) and earnings per shareincreased from 2.6 pence to 3.1 pence. Adjusted earnings per share (afterallowing for non cash adjustments) is 4.2 pence, an increase of 56% from 2.7pence. Cash generated by operations was £1.8 million due to an extension indebtor days (£2.7 million in the six months to 31 January 2007). Analysis of Adjusted Profit Before Tax: 6 months to 6 months to 12 months to 31/1/08 31/1/07 31/7/07 £'000 £'000 £'000 Profit before tax 2,977 2,316 5,605 Amortisation 1,308 58 -Share based payments 161 21 47Imputed interest 165 - - Adjusted profit before tax 4,611 2,395 5,652 One off costsOne off IFRS transition costs 48 - -Holiday pay accrual 242 8 47Integration costs 266 - - Normalised profit before tax 5,167 2,403 5,699 Basic earnings per share 3.1 2.6* 6.2*attributable to equity holders ofthe companyAdjusted earnings per share 4.2 2.7* 6.3*Normalised earnings per share 4.8 2.7* 6.4* * Restated assuming 5:1 share split on 10 April 2007 had been effectivethroughout the period. On 31 January 2008, YouGov Group's non current assets totaled £50.7 million(£5.4 million at 31 January 2007), this includes goodwill £30.5 million (£1.1million at 31 January 2007), intangible assets of £16.2 million, and property,plant and equipment £2.2 million (£0.4 million at 31 January 2007) reflectingour ongoing investment in our infrastructure. Current assets total £29.0 million(£7.6 million at 31 January 2007) including £14 million in cash or on deposit(£4.3 million at 31 January 2007). Current liabilities stood at £15.0 million(£3.1 million at 31 January 2007). Overall net assets stood at £52.3 million(£9.5 million at 31 January 2007). The Directors are not recommending the payment of a dividend at this stage ofthe Company's development, which is consistent with statements made at the timeof flotation and reflects the growth of the Company and the considerableopportunities still available to us. Review of operations YouGov continues to develop and strengthen its position as a global full-serviceonline research agency with strong client relationships and product offeringsgenerating a high level of repeat business. Europe, Middle East and Africa (EMEA) Each of the Group companies in EMEA has achieved strong organic growth driven bya combination of increasing the amount of research provided to current clientsand the winning of new clients. Client numbers have increased from 306 at 31 January 2007 to 1,215 at 31 January2008. The profile of our customer base includes household names across allsectors such as Google, Marks & Spencer, Costa and the European UnionCommission. The core service offering focuses on data services (Omnibus and BrandIndex beingthe key lines from this suite) and consulting services utilising qualitative andquantitative research. We have already seen the initial successes of theintegration process coming through as planned with collaborative cross borderprojects and the rollout of BrandIndex in Germany and Omnibus in the MiddleEast. The re-focusing of the UK business allows the Group to increase itsvalue-add proposition as well as dovetail with the German business which hassimilar sector specialism. We are poised to launch BrandIndex in Scandinavia, in the first half of calendar2008, which will cover the Nordic region. Headcount in the region has increased from 76 at 31 January 2007 to 399 at 31January 2008. YouGovAlpha was created in August, building on YouGov's success in the financialservices sector, and has rapidly established an offering of consulting services,buy-side and sell-side research and data services (Clothing Retail Index andConsumer Retail Index). The team has established traction within the investmentcommunity and we are excited by future opportunities. United States of America (USA) Sales growth in the USA continues to be strong. There were 63 clients at 31January 2008. The volume of research provided to these clients over the periodhas risen as have average project values. The profile of the customer base isstill skewed towards the higher education market (which is Polimetrix'sheritage) but this is becoming less so as other markets such as healthcare aretargeted. The product offering in the region now includes BrandIndex and Omnibus whilstthe qualitative and quantitative offerings have also been significantlyenhanced. There have been a number of new hires across all divisions and revenuegenerating headcount has increased from 21 at 31 January 2007 to 26 at 31January 2008. Polimetrix has worked directly or indirectly for seven primary campaigns in thecurrent USA presidential elections, and are engaged in a long term pollingarrangement for the 2008 elections for a national organisation. Since thebeginning of November 2007, Polimetrix has been working with The Economist totrack public opinion on a variety of topics leading up to the presidentialelection on a weekly basis. Panel and product development We have continued to broaden our global capabilities through investment inexisting panels and establishing new geographic and specialist panels. Thepanels continue to support the growth achieved by all Group companies. Panel sizes at 31 January 2008 are: • EMEA 476,337 (up from 199,047 at 31 January 2007) • USA 1,034,437 panellists (up from 832,111 at 31 January 2007) Cross border research All three acquisitions provide potential revenue synergies through increasingour global reach. We are already seeing the benefits of Group members workingclosely together demonstrated by winning our recent joint pitch for a long termproject with the European Commission. The project will involve YouGov undertaking consumer research across sevenmember countries to develop a standard format for the disclosure of informationof financial services products. This is the first time the EU Commission hasengaged in consumer research within the financial services sector and is ahugely exciting project to be involved in. The project will include online quantitative research completed by YouGovcomplemented by offline qualitative research. YouGov was able to create a costeffective and innovative solution to the online element of the project bybringing in the complementary expertise and geographic coverage of Zapera andpsychonomics. The success of the pitch was based on the deep sector knowledge of the YouGovGroup teams, the online research methodology and the geographic coverage acrossEurope. This high profile project demonstrates the enhanced offering whichYouGov is now able to provide clients. YouGov's ability to provide cross border research opens up an important andlucrative part of the research market that we could not access prior to therecent acquisitions. Market conditions According to Inside Research, the online research market continues to grow at afaster pace (23%) than the total world wide research market (4%). Worldwideonline research spend increased to US$3.6bn in 2007 from US$2.9bn in 2006. Thegrowth in online research for 2008 is forecast to be 21%, in line with 2007growth. International Financial Reporting Standards (IFRS) YouGov adopted International Financial Reporting Standards effective from 1August 2006 and these are our first reported interim results under thestandards. Key changes are in the accounting for share based payments,reclassification of fixed assets, accounting for acquisitions, non-amortisationof goodwill, accounting for holiday pay, accounting for rent free periods anddeferred tax. YouGovAlpha JV YouGov plc announced on 6 March 2008 that it has signed heads of agreement withNumis Corporation plc and FOUR Capital Partners Limited to form a joint venturehedge fund designed to exploit investment opportunities identified by YouGov'sproprietary, real-time consumer research capability. This joint venture willbuild on the success of YouGovAlpha, the UK's only dedicated market researchagency with services tailored to the specific needs of fund managers andinvestment professionals. The joint venture will build on YouGov's UK and USsuccess. At a time when market conditions are difficult, the joint venturepartners believe that the fund's distinctive approach will be attractive to abroad range of investors and plan to raise a first fund later in the year. Board Change On 6 March 2008 Peter Kellner stood down as President and Non-Executive Directorfrom the YouGov plc Board. Peter will remain as emeritus President and willcontinue working with the Company's media, political and other clients, on apart time basis. Additionally he will continue to represent YouGov in the mediaand at academic and other conferences. Current trading and outlook The enlarged Group has delivered a strong performance during its first sixmonths of trading. We are confident that the investments made and the planningundertaken in the first part of the year will allow us to continue the momentuminto the second half, through additional integration activities. The initialrollout of YouGov products is on track and the three businesses are deliveringthe expected benefits and synergies. The business continues to trade in linewith our expectations and the Board is confident that 2008 will be a successfulyear both financially and operationally. Our strategy remains focused oninnovation, investment and internationalisation with recently acquiredbusinesses accelerating this strategy and providing YouGov with internationalscale in key market research territories. The first six months has been a period of considerable change with many newpeople joining the YouGov team. While this has lead to a number of associatedexecution challenges, the integration is progressing well and there continue tobe many exciting opportunities that are being pursued by our immensely talentedteams. I take this opportunity on behalf of the Board to thank all of our teams fortheir hard work and I look forward to our continued success in the remainder ofthe year to July 2008 and beyond. I would also like to thank our clients, our shareholders and our panel membersfor their contribution to the Company's success. The interim report was approved by the Board on 31 March 2008. Nadhim ZahawiChief Executive OfficerYouGov plc Independent Review report to YouGov plc Introduction We have been engaged by the company to review the condensed set of financialstatements in the half- yearly financial report for the six months ended 31 January 2008 which comprisesthe condensed consolidated interim income statement, the condensed consolidatedinterim balance sheet, the condensed consolidated interim statement of changesin equity, the condensed consolidated interim cashflow statement and relatedexplanatory notes. We have read the other information contained in the interimreport which comprises only the Chairman's report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. This report is made solely to the company in accordance with guidance containedin ISRE (UK and Ireland) 2410, "Review of Interim Financial Information performed by the Independent Auditor of the Entity". Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. As disclosed in note 1, the next annual financial statementsof the Group will be prepared in accordance with International FinancialReporting Standards as adopted by the European Union. This interim report has been prepared in accordance with InternationalAccounting Standard 34 "Interim Financial Reporting" and the requirements ofIFRS 1 "First-time Adoption of International Financial Reporting Standards"relevant to interim reports. The accounting policies are consistent with those that the directors intend touse in the next annual financial statements. Our Responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 31 January 2008 is not prepared, in all materialrespects, in accordance with International Accounting Standard 34 as adopted bythe European Union. GRANT THORNTON UK LLPCHARTERED ACCOUNTANTSLondon31 March 2008 The maintenance and integrity of the YouGov website is the responsibility of thedirectors: the interim review does not involve consideration of these mattersand, accordingly, the company's reporting accountants accept no responsibilityfor any changes that may have occurred to the interim report since it wasinitially presented on the website. Legislation in the United Kingdom governingthe preparation and dissemination of the interim report differ from legislationin other jurisdictions. YOUGOV PLC CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT For the period ended 31 January 2008 Note 6 months to 6 months 12 months 31/1/08 to 31/1/07 to 31/7/07 £'000 £'000 £'000Continuing operationsRevenue 3 18,843 6,083 14,303 Cost of sales (3,197) (1,215) (2,647) Gross profit 15,646 4,868 11,656 Administrative expenses (11,380) (2,586) (6,083) Group operating profit before amortisation and 4,266 2,282 5,573exceptional items Amortisation of intangibles (16) (61) (15)Amortisation of intangibles identified on (1,292) - -acquisition Group operating profit 3 2,958 2,221 5,558 Finance income 271 110 188Finance costs (52) (1) (2)Imputed finance cost (165) - -Share of post tax loss in joint ventures (35) (14) (139) Profit before taxation 2,977 2,316 5,605 Taxation 9 255 (243) (613) Profit for the year 3,232 2,073 4,992Attributable to: Equity holders of the parent company 2,731 1,749 4,198 Minority interests 501 324 794 3,232 2,073 4,992 Earnings per shareBasic earnings per share attributable to equity 7 3.1 2.6* 6.2*holders of the companyDiluted earnings per share attributable to equity 2.8 2.5* 5.9*holders of the companyAdjusted earnings per share attributable to equity 4.2 2.7* 6.3*holders of the company * Restated assuming 5:1 share split on 10 April 2007 had been effectivethroughout the period. The accompanying accounting policies and notes form an integral part of thesefinancial statements. YOUGOV PLC CONDENSED CONSOLIDATED INTERIM BALANCE SHEET For the period ended 31 January 2008 31/01/2008 31/01/2007 31/07/2007 Note £'000 £'000 £'000AssetsNon Current AssetsGoodwill 30,538 1,068 1,090Intangible assets 6 16,174 22 343Property, plant and equipment 5 2,166 350 499Investment accounted for using the equity method 29 3,975 4,539Deferred tax assets 9 1,747 9 20 50,654 5,424 6,491Current AssetsInventories 2,521 - -Trade and other receivables 11,612 3,296 5,693Other current assets 816 - -Cash and cash equivalents 14,049 4,287 4,061 Total current assets 28,998 7,583 9,754Total assets 79,652 13,007 16,245 LiabilitiesCurrent liabilitiesLease liabilities 21 29 24Deferred consideration 4,157 - -Trade and other payables 10,501 2,336 3,470Short term borrowings 104 - -Current tax liability 250 752 147Total current liabilities 15,033 3,117 3,641Net current assets / liabilities 13,965 4,466 6,113 Non current liabilitiesDeferred consideration 3,652 347 334Long term borrowings 2,305 - -Deferred tax liability 9 6,353 19 56Total non current liabilities 12,310 366 390Total liabilities 27,343 3,483 4,031Total net assets 3 52,309 9,524 12,214 EquityIssued share capital 4 190 134 135Share premium 29,158 2,987 3,026Merger reserve 9,240 - -Deferred consideration reserve 1,085 - -Foreign exchange reserve 29 - -Profit and loss reserve 10,646 5,373 7,593Total parent shareholder's equity 50,348 8,494 10,754Minority interests in equity 1,961 1,030 1,460Total equity 52,309 9,524 12,214 Katherine Lee, Chief Financial Officer YOUGOV PLC CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY For the period ended 31 January 2008 Profit Share Foreign Deferred and Share premium exchange Merger consideration loss Minority Total capital account reserve reserve reserve account TOTAL Interest Equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 August 2006 134 2,943 - - - 3,735 6,812 743 7,555 Changes in equity for first half 2006/07 Net income recognised directly in equityExpenses offset against share premium - (7) - - - - (7) - (7)Foreign exchange difference on the retranslation of overseas entities - - - - - (130) (130) (37) (167)Profit for the period - - - - - 1,749 1,749 324 2,073Total recognised income and expense for the period - (7) - - - 1,619 1,612 287 1,899Issue of share capital for exercise of share options - 51 - - - - 51 - 51Issue of share options - - - - - 19 19 - 19Balance at 31 January 2007 134 2,987 - - - 5,373 8,494 1,030 9,524 Changes in equity for second half 2006/07 Net income recognised directly in equityExpenses offset against share premium - (12) - - - - (12) - (12)Foreign exchange difference on the retranslation of overseas entities - - - - - (230) (230) (40) (270)Profit for the period - - - - - 2,449 2,449 470 2,919Total recognised income and expense for the period - (12) - - - 2,219 2,207 430 2,637Dividends - - - - - (12) (12) - (12)Issue of share capital through exercise of share options 1 51 - - - - 52 - 52Issue of share options - - - - - 13 13 - 13Balance at 31 July 2007 135 3,026 - - - 7,593 10,754 1,460 12,214 Profit Share Foreign Deferred and Share premium exchange Merger consideration loss Minority Total capital account reserve reserve reserve account TOTAL Interest Equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Changes in equity for first half 2007/08Balance at 1 August 2007 135 3,026 - - - 7,593 10,754 1,460 12,214Net income recognised directly in equityExpenses offset against share premium - (1,068) - - - - (1,068) - (1,068)Foreign exchange difference on the retranslation of overseas entities - - 29 - - - 29 - 29Profit for the period - - - - - 2,731 2,731 501 3,232Total recognised income and expense for the period - (1,068) 29 - - 2,731 1,692 501 2,193Issue of share capital through exercise of share options 4 239 - - - - 243 - 243Issue of share capital through fundraising 39 26,961 - - - - 27,000 - 27,000Issue of share capital through allotment of shares in satisfaction of acquisition consideration 12 - - 9,240 - - 9,252 - 9,252Deferred consideration as part consideration for acquisition - - - - 1,085 - 1,085 - 1,085Issue of share options - - - - - 322 322 - 322Balance at 31 January 2008 190 29,158 29 9,240 1,085 10,646 50,348 1,961 52,309 YOUGOV PLC CONDENSED CONSOLIDATED INTERIM CASHFLOW STATEMENT For the period ended 31 January 2008 6 months 6 months 12 months to to to Note 31/1/08 31/1/07 31/7/07 £'000 £'000 £'000 Cash flows from operating activitiesProfit after taxation 3,232 2,073 4,992Adjustments for: Depreciation 367 37 111 Amortisation 1,308 61 15 Foreign exchange gain (36) (112) - Share option expense 166 - - Taxation expense recorded in profit and loss (270) 243 613 Loan revaluation (42) - - Investment income (51) (113) (232) (Increase)/decrease in trade and other receivables (3,930) 459 (2,000) Increase in trade and other payables 1,071 89 1,307 Cash generated from operations 1,815 2,737 4,806Interest paid (220) (1) (2)Income taxes paid (554) - (960) Net cash generated from operating activities 1,041 2,736 3,844 Cashflow from investing activitiesAcquisition of subsidiaries (net of cash acquired) (15,765) - (681)Acquisition of associate - (3,889) (3,727)Acquisition of joint venture - - (34)Proceeds from sale of property, plant and equipment 22 - -Purchase of property, plant and equipment (1,630) (242) (467)Purchase of intangible assets (544) (22) (383)Interest received 271 114 234 Net cash used in investing activities (17,646) (4,039) (5,058) Cash flows from financing activitiesProceeds from issue of share capital 26,211 44 84Repayment of debt (2) - - Net cash used in financing activities 26,209 44 84 Net increase / (decrease) in cash, cash equivalents and overdrafts 9,604 (1,259) (1,130)Cash and cash equivalents at beginning of year 4,061 5,546 5,546Exchange gain on cash and cash equivalents 384 - (355) Cash, cash equivalents and overdrafts at end of year 14,049 4,287 4,061 YOUGOV PLC NOTES TO THE INTERIM REPORT For the period ended 31 January 2008 1 PRINCIPAL ACCOUNTING POLICIES Nature of operations YouGov plc and subsidiaries' ('the Group') principal activity is the provisionof market research. YouGov plc is the Group's ultimate parent company. It is incorporated anddomiciled in Great Britain. The address of YouGov plc's registered office is 50Featherstone Street, London, United Kingdom. YouGov plc's shares are listed onthe Alternative Investment Market of the London Stock Exchange. YouGov plc's consolidated interim financial statements are presented in PoundsSterling (£), which is also the functional currency of the parent company. These consolidated condensed interim financial statements have been approved forissue by the Board of Directors on 28 March 2008. The financial information set out in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thefigures for the year ended 31 July 2006 have been extracted from the statutoryfinancial statements which have been filed with the Registrar of Companies. Theauditors' report on those financial statements was unqualified and did notcontain a statement under Section 237(2) of the Companies Act 1985. Basis of preparation These interim condensed consolidated financial statements are for the six monthsended 31 January 2008. They have been prepared in accordance with InternationalAccounting Standard 34 'Interim Financial Reporting' and the requirements ofInternational Financial Reporting Standards 1 'First-time Adoption ofInternational Financial Reporting Standards' relevant to interim reports. Theyhave been prepared on this basis as they will form part of the period covered bythe Group's first IFRS financial statements for the year ended 31 July 2008.They do not include all of the information required for full annual financialstatements, and should be read in conjunction with the consolidated financialstatements for the year ended 31 July 2007. These condensed consolidated interim financial statements (the interim financialstatements) have been prepared in accordance with the accounting policies setout below which are based on the recognition and measurement principles of IFRSin issue and as adopted by the European Union (EU) and are effective at 31 July2008 or are expected to be adopted and effective at 31 July 2008, our firstannual reporting date at which we are required to use IFRS accounting standardsadopted by the EU. The financial statements have been prepared under the historical costconvention. The policies have changed from the previous year when the financial statementswere prepared under applicable United Kingdom Generally Accepted AccountingPrinciples (UK GAAP). The comparative information has been restated inaccordance with IFRS. The changes to accounting policies are explained in note9 with the transition statement which shows the reconciliation of openingbalances. The date of transition to IFRS was 1 August 2006. The group has taken advantage of certain exemptions available under IFRS1First-time adoption of International Financial Reporting Standards. Theexemptions used are explained under the respective accounting policy. The accounting policies have been applied consistently throughout the Group forthe purposes of preparation of these condensed consolidated interim financialstatements. Basis of consolidation The group financial statements consolidate those of the company and all of itssubsidiary undertakings drawn up to 31 January 2008. Subsidiaries are entitiescontrolled by the Group. Control is achieved where the Group has the power togovern the financial and operating policies of an entity so as to obtainbenefits from its activities. The group obtains and exercises control throughvoting rights. All intra-group transactions, balances, income and expenses are eliminated infull on consolidation. Amounts reported in the financial statements of subsidiaries have been adjustedwhere necessary to ensure consistency with the accounting policies adopted bythe group. Acquisitions of subsidiaries are dealt with by the purchase method. The purchasemethod involves the recognition at fair value of all identifiable assets andliabilities, including contingent liabilities of the subsidiary, at theacquisition date, regardless of whether or not they were recorded in thefinancial statements of the subsidiary prior to acquisition. On initialrecognition, the assets and liabilities of the subsidiary are included in theconsolidated balance sheet at their fair values, which are also used as thebases for subsequent measurement in accordance with the group accountingpolicies. Goodwill is stated after separating out identifiable intangibleassets. Goodwill represents the excess of acquisition cost over the fair valueof the group's share of the identifiable net assets of the acquired subsidiaryat the date of acquisition. The group applies a policy of treating transactions with minority interests astransactions with parties external to the group. Disposals to minority interestsresult in gains and losses for the group that are recorded in the incomestatement. Purchases from minority interests result in goodwill, being thedifference between any consideration paid and the relevant share acquired of thecarrying value of net assets of the subsidiary. Business combinations completed prior to date of transition to IFRS The group has elected not to apply IFRS 3 Business Combinations retrospectivelyto business combinations prior to the date of transition at 1 August 2006.Accordingly the classification of the combination (acquisition) remainsunchanged from that used under UK GAAP. Assets and liabilities are recognisedat date of transition if they would be recognised under IFRS, and are measuredusing their UK GAAP carrying amount immediately post-acquisition as deemed costunder IFRS, unless IFRS requires fair value measurement. Deferred tax andminority interest are adjusted for the impact of any consequential adjustmentsafter taking advantage of the transitional provisions. The transitional provisions used for past business combinations apply equally topast acquisitions of interests in associates and joint ventures. Associates and joint ventures Entities whose economic activities are controlled jointly by the group and byother ventures independent of the group are accounted for using the equitymethod. Associates are those entities over which the group has significantinfluence (defined as the power to participate in the financial and operatingdecisions of the investee but not control or joint control over those policies)but which are neither subsidiaries nor interests in joint ventures. The resultsand assets and liabilities of associates are incorporated in these financialstatements using the equity method of accounting, which under investments inassociates are carried in the consolidated balance sheet at cost as adjusted forpost-acquisition changes in the Group's share of net assets of the associateless any impairment in the value of individual investments. However, when the group's share of losses in an associate equals or exceeds itsinterest in the associate, including any unsecured receivables, the group doesnot recognise further losses, unless it has incurred obligations or madepayments on behalf of the associate. If the associate subsequently reportsprofits, the investor resumes recognising its share of those profits only afterits share of the profits equals the share of losses not recognised. Unrealised gains on transactions between the group and its associates areeliminated to the extent of the group's interest in the associates. Unrealisedlosses are also eliminated unless the transaction provides evidence of animpairment of the asset transferred. Amounts reported in the financialstatements of associates have been adjusted where necessary to ensureconsistency with the accounting policies adopted by the group. Goodwill Goodwill representing the excess of the cost of acquisition over the fair valueof the group's share of the identifiable net assets acquired, is capitalised andreviewed annually for impairment. Goodwill is carried at cost less accumulatedimpairment losses. Negative goodwill is recognised immediately afteracquisition in the income statement. Goodwill written off to reserves prior to date of transition to IFRS remains inreserves. There is no re-instatement of goodwill that was amortised prior totransition to IFRS. Goodwill previously written off to reserves is not writtenback to profit or loss on subsequent disposal. Impairment reviews are performed annually. Revenue Revenue is measured by reference to the fair value of consideration received orreceivable by the group for services provided, excluding VAT and tradediscounts. Sale of products Revenue from the sale of goods is recognised when all the following conditionshave been satisfied: • the group has transferred to the buyer the significant risks and rewards ofownership of the goods which is generally when projects have been delivered oraccess passwords have been sent to the customer • the group retains neither continuing managerial involvement to the degreeusually associated with ownership nor effective control over the goods soldwhich is generally when a project is delivered • the amount of revenue can be measured reliably • it is probable that the economic benefits associated with the transactionwill flow to the group, and • the costs incurred or to be incurred in respect of the transaction can bemeasured reliably. Rendering of services When the outcome of a transaction involving the rendering of services can beestimated reliably, revenue associated with the transaction is recognised byreference to the stage of completion of the transaction at the balance sheetdate. The outcome of the transaction is deemed to be able to be estimatedreliably when all the following conditions are satisfied: • the amount of revenue can be measured reliably, usually based on a statusof project completion based on each project manager's estimates and timerecords, • it is probable that the economic benefits associated with the transactionwill flow to the entity, and • the stage of completion of the transaction at the balance sheet date can bemeasured reliably and is estimated by reference to the number of hours assignedand completed on an individual project. Panel incentive costs The company invites Polling Club members to fill out surveys for a cash orpoints based incentive. Although these amounts are not paid until apredetermined target value has accrued on a polling club member's account, anassessment of incentives likely to be paid (present obligation) is made basedupon the result of past panellist behaviour and is recognised as a cost of salein the period in which the service is provided where settlement is expected toresult as an outflow of resources (payment). Interest Interest is recognised using the effective interest method which calculates theamortised cost of a financial asset and allocates the interest income over therelevant period. The effective interest rate is the rate that exactly discountsestimated future cash receipts through the expected life of the financial assetto the net carrying amount of the financial asset. Dividends Dividends are recognised when the shareholders right to receive payment isestablished. Exceptional items Items are highlighted as exceptional in the income statement when separatedisclosure is considered helpful in understanding the underlying performance ofthe business. Property, plant and equipment and depreciation Property, plant and equipment is stated at cost or valuation, net ofdepreciation and any provision for impairment. No depreciation is chargedduring the period of construction. Leasehold property is included in property,plant and equipment only where it is held under a finance lease. Borrowingcosts on property, plant and equipment under construction are capitalised duringthe period of construction based on specific funds borrowed. Depreciation iscalculated to write down the cost less estimated residual value of all tangiblefixed assets by annual installments over their estimated useful economic lives. Asset Depreciation rate Freehold property 50 yearsLeasehold property and improvements Straight line over the life of the leaseFixtures and fittings 25% on a reducing balanceComputer equipment 33% per annum straight lineMotor vehicles 25% or the life of the lease Intangible assets Intangible assets represent identifiable non-monetary assets without physicalsubstance. Intangible assets are valued at either the directly attributablecosts or using valuation methods such as discounted cashflows and replacementcost in the case of acquired intangible assets. The Directors estimate the useful economic life of each asset and use theseestimates in applying amortisation rates. The Directors periodically revieweconomic useful life estimates. Directors conduct an impairment review of intangible assets where necessary.Where an impairment arises, losses are recognised in the income statement. Panel acquisition costs Panel acquisition costs reflect the direct cost of recruiting new panel members.Only the proportion of expenditure that contributed to growth of the panel iscapitalised which is based on management estimates of panel churn. Amortisationis charged to write off the panel acquisition costs over a 5 year period, thisbeing the Director's estimate of the average active life of a panellist. Recognition criteria include validity testing to ensure that specific andmeasurable costs relate to a completed enhancement of the panel which can befruitfully utilised by the business and generate future probably economicbenefits. Panels acquired through business combinations are recognised at an independentlyvalued fair value. Software development Where software is developed internally, directly attributable costs includingemployee costs incurred on software development along with an appropriateportion of relevant overheads. The costs of internally generated softwaredevelopments are recognised as intangible assets and are subsequently measuredin reference to specific expenditure. However, until completion of thedevelopment project, the assets are subject to impairment testing only. Amortisation commences upon completion of the asset, and is shown withinamortisation of intangibles. Careful judgement by the directors is applied when deciding whether therecognition requirements for development costs have been met. Criteria includethe technological feasibility of the software, and that it is going to be ofbeneficial use to the business, thereby generating future economic benefits.Adequate reporting procedures exist to capture the expenditure. Judgements are based on the information available at each balance sheet date.In addition, all internal activities related to the research and development ofnew software products are continuously monitored by the directors. Software acquired through acquisition is independently fair valued. Customer Contract and Lists Where a customer contract or list is acquired as part of a business combinationthe cost of the asset is recognised at its fair value to the Group at the dateof acquisition. The fair value is calculated by an independent expert. Customer contracts and lists are amortised over a useful economic life based onDirectors' estimates. Patents and trademarks Patents and trademarks acquired to protect the YouGov brand and it's productsare included at cost and are not amortised, as the trademarks are infinite intheir longevity. The patents are subject to an annual impairment review. Order backlog Due to the nature of their businesses, Polimetrix, Zapera and psychonomics alltend to have a certain level of secured orders (order backlog) or quotationsthat have been accepted, and are awaiting commencement, completion or delivery.The fair value of these assets has been calculated by discounting the presentvalue of the future anticipated cash inflow at the time of acquisition. Research and development Expenditure on research (or the research phase of an internal project) isrecognised as an expense in the period in which it is incurred. Development costs incurred on specific projects are capitalised when all thefollowing conditions are satisfied: • completion of the intangible asset is technically feasible so that it willbe available for use or sale • the group intends to complete the intangible asset and use or sell it • the group has the ability to use or sell the intangible asset • the intangible asset will generate probable future economic benefits.Among other things, this requires that there is a market for the output from theintangible asset or for the intangible asset itself, or, if it is to be usedinternally, the asset will be used in generating such benefits • there are adequate technical, financial and other resources to complete thedevelopment and to use or sell the intangible asset, and • the expenditure attributable to the intangible asset during its developmentcan be measured reliably. Development costs not meeting the criteria for capitalisation are expensed asincurred. The cost of an internally generated intangible asset comprises all directlyattributable costs necessary to create, produce, and prepare the asset to becapable of operating in the manner intended by management. Assets acquired as part of a business combination In accordance with IFRS 3 Business Combinations, an intangible asset acquired ina business combination is deemed to have a cost to the group of its fair valueat the acquisition date. The fair value of the intangible asset reflects marketexpectations about the probability that the future economic benefits embodied inthe asset will flow to the group. Where an intangible asset might be separable,but only together with a related tangible or intangible asset, the group ofassets is recognised as a single asset separately from goodwill where theindividual fair values of the assets in the group are not reliably measurable.Where the individual fair value of the complementary assets are reliablymeasurable, the group recognises them as a single asset provided the individualassets have similar useful lives. Intangible asset Amortisation period Consumer panel 5 yearsSoftware development 5 yearsCustomer relationships 10 - 11 yearsTrademarks 5 - 15 yearsOrder backlog 1 year Impairment testing of goodwill, other intangible assets and property, plant andequipment For the purposes of assessing impairment, assets are grouped at the lowestlevels for which there are separately identifiable cash flows (cash-generatingunits). As a result, some assets are tested individually for impairment andsome are tested at cash-generating unit level. Goodwill is allocated to thosecash- generating units that are expected to benefit from synergies of therelated business combination and represent the lowest level within the group atwhich management monitors the related cash flows. Goodwill, other individual assets or cash-generating units that includegoodwill, other intangible assets with an indefinite useful life, and thoseintangible assets not yet available for use are tested for impairment at leastannually. All other individual assets or cash-generating units are tested forimpairment whenever events or changes in circumstances indicate that thecarrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's orcash-generating unit's carrying amount exceeds its recoverable amount. Therecoverable amount is the higher of fair value, reflecting market conditionsless costs to sell, and value in use based on an internal discounted cash flowevaluation. Impairment losses recognised for cash-generating units, to which goodwill hasbeen allocated, are credited initially to the carrying amount of goodwill. Anyremaining impairment loss is charged pro rata to the other assets in the cashgenerating unit. With the exception of goodwill, all assets are subsequentlyreassessed for indications that an impairment loss previously recognised may nolonger exist. Leased assets In accordance with IAS 17, the economic ownership of a leased asset istransferred to the lessee if the lessee bears substantially all the risks andrewards related to the ownership of the leased asset. The related asset isrecognised at the time of inception of the lease at the fair value of the leasedasset or, if lower, the present value of the minimum lease payments plusincidental payments, if any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability. Leases ofland and buildings are split into land and buildings elements according to therelative fair values of the leasehold interests at the date of entering into thelease agreement. The interest element of leasing payments represents a constant proportion of thecapital balance outstanding and is charged to the income statement over theperiod of the lease. All other leases are regarded as operating leases and the payments made underthem are charged to the income statement on a straight line basis over the leaseterm. Lease incentives are spread over the term of the lease. Taxation Current tax is the tax currently payable based on taxable profit for the year. Deferred income taxes are calculated using the liability method on temporarydifferences. Deferred tax is generally provided on the difference between thecarrying amounts of assets and liabilities and their tax bases. However,deferred tax is not provided on the initial recognition of goodwill, nor on theinitial recognition of an asset or liability unless the related transaction is abusiness combination or affects tax or accounting profit. Deferred tax ontemporary differences associated with shares in subsidiaries and joint venturesis not provided if reversal of these temporary differences can be controlled bythe group and it is probable that reversal will not occur in the foreseeablefuture. In addition, tax losses available to be carried forward as well asother income tax credits to the group are assessed for recognition as deferredtax assets. Deferred tax liabilities are provided in full, with no discounting. Deferredtax assets are recognised to the extent that it is probable that the underlyingdeductible temporary differences will be able to be offset against futuretaxable income. Current and deferred tax assets and liabilities are calculatedat tax rates that are expected to apply to their respective period ofrealisation, provided they are enacted or substantively enacted at the balancesheet date. Changes in deferred tax assets or liabilities are recognised as a component oftax expense in the income statement, except where they relate to items that arecharged or credited directly to equity in which case the related deferred tax isalso charged or credited directly to equity. Financial assets Financial assets are divided into the following categories: loans andreceivables; financial assets at fair value through profit or loss;available-for-sale financial assets; and held-to-maturity investments.Financial assets are assigned to the different categories by management oninitial recognition, depending on the purpose for which they were acquired. Thedesignation of financial assets is re-evaluated at every reporting date at whicha choice of classification or accounting treatment is available. All financial assets are recognised when the group becomes a party to thecontractual provisions of the instrument. Financial assets other than thosecategorised as at fair value through profit or loss are recognised at fair valueplus transaction costs. Financial assets categorised as at fair value throughprofit or loss are recognised initially at fair value with transaction costsexpensed through the income statement. Financial assets at fair value through profit or loss include financial assetsthat are either classified as held for trading or are designated by the entityas at fair value through profit or loss upon initial recognition. Subsequent to initial recognition, the financial assets included in thiscategory are measured at fair value with changes in fair value recognised in theincome statement. Financial assets originally designated as financial assets atfair value through profit or loss may not be reclassified. Financial assets are designated as at fair value through profit or loss wherethey are managed and their performance evaluated on a fair value basis inaccordance with the group's documented risk management strategy. Loans and receivables are non-derivative financial assets with fixed ordeterminable payments that are not quoted in an active market. Tradereceivables and other financial assets which are classified as loans andreceivables are classified as loans and receivables. Loans and receivables aremeasured subsequent to initial recognition at amortised cost using the effectiveinterest method, less provision for impairment. Any change in their valuethrough impairment or reversal of impairment is recognised in the incomestatement. Provision against trade receivables is made when there is objective evidencethat the group will not be able to collect all amounts due to it in accordancewith the original terms of those receivables. The amount of the write-down isdetermined as the difference between the asset's carrying amount and the presentvalue of estimated future cash flows. An assessment for impairment is undertaken at least at each balance sheet date. Regular purchases and sales are accounted for on settlement date. Where anentity uses settlement date accounting for an asset that is subsequentlymeasured at cost or amortised cost, the asset is recognised initially at itsfair value on the trade date. A financial asset is derecognised only where the contractual rights to the cashflows from the asset expire or the financial asset is transferred and thattransfer qualifies for derecognition. A financial asset is transferred if thecontractual rights to receive the cash flows of the asset have been transferredor the group retains the contractual rights to receive the cash flows of theasset but assumes a contractual obligation to pay the cash flows to one or morerecipients. A financial asset that is transferred qualifies for derecognitionif the group transfers substantially all the risks and rewards of ownership ofthe asset, or if the group neither retains nor transfers substantially all therisks and rewards if ownership but does transfer control of that asset. Financial liabilities Financial liabilities are obligations to pay cash or other financial assets andare recognised when the group becomes a party to the contractual provisions ofthe instrument. Financial liabilities categorised as at fair value throughprofit or loss are recorded initially at fair value, all transaction costs arerecognised immediately in the income statement. All other financial liabilitiesare recorded initially at fair value, net of direct issue costs. Financial liabilities categorised as at fair value through profit or loss areremeasured at each reporting date at fair value, with changes in fair valuebeing recognised in the income statement. All other financial liabilities arerecorded at amortised cost using the effective interest method, withinterest-related charges recognised as an expense in finance cost in the incomestatement. Finance charges, including premiums payable on settlement orredemption and direct issue costs, are charged to the income statement on anaccruals basis using the effective interest method and are added to the carryingamount of the instrument to the extent that they are not settled in the periodin which they arise. Financial liabilities are categorised as at fair value through profit or losswhere they are classified as held-for- trading or designated as at fair valuethrough profit or loss on initial recognition. Financial liabilities aredesignated as at fair value through profit or loss where they are managed andtheir performance evaluated on a fair value basis in accordance with the group'sdocumented risk management. A financial liability is derecognised only when the obligation is extinguished,that is, when the obligation is discharged or cancelled or expires. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, togetherwith other short-term, highly liquid investments that are readily convertibleinto known amounts of cash and which are subject to an insignificant risk ofchanges in value. In addition, bank overdrafts which are repayable on demandare included. Equity Equity comprises the following: • Share capital represents the nominal value of equity shares. • Share premium represents the excess over nominal value of the fair value ofconsideration received for equity shares, net of expenses of the share issue. • Merger reserve represents the excess over nominal value of the fair valueof consideration received for equity shares issued/allotted directly to acquireanother entity meeting the specific requirements of section 131 of the CompaniesAct 1985. The conditions of the relief include: o Securing at least 90% of the nominal value of equity of another company o The arrangement provides for allotment of equity shares in the issuingcompany • Deferred consideration reserve represents the total value of equity thatmay be issued should specific earn-out agreements be achieved. • Foreign exchange reserve represents the differences arising fromtranslation of investments in overseas subsidiaries. • Profit and loss reserve represents retained profits. Foreign currencies Transactions in foreign currencies are translated at the exchange rate ruling atthe date of the transaction. Monetary assets and liabilities in foreign currencies are translated at therates of exchange ruling at the balance sheet date. Non-monetary items that aremeasured at historical cost in a foreign currency are translated at the exchangerate at the date of the transaction. Non-monetary items that are measured atfair value in a foreign currency are translated using the exchange rates at thedate when the fair value was determined. Any exchange differences arising on the settlement of monetary items or ontranslating monetary items at rates different from those at which they wereinitially recorded are recognised in the profit or loss in the period in whichthey arise. Exchange differences on non-monetary items are recognised in the statement ofrecognised income and expenses to the extent that they relate to a gain or losson that non-monetary item taken to the statement of recognised income andexpenses, otherwise such gains and losses are recognised in the incomestatement. The assets and liabilities in the financial statements of foreign subsidiariesand associates and related goodwill are translated at the rate of exchangeruling at the balance sheet date. Income and expenses are translated at theactual rate. The exchange differences arising from the retranslation of theopening net investment in subsidiaries and associates are taken directly to the"Foreign currency reserve" in equity. Employee benefits Equity settled share-based payment All share-based payment arrangements granted after 7 November 2002 that had notvested prior to 1 August 2006 are recognised in the financial statements. This fair value is appraised at the grant date and excludes the impact ofnon-market vesting conditions. All equity-settled share-based payments are ultimately recognised as an expensein the income statement with a corresponding credit to "other reserve". If vesting periods or other non-market vesting conditions apply, the expense isallocated over the vesting period, based on the best available estimate of thenumber of share options expected to vest. Estimates are subsequently revisedif there is any indication that the number of share options expected to vestdiffers from previous estimates. Any cumulative adjustment prior to vesting isrecognised in the current period. No adjustment is made to any expense recognised in prior periods if shareoptions ultimately exercised are different to that estimated on vesting. Upon exercise of share options the proceeds received net of attributabletransaction costs are credited to share capital, and where appropriate sharepremium. Contingent consideration Future anticipated payments to vendors in respect of earnouts are based on thedirectors' best estimates of future obligations, which are dependent on thefuture performance of the interests acquired and assume the operating companiesimprove profits in line with directors' estimates. When consideration payableis deferred, the fair value of the consideration is obtained by discounting topresent value the amounts expected to be payable in the future at a rateequivalent to a UK 10 year treasury gilt. Imputed interest When the outflow of cash or cash equivalents is deferred, and the arrangementconstitutes a financing transaction, the fair value of the consideration is thepresent value of all future payments determined using an imputed rate ofinterest. The imputed rate of interest used is the UK 10 year treasury gilt.The difference between the present value of all future payments and the nominalamount of the consideration is recognised as an interest charge. Critical accounting estimates and judgements Estimates and judgements are evaluated on a regular basis and are based onhistorical experience and other factors, such as expectations of future eventsthat are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. Theseestimates, by definition, will rarely equal the related actual results. Theestimates and assumptions that have a significant risk of causing a materialadjustment to the carrying amounts of assets and liabilities within the nextfinancial year are discussed below. Goodwill The Group tests annually whether goodwill has suffered any impairment, inaccordance with the accounting policy. The recoverable amount ofcash-generating units has been determined based on discounted future cashflows.These calculations require estimates to be made. Income taxes The Group is subject to income taxes in various jurisdictions. Judgement isrequired in determining the worldwide provision for income taxes. There are manytransactions/calculations for which the ultimate tax determination is uncertainduring the ordinary course of business. Where the final tax outcome is differentto what is initially recorded, such differences will impact the income tax anddeferred tax provisions. Intangible assets The Group is required to identify and assess the useful life of intangibleassets and determine if there is a finite or indefinite life. Judgement isrequired in determining if an intangible asset has a finite life and the extentof this finite life in order to calculate the amortisation charge on the asset.The Group tests at each reporting date whether intangible assets have sufferedany indicators of impairment, in accordance with the accounting policy. Therecoverable amount of cash-generating units have been determined based ondiscounted future cashflows. These calculations require estimates to be made.Where there is no method of valuation for an intangible asset, management willmake use of a valuation technique to determine the value of an intangible ifthere is no evidence of a market value. In doing so certain assumptions andestimates will be made. Share based payments The Group is required to measure the fair value of equity settled transactionswith employees at the grant date of the equity instruments. The fair value isdetermined by using the Black-Scholes method. This requires assumptionsregarding interest free rates, share price volatility and expected life of anemployee share option. The volatility of the Company's share price on each dateof grant was calculated as the average of volatilities of share prices ofcompanies in the Peer Group on the corresponding dates. Deferred taxation Judgement is required by management in determining whether the Group shouldrecognise a deferred tax asset. Management considered whether there issufficient certainty its tax losses available to carry forward would ultimatelybe offset against future earnings, this judgement impacts on the degree to whichdeferred tax assets are recognised. Contingent consideration As part of the acquisitions, contingent consideration is payable to sellingshareholders groups based on the future performance of the businesses.Judgement is required in estimating the magnitude of contingent considerationand the likelihood of payment. 2. SEASONAL FLUCTUATIONS The market research industry is subject to seasonal fluctuations, with peakdemand in the second half of the Group's financial year. For the six months to31 January 2008 the level of sales represented 132% of the annual level ofresearch sales in the year ended 31 July 2007. For the 6 months ended 31January 2007 the level of sales represented 43% of the annual level of researchsales in the year ended 31 July 2007. 3 SEGMENTAL ANALYSIS The group only undertakes one class of business, that of market research. The group supplies two geographical segments that are deemed significant, EMEAand USA. Turnover by origin and destination are not materially different. Revenue 6 months 6 months 12 months to 31/1/08 to 31/1/07 to 31/7/07 £'000 £'000 £'000 EMEA 17,785 6,083 14,303USA 1,058 - -Group turnover 18,843 6,083 14,303 Segment operating profit 6 months to 6 months 12 months 31/1/08 to 31/1/07 to 31/7/07 £'000 £'000 £'000 EMEA 4,183 2,886 6,953 USA (731) - -Central corporate expenses (494) (665) (1,395)Group operating profit 2,958 2,221 5,558 Net assets 6 months to 6 months 12 months 31/1/08 to 31/1/07 to 31/7/07 £'000 £'000 £'000 EMEA 37,703 5,668 8,487USA 14,606 3,856 3,727Group net assets 52,309 9,524 12,214 All of the segment revenue reported above is from external customers. Segment profit represents the profit earned by each segment before interest taxand minority interest, and without allocation of central administration costsand directors' salaries. 4 SHARE ISSUE Shares issued and authorised for the period to 31 January 2008 can be summarisedas follows: Number £'0006 months to 31 January 2008At 1 August 2007 67,422,570 135Issue of shares 27,411,983 55At 31 January 2008 94,834,553 190 6 months to 31 January 2007*At 1 August 2006 66,847,785* 134Issue of shares 283,455* 0At 31 January 2007 67,131,240* 134 Year to 31 July 2007At 1 August 2006 66,847,785 134Issue of shares 574,785 1At 31 July 2007 67,422,570 135 * Restated assuming 5:1 share split on 10 April 2007 had been effectivethroughout the period. During the period to 31 January 2008, 25,215,543 shares were issued to satisfyconsideration for the acquisitions of Polimetrix, psychonomics and Zapera.2,196,440 shares were also issued to satisfy share options previously grantedunder YouGov plc's employee share option scheme. The shares relating to the acquisitions were issued in three tranches, on 3, 6and 10 of September 2007. Of the total issue, 19,285,714 shares yielded £26.2min cash (net of expenses) and 5,929,829 shares were issued as acquisitionshares. The issues increased shareholders equity by £36.3m. The weightedaverage share price was £1.44. The 2,196,440 shares issued to satisfy share options yielded £0.2m in cash andincreased shareholders equity by £0.2m. The weighted average share price was£0.11. 5 ADDITIONS AND DISPOSALS OF PROPERTY, PLANT AND EQUIPMENT The following table shows the significant additions and disposals of property,plant and equipment. Freehold Leasehold Computer Fixtures and Motor property property equipment fittings vehicles Total £'000 £'000 £'000 £'000 £'000 £'000 Carrying amount at 1 - 175 132 159 33 499August 2007Additions 942 30 227 268 - 1,467Acquired through - - 91 476 567acquisitionsDisposals - - - - - -Depreciation - (21) (130) (211) (5) (367)Reclassified - - - - - - Carrying amount at 31 942 184 320 692 28 2,166January 2008 Carrying amount at 1 - 41 60 36 18 155August 2006Additions - 5 106 103 28 242Acquired through - - - - - -acquisitionsDisposals - - (10) - - (10)Depreciation - (8) (15) (8) (6) (37)Reclassified - (18) - 18 - - Carrying amount at 31 - 20 141 149 40 350January 2007 Carrying amount at 1 - 41 60 36 18 155August 2006Additions - 189 114 137 27 467Acquired through - - - - - -acquisitionsDisposals - (11) - (1) - (12)Depreciation - (26) (42) (31) (12) (111)Reclassified - (18) - 18 - - Carrying amount at 31 - 175 132 159 33 499July 2007 6 ADDITIONS AND DISPOSALS OF INTANGIBLE ASSETS The following table shows the significant additions and disposals of intangibleassets. Customer contracts & Trade Order Research and Panel Software lists marks backlog development Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Carrying amount at 115 200 - 28 - - 3431 August 2007Additions 165 943 - 7 - 286 1,401Acquired through 5,301 - 4,621 5,430 386 - 15,738acquisitionsDisposals - - - - - - -Amortisation (548) (64) (216) (287) (193) - (1,308) Carrying amount at 5,033 1,079 4,405 5,178 193 286 16,17431 January 2008 - - -Carrying amount at - 3 - - - - 31 August 2006Additions - 22 - - - - 22Acquired through - - - - - - -acquisitionsDisposals - - - - - - -Amortisation - (3) - (3) Carrying amount at - 22 - - - - 2231 January 2007 - - -Carrying amount at - 3 - - - - 31 August 2006Additions 124 203 - 28 - - 355Acquired through - - - - - - -acquisitionsDisposals - - - -Amortisation (9) (6) - - - - (15) Carrying amount at 115 200 - 28 - - 34331 July 2007 7 EARNINGS PER SHARE The calculation of the basic earnings per share is based on the earningsattributable to ordinary shareholders divided by the weighted average number ofshares in issue during the year. Shares held in employee share trusts aretreated as cancelled for the purposes of this calculation. The calculation of diluted earnings per share is based on the basic earnings pershare, adjusted to allow for the issue of shares and the post tax effect ofdividends and/or interest, on the assumed conversion of all dilutive options andother dilutive potential ordinary shares. The adjusted earnings per share removes the effect of the amortisation ofintangible assets, share based payments and imputed interest and any related taxeffects from the calculation as follows: 6 months 6 months 12 months to 31/1/08 to 31/1/07 to 31/7/07 £'000 £'000 £'000 Earnings 2,731 1,749 4,198 Add: amortisation of intangible assets 1,308 61 15Add: share based payments 161 21 47Add: imputed interest 165 - -Tax effect of the above adjustments (645) (6) (14) Adjusted retained profit 3,720 1,825 4,246 Reconciliations of the earnings and weighted average number of shares used inthe calculations are set out below. 6 months 6 months 12 months to 31/1/08 to 31/1/07 to 31/7/07Number of sharesWeighted average number of shares during the period:('000 shares)- Basic 88,501 66,859* 67,351- Dilutive effect of share options 8,959 3,831* 3,462- Diluted 97,460 70,690* 70,813 Basic earnings per share (in pence) 3.1 2.6 6.2Adjusted basic earnings per share (in pence) 4.2 2.7 6.3Diluted earnings per share (in pence) 2.8 2.5 5.9Adjusted diluted earnings per share (in pence) 3.8 2.6 6.0 The adjustments have the following effect: Basic earnings per share 3.1 2.6 6.2 Amortisation of intangible assets 1.5 0.1 -Share based payments 0.2 - 0.1Imputed interest 0.2 - -Tax effect of the above adjustments (0.8) - - Adjusted earnings per share 4.2 2.7 6.3 Diluted earnings per share 2.8 2.5 5.9 Amortisation of intangible assets 1.3 0.1 -Share based payments 0.2 - 0.1Imputed interest 0.2 - -Tax effect of the above adjustments (0.7) - - Adjusted diluted earnings per share 3.8 2.6 6.0 * Restated for 5:1 share split on 10 April 2007. 8 BUSINESS COMBINATIONS Acquisition of psychonomics The acquisition of 100% of the issued share capital of psychonomics AG ("psychonomics") was announced on 7 August 2007. psychonomics is a leading marketresearch agency incorporated in 1992 and has its head office in Cologne withoffices in Vienna and Berlin. The consideration payable for the entire issued share capital of psychonomicswas £17.5m and was satisfied by the issue of shares to the value of £3.5m(priced at the average mid-market closing price over the 30 day period to 31August 2007 being the final trading day prior to shareholder approval), with thebalance at completion being paid in cash, of £10.7m. The psychonomics sellersare entitled to be paid the pre completion profits of psychonomics for thecurrent year calculated in proportion to the number of months elapsed prior tocompletion. Such amount is capped at £1m. An earn-out has also been put inplace for the 2 financial years ending 31 December 2008. Under this earn-out,based on financial targets being met, a maximum of a further £1.9m will bepayable, either in cash or shares (priced at the average price of trading overthe 30 dealing day period following publication of the audited financialstatements for the financial year ending 31 December 2008). In addition to thepurchase price payable, shares to the value of €500,000 will be issued for apsychonomics employee incentivisation programme. This payment is not presentlyincluded in the financial statements as the shares have not been issued.Professional fees of £25k for due diligence, and £387k for other professionalfees were incurred. The allocation of the purchase price to the assets and liabilities ofpsychonomics was only provisionally completed at 31 January 2008. The amountsprovisionally recognised for each class of psychonomics assets, liabilities, andcontingent liabilities recognised at the acquisition date are as follows: Acquiree's carrying Provisional fair Fair value amount before Value combination Adjustments £'000 £'000 £'000Net assets acquired:Goodwill 15 - 15Intangible assets 47 - 47Property, plant and equipment 423 - 423Work in progress 2,367 - 2,367Trade and other receivables 1,881 - 1,881Cash and cash equivalents 355 - 355Other current assets 139 - 139Trade and other payables (4,171) - (4,171)Short term borrowings (99) - (99)Current tax liability (33) - (33)Deferred tax liability (71) - (71)Minority interest (18) - (18)Net assets 835 - 835Goodwill arising on acquisition 9,333Intangibles arising on acquisition 7,341 17,509Total consideration, analysed as: 10,684 CashEquity 3,532Deferred consideration 2,881Acquisition expenses 412 17,509Net cash outflow arising on acquisition:Cash consideration paid 10,684Cash and cash equivalents acquired (355) 10,329 Ownership and control passed to YouGov plc on 7 August 2007 and psychonomics hasbeen consolidated within the Group financial statements from August 2007. As at 31 January 2008, the fair value exercise was not completed. The fairvalue exercise had not been completed by the reporting date due to the timing ofreceiving audited accounts. Under IFRS the fair value exercise can be completedwithin 12 months of acquisition and this will be completed prior to 31 July2008. The goodwill arising on the acquisition of psychonomics is attributable to theanticipated synergies expected to be derived from the combination and value ofthe workforce of psychonomics which cannot be recognised as an intangible assetunder IAS38 "Intangible Assets". Since the acquisition psychonomics has contributed £6m to Group revenue and£0.5m to the Group profit for the period to 31 January 2008. Acquisition of Zapera Zapera.com A/S ("Zapera") is an online research agency with offices in Denmark,Sweden and Norway and specialises in healthcare, pharmaceutical and brandresearch. The consideration payable for the acquisition of 100% of the issuedshare capital of Zapera on 7 August 2007 was cash of £4.9m and the allotment of264,026 shares to the value of £412,000 (priced at 151.5p per Ordinary Share).In addition, YouGov applied £1.9m towards the repayment of loan capital, theacquisition of bank debt and the payment of deferred consideration pursuant to aprevious acquisition made by Zapera. Additional consideration of £2.25m willbecome payable to the sellers subject to certain financial hurdles for the 12month period to 31 July 2008 being met by Zapera. The earn out will be settledwith equity priced at the average mid-market closing price of trading of theYouGov shares over the 10 day period to the date falling 1 working day prior tothat on which the Earn Out Equity is to be issued. The 2 original founders areentitled to an earnout payment of (in aggregate) £1.25m depending on thefinancial performance for the 12 month periods to each of 31 July 2009 and 2010,both discounted to present value of £3.3m. Any such earn-out payment to thefounders will be satisfied 50% in cash and 50% in Ordinary Shares priced in thesame manner as the initial earn out. Professional fees of £86k for duediligence, and £32k for other professional fees were incurred. The allocation of the purchase price to the assets and liabilities of Zapera wasonly provisionally completed at 31 January 2008. The amounts provisionallyrecognised for each class of Zapera assets, liabilities, and contingentliabilities recognised at the acquisition date are as follows. Acquiree's carrying Provisional fair Fair value amount before value combination Adjustments £'000 £'000 £'000Net assets acquired:Goodwill 2,466 (2,466) -Property, plant and equipment 95 - 95Deferred tax asset 139 103 242Inventories 130 - 130Trade and other receivables 505 (10) 495Cash and cash equivalents 123 - 123Trade and other payables (987) (335) (1,322)Short term borrowings (117) - (117)Long term borrowings (2,041) - (2,041)Net assets 313 (2,708) (2,395)Goodwill arising on acquisition 9,472Intangibles arising on acquisition 3,556 10,633 Total consideration, analysed as: 4,930 CashEquity 412Deferred consideration 3,260Acquired liabilities 1,913Acquisition expenses 118 10,633Net cash outflow arising on acquisition:Cash consideration paid 4,930Cash and cash equivalents acquired (123) 4,807 The acquired liabilities have been discounted to arrive at a present value asfollows: £'000Shareholders loan 731Bank loan 754Deferred consideration 555 2,040 Ownership and control passed to YouGov plc on 7 August 2007 and Zapera has beenconsolidated within the Group financial statements from August 2007. The allocation of purchase prices to the assets and liabilities was onlyprovisionally completed at 31 January 2008 due to pressures on subsidiaryfinancial reporting and associated management time. Under IFRS, acquiringcompanies have a period of 12 months in which to finalise the allocation andthis will be completed by 31 July 2008. The goodwill arising on the acquisition of Zapera is attributable to theanticipated profitability of the distribution of the Group's products in the newmarkets and the anticipated future operating synergies from the combination. Since the acquisition Zapera has contributed £3m to Group revenue and £0.2m tothe Group profit for the period to 31 January 2008. Acquisition of Polimetrix Polimetrix Inc ("Polimetrix") is an online market research agency. Under theterms of a pre-existing option surviving from the time that we acquired ourinitial stake in Polimetrix, YouGov and YouGovAmerica had the right to purchasethe 68% of Polimetrix not owned by YouGovAmerica. The merger of Polimetrix andYouGovAmerica, effected on 7 August 2007, resulted in the acquisition of such68% at a price of $2.10 per share. For tax structuring purposes the acquisitionwas effected by merging Polimetrix with a YouGov acquisition vehicle. The totalconsideration payable was £14.7m of which £8.1m was satisfied in cash, £5.3m inequity in YouGov. The value of the equity at completion was based on the averagemid-market closing prices of the shares over the 30 day period to 31 August2007, being the final day of trading prior to the EGM. £1.1m of the shares willonly be issued one year following completion provided there are no claims madeby YouGov under the merger agreement based on the average mid-market closingprice used to calculate the initial payment. The Acquisition Shares are subjectto selling restrictions for a period of 12 months from the date of completion.Professional fees of £122k were incurred. The allocation of the purchase price to the assets and liabilities of Polimetrixwas only provisionally completed at 31 January 2008. The net assets acquired inthe transaction, and the goodwill arising, are as follows: Acquiree's carrying Provisional fair Fair value amount before value combination adjustments £'000 £'000 £'000Net assets acquired:Property, plant and equipment 82 (30) 52Deferred tax asset - 1,031 1,031Trade and other receivables 202 - 202Cash and cash equivalents 3,565 - 3,565Trade and other payables (360) - (360)Net assets 3,489 1,001 4,490Goodwill arising on acquisition 4,992Intangibles arising on acquisition 5,262 14,744Total consideration, analysed as: 8,108 CashEquity 5,306Deferred consideration 1,086Acquired liabilities 122Acquisition expenses 122 14,744Net cash outflow arising on acquisition:Cash consideration paid 4,260Cash and cash equivalents acquired (3,565) 695 Ownership and control passed to YouGov plc on 7 August 2007 and Polimetrix hasbeen consolidated within the Group financial statements from August 2007. The allocation of purchase prices to the assets and liabilities was onlyprovisionally completed at 31 January 2008 as audited financial statements werenot available. Under IFRS, acquiring companies have a period of 12 months inwhich to finalise the allocation and this will be completed by 31 July 2008. The goodwill arising on the acquisition of Polimetrix Inc is attributable to theanticipated profitability of the distribution of the Group's products in the newmarkets and the anticipated future operating synergies from the combination. Since the acquisition Polimetrix has contributed £1.2m to Group revenue and(£0.1m) to the Group profit for the period to 31 January 2008. 9 TAXATION 6 months 6 months 12 months to 31/1/08 to 31/1/07 to 31/7/07 £'000 £'000 £'000 Current Taxation 633 234 585 Deferred Taxation (903) 7 37 Group taxation (270) 241 622 Deferred tax on JV loss disclosed within'share of post tax loss in joint ventures' 15 - - Taxation per the income statement (255) 241 622 6 months 6 months 12 months to 31/1/08 to 31/1/07 to 31/7/07 Profit before tax per the income statement 2,977 2,316 5,599Deferred tax on JV loss disclosed within'share of post tax loss in joint ventures' (15) - -Group profit before tax 2,962 2,316 5,599 Weighted average tax rate 17% 11% 11% Tax calculated at domestic tax rates applicableto profits in the respective countries 517 254 630 Adjustment in respect of prior period 36 (15) (19) Expenses not deductible for tax purposes 80 (5) (26) Deferred taxation asset on losses (256) - - Deferred tax on timing differences 5 7 37 Deferred taxation on IFRS adjustments(intangibles arising on acquisition) (600) - - Deferred taxation on IFRS adjustments (other) (52) - - Group taxation (270) 241 622 Deferred tax on JV loss disclosed within'share of post tax loss in joint ventures' 15 - -Taxation per the income statement (255) 241 622 The weighted average applicable tax rate has changed due to the acquisition ofbusinesses operating under different tax regimes. The movement in deferred tax assets and liabilities during the year, withouttaking into account the consideration of offsetting of balances within the sametax jurisdiction is as follows: Deferred Tax Asset Accelerated Tax Fair Value Tax Depreciation Gain Losses Total £'000 £'000 £'000 £'000 At 1 August 2006 - - - - At 31 January 2007 - - - - At 31 July 2007 - - - - Acquisition Of Subsidiary 118 273 1,000 1,391 Credited to the income statement 100 - 256 356 At 31 January 2007 218 273 1,256 1,747 Deferred Tax Liability Accelerated Tax Fair Value Depreciation Loss Other Total £'000 £'000 £'000 £'000 At 1 August 2006 (12) - - (12) (Credited) to the income statement (7) - - (7) At 31 January 2007 (19) - - (19) (Credited) to the income statement (37) - - (37) At 31 July 2007 (56) - - (56) Acquisition Of Subsidiary (6,844) - - (6,844) Charged to the income statement 547 - - 547 At 31 January 2007 (6,353) - - (6,353) 10 EXPLANATION OF TRANSITION TO IFRS As stated in the Basis of Preparation, these are the Group's first condensedconsolidated interim financial statements for part of the period covered by thefirst IFRS annual consolidated financial statement prepared in accordance withIFRS. An explanation of how the transition from UK GAAP to IFRS has affected theGroup's financial position, financial performance is set out below. IFRS 1 permits companies adopting IFRS for the first time to take certainexemptions from the full requirements of IFRS in the transition period. Theseinterim financial statements have been prepared on the basis of taking thefollowing exemptions: • business combinations prior to 1 August 2006, the Group's date oftransition to IFRS, have not been restated to comply with IFRS3 "BusinessCombinations". Goodwill arising from these business combinations of £1.2m hasnot been restated other than as set out below. • Cumlative translation differences on foreign operations are deemed tobe nil at 1 August 2006. Any gains and losses recognised in the consolidatedincome statement on subsequent disposal of foreign operations will excludetranslation differences arising prior to the transition date. • The entity has elected not to apply IAS21 "the effects of Changes inForeign Exchange Rates" retrospectively to goodwill and fair value adjustmentsarising on business combinations before the Group's date of transition to IFRS.Such goodwill and fair value adjustments are not treated as foreign currencyassets and so are not retranslated at each reporting date. Reconciliation Of Equity as at 1 August 2006 UK GAAP A B C D E F IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Non Current AssetsGoodwill 1,171 1,171Intangible assets 0 3 3Property, plant & equipment 158 (3) 155Investment accounted for using the equity 110 110methodDeferred tax assets 0 11 11 1,439 1,450Current AssetsInventories 0 0Trade and other receivables 3,699 3,699Current tax receivable 0 0Other current assets 0 0Cash and cash equivalents 5,546 5,546 9,245 9,245Current LiabilitiesLease liabilities (18) (18)Deferred consideration 0 0Trade and other payables (2,251) (42) 75 (2,218)Short term borrowings 0 0Current tax liability (527) (527) (2,796) (2,763)Non Current LiabilitiesDeferred consideration (365) (365)Long term borrowings 0 0Deferred tax liability (12) (12) (377) (377) Net Assets 7,511 0 (42) 75 11 0 0 7,555 Reconciliation Of Equity as at 1 August2006 UK GAAP A B C D E F IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000EquityIssued share capital 134 134Share premium 2,943 2,943Merger reserve 0 0Deferred consideration reserve 0 0Foreign exchange reserve 0 0Retained earnings 3,691 (42) 75 11 3,735Minority interests in equity 743 743 Total Equity 7,511 0 (42) 75 11 0 0 7,555 Reconciliation Of Equity as at 31 January 2007 UK GAAP A B C D E F IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Non Current AssetsGoodwill 1,012 56 1,068Intangible assets 0 22 22Property, plant & equipment 372 (22) 350Investment accounted for using the equity 3,975 3,975methodDeferred tax assets 0 9 9 5,359 5,424Current AssetsInventories 0 0Trade and other receivables 3,302 (6) 3,296Current tax receivable 0 0Other current assets 0 0Cash and cash equivalents 4,287 4,287 7,589 7,583Current LiabilitiesLease liabilities (29) (29)Deferred consideration 0 0Trade and other payables (2,386) (44) 94 (2,336)Short term borrowings 0 0Current tax liability (752) (752) (3,167) (3,117)Non Current LiabilitiesDeferred consideration (347) (347)Long term borrowings 0 0Deferred tax liability (19) (19) (366) (366) Net Assets 9,415 0 (44) 94 9 56 (6) 9,524 Reconciliation Of Equity as at 31 January2007 UK GAAP A B C D E F IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000EquityIssued share capital 134 134Share premium 2,987 2,987Merger reserve 0 0Deferred consideration reserve 0 0Foreign exchange reserve 0 0Retained earnings 5,264 (44) 94 9 56 (6) 5,373Minority interests in equity 1,030 1,030 Total Equity 9,415 0 (44) 94 9 56 (6) 9,524 Reconciliation Of Equity as at 31 July 2007 UK GAAP A B C D E F IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Non Current AssetsGoodwill 1,034 56 1,090Intangible assets 143 200 343Property, plant & equipment 699 (200) 499Investment accounted for using the equity 4,463 76 4,539methodDeferred tax assets 0 20 20 6,339 6,491Current AssetsInventories 0 0Trade and other receivables 5,699 (6) 5,693Current tax receivable 0 0Other current assets 0 0Cash and cash equivalents 4,061 4,061 9,760 9,754Current LiabilitiesLease liabilities (24) (24)Deferred consideration 0 0Trade and other payables (3,494) (83) 107 (3,470)Short term borrowings 0 0Current tax liability (147) (147) (3,665) (3,641)Non Current LiabilitiesDeferred consideration (334) (334)Long term borrowings 0 0Deferred tax liability (56) (56) (390) (390) Net Assets 12,044 0 (83) 107 20 132 (6) 12,214 Reconciliation Of Equity as at 31 July 2007 UK GAAP A B C D E F IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000EquityIssued share capital 135 135Share premium 3,026 3,026Merger reserve 0 0Deferred consideration reserve 0 0Foreign exchange reserve 0 0Retained earnings 7,423 (83) 107 20 132 (6) 7,593Minority interests in equity 1,460 1,460 Total Equity 12,044 0 (83) 107 20 132 6 12,214 Reconciliation Of Profit For The 6 Months Ended 31 January 2007 UK GAAP A B C D E F IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue 6,083 6,083 Cost of sales (1,215) (1,215) Gross Profit 4,868 4,868 Administrative expenses (2,581) (2) (6) (2,589)Management fee 0 0 Group Operating Profit Pre Amortisation 2,287 2,279 Amortisation of intangibles (114) 56 (58) Group Operating Profit 2,173 2,221 Finance income 110 110Finance costs (1) (1)Share of post tax loss in joint ventures (14) (14) Profit Before Taxation 2,268 2,316 Taxation - excluding deferred tax on (241) (2) (243)goodwill Profit For The Year 2,027 2,073 Attributable to: Equity holders of the parent company 1,703 1,749 Minority interests 324 324 2,027 2,073 Reconciliation Of Profit For The 6 Months Ended 31 July 2007 UK GAAP A B C D E F IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue 14,303 14,303 Cost of sales (2,647) (2,647) Gross Profit 11,656 11,656 Administrative expenses (6,061) (41) (6) (6,108)Management fee 10 10 Group Operating Profit Pre Amortisation 5,605 5,558 Amortisation of intangibles (132) 132 - Group Operating Profit 5,473 5,558 Finance income 188 188Finance costs (2) (2)Share of post tax loss in joint ventures (139) (139) Profit Before Taxation 5,520 5,605 Taxation - excluding deferred tax on (622) 9 (613)goodwill Profit For The Year 4,898 4,992 Attributable to: Equity holders of the parent company 4,104 4,198 Minority interests 794 794 4,898 4,992 11 EXPLANATION OF TRANSITION TO IFRS A) Under UK GAAP software costs were included as part of tangible fixed assets.These have been reclassified as intangible assets under IFRS as they meet therecognition criteria defined by IAS 38. The result of this is to increaseintangible assets and decrease property, plant and equipment in the periods to31 July 2006, 31 January 2007 and 31 July 2007 by £3k, £22k and £200krespectively. B) IAS 19 requires the recording of a holiday pay accrual. This has beenincluded for each of the reporting periods. For the 12 months to 31 July 2006the impact on the Profit & Loss was £42k (accrual included within trade andother payables £42k), for the 6 months to 31 January 2007 the impact on theProfit & Loss was £2k (accrual included within trade and other payables £44k)and for the 6 months to 31 July 2007 the impact on the Profit and Loss was £41k(accrual included within trade and other payables £83k). C) The liability in relation to share based payments in all periods to 31 July2007 was included within trade and other payables. This adjustment correctlydiscloses the amounts within the share based payment reserve. The Profit andLoss entry of a £19k charge in the period to 31 July 2006 adjusts the accountingtreatment between UITF 17 under UK GAAP and IFRS 2. D) Under FRS 19 deferred tax was recognised only on timing differences; incontrast IAS12 'Income Taxes' requires the recognition of deferred tax on alltemporary differences. The recognition of a holiday pay accrual under IAS19 hasled to the occurrence of temporary differences. The effect of this adjustment isto create a deferred tax asset of £11k at 31 July 2006, £9k at 31 January 2007and £20k at 31 July 2007. The tax charge in the Profit and Loss was increased by£2k in the 6 months to 31 January 2007 and reduced by £9k in the 6 months to 31July 2007. E) Goodwill recognised by the Group on the acquisition of Siraj and Polimetrix(32% stake) under UK GAAP was amortised over a period of 5 years. Under IFRSgoodwill is not amortised, but tested annually for impairment. The goodwillamortisation charge recognised in accordance with UK GAAP in 2007 has beenwritten back. The result of these adjustments is to reduce the cost ofamortisation in the Profit and Loss by £56k in the 6 months to 31 January 2007and £132k in the 12 months to 31 July 2007 and increase the carrying value ofthe goodwill by the same amounts. F) Under UK GAAP, rent free periods are recognised in the income statement overa period of the shorter of either the length of the lease or period to theprevailing date at which market rent becomes payable. Under IFRS rent freeperiods are amortised over the length of the lease. This has resulted in anadditional Profit and Loss charge of £6k being recognised in each of the periodsending 31 January 2007 and 31 July 2007 respectively. The corresponding balancesheet entry reduces trade and other receivables by an equal amount. 12 RELATED PARTY TRANSACTIONs There have been no transactions with directors during the period. During the period to 31 January 2008 sales were made to Endemol UK totalling£1,500 (period to 31 January 2007: £2,600). Endemol UK is a company which PeterBazalgette, a non-executive director of YouGov plc, was a director during theperiod. The sales were made at arms length and on usual commercial terms. As at31 January 2008 Endemol UK owed YouGov plc £nil (31 January 2007: £nil). During the period to 31 January 2008 goods and services were procured from IIRLimited totalling £nil (period to 31 January 2007: £5,293). IIR Limited is acompany which Anthony Foye, a non-executive director of YouGov plc, was adirector during the period. The purchase was made at arms length and on usualcommercial terms. As at 31 January 2008 YouGov plc owed IIR Limited £nil (31January 2007: £nil). During the period to 31 January 2008 YouGov plc provided research servicestotalling £762,500 (period to 31 January 2007: £nil) to Privero Capital, a USbased investment fund. A minority stake in this fund is partially owned byStephan Shakespeare and Balshore Investments (the family trust of NadhimZahawi's family), each of whom control 18.75% of the fund. At 31 January 2008Privero owed YouGov plc £145,256 (31 January 2007: £nil). During the period to 31 January 2008 sales were made to YouGovExecutiontotalling £4,300 (period to 31 January 2007: £138,961). At 31 January 2008YouGovExecution owed YouGov plc £51,240 (31 January 2007: £33,488). During the period to 31 January 2008 sales were made to YouGovCentaur totalling£17,100 (period to 31 January 2007: £nil). At 31 January 2008 YouGovCentaur owedYouGov plc £10,405 (31 January 2007: £nil). Trading between YouGov plc and subsidiary companies is excluded from the relatedparty note as this has been eliminated on consolidation. 13 EVENTS AFTER THE BALANCE SHEET DATE Research-driven hedge fund launch YouGov plc announced on 6 March 2008 that it has signed heads of agreement withNumis Corporation plc and FOUR Capital Partners Limited to form a joint venturehedge fund designed to exploit investment opportunities identified by YouGov'sproprietary, real-time consumer research capability. Board Change On 6 March 2008 Peter Kellner, President and Executive Director, is standingdown from the YouGov plc Board. Peter will remain as emeritus President and willcontinue working with the Company's media, political and other clients, on apart time basis. Additionally he will continue to represent YouGov in the mediaand at academic and other conferences. Employee Benefit Trust Under the terms of the psychonomics sale and purchase agreement, €500,000 ofYouGov shares was to be issued to employees as an incentive programme. Anemployee benefit trust will be created on to hold these shares until thedistribution date. This information is provided by RNS The company news service from the London Stock Exchange
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