Interim Results

YouGov PLC 31 March 2008 31 March 2008 YouGov plc Interim Results for the period ended 31 January 2008 Transforming YouGov - Acquisitions accelerate development Highlights Financial highlights â€¢ Strong focus on topline growth - turnover up 208% to Â£18.8 million in the six months to 31 January 2008 from Â£6.1 million in the same period in 2007 â€¢ Organic growth of 43% reflecting continued investment in technology, products and people â€¢ Adjusted Operating profit before amortisation and exceptional items up 87% from Â£2.3 million in the six months to 31 January 2007 to Â£4.3 million â€¢ Profit before tax up 30% from Â£2.3 million in the six months to 31 January 2007 to Â£3.0 million (Normalised Profit before tax increased 117% from Â£2.4 million to Â£5.2 million) â€¢ Successful Â£27.0 million placing (19,285,714 shares issued) and issue of 5,929,829 (Â£9.3 million) shares to support significant international expansion â€¢ Â£14 million of cash on balance sheet Operational highlights â€¢ Completed three transformational acquisitions providing us with enlarged global reach and sector expertise â€¢ Integration focussing on products, systems, financial reporting and people, is on track â€¢ Acquisitions allow us to accelerate YouGov's organic expansion and core product roll out â€¢ 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 â€¢ EMEA panel expanded considerably to 476,337 at 31 January 2008 against 199,047 at 31 January 2007 â€¢ North American panel now 1,034,437 against 832,111 at this point last year â€¢ Group marketing and branding of companies underway â€¢ Benefits of acquisitions coming through evidenced in cross border wins â€¢ Products rollout scheduled and underway â€¢ Investment in people with Group headcount increasing from 76 at 31 January 2007 to a Group headcount of 425 at 31 January 2008 â€¢ Confident of another successful year for the enlarged Group Commenting on the results Nadhim Zahawi, Co-Founder and CEO of YouGov plc said: 'At YouGov we are all very proud of how we have handled this period of growth and change, and the challenges these bring. Challenges include: growth and integration whilst maintaining profitability. We are continuing to build the platform to allow us to achieve our ambition to be one of the dominant players in this industry. 'The first half of the financial year has been a period of transformation for YouGov. While the good organic growth demonstrates the strength of our model and commitment to research excellence, the acquisitions announced in August have accelerated our international expansion considerably. As planned, the three companies have been largely integrated and the benefits are coming through as we rollout our core products. 'We are benefitting from the considerable investment we are making across the Group which, combined with the international opportunities we have identified, make us confident that 2008 will be another successful year. The second half has started well with the momentum seen in the first half continuing and trading in line with the Board's expectations.' Enquiries: YouGov plc Nadhim Zahawi / Katherine Lee 020 7012 6000 Financial Dynamics Charles Palmer / Nicola Biles 020 7831 3113 Nomad - Grant Thornton UK LLP Gerry Beaney / Colin Aaronson 020 7383 5100 Chief Executive's Statement Introduction YouGov's growth over the past six months has been significant with the acquisition of Zapera (Scandinavia), psychonomics (Germany) and the remaining stake in Polimetrix (USA) supplementing its good organic growth. We have been committed in our focus to bringing these two existing research groups and a US version of YouGov into our enlarged Group. Good headway has been made in integrating all acquired businesses and rolling out core products across the Group, such as BrandIndex and Omnibus. Cross border project wins are already demonstrating the success of this integration and product roll out. During the first half YouGov's growth continued both organically (43%) in EMEA and USA and through acquisitions (165%). This reflects the strength of our strategy of combining product development with geographical expansion and selective acquisition. Alongside the focus on growing turnover and profits, we have been actively investing in our core assets - our people and our infrastructure. A number of high calibre appointments have been made following the refocusing of the UK business, to create specialist sector verticals. This, coupled with the acquisitions of lower margin businesses has resulted in the expected softening of operating margins. However, this provides the business with a strong platform to continue to deliver growth. Staff numbers have increased from a Group headcount of 76 at 31 January 2007 to 425 at 31 January 2008. Recruitment has taken place across all business areas. Acquisitions On 27 July 2007 we announced the first in a series of transactions; our German expansion through the acquisition of the psychonomics Group AG. This was followed, post year end, with the acquisition of the remaining 68% stake in Polimetrix, our US associate and the acquisition of Zapera, a Group based in Scandinavia. These acquisitions were funded through a share placing, which our shareholders approved on 3 September 2007. These acquisitions will allow us to accelerate our growth and are consistent with the strategy to establish key geographic hubs to provide us with an enhanced global presence. All acquisitions will be earnings enhancing in the first full year. Integration plan is well underway, and integration will continue to be our focus in the second half of the financial year. Financial performance Turnover has increased by 208% to Â£18.8 million in the period (Â£6.1 million in the six months to 31 January 2007). Profit before tax rose 30% to Â£3.0 million (Â£2.3 million in the six months to 31 January 2007) and earnings per share increased from 2.6 pence to 3.1 pence. Adjusted earnings per share (after allowing for non cash adjustments) is 4.2 pence, an increase of 56% from 2.7 pence. Cash generated by operations was Â£1.8 million due to an extension in debtor days (Â£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 Â£'000 Â£'000 Â£'000 Profit before tax 2,977 2,316 5,605 Amortisation 1,308 58 - Share based payments 161 21 47 Imputed interest 165 - - Adjusted profit before tax 4,611 2,395 5,652 One off costs One off IFRS transition costs 48 - - Holiday pay accrual 242 8 47 Integration costs 266 - - Normalised profit before tax 5,167 2,403 5,699 Basic earnings per share 3.1 2.6* 6.2* attributable to equity holders of the company Adjusted earnings per share 4.2 2.7* 6.3* Normalised earnings per share 4.8 2.7* 6.4* * Restated assuming 5:1 share split on 10 April 2007 had been effective throughout the period. On 31 January 2008, YouGov Group's non current assets totaled Â£50.7 million (Â£5.4 million at 31 January 2007), this includes goodwill Â£30.5 million (Â£1.1 million at 31 January 2007), intangible assets of Â£16.2 million, and property, plant and equipment Â£2.2 million (Â£0.4 million at 31 January 2007) reflecting our ongoing investment in our infrastructure. Current assets total Â£29.0 million (Â£7.6 million at 31 January 2007) including Â£14 million in cash or on deposit (Â£4.3 million at 31 January 2007). Current liabilities stood at Â£15.0 million (Â£3.1 million at 31 January 2007). Overall net assets stood at Â£52.3 million (Â£9.5 million at 31 January 2007). The Directors are not recommending the payment of a dividend at this stage of the Company's development, which is consistent with statements made at the time of flotation and reflects the growth of the Company and the considerable opportunities still available to us. Review of operations YouGov continues to develop and strengthen its position as a global full-service online research agency with strong client relationships and product offerings generating a high level of repeat business. Europe, Middle East and Africa (EMEA) Each of the Group companies in EMEA has achieved strong organic growth driven by a combination of increasing the amount of research provided to current clients and the winning of new clients. Client numbers have increased from 306 at 31 January 2007 to 1,215 at 31 January 2008. The profile of our customer base includes household names across all sectors such as Google, Marks & Spencer, Costa and the European Union Commission. The core service offering focuses on data services (Omnibus and BrandIndex being the key lines from this suite) and consulting services utilising qualitative and quantitative research. We have already seen the initial successes of the integration process coming through as planned with collaborative cross border projects and the rollout of BrandIndex in Germany and Omnibus in the Middle East. The re-focusing of the UK business allows the Group to increase its value-add proposition as well as dovetail with the German business which has similar sector specialism. We are poised to launch BrandIndex in Scandinavia, in the first half of calendar 2008, which will cover the Nordic region. Headcount in the region has increased from 76 at 31 January 2007 to 399 at 31 January 2008. YouGovAlpha was created in August, building on YouGov's success in the financial services sector, and has rapidly established an offering of consulting services, buy-side and sell-side research and data services (Clothing Retail Index and Consumer Retail Index). The team has established traction within the investment community and we are excited by future opportunities. United States of America (USA) Sales growth in the USA continues to be strong. There were 63 clients at 31 January 2008. The volume of research provided to these clients over the period has risen as have average project values. The profile of the customer base is still skewed towards the higher education market (which is Polimetrix's heritage) but this is becoming less so as other markets such as healthcare are targeted. The product offering in the region now includes BrandIndex and Omnibus whilst the qualitative and quantitative offerings have also been significantly enhanced. There have been a number of new hires across all divisions and revenue generating headcount has increased from 21 at 31 January 2007 to 26 at 31 January 2008. Polimetrix has worked directly or indirectly for seven primary campaigns in the current USA presidential elections, and are engaged in a long term polling arrangement for the 2008 elections for a national organisation. Since the beginning of November 2007, Polimetrix has been working with The Economist to track public opinion on a variety of topics leading up to the presidential election on a weekly basis. Panel and product development We have continued to broaden our global capabilities through investment in existing panels and establishing new geographic and specialist panels. The panels continue to support the growth achieved by all Group companies. Panel sizes at 31 January 2008 are: â€¢ EMEA 476,337 (up from 199,047 at 31 January 2007) â€¢ USA 1,034,437 panellists (up from 832,111 at 31 January 2007) Cross border research All three acquisitions provide potential revenue synergies through increasing our global reach. We are already seeing the benefits of Group members working closely together demonstrated by winning our recent joint pitch for a long term project with the European Commission. The project will involve YouGov undertaking consumer research across seven member countries to develop a standard format for the disclosure of information of financial services products. This is the first time the EU Commission has engaged in consumer research within the financial services sector and is a hugely exciting project to be involved in. The project will include online quantitative research completed by YouGov complemented by offline qualitative research. YouGov was able to create a cost effective and innovative solution to the online element of the project by bringing in the complementary expertise and geographic coverage of Zapera and psychonomics. The success of the pitch was based on the deep sector knowledge of the YouGov Group teams, the online research methodology and the geographic coverage across Europe. This high profile project demonstrates the enhanced offering which YouGov is now able to provide clients. YouGov's ability to provide cross border research opens up an important and lucrative part of the research market that we could not access prior to the recent acquisitions. Market conditions According to Inside Research, the online research market continues to grow at a faster pace (23%) than the total world wide research market (4%). Worldwide online research spend increased to US$3.6bn in 2007 from US$2.9bn in 2006. The growth in online research for 2008 is forecast to be 21%, in line with 2007 growth. International Financial Reporting Standards (IFRS) YouGov adopted International Financial Reporting Standards effective from 1 August 2006 and these are our first reported interim results under the standards. Key changes are in the accounting for share based payments, reclassification of fixed assets, accounting for acquisitions, non-amortisation of goodwill, accounting for holiday pay, accounting for rent free periods and deferred tax. YouGovAlpha JV YouGov plc announced on 6 March 2008 that it has signed heads of agreement with Numis Corporation plc and FOUR Capital Partners Limited to form a joint venture hedge fund designed to exploit investment opportunities identified by YouGov's proprietary, real-time consumer research capability. This joint venture will build on the success of YouGovAlpha, the UK's only dedicated market research agency with services tailored to the specific needs of fund managers and investment professionals. The joint venture will build on YouGov's UK and US success. At a time when market conditions are difficult, the joint venture partners believe that the fund's distinctive approach will be attractive to a broad range of investors and plan to raise a first fund later in the year. Board Change On 6 March 2008 Peter Kellner stood down as President and Non-Executive Director from the YouGov plc Board. Peter will remain as emeritus President and will continue working with the Company's media, political and other clients, on a part time basis. Additionally he will continue to represent YouGov in the media and at academic and other conferences. Current trading and outlook The enlarged Group has delivered a strong performance during its first six months of trading. We are confident that the investments made and the planning undertaken in the first part of the year will allow us to continue the momentum into the second half, through additional integration activities. The initial rollout of YouGov products is on track and the three businesses are delivering the expected benefits and synergies. The business continues to trade in line with our expectations and the Board is confident that 2008 will be a successful year both financially and operationally. Our strategy remains focused on innovation, investment and internationalisation with recently acquired businesses accelerating this strategy and providing YouGov with international scale in key market research territories. The first six months has been a period of considerable change with many new people joining the YouGov team. While this has lead to a number of associated execution challenges, the integration is progressing well and there continue to be many exciting opportunities that are being pursued by our immensely talented teams. I take this opportunity on behalf of the Board to thank all of our teams for their hard work and I look forward to our continued success in the remainder of the year to July 2008 and beyond. I would also like to thank our clients, our shareholders and our panel members for their contribution to the Company's success. The interim report was approved by the Board on 31 March 2008. Nadhim Zahawi Chief Executive Officer YouGov plc Independent Review report to YouGov plc Introduction We have been engaged by the company to review the condensed set of financial statements in the half- yearly financial report for the six months ended 31 January 2008 which comprises the condensed consolidated interim income statement, the condensed consolidated interim balance sheet, the condensed consolidated interim statement of changes in equity, the condensed consolidated interim cashflow statement and related explanatory notes. We have read the other information contained in the interim report which comprises only the Chairman's report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. As disclosed in note 1, the next annual financial statements of the Group will be prepared in accordance with International Financial Reporting Standards as adopted by the European Union. This interim report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and the requirements of IFRS 1 'First-time Adoption of International Financial Reporting Standards' relevant to interim reports. The accounting policies are consistent with those that the directors intend to use in the next annual financial statements. Our Responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union. GRANT THORNTON UK LLP CHARTERED ACCOUNTANTS London 31 March 2008 The maintenance and integrity of the YouGov website is the responsibility of the directors: the interim review does not involve consideration of these matters and, accordingly, the company's reporting accountants accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of the interim report differ from legislation in other jurisdictions. YOUGOV PLC CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT For the period ended 31 January 2008 Note 6 months to 6 months 12 months 31/1/08 to 31/1/07 to 31/7/07 Â£'000 Â£'000 Â£'000 Continuing operations Revenue 3 18,843 6,083 14,303 Cost of sales (3,197) (1,215) (2,647) Gross profit 15,646 4,868 11,656 Administrative expenses (11,380) (2,586) (6,083) Group operating profit before amortisation and 4,266 2,282 5,573 exceptional items Amortisation of intangibles (16) (61) (15) Amortisation of intangibles identified on (1,292) - - acquisition Group operating profit 3 2,958 2,221 5,558 Finance income 271 110 188 Finance costs (52) (1) (2) Imputed finance cost (165) - - Share of post tax loss in joint ventures (35) (14) (139) Profit before taxation 2,977 2,316 5,605 Taxation 9 255 (243) (613) Profit for the year 3,232 2,073 4,992 Attributable to: Equity holders of the parent company 2,731 1,749 4,198 Minority interests 501 324 794 3,232 2,073 4,992 Earnings per share Basic earnings per share attributable to equity 7 3.1 2.6* 6.2* holders of the company Diluted earnings per share attributable to equity 2.8 2.5* 5.9* holders of the company Adjusted earnings per share attributable to equity 4.2 2.7* 6.3* holders of the company * Restated assuming 5:1 share split on 10 April 2007 had been effective throughout the period. The accompanying accounting policies and notes form an integral part of these financial statements. YOUGOV PLC CONDENSED CONSOLIDATED INTERIM BALANCE SHEET For the period ended 31 January 2008 31/01/2008 31/01/2007 31/07/2007 Note Â£'000 Â£'000 Â£'000 Assets Non Current Assets Goodwill 30,538 1,068 1,090 Intangible assets 6 16,174 22 343 Property, plant and equipment 5 2,166 350 499 Investment accounted for using the equity method 29 3,975 4,539 Deferred tax assets 9 1,747 9 20 50,654 5,424 6,491 Current Assets Inventories 2,521 - - Trade and other receivables 11,612 3,296 5,693 Other current assets 816 - - Cash and cash equivalents 14,049 4,287 4,061 Total current assets 28,998 7,583 9,754 Total assets 79,652 13,007 16,245 Liabilities Current liabilities Lease liabilities 21 29 24 Deferred consideration 4,157 - - Trade and other payables 10,501 2,336 3,470 Short term borrowings 104 - - Current tax liability 250 752 147 Total current liabilities 15,033 3,117 3,641 Net current assets / liabilities 13,965 4,466 6,113 Non current liabilities Deferred consideration 3,652 347 334 Long term borrowings 2,305 - - Deferred tax liability 9 6,353 19 56 Total non current liabilities 12,310 366 390 Total liabilities 27,343 3,483 4,031 Total net assets 3 52,309 9,524 12,214 Equity Issued share capital 4 190 134 135 Share premium 29,158 2,987 3,026 Merger reserve 9,240 - - Deferred consideration reserve 1,085 - - Foreign exchange reserve 29 - - Profit and loss reserve 10,646 5,373 7,593 Total parent shareholder's equity 50,348 8,494 10,754 Minority interests in equity 1,961 1,030 1,460 Total equity 52,309 9,524 12,214 Katherine Lee, Chief Financial Officer YOUGOV PLC CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY For the period ended 31 January 2008 Profit Share Foreign Deferred and Share premium exchange Merger consideration loss Minority Total capital account reserve reserve reserve account TOTAL Interest Equity Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Balance at 1 August 2006 134 2,943 - - - 3,735 6,812 743 7,555 Changes in equity for first half 2006/07 Net income recognised directly in equity Expenses offset against share premium - (7) - - - - (7) - (7) Foreign exchange difference on the retranslation of overseas entities - - - - - (130) (130) (37) (167) Profit for the period - - - - - 1,749 1,749 324 2,073 Total recognised income and expense for the period - (7) - - - 1,619 1,612 287 1,899 Issue of share capital for exercise of share options - 51 - - - - 51 - 51 Issue of share options - - - - - 19 19 - 19 Balance at 31 January 2007 134 2,987 - - - 5,373 8,494 1,030 9,524 Changes in equity for second half 2006/07 Net income recognised directly in equity Expenses offset against share premium - (12) - - - - (12) - (12) Foreign exchange difference on the retranslation of overseas entities - - - - - (230) (230) (40) (270) Profit for the period - - - - - 2,449 2,449 470 2,919 Total recognised income and expense for the period - (12) - - - 2,219 2,207 430 2,637 Dividends - - - - - (12) (12) - (12) Issue of share capital through exercise of share options 1 51 - - - - 52 - 52 Issue of share options - - - - - 13 13 - 13 Balance at 31 July 2007 135 3,026 - - - 7,593 10,754 1,460 12,214 Profit Share Foreign Deferred and Share premium exchange Merger consideration loss Minority Total capital account reserve reserve reserve account TOTAL Interest Equity Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Changes in equity for first half 2007/08 Balance at 1 August 2007 135 3,026 - - - 7,593 10,754 1,460 12,214 Net income recognised directly in equity Expenses offset against share premium - (1,068) - - - - (1,068) - (1,068) Foreign exchange difference on the retranslation of overseas entities - - 29 - - - 29 - 29 Profit for the period - - - - - 2,731 2,731 501 3,232 Total recognised income and expense for the period - (1,068) 29 - - 2,731 1,692 501 2,193 Issue of share capital through exercise of share options 4 239 - - - - 243 - 243 Issue of share capital through fundraising 39 26,961 - - - - 27,000 - 27,000 Issue of share capital through allotment of shares in satisfaction of acquisition consideration 12 - - 9,240 - - 9,252 - 9,252 Deferred consideration as part consideration for acquisition - - - - 1,085 - 1,085 - 1,085 Issue of share options - - - - - 322 322 - 322 Balance at 31 January 2008 190 29,158 29 9,240 1,085 10,646 50,348 1,961 52,309 YOUGOV PLC CONDENSED CONSOLIDATED INTERIM CASHFLOW STATEMENT For the period ended 31 January 2008 6 months 6 months 12 months to to to Note 31/1/08 31/1/07 31/7/07 Â£'000 Â£'000 Â£'000 Cash flows from operating activities Profit after taxation 3,232 2,073 4,992 Adjustments for: Depreciation 367 37 111 Amortisation 1,308 61 15 Foreign exchange gain (36) (112) - Share option expense 166 - - Taxation expense recorded in profit and loss (270) 243 613 Loan revaluation (42) - - Investment income (51) (113) (232) (Increase)/decrease in trade and other receivables (3,930) 459 (2,000) Increase in trade and other payables 1,071 89 1,307 Cash generated from operations 1,815 2,737 4,806 Interest paid (220) (1) (2) Income taxes paid (554) - (960) Net cash generated from operating activities 1,041 2,736 3,844 Cashflow from investing activities Acquisition of subsidiaries (net of cash acquired) (15,765) - (681) Acquisition of associate - (3,889) (3,727) Acquisition of joint venture - - (34) Proceeds from sale of property, plant and equipment 22 - - Purchase of property, plant and equipment (1,630) (242) (467) Purchase of intangible assets (544) (22) (383) Interest received 271 114 234 Net cash used in investing activities (17,646) (4,039) (5,058) Cash flows from financing activities Proceeds from issue of share capital 26,211 44 84 Repayment of debt (2) - - Net cash used in financing activities 26,209 44 84 Net increase / (decrease) in cash, cash equivalents and overdrafts 9,604 (1,259) (1,130) Cash and cash equivalents at beginning of year 4,061 5,546 5,546 Exchange gain on cash and cash equivalents 384 - (355) Cash, cash equivalents and overdrafts at end of year 14,049 4,287 4,061 YOUGOV PLC NOTES TO THE INTERIM REPORT For the period ended 31 January 2008 1 PRINCIPAL ACCOUNTING POLICIES Nature of operations YouGov plc and subsidiaries' ('the Group') principal activity is the provision of market research. YouGov plc is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The address of YouGov plc's registered office is 50 Featherstone Street, London, United Kingdom. YouGov plc's shares are listed on the Alternative Investment Market of the London Stock Exchange. YouGov plc's consolidated interim financial statements are presented in Pounds Sterling (Â£), which is also the functional currency of the parent company. These consolidated condensed interim financial statements have been approved for issue by the Board of Directors on 28 March 2008. The financial information set out in this interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The figures for the year ended 31 July 2006 have been extracted from the statutory financial statements which have been filed with the Registrar of Companies. The auditors' report on those financial statements was unqualified and did not contain a statement under Section 237(2) of the Companies Act 1985. Basis of preparation These interim condensed consolidated financial statements are for the six months ended 31 January 2008. They have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and the requirements of International Financial Reporting Standards 1 'First-time Adoption of International Financial Reporting Standards' relevant to interim reports. They have been prepared on this basis as they will form part of the period covered by the Group's first IFRS financial statements for the year ended 31 July 2008. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements for the year ended 31 July 2007. These condensed consolidated interim financial statements (the interim financial statements) have been prepared in accordance with the accounting policies set out below which are based on the recognition and measurement principles of IFRS in issue and as adopted by the European Union (EU) and are effective at 31 July 2008 or are expected to be adopted and effective at 31 July 2008, our first annual reporting date at which we are required to use IFRS accounting standards adopted by the EU. The financial statements have been prepared under the historical cost convention. The policies have changed from the previous year when the financial statements were prepared under applicable United Kingdom Generally Accepted Accounting Principles (UK GAAP). The comparative information has been restated in accordance with IFRS. The changes to accounting policies are explained in note 9 with the transition statement which shows the reconciliation of opening balances. The date of transition to IFRS was 1 August 2006. The group has taken advantage of certain exemptions available under IFRS1 First-time adoption of International Financial Reporting Standards. The exemptions used are explained under the respective accounting policy. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements. Basis of consolidation The group financial statements consolidate those of the company and all of its subsidiary undertakings drawn up to 31 January 2008. Subsidiaries are entities controlled by the Group. Control is achieved where the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The group obtains and exercises control through voting rights. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the group. Acquisitions of subsidiaries are dealt with by the purchase method. The purchase method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with the group accounting policies. Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition. The group applies a policy of treating transactions with minority interests as transactions with parties external to the group. Disposals to minority interests result in gains and losses for the group that are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary. Business combinations completed prior to date of transition to IFRS The group has elected not to apply IFRS 3 Business Combinations retrospectively to business combinations prior to the date of transition at 1 August 2006. Accordingly the classification of the combination (acquisition) remains unchanged from that used under UK GAAP. Assets and liabilities are recognised at date of transition if they would be recognised under IFRS, and are measured using their UK GAAP carrying amount immediately post-acquisition as deemed cost under IFRS, unless IFRS requires fair value measurement. Deferred tax and minority interest are adjusted for the impact of any consequential adjustments after taking advantage of the transitional provisions. The transitional provisions used for past business combinations apply equally to past acquisitions of interests in associates and joint ventures. Associates and joint ventures Entities whose economic activities are controlled jointly by the group and by other ventures independent of the group are accounted for using the equity method. Associates are those entities over which the group has significant influence (defined as the power to participate in the financial and operating decisions of the investee but not control or joint control over those policies) but which are neither subsidiaries nor interests in joint ventures. The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, which under investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group's share of net assets of the associate less any impairment in the value of individual investments. However, when the group's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the investor resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised. Unrealised gains on transactions between the group and its associates are eliminated to the extent of the group's interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of associates have been adjusted where necessary to ensure consistency with the accounting policies adopted by the group. Goodwill Goodwill representing the excess of the cost of acquisition over the fair value of the group's share of the identifiable net assets acquired, is capitalised and reviewed annually for impairment. Goodwill is carried at cost less accumulated impairment losses. Negative goodwill is recognised immediately after acquisition in the income statement. Goodwill written off to reserves prior to date of transition to IFRS remains in reserves. There is no re-instatement of goodwill that was amortised prior to transition to IFRS. Goodwill previously written off to reserves is not written back to profit or loss on subsequent disposal. Impairment reviews are performed annually. Revenue Revenue is measured by reference to the fair value of consideration received or receivable by the group for services provided, excluding VAT and trade discounts. Sale of products Revenue from the sale of goods is recognised when all the following conditions have been satisfied: â€¢ the group has transferred to the buyer the significant risks and rewards of ownership of the goods which is generally when projects have been delivered or access passwords have been sent to the customer â€¢ the group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold which is generally when a project is delivered â€¢ the amount of revenue can be measured reliably â€¢ it is probable that the economic benefits associated with the transaction will flow to the group, and â€¢ the costs incurred or to be incurred in respect of the transaction can be measured reliably. Rendering of services When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the balance sheet date. The outcome of the transaction is deemed to be able to be estimated reliably when all the following conditions are satisfied: â€¢ the amount of revenue can be measured reliably, usually based on a status of project completion based on each project manager's estimates and time records, â€¢ it is probable that the economic benefits associated with the transaction will flow to the entity, and â€¢ the stage of completion of the transaction at the balance sheet date can be measured reliably and is estimated by reference to the number of hours assigned and completed on an individual project. Panel incentive costs The company invites Polling Club members to fill out surveys for a cash or points based incentive. Although these amounts are not paid until a predetermined target value has accrued on a polling club member's account, an assessment of incentives likely to be paid (present obligation) is made based upon the result of past panellist behaviour and is recognised as a cost of sale in the period in which the service is provided where settlement is expected to result as an outflow of resources (payment). Interest Interest is recognised using the effective interest method which calculates the amortised cost of a financial asset and allocates the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Dividends Dividends are recognised when the shareholders right to receive payment is established. Exceptional items Items are highlighted as exceptional in the income statement when separate disclosure is considered helpful in understanding the underlying performance of the business. Property, plant and equipment and depreciation Property, plant and equipment is stated at cost or valuation, net of depreciation and any provision for impairment. No depreciation is charged during the period of construction. Leasehold property is included in property, plant and equipment only where it is held under a finance lease. Borrowing costs on property, plant and equipment under construction are capitalised during the period of construction based on specific funds borrowed. Depreciation is calculated to write down the cost less estimated residual value of all tangible fixed assets by annual installments over their estimated useful economic lives. Asset Depreciation rate Freehold property 50 years Leasehold property and improvements Straight line over the life of the lease Fixtures and fittings 25% on a reducing balance Computer equipment 33% per annum straight line Motor vehicles 25% or the life of the lease Intangible assets Intangible assets represent identifiable non-monetary assets without physical substance. Intangible assets are valued at either the directly attributable costs or using valuation methods such as discounted cashflows and replacement cost in the case of acquired intangible assets. The Directors estimate the useful economic life of each asset and use these estimates in applying amortisation rates. The Directors periodically review economic useful life estimates. Directors conduct an impairment review of intangible assets where necessary. Where an impairment arises, losses are recognised in the income statement. Panel acquisition costs Panel acquisition costs reflect the direct cost of recruiting new panel members. Only the proportion of expenditure that contributed to growth of the panel is capitalised which is based on management estimates of panel churn. Amortisation is charged to write off the panel acquisition costs over a 5 year period, this being the Director's estimate of the average active life of a panellist. Recognition criteria include validity testing to ensure that specific and measurable costs relate to a completed enhancement of the panel which can be fruitfully utilised by the business and generate future probably economic benefits. Panels acquired through business combinations are recognised at an independently valued fair value. Software development Where software is developed internally, directly attributable costs including employee costs incurred on software development along with an appropriate portion of relevant overheads. The costs of internally generated software developments are recognised as intangible assets and are subsequently measured in reference to specific expenditure. However, until completion of the development project, the assets are subject to impairment testing only. Amortisation commences upon completion of the asset, and is shown within amortisation of intangibles. Careful judgement by the directors is applied when deciding whether the recognition requirements for development costs have been met. Criteria include the technological feasibility of the software, and that it is going to be of beneficial use to the business, thereby generating future economic benefits. Adequate reporting procedures exist to capture the expenditure. Judgements are based on the information available at each balance sheet date. In addition, all internal activities related to the research and development of new software products are continuously monitored by the directors. Software acquired through acquisition is independently fair valued. Customer Contract and Lists Where a customer contract or list is acquired as part of a business combination the cost of the asset is recognised at its fair value to the Group at the date of acquisition. The fair value is calculated by an independent expert. Customer contracts and lists are amortised over a useful economic life based on Directors' estimates. Patents and trademarks Patents and trademarks acquired to protect the YouGov brand and it's products are included at cost and are not amortised, as the trademarks are infinite in their longevity. The patents are subject to an annual impairment review. Order backlog Due to the nature of their businesses, Polimetrix, Zapera and psychonomics all tend to have a certain level of secured orders (order backlog) or quotations that have been accepted, and are awaiting commencement, completion or delivery. The fair value of these assets has been calculated by discounting the present value of the future anticipated cash inflow at the time of acquisition. Research and development Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in which it is incurred. Development costs incurred on specific projects are capitalised when all the following conditions are satisfied: â€¢ completion of the intangible asset is technically feasible so that it will be available for use or sale â€¢ the group intends to complete the intangible asset and use or sell it â€¢ the group has the ability to use or sell the intangible asset â€¢ the intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits â€¢ there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset, and â€¢ the expenditure attributable to the intangible asset during its development can be measured reliably. Development costs not meeting the criteria for capitalisation are expensed as incurred. The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management. Assets acquired as part of a business combination In accordance with IFRS 3 Business Combinations, an intangible asset acquired in a business combination is deemed to have a cost to the group of its fair value at the acquisition date. The fair value of the intangible asset reflects market expectations about the probability that the future economic benefits embodied in the asset will flow to the group. Where an intangible asset might be separable, but only together with a related tangible or intangible asset, the group of assets is recognised as a single asset separately from goodwill where the individual fair values of the assets in the group are not reliably measurable. Where the individual fair value of the complementary assets are reliably measurable, the group recognises them as a single asset provided the individual assets have similar useful lives. Intangible asset Amortisation period Consumer panel 5 years Software development 5 years Customer relationships 10 - 11 years Trademarks 5 - 15 years Order backlog 1 year Impairment testing of goodwill, other intangible assets and property, plant and equipment For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash- generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the group at which management monitors the related cash flows. Goodwill, other individual assets or cash-generating units that include goodwill, other intangible assets with an indefinite useful life, and those intangible assets not yet available for use are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation. Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. Leased assets In accordance with IAS 17, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is recognised at the time of inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability. Leases of land and buildings are split into land and buildings elements according to the relative fair values of the leasehold interests at the date of entering into the lease agreement. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to the income statement over the period of the lease. All other leases are regarded as operating leases and the payments made under them are charged to the income statement on a straight line basis over the lease term. Lease incentives are spread over the term of the lease. Taxation Current tax is the tax currently payable based on taxable profit for the year. Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the group are assessed for recognition as deferred tax assets. Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity. Financial assets Financial assets are divided into the following categories: loans and receivables; financial assets at fair value through profit or loss; available-for-sale financial assets; and held-to-maturity investments. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which they were acquired. The designation of financial assets is re-evaluated at every reporting date at which a choice of classification or accounting treatment is available. All financial assets are recognised when the group becomes a party to the contractual provisions of the instrument. Financial assets other than those categorised as at fair value through profit or loss are recognised at fair value plus transaction costs. Financial assets categorised as at fair value through profit or loss are recognised initially at fair value with transaction costs expensed through the income statement. Financial assets at fair value through profit or loss include financial assets that are either classified as held for trading or are designated by the entity as at fair value through profit or loss upon initial recognition. Subsequent to initial recognition, the financial assets included in this category are measured at fair value with changes in fair value recognised in the income statement. Financial assets originally designated as financial assets at fair value through profit or loss may not be reclassified. Financial assets are designated as at fair value through profit or loss where they are managed and their performance evaluated on a fair value basis in accordance with the group's documented risk management strategy. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Trade receivables and other financial assets which are classified as loans and receivables are classified as loans and receivables. Loans and receivables are measured subsequent to initial recognition at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in the income statement. Provision against trade receivables is made when there is objective evidence that the group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows. An assessment for impairment is undertaken at least at each balance sheet date. Regular purchases and sales are accounted for on settlement date. Where an entity uses settlement date accounting for an asset that is subsequently measured at cost or amortised cost, the asset is recognised initially at its fair value on the trade date. A financial asset is derecognised only where the contractual rights to the cash flows from the asset expire or the financial asset is transferred and that transfer qualifies for derecognition. A financial asset is transferred if the contractual rights to receive the cash flows of the asset have been transferred or the group retains the contractual rights to receive the cash flows of the asset but assumes a contractual obligation to pay the cash flows to one or more recipients. A financial asset that is transferred qualifies for derecognition if the group transfers substantially all the risks and rewards of ownership of the asset, or if the group neither retains nor transfers substantially all the risks and rewards if ownership but does transfer control of that asset. Financial liabilities Financial liabilities are obligations to pay cash or other financial assets and are recognised when the group becomes a party to the contractual provisions of the instrument. Financial liabilities categorised as at fair value through profit or loss are recorded initially at fair value, all transaction costs are recognised immediately in the income statement. All other financial liabilities are recorded initially at fair value, net of direct issue costs. Financial liabilities categorised as at fair value through profit or loss are remeasured at each reporting date at fair value, with changes in fair value being recognised in the income statement. All other financial liabilities are recorded at amortised cost using the effective interest method, with interest-related charges recognised as an expense in finance cost in the income statement. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are charged to the income statement on an accruals basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Financial liabilities are categorised as at fair value through profit or loss where they are classified as held-for- trading or designated as at fair value through profit or loss on initial recognition. Financial liabilities are designated as at fair value through profit or loss where they are managed and their performance evaluated on a fair value basis in accordance with the group's documented risk management. A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. In addition, bank overdrafts which are repayable on demand are included. Equity Equity comprises the following: â€¢ Share capital represents the nominal value of equity shares. â€¢ Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue. â€¢ Merger reserve represents the excess over nominal value of the fair value of consideration received for equity shares issued/allotted directly to acquire another entity meeting the specific requirements of section 131 of the Companies Act 1985. The conditions of the relief include: o Securing at least 90% of the nominal value of equity of another company o The arrangement provides for allotment of equity shares in the issuing company â€¢ Deferred consideration reserve represents the total value of equity that may be issued should specific earn-out agreements be achieved. â€¢ Foreign exchange reserve represents the differences arising from translation of investments in overseas subsidiaries. â€¢ Profit and loss reserve represents retained profits. Foreign currencies Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the profit or loss in the period in which they arise. Exchange differences on non-monetary items are recognised in the statement of recognised income and expenses to the extent that they relate to a gain or loss on that non-monetary item taken to the statement of recognised income and expenses, otherwise such gains and losses are recognised in the income statement. The assets and liabilities in the financial statements of foreign subsidiaries and associates and related goodwill are translated at the rate of exchange ruling at the balance sheet date. Income and expenses are translated at the actual rate. The exchange differences arising from the retranslation of the opening net investment in subsidiaries and associates are taken directly to the 'Foreign currency reserve' in equity. Employee benefits Equity settled share-based payment All share-based payment arrangements granted after 7 November 2002 that had not vested prior to 1 August 2006 are recognised in the financial statements. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions. All equity-settled share-based payments are ultimately recognised as an expense in the income statement with a corresponding credit to 'other reserve'. If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share premium. Contingent consideration Future anticipated payments to vendors in respect of earnouts are based on the directors' best estimates of future obligations, which are dependent on the future performance of the interests acquired and assume the operating companies improve profits in line with directors' estimates. When consideration payable is deferred, the fair value of the consideration is obtained by discounting to present value the amounts expected to be payable in the future at a rate equivalent to a UK 10 year treasury gilt. Imputed interest When the outflow of cash or cash equivalents is deferred, and the arrangement constitutes a financing transaction, the fair value of the consideration is the present value of all future payments determined using an imputed rate of interest. The imputed rate of interest used is the UK 10 year treasury gilt. The difference between the present value of all future payments and the nominal amount of the consideration is recognised as an interest charge. Critical accounting estimates and judgements Estimates and judgements are evaluated on a regular basis and are based on historical experience and other factors, such as expectations of future events that are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. These estimates, by definition, will rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Goodwill The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy. The recoverable amount of cash-generating units has been determined based on discounted future cashflows. These calculations require estimates to be made. Income taxes The Group is subject to income taxes in various jurisdictions. Judgement is required in determining the worldwide provision for income taxes. There are many transactions/calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome is different to what is initially recorded, such differences will impact the income tax and deferred tax provisions. Intangible assets The Group is required to identify and assess the useful life of intangible assets and determine if there is a finite or indefinite life. Judgement is required in determining if an intangible asset has a finite life and the extent of this finite life in order to calculate the amortisation charge on the asset. The Group tests at each reporting date whether intangible assets have suffered any indicators of impairment, in accordance with the accounting policy. The recoverable amount of cash-generating units have been determined based on discounted future cashflows. These calculations require estimates to be made. Where there is no method of valuation for an intangible asset, management will make use of a valuation technique to determine the value of an intangible if there is no evidence of a market value. In doing so certain assumptions and estimates will be made. Share based payments The Group is required to measure the fair value of equity settled transactions with employees at the grant date of the equity instruments. The fair value is determined by using the Black-Scholes method. This requires assumptions regarding interest free rates, share price volatility and expected life of an employee share option. The volatility of the Company's share price on each date of grant was calculated as the average of volatilities of share prices of companies in the Peer Group on the corresponding dates. Deferred taxation Judgement is required by management in determining whether the Group should recognise a deferred tax asset. Management considered whether there is sufficient certainty its tax losses available to carry forward would ultimately be offset against future earnings, this judgement impacts on the degree to which deferred tax assets are recognised. Contingent consideration As part of the acquisitions, contingent consideration is payable to selling shareholders groups based on the future performance of the businesses. Judgement is required in estimating the magnitude of contingent consideration and the likelihood of payment. 2. SEASONAL FLUCTUATIONS The market research industry is subject to seasonal fluctuations, with peak demand in the second half of the Group's financial year. For the six months to 31 January 2008 the level of sales represented 132% of the annual level of research sales in the year ended 31 July 2007. For the 6 months ended 31 January 2007 the level of sales represented 43% of the annual level of research sales in the year ended 31 July 2007. 3 SEGMENTAL ANALYSIS The group only undertakes one class of business, that of market research. The group supplies two geographical segments that are deemed significant, EMEA and USA. Turnover by origin and destination are not materially different. Revenue 6 months 6 months 12 months to 31/1/08 to 31/1/07 to 31/7/07 Â£'000 Â£'000 Â£'000 EMEA 17,785 6,083 14,303 USA 1,058 - - Group turnover 18,843 6,083 14,303 Segment operating profit 6 months to 6 months 12 months 31/1/08 to 31/1/07 to 31/7/07 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'000 EMEA 37,703 5,668 8,487 USA 14,606 3,856 3,727 Group net assets 52,309 9,524 12,214 All of the segment revenue reported above is from external customers. Segment profit represents the profit earned by each segment before interest tax and minority interest, and without allocation of central administration costs and directors' salaries. 4 SHARE ISSUE Shares issued and authorised for the period to 31 January 2008 can be summarised as follows: Number Â£'000 6 months to 31 January 2008 At 1 August 2007 67,422,570 135 Issue of shares 27,411,983 55 At 31 January 2008 94,834,553 190 6 months to 31 January 2007* At 1 August 2006 66,847,785* 134 Issue of shares 283,455* 0 At 31 January 2007 67,131,240* 134 Year to 31 July 2007 At 1 August 2006 66,847,785 134 Issue of shares 574,785 1 At 31 July 2007 67,422,570 135 * Restated assuming 5:1 share split on 10 April 2007 had been effective throughout the period. During the period to 31 January 2008, 25,215,543 shares were issued to satisfy consideration for the acquisitions of Polimetrix, psychonomics and Zapera. 2,196,440 shares were also issued to satisfy share options previously granted under YouGov plc's employee share option scheme. The shares relating to the acquisitions were issued in three tranches, on 3, 6 and 10 of September 2007. Of the total issue, 19,285,714 shares yielded Â£26.2m in cash (net of expenses) and 5,929,829 shares were issued as acquisition shares. The issues increased shareholders equity by Â£36.3m. The weighted average share price was Â£1.44. The 2,196,440 shares issued to satisfy share options yielded Â£0.2m in cash and increased shareholders equity by Â£0.2m. The weighted average share price was Â£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 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Carrying amount at 1 - 175 132 159 33 499 August 2007 Additions 942 30 227 268 - 1,467 Acquired through - - 91 476 567 acquisitions Disposals - - - - - - Depreciation - (21) (130) (211) (5) (367) Reclassified - - - - - - Carrying amount at 31 942 184 320 692 28 2,166 January 2008 Carrying amount at 1 - 41 60 36 18 155 August 2006 Additions - 5 106 103 28 242 Acquired through - - - - - - acquisitions Disposals - - (10) - - (10) Depreciation - (8) (15) (8) (6) (37) Reclassified - (18) - 18 - - Carrying amount at 31 - 20 141 149 40 350 January 2007 Carrying amount at 1 - 41 60 36 18 155 August 2006 Additions - 189 114 137 27 467 Acquired through - - - - - - acquisitions Disposals - (11) - (1) - (12) Depreciation - (26) (42) (31) (12) (111) Reclassified - (18) - 18 - - Carrying amount at 31 - 175 132 159 33 499 July 2007 6 ADDITIONS AND DISPOSALS OF INTANGIBLE ASSETS The following table shows the significant additions and disposals of intangible assets. Customer contracts & Trade Order Research and Panel Software lists marks backlog development Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Carrying amount at 115 200 - 28 - - 343 1 August 2007 Additions 165 943 - 7 - 286 1,401 Acquired through 5,301 - 4,621 5,430 386 - 15,738 acquisitions Disposals - - - - - - - Amortisation (548) (64) (216) (287) (193) - (1,308) Carrying amount at 5,033 1,079 4,405 5,178 193 286 16,174 31 January 2008 - - - Carrying amount at - 3 - - - - 3 1 August 2006 Additions - 22 - - - - 22 Acquired through - - - - - - - acquisitions Disposals - - - - - - - Amortisation - (3) - (3) Carrying amount at - 22 - - - - 22 31 January 2007 - - - Carrying amount at - 3 - - - - 3 1 August 2006 Additions 124 203 - 28 - - 355 Acquired through - - - - - - - acquisitions Disposals - - - - Amortisation (9) (6) - - - - (15) Carrying amount at 115 200 - 28 - - 343 31 July 2007 7 EARNINGS PER SHARE The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. Shares held in employee share trusts are treated as cancelled for the purposes of this calculation. The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares. The adjusted earnings per share removes the effect of the amortisation of intangible assets, share based payments and imputed interest and any related tax effects from the calculation as follows: 6 months 6 months 12 months to 31/1/08 to 31/1/07 to 31/7/07 Â£'000 Â£'000 Â£'000 Earnings 2,731 1,749 4,198 Add: amortisation of intangible assets 1,308 61 15 Add: share based payments 161 21 47 Add: imputed interest 165 - - Tax effect of the above adjustments (645) (6) (14) Adjusted retained profit 3,720 1,825 4,246 Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below. 6 months 6 months 12 months to 31/1/08 to 31/1/07 to 31/7/07 Number of shares Weighted average number of shares during the period: ('000 shares) - Basic 88,501 66,859* 67,351 - Dilutive effect of share options 8,959 3,831* 3,462 - Diluted 97,460 70,690* 70,813 Basic earnings per share (in pence) 3.1 2.6 6.2 Adjusted basic earnings per share (in pence) 4.2 2.7 6.3 Diluted earnings per share (in pence) 2.8 2.5 5.9 Adjusted diluted earnings per share (in pence) 3.8 2.6 6.0 The adjustments have the following effect: Basic earnings per share 3.1 2.6 6.2 Amortisation of intangible assets 1.5 0.1 - Share based payments 0.2 - 0.1 Imputed interest 0.2 - - Tax effect of the above adjustments (0.8) - - Adjusted earnings per share 4.2 2.7 6.3 Diluted earnings per share 2.8 2.5 5.9 Amortisation of intangible assets 1.3 0.1 - Share based payments 0.2 - 0.1 Imputed interest 0.2 - - Tax effect of the above adjustments (0.7) - - Adjusted diluted earnings per share 3.8 2.6 6.0 * Restated for 5:1 share split on 10 April 2007. 8 BUSINESS COMBINATIONS Acquisition of psychonomics The acquisition of 100% of the issued share capital of psychonomics AG (' psychonomics') was announced on 7 August 2007. psychonomics is a leading market research agency incorporated in 1992 and has its head office in Cologne with offices in Vienna and Berlin. The consideration payable for the entire issued share capital of psychonomics was Â£17.5m and was satisfied by the issue of shares to the value of Â£3.5m (priced at the average mid-market closing price over the 30 day period to 31 August 2007 being the final trading day prior to shareholder approval), with the balance at completion being paid in cash, of Â£10.7m. The psychonomics sellers are entitled to be paid the pre completion profits of psychonomics for the current year calculated in proportion to the number of months elapsed prior to completion. Such amount is capped at Â£1m. An earn-out has also been put in place for the 2 financial years ending 31 December 2008. Under this earn-out, based on financial targets being met, a maximum of a further Â£1.9m will be payable, either in cash or shares (priced at the average price of trading over the 30 dealing day period following publication of the audited financial statements for the financial year ending 31 December 2008). In addition to the purchase price payable, shares to the value of â‚¬500,000 will be issued for a psychonomics employee incentivisation programme. This payment is not presently included in the financial statements as the shares have not been issued. Professional fees of Â£25k for due diligence, and Â£387k for other professional fees were incurred. The allocation of the purchase price to the assets and liabilities of psychonomics was only provisionally completed at 31 January 2008. The amounts provisionally recognised for each class of psychonomics assets, liabilities, and contingent liabilities recognised at the acquisition date are as follows: Acquiree's carrying Provisional fair Fair value amount before Value combination Adjustments Â£'000 Â£'000 Â£'000 Net assets acquired: Goodwill 15 - 15 Intangible assets 47 - 47 Property, plant and equipment 423 - 423 Work in progress 2,367 - 2,367 Trade and other receivables 1,881 - 1,881 Cash and cash equivalents 355 - 355 Other current assets 139 - 139 Trade and other payables (4,171) - (4,171) Short term borrowings (99) - (99) Current tax liability (33) - (33) Deferred tax liability (71) - (71) Minority interest (18) - (18) Net assets 835 - 835 Goodwill arising on acquisition 9,333 Intangibles arising on acquisition 7,341 17,509 Total consideration, analysed as: 10,684 Cash Equity 3,532 Deferred consideration 2,881 Acquisition expenses 412 17,509 Net cash outflow arising on acquisition: Cash consideration paid 10,684 Cash and cash equivalents acquired (355) 10,329 Ownership and control passed to YouGov plc on 7 August 2007 and psychonomics has been consolidated within the Group financial statements from August 2007. As at 31 January 2008, the fair value exercise was not completed. The fair value exercise had not been completed by the reporting date due to the timing of receiving audited accounts. Under IFRS the fair value exercise can be completed within 12 months of acquisition and this will be completed prior to 31 July 2008. The goodwill arising on the acquisition of psychonomics is attributable to the anticipated synergies expected to be derived from the combination and value of the workforce of psychonomics which cannot be recognised as an intangible asset under IAS38 'Intangible Assets'. Since the acquisition psychonomics has contributed Â£6m to Group revenue and Â£0.5m to the Group profit for the period to 31 January 2008. Acquisition of Zapera Zapera.com A/S ('Zapera') is an online research agency with offices in Denmark, Sweden and Norway and specialises in healthcare, pharmaceutical and brand research. The consideration payable for the acquisition of 100% of the issued share capital of Zapera on 7 August 2007 was cash of Â£4.9m and the allotment of 264,026 shares to the value of Â£412,000 (priced at 151.5p per Ordinary Share). In addition, YouGov applied Â£1.9m towards the repayment of loan capital, the acquisition of bank debt and the payment of deferred consideration pursuant to a previous acquisition made by Zapera. Additional consideration of Â£2.25m will become payable to the sellers subject to certain financial hurdles for the 12 month period to 31 July 2008 being met by Zapera. The earn out will be settled with equity priced at the average mid-market closing price of trading of the YouGov shares over the 10 day period to the date falling 1 working day prior to that on which the Earn Out Equity is to be issued. The 2 original founders are entitled to an earnout payment of (in aggregate) Â£1.25m depending on the financial performance for the 12 month periods to each of 31 July 2009 and 2010, both discounted to present value of Â£3.3m. Any such earn-out payment to the founders will be satisfied 50% in cash and 50% in Ordinary Shares priced in the same manner as the initial earn out. Professional fees of Â£86k for due diligence, and Â£32k for other professional fees were incurred. The allocation of the purchase price to the assets and liabilities of Zapera was only provisionally completed at 31 January 2008. The amounts provisionally recognised for each class of Zapera assets, liabilities, and contingent liabilities recognised at the acquisition date are as follows. Acquiree's carrying Provisional fair Fair value amount before value combination Adjustments Â£'000 Â£'000 Â£'000 Net assets acquired: Goodwill 2,466 (2,466) - Property, plant and equipment 95 - 95 Deferred tax asset 139 103 242 Inventories 130 - 130 Trade and other receivables 505 (10) 495 Cash and cash equivalents 123 - 123 Trade and other payables (987) (335) (1,322) Short term borrowings (117) - (117) Long term borrowings (2,041) - (2,041) Net assets 313 (2,708) (2,395) Goodwill arising on acquisition 9,472 Intangibles arising on acquisition 3,556 10,633 Total consideration, analysed as: 4,930 Cash Equity 412 Deferred consideration 3,260 Acquired liabilities 1,913 Acquisition expenses 118 10,633 Net cash outflow arising on acquisition: Cash consideration paid 4,930 Cash and cash equivalents acquired (123) 4,807 The acquired liabilities have been discounted to arrive at a present value as follows: Â£'000 Shareholders loan 731 Bank loan 754 Deferred consideration 555 2,040 Ownership and control passed to YouGov plc on 7 August 2007 and Zapera has been consolidated within the Group financial statements from August 2007. The allocation of purchase prices to the assets and liabilities was only provisionally completed at 31 January 2008 due to pressures on subsidiary financial reporting and associated management time. Under IFRS, acquiring companies have a period of 12 months in which to finalise the allocation and this will be completed by 31 July 2008. The goodwill arising on the acquisition of Zapera is attributable to the anticipated profitability of the distribution of the Group's products in the new markets and the anticipated future operating synergies from the combination. Since the acquisition Zapera has contributed Â£3m to Group revenue and Â£0.2m to the Group profit for the period to 31 January 2008. Acquisition of Polimetrix Polimetrix Inc ('Polimetrix') is an online market research agency. Under the terms of a pre-existing option surviving from the time that we acquired our initial stake in Polimetrix, YouGov and YouGovAmerica had the right to purchase the 68% of Polimetrix not owned by YouGovAmerica. The merger of Polimetrix and YouGovAmerica, effected on 7 August 2007, resulted in the acquisition of such 68% at a price of $2.10 per share. For tax structuring purposes the acquisition was effected by merging Polimetrix with a YouGov acquisition vehicle. The total consideration payable was Â£14.7m of which Â£8.1m was satisfied in cash, Â£5.3m in equity in YouGov. The value of the equity at completion was based on the average mid-market closing prices of the shares over the 30 day period to 31 August 2007, being the final day of trading prior to the EGM. Â£1.1m of the shares will only be issued one year following completion provided there are no claims made by YouGov under the merger agreement based on the average mid-market closing price used to calculate the initial payment. The Acquisition Shares are subject to selling restrictions for a period of 12 months from the date of completion. Professional fees of Â£122k were incurred. The allocation of the purchase price to the assets and liabilities of Polimetrix was only provisionally completed at 31 January 2008. The net assets acquired in the transaction, and the goodwill arising, are as follows: Acquiree's carrying Provisional fair Fair value amount before value combination adjustments Â£'000 Â£'000 Â£'000 Net assets acquired: Property, plant and equipment 82 (30) 52 Deferred tax asset - 1,031 1,031 Trade and other receivables 202 - 202 Cash and cash equivalents 3,565 - 3,565 Trade and other payables (360) - (360) Net assets 3,489 1,001 4,490 Goodwill arising on acquisition 4,992 Intangibles arising on acquisition 5,262 14,744 Total consideration, analysed as: 8,108 Cash Equity 5,306 Deferred consideration 1,086 Acquired liabilities 122 Acquisition expenses 122 14,744 Net cash outflow arising on acquisition: Cash consideration paid 4,260 Cash and cash equivalents acquired (3,565) 695 Ownership and control passed to YouGov plc on 7 August 2007 and Polimetrix has been consolidated within the Group financial statements from August 2007. The allocation of purchase prices to the assets and liabilities was only provisionally completed at 31 January 2008 as audited financial statements were not available. Under IFRS, acquiring companies have a period of 12 months in which to finalise the allocation and this will be completed by 31 July 2008. The goodwill arising on the acquisition of Polimetrix Inc is attributable to the anticipated profitability of the distribution of the Group's products in the new markets and the anticipated future operating synergies from the combination. Since the acquisition Polimetrix has contributed Â£1.2m to Group revenue and (Â£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 Â£'000 Â£'000 Â£'000 Current Taxation 633 234 585 Deferred Taxation (903) 7 37 Group taxation (270) 241 622 Deferred tax on JV loss disclosed within 'share of post tax loss in joint ventures' 15 - - Taxation per the income statement (255) 241 622 6 months 6 months 12 months to 31/1/08 to 31/1/07 to 31/7/07 Profit before tax per the income statement 2,977 2,316 5,599 Deferred tax on JV loss disclosed within 'share of post tax loss in joint ventures' (15) - - Group profit before tax 2,962 2,316 5,599 Weighted average tax rate 17% 11% 11% Tax calculated at domestic tax rates applicable to profits in the respective countries 517 254 630 Adjustment in respect of prior period 36 (15) (19) Expenses not deductible for tax purposes 80 (5) (26) Deferred taxation asset on losses (256) - - Deferred tax on timing differences 5 7 37 Deferred taxation on IFRS adjustments (intangibles arising on acquisition) (600) - - Deferred taxation on IFRS adjustments (other) (52) - - Group taxation (270) 241 622 Deferred tax on JV loss disclosed within 'share of post tax loss in joint ventures' 15 - - Taxation per the income statement (255) 241 622 The weighted average applicable tax rate has changed due to the acquisition of businesses operating under different tax regimes. The movement in deferred tax assets and liabilities during the year, without taking into account the consideration of offsetting of balances within the same tax jurisdiction is as follows: Deferred Tax Asset Accelerated Tax Fair Value Tax Depreciation Gain Losses Total Â£'000 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'000 Â£'000 At 1 August 2006 (12) - - (12) (Credited) to the income statement (7) - - (7) At 31 January 2007 (19) - - (19) (Credited) to the income statement (37) - - (37) At 31 July 2007 (56) - - (56) Acquisition Of Subsidiary (6,844) - - (6,844) Charged to the income statement 547 - - 547 At 31 January 2007 (6,353) - - (6,353) 10 EXPLANATION OF TRANSITION TO IFRS As stated in the Basis of Preparation, these are the Group's first condensed consolidated interim financial statements for part of the period covered by the first IFRS annual consolidated financial statement prepared in accordance with IFRS. An explanation of how the transition from UK GAAP to IFRS has affected the Group's financial position, financial performance is set out below. IFRS 1 permits companies adopting IFRS for the first time to take certain exemptions from the full requirements of IFRS in the transition period. These interim financial statements have been prepared on the basis of taking the following exemptions: â€¢ business combinations prior to 1 August 2006, the Group's date of transition to IFRS, have not been restated to comply with IFRS3 'Business Combinations'. Goodwill arising from these business combinations of Â£1.2m has not been restated other than as set out below. â€¢ Cumlative translation differences on foreign operations are deemed to be nil at 1 August 2006. Any gains and losses recognised in the consolidated income statement on subsequent disposal of foreign operations will exclude translation differences arising prior to the transition date. â€¢ The entity has elected not to apply IAS21 'the effects of Changes in Foreign Exchange Rates' retrospectively to goodwill and fair value adjustments arising on business combinations before the Group's date of transition to IFRS. Such goodwill and fair value adjustments are not treated as foreign currency assets and so are not retranslated at each reporting date. Reconciliation Of Equity as at 1 August 2006 UK GAAP A B C D E F IFRS Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Non Current Assets Goodwill 1,171 1,171 Intangible assets 0 3 3 Property, plant & equipment 158 (3) 155 Investment accounted for using the equity 110 110 method Deferred tax assets 0 11 11 1,439 1,450 Current Assets Inventories 0 0 Trade and other receivables 3,699 3,699 Current tax receivable 0 0 Other current assets 0 0 Cash and cash equivalents 5,546 5,546 9,245 9,245 Current Liabilities Lease liabilities (18) (18) Deferred consideration 0 0 Trade and other payables (2,251) (42) 75 (2,218) Short term borrowings 0 0 Current tax liability (527) (527) (2,796) (2,763) Non Current Liabilities Deferred consideration (365) (365) Long term borrowings 0 0 Deferred tax liability (12) (12) (377) (377) Net Assets 7,511 0 (42) 75 11 0 0 7,555 Reconciliation Of Equity as at 1 August 2006 UK GAAP A B C D E F IFRS Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Equity Issued share capital 134 134 Share premium 2,943 2,943 Merger reserve 0 0 Deferred consideration reserve 0 0 Foreign exchange reserve 0 0 Retained earnings 3,691 (42) 75 11 3,735 Minority interests in equity 743 743 Total Equity 7,511 0 (42) 75 11 0 0 7,555 Reconciliation Of Equity as at 31 January 2007 UK GAAP A B C D E F IFRS Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Non Current Assets Goodwill 1,012 56 1,068 Intangible assets 0 22 22 Property, plant & equipment 372 (22) 350 Investment accounted for using the equity 3,975 3,975 method Deferred tax assets 0 9 9 5,359 5,424 Current Assets Inventories 0 0 Trade and other receivables 3,302 (6) 3,296 Current tax receivable 0 0 Other current assets 0 0 Cash and cash equivalents 4,287 4,287 7,589 7,583 Current Liabilities Lease liabilities (29) (29) Deferred consideration 0 0 Trade and other payables (2,386) (44) 94 (2,336) Short term borrowings 0 0 Current tax liability (752) (752) (3,167) (3,117) Non Current Liabilities Deferred consideration (347) (347) Long term borrowings 0 0 Deferred tax liability (19) (19) (366) (366) Net Assets 9,415 0 (44) 94 9 56 (6) 9,524 Reconciliation Of Equity as at 31 January 2007 UK GAAP A B C D E F IFRS Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Equity Issued share capital 134 134 Share premium 2,987 2,987 Merger reserve 0 0 Deferred consideration reserve 0 0 Foreign exchange reserve 0 0 Retained earnings 5,264 (44) 94 9 56 (6) 5,373 Minority interests in equity 1,030 1,030 Total Equity 9,415 0 (44) 94 9 56 (6) 9,524 Reconciliation Of Equity as at 31 July 2007 UK GAAP A B C D E F IFRS Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Non Current Assets Goodwill 1,034 56 1,090 Intangible assets 143 200 343 Property, plant & equipment 699 (200) 499 Investment accounted for using the equity 4,463 76 4,539 method Deferred tax assets 0 20 20 6,339 6,491 Current Assets Inventories 0 0 Trade and other receivables 5,699 (6) 5,693 Current tax receivable 0 0 Other current assets 0 0 Cash and cash equivalents 4,061 4,061 9,760 9,754 Current Liabilities Lease liabilities (24) (24) Deferred consideration 0 0 Trade and other payables (3,494) (83) 107 (3,470) Short term borrowings 0 0 Current tax liability (147) (147) (3,665) (3,641) Non Current Liabilities Deferred consideration (334) (334) Long term borrowings 0 0 Deferred tax liability (56) (56) (390) (390) Net Assets 12,044 0 (83) 107 20 132 (6) 12,214 Reconciliation Of Equity as at 31 July 2007 UK GAAP A B C D E F IFRS Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Equity Issued share capital 135 135 Share premium 3,026 3,026 Merger reserve 0 0 Deferred consideration reserve 0 0 Foreign exchange reserve 0 0 Retained earnings 7,423 (83) 107 20 132 (6) 7,593 Minority interests in equity 1,460 1,460 Total Equity 12,044 0 (83) 107 20 132 6 12,214 Reconciliation Of Profit For The 6 Months Ended 31 January 2007 UK GAAP A B C D E F IFRS Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Revenue 6,083 6,083 Cost of sales (1,215) (1,215) Gross Profit 4,868 4,868 Administrative expenses (2,581) (2) (6) (2,589) Management fee 0 0 Group Operating Profit Pre Amortisation 2,287 2,279 Amortisation of intangibles (114) 56 (58) Group Operating Profit 2,173 2,221 Finance income 110 110 Finance costs (1) (1) Share of post tax loss in joint ventures (14) (14) Profit Before Taxation 2,268 2,316 Taxation - excluding deferred tax on (241) (2) (243) goodwill Profit For The Year 2,027 2,073 Attributable to: Equity holders of the parent company 1,703 1,749 Minority interests 324 324 2,027 2,073 Reconciliation Of Profit For The 6 Months Ended 31 July 2007 UK GAAP A B C D E F IFRS Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Revenue 14,303 14,303 Cost of sales (2,647) (2,647) Gross Profit 11,656 11,656 Administrative expenses (6,061) (41) (6) (6,108) Management fee 10 10 Group Operating Profit Pre Amortisation 5,605 5,558 Amortisation of intangibles (132) 132 - Group Operating Profit 5,473 5,558 Finance income 188 188 Finance costs (2) (2) Share of post tax loss in joint ventures (139) (139) Profit Before Taxation 5,520 5,605 Taxation - excluding deferred tax on (622) 9 (613) goodwill Profit For The Year 4,898 4,992 Attributable to: Equity holders of the parent company 4,104 4,198 Minority interests 794 794 4,898 4,992 11 EXPLANATION OF TRANSITION TO IFRS A) Under UK GAAP software costs were included as part of tangible fixed assets. These have been reclassified as intangible assets under IFRS as they meet the recognition criteria defined by IAS 38. The result of this is to increase intangible assets and decrease property, plant and equipment in the periods to 31 July 2006, 31 January 2007 and 31 July 2007 by Â£3k, Â£22k and Â£200k respectively. B) IAS 19 requires the recording of a holiday pay accrual. This has been included for each of the reporting periods. For the 12 months to 31 July 2006 the impact on the Profit & Loss was Â£42k (accrual included within trade and other payables Â£42k), for the 6 months to 31 January 2007 the impact on the Profit & Loss was Â£2k (accrual included within trade and other payables Â£44k) and for the 6 months to 31 July 2007 the impact on the Profit and Loss was Â£41k (accrual included within trade and other payables Â£83k). C) The liability in relation to share based payments in all periods to 31 July 2007 was included within trade and other payables. This adjustment correctly discloses the amounts within the share based payment reserve. The Profit and Loss entry of a Â£19k charge in the period to 31 July 2006 adjusts the accounting treatment between UITF 17 under UK GAAP and IFRS 2. D) Under FRS 19 deferred tax was recognised only on timing differences; in contrast IAS12 'Income Taxes' requires the recognition of deferred tax on all temporary differences. The recognition of a holiday pay accrual under IAS19 has led to the occurrence of temporary differences. The effect of this adjustment is to create a deferred tax asset of Â£11k at 31 July 2006, Â£9k at 31 January 2007 and Â£20k at 31 July 2007. The tax charge in the Profit and Loss was increased by Â£2k in the 6 months to 31 January 2007 and reduced by Â£9k in the 6 months to 31 July 2007. E) Goodwill recognised by the Group on the acquisition of Siraj and Polimetrix (32% stake) under UK GAAP was amortised over a period of 5 years. Under IFRS goodwill is not amortised, but tested annually for impairment. The goodwill amortisation charge recognised in accordance with UK GAAP in 2007 has been written back. The result of these adjustments is to reduce the cost of amortisation in the Profit and Loss by Â£56k in the 6 months to 31 January 2007 and Â£132k in the 12 months to 31 July 2007 and increase the carrying value of the goodwill by the same amounts. F) Under UK GAAP, rent free periods are recognised in the income statement over a period of the shorter of either the length of the lease or period to the prevailing date at which market rent becomes payable. Under IFRS rent free periods are amortised over the length of the lease. This has resulted in an additional Profit and Loss charge of Â£6k being recognised in each of the periods ending 31 January 2007 and 31 July 2007 respectively. The corresponding balance sheet entry reduces trade and other receivables by an equal amount. 12 RELATED PARTY TRANSACTIONs There have been no transactions with directors during the period. During the period to 31 January 2008 sales were made to Endemol UK totalling Â£1,500 (period to 31 January 2007: Â£2,600). Endemol UK is a company which Peter Bazalgette, a non-executive director of YouGov plc, was a director during the period. The sales were made at arms length and on usual commercial terms. As at 31 January 2008 Endemol UK owed YouGov plc Â£nil (31 January 2007: Â£nil). During the period to 31 January 2008 goods and services were procured from IIR Limited totalling Â£nil (period to 31 January 2007: Â£5,293). IIR Limited is a company which Anthony Foye, a non-executive director of YouGov plc, was a director during the period. The purchase was made at arms length and on usual commercial terms. As at 31 January 2008 YouGov plc owed IIR Limited Â£nil (31 January 2007: Â£nil). During the period to 31 January 2008 YouGov plc provided research services totalling Â£762,500 (period to 31 January 2007: Â£nil) to Privero Capital, a US based investment fund. A minority stake in this fund is partially owned by Stephan Shakespeare and Balshore Investments (the family trust of Nadhim Zahawi's family), each of whom control 18.75% of the fund. At 31 January 2008 Privero owed YouGov plc Â£145,256 (31 January 2007: Â£nil). During the period to 31 January 2008 sales were made to YouGovExecution totalling Â£4,300 (period to 31 January 2007: Â£138,961). At 31 January 2008 YouGovExecution owed YouGov plc Â£51,240 (31 January 2007: Â£33,488). During the period to 31 January 2008 sales were made to YouGovCentaur totalling Â£17,100 (period to 31 January 2007: Â£nil). At 31 January 2008 YouGovCentaur owed YouGov plc Â£10,405 (31 January 2007: Â£nil). Trading between YouGov plc and subsidiary companies is excluded from the related party note as this has been eliminated on consolidation. 13 EVENTS AFTER THE BALANCE SHEET DATE Research-driven hedge fund launch YouGov plc announced on 6 March 2008 that it has signed heads of agreement with Numis Corporation plc and FOUR Capital Partners Limited to form a joint venture hedge fund designed to exploit investment opportunities identified by YouGov's proprietary, real-time consumer research capability. Board Change On 6 March 2008 Peter Kellner, President and Executive Director, is standing down from the YouGov plc Board. Peter will remain as emeritus President and will continue working with the Company's media, political and other clients, on a part time basis. Additionally he will continue to represent YouGov in the media and at academic and other conferences. Employee Benefit Trust Under the terms of the psychonomics sale and purchase agreement, â‚¬500,000 of YouGov shares was to be issued to employees as an incentive programme. An employee benefit trust will be created on to hold these shares until the distribution date. This information is provided by RNS The company news service from the London Stock Exchange

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