YouGov — Update 7 February 2016

YouGov (AIM: YOU)

Last close As at 27/03/2024

902.00

−34.00 (−3.63%)

Market capitalisation

990m

More on this equity

Research: TMT

YouGov — Update 7 February 2016

YouGov

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

TMT

YouGov

Products and Profiles

Half-year pre-close update

Media

8 February 2016

Price

142.5p

Market cap

£149m

Net cash (£m) at end July 2015

10.0

Shares in issue

104.3m

Free float

83%

Code

YOU

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

2.7

(3.4)

22.6

Rel (local)

2.5

4.8

40.6

52-week high/low

154.0p

102.8p

Business description

YouGov is an international, full-service online market research and data analytics group. Its offer includes custom research, omnibus, field and tab services, qualitative research, syndicated products and market intelligence reports.

Next events

Interim results

21 March 2016

Prelims

10 October 2016

Analysts

Fiona Orford-Williams

+44 (0)20 3077 5739

Bridie Barrett

+44 (0)20 3077 5700

YouGov is a research client of Edison Investment Research Limited

YouGov’s half-year pre-close statement confirms the group is trading well and in line with expectations. Our forecast is for revenue growth in the current financial year to July of 10% (the same for FY17), well ahead of forecast average growth from the quoted sector of 4-5%. Good progress is continuing across data products and services and the custom research business. Continued increases in higher-margin product, with the cash resource to fund the progress, underpins the forecast premium growth and, by extension, the rating.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

07/14

67.4

7.6

5.8

0.8

24.6

0.6

07/15

76.1

9.1

6.7

1.0

21.3

0.7

07/16e

83.5

10.7

7.6

1.2

18.8

0.8

07/17e

91.8

12.1

8.4

1.4

17.0

1.0

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Growth ahead of market

As is usual for YouGov at this juncture, there is no financial data in the brief update and we have made no adjustments to our forecasts for either FY16 or FY17. The strong top-line growth of both BrandIndex and Omnibus mean that together they should account for around one-third of FY16 group revenues, with the newer Profiles product also building as it establishes in key geographies. Custom Research revenue growth continues to outperform its market, albeit at a much lower growth rate than data products. The increasing proportion of revenue and contribution from Products and Services supports our modelled improvement in group operating margin in FY16 and FY17, which in turn drives the earnings growth towards the LTIP’s demanding targets. The LTIP triggers in full on achievement of 25% CAGR in earnings over five years to July 2019, with no grant at all for growth <10%, or if the operating margin fails to average more than 12% over the period (11.3% in FY15, 11.9% FY16e).

Cash to invest

YouGov has an inherently cash-generative business model, with the resultant funds invested in upgrading the products and services it provides to its clients, launching new initiatives and rolling out to new territories. It has also been investing in internal infrastructure to improve efficiency; moving some support functions to lower-cost locations, increasing process automation and adding cloud-based analytics.

Valuation: Price reflects premium growth

The share price picked up last summer, with a further fillip on the full year results in October, since when it has continued to outperform a falling market. YouGov’s shares are on an annualised CY16e EV/EBITDA of 12.4x, comfortably ahead of the sector on 10.0x. With continued good trading momentum leading to revenue and earnings growth clearly well above sector forecasts, and a progressive dividend, this premium over the sector is clearly justified.

Financial summary

Exhibit 1: Financial summary

£'000s

2014

2015

2016e

2017e

Year end 31 July

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

67,375

76,110

83,500

91,800

Cost of Sales

(15,812)

(17,472)

(18,788)

(20,196)

Gross Profit

51,564

58,638

64,713

71,604

EBITDA

 

 

8,020

9,273

10,646

11,826

Operating Profit (before GW, except and share-based payments)

7,936

9,239

10,843

12,223

Intangible Amortisation

(3,965)

(4,633)

(4,633)

(4,633)

Share based payments

(547)

(669)

(900)

(1,100)

Exceptionals

(2,385)

(1,072)

0

0

Other

(14)

41

0

0

Operating Profit

1,025

2,906

5,310

6,490

Net Interest

(292)

(220)

(143)

(123)

Profit Before Tax (norm)

 

 

7,630

9,060

10,700

12,100

Profit Before Tax (FRS 3)

 

 

733

2,686

5,167

6,367

Tax

(316)

580

(2,461)

(2,965)

Profit After Tax (norm)

7,314

9,640

8,239

9,136

Profit After Tax (FRS 3)

417

3,266

2,504

3,403

Average Number of Shares Outstanding (m)

98.0

101.0

103.9

104.3

EPS - normalised fully diluted (p)

 

 

5.8

6.7

7.6

8.4

EPS - FRS 3 (p)

 

 

0.4

3.2

2.4

3.2

Dividend per share (p)

0.8

1.0

1.2

1.4

Gross Margin (%)

76.5

77.0

77.5

78.0

EBITDA Margin (%)

11.9

12.2

12.8

12.9

Operating Margin (before GW and except & share-based payments) (%)

11.0

11.3

11.9

12.1

BALANCE SHEET

Fixed Assets

 

 

52,259

53,726

52,427

52,427

Intangible Assets

46,650

46,145

46,000

46,000

Tangible Assets

5,609

7,377

6,223

6,223

Investments

0

204

204

204

Current Assets

 

 

29,873

33,329

37,594

42,524

Stocks

0

0

0

0

Debtors

21,687

22,507

24,692

27,418

Cash

7,429

10,017

12,145

14,552

Current Liabilities

 

 

(21,480)

(22,983)

(25,215)

(27,447)

Creditors

(21,296)

(22,983)

(25,215)

(27,447)

Short term borrowings

(184)

0

0

0

Long Term Liabilities

 

 

(2,700)

(2,449)

(3,500)

(3,250)

Long term borrowings

0

0

0

0

Other long term liabilities

(2,700)

(2,449)

(3,500)

(3,250)

Net Assets

 

 

57,952

61,623

61,307

64,254

CASH FLOW

Operating Cash Flow

 

 

8,600

10,091

11,000

12,000

Net Interest

(295)

(233)

(143)

(123)

Tax

(287)

(730)

(2,106)

(2,587)

Capex

(5,759)

(5,754)

(5,500)

(5,500)

Acquisitions/disposals

(1,003)

(470)

0

(36)

Financing

(101)

454

0

0

Dividends

(566)

(773)

(1,123)

(1,347)

Net Cash Flow

589

2,585

2,128

2,407

Opening net debt/(cash)

 

 

(6,656)

(7,245)

(10,017)

(12,145)

HP finance leases initiated

0

0

0

0

Other

0

187

0

0

Closing net debt/(cash)

 

 

(7,245)

(10,017)

(12,145)

(14,552)

Source: Company accounts, Edison Investment Research

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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