Final Results
ADVFN PLC
31 October 2007
Embargoed for release until 7.30 am Wednesday 31st October 2007
ADVFN plc ('ADVFN' or 'the Company')
Preliminary Results for the Year Ended 30 June 2007
ADVFN, Europe's number one stocks and shares website, today announces its
preliminary results for the year ended 30 June 2007.
Highlights:
• Turnover up 35% to £6.0M (2006: £4.5M)
• EBITDA profits of £262,000 (2006: loss £188,000)
• Operating losses reduced by 19% to £1.07M (2006: £1.32M)
• Net assets up over 27% to £6.8M (2006: £5.3M)
• InvestorsHub.com Inc and SI Holdings LLC turnover up 107% for the nine
months since acquisition to June 2007 compared to the previous nine months
• ADVFN user numbers up over 38% to 970,000 (2006: 700,000)
• Total group user numbers up 65% to 3.3M (2006: 2M)
• InvestorsHub.com Inc and SI Holdings LLC successfully acquired and
integrated into the group during the year
Clem Chambers, CEO of ADVFN, commented:
'The last year has been a year of record growth and international success. We
are poised to dramatically expand market share outside of the UK and look
forward to the future with optimism.'
For further information, please contact:
Clem Chambers, clemc@advfn.com
Francesca De Franco, PR francescad@advfn.com 020 7070 0932
Fiona Kindness, Grant Thornton UK LLP (Nominated Adviser) 020 7728 3414
Chief Executive's Statement
The year to June 30th 2007 has been a strong period for the group. Our sales
have continued to grow, up 35% from £4,463,000 last year to £6,022,000. This has
come from growth in our subscription products, advertising income and Equity
Development's paid for equity research. This strong sales performance extends
right throughout the group, with Equity Development and our US operations,
InvestorsHub.com (iHub) and Silicon Investor (SI), doing well.
We have stated in the past that we intend to grow both at home and abroad and in
this period we have seen our international offerings take off. We have had
particularly strong progress in Brazil and Italy, with encouraging developments
in France and Germany. InvestorsHub.com and Silicon Investor have also had
strong sales growth which we believe represents early evidence of significant
revenue potential going forwards. Based on the latest figures from web
information company ALEXA (www.alexa.com), over 75% of total ADVFN global
traffic now comes from outside of the UK. We are working hard translating this
into the kind of revenue yields we currently enjoy in the UK market. This broad
usage growth represents major revenue potential as we develop our advertising
and subscription products in localised markets.
Strong international growth is an important and exciting development for ADVFN
that sees our strategy for creating a global financial information platform
begin to pay off. It would have been far easier to concentrate on the UK market
alone, but now as our local competition falls away and we enjoy accelerating
traction in overseas markets, we feel confident we are in the early stages of
delivering on the vision of a truly global business. While ADVFN continues to
grow in the UK, with what is now an established business model,
commercialisation is still at an early stage overseas. Yet even so, the initial
contributions to sales growth are significant and growing. As we tap further
into these new markets and continue to develop the iHub and SI properties, it is
clear that the potential is there to multiply our revenues. This won't be
achieved overnight but this across-the-board progress leads us to believe that
this new phase is underway.
Our registered user numbers are now, at the report date, over one million and
our subscriber numbers are in a period of fast growth. The rates of acquisition
of both subscriptions and registrations are at record levels and have been
unaffected, perhaps even enhanced, by this summer's market turbulence. In a
volatile market investors need access to unbiased market information wherever
they may be in the world; ADVFN remains one of the very few destinations that
can fulfil this need.
The operational leverage of a tried and tested, robust platform gives us an
opportunity to become both highly profitable and cash generative. The small
variance between our net cash at the year end and the previous interim period is
an indication of how our growth is being achieved without any significant drain
on our finances.
Financial overview
ADVFN has continued its growth in turnover for the seventh consecutive year.
Turnover for the year ended 30 June 2007 was £6.02 million - a rise of 35 % on
last year (2006: £4.46 million). EBITDA for the year was £262,000 compared to
£188,000 loss last year. Operating losses have been reduced by 19% to
£1.07million (2006: £1.32million).
The directors are encouraged with the performance for the year and believe that
ADVFN is in a strong position to continue to expand its market share as we roll
out our localised content and continue to integrate iHub and Silicon Investor
into the ADVFN infrastructure. Equity Development continues to grow and build an
increasing portfolio of clients as it leverages its reputation as a market
leader in sponsored research.
Financial performance
Key financial performance for the year has been summarised as follows:
Year to 30 Year to 30 Change Change
June 2007 June 2006
£'000 £'000 £'000 %
Turnover 6,022 4,463 1,559 35
Operating Loss (1,073) (1,318) 245 19
EBITDA
We have many non-cash expenses and therefore feel that our EBITDA is a more
accurate measure of our performance than our operating results, which can be
seen from the table below:
EBITDA - Earnings before interest, tax, 2007 2006
depreciation, amortisation and
exceptional items £'000 £'000
Loss on ordinary activities after (1,499) (1,021)
taxation
Amortisation 195 337
Depreciation 971 678
Taxation (278) (58)
Share of associates operating losses 738 567
Exceptional item - gain on part disposal - (761)
of subsidiary
Share options expense 169 115
Net interest (34) (45)
EBITDA 262 (188)
Strategy
Our continued strategy is to build on our market position which is number one in
the UK and Europe while at the same time expanding our model into other world
markets. In the main, this is being achieved from London or via joint ventures
with local partners. In the USA, the ADVFN, SI and iHub brands have now leaped
ahead of the UK in terms of site traffic. Our USA traffic is now over 30% of our
total traffic, which now places the UK into second place at around 23%. This is
a trend we expect to see continuing as we move forward. Likewise, we expect
income from overseas markets to become an increasing percentage of our turnover,
which should eventually reflect the market size and economy of the various
territories we become established in. This should, over time, transform ADVFN
into a much larger enterprise.
Turnover
As detailed above, our sales have achieved growth over the year of 35%. We
expect this growth to continue and accelerate as we open new markets and begin
to benefit from our USA operations. As also shown in the table above, our
operating loss has been reduced by £245,000 or 19% compared to 2006. Despite the
reduction in our operating loss, our net loss for the year actually rose by 47%
to £1,499,000. This is due to two things: Firstly the share of operating losses
of our associates rose by 30% to £738,000, relating to our investment in All IPO
Plc and the technical impact on our accounts of our shareholding in ADVFN Japan.
Secondly last year we had an exceptional gain of £761,000 relating to a gain on
part disposal of associates which more than wiped out the share of associate's
losses, whereas this year there was no such gain to help reduce this charge.
Operating costs
Compared to the 35% growth in turnover, our operating costs known as
administrative expenses have grown by nearly 26% to £6,582,000. Within this
there are items of £169,000 for share option valuation expense, £174,000 for
amortisation of goodwill, plus the £312,000 overhead of our US acquisitions
during the period. Due to the introduction of FRS 20 we have had to bear an
expense of £169,000 in connection with share options issued being expensed, with
£115,000 included for 2006 within the restated figures. In addition, we have had
to bear £174,000 of amortisation costs relating to goodwill on consolidation
compared to £77,000 in 2006. Market data-feed costs have increased as have
bandwidth, networking and hosting charges which have increased our costs. Due to
organic growth and acquisition, staffing levels and wages have also risen giving
us an increase in total overheads of 25%, which is in line with our
expectations. Our marketing and customer acquisition costs have remained
reasonably static throughout the year and we expect this level to be maintained
for the next 12 months.
Research and development
The company continues to invest in the quality and design of its products. We
believe sustained investment in our research and development is fundamental to
the continuing growth of the business.
Environmental policy
Management continued to look for ways to develop the group's environmental
policy during the year. It is our objective to consistently improve our
performance in this area.
Summary of key performance indicators
The directors have monitored the progress of the overall company strategy and
the individual strategic elements by reference to certain financial and
non-financial key performance indicators, as outlined below:
2007 2007 2006 2006
Actual Target Actual Target
Growth in sales (%) 35% 30% 35% 30%
Staff turnover (%) 18% 20% 25% 20%
Average head count 54 55 47 45
Advfn registered users 970K 850K 700K 650K
Group registered users 3.3M 2.5M 2M 1.75M
Future developments for the business
We believe our continued investment in our service and product ranges and brands
like Equity Development, ADVFN, Silicon Investor and InvestorsHub in the
financial sector and CupidBay and Fotothing in the leisure space plus the
addition of new products across our services, will enable us to improve on our
already strong market position. Our emphasis on quality, design and employing
people with the relevant expertise underlines this development. As a result we
remain confident that we will continue to maintain our current level of
performance in the foreseeable future.
Principal risks and uncertainties
The management of the business and the nature of the Company's strategy are
subject to a number of risks. The directors are of the opinion that a thorough
risk management process is adopted which involves the formal review of all the
risks identified below. Where possible, processes are in place to monitor and
mitigate such risks. We have set out below the principal risks facing the
business.
Economic downturn
The success of the world's stock markets could affect the business and many
things around the world can affect a stock market from war to human error. This
can also have a knock on effect on consumer spending power. However, in the past
when we have seen a market downturn it has not changed our customer appetite for
information about what is happening in the market be it good or bad. In response
to this risk, senior management aim to keep abreast of economic conditions
around the world. Not only should senior management be aware of it, likewise so
should our customers and members. In cases of severe economic downturn,
marketing and pricing strategies are modified to reflect the new market
conditions.
High proportion of fixed overheads and variable revenues
A large proportion of the company's overheads are reasonably fixed. There is the
risk that any significant changes in revenue may lead to the inability to cover
such costs. Management closely monitor fixed overheads against budget on a
monthly basis and cost-saving exercises would be implemented should there be an
anticipated decline in revenues.
Product obsolescence
Due to the nature of the market in which the company operates, products are
subject to technological advances and resultant obsolescence. The directors are
committed to the research and development strategy in place, and are confident
that the company is able to react effectively to the developments within the
market.
Fluctuations in currency exchange rates
Approximately 20% of our turnover relates to overseas operations. As a company,
we are therefore exposed to foreign currency fluctuations. The company manages
its foreign exchange exposure on a net basis, and if required would use forward
foreign exchange contracts and other derivatives/financial instruments to reduce
the exposure. If the hedging activity does not mitigate the exposure, then the
results and the financial condition of the company might be adversely impacted
by foreign currency fluctuations.
People
Our team of experienced people is critical to the ongoing success of the
business. I would like to take this opportunity to once again thank both the
board and the staff for their continued hard work.
Prospects
There are many opportunities opening up for us as we roll out the ADVFN platform
worldwide. With rapid progress in the US, Brazil and Italy, we feel that the
ADVFN model is ready to address a much bigger market. The company is therefore
well positioned over the next two years to become strongly cash generative and
profitable.
Clem Chambers
Chief Executive
30th October 2007
ADVFN PLC
Consolidated Profit and Loss Account
for the year ended 30 June 2007
Continuing Continuing Total 2006
Acquisitions
2007 2007 2007 As
restated
Notes £'000 £'000 £'000 £'000
Turnover 5,633 389 6,022 4,463
Cost of sales (442) (71) (513) (537)
Gross profit 5,191 318 5,509 3,926
Administrative expenses
Share option valuation
expense (169) - (169) (115)
Amortisation of
goodwill (174) - (174) (77)
Other administrative
expenses (5,926) (313) (6,239) (5,052)
Total administrative
expenses (6,269) (313) (6,582) (5,244)
Operating
(loss)/profit (1,078) 5 (1,073) (1,318)
Exceptional item:
Gain on part disposal
of associates - - - 761
Share of operating
losses of associates (738) - (738) (567)
Net interest 34 - 34 45
(Loss)/profit on
ordinary activities
before taxation (1,782) 5 (1,777) (1,079)
Tax on loss on
ordinary activities 278 - 278 58
(Loss)/profit on
ordinary activities
after taxation (1,504) 5 (1,499) (1,021)
Loss per ordinary
share 2
Basic (0.27p) (0.22p)
Fully diluted (0.27p) (0.22p)
All operations are continuing.
ADVFN PLC
Balance Sheets
at 30 June 2007
Group Company Group Company
2007 2007 2006 2006
As As restated
restated
Notes £'000 £'000 £'000 £'000
Fixed assets
Intangible assets 2,280 - 874 21
Tangible assets 1,703 1,510 1,681 1,407
Investments 1,595 2,692 2,402 1,055
5,578 4,202 4,957 2,483
Current assets
Debtors 1,415 1,681 938 1,200
Investments 78 29 48 29
Cash at bank and in hand 1,358 1,161 938 862
2,851 2,871 1,924 2,091
Creditors: amounts falling
due within
one year (1,626) (1,274) (1,512) (1,305)
Net current assets 1,225 1,597 412 786
Total assets less current
liabilities 6,803 5,799 5,369 3,269
Creditors: amounts
falling due after more
than one year (20) (20) (28) (28)
6,783 5,779 5,341 3,241
Capital and reserves
Called up share capital 5,870 5,870 4,798 4,798
Share premium account 7,600 7,600 5,634 5,634
Option valuation reserve 335 343 174 174
Merger reserve 221 221 221 221
Shares to be issued 332 332 498 498
Profit and loss account (7,575) (8,587) (5,984) (8,084)
Shareholders' funds 3 6,783 5,779 5,341 3,241
The financial statements were approved by the Board of Directors on 30th October
2007
ADVFN PLC
Consolidated Cash Flow Statement
for the year ended 30 June 2007
2007 2006
Notes £'000 £'000
Net cash inflow from operating 4 109 65
activities
Returns on investment and
servicing of finance
Interest received 49 50
Interest paid (15) (5)
34 45
Capital expenditure
Payments to acquire tangible (937) (1,067)
fixed assets
Payments to acquire investments - (15)
(937) (1,082)
Acquisitions
Purchase of subsidiary (1,637) (246)
undertaking
Cash acquired with subsidiary 13 -
undertaking
(1,624) (246)
Net cash outflow before (2,418) (1,218)
financing
Financing
Issue of ordinary share capital 3,053 344
Share issue costs (181) (3)
Capital element of finance
leases and hire purchase (34) (24)
contracts repaid
Net cash inflow from financing 2,838 317
Increase / (decrease) in cash 5,6 420 (901)
Statement of Total Recognised Gains and Losses
for the year ended 30 June 2007
2007 2006
£'000 £'000
(Loss) for the financial year (1,499) (1,021)
Currency differences on foreign (92) -
currency net investments
Total losses recognised since (1,591) (1,021)
last financial statements
ADVFN PLC
Notes for the year ended 30 June 2007
1. General
The financial information herein does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. The financial information has
been extracted from the Company's 2007 statutory financial statements upon which
the auditors reported on 30 October 2007. Their opinion does not include any
statement under section 237 of the Companies Act 1985.
The financial statements have been prepared in accordance with applicable United
Kingdom Accounting Standards and under the historical cost convention. The
principal accounting policies have remained unchanged since the previous year
except for the adoption of FRS 20 'Share based payments'.
The Company has adopted FRS20 with effect from 1 July 2006. FRS20 requires the
recognition of a charge to the profit and loss account for all applicable share
based payments, including share options. The Company has equity-settled share
based payments but no cash-settled share based payments. All share based
payments awards granted after 7 November 2002 which had not vested prior to 1
July 2006 are recognised in the financial statements at their fair value at the
date of grant.
As vesting periods and non-market based vesting conditions apply, the expense is
allocated over the vesting period, based on the best available estimate of share
options expected to vest. Estimates are revised subsequently 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. All equity-settled share based payments are ultimately
recognised as an expense in the profit and loss account with a corresponding
credit to the option valuation reserve.
The adoption of FRS20 requires a prior period adjustment to be made for awards
granted before 1 July 2006. This has created an opening balance within the
option valuation reserve at 1 July 2006 of £174,000 and reduced the profit and
loss account reserve by an equal amount. In addition, the re-stated loss after
tax for the year ended 30 June 2006 has increased by £115,000.
Copies of the annual report are being posted to shareholders and copies will be
available from the company's registered office at Suite 27, Essex Technology
Centre, The Gables, Fyfield Road, Ongar, Essex, CM5 0GA.
2. Loss per ordinary share
2007 2006
Loss Number Loss Loss Number Loss
of shares per share of shares per
share
As As
restated restated
£'000 '000 p £'000 '000 p
Loss for the
year (1,499) (1,021)
Weighted
average number
of shares 565,331 469,165
Loss per share (0.27p) (0.22p)
The options are anti-dilutive for both years due to the losses incurred.
3. Reconciliation of movements in shareholders' funds
2007 2006
As
restated
£'000 £'000
Loss for the financial year (1,499) (1,021)
Recognition of equity settled
share based payments in the 161 115
year (FRS20)
Foreign exchange differences (92) -
Net receipts from issues of 3,038 632
shares
Shares to be issued (166) 498
Net increase in shareholders' 1,442 224
funds
Shareholders' funds at 1 July 5,341 5,117
2006
Shareholders' funds at 30 June 6,783 5,341
2007
4. Reconciliation of operating loss to net cash outflow from operating
activities
2007 2006
As restated
£'000 £'000
Operating loss (1,073) (1,318)
Recognition of equity settled share
based payments in the 169 115
year (FRS20)
Amortisation 195 337
Depreciation 971 678
Increase in debtors (197) (135)
Increase in creditors 82 388
Investments acquired for services (30) -
rendered
Foreign exchange differences (8) -
Net cash inflow from operating 109 65
activities
5. Reconciliation of net cash flow to movement in net funds
2007 2006
£'000 £'000
Increase / (decrease) in cash for the year 407 (901)
Cash acquired on acquisitions 13 15
Inception of new finance leases and hire purchase (49) (75)
agreements
Cash outflow from capital repayments of hire purchase 34 24
agreements
Movement in net funds in the year 405 (937)
Net funds at 1 July 2006 869 1,806
Net funds at 30 June 2007 1,274 869
6. Analysis of movements in net funds
At 1 July Cash flow Acquisitions Non cash At
2006 items 30 June
2007
£'000 £'000 £'000 £'000 £'000
Cash in hand
and at bank 938 407 13 - 1,358
Finance leases
and hire
purchase
agreements (69) 34 - (49) (84)
869 441 13 (49) 1,274
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